Dakota Telecommunications Group, In re
| Decision Date | 16 March 1999 |
| Docket Number | No. C8-98-1139,C8-98-1139 |
| Citation | 590 N.W.2d 644 |
| Court | Minnesota Court of Appeals |
| Parties | In re Application of DAKOTA TELECOMMUNICATIONS GROUP, d/b/a Dakota Telecom, Inc. for a Cable Television Franchise in Marshall, Minnesota. |
Syllabus by the Court
An incumbent cable television franchise does not have standing to challenge the general fitness of a competing franchise.
Christopher J. Dietzen, James M. Susag, Larkin, Hoffman, Daly & Lindgren, Ltd., Bloomington, for relator Bresnan Communications Company, Limited Partnership.
Charles T. Wilson, Michael S. Dove, Gislason, Dosland, Hunter & Malecki, P.L.L.P., New Ulm, for respondent Dakota Telecommunications Group d/b/a Dakota Telecom, Inc.
Clifford M. Greene, John M. Baker, Greene, Espel, P.L.L.P., Minneapolis, for respondent City of Marshall and Marshall Municipal Utilities Commission.
Considered and decided by SHORT, Presiding Judge, TOUSSAINT, Judge, and HUSPENI, Judge. *
Bresnan Communications Co., L.P. (Bresnan) appeals by writ of certiorari the City of Marshall's (city) grant of a second, nonexclusive cable television franchise to Dakota Telecommunications Group (DTG). On appeal, Bresnan argues the city acted arbitrarily and capriciously in granting DTG's franchise without substantial evidence of DTG's financial ability to construct and sustain its proposed cable system, and violated Bresnan's due process rights in denying a contested case proceeding. The city and DTG (collectively respondents) argue Bresnan's claim is barred because the grant of DTG's franchise was not quasi-judicial, and Bresnan lacks standing.
Until 1998, Bresnan, owner of a nonexclusive cable television franchise granted by the city, was the city's only cable television provider. On January 20, 1998, during a public hearing on expansion of the city's fiber optic technology, DTG proposed the construction and ownership of a competing cable television franchise. In response, the city created an ad hoc committee to address all issues involved with the introduction of a second franchise. During that committee's first meeting, the city's consultant explained a franchise application could be rejected only if it lacked appropriate qualifications, and any new franchise relationship must be consistent with Bresnan's existing franchise agreement. The committee recommended the city offer DTG an agreement identical to Bresnan's franchise for three years and, at the time of Bresnan's renewal, guarantee DTG an additional 12 years under new terms that apply uniformly to both DTG and Bresnan.
On February 17, 1998, the city authorized the issuance of a notice of intent to award a second cable television franchise. On February 20, 1998, this notice was published. On March 13, 1998, DTG submitted its franchise application. After receiving DTG's application, the city asked DTG to furnish additional information that included evidence of DTG's financial ability to sustain its proposed cable television system. DTG submitted all requested information, except for three requests for proprietary, trade secret, and confidential information.
At a public meeting on April 6, 1998, Bresnan's witnesses opposed DTG's franchise and Bresnan submitted a lengthy letter highlighting questions regarding DTG's financial inability to operate and sustain its proposed cable system. In response to Bresnan's concerns, the city's consultant prepared a report that concluded, using industry standards, DTG provided evidence of available financing to accomplish its proposed cable television franchise. But that report recommended the city ensure DTG's compliance by enforcing the proposed franchise ordinance's $500,000 performance and payment bond requirement and mandating a corporate guaranty from DTG that it stood behind the obligations of its wholly owned subsidiary, Dakota Telecom, Inc. This report was presented to the city during another public meeting on April 20, 1998, and, at that time, the city's consultant concluded no financial problems prevented the city from granting DTG's proposed franchise.
On April 27, 1998, Bresnan asked to examine DTG employees, city staff, and the city's consultant under oath as to DTG's financial ability, an alleged loan agreement between DTG and the city, and the relationship between DTG and the Marshall Municipal Utilities Commission. That same day, the city denied Bresnan's request and adopted an ordinance granting DTG a municipal cable television franchise. On May 27, 1998, DTG accepted the franchise in writing.
I. Is the city council's grant of DTG's cable television franchise a quasi-judicial act subject to appeal by writ of certiorari?
