Cellco P'ship v. City of Rochester

• Citation: 473 F.Supp.3d 268
• Decision Date: 11 June 2020
• Docket Number: 6:19-CV-06583 EAW
• Parties: CELLCO PARTNERSHIP d/b/a Verizon Wireless, Plaintiff, v. CITY OF ROCHESTER, Defendant.
• Court: U.S. District Court — Western District of New York

473 F.Supp.3d 268

CELLCO PARTNERSHIP d/b/a Verizon Wireless, Plaintiff,

v.CITY OF ROCHESTER, Defendant.

6:19-CV-06583 EAW

United States District Court, W.D. New York.

Signed June 11, 2020

Damon Suden, Kelley Drye and Warren LLP, New York, NY, Edward A. Yorkgitis, Jr., Pro Hac Vice, Kelley Drye and Warren LLP, Washington, DC, Geoffrey W. Castello, Lauri A. Mazzuchetti, Pro Hac Vice, Robert N. Ward, Kelley Drye & Warren LLP, Parsippany, NJ, for Plaintiff.

Patrick Beath, City of Rochester, Rochester, NY, for Defendant.

DECISION AND ORDER

ELIZABETH A. WOLFORD, United States District Judge

INTRODUCTION

Plaintiff Cellco Partnership d/b/a Verizon Wireless ("Plaintiff" or "Verizon") brings the instant lawsuit, alleging that the City of Rochester ("Defendant" or "the City"), through its enactment of certain provisions of the City of Rochester Telecommunications Code, has violated Section 253 of the Federal Communications Act of 1934, 47 U.S.C. § 253 (" Section 253"). (Dkt. 1). Presently before the Court is Defendant's motion to dismiss the Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6), for lack of standing and failure to state a claim. (Dkt. 14). Also before the Court is Plaintiff's motion for discovery, requesting an order directing the parties to participate in a Rule 26(f) conference, or scheduling a Rule 16(b) conference, while the Rule 12(b)(6) motion is pending. (Dkt. 16). For the following reasons, Defendant's motion to dismiss (Dkt. 14) is denied, and Plaintiff's motion for discovery (Dkt. 16) is denied as moot.

BACKGROUND

The following facts are taken from Plaintiff's Complaint. (Dkt. 1). As is required at this stage of the proceedings, the Court treats Plaintiff's well-pleaded allegations as true.

Plaintiff "constructs and deploys wireless and other facilities for the provision of telecommunications services to the public[.]" (Id. at ¶ 6). Due to the increasing demand by the public for use of wireless network infrastructure, Plaintiff has begun "densifying" its wireless network infrastructure. (Id. at ¶ 10). Plaintiff accomplishes this densification with "Small Wireless Facilities," by deploying "next-generation technology," or "5G," and by installing fiber optic cable to connect Small Wireless Facilities to their wireless networks. (Id. ). The Small Wireless Facilities are "smaller, operate closer to the ground, and use less power than current wireless facilities," but "must be connected to the wireless provider's other network equipment so that phone calls and other services ... can be completed." (Id. at ¶ 11).

Defendant recently made changes to its Telecommunications Code ("the Code") that Plaintiff alleges violate Section 253. (Id. at ¶¶ 1, 33). Section 253 "bars local governments from imposing statutes, regulations, or requirements that prohibit or have the effect of prohibiting the provision of telecommunications services." (Id. at ¶ 1). The Federal Communications Commission ("FCC") has issued guidance on Section 253 in an order entitled Accelerating Wireless Broadband Deployment by Removing Barriers to Infrastructure Investment et al. (the "FCC Ruling/Order" or the "Barriers Order"), which interprets and implements Section 253. (Id. ). The FCC Ruling/Order recognizes that a local legal requirement constitutes an "effective prohibition," if it "materially limits or inhibits the ability of any competitor or potential competitor to compete in a fair and balanced legal and regulatory environment." (Id. ). Plaintiff contends that in this order, "the FCC has confirmed that a local government's imposition of the following fees constitute ... a material limitation or inhibition on providers’ ability to compete, in violation of Section 253 : (a) fees that do not reflect a reasonable approximation of a state or local government's objectively reasonable costs of maintaining the rights-of-way used or occupied by a telecommunications service provider, maintaining a structure within the rights-of-way used or occupied by a telecommunications service provider, or processing an application or permit by a telecommunication services provider or (b) fees that are discriminatory. " (Id. ) (emphasis added).

