Carlson v. Village of Union City, Mich.

• Citation: 601 F. Supp. 801
• Decision Date: 29 January 1985
• Docket Number: No. K83-243 CA.,K83-243 CA.
• Parties: Dennis CARLSON, et al., Plaintiff, v. VILLAGE OF UNION CITY, MICHIGAN, et al., Defendants.
• Court: U.S. District Court — Western District of Michigan

601 F. Supp. 801

Dennis CARLSON, et al., Plaintiff, v. VILLAGE OF UNION CITY, MICHIGAN, et al., Defendants.

No. K83-243 CA.

United States District Court, W.D. Michigan, S.D.

January 29, 1985.

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James D. O'Connell, O'Connell & Wayne, Highland Park, Mich., for plaintiff.

Mark W. Garrison, Tuck & Garrison, Albion, Mich., for defendants.

OPINION

BENJAMIN F. GIBSON, District Judge.

In April of 1981, the Village of Union City granted to St. Joseph Valley Cablevision a franchise, giving St. Joseph the right to build, operate, and maintain a cable television system within the village.¹ The franchise was non-exclusive and had a term of 15 years.

In April of 1983, after notice and a hearing, the trustees of the village revoked the franchise. By that time, plaintiff, the owner of St. Joseph Valley Cablevision, had expended considerable sums to string cable and erect facilities necessary for the transmission of the cable television signal. Under the terms of the franchise, plaintiff had six months to remove his equipment before the equipment would be considered transferred and assigned to the village.

Plaintiff alleges that the village revoked the franchise as a result of a conspiracy between Union City, the village trustees, and unknown others, to prevent plaintiff from providing cable television service. Defendants, the village and its individual trustees, claim that the franchise was revoked because plaintiff failed to install the system within the timetable provided in the franchise agreement. Specifically, defendants claim that, after a period of two years, plaintiff had yet to provide service to any residences within the village.

Plaintiff has claimed violations of the first amendment, the equal protection clause, the takings clause of the fifth amendment, the contracts clause, and section one of the Sherman Act. Pendent to his federal claims, plaintiff has raised several state law claims, most notably a breach of contract claim.

Defendants have moved for summary judgment on all federal claims. In the event the Court grants summary judgment on the federal claims, defendants have moved for dismissal of the pendent state claims for lack of jurisdiction. As discussed below, the Court finds merit in defendants' arguments and grants summary judgment and dismissal.

I. THE ANTITRUST CLAIM

Plaintiff alleges that defendants consulted with potential competitors of St. Joseph Valley Cablevision and conspired to take over the facilities of St. Joseph's. He claims that defendants intended to prevent him from providing cable television service to the franchise territory and to arrange for one of his competitors, or Union City itself, to monopolize the business of providing cable television service in the Village of Union City and surrounding areas. Plaintiff claims that defendants revoked his franchise for an anti-competitive purpose and with an anticompetitive effect. He characterizes defendants' conduct as an unreasonable restraint of trade, a group boycott, and a concerted refusal to deal.

Defendants have moved for dismissal, claiming that they are immune from federal antitrust liability under the "state action" doctrine. The Court finds this argument convincing and accordingly grants summary judgment on the antitrust claims.

The state action exemption was first addressed by the Supreme Court in Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943). The state of California had adopted a program for the marketing of its raisin crop that restricted production and marketing of raisins. Faced with conflicting state and federal law, the Court concluded that Congress had not intended for the Sherman Act to restrict the actions of the sovereign states. Thus, the Court held that the state marketing program was immune from the force of the federal antitrust laws. 317 U.S. at 350-51, 63 S.Ct. at 313-14.

In City of Lafayette v. Louisiana Power & Light Co., 435 U.S. 389, 98 S.Ct. 1123, 55 L.Ed.2d 364 (1978), a plurality of the Court held that the immunity accorded to actions of states is not automatically extended to actions of municipalities. Expressing concern that a "serious economic dislocation" could result if cities were free to place their own parochial interests above the nation's economic goals, 435 U.S. at 412-13, 98 S.Ct. at 1136-37, the plurality held that actions of municipalities should not receive the same deference accorded state activity. Instead, Parker immunity should only be granted when a municipality engages in conduct "pursuant to state policy to displace competition with regulation or monopoly public service." 435 U.S. at 413, 98 S.Ct. at 1137. Further, to qualify for immunity, the state policy pursuant to which the municipality acts must be one that is "clearly articulated and affirmatively expressed." 435 U.S. at 410, 98 S.Ct. at 1135.

