Springfield Television, Inc. v. City of Springfield, Mo.

• Decision Date: 12 June 1972
• Docket Number: No. 71-1590.,71-1590.
• Parties: SPRINGFIELD TELEVISION, INC., a Missouri Corporation, et al., Appellants, v. The CITY OF SPRINGFIELD, MISSOURI, a Municipal Corporation, et al., Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

462 F.2d 21 (1972)

SPRINGFIELD TELEVISION, INC., a Missouri Corporation, et al., Appellants, v. The CITY OF SPRINGFIELD, MISSOURI, a Municipal Corporation, et al., Appellees.

No. 71-1590.

United States Court of Appeals, Eighth Circuit.

Submitted February 18, 1972.

Decided June 12, 1972.

Richard Farrington, Farrington, Curtis & Strong, John K. Hulston, Springfield, Mo., for appellants.

Joseph E. Stevens, Jr., Lathrop, Koontz, Righter, Clagett, Parker & Norquist, Gary S. Dyer, Kansas City, Mo., Neale, Newman, Bradshaw & Freeman, F. B. Freeman, Don G. Busch, Springfield, Mo., for appellees.

Before MATTHES, Chief Judge, and LAY and ROSS, Circuit Judges.

LAY, Circuit Judge.

This is the second appeal to this court arising out of the competitive struggle over the grant of a CATV franchise by the City of Springfield, Missouri, to the International Telemeter of Springfield Corporation. The plaintiffs are: (1) Springfield (Mo)-CATV, Inc., a Missouri corporation authorized by its corporate charter to operate a community antenna television (CATV) system; (2) Springfield Television, Inc., and Independent Broadcasting Company, Inc., two separate television broadcasting stations licensed by the FCC to operate separate television stations in the City of Springfield, Missouri; and (3) four individuals who are registered voters and taxpayers of the City of Springfield. The first named plaintiff (Springfield (Mo)-CATV) is owned in equal parts by the other two corporate plaintiffs and was formed specifically for the purpose of obtaining the franchise to provide the City of Springfield with CATV service. The four individuals named are stockholders and some are directors of the two broadcasting stations.

The amended complaint alleges that the Springfield City Council passed two resolutions and Special Ordinance No. 15121 by which a franchise was granted to International Telemeter. This ordinance was originally challenged on several grounds, basically, that it was invalid because it sought to regulate an area of interstate communication preempted by the Communication Act of 1934 and certain specified FCC regulations; that it was repugnant to the United States Constitution since it placed an undue burden on interstate commerce; and that it violated the Establishment Clause of the First Amendment. A pendent state claim challenges the grant of the franchise as exceeding the city's authority because of failure to comply with the public election requirement contained in the enfranchising provision of the Springfield City Charter. Plaintiffs seek a declaratory judgment declaring the ordinance invalid and an injunction prohibiting the City of Springfield, its City Council members and International Telemeter from enforcing or implementing the ordinance and franchise grant.

The suit was originally dismissed by the district court on the grounds that federal jurisdiction was lacking. On appeal this court reversed with Chief Judge Matthes observing:

"The district court has jurisdiction to explore fully appellants\' preemption claim and, because of that, to consider also the other allegations of deprivation of rights protected by the United States Constitution. As to the remaining claims arising under the Missouri constitution and laws and the Charter of the City of Springfield, the district court should be guided on remand by the principles expressed in United Mine Workers of America v. Gibbs 383 U.S. 715, supra, 721-729, 86 S.Ct. 1130 16 L.Ed.2d 218, concerning Federal pendent juridiction of state claims." Springfield Television, Inc. v. City of Springfield, Mo., 428 F.2d 1375, 1380-1381 (8 Cir.1970). (Emphasis ours.)

On remand the parties limited the factual and legal issues to be presented to the district court by stipulation. According to this agreement only the two federal constitutional claims and the pendent state claim concerning compliance with the city charter were submitted for decision. The district court again dismissed the suit finding that both the corporate and individual parties lacked the standing necessary to raise the submitted federal constitutional issues. However, the district court "in order to complete the record and attempt to avoid the necessity of another remand" passed on the merits of all of the issues presented in the stipulation. The district court found there was no legal merit to either of the federal claims raised and further held that the election requirement of the city charter did not apply since the CATV system was not a "public utility" within the meaning of the election provision. Thus, the district court based its dismissal of the complaint on the merits as well. This appeal followed.

