Community Communications Co., Inc. v. City of Boulder, Colo., 80-1882
| Decision Date | 06 November 1981 |
| Docket Number | No. 80-1882,80-1882 |
| Citation | 660 F.2d 1370 |
| Parties | 1981-2 Trade Cases 64,300, 7 Media L. Rep. 1993 COMMUNITY COMMUNICATIONS COMPANY, INC., Plaintiff-Appellee, v. CITY OF BOULDER, COLORADO, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Tenth Circuit |
Jeffrey H. Howard of Davis, Graham & Stubbs, Denver, Colo. (Dale R. Harris Bruce T. Reese, Glenn W. Merrick, and Kathleen A. McGinn of Davis, Graham & Stubbs, Denver, Colo.; and Joseph N. DeRaismes and Allan E. Boles, Jr., Boulder, Colo., with him on the brief), for defendant-appellant.
Harold R. Farrow of Farrow, Schildhause & Wilson, Oakland, Cal. (Thomas A. Seaton of Farrow, Schildhause & Wilson, Oakland, Cal., and Stephen M. Brett and Robert E. Youle of Sherman & Howard, Denver, Colo., with him on the brief), for plaintiff-appellee.
Thomas B. McMahon, Asst. Atty. Gen., Denver, Colo. , for amicus curiae Colorado Attorney General.
Blake T. Jordan, Staff Attorney, Wheat Ridge, Colo., on the brief for amicus curiae Colorado Municipal League.
Before SETH, Chief Judge, SEYMOUR, Circuit Judge, and BOHANON, * District Judge.
We have been once again asked to reverse a grant by the district court of a preliminary injunction against the City of Boulder, Colorado (City) enjoining the City from enforcing a legislative restriction on the authority of Community Communications Company (CCC) to conduct its cable television business in Boulder. See Community Communications Co. v. City of Boulder, 485 F.Supp. 1035 (D.Colo.), rev'd, 630 F.2d 704 (10th Cir. 1980) (Boulder I). This time the district court preliminarily barred the City from limiting CCC's authorized operations to the geographic area described in Boulder City Ordinance No. 4515. 1 For the reasons set forth below, we believe that during the pendency of this litigation CCC should only be permitted to conduct such operations in the City of Boulder as are necessary to fully provide cable services to customers throughout the area contemplated by Ordinance No. 4515, and to customers outside that area who were actually connected to CCC's cable system as of May 18, 1981. 2 In addition, we conclude the City should be preliminarily barred from issuing any exclusive cable franchise to another cable company for any remaining portion of Boulder until a decision has been rendered on the merits of this case. To the extent the district court's preliminary injunction is inconsistent with these conclusions, it is reversed.
In 1964, the City Council of Boulder granted a nonexclusive, revocable permit to a predecessor of CCC, authorizing but not requiring the company to provide cable broadcasting services to all of Boulder. The permit was issued in the form of an ordinance allowing use of the public ways to string cable for a period of twenty years, with the reservation that the City Council could revoke the permit at its pleasure at any time. In 1966, the permit was assigned to CCC.
Under the permit, CCC chose for roughly 15 years to provide cable television service only to the University Hill area of Boulder, an area comprised of approximately 20% of Boulder's residential units and blocked off from normal reception of Denver television stations. In 1979, CCC informed the City of its plans to expand the area it served and the programming it carried. Shortly thereafter, the City received a request from Boulder Communications Company (BCC) for a cable television permit. BCC indicated that regardless of the action the City took in regard to CCC, it planned to begin building a new system as soon as possible after it received a permit.
In response to these developments, the City undertook a study of cable broadcasting technology and concluded that cable systems are natural monopolies. Consequently, the City became concerned that CCC, because of its headstart, would always be the only cable operator in Boulder if allowed to expand, even though it might not be the best operator Boulder could otherwise obtain. The City decided to place a moratorium on CCC's expansion in order to provide other companies the opportunity to make bids to service the remaining parts of Boulder before CCC could become so entrenched that new entry would be impracticable. On December 18, 1979, the City Council enacted a moratorium to restrict CCC from expanding its area of service for 90 days.
