City of San Antonio v. Time Warner Cable, Tex. LLC

• Decision Date: 31 March 2021
• Docket Number: Case No. SA-17-CV-1232-JKP-HJB
• Citation: 532 F.Supp.3d 402
• Parties: CITY OF SAN ANTONIO, Plaintiff, v. TIME WARNER CABLE, TEXAS LLC, d/b/a Spectrum and Charter Communications, Defendant.
• Court: U.S. District Court — Western District of Texas

532 F.Supp.3d 402

CITY OF SAN ANTONIO, Plaintiff,

v.TIME WARNER CABLE, TEXAS LLC, d/b/a Spectrum and Charter Communications, Defendant.

Case No. SA-17-CV-1232-JKP-HJB

United States District Court, W.D. Texas, San Antonio Division.

Signed March 31, 2021

Bonnie K. Kirkland, Jane Elizabeth Bockus, Dykema Cox Smith, Melanie Lynn Fry, Michael Debs Bernard, Dykema Gossett PLLC, San Antonio, TX, Charles Carter, Mayer LLP, Dallas, TX, for Plaintiff.

Abraham J. Shanedling, Paul A. Werner, Pro Hac Vice, Sheppard, Mullin, Richter & Hampton LLP, Washington, DC, Christian A. Orozco, Department of Justice, Tax Division, Amanda L. Cottrell, Sheppard Mullin Richter & Hampton, LP, Joshua M. Sandler, Lynn Pinker Hurst & Schwegmann, LLP, Dallas, TX, for Defendant.

MEMORANDUM OPINION AND ORDER

JASON PULLIAM, UNITED STATES DISTRICT JUDGE

This case involves an audit by the City of San Antonio ("Plaintiff" or "the City") of Defendant Time Warner Cable Texas LLC's ("TWC") franchise fee payments and the City's efforts to obtain information to complete its audit and to obtain damages for underpayments. Before the Court are cross motions for summary judgment: TWC's Motion for Summary Judgment (ECF No. 73) and City of San Antonio's Motion for Partial Summary Judgment (ECF No. 76). The motions are fully briefed, including evidence submitted by both sides.¹ TWC has filed a response (ECF No. 88) to the City's summary judgment motion and a reply brief (ECF No. 104 with an exhibit) supporting its motion. The City has similarly filed a response (ECF No. 91 with exhibits) to Defendant's motion and a reply brief (ECF No. 102) to support its motion. The Court has also received an amicus brief from the Texas Attorney General (ECF No. 101), an amicus brief from a Coalition of Cities (ECF No. 116), and TWC's response (ECF No. 117) to the latter brief. After considering the motions, related briefing, relevant evidence, and the applicable law the Court grants both motions in part as set forth herein.

I. BACKGROUND²

In 2005, Texas enacted Chapter 66 of the Public Utility Regulatory Act ("PURA"), Tex. Util. Code §§ 66.001 to 66.017.³ Chapter 66 became effective in September 2005. This case concerns an alleged underpayment of cable franchise fees. In 2009, the City began an audit of TWC's franchise fees for the period 2006 to 2009. In September 2009, after TWC had objected to the production of documents and information necessary to conduct the audit, the City commenced a state mandamus action to compel production and examination of TWC's business books and records. See ECF No. 91-1 (Ex. H, Pl.’s Pet. Mandamus). In April 2011, the City succeeded in that action after a trial on the merits. See ECF No. 91-2 (Ex. I, Order).

The parties have diverging views as to what happened during the intervening years. Defendant paints a picture of ineptness, abandonment, and neglect on the part of the City, whereas the City paints TWC as hindering and obstructing the audit process. But despite the differing characterizations, the parties essentially agree on the facts. The parties disagree on TWC's compliance with disclosure obligations during the intervening years, but they agree that they discussed the issues on various occasions through 2011 and 2012. The City completed a draft audit in 2014 based upon what it viewed as incomplete documentation. See ECF No. 76-11 (sealed Ex. K). The Executive Summary of that draft audit shows an underpayment of fees by TWC between 2006 and 2015. See id. at i. Following that audit, the parties continued to meet on several occasions. On August 17, 2015, the City sent TWC a demand letter for underpayments from 2006 through 2013. See ECF No. 91-20 (Ex. J-19). The City voluntarily dismissed the mandamus action without prejudice on March 22, 2016. See ECF No. 91-21 (Ex. N, Order of Dismissal). Later that year, the parties unsuccessfully mediated their dispute. See ECF No. 91-24 (sealed Ex. A).

