Liberty Cable Co., Inc. v. City of New York, 94 Civ. 8886 (LAP).
| Decision Date | 13 March 1995 |
| Docket Number | No. 94 Civ. 8886 (LAP).,94 Civ. 8886 (LAP). |
| Citation | 893 F. Supp. 191 |
| Parties | LIBERTY CABLE COMPANY, INC., Sixty Sutton Corp. and Jack A. Veerman, Plaintiffs, v. The CITY OF NEW YORK and Ralph A. Balzano, Commissioner of Department of Information Technology and Telecommunications, The New York State Commission on Cable Television, William B. Finneran, Gerard D. Di Marco, Barbara T. Rochman, David F. Wilbur, and John Passidomo, Defendants, The United States of America, Time Warner Cable of New York City and Paragon Cable Manhattan, Defendants-Intervenors. |
| Court | U.S. District Court — Southern District of New York |
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Robert Begleiter, Lloyd Constantine, Leslie F. Spasser, Eliot Spitzer, Constantine & Partners, New York City, for plaintiff Liberty Cable Co., Inc.
W. James MacNaughton, Woodbridge, NJ, for plaintiffs Sixty Sutton Corp. and Jack A. Veerman.
Paul A. Crotty, Corp. Counsel of the City of New York by Lewis S. Finkelman, Daniel J. Struck, New York City, for defendants The City of New York and Ralph A. Balzano.
Dennis C. Vacco, Atty. Gen. of State of New York by Marilyn T. Trautfield, Jeanne Lahiff, New York City, for defendants The New York State Com'n on Cable Television, William B. Finneran, Gerard D. Di Marco, Barbara T. Rochman, David F. Wilbur, and John Passidomo.
Mary Jo White, U.S. Atty. by Kathy S. Marks, Asst. U.S. Atty., New York City, for defendant-intervenor The U.S.
Martin J. Schwartz, Richard G. Primoff, Rubin Baum Levin Constant & Friedman and Stuart W. Gold, Rowan D. Wilson, Cravath, Swaine & Moore, New York City, for defendants-intervenors Time Warner Cable of New York City and Paragon Cable Manhattan.
Plaintiffs Liberty Cable Co., Inc. ("Liberty"), Sixty Sutton Corp. ("Sixty Sutton"), and Jack A. Veerman seek, inter alia, a declaratory judgment that 47 U.S.C. ?? 522(7) and 541(b) are unconstitutional. Before me now is their motion for a preliminary injunction against agencies and officials of New York State (the "State") and the City of New York (the "City") and defendants' motion to dismiss the complaint. For the reasons stated below, the complaint is dismissed as to certain claims and, as to the remainder, plaintiffs' motion for a preliminary injunction is denied.
"Cable operators" in the City of New York are regulated on the federal, state, and city level. On the federal level, the Cable Communications Policy Act of 1984, 47 U.S.C. ?? 521 et seq. (the "Cable Act") regulates "cable operators." A "cable operator" is defined in pertinent part as "any person or group of persons ... who provides cable service over a cable system and directly or through one or more affiliates owns a significant interest in such cable system." 47 U.S.C. ? 522(5). A "cable system" is defined in pertinent part as:
a facility, consisting of a set of closed transmission paths and associated signal generation, reception, and control equipment that is designed to provide cable service which includes video programming and which is provided to multiple subscribers within a community, but such term does not include ... a facility that serves only subscribers in 1 or more multiple unit dwellings under common ownership, control, or management, unless such facility or facilities uses any public right-of-way.
47 U.S.C. ? 522(7). The exclusion in the definition of a cable franchise has been referred to as the "private cable exemption."
Aside from exceptions not relevant here, "a cable operator may not provide cable service without a franchise." 47 U.S.C. ? 541(b). A "franchise" is "an initial authorization, or renewal thereof ... issued by a franchising authority ... which authorizes the construction or operation of a cable system." 47 U.S.C. ? 522(9). A "franchising authority" is defined as "any governmental entity empowered by Federal, State, or local law to grant a franchise." 47 U.S.C. ? 522(10). Thus, a cable operator must look to state and/or local authorities to obtain a franchise.
