Storer Cable Com. v. City of Montgomery, Ala., Civ. A. No. 90-T-958-N.
| Decision Date | 09 October 1992 |
| Docket Number | Civ. A. No. 90-T-958-N. |
| Citation | 806 F. Supp. 1518 |
| Parties | STORER CABLE COMMUNICATIONS, et al., Plaintiffs, v. The CITY OF MONTGOMERY, ALABAMA, et al., Defendants. |
| Court | U.S. District Court — Middle District of Alabama |
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Robert A. Huffaker, Montgomery, Ala., Terry S. Beinstock, James Cunningham, Jr., Miami, Fla., for plaintiffs.
Solomon Seay, Montgomery, Ala., John J. Dalton, June Kirkland, Richard Ford, Alan Shor, James Lamberth, Ralph Greil, Atlanta, Ga., for TNT.
Maury D. Smith, W. Joseph McCorkle, Montgomery, Ala., for City defendants.
Don Siegelman, Stephen Dodd, Mary Culberson, Montgomery, Ala., for State of Ala.
Susan Russ, Bradley Byrne, Tyrone Means, Montgomery, Ala., for MCE.
Several cable television companies have brought this lawsuit challenging the legality of two municipal ordinances, 9-90 and 48-90, enacted by the City of Montgomery, Alabama. Plaintiffs Storer Cable Communications, ESPN, Inc., Satellite Services, Inc., and Turner Network Television contend that the ordinances contravene a number of federal constitutional provisions and statutes as well as Alabama law. They seek declaratory, injunctive, and monetary relief. Jurisdiction is premised on federal-question jurisdiction, 28 U.S.C.A. §§ 1331, 1343, and the doctrine of pendent jurisdiction. The defendants are the City of Montgomery and its mayor; the State of Alabama; and Montgomery Cablevision and Entertainment, Inc., a local cable television operator.
This cause is now before the court on the parties' various motions for summary judgment. For the reasons which follow, the motions will be granted in part and denied in part.
In June of 1976, the City of Montgomery passed Ordinance 50-76 and took its first step in regulating the provision of cable television services within the city. The ordinance requires a cable television operator first to obtain a franchise granted by the city before constructing, operating, or maintaining a cable television system. According to Ordinance 50-76, "no amendment substantially amending the existing rights and obligations of the Grantee shall be adopted without the Grantee's consent." The ordinance also declares that a grantee is at all times "subject to the lawful exercise of the City's police power ... and such reasonable regulations as the City Council may subsequently promulgate thereunder." Finally, the ordinance provides that "No rate established shall afford any undue preference or advantage among subscribers, but separate rates may be established for separate classes of subscribers and rates may reflect the increased cost of providing service to isolated or sparsely populated areas."
In October 1976, the city granted its first cable television franchise, to Storer Cable.1 Since obtaining its franchise, Storer Cable has established a cable system in the city and provides cable programming to the city's residents. The company provides "basic" cable programming to subscribers for a monthly fee.2 Customers may also select to receive additional programming at extra costs. The basic service includes not only the transmission of local and distant television signals but also special cable programs obtained from various cable television "programmers" such as ESPN and Turner Network. Additionally, Storer Cable purchases some programming through intermediates, such as Satellite Services, who have acquired the distribution rights from the various programmers. Storer Cable obtains much of its cable programming through exclusive contracts. For example, the company has exclusive programming contracts with ESPN (for its NFL Football Package), CNBC, Sport-South, and Turner Network. These contracts provide that Storer Cable has the sole rights to transmit designated programming to Montgomery consumers.