II. Does Bresnan have standing to contest DTG's franchise?
III. Did the city council arbitrarily and capriciously grant DTG's franchise?
IV. Did the city council violate Bresnan's due process rights by refusing to allow Bresnan the opportunity to examine parties involved in DTG's franchise negotiations?
Municipal bodies are granted broad discretion in dealing with matters of local importance. Honn v. City of Coon Rapids, 313 N.W.2d 409, 414-15 (Minn.1981); Arcadia Dev. Corp. v. City of Bloomington, 267 Minn. 221, 225, 125 N.W.2d 846, 850 (1964). As a result, when examining quasi-judicial municipal proceedings, we review the evidence only to determine whether it supports the findings of fact or the conclusions of law, and whether the municipality's decision was arbitrary or capricious. Dokmo v. Independent Sch. Dist. No. 11, 459 N.W.2d 671, 675 (Minn.1990). Decisions involving the grant of a cable television franchise are guided by the Cable Act. Minn.Stat. §§ 238.01-.43 (1998); see also 47 U.S.C. §§ 521-573 (1994 & Supp.1996) (directing states in adoption of cable television franchises).
As a preliminary matter, respondents argue Bresnan's appeal is barred from consideration because the city's grant of DTG's franchise was not quasi-judicial. See Honn, 313 N.W.2d at 414 (). Quasi-judicial proceedings involve an investigation into a disputed claim that weighs evidentiary facts, applies those facts to a prescribed standard, and results in a binding decision. See Minnesota Ctr. for Envtl. Advocacy v. Metropolitan Council, 587 N.W.2d 838, 841-44 (Minn.1999) (). In granting a cable television franchise, the Cable Act requires that franchise proposals contain specific information and a public hearing be held affording reasonable notice and opportunity to be heard. Minn.Stat. § 238.081, subds. 4, 6. This procedure involves testimonial and documentary evidence, and results in a binding decision. Minnesota Ctr., 587 N.W.2d at 844 (); Senior v. City of Edina, 547 N.W.2d 411, 416 (Minn.App.1996) (). Because the city followed the Cable Act's requirements, we reject respondent's preliminary argument and conclude the city's grant of DTG's cable television franchise was a quasi-judicial proceeding.
Respondents also argue Bresnan's appeal is barred because Bresnan lacks standing. A party has standing to invoke judicial review of a municipality's decision only if that party suffers a legally cognizable injury from the decision. Churchill Truck Lines, Inc. v. United States, 533 F.2d 411, 416 (8th Cir.1976); In re Sandy Pappas Senate Comm., 488 N.W.2d 795, 797 (Minn.1992); see also Twin Ports Convalescent, Inc. v. Minnesota State Bd. of Health, 257 N.W.2d 343, 346 (Minn.1977) (). Moreover, the interest the party seeks to protect must be within the zone of interests protected by the statute in question. Churchill, 533 F.2d at 416; Minnesota Fifth Congressional Dist. Independent-Republican Party v. State ex rel. Spannaus, 295 N.W.2d 650, 652 n. 1 (Minn.1980); see In re State Farm Mut. Auto. Ins. Co., 392 N.W.2d 558, 564 (Minn.App.1986) ().
Even though the Cable Act does not explicitly confer standing to incumbent franchises contesting a competing franchise's general fitness, Bresnan asserts its potential loss of profits from the city's grant of DTG's franchise provides a sufficient basis for its appeal. See Byrd v. Independent Sch. Dist. No. 194, 495 N.W.2d 226, 231 (Minn.App.1993) (), review denied (Minn. Apr. 20, 1993); In re Crown CoCo, Inc., 458 N.W.2d 132, 135-36 (Minn.App.1990) (). The question before us is whether Bresnan's potential economic injury from the city's grant of a second, nonexclusive cable television franchise is a legally cognizable injury protected by the Cable Act.
The Cable Act intends to promote competition within the cable communications market. See Minn.Stat. § 238.01 (); see also 47 U.S.C. § 541(a)(1) (). Although the Cable Act also intends to further the public's interest by only awarding franchises to responsible cable operators, it does not support an incumbent franchise's attempt to secure a monopoly by challenging the fitness of new,...
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