Greater Fremont, Inc. v. City of Fremont

• Citation: 302 F. Supp. 652
• Decision Date: 30 December 1968
• Docket Number: C 65-209.,No. C 65-211,C 65-211
• Parties: GREATER FREMONT, INC., Plaintiff, v. CITY OF FREMONT et al., Defendants. GREATER SANDUSKY, INC., Plaintiff, v. CITY OF SANDUSKY et al., Defendants.
• Court: U.S. District Court — Northern District of Ohio

302 F. Supp. 652

GREATER FREMONT, INC., Plaintiff, v. CITY OF FREMONT et al., Defendants.

GREATER SANDUSKY, INC., Plaintiff, v. CITY OF SANDUSKY et al., Defendants.

Nos. C 65-211, C 65-209.

United States District Court N. D. Ohio, W. D.

December 30, 1968.

COPYRIGHT MATERIAL OMITTED

J. Edward Goff, J. Eugene Farber, Toledo, Ohio, for plaintiff.

Roger H. Smith, Toledo, Ohio, for defendants.

OPINION

DON J. YOUNG, District Judge.

These cases came before the Court on motions of the plaintiffs for injunctions against the respective defendants to prevent the enforcement of certain ordinances against the plaintiffs. The cases have been consolidated for consideration since they present essentially the same questions and factual situations. The cases have been submitted to the Court upon stipulations of fact and are now ready for resolution of the dispute on the merits.

At the time of the commencement of this suit both of the plaintiffs were corporations organized under the laws of Ohio. In December, 1966, the two corporations were merged into Wonderland Ventures, Inc., a Michigan Corporation licensed to do business in the State of Ohio.

Plaintiffs seek to bring to the citizens of Sandusky, Ohio and Fremont, Ohio, respectively, the services of a community antenna television system (hereinafter referred to as CATV). These systems would take, from the air, television signals from the States of Pennsylvania, Michigan, Ohio, and the Province of Ontario, Canada, and relay them to the Sandusky and Fremont areas. The signals would then be distributed to the subscribers via the facilities of the Ohio Bell Telephone Company. Ohio Bell would add such facilities to its existing equipment as necessary and would provide service for an initial fee for installation and a regular monthly rental.¹ Thereafter, on May 21, 1965, plaintiff Greater Fremont paid Ohio Bell $31,299.00 on its contract; and plaintiff Greater Sandusky paid Ohio Bell $37,139.00 on its contract. Plaintiffs then rented space in the two cities from which to sell and service the CATV systems and also acquired sites for the construction of antenna towers and other necessary "head-end" equipment.

The ordinances in question were passed by Sandusky on September 13, 1965, with amendments of September 27, 1965 and January 24, 1966; and by Fremont on September 23, 1965. Both ordinances purport to regulate CATV systems by means of a franchise system. Copies of the ordinances are attached to the respective stipulations of facts. At the time of the passage of these ordinances, work had been commenced by Ohio Bell and some of the necessary equipment was already installed. Both cities have advised the plaintiffs that should they proceed with the installation of these systems they would be prosecuted under these ordinances. It has further been stipulated that the respective plaintiffs would be prosecuted for failure to comply with the respective ordinances. The plaintiffs seek to have the enforcement of the ordinances against them permanently enjoined.

Before proceeding to consider this case on the merits, it is necessary to determine whether this Court has jurisdiction over the controversy. Plaintiffs have alleged that jurisdiction lies under 28 U.S.C. § 1337 and under 28 U.S.C. § 1331. Defendants deny that this Court has either jurisdiction over the subject matter or power to grant the relief requested.

Under 28 U.S.C. § 1337, this Court is given jurisdiction over an "original action or proceeding arising under any Act of Congress regulating commerce or protecting trade and commerce against restraints and monopolies." It is clear that CATV systems are under the jurisdiction of the Federal Communications Commission, United States v. Southwestern Cable Co., 392 U.S. 157, 88 S.Ct. 1994, 20 L.Ed.2d 1001 (1968), and one of the major questions presented in this case is whether the FCC has preempted regulation of CATV systems from the states under the doctrine of Cooley v. Board of Wardens of Port of Philadelphia, 53 U.S. (12 How.) 299, 13 L.Ed. 996 (1851).