The Supreme Court has recently considered the state action immunity doctrine in the context of a municipality's regulation of cable television. In Community Communications Co. v. City of Boulder, 455 U.S. 40, 102 S.Ct. 835, 70 L.Ed.2d 810 (1982), a cable television operator sued the City of Boulder for enacting a three month moratorium on cable television development. The City argued that, because it was acting pursuant to the home rule powers conferred upon it by the state constitution, it was entitled to Parker immunity.² The Court held that the home rule provision did not satisfy the "clear articulation and affirmative expression" standard and described Colorado's policy as one of "mere neutrality" respecting the municipal actions challenged as anticompetitive. Thus, the Court concluded that the Parker immunity doctrine did not apply.

Defendants argue that the facts of the present case are distinguishable from those of Boulder. Instead of asserting home rule powers as the basis for their actions, defendants suggest that article 7, section 29, of the Michigan Constitution provides the "clearly articulated and affirmatively expressed" state policy required. Article 7, section 29, provides that:

No person, partnership, association or corporation, public or private, operating a public utility shall have the right to the use of the highways, streets, alleys or other public places of any county, township, city or village for wires, poles, pipes, tracks, conduits or other utility facilities, without the consent of the duly constituted authority of the county, township, city or village; or to transact local business therein without first obtaining a franchise from the township, city or village. Except as otherwise provided in this constitution the right of all counties, townships, cities and villages to the reasonable control of their highways, streets, alleys and public places is hereby reserved to such local units of government.

As the Sixth Circuit has recently noted, the Supreme Court's Boulder opinion left open two critical questions. Hybud Equipment Corp. v. City of Akron, 742 F.2d 949 at 959 (6th Cir.1984). First, although the Court made clear that home rule powers alone were insufficient to invoke the Parker exemption, it did not describe what degree of specific statutory authorization would be necessary. Second, it did not resolve a question raised by previous cases—whether a municipality's actions must also satisfy a test of "active state supervision" to qualify for immunity. Both of these issues are raised in the present case.

A. Clearly articulated and affirmatively expressed

The Supreme Court has only vaguely outlined the contours of its "clearly articulated and affirmatively expressed" standard. In Lafayette, the plurality noted that its holding did not mean that "a political subdivision necessarily must be able to point to a specific, detailed legislative authorization before it properly may assert a Parker defense." Rather, the actions of the municipality will be immune when a court finds from the authority given the municipality to operate in a particular area "that the legislature contemplated the kind of action complained of." 435 U.S. at 415, 98 S.Ct. at 1138. In Boulder, a majority of the Court adopted the analysis of the Lafayette plurality and emphasized that the legislative directive must be more than a merely neutral expression of state policy respecting the actions challenged as anticompetitive. 455 U.S. at 48-50, 55, 102 S.Ct. at 839-40, 842.

The Sixth Circuit has, to some extent, focused the inquiry under the "clearly articulated" standard. In its application of the doctrines enumerated in Lafayette and Boulder, the Sixth Circuit has held that a municipality is acting pursuant to a "clearly articulated and affirmatively expressed" state policy if its actions are a "reasonable and foreseeable exercise of delegated powers within the scope of an agency's authority." Hybud Equipment Corp. v. City of Akron, 742 F.2d 949 at 960 (6th Cir.1984). Thus, in this case, the Court must decide whether Union City's revocation of plaintiff's cable television franchise resulted from a "reasonable and foreseeable exercise" of the powers delegated to Union City by article 7, section 29, of the Michigan Constitution.

The first issue to be resolved is whether cable television is a "public utility" within the meaning of section 29. The Michigan Court of Appeals has specifically held that it is. Meridian Township v. Roberts, 114 Mich.App. 803, 319 N.W.2d 678, amended, ___ Mich.App. ___, 324 N.W.2d 339 (1982). This Court will defer to the state court's interpretation of its own constitution. See Community Communications Co. v. City of Boulder, 455 U.S. 40, 52-53 nn. 15 & 16, 102 S.Ct. 835, 841-42 nn. 15 & 16, 70 L.Ed.2d 810 (1982); Euster v. Eagle Downs Racing Assn., 677 F.2d 992, 996 n. 6 (3d Cir.), cert. denied, 459 U.S. 1022, 103 S.Ct. 388, 74 L.Ed.2d 519 (1982).

Given that cable television is a public utility governed by section 29, the next question to be resolved is whether that section provides a "clear...