Knology, Inc. v. Insight Communications Co., 05-6391.

• Decision Date: 22 August 2006
• Docket Number: No. 05-6391.,05-6391.
• Citation: 460 F.3d 722
• Parties: KNOLOGY, INC., Plaintiff-Appellee, v. INSIGHT COMMUNICATIONS CO., L.P., Insight Kentucky Partners, L.P., Defendants-Appellants.
• Court: U.S. Court of Appeals — Sixth Circuit

460 F.3d 722

KNOLOGY, INC., Plaintiff-Appellee, v. INSIGHT COMMUNICATIONS CO., L.P., Insight Kentucky Partners, L.P., Defendants-Appellants.

No. 05-6391.

United States Court of Appeals, Sixth Circuit.

Argued: July 21, 2006.

Decided and Filed: August 22, 2006.

ARGUED:

Laurence J. Zielke, Pedley, Zielke, Gordinier & Pence, Louisville, Kentucky, for Appellants. Eric L. Ison, Greenebaum, Doll & McDonald, Louisville Kentucky, for Appellee.

ON BRIEF:

Laurence J. Zielke, Pedley, Zielke, Gordinier & Pence, Louisville, Kentucky, for Appellants. Eric L. Ison, Holland N. McTyeire, Melissa Norman Bork, Greenebaum, Doll & McDonald, Louisville, Kentucky, for Appellee.

Before: MARTIN and SUTTON, Circuit Judges; JORDAN, District Judge.^*

BOYCE F. MARTIN, JR., Circuit Judge.

Insight Communications Company, L.P., and Insight Kentucky Partners, L.P., (collectively "Insight") appeal the district court's denial of their motion for costs based on the district court's granting of Knology, Inc.'s motion for voluntary dismissal with prejudice. The dismissal followed this Court's ruling in an earlier appeal that Insight was entitled to Noerr-Pennington immunity on Knology's claims for damages, which reversed the district court's determination that only a portion of Knology's claims were barred, as well as its related grant of partial summary judgment in favor of Knology. On remand, both parties filed motions for dismissal with prejudice—Insight sought through its motion to have Knology pay its costs in defending the lawsuit, while Knology's motion sought dismissal with both parties bearing their own costs. The district court granted Knology's motion denying costs, and dismissed Insight's motion as moot. For the following reasons, we AFFIRM the district court's decision.

I.

The prior panel decision in this case, issued on December 29, 2004, addressed Insight's interlocutory appeal of the district court's partial grant of summary judgment in favor of Knology on May 30, 2003. Knology, Inc. v. Insight Commc'ns Co., L.P., 393 F.3d 656 (6th Cir.2004). The facts set forth in that opinion provide helpful background for the present appeal:

Insight and Knology are cable television service providers. In 1998, the City of Louisville, Kentucky, passed Ordinance 76, granting Insight a franchise to provide cable services. The ordinance included a "level playing field" provision, which states:

The rights and privileges granted by this ordinance to Operator are not exclusive and nothing herein is intended to or shall be construed so as to prevent the City from granting other . . . franchises ... provided, however, that [they] are neither "more favorable" nor "less favorable" than those granted to Operator herein .... Any subsequent franchise shall contain a provision suspending the effective date for sixty (60) days during which time after prompt written notice is given by the City to Operator, if Operator claims to be aggrieved, parties shall seek a Declaration of Rights in a court of competent jurisdiction during which time the effective date of the subsequent franchise shall be suspended pending a final and nonappealable decision resolving the issue.

Two years later, Louisville enacted Ordinance 114, creating Knology's franchise, which provides

The Franchise created by this Ordinance shall become effective as to any particular Franchisee sixty (60) days after the effective date of the Board of Aldermen's Resolution accepting that Franchisee's bid; provided, however, that if [Insight seeks] a Declaration of Rights ... the effective date of the Franchise . . . shall be suspended pending a final and nonappealable decision resolving the issue.

As the ordinance anticipated, Insight then sued the City in state court, seeking a declaration that the City granted Knology a more favorable franchise. That suit triggered the ordinance provision suspending the effective date of Knology's franchise until a final, nonappealable decision resolved the issue. Some thirteen months later, the state court granted summary judgment for the City, finding that the franchises were substantially similar. The Kentucky Court of Appeals affirmed, and the Kentucky Supreme Court denied discretionary review.

