Massachusetts Bay Transportation Authority v. Clear Channel Outdoor, Inc.

• Decision Date: 31 January 2018
• Docket Number: 1844CV00268BLS2
• Parties: MASSACHUSETTS BAY TRANSPORTATION AUTHORITY v. CLEAR CHANNEL OUTDOOR, INC.
• Court: Massachusetts Superior Court

MASSACHUSETTS BAY TRANSPORTATION AUTHORITY v. CLEAR CHANNEL OUTDOOR, INC.

No. 1844CV00268BLS2

Superior Court of Massachusetts, Suffolk, Business Litigation Session

January 31, 2018

File Date: February 1, 2018

MEMORANDUM AND ORDER DENYING CLEAR CHANNEL’S MOTION FOR A TEMPORARY RESTRAINING ORDER

Kenneth W. Salinger, Justice

In 2003 the Massachusetts Bay Transportation Authority granted Clear Channel Outdoor, Inc., a 15-year license to operate billboards on MBTA property. That license will expire in early March 2018.^[1] The MBTA recently issued a request for responses by parties willing to enter into a six-month license to operate the same billboards beginning after the Clear Channel license expires. The MBTA received bids from Outfront Media, LLC, which agreed to enter into a six-month license, and Clear Channel, which refused to accept a term that short. The MBTA disqualified Clear Channel. It intends to award a six-month license to Outfront Media.

The MBTA brought this action. It seeks declarations that its recent request for responses is lawful, Clear Channel is not entitled to enforce a right of first refusal contained in its 2003 license, and neither of these disputes is subject to the arbitration clause in the 2003 license. It also seeks certain preliminary injunctive relief to enforce terms of the parties’ existing license. The parties agreed upon a schedule for the filing of cross motions for a preliminary injunction with a hearing on those motions now scheduled for February 22.

Clear Channel has filed an emergency motion seeking a temporary restraining order that would bar the MBTA from taking any steps to license its billboards to or contract with Outfront Media, or from " interfering in any way with Clear Channel’s rights in the billboards themselves or the permits necessary to operate those billboards."

The Court will DENY this motion for a TRO because Clear Channel has not met its burden of showing that it is entitled to the requested relief, " A preliminary injunction [or a TRO] is an extraordinary remedy never awarded as of right." Winter v. Natural Res. Def. Council, Inc., 555 U.S 7, 24 (2008). To the contrary, " the significant remedy of a preliminary injunction should not be granted unless the plaintiffs [have] made a clear showing of entitlement thereto." Student No. 9 v. Board of Educ., 440 Mass. 752, 762 (2004). Clear Channel has not yet made such a showing.

1. Clear Channel Has Asserted No Claims

Clear Channel’s request for injunctive relief is premature because Clear Channel has not asserted any counterclaims or any other kind of affirmative claim against the MBTA.

To obtain preliminary injunctive relief, " the applicant must show a likelihood of success on the merits of the underlying claim; actual or threatened irreparable harm in the absence of injunction; and a lesser degree of irreparable harm to the opposing party from the imposition of an injunction." Wilson v. Commissioner of Transitional Assistance, 441 Mass. 846, 860 (2004). Since Clear Channel seeks to enjoin governmental action, the Court must also consider whether the requested injunctive relief will promote or at least not adversely affect the public interest. See Siemens Bldg. Technologies, Inc. v. Division of Capital Asset Management; 439 Mass. 759, 762 & 765 (2003) (affirming denial of injunction sought by disappointed bidder because injunction would adversely affect the public interest).

Thus, the filing of a meritorious claim or counterclaim is a condition precedent to seeking injunctive relief. See, e.g., Litton Industries, Inc. v. Colon, 587 F.2d 70, 74 (1st Cir. 1979) (injunction " must be based on a valid cause of action alleged in the complaint"); Goerlitz v. City of Maryville, 333 S.W.3d 450, 455 (Mo. 2011) (en bane) (" an injunction is a remedy and not a cause of action; therefore, it must be based on some recognized and pleaded legal theory"). " [A]ny motion or suit for either a preliminary or permanent injunction must be based upon a cause of action ... ‘There is no such thing as a suit for a traditional injunction in the abstract. For a traditional injunction to be even theoretically available, a plaintiff must be able to articulate a basis for relief that would withstand scrutiny under’ " a motion to dismiss for failure to state a claim. Alabama v. U.S. Army Corps of Engineers, 424 F.3d 1118, 1127 (11th Cir. 2005), quoting Klay v. United Healthgroup, Inc., 376 F.3d 1092, 1097 (11th Cir. 2004).

