Nepsk, Inc. v. Town of Houlton

• Decision Date: 13 March 2002
• Docket Number: No. 01-1787.,01-1787.
• Citation: 283 F.3d 1
• Parties: NEPSK, INC., d/b/a Houlton Cable, Plaintiff, Appellant, v. TOWN OF HOULTON, Defendant, Appellee.
• Court: U.S. Court of Appeals — First Circuit

Page 1

283 F.3d 1

NEPSK, INC., d/b/a Houlton Cable, Plaintiff, Appellant, v. TOWN OF HOULTON, Defendant, Appellee.

No. 01-1787.

United States Court of Appeals, First Circuit.

Heard December 3, 2001.

Decided March 13, 2002.

Roy T. Pierce, with whom Bruce C. Gerrity, and Preti, Flaherty, Beliveau, Pachios & Haley, LLC were on brief, for appellant.

Patrick J. Scully, with whom Joseph J. Hahn, Kate S. Debevoise and Bernstein, Shur, Sawyer & Nelson, P.A. were on brief, for appellee.

Before TORRUELLA, LYNCH, and LIPEZ, Circuit Judges.

LIPEZ, Circuit Judge.

This suit arises out of a dispute over a cable franchise for the Town of Houlton, Maine ("Town"). In early 1999, the Town decided not to renew the franchise held by NEPSK, Inc., d/b/a Houlton Cable ("Houlton Cable"). Instead, it sought competitive proposals for a new cable franchise, and eventually awarded the franchise to Houlton Cable's competitor, Pine Tree Cablevision Associates ("Pine Tree"). Houlton Cable then commenced this suit against the Town, alleging multiple violations of the Cable Communications Policy Act of 1984, as amended by the Cable Television Consumer Protection and Competition Act of 1992 and the Telecommunications Act of 1996 (codified in pertinent part at 47 U.S.C. §§ 521-573) (the "Act"). The district court granted the Town's motion for judgment on the pleadings as to two counts of the complaint, based on Houlton Cable's failure to respond to the motion as required by District of Maine Local Rule 7(b). Several months later, the court entered summary judgment for the Town on the remaining count of the complaint. Houlton Cable challenges both decisions. We affirm.

I.

On April 23, 1984, the Town entered into a cable franchise agreement with Houlton Cable's predecessor, Houlton CATV, Inc.¹ The franchise ran for a period of 15 years, and was set to expire in April of 1999. Under federal law, 47 U.S.C. § 546(a)-(g), Houlton Cable was entitled to initiate formal renewal procedures by submitting a written request to the Town between April and October, 1996. If neither Houlton Cable nor the Town took action within that six-month window, the renewal process would be governed by the informal procedures set out in § 546(h).

Houlton Cable submitted a renewal proposal in November, 1997, well after the expiration of the six-month period for initiation of formal procedures. For several months, the Town took no action on the proposal. Then, in April of 1998, the Town Council voted to "invite new applications for the Houlton Cable franchise." Consistent with the informal renewal procedures prescribed by § 546(h), the Town scheduled a public hearing to address the cable franchise issue. Following that hearing, in February of 2000, the Town Council decided not to renew Houlton Cable's franchise and to solicit bids from other providers. Minutes from the public hearing and the Town Council's subsequent meeting indicate that Houlton Cable's refusal to provide high-speed Internet access to its subscribers was a major factor in the Town's decision to reject the renewal proposal.

On March 31, 2000, the Town issued a Request for Proposals ("RFP") soliciting proposals for a new, ten-year cable franchise. As the RFP made clear, the Town did not believe it could support more than one franchise. Although it had not undertaken any detailed analysis of the issue, the Town was aware that no municipality in Maine — including those much larger than Houlton — was served by more than one cable company. Accordingly, the Town explained in the RFP that it planned to award only one franchise:

The Town of Houlton recognizes that it cannot award an exclusive cable television franchise to any applicant. Nevertheless, the Town also recognizes that the Town of Houlton can only feasibly support one cable television franchise at one time. Accordingly, the Town intends to award only one cable television franchise during the next ten year period, which will be the franchise as a result of this RFP process.

The Town received proposals from two parties, Houlton Cable and Pine Tree. After considering both proposals, the Town determined that Pine Tree's "most closely [met] the needs of the Town as determined by public surveys and [the earlier] public hearing." At a meeting in May, 2000, the Town Council voted to reject Houlton Cable's proposal, and to pursue negotiations with Pine Tree.

