City of Detroit v. Michigan
| Decision Date | 10 July 2012 |
| Docket Number | Case No. 10–12427. |
| Citation | 879 F.Supp.2d 680 |
| Parties | CITY OF DETROIT, Plaintiff, v. State of MICHIGAN and Comcast of Detroit, Defendants, and Michigan Attorney General, Intervening Defendant. |
| Court | U.S. District Court — Eastern District of Michigan |
OPINION TEXT STARTS HERE
John W. Pestle, Stephen F. MacGuidwin, Timothy J. Lundgren, Aaron M. Phelps, Varnum, Riddering, Schmidt & Howlett LLP, Grand Rapids, MI, for Plaintiff.
Robert G. Scott, Jr., Davis, Wright, Washington, DC, Spencer A. Sattler, Michigan Attorney General's Office, Michael S. Ashton, Fraser, Trebilcock, Lansing, MI, for Defendants.
Robert W. Beach, Spencer A. Sattler, Michigan Department of Attorney General, Lansing, MI, for Intervening Defendant.
The City of Detroit has sued defendant Comcast of Detroit, the City's cable television provider, seeking to enforce the terms of the latest negotiated franchise agreement between Comcast and the City, which expired on February 28, 2007. The City contends that Comcast is a holdover tenant, and it must comply with all the terms of the expired agreement. Comcast maintains that it is operating under a new agreement that took effect by operation of a state law—the Uniform Video Services Local Franchise Act, Mich. Comp. Laws § 484.3301 et seq.—which took effect in 2007 and resulted in the elimination of the terms in the old franchise agreement that the City seeks to enforce. The City insists, however, that certain provisions of the Michigan Act are preempted by federal law and violate the Michigan constitution's guarantee to local units of government of control over their public spaces and rights-of-way, and the end result is that Comcast must comply with the old franchise agreement until a new one is approved by the City.
After the Court denied Comcast's motion to dismiss, the Michigan attorney general intervened to defend the Michigan Act, and all parties filed cross motions for partial summary judgment. The Court heard oral argument on October 27, 2011, and the parties have since sought and received permission to submit additional authority. The Court also received several amicus briefs. The Court now finds that the City has standing to challenge the validity of certain aspects of the Michigan Act on federal preemption grounds, but that it has no standing to challenge the Act's removal of municipalities' authority to enforce customer service and anti-discrimination provisions in existing franchise agreements, and that controversy is not ripe. The Court also finds invalid on federal preemption grounds the provisions of the Michigan Act addressing the modification of existing franchise agreements and barring enforcement provisions relating to public, government, and education channels. However, the Act's renewal procedures and its failure to require universal build-outs are not preempted by federal law. The Court also finds that the state attorney general has offered a construction of the Act that avoids a conflict with the state constitution, that is, that municipalities may refuse to approve a franchise renewal application and negotiate acceptable terms with the cable provider, without the standard form agreement automatically taking effect. Therefore, the Act does not violate the Michigan constitution. That holding leads to the conclusion that Comcast and the City have no current franchise agreement in place. Because Michigan law does not permit a franchisee to be regarded as a holdover tenant, Comcast must be found to be a trespasser. The parties will be directed to address an appropriate remedy. Therefore, the Court will grant in part and deny in part each of the parties' motions for partial summary judgment.
The facts of the case and the nature of the dispute were described in detail in the Court's earlier opinion denying Comcast's motion to dismiss. See City of Detroit v. Comcast of Detroit, Inc., 771 F.Supp.2d 781, 783–85 (E.D.Mich.2011). To summarize, in 1994, Comcast assumed the obligations of a franchise agreement negotiated by the City and Comcast's predecessor, Barden Cablevision of Detroit. That agreement contained several features that were favorable to the City, including provisions that required Comcast to provide free hook-ups (“drops”) and service to municipal and school buildings; maintain a network to facilitate communications among City buildings; furnish additional public, education, and government (PEG) channels and at least three PEG studios, plus mobile units, staff, and equipment; make payments to the Public Benefit Corporation to support PEG channels; and provide free transmission lines for the City's PEG channels. Before the agreement expired in February 2007, Comcast and the City began negotiating to renew the franchise. The City insisted that Comcast include in the new agreement language concerning consumer protections, anti-discrimination, and PEG channels, and on March 16, 2007, the City approved Comcast's application subject to additional terms that included those provisions. However, Comcast sent the City a letter on April 23, 2007 rejecting the franchise as approved. Instead, Comcast unilaterally declared that Michigan law deemed the franchise approved without the additional terms and has continued to operate in the City of Detroit despite the absence of a franchise agreement approved by the City.
