City of Portland v. Electric Lightwave, Inc., No. Civ. 03-538-AS.
| Decision Date | 05 May 2005 |
| Docket Number | No. Civ. 03-538-AS. |
| Parties | CITY OF PORTLAND, OREGON, an Oregon municipal corporation, Plaintiff, v. ELECTRIC LIGHTWAVE, INC., a Delaware corporation, Defendant. |
| Court | U.S. District Court — District of Oregon |
Terrence Thatcher, Benjamin Walters, Tracy Pool Reeve, Deputy City Attorneys, Office of City Attorney, Portland, OR, for City of Portland.
Timothy R. Volpert, Davis Wright Termaine LLP, Portland, OR, Charles L. Best, Electric Lightwave, Inc., Vancouver, WA, for Electric Lightwave, Inc.
The City of Portland (City) filed a complaint against Electric LightWave, Inc. (ELI), for breach of contract for failing to pay franchise fees due and owing under a municipal franchise (Franchise Agreement) the City and ELI entered into eight years ago. Under the Franchise Agreement, the City granted ELI the right to construct and operate a telecommunications system, "in, under, and over the surface of the City's streets." In return, among other things, ELI agreed to pay the City compensation of 5% of its "gross revenues" earned from telecommunications services in the City. ELI responded to the complaint that it is no longer required to comply with the terms of the contract under the Federal Telecommunications Act of 1996, 47 U.S.C. 253 (FTA or Act).
The parties filed cross-motions for summary judgment. The. City seeks judgment on its breach of contract claim and asks the court to strike or dismiss all eight of ELI's affirmative defenses and all five of ELI's counterclaims. The City also seeks summary judgment on certain contract interpretation issues.1 Conversely, ELI seeks summary judgment against the City's breach of contract claim and in favor of its first, fourth and fifth counterclaims, all based on its theory that the Franchise Agreement is preempted by the Act. The parties also filed motions to strike portions of the other's summary judgment submissions.
In 1990, the City and ELI entered into the Franchise Agreement that allowed ELI to use city streets for the purpose of providing telecommunications services to ELI's customers in exchange for ELI's payment of a franchise fee to the City. The 1990 Franchise Agreement was amended and updated during the spring of 1996. On. June 19, 1996, the City passed Ordinance 170283, granting ELI a telecommunications franchise for 10 years. The Franchise Agreement was approved by the City Council in July 1996, and reaffirmed and validated by the City Council in January 1999. Specifically, on January 6, 1999, the City enacted Ordinance 172996 (Ratifying Ordinance), which ratified the City's June 19, 1996 grant of a franchise to ELI.
Section 21 of the Ratifying Ordinance required ELI to file a written acceptance of the Ordinance within 30 days and provided: "Such acceptance shall be unqualified and shall be construed to be an acceptance of all the terms, conditions and restrictions contained in this ordinance and Ordinance No. 170283," Section 21 of Ordinance No. 170283 is virtually the same: ELI sent the City an "Acceptance of Franchise Ordinance 172996" on January 7, 1999. The Ordinance required ELI to return an acceptance of the Franchise Agreement to the City within 30 days after the date of the Ordinance or it would be null and void. The City neglected to send out the acceptance and, as a result, the acceptance was never returned. To remedy this error, the City ratified the Franchise Agreement on January 6, 1999, with the Franchise Agreement to be effective as of September 19, 1996. ELI signed a document accepting the terms and provisions of the Franchise Agreement on January 7, 1999, as required by the Ordinance and the Portland City Code.
After City of Auburn v. Qwest Corp., 247 F.3d 966, amended and superseded by, 260 F.3d 1160 (9th Cir.2001), was decided in 2001, ELI notified the City, by letter dated July 25, 2001, that numerous sections of the Franchise Agreement, including most of those sections at issue here, appeared to have been impacted by the decision in City of Auburn, and asked the City to meet to discuss that impact and to renegotiate the Franchise Agreement pursuant to Section 17, which sets forth terms for renegotiation of the Franchise Agreement. By way, of a letter dated August 1, 2001, the City refused to renegotiate the Franchise Agreement.
On August 15, 2001, ELI advised the City that it believed several aspects of the Franchise Agreement violated the FTA. ELI stopped paying Franchise fees as required under the Franchise Agreement and, instead, made payments pursuant to a formula that it felt was appropriate wider the terms of the Act. The amounts otherwise due were deposited in an escrow account2 which, at the time this action was filed held approximately 2.2 million dollars. The City then filed this action for breach of contract based, in part, on ELI's failure to pay the Franchise fee pursuant to the terms of the Franchise Agreement.3
Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(a). The materiality of a fact is determined by the substantive law on the issue. T.W. Electrical Serv., Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir.1987). The authenticity of a dispute is determined by whether the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
The moving party has the burden of establishing the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If the moving party shows the, absence of a genuine issue of material fact, the nonmoving party must go beyond the pleadings and identify facts which show a genuine issue for trial. Id at 324, 106 S.Ct. 2548.
