City Communications, Inc. v. City of Detroit

• Decision Date: 01 November 1989
• Docket Number: Nos. 88-1965,88-2138,s. 88-1965
• Parties: 1989-2 Trade Cases 68,832 CITY COMMUNICATIONS, INC., Plaintiff-Appellant, v. The CITY OF DETROIT; Barden Cable-Vision; and MacLean-Hunter, Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 1081

888 F.2d 1081

1989-2 Trade Cases 68,832

CITY COMMUNICATIONS, INC., Plaintiff-Appellant, v. The CITY OF DETROIT; Barden Cable-Vision; and MacLean-Hunter, Defendants-Appellees.

Nos. 88-1965, 88-2138.

United States Court of Appeals, Sixth Circuit.

Argued Aug. 15, 1989.

Decided Nov. 1, 1989.

William M. Saxton, Butzel, Long, Gust, Klein & Van Zile, Detroit, Mich., Peter S. Greenberg, argued, Schnader, Harrison, Segal & Lewis, Philadelphia, Pa., for plaintiff-appellant City Communications, Inc.

William D. Sargent, I.W. Winsten, argued, Honigman, Miller, Schwartz & Cohn, Detroit, Mich., for defendant-appellee City of Detroit.

Fred W. Freeman, Robert W. Powell, Dickinson, Wright, Moon, Van Dusen & Freeman, W. Gerald Warren, argued, Detroit, Mich., for defendant-appellee Barden Cable-Vision.

William J. DeBiasi, Taylor, Mich., for defendant-appellee MacLean Hunter.

Before JONES and MILBURN, Circuit Judges, and BELL, District Judge ^*.

MILBURN, Circuit Judge.

Plaintiff-appellant City Communications, Inc., an unsuccessful bidder for a franchise to install a cable television system in the City of Detroit, appeals the multiple summary judgments of the district court dismissing its First Amendment and antitrust claims against the City of Detroit and the successful bidder, Barden Cable-Vision Company. For the reasons that follow, we affirm.

I.

A. Procedural History

In 1982, the City of Detroit issued a Request for Proposals ("RFP") to construct, operate, and maintain a cable television system in the City. Plaintiff-appellant City Communications, Inc. ("CCI") and defendant-appellee Barden Cable-Vision ("Barden") of Detroit were among the bidders. In July 1983, the Detroit City Council awarded a non-exclusive franchise to Barden.

CCI filed the complaint that is the subject of this appeal on March 18, 1986. The complaint alleged violations of Sections 1 and 2 of the Sherman Antitrust Act, 15 U.S.C. Secs. 1 and 2, the First and Fourteenth Amendments to the United States Constitution, and state law. The named defendants were the City of Detroit, Barden, and MacLean-Hunter Cable TV, Inc. ("MacLean-Hunter"), a Canadian corporation that is part owner of the Detroit cable franchise as the result of an assignment by Barden.

The defendants moved to dismiss under Federal Rules of Civil Procedure 12(b)(6) and 56. The district court dismissed CCI's antitrust and Fourteenth Amendment claims against the City and the state law claims against all defendants. However, the district court left intact CCI's First Amendment claims against the City and its antitrust claims against the private parties. See City Communications, Inc. v. City of Detroit, 650 F.Supp. 1570 (E.D.Mich.1987) (City Communications I ) (as the district court considered motions outside the pleadings in ordering a dismissal of these claims, the dismissal should be treated as a summary judgment). The district court later denied the defendants' motions to reconsider or to certify for an interlocutory appeal. See City Communications, Inc. v. City of Detroit, 660 F.Supp. 932 (E.D.Mich.1987) (City Communications II ).

CCI then moved for summary judgment on its First Amendment claim against the City. The City responded with a cross-motion for summary judgment, arguing, among other things, that the case should be dismissed on ripeness and standing grounds. The district court granted summary judgment in favor of the City and dismissed CCI's First Amendment claims without prejudice. See City Communications, Inc. v. City of Detroit, 685 F.Supp. 160, 164 (E.D.Mich.1988) (City Communications III ).

On September 8, 1988, pursuant to Fed.R.Civ.P. 54(b), the district court entered a final judgment in favor of the City as to all of CCI's claims against it. CCI filed a timely notice of appeal to this court on September 20, 1988, which was docketed as No. 88-1965.

Meanwhile, on June 1, 1988, defendants Barden and MacLean-Hunter filed a motion for summary judgment on CCI's antitrust claims. On September 28, 1988, the district court granted summary judgment in favor of Barden and MacLean-Hunter, see City Communications, Inc. v. City of Detroit, 695 F.Supp. 911, 916 (E.D.Mich.1988) (City Communications IV ), and entered its final judgment dismissing the case on October 14, 1988. On October 26, 1988, CCI filed a timely notice of appeal, which was docketed in this court as No. 88-2138. On November 28, 1988, the parties filed a joint motion and stipulation to consolidate their appeals, which was granted.