For almost 15 years, Storer Cable was the only cable franchisee in Montgomery. In December of 1989, a number of other local citizens incorporated a new cable company, Montgomery Cablevision, to compete with Storer Cable. In early 1990, Montgomery Cablevision applied to the city for a cable franchise. Eventually, in March of 1990, the company was granted a franchise by the city, but during and directly after the consideration process the city passed the two cable regulations, Ordinances 9-90 and 48-90, which are the subject of this litigation. The relevant texts of the ordinances are set out in the margin below.3
Ordinance 9-90 on its face adds to the original anti-price discrimination language of Ordinance 50-76 the following sentence: "In no event shall rates be established so low for any class of subscriber or for any geographic location as to prevent, discourage, restrict, or diminish competition in the furnishing of cable services." The disputed parts of Ordinance 48-90 are §§ 3 through 7. Section 3 appears to be an antitrust provision and generally prohibits cable television exhibitors, distributors and program suppliers from monopolizing or restraining trade in the area of cable television programming or services and from attempting to do so. Section 4 targets specific types of licensing activity by making it unlawful for cable television exhibitors, distributors and program suppliers to conspire to fix or limit the sale or licensing of cable program material or services, or to discriminate against another grantee with respect to such sales or licensing "where the purpose or effect of such ... combination ... is or may be to tend to create a monopoly or to injure, destroy, inhibit, prevent or lessen substantially competition with respect to the provision of cable television service within the City." Section 5 allows the city to terminate the franchise of a grantee should the grantee violate the provisions of ordinance, and § 6 gives injured parties a private right of action for legal and equitable relief. Finally, § 7 of the ordinance provides that, in all actions brought under the ordinance, proof of any one proscribed act creates a presumption that the defendant had the purpose or intent to inhibit, diminish, eliminate, or prevent competition.
In May 1990, prior to the passage of Ordinance 48-90, Montgomery Cablevision wrote to both Turner Network and ESPN demanding that the companies provide it with certain programming which they were licensing to Storer Cable on an exclusive basis in the Montgomery area. Turner Network and ESPN both refused. In September 1990, the plaintiffs — Storer Cable, ESPN, Satellite Services, and Turner Network — brought this lawsuit against the City of Montgomery and its mayor, claiming that the new laws — Ordinances 9-90 and 48-90 — violate the United States Constitution, federal law, and Alabama law. Montgomery Cablevision and the State of Alabama intervened as defendants, and Montgomery Cablevision filed a counterclaim charging the plaintiffs with violations of the Sherman Act, 15 U.S.C.A. §§ 1, 2 and Ordinance 48-90 §§ 3, 4. All parties have now moved for summary judgment on most of the issues raised.
Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment is appropriate where "there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law." A district court must consider "all the evidence in the light most favorable to the non-moving party ... and resolve all reasonable doubts in favor of the non-moving party." Earley v. Champion International Corp., 907 F.2d 1077, 1080 (11th Cir.1990) (citations omitted).
Although the parties essentially agree on the facts underlying this case, important disputed issues have been raised concerning the two ordinances, namely their intended purpose, their proper interpretation, and their impact on the provision of cable services and programming in Montgomery. These issues are discussed in detail below in relation to the arguments advanced by the parties. For the sake of a general understanding of the dispute, however, a few points will be made at this juncture.
First, the parties disagree over what the city's purposes were in enacting the two ordinances and whether those purposes are legitimate. The plaintiffs point to the circumstances surrounding the enactment of the ordinances, including the city counsel's discussions of the ordinances during their deliberations, as support for their position that the ordinances were passed specifically for the benefit of Montgomery Cablevision — to help the local cable company compete against Storer Cable by negating the latter's competitive advantages. Those advantages would include Storer Cable's exclusive programming licensing arrangements and purported ability to undercut Montgomery Cablevision's pricing. The defendants, in contrast, rely on the ordinances' statements of purpose and general language as support for the contention that the enactments are neither intended to target the plaintiffs per se, nor to benefit Montgomery Cablevision. The defendants maintain that the ordinances' overarching purpose is to benefit the public by promoting competition in the local cable industry by prohibiting anti-competitive practices.
As a second and related matter, the parties disagree as to what conduct the ordinances prohibit. The plaintiffs, in some portions of their briefs, contend that both ordinances are unconstitutionally vague and thus give no reasonable notice of the scope of their prohibitions. Alternatively, the plaintiffs read §§ 3, 4, and 7 of Ordinance 48-90 as combining to require programmers to license their programming to all comers and as banning all exclusive licensing agreements between cable exhibitors and suppliers or distributors for the provision of cable programming, or at least as prohibiting the exclusive agreements between the plaintiffs in this case. The defendants, on the other hand, agree that...
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