However, not all types of cable systems need comply with this regulatory scheme. Under the "private cable exemption" of the Cable Act, a cable system is exempt from these franchising requirements if it meets two tests. First, it must be a system confined to commonly owned, controlled, or managed multiple unit dwellings. 47 U.S.C. ? 522(7). Second, the system must not use any public right-of-way, for example, by placing coaxial cable or hard wire above or under public streets or rights of way. Id. Traditional cable systems, which are subject to regulation, deliver programming by means of coaxial cables that physically connect the cable operator with the subscriber and that generally are laid under city streets or along utility lines.
Satellite master antenna television ("SMATV"), however, is a type of cable service that can fit within the private cable exemption and, when it does, need not obtain a franchise. See F.C.C. v. Beach Communications, ___ U.S. ___, ___-___, 113 S.Ct. 2096, 2099-2100, 124 L.Ed.2d 211 (1993) (citing In re Definition of a Cable Television Sys., 5 F.C.C.Rcd. 7638 (1990)).1 SMATV provides cable service by means of a satellite dish and reception facilities installed on the grounds of private buildings. Under 47 U.S.C. ? 522(7), a SMATV system that uses cable to link more than one multiple unit dwelling under common ownership, control, or management falls within the private cable exemption. However, a SMATV system that uses cable to link more than one multiple unit dwelling not under common ownership, control, or management does not fall within the private cable exemption and is subject to the regulation imposed by the Cable Act.
After the federal regulations, the next levels of regulation a would-be cable operator in the City of New York must look to are the State and then the City. New York law provides that a cable television system may not commence or expand its operations without a franchise from the municipality in which it proposes to provide or expand service. N.Y.Exec.Law ? 819(1) (McKinney 1982). In New York, a "cable television system" is defined as:
any system which operates for hire the service of receiving and amplifying programs broadcast by one or more television or radio stations or any other programs originated by a cable television company or by any other party, and distributing such programs by wire, cable, microwave or other means, whether such means are owned or leased, to persons in one or more municipalities who subscribe to such service.
N.Y.Exec.Law ? 812(2) (McKinney 1982 & Supp.1995). New York law also authorizes municipalities to grant the franchises which are required of cable television systems:
A municipality shall have the power to require a franchise of any cable television system providing service within the municipality, notwithstanding that said cable television system does not occupy, use or in any way traverse a public street. The provision of any municipal charter or other law authorizing a municipality to require and grant franchises is hereby enlarged and expanded, to the extent necessary, to authorize such franchises.
N.Y.Exec.Law ? 819(2). Once a franchise has been awarded by the municipality, it must be confirmed by the New York State Commission on Cable Television ("NYSCC") to be effective. N.Y.Exec.Law ? 821(1) (McKinney 1982).
In New York City, the municipal franchising agency authorized by the New York City Charter to grant franchises to cable television systems is the Department of Information Technology and Telecommunications ("DOITT"), formerly the Department of Telecommunications and Energy. Chapter 48, ? 1072(c). On October 13, 1993, the New York City Council authorized Resolution No. 1639 ("Resolution 1639"), which states in pertinent part that:
The Council authorizes the Department of Telecommunications and Energy to grant non-exclusive franchises for the provision of cable television services and the installation of cable television facilities and associated equipment on, over, and under the inalienable property of the City of New York.
(Resolution 1639).2
On February 24, 1995, after the plaintiffs had commenced the instant action, DOITT issued a notice of rulemaking regarding solicitations for franchises for the provision of cable service in a manner that does not use the inalienable property of the City (the "New Rulemaking"). .3 The notice stated, inter alia, that the public written comment period for the proposed rules will close on April 3, 1995, and a public hearing is scheduled for April 4, 1995. . The proposed rules also include deadlines for the submission of franchise applications, DOITT's review of such applications, and the preparation of agreements. . Agreements must be approved by the Franchise and Concession Review Committee and by the Mayor. .
Liberty provides cable service in several different ways in the City, including the use of SMATV systems. (Price Aff. ? 3).4 Liberty receives satellite and broadcast television signals at its "head end" facility on East 95th Street in Manhattan. (Price Aff. ? 5). These signals are processed and transmitted by microwave to reception antennae located on multiple unit buildings located throughout the greater metropolitan area. (Price Aff. ? 5). Liberty's reception antennae deliver cable service to building residents using one of three configurations. (Price Aff. ? 7).
The first type of system employed by Liberty is known as the "Stand Alone System" configuration. The Stand Alone System utilizes a single microwave reception antenna to deliver cable service to the residents of the single building where the antenna is located. (Price Aff. ? 8).
The second system used by Liberty, referred to as...
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