Soon after Insight filed in state court, Knology sued Insight and the City in the district court. Knology argued, among other things, that Insight's state suit and its invocation of the provision suspending Knology's franchise violated the Sherman Act, the Cable Act, and the First Amendment, and that Knology was therefore entitled to damages under the Sherman Act and 42 U.S.C. § 1983. The district court, ruling on a motion for partial summary judgment, viewed Insight's one act—filing suit—as two acts, warranting two contrary holdings: Insight was immune under the Noerr-Pennington doctrine for its act of filing the state court action, but not immune for its invocation of the franchise suspension provision (by its act of filing the state court action). The district court also ruled Insight was not immune from Knology's § 1983 claims, because it was a "state actor" when it invoked the suspension. That reasoning led the court to enter summary judgment for Knology on its § 1983 First Amendment claim.

Id. at 657-58. Insight sought and was granted an interlocutory appeal of the summary judgment order. On that appeal, this Court disagreed with the district court's reasoning that Insight's filing of suit constituted two acts. Id. at 659. Instead, it determined that the filing of the state court action and the related suspension of Knology's franchise were in fact a single act, and that Noerr-Pennington immunity applied to both. Id. The Court's opinion expressly stated: "Noerr-Pennington bars all of Knology's claims for damages against Insight arising out of the stay." Id.

As Knology now points out, the district court's original summary judgment order granted it relief beyond its money damages claims, and that relief was not reversed by this Court. In the summary judgment order, the district court also granted declaratory judgment in favor of Knology, finding that the Automatic Stay provision violated federal law. Additionally, the district court granted a permanent injunction, preventing the enforcement of the automatic stay provision to suspend Knology's franchise. This injunction was eventually modified pursuant to Insight's motion for reconsideration, but that modification only kept the injunction from applying against Insight, which had no power to enforce the ordinance at any rate, while maintaining the unenforceability of the stay provision generally. Also, in March 2001, shortly after the litigation was commenced, Knology was granted a preliminary injunction temporarily preventing "the portion of the questioned ordinance that has the effect of suspending Knology's franchise." Neither the declaratory judgment nor the preliminary or permanent injunctions were reversed by this Court's prior decision.

After this Court reversed and remanded the district court's grant of summary judgment in favor of Knology on its money damages claims, both sides filed motions to dismiss in the district court. Insight's motion claimed that dismissal was the only possible action in light of this Court's mandate on remand. Knology filed a competing motion for voluntary dismissal, with each side bearing its own costs. In opposing Knology's motion, Insight argued that it was entitled to costs under Fed.R.Civ.P. 54(d), which provides that "costs shall be allowed as of course to the prevailing party unless the court otherwise directs." The district court granted Knology's motion, dismissing the case with each party to bear its own costs, and denied Insight's motion as moot.

The district court reasoned that even though Knology ultimately lost on appeal its ability to seek money damages in light of the Noerr-Pennington doctrine, it still prevailed on its declaratory judgment claim regarding the validity of the automatic stay provision. Although this claim was formally against the city, Insight vigorously opposed the court's ruling. Given Knology's partial success, the district court deemed it inappropriate to award costs to Insight. In addition to determining that Insight was not a prevailing party under Rule 54, the district court also found that the case was "close and difficult," and that Knology "conducted this litigation in a proper, good faith manner." Dist. Ct. Op. at 4. Thus, even if Insight could have been deemed a prevailing party, the district court made clear that it would have exercised its discretion to refrain from awarding costs in an apparent alternative holding. Insight now appeals the district court's decision, seeking an order instructing the District Court to award it costs for the lawsuit.

II.

Insight attempts to argue that we should review de novo the district court's denial of costs, citing cases involving a district court's application of a mandate from the court of appeals on remand. This is a misleading position on Insight's behalf, as nothing in this Court's prior opinion spoke to the issue of awarding costs under Rule 54. The prior panel's opinion only spoke to the issue of whether Insight was protected from Knology's money damages claims based on Noerr-Pennington immunity. It did not clearly reverse the district court's declaratory judgment on the validity of the automatic stay provision under federal law and did not address the injunctive relief awarded to Knology. Thus it does not establish that Insight was a prevailing party on all of Knology's claims, nor can it be said that our present review involves the district court's application of a prior mandate from this Court.

As Knology correctly points out, in the context of attorney's fees provided by statute, we review a district court's determination of prevailing party status under the clear error standard. Gregory v. Shelby County, 220 F.3d 433, 447 (6th Cir.2000) (applying clear error standard for...