Although we require a reversal of the judgment on the non-federal claim, we must first be satisfied that there exists a justiciable federal claim to support pendent jurisdiction. Although we left the issue of standing open on the first appeal, we indicated sufficient facts had been alleged in the complaint so as to provide standing on the federal preemption issue. The corporate plaintiffs allege a direct economic injury¹ and it is our appraisal that the FCC regulations seek to protect the "zone of interest" within which these plaintiffs operate.² See Association of Data Processing Service v. Camp, 397 U.S. 150, 90 S.Ct. 827, 25 L.Ed.2d 184 (1970), and Investment Company Institute v. Camp, 401 U.S. 617, 620, 91 S.Ct. 1091, 28 L.Ed.2d 367 (1971).

The district court apparently felt that since the parties chose not to present the preemption issue on remand, standing could only be measured in terms of the submitted federal constitutional issues.³ However, this ruling misconstrues the effect of the stipulation. As we view the stipulation, it served only as an agreement to put aside and not press the preemption issue as a possible basis of recovery. Cf. United States v. Reading Co., 289 F.2d 7, 9 (3 Cir.1961). The effect of such a stipulation is that plaintiffs have chosen to forgo their opportunity to litigate the preemption issue and are willing to rely solely on the remaining claims. Such an agreement in no way removes the jurisdictional predicate upon which this court originally based its decision. Thus, the standing which plaintiffs had on this federal claim continued after the remand and stipulation. However, even if the stipulation in effect dismissed the preemption claim from the lawsuit, under recent application of the principles relating to the exercise of pendent jurisdiction, we find that the state claim remained within the court's jurisdiction. See Rosado v. Wyman, 397 U.S. 397, 90 S.Ct. 1207, 25 L.Ed.2d 442 (1970);⁴ Gray v. International Ass'n of Heat & F.I. and A.W.L. No. 51, 447 F.2d 1118 (6 Cir.1971); Gem Corrugated Box Corp. v. National Kraft Container Corp., 427 F.2d 499 (2 Cir.1970); cf. Ryan v. J. Walter Thompson Co., 453 F.2d 444 (2 Cir.1971).

Having found standing on the federal issue we must now consider the appellees' complaint that the plaintiffs lack standing to raise the pendent issue of the validity of the ordinance's enactment. The city charter requires that every ordinance which grants a "public utility franchise" must be submitted to the vote of the electorate of the City of Springfield. The complaint alleges that CATV is a "public utility" within the meaning of the charter and that therefore Special Ordinance No. 15121 is invalid since it was not voted upon by the people before enactment. Plaintiffs' standing on this pendent issue does not depend upon whether the CATV franchise is in fact a "public utility franchise." Plaintiffs need only allege that they are within the zone of interests protected by the election requirement. Investment Company Institute v. Camp, 401 U.S. at 620, 91 S.Ct. 1091. We think they have done this here. The primary beneficiary of the election requirement is the electorate of the City of Springfield.⁵ However, in line with the broad interpretation given by the Supreme Court to Section 4 of the Bank Service Corporation Act of 1962 in Data Processing, supra, and the expansive view taken of the protective scope of the licensing requirement at issue in Chicago v. Atchison, Topeka & Santa Fe R. Co., 357 U.S. 77, 78 S.Ct. 1063, 2 L.Ed. 2d 1174 (1958), we find that the charter provision here may also be said to evidence an intent to protect these corporate plaintiffs' interest as well. Such an election provides competitors with an opportunity to campaign against enfranchising new enterprises.⁶ We conclude this interest is protected by the charter provision and provides sufficient adversity to give standing here.

We turn now to the merits of the pendent claim.

Plaintiffs assert that the Special Ordinance which grants the franchise in question was invalidly passed since it was not submitted to the vote of the electorate of the City of Springfield. Article XVII of the Springfield City Charter reads:

"Section 17.1. Granting franchises.

"All public utility franchises and all renewals, extensions and amendments thereof shall be granted only by ordinance. No such ordinance shall be adopted within less than thirty days after application therefor has been filed with the council, nor until a full public hearing has been held thereon. No such ordinance shall become effective until it has been submitted to the electors and has been approved by a majority of the electors voting thereon.

"No ordinance shall be submitted at an election less than sixty days after the grantee named therein has filed its unconditional acceptance of such franchise, and it shall not be submitted to a special election unless the expense of holding the election, as determined by the council, shall have been paid into the city treasury by the grantee. No exclusive franchises shall ever be granted, and no franchise shall be granted for a longer term than 20 years. No such franchise shall be transferable directly or indirectly, except with the approval of the council expressed by ordinance after a

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