Plaintiff alleges that the Code conflicts with Section 253 in two ways: (1) the Code's annual right-of-way¹ compensation fees, which are imposed on telecommunications providers occupying or using the public rights-of-way in the City, violate federal law; and (2) the Code's excess and duplicative fees violate federal law. Regarding the annual right-of-way fees, Plaintiff identifies three ways in which unlawful fees are included at Section 106-15 of the Code: the annual fees imposed by the Code are "value-based fees," as opposed to fees based on the City's "actual and objectively reasonable costs" (id. at ¶¶ 35-36); the recurring pole attachment fees imposed by the Code—"[o]ne thousand five hundred dollars per standard City-owned pole or standard pole purchased and replaced by the licensee and dedicated to the City, and $1,000 per smart pole installed by the licensee and dedicated to the City"—are unreasonably high and inconsistent with the FCC Ruling/Order, which found that recurring Small Wireless Facility fees capped at $270 annually were presumptively reasonable (id. at ¶¶ 37-40); and the Code's annual underground and aerial installation fees for backhaul² —which impose a flat fee up to a certain number of linear feet and then increase on a per linear foot basis—are unreasonably high and are discriminatory (id. at ¶¶ 41-58).

Regarding the Code's "excess and duplicative fees," Plaintiff alleges that the Code states that the fees imposed by Section 106-15 are "in addition to any other applicable fees imposed by the Code, including rent, special assessments, and taxes." (Id. at ¶ 59). Plaintiff alleges that these "other applicable fees," which are found at Chapters 104 and 106 of the Code, violate Section 253 "where they apply to providers with Small Wireless Facility attachments and/or underground or aerial installations to the extent that they are in excess of and duplicative of the non-cost-based fees" in Section 106-15 of the Code, because "[t]he combined fees are ... not a reasonable approximation of objectively reasonable costs actually incurred by the City as a result of a provider's use of the right-of-way." (Id. at ¶ 60). Plaintiff contends that some of the costs imposed by Chapters 104 and 106 of the Code are also captured in other fee provisions of the Code, "meaning that such costs may be recovered more than once, which would be inherently non-cost-based and unreasonable in violation of Section 253." (Id. at ¶ 62; see also id. at ¶¶ 63-65).

Plaintiff alleges that "[t]o better serve its customers and the City and to begin to serve new customers and provide new services, [it] seeks to extend, densify, and upgrade its wireless network infrastructure, including to install additional Small Wireless Facilities to support the provision of current and next-generation telecommunications services such as 5G and to deploy fiber to connect these facilities." (Id. at ¶ 66). Plaintiff further alleges that "[t]o successfully do this, [it] requires new approvals from Defendant to access City property." (Id. ). The parties have engaged in various communications regarding the Code, both prior to and after the enactment of the provisions at issue, regarding Plaintiff's ability to provide next-generation wireless services in the City. For example, on January 10, 2019, Plaintiff petitioned Defendant in writing, requesting that Defendant not enact the Code for several reasons, including for the reasons alleged in the Complaint. (Id. at ¶ 67). Further, on February 7, 2019, Plaintiff provided Defendant with suggested revisions to the Code so that it would comply with federal law, including revisions to the fee provisions in the Code. (Id. at ¶ 68). However, on February 20, 2019, the City enacted the Code without incorporating "the vast majority" of Plaintiff's suggested revisions, and on April 1, 2019, the Code took effect. (Id. at ¶¶ 69-70).

Thereafter, on April 15, 2019, Plaintiff sought clarification from Defendant as to whether it believed the Code provisions complied with federal law. (Id. at ¶ 71). Plaintiff further "advised Defendant in that letter that it was eager to deploy wireless network infrastructure to enable it to offer next-generation wireless services in the City, but the City's response would affect [its] ability to do so." (Id. ). On April 29, 2019, Defendant responded that it had "concluded that [its] permit fees and recurring fees for use of the City's rights of way, including those for pole attachments related to the deployment of small wireless facilities, comply with all federal law requirements and limitations." (Id. at ¶ 72). Finally, on July 30, 2019, Defendant wrote to Plaintiff, advising that in order to comply with the Code, Plaintiff was required by October 1, 2019, "to register under Section 106-5 of the Code, complete and enter into a Master License Agreement, complete Permit applications as necessary, and make ‘payment of all fees and compensation due to the City that accrued as of the effective date of [the Code].’ " (Id. at ¶ 74).

Plaintiff alleges that it "has been, and will continue to be, damaged and irreparably harmed" due to Defendant's actions. Plaintiff alleges that the harm caused by Defendant's actions materially inhibit its:

(a) ability to provide the public with telecommunications services, including the ability to provide emergency communications; (b) ability to compete with other providers of telecommunications services; and (c) full use of its existing licenses and business investments, all of which are irretrievably impairing [Plaintiff's] good will and business reputation.

(Id. at ¶ 75).

The Complaint includes two cause of action: (1) violation of Sections 253(a) and (c), for unfair and unreasonable Small Wireless Facility attachment fees that prohibit or have the effect...