Plaintiff commenced this action in state court in October 2017. See Pl.’s Orig. Pet. (ECF No. 1-1). Defendant removed the action to this Court on December 4, 2017, based on diversity jurisdiction. See Notice of Removal (ECF No. 1). In April 2018, the Court denied Defendant's motion to dismiss as to Plaintiff's request for declaratory relief and Defendant's assertions of laches and waiver but granted it with respect to asserted claims of accounting and constructive trust. See Order (ECF No. 14). Plaintiff omitted the dismissed claims in its First Amended Complaint ("FAC") filed in July 2018. See FAC (ECF No. 23). It therein seeks a declaratory judgment as to (1) the definition of "gross revenue" as found in PURA and (2) "support" required under PURA. See id. ¶ 32. It also asserts claims for statutory violations, money had and received, and attorney fees. See id. ¶¶ 33-40. It seeks unpaid franchise fees "from 2006 through the time of filing this lawsuit." Id. ¶ 27.

On April 17, 2020, Plaintiff filed an opposed motion for leave to file a Second Amended Complaint ("SAC") that proposes amendments to "(1) clarify Plaintiff's position; (2) narrow the issues before this Court; and, (3) do not add any factual allegations, causes of action, or requested relief." See ECF No. 71 at 2. Later that day, the parties filed their cross motions for summary judgment. Defendant argues that Plaintiff's claims not only fail on their merits but are also barred by the doctrines of laches and waiver. Plaintiff, on the other hand, moves for partial summary judgment on its claim for declaratory judgment and sets out three requested declarations.

The parties have completed their briefing on the motions and interested parties have filed amicus briefs. The Court is prepared to rule. Given the cross nature of the motions, the briefing often overlaps and duplicates other briefing. In general, the Court may merely cite to one source of duplicative information.

II. APPLICABLE LAW

"Under the Erie doctrine, federal courts sitting in diversity apply state substantive law and federal procedural law." Gasperini v. Ctr. for Humanities, Inc. , 518 U.S. 415, 427, 116 S.Ct. 2211, 135 L.Ed.2d 659 (1996) ; accord Erie R.R. Co. v. Tompkins , 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). Because jurisdiction in this case is based on diversity of citizenship, the Court must "apply Texas law." Ocwen Loan Servicing, L.L.C. v. Berry , 852 F.3d 469, 473 (5th Cir. 2017).

"When reviewing issues of state law, federal courts look to the law of that state's highest court." City of Alexandria v. Brown , 740 F.3d 339, 351 (5th Cir. 2014) ; accord Price v. City of San Antonio, Tex. , 431 F.3d 890, 892 (5th Cir. 2005). Absent a final decision by the Texas Supreme Court that " ‘precisely’ resolves the legal issue, federal courts "must make an Erie guess and determine as best [they] can what the Supreme Court of Texas would decide." Martinez v. Walgreen Co. , 935 F.3d 396, 398 (5th Cir. 2019) (citation omitted). When compelled to make an Erie guess, federal courts "defer to intermediate state appellate court decisions, unless convinced by other persuasive data that the highest court of the state would decide otherwise." Mem'l Hermann Healthcare Sys. Inc. v. Eurocopter Deutschland, GMBH , 524 F.3d 676, 678 (5th Cir. 2008) (citations and internal quotation marks omitted); accord Price , 431 F.3d at 893 n.5. The federal courts not only look to the intermediate state appellate decisions, but also to "the general rule on the issue, decisions from other jurisdictions, and general policy concerns." Martinez , 935 F.3d at 398 (citation omitted).

When federal courts "interpret a Texas statute," they "follow the same rules of construction that a Texas court would apply—and under Texas law the starting point of [the] analysis is the plain language of the statute." Forte v. Wal-Mart Stores, Inc. , 780 F.3d 272, 277 (5th Cir. 2015) (quoting Wright v. Ford Motor Co. , 508 F.3d 263, 269 (5th Cir. 2007) ), certified question accepted (Mar. 6, 2015), certified question answered , 497 S.W.3d 460 (Tex. 2016).

III. LEGAL STANDARD

"The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). "As to materiality, the substantive law will identify which facts are material" and facts are "material" only if they "might affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Disputes over material facts qualify as "genuine" within the meaning of Rule 56 when "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. Given the required existence of a genuine dispute of material fact, "the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment." Id. at 247-48, 106 S.Ct. 2505. A claim lacks a genuine dispute for trial when "the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party." Scott v. Harris , 550 U.S. 372, 380, 127 S.Ct. 1769, 167 L.Ed.2d 686 (2007) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 586-87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) ).

The "party seeking summary judgment always bears the initial responsibility of informing the district court of the basis for its motion." Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). When seeking summary judgment on an affirmative defense, the movant "must establish beyond peradventure" each essential element of the defense. Access Mediquip L.L.C. v. UnitedHealthcare Ins. Co. , 662 F.3d 376, 378 (5th Cir. 2011), adhered to on reh'g en banc , 698 F.3d 229 (5th Cir. 2012) ; Fontenot v. Upjohn Co. , 780 F.2d 1190, 1194 (5th Cir. 1986).

When considering a motion for summary judgment, courts view all facts and reasonable inferences drawn from...