Tc Systems Inc. v. Town of Colonie, New York
| Decision Date | 16 May 2003 |
| Docket Number | No. 1:00-CV-1972 FJS/RFT.,1:00-CV-1972 FJS/RFT. |
| Citation | 263 F.Supp.2d 471 |
| Parties | TC SYSTEMS, INC. and TELEPORT COMMUNICATIONS NEW YORK, Plaintiffs-Counter-Defendants, v. TOWN OF COLONIE, NEW YORK Defendant-Counter-Claimant. |
| Court | U.S. District Court — Northern District of New York |
Whiteman Osterman & Hanna, Albany, Attorneys for Plaintiffs-Counter-Defendants, Neil L. Levine, Esq. Cole, Raywid & Braverman, L.L.P., Washington, D.C., Attorneys for Plaintiffs-Counter-Defendants, Robert G. Scott, Jr., Esq, T. Scott Thompson, Esq.
Town of Colonie, Office of the Town Attorney, Newtonville, Attorneys for Defendant-Counter-Claimant, Danielle Demers, Esq.
Miller & Van Eaton, P.L.L.C, Washington, D.C, Attorneys for Defendant^Counter-Claimant, William Malone, Esq, Matthew C. Ames, Esq, Marci L. Frischkorn, Esq, of Counsel.
Plaintiffs-Counter-Defendants TC Systems, Inc. and Teleport Communications New York (collectively, "Plaintiffs" or "TCG") commenced this action on December 22, 2000, against Defendant^Counter-Claimant Town of Colonie, New York ("Defendant" or "the Town"), alleging that the Town's Local Law No. 13 of 1999 ("Local Law No. 13") and Draft Franchise Agreement ("Draft Franchise") violate both state and federal law. Specifically, Plaintiffs' Amended Complaint contains twelve causes of action asserting various violations of § 253 of the Federal Telecommunications Act of 1996 (the "TCA"), New York State law and the United States Constitution.
In response to Plaintiffs' Amended Complaint, Defendant filed counterclaims alleging that Plaintiffs have violated Section 27 of the New York Transportation Corporations Law ("Section 27") and Local Law No. 13.
Plaintiffs are wholly owned subsidiaries of AT & T corporation. Plaintiff TC Systems, Inc. ("TC Systems") is a provider of telephone and telecommunications services and, as such, is classified as a Transportation Corporation under New York Transportation Corporations Law.1 Plaintiff TC Systems is authorized to erect, construct, own, use and maintain lines for telephone purposes within the State of New York under New York Transportation Corporations Law. See N.Y. Transp. Corp. Law §§ 2, 25, 27 (McKinney 2002).2 Plaintiff Teleport Communications New York ("TC New York") is a New York General Partnership organized under the laws of New York State. TC New York provides telephone and telecommunications services to the public.
In August 1999, TC Systems applied for permission to construct and operate facilities for the provision of telephone and telecommunications services within the Town pursuant to the Town's then-existing laws. Subsequently, in November 1999, the Town adopted Local Law No. 13, which implemented regulations governing the issuance of franchises to construct, operate and maintain facilities for the provision of telecommunications services within the Town. See Local Law No. 13. Under the terms of Local Law No 13, telecommunications providers are required to obtain a franchise from the Town as a prerequisite to using or occupying the