B. Facts

In April 1981, the Detroit City Council enacted ordinances aimed at establishing a cable television system for the City. One ordinance established the Detroit Cable Communications Commission to review all applications and recommend a franchise to the Mayor. In August 1982, the City issued a Request for Proposals to provide cable television services for the City.

Three bidders responded to the RFP--plaintiff-appellant CCI, defendant-appellee Barden, and Detroit Inner-Unity Bell Cable System ("DIUB", not a party to this action). Each bid was accompanied by a bidding fee of $10,000. The bids were evaluated for technical and financial soundness and by other objective criteria. One of the City's prime concerns was "cream skimming," that being the practice (in its extreme) of installing cable service in affluent subdivisions, where installation costs are low, equipment damage is minimal and customers typically order extra services and pay their bills regularly, and slighting inner-city areas. One reason the City elected to award a single, city-wide non-exclusive franchise was to ensure that the franchisee could and would provide equal services to all residents.

In July 1983, the City awarded the franchise to Barden. The non-exclusive franchise was to commence on August 31, 1983, and continue for fifteen years, unless terminated or forfeited by the City. The award was conditioned upon Barden's ability to demonstrate an unconditional financial commitment for constructing and operating the cable system by August 31, 1984.

In August 1984, Barden notified the City that it could not meet the August 31 deadline. It also sought to modify the system it had agreed to install. The City agreed to extend the deadline by a month, in order that the Commission could hold public hearings on Barden's requested modifications. The Commission initially recommended that Barden's franchise be terminated. However, before the City acted, Congress passed the Cable Communications Policy Act of 1984, 47 U.S.C. Secs. 521-559. The Commission then retracted its recommendation of termination, and the City granted Barden additional time to secure its financing.

In 1985, Barden requested additional modifications to the system it was to install, and in May and December of that year, the City agreed to Barden's requested modifications. These modifications included changing the proposed structure of the cable system; elimination of $38 million in proposed grants to the City; reducing the number of channels in the system from 112 to 78; increasing the construction time by three years, to a total of 5 1/2 years; assigning defendant-appellee MacLean-Hunter a 40 percent or greater ownership interest in the City's system; and reducing Barden's construction expenditures by approximately one-third.

During the course of the litigation in the district court, the City indicated it would consider awarding a second cable franchise. City Communications III, 685 F.Supp. at 162. CCI informed the City in a letter that it was "not adverse" to competing for a second system. In a letter dated December 2, 1987, the City responded by stating that CCI would have to submit a detailed plan for a second cable system before the City could consider awarding a second franchise. Id. At issue in this appeal are the summary judgments granted by the district court.

II.

A.

Our review of a district court's grant of summary judgment is de novo. Pinney Dock & Transport Co. v. Pennsylvania Cent. Corp., 838 F.2d 1445, 1472 (6th Cir.), cert. denied sub nom. Pinney Dock & Transport Co. v. Norfolk & Western Ry. Co., --- U.S. ----, 109 S.Ct. 196, 102 L.Ed.2d 166 (1988). We must view all facts and inferences drawn therefrom "in the light most favorable to the non-moving party," 60 Ivy Street Corp. v. Alexander, 822 F.2d 1432, 1435 (6th Cir.1987), as the party moving for summary judgment carries the burden of showing "no genuine issue of material fact exists." Id.

Yet, in the face of a summary judgment motion, the moving party may not rest on its pleadings, Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986), but must come forward with some probative evidence to support its claims and make it necessary to resolve differences at trial. 60 Ivy Street Corp. 822 F.2d at 1435. "By its very terms, this standard provides that the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986) (emphasis in original).

In determining whether an agreement or conspiracy existed for the purposes of the antitrust law, a plaintiff "must present evidence 'that tends to exclude the possibility' that the alleged conspirators acted independently." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 588, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986) (quoting Monsanto Co. v. Spray-Rite Service Corp., 465 U.S. 752, 764, 104 S.Ct. 1464, 1471, 79 L.Ed.2d 775 (1984)). "[C]onduct that is as consistent with permissible competition as with illegal conspiracy does not, without more, support even an inference of conspiracy." Matsushita, 475 U.S. at 597 n. 21, 106 S.Ct. at 1362 n. 1. ¹

B.

On August 15, 1989, shortly before oral argument was scheduled in this case, the City...