The Court will not deny the TRO motion on this basis, however. Instead, it will assume that Clear Channel is prepared to assert counterclaims consistent with the legal theories outlined in its motion papers. In its memorandum, Clear Channel asserts two distinct theories under which it seeks relief against the MBTA. As explained below, neither theory supports the issuance of the requested TRO.

2. Claim that the MBTA Sought Commercially Unreasonable Terms

Clear Channel asserts that " the MBTA has violated its own contractual obligation to Clear Channel to afford it a right to bid on a solicitation that does not include terms that are commercially unreasonable or intended to defeat Clear Channel’s option, " meaning its right of first refusal.

Clear Channel has not demonstrated that such a claim is likely to succeed. And Clear Channel is not entitled to preliminary injunctive relief if it cannot prove that it is likely to succeed on the merits of its claims. See Fordyce v. Town of Hanover, 457 Mass. 248, 265 (2010) (vacating preliminary injunction on claim brought under public bidding statutes).

It seems unlikely that Clear Channel can prevail on a claim that it had some contractual right to have the opportunity to bid on a new billboard license on terms that Clear Channel considers to be commercially viable. To the contrary, the license agreement between Clear Channel and the MBTA specifies, in the same right-of-first-refusal provision upon which Clear Channel relies, that the MBTA could " publish a solicitation of bids" to license the billboards after Clear Channel’s contract expires " under such terms and conditions deemed to be in the best interests of the MBTA." The only commercially reasonable interpretation of this unambiguous provision is that the MBTA retained the discretion to decide what terms and conditions for a new billboard license would be in its best interests. Clear Channel has no contractual right to dictate to the MBTA what license terms would be acceptable to Clear Channel, and then require the MBTA to grant a license on those terms. See generally Robert and Ardis James Foundation v. Meyers, 474 Mass. 181, 188 (2016) (court must construe contracts in manner that gives them " effect as ... rational business instrument[s] and in a manner which will carry out the intent of the parties") (quoting Starr v. Fordham, 420 Mass. 178, 192 (1995)); Seaco Ins. Co. v. Barbosa, 435 Mass. 772, 779 (2002) (" If a contract ... is unambiguous, its interpretation is a question of law that is appropriate for a judge to decide on summary judgment"); Eigerman v. Putnam Investments, Inc., 450 Mass. 281, 287 (2007) (" Whether a contract is ambiguous is also a question of law"); Indus Partners, LLC v. Intelligroup, Inc., 77 Mass.App.Ct. 793, 795 (2010) (" ambiguity is not created simply because a controversy exists between parties, each favoring an interpretation contrary to the other’s") (quoting Jefferson Ins. Co. v. Holyoke, 23 Mass.App.Ct. 472, 475 (1987)).

Clear Channel could not circumvent the provision quoted above by invoking the implied covenant of good faith and fair dealing, which " is implied in every contract." See Weiler v. PortfolioScope, Inc., 469 Mass. 75, 82 (2014), quoting Uno Restaurants, Inc. v. Boston Kenmore Realty Corp., 441 Mass. 376, 385 (2004). The implied covenant " does not create rights or duties beyond those the parties agreed to when they entered into the contract." Boston Med. Ctr. Corp. v. Secretary or Executive Office of Health & Human Servs., 463 Mass. 447, 460 (2012) (affirming dismissal of claim), quoting Curtis v. Herb Chambers I- 95, Inc., 458 Mass. 674, 680 (2011). Instead, the implied covenant only governs " the manner in which existing contractual duties are performed." Eigerman v. Putnam Investments, Inc., 450 Mass. 281, 289 (2007).

Nor is Clear Channel likely to be able to prove that the MBTA crafted unreasonable terms in a deliberate effort to nullify Clear Channel’s right of first refusal, and thereby violated the implied covenant. Cf. Weiler, 469 Mass. at 82 (" The implied covenant provides ‘that neither party shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract ...’ ") (quoting Druker v. Roland Wm. Jutras Assocs., Inc., 370 Mass. 383, 385 (1976)).

It appears to be undisputed that Outfront Media is able to perform and is prepared to accept the terms proposed by the MBTA. Although Clear Channel insists that those terms are not commercially reasonable, Outfront Media apparently disagrees. Under these circumstances it will be hard for Clear Channel to establish that the MBTA’s request for responses was a charade, rather than a good faith effort to enter into a short, six-month lease of the billboards for reasons that make sense to the MBTA and Outfront even if they make no sense to Clear Channel. In any case, Clear Channel has not made any such showing yet.

3. Claim that Clear Channel has a Right of First Refusal

Clear Channel’s other legal theory is that the MBTA has breached the parties’ license agreement by refusing to give Clear Channel any chance to exercise its right of first...