Where a substantial federal question is raised, the federal court has jurisdiction to determine any state claims involved which arise from the same operative facts. United Mine Workers of America v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966); Massachusetts Universalist Convention v. Hildreth & Rodgers Co., 87 F.Supp. 822 (D.C.Mass.1949), aff'd, 183 F.2d 497 (1st Cir. 1950). Since the facts essential to determine whether the FCC has preempted this type of regulation and those necessary to determine the validity of these ordinances are essentially the same, this Court has jurisdiction over the entire controversy.

This Court also has jurisdiction under 28 U.S.C. § 1331 since the controversy involves questions of whether the plaintiff corporations are being denied due process and the equal protection of the laws as guaranteed by the Fourteenth Amendment of the Constitution of the United States.

The next question is whether this Court, having jurisdiction over the disputes, has the power to grant the relief prayed for. The general rule is that a federal court will not enjoin the enforcement of state criminal statutes or municipal ordinances unless there is clearly an irreparable injury to the plaintiffs and that forcing the plaintiffs to attack the validity of the statute in a criminal proceeding is a viable alternative. Outdoor American Corp. v. City of Philadelphia, 333 F.2d 963 (3rd Cir.), cert. denied, 379 U.S. 903, 85 S.Ct. 192, 13 L.Ed.2d 176 (1964). It is clear, however, that the prayer of the petition in these cases is in reality one for declaratory relief under 28 U.S.C. § 2201, Rule 57, Federal Rules of Civil Procedure, with the prayer for injunctive relief as a prayer for further proper relief under 28 U.S.C. § 2202. It is clearly within the power of this Court to so proceed. Katzenbach v. McClung, 379 U.S. 294, 85 S.Ct. 377, 13 L.Ed.2d 290 (1964).

Considering the length of time that the cases have been in this Court and the fact that this Court is now in a position to dispose of the matter, and since it is clear from the trial briefs that the defendant in fact is considering the case as being solely one of the validity of the ordinances, the Court will consider the prayer as one for declaratory relief.²

Before proceeding to consider the issues on the merits it might be well to consider the nature of CATV. A physical description of its essential operation has previously been sketched. At the danger of being slightly repetitious, CATV is a system whereby various electromagnetic waves are received by a central antenna, are amplified and then are distributed via cable to the subscribers of the company. As the name implies the signals are usually, but not necessarily, television signals. Each individual within the class of prospective subscribers can make a choice as to whether or not to subscribe to the service.

Depending upon the point of view taken, the criteria employed, and the particular system in question, CATV can be placed into different pre-existing categories. A discussion of some of these will be helpful in resolution of this dispute.

The first category into which some CATV systems can be placed is that of the maintainer of a distribution system. The characteristics essential for this classification are the erection of poles or the laying of conduits and the stringing of cable. It is of little consequence whether this is done over private or public right of way. When a CATV system so undertakes to maintain its own distribution system, it is analogous to the telephone, electric, gas, water and other companies that do likewise. As such, it is subject to the same kind of regulation as are these companies when the reasons for those regulations apply to it.³

Not all CATV systems choose to erect and maintain their own distribution systems. When they do not, they contract with someone already maintaining a system suitable for handling CATV to transmit the signals from the antenna to the "head-end" equipment and from the "head-end" equipment to the subscribers. Usuaully such a contract is made with a telephone company.⁴ When such a contract is made, the reasons for regulating CATV as if it were an electric, gas, water or telephone company cease to exist. The CATV company is not stringing wires or digging ditches or erecting poles so that the general problems which these activities present to the local residents are not present. Further, the contracting distribution system is not changing or substantially increasing its regular activities so that this as well is no cause for further regulation.

A second way in which CATV can be considered is as a disseminator of entertainment. In this role CATV can be compared to the theatre, television, radio, newspapers, magazines and music services. Each of these in its role as a media of entertainment helps to lighten the burden of daily routine. While these media vary from "hot" to "cold", to use the McLuhanise phrase, they serve exactly the same function, and no distinction should be drawn between these forms of entertainment for regulatory purposes unless there is some real basis for the distinction.

The third way in which CATV can be considered is as a communicator of news, thoughts, and ideas similar to a newspaper, television, radio, books, magazines, news wire services, etc. It differs from these only in that it is always a secondary source of these items of news, thoughts, and ideas, since it is only repeating what is presented on television. Nonetheless, it is presenting the news, thoughts and ideas that appear on television, and disseminating them to some individuals who would be unable to receive them without the aid of CATV.

When we consider CATV in this role, we are approaching the areas of freedom of speech and of the press protected by the First Amendment. In this area, the courts must always be alert to prevent improper...