On January 15, 1980, CCC filed a complaint against the City in federal district court. The complaint listed several grounds for relief including allegations that the City's actions violated section 1 of the Sherman Act, 15 U.S.C. § 1, and the First Amendment. CCC continued to string cable. When the City tore down some of the new cable, CCC sought a preliminary injunction from the district court to enjoin enforcement of the moratorium.
In its March 17, 1980 decision, the district court recognized that the case presented significant First Amendment questions, but found them "not now ripe for decision." Boulder I, 485 F.Supp. at 1040. It focused instead on the Sherman Act claim and granted a preliminary injunction against the City on that basis. The City appealed.
This court reversed in a May 28, 1980 decision. We concluded that the trial court had erred as a matter of law in grounding a preliminary injunction on the Sherman Act claim. See Boulder I, 630 F.2d 704, 708 (10th Cir. 1980). Because authorization to use public ways for provision of cable service is a matter of local governmental concern, 3 we held the home-rule City of Boulder to be immune from antitrust liability under the state action doctrine of Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943). We noted that the district court had "expressed no other basis for the restraining order than the antitrust factor." Boulder I, 630 F.2d at 708.
The 90-day moratorium had expired by the time of our decision in Boulder I, so the City enacted emergency ordinances on June 3 and June 24 placing further temporary restrictions on CCC's expansion in Boulder while the City considered its alternatives. By this time, three companies besides CCC had submitted proposals to provide cable services to Boulder. However, these other companies, including Boulder Communications Company, indicated they would not accept a permit in any area where CCC had authority to string cable.
The City concluded that direct competition in Boulder between cable companies within the same geographic area will not be possible in the foreseeable future. It settled on districting as the best practicable alternative. Under the City's plan, CCC will be restricted to servicing a single district comprising approximately one-third of the City's population. One or more cable companies will be granted permits to service other districts within Boulder. The City believes that although it cannot have direct competition, the districting plan will at least provide comparison. That is, by having more than one cable company operating in Boulder, the City will have a comparative basis for evaluating permit renewal applications. The City also believes that districting will achieve diversity of cable communications, especially if interconnection is required among cable systems whereby each cable company would make available to its subscribers some portion of the programming carried by other cable companies. In sum, through districting the City hopes to provide for its citizens multi-purpose, state-of-the-art cable communication services, including, for example, not only extensive programming but also two-way communications through the cable system.
To begin implementing its districting plan, the City enacted Ordinance No. 4515, see note 1 supra, which partially revoked CCC's long-standing permit and replaced it with a permanent geographic limitation on CCC's authority to operate a cable system in Boulder. CCC responded by filing a second motion with the district court for a preliminary injunction. The City cross-moved to enjoin CCC from violating the limitations of the new ordinance.
The district court denied the City's motion and granted another preliminary injunction in favor of CCC, reasoning that the cable company had demonstrated irreparable harm and a reasonable probability of success on the merits of both its Sherman Act and First Amendment claims. See Community Communications Co. v. City of Boulder, 496 F.Supp. 823 (D.Colo.1980) (Boulder II). On appeal, the City challenges the trial court's reasoning on both grounds.
As an initial matter, we note that the cable broadcasting industry has a prior history of federal, state, and local regulation. See, e. g., Besen, The Deregulation of Cable Television, 44 Law & Contemp. Prob. 79 (1981); Comment, Technology Meets Bureaucracy, The FCC's Policy for Two-Way Television, 31 Fed.Com.L.J. 413 (1979). Generally, regulation has been premised upon cable companies' need to use public streets and rights of way to lay or string their cable. Local regulation has commonly taken the form of licensing or franchising cable companies. See generally Albert, The Federal and Local Regulation of Cable Television, 48 Univ.Colo.L.Rev. 501, 508-13 (1977). The question in the present case is whether the City has gone too far under either the antitrust laws or the First Amendment in its efforts to regulate CCC's cable operations.
To the extent the lower court grounded its order on the Sherman Act claim, it is in error. In Boulder I, we reversed the district court's earlier grant of an injunction because we held the City immune from antitrust liability for its action in placing a moratorium on CCC's expansion. 4 The reasoning of Boulder I applies here as well. That the...
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