Hippopress, LLC v. SMG

Decision Date08 December 2003
Docket NumberNo. 2002–786.,2002–786.
Citation837 A.2d 347,150 N.H. 304
CourtNew Hampshire Supreme Court
Parties HIPPOPRESS, LLC v. SMG (A PENNSYLVANIA PARTNERSHIP) d/b/a SMG Operations and another.

Boutin & Associates, P.L.L.C., of Londonderry (Brenda E. Keith, on the brief and orally), for the plaintiff.

Devine, Millimet & Branch, P.A., of Manchester (Alexander J. Walker, Jr., on the brief, and Mr. Walker orally), for defendants SMG and the City of Manchester.

Malloy & Sullivan, P.C., of Manchester (Gregory V. Sullivan, on the brief and orally), for defendant the Union Leader Corporation.

Edward T. Clancy, of Dover, on the brief, for the New Hampshire Civil Liberties Union, as amicus curiae.

BRODERICK, J.

The defendants, SMG, the City of Manchester (City) and the Union Leader Corporation (Union Leader), appeal an order of the Superior Court (Brennan , J.) ruling that SMG violated both Part I, Article 22 of the New Hampshire Constitution and the First Amendment of the United States Constitution by not allowing the plaintiff, HippoPress, LLC (HippoPress), to distribute its newspaper in the Verizon Wireless Arena (arena). HippoPress cross-appeals that part of the order ruling that SMG was not a "state actor" for purposes of 42 U.S.C. §§ 1983 and 1988 (2000). We reverse in part and affirm in part.

The record supports the following facts. The City owns the arena, a large multi-purpose sport and entertainment venue located in downtown Manchester. SMG is the country's largest facility management company, specializing in managing and operating stadiums, arenas and convention centers. The City and SMG entered into a "Management Agreement" (agreement), which required SMG to staff, manage, operate and maintain the arena. Article 5.2.10 of the agreement provides that SMG "shall, subject to the overall approval of [the City], negotiate, execute and perform all contracts ... for the use of Advertising space in or about the [arena] and all Advertising rights of whatever kind or nature related to the [arena]." Under this provision, SMG entered into a contract with Union Leader, which provided that: (1) Union Leader would be the exclusive newspaper sponsor for the arena; (2) SMG would not enter into advertising signage agreements with any other newspapers; and (3) Union Leader would have the exclusive right to sell and distribute newspapers within the arena.

HippoPress publishes a weekly newspaper containing general local news, political and editorial comment, and entertainment news. HippoPress requested permission from SMG to distribute its newspapers by racks or vending machines inside the arena. Because SMG had previously granted Union Leader the exclusive right to sell and distribute newspapers there, SMG denied the request.

Prior to the arena's grand opening, HippoPress sought a temporary restraining order to require SMG to permit distribution of its newspaper in the building, as well as preliminary and permanent injunctions enjoining SMG from preventing distribution of its newspaper there in the future. In denying a temporary restraining order, the court found that the arena was neither a "traditional public forum" nor a "designated public forum." Therefore, SMG could regulate access to the building provided that "the regulation on speech [was] reasonable and not an effort to suppress expression merely because public officials oppose the speaker's view." According to the court, SMG's contract with Union Leader was a reasonable attempt to increase the profitability of the arena and was not the result of arbitrary or capricious conduct. SMG and the City moved unsuccessfully to dismiss the remainder of HippoPress' claim.

The case went to trial in the superior court, which found that "[t]he City's purpose in establishing the Arena [was] to provide revenue and economic vitality to the City through ticket sales and other indirect economic benefits." Contrary to its earlier ruling on the temporary restraining order, the court found that "the exclusive contract for distribution of the Union Leader newspaper in the City Arena open[ed] the door to the First Amendment and the Constitutional rights of competing newspapers ... [and] transformed the City Arena from a non public forum to a public forum for competing newspapers." The court, citing Consolidated Edison Co. v. Public Service Commission, 447 U.S. 530, 535, 100 S.Ct. 2326, 65 L.Ed.2d 319 (1980), stated that in a public forum, "the first amendment allows reasonable, content-neutral regulation of the time, place and manner of expression ... where such regulation narrowly tailored furthers significant government interests, and does not foreclose other opportunities for expression."

Under this standard, the court determined that the exclusive newspaper distribution contract between SMG and Union Leader was not a reasonable regulation and that it foreclosed other opportunities for expression. Consequently, the court ordered the City to either remove Union Leader vending machines from the arena, thereby reinstating the arena as a nonpublic forum, or establish reasonable criteria for the application and installation of vending machines for newspapers interested in distributing their papers in the arena, including Union Leader and HippoPress.