Houlton Cable then initiated this suit against the Town. Count I of its complaint alleged that the Town violated the Act by failing to comply with the formal renewal procedures set forth in § 546(a)-(g). Count II alleged that the Town had conditioned the renewal of Houlton Cable's franchise on Houlton Cable's willingness to provide high speed internet service to its subscribers. Such a demand, Houlton Cable maintained, violated 47 U.S.C. § 541(b)(3)(D), which prohibits franchising authorities from requiring cable operators to provide certain "telecommunication service[s]" as a condition of a franchise award, and 47 U.S.C. § 544(e), which states that "[n]o State or franchising authority may prohibit, condition, or restrict a cable system's use of any type of ... transmission technology." Finally, Count III alleged that the Town unreasonably refused to award Houlton Cable a "second" franchise, in violation of 47 U.S.C. § 541(a)(1).

After answering the complaint, the Town moved under Fed.R.Civ.P. 12(c) for judgment on the pleadings as to Counts I and II. With respect to Count I, the Town argued that, since neither Houlton Cable nor the Town had initiated formal renewal procedures during the six-month window, the renewal process properly was governed by the informal procedures authorized by § 456(h). In response to Count II, the Town contended that the Act did not apply retroactively to invalidate the terms of the 1984 Franchise Agreement, which provided that the decision as to renewal was committed to the Town's discretion, and would be based in part on "the development of cable services." In the alternative, the Town argued that high-speed internet access is neither a "telecommunication service" nor a "transmission technology," and therefore is not governed by §§ 541(b)(3)(D)(a) and 544(e) of the Act.

Pursuant to Local Rule 7(b) of the District of Maine, Houlton Cable was obligated to respond to the Town's motion within ten days.² Houlton Cable did not so respond, and, accordingly, was deemed to have consented to the motion. Thus, on December 7, 2000 — one day after the ten-day period had expired — the district court entered judgment for the Town on Counts I and II "per Local Rule 7(b)."

Houlton Cable filed a motion under Fed. R.Civ.P. 59(e), asking the court to reconsider and vacate its December 7 judgment. It argued that the district court could not enter judgment on the pleadings without first satisfying itself that the Town was in fact entitled to judgment as a matter of law. The court granted the motion for reconsideration, but reaffirmed its initial judgment. Rule 12(c), the court noted, does not prescribe any particular standard of decision; therefore, it does not prohibit the entry of judgment on the basis of noncompliance with a local waiver rule, without consideration of the merits of the motion. Given the absence of a direct conflict between Federal Rule 12(c) and Local Rule 7(b), the court concluded that it was entitled to enforce its local rule strictly.

The Town then moved for summary judgment on Count III of Houlton Cable's complaint, arguing that the provisions of § 541(a)(1) governing applications for a second, competitive franchise did not apply to the Town's choice to award an initial franchise to one provider rather than another. The court³ agreed, and entered judgment for the Town on Count III. Houlton Cable filed a timely notice of appeal, challenging the district court's December 7 grant of judgment on the pleadings as to Counts I and II, its refusal to rescind that judgment under Rule 59(e), and its grant of summary judgment on Count III.

II.

We turn, first, to the district court's decisions with respect to Counts I and II. In granting the Town's motion for judgment on the pleadings, the court relied on District of Maine Local Rule 7(b), which then provided:

Unless within ten (10) days after the filing of a motion the opposing party files written objection thereto, incorporating a memorandum of law, the opposing party shall be deemed to have waived objection.

Houlton Cable conceded that it did not comply with that rule, and that its failure to file a timely response did not constitute "excusable neglect," permitting reconsideration under Fed.R.Civ.P. 60(b)(1). Thus, Houlton Cable sought relief under Fed. R.Civ.P. 59(e) on the ground that the district court's judgment was based on an error of law. See Acevedo-Villalobos v. Hernandez, 22 F.3d 384, 390 (1st Cir.1994) (explaining that Rule 59(e) is the proper vehicle for a party seeking to overturn a judgment on the basis of alleged legal errors). Maintaining that Rule 12(c) requires a decision on the merits, it argued that the district court erred as a matter of law when it granted the Town's motion for judgment on the pleadings solely on the basis of a local "deemed waiver" rule like Rule 7(b).

Houlton Cable renews that argument on appeal. We review the district court's initial application of its local rule for abuse of discretion. CMM Cable Rep, Inc. v. Ocean Coast Props., Inc., 97 F.3d 1504, 1528 (1st Cir.1996). We apply the same standard to the district court's denial of a Rule 59(e) motion to alter or amend the judgment. See Williams v. Poulos, 11 F.3d 271, 289 (1st Cir.1993). However, the court's interpretation of Rule 12(c) of the Federal Rules of Civil Procedure presents a legal question, which we review de novo. See Sec. & Exch. Comm'n v. Sargent, 229 F.3d 68, 79 (1st Cir.2000).

Local Rule 7(b) and its predecessor, District of Maine Local Rule 19(c), have been in existence for almost 20 years.⁴ Courts in...