City Communications, Inc. v. City of Detroit, 86-CV-71087-DT.

• Decision Date: 28 September 1988
• Docket Number: No. 86-CV-71087-DT.,86-CV-71087-DT.
• Citation: 695 F. Supp. 911
• Parties: CITY COMMUNICATIONS, INC., a Michigan corporation, Plaintiff, v. CITY OF DETROIT, a Municipal corporation; Barden Cablevision of Detroit, Inc., a Michigan corporation; and MacLean-Hunter Cable TV, Inc., a Canadian corporation, Defendants.
• Court: U.S. District Court — Western District of Michigan

695 F. Supp. 911

CITY COMMUNICATIONS, INC., a Michigan corporation, Plaintiff, v. CITY OF DETROIT, a Municipal corporation; Barden Cablevision of Detroit, Inc., a Michigan corporation; and MacLean-Hunter Cable TV, Inc., a Canadian corporation, Defendants.

No. 86-CV-71087-DT.

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

September 28, 1988.

Schnader, Harrison, Segal & Lewis by Peter S. Greenberg, Christine C. Levin, Philadelphia, Pa., Butzel, Long, Gust, Klein & Van Zile by William M. Saxton, Keefe A. Brooks, Detroit, Mich. (Hyde & Mercer, William R. Hyde, Jr., Washington, D.C., of counsel), for plaintiff.

Dickinson, Wright, Moon, Van Dusen & Freeman by W. Gerald Warren, Detroit, Mich., for Barden Cablevision of Detroit, Inc.

Honigman, Miller, Schwartz & Cohn by I.W. Winsten, Detroit, Mich., for City of Detroit.

William J. DeBiasi, Taylor, Mich., for MacLean-Hunter Cable TV, Inc.

OPINION

GILMORE, District Judge.

With this opinion, the Court writes the last chapter in the ongoing dispute between City Communications, the City of Detroit, Barden Cablevision, and MacLean-Hunter Cable TV, Inc.¹

The lawsuit arises out of the award of a cable TV franchise by the City of Detroit (City) to defendant Barden Cablevision and defendant MacLean-Hunter (collectively referred to as Barden). The complaint of City Communications (CCI) alleges, inter alia, that the defendants violated Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 2, by manipulating the franchise award process to insure that Barden would be the successful applicant, and that the City thereafter improperly acquiesced in Barden's demand to eliminate from its proposal virtually all of the features which had provided the basis for the award of the franchise to Barden.

In a previous opinion, the Court granted the City's motion to dismiss the antitrust counts as to it, concluding that the City was entitled to state action immunity. However, in the same opinion, the Court denied a similar motion by Barden. City Communications, Inc. v. City of Detroit, 650 F.Supp. 1570, 1578-79 (E.D.Mich.1987).

In a subsequent ruling on Barden's motion for reconsideration, the Court framed the antitrust issue as follows:

This Court agrees with the defendants that, once it is determined that the municipality is entitled to immunity from the antitrust laws, the private parties who are regulated by the municipality are also entitled to immunity as long as the "effective decision-maker" is a municipality rather than private parties. It is precisely on this issue that the Court is faced with a factual dispute. Were the City of Detroit's decisions that permitted the defendants to retain their exclusive cable television franchise made by the City, or did Barden and MacLean have so much influence that the decisions were effectively those of private defendants. ...

660 F.Supp. at 935.

The Court thereupon denied Barden's motion for summary judgment, holding that an issue of fact existed over who was the effective decision-maker in granting Barden the cable TV franchise for the City of Detroit, and in approving the subsequent modifications.

To allow discovery in contemplation of another motion for summary judgment on the effective decision-maker issue, the Court on January 13, 1988, extended the discovery cutoff in this case until May 1, 1988, on the effective decision-maker issue only. All discovery on the effective decision-maker issue is complete, and defendant's motion for summary judgment can again be considered.

Barden asserts that the award of the franchise, and every challenged modification of the franchise, was approved and enacted by the Detroit City Council in public meetings by formal vote after input by the Mayor, the City Council, and the Detroit Cable Communications Commission (DCCC).

Barden notes particularly that plaintiff admits that there was no corruption in the franchise process in that it responded to an interrogatory on March 4, 1988 that "Plaintiff does not contend that Barden or MacLean-Hunter engaged in kickbacks or bribes, or anything of that nature."

Moreover, Barden contends that Councilman Ravitz, the only person plaintiff deposed among the City Council, the Mayor and the Cable Commission members testified that all of the City Council members viewed the grant of a cable franchise as one of the most important decisions to come before the Council, and that they were all acting in what they believed to be the best interest of the City of Detroit.