Special rules of construction apply to evaluating summary judgment motions: (1) all reasonable doubts as to the existence of genuine issues of material fact should be resolved against the moving party; and (2) all inferences to be drawn from the underlying facts must be viewed in the light most favorable to the nonmoving party. T.W. Electrical, 809 F.2d at 630.
By way of historical information, the court notes that the City is a municipal corporation in existence since its first legislative charter became effective in 1851. To date, the City had granted 26 telecommunications franchises.4 The City represented at oral argument that it has never rejected a telecommunications franchise. Indeed, in his sworn affidavit, David Olson, the Director of the City's Office of Cable Communications and Franchise Management (Franchise Office), testified that "[i]n the years that I have served as the Director of the Franchise Office [since 1983], the City has (a) never denied a telecommunications franchise to any applicant; (b) never refused to renew or extend the term of a telecommunications franchise when requested by the franchisee; and (c) never declined to approve a change in ownership or control of a telecommunications franchise." Id. In addition, the City has franchise agreements with various energy utilities and other companies with extensive facilities in the City streets. Declaration of David C. Olson.
ELI operates in the State of Oregon as a "competitive telecommunications provider" under a Public Utility Commission grant of authority. See Or. Rev. State. § 759.005(2). Declaration of Mary Beth Henry. As mentioned above, the City granted its first franchise to ELI in 1990. That Franchise Agreement provided that ELI would pay the City a Franchise fee of 5% of its gross revenues, as defined, in the Franchise Agreement. ELI has operated under the current Franchise Agreement since 1996. ELI provides 21 different kinds of telecommunications services to customers in Portland, and by its own admission, there are no telecommunications services which ELI offers elsewhere in the United States but not in Portland as a result of the 1996 Franchise Agreement. ELI's Response to City's Interrogatory No. 3, Exhibit 1 to Thatcher Deposition. ELI provides no residential telecommunications services in the City.
ELI's 1990 Franchise Agreement was the first such franchise granted by the City to a competitive telecommunications carrier. Id. Subsequent to ELI's first Franchise Agreement, many other competitive telecommunications carriers have sought and obtained franchises or other authority to occupy City streets. Id. In fact, the City has issued 13 franchises similar to that granted to ELI to other competitive telecommunications providers. Declaration of Mary Beth Henry.
Qwest Corporation (Qwest) is the successor to the former Bell system telecommunications monopoly provider, Pacific Northwest Bell, later U.S. West. Qwest operates as a telecommunications utility as defined under Or.Rev.Stat. § 759.005(1), providing, among other things, local telephone service. Qwest provides telecommunications service in Portland and occupies City rights of way under the terms of a revocable permit granted by the City. Qwest provides the bulk of residential telecommunications services in Portland. Qwest permit fees for use of City rights of way are set at 7% of revenues earned by Qwest in the City from the sale of exchange access service. This is identical to the privilege tax the City is authorized to levy on Qwest under Or.Rev.Stat. § 221.515. The terms of Qwest's permit and ELI's Franchise Agreement have several similarities.
In its filings with the City, Qwest recently declared annual exchange access...
To continue reading
Request your trial
-
Sprint Telephony Pcs, L.P. v. County of San Diego
...But the tension between the Auburn standard and the full text of § 253(a) has not gone unnoticed. See City of Portland v. Elec. Lightwave, Inc., 452 F.Supp.2d 1049, 1059 (D.Or.2005) ("The Ninth Circuit's interpretation of the scope of section 253(a) appears to depart from the plain meaning ......
-
Time Warner Telecom of Oregon v. City of Portland
...have the effect of prohibiting a telecommunications provider from entering the market?" City of Portland v. Electric Lightwave, Inc., 452 F.Supp.2d 1049, 2005 WL 4044333, *11 (D.Or. May 5, 2005) (ELI). I agree with Judge Ashmanskas that although a provider "is not required to make an actual......
-
CNSP, Inc. v. Webber
... ... ] in their official capacities as mayor and city councilors of the City of Santa Fe, Defendants ... 2020); Fed.R.Civ.P. 56(a). A fact is considered material if ... See, e.g., City of Portland, Or. v. Elec. Lightwave, ... Inc., 452 ... ...
-
New York State Thruway Auth. v. Level 3 Commc'ns, LLC
...judgment action. See NextG Networks, 513 F.3d at 53 n.4; Western Airlines, 817 F.2d at 225-26; City of Portland, Or. v. Electric Lightwave, Inc., 452 F. Supp. 2d 1049 (D. Or. 2005). ...