Comcast relies primarily on Michigan's Uniform Video Services Local Franchise Act (“the Michigan Act”), Mich. Comp. Laws § 484.3301 et seq., to justify its position. The City insists that several parts of the Michigan Act are preempted by the Cable Communications Policy Act (“the Cable Act”), 47 U.S.C. § 521 et seq. Each body of legislation sets forth the respective obligations and limitations on cable operators and governmental franchising authorities. The dispute in this case can fairly be characterized as a disagreement over which provisions of the Cable Act are mandatory concerning cable operators' obligations and the authority of local governmental units, and which are merely permissive. The Cable Act contains an express preemption provision, and the parties do not seriously dispute the general proposition that state law cannot lawfully excuse a cable provider from complying with the mandatory parts of the Cable Act. As with most regulatory conflicts, however, the devil is in the details.
When Congress enacted the Cable Act in 1985 to add Title VI to the Communications Act of 1934, there existed an “ ‘illdefined [ sic ] ... state of regulatory uncertainty’ ” created by the overlapping authority held by the FCC and local municipalities. Alliance for Cmty. Media v. FCC, 529 F.3d 763, 767–68 (6th Cir.2008) (quoting American Civil Liberties Union v. FCC, 823 F.2d 1554, 1559 (D.C.Cir.1987)). The amending legislation “present[ed] the critical role of municipal governments in the franchise process ... while affirming the FCC s exclusive jurisdiction over cable service, and overall facilities which relate to such service.” Id. at 768 (quoting City of New York v. FCC, 814 F.2d 720, 723 (D.C.Cir.1987)). The Act, together with the Cable Television Consumer Protection and Competition Act, Pub. L. No. 102–385, 106 Stat. 1460, passed in 1992, establishes a minimum level of services, PEG channel access, consumer protections, and anti-discrimination requirements that franchising authorities must include in their franchise agreements with cable operators. See Time Warner Ent. Co., L.P. v. FCC, 93 F.3d 957, 966 (D.C.Cir.1996). The national legislation establishes both a floor and a ceiling concerning performance requirements that must be included in franchise agreements and may be demanded from cable providers, it permits local franchising authorities to negotiate with cable operators for higher levels of service, and it prohibits laws and practices that fall below those levels. See47 U.S.C. § 556(c) ().
The Cable Act states that “[a] franchising authority may award, in accordance with the provisions of this subchapter, 1 or more franchises within its jurisdiction.” 47 U.S.C. § 541(a)(1). A franchising authority can be “any governmental entity empowered by Federal, State, or local law to grant a franchise.” 47 U.S.C. § 522(10). A “franchise” is defined as “an initial authorization, or renewal thereof ..., which authorizes the construction or operation of a cable system.” 47 U.S.C. § 522(9). “A municipal franchise granted to a cable operator has commonly specified the nature of the cable system to be constructed, the service to be provided, and the rate which may be charged for those services.” H.R. Rep. 98–934, at 19 (1984), reprinted in 1984 U.S.C.C.A.N. 4655, 4656. The “franchising authority,” sometimes called a “local franchising authority, or “LFA,” refers to “any governmental entity empowered by Federal, State, or local law to grant a franchise.” 47 U.S.C. § 522(10). In states where the franchising process includes approval by a state agency as well as the local government, the legislative history indicates that the term “franchising authority” should include the agency as well as the local government. H.R. Rep. 98–934, at 45 (1984), reprinted in 1984 U.S.C.C.A.N. 4655, 4682. Without a franchise, a cable operator cannot provide cable services. 47 U.S.C. § 541(b)(1). “By delegating this task to LFAs, the 1984 Act effectively ‘preserve[d] the role of municipalities in cable regulation.’ ” Alliance for Cmty. Media, 529 F.3d at 768 (quoting City of Dallas, Tex. v. FCC, 165 F.3d 341, 345 (5th Cir.1999)).
Section 541 “enumerates various...
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