The court also addressed HippoPress' claim for attorney's fees under 42 U.S.C. §§ 1983 and 1988. Section 1983 grants individuals a cause of action against "[e]very person who, under color of any statute, ordinance, regulation, custom, or usage ... subjects ... any citizen of the United States ... to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws." In actions to enforce 42 U.S.C. § 1983, courts "may allow the prevailing party ... a reasonable attorney's fee as part of the costs." 42 U.S.C. § 1988. The court, citing Jerry's Sport Center, Inc. v. Novick, 122 N.H. 636, 448 A.2d 404 (1982), stated that "absent a showing that the State's conduct amounted to joint participation with a party or that the private action and the State's conduct had a sufficiently close nexus, mere State participation will not constitute state action." The court found that the "City was not a party to the contract [between SMG and Union Leader], had no knowledge of the contract nor did [it] participate in any way in the negotiations of the contract. The mere general overall approval of all contracts does [not constitute] conduct which rises to the level of state action required under [ 42 U.S.C. §] 1983."

The primary question for our review is whether the exclusive newspaper distribution contract between SMG and Union Leader violates HippoPress' rights under Part I, Article 22 of the New Hampshire Constitution or the First Amendment of the United States Constitution, made applicable to the States by the Fourteenth Amendment, Petition of Brooks , 140 N.H. 813, 817, 678 A.2d 140 (1996). We first consider the parties' contentions under the New Hampshire Constitution, State v. Ball, 124 N.H. 226, 231, 471 A.2d 347 (1983), citing decisions of the federal courts only to aid in our analysis. Id. at 232–33, 471 A.2d 347.

This court reviews the trial court's rulings on mixed questions of law and fact under a clearly erroneous standard.

Cadle Co. v. Bourgeois, 149 N.H. 410, 415, 821 A.2d 1001 (2003). If, however, the trial court misapplies the law to its factual findings, we review the matter independently under a plain error standard. Id. Questions of law are reviewed de novo . Duffy v. City of Dover, 149 N.H. 178, 181, 818 A.2d 1251 (2003).

The defendants contend that the trial court erred by finding state action sufficient to support a violation of HippoPress' State and federal constitutional rights, despite finding insufficient state action to support a violation of 42 U.S.C. § 1983. They argue that no state action existed. HippoPress contends that the trial court erred by not finding state action sufficient to support its 42 U.S.C. § 1983 claim. In the alternative, it argues that state action is not necessary to find a violation of Part I, Article 22 of the New Hampshire Constitution. We conclude that the trial court erred by finding state action under the facts of this case, and that state action is necessary for a violation of Part I, Article 22 of the New Hampshire Constitution.

It is well established that state action is an essential prerequisite to finding a violation of either Part I, Article 22 of the New Hampshire Constitution or the First Amendment of the United States Constitution. See State v. Carroll, 138 N.H. 687, 691, 645 A.2d 82 (1994) ; In re Certain Scholarship Funds, 133 N.H. 227, 229–30, 575 A.2d 1325 (1990). Similarly, 42 U.S.C. § 1983 requires action that is fairly attributable to the State. Lugar v. Edmondson Oil Co., 457 U.S. 922, 937, 102 S.Ct. 2744, 73 L.Ed.2d 482 (1982) ; Yeo v. Town of Lexington, 131 F.3d 241, 248–49 (1st Cir.1997), cert. denied, 524 U.S. 904, 118 S.Ct. 2060, 141 L.Ed.2d 138 (1998). The state action inquiry has consistently been treated the same under the Federal Constitution and 42 U.S.C. § 1983. See Rendell–Baker v. Kohn, 457 U.S. 830, 837–38, 102 S.Ct. 2764, 73 L.Ed.2d 418 (1982) ; United States v. Price, 383 U.S. 787, 794 n. 7, 86 S.Ct. 1152, 16 L.Ed.2d 267 (1966) ; Barrios–Velazquez v. AEELA, 84 F.3d 487, 491 (1st Cir.1996).

State action may be attributed to a private actor, such as SMG, if: (1) there is a financial or regulatory nexus between the private actor and the government, which compelled the private actor to act as it did; (2) the private actor assumes a traditionally public function; or (3) a symbiotic relationship exists between the private actor and the government. See Ponce v. Basketball Feder. of Com. of Puerto Rico, 760 F.2d 375, 377 (1st Cir.1985).

In order to establish state action under the nexus test, HippoPress needed to demonstrate that "there [was] a sufficiently close nexus between the [City] and the challenged action of [SMG] so that the action of the...

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