Barden also contends that, to the extent it petitioned the decision makers to grant the franchise and to modify it, such petition was constitutionally protected under the First Amendment, and the fact that the petition was successful does not make Barden the effective decision maker.

CCI, on the other hand, asserts that the City did not engage in effective decision making because: (1) the testimony by Councilman Ravitz merely establishes that the City gave in to Barden's demands for modifications because the City felt it had no other choice after Barden had manipulated deadlines for over a year; and (2) Ravitz testified that to this day the City Council does not even know who owns the Detroit cable franchise. Moreover, plaintiff asserts that DCCC, upon whom the City Council relied for conveyance of information, repeatedly failed to obtain relevant information, and repeatedly withheld from the Council material that it did obtain. Plaintiff CCI contends that Barden manipulated the process in order to obtain valuable concessions from the City, which eviscerated their proposal for the provision of cable services. CCI also asserts most strongly that a clear factual issue exists as to who the effective decision maker was that should require denial of the motion for summary judgment and a trial on the merits.

CCI cites the following "facts" in support of the absence of effective decision making on the part of the City:

1. The Cable Commission's failure to consider Barden's cable franchise difficulties in Toledo and Royal Oak.

2. The Cable Commission's failure to provide its financing consultant with crucial information about Barden's financial difficulties in Toledo, or about CCI's prior cable track record and financial backing.

3. The Cable Commission's and the Council's failure to consider alternatives to the award of a single franchise.

4. The Cable Commission's acquiescence in Barden's year-long delay in negotiating the franchise agreement while apparently awaiting the passage of the Cable Communications Policy Act of 1984.

5. The Cable Commission's use of the Cable Communications Policy Act of 1984 as a pretext for not terminating the Barden franchise.

6. The Cable Commission's refusal to meet with City Council to discuss the status of negotiations with Barden.

7. The Cable Commission's and the City's repeated acquiescence in Barden's demands to eliminate from its proposal the key features which resulted in the award of the franchise to it.

8. The Cable Commission's and City's failure to ask CCI if it would fulfill its franchise proposal or the Barden franchise proposal, after Barden refused to honor its own proposal.

9. The City Council's sense that it was forced to accede to Barden's modification demands because of the delay that had taken place.

10. The Cable Commission's failure to even inquire into whether Barden's claim that its proposal was commercially impractical was accurate.

11. The Cable Commission's assurances to the Council that MacLean-Hunter would not gain management or ownership control of the franchise, and the Council's unawareness that that is precisely what has occurred.

Once it is determined that a municipality is entitled to immunity from the antitrust laws, the private parties who are regulated by the municipality are also entitled to immunity as long as the effective "decision maker" is the municipality rather than the private parties. The precise question was framed by this Court in City Communications v. City of Detroit, 660 F.Supp. 932 (E.D.Mich.1987): "Were the City of Detroit's decisions that permitted the defendants to retain their exclusive cable television franchise made by the City, or did Barden and MacLean have so much influence that the decisions were effectively those of the private defendants?" Id. at 935.²

To avoid summary judgment on this effective decision-maker issue, plaintiff must make a sufficient showing of a factual question of either corruption by Barden on the City's decision-making process or of delegation by the City of Detroit of the decision-making function to Barden and MacLean-Hunter.

The plaintiff has already conceded that there was no corruption in the franchise process in its answer to an interrogatory on March 4, 1988, when it said that "Plaintiff does not contend that Barden or MacLean-Hunter engaged in kickbacks or bribes or anything of that nature."

Therefore, in order for plaintiff to defeat defendant's motion for summary judgment, plaintiff needs to show that a sufficient factual issue exists of delegation by the City to Barden and MacLean-Hunter.

In determining whether an agreement or conspiracy existed for the purposes of the antitrust law, an antitrust plaintiff "must present evidence `that tends to exclude the possibility' that the alleged conspirators acted independently." Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 589, 106 S.Ct. 1348, 1357, 89 L.Ed.2d 538 (1986) (quoting Monsanto Co. v. Spray-Rite Service Corp., 465 U.S. 752, 764, 104 S.Ct. 1464, 1470, 79 L.Ed.2d 775 (1984)). The Court pointed out that "conduct that is as consistent with permissible competition as with illegal conspiracy does not, without more, support even an inference of conspiracy." 475 U.S. at 597 n. 21, 106 S.Ct. at 1362 n. 21. Therefore, to avoid summary judgment, CCI must present evidence which, if true, would exclude the possibility that Detroit acted independently.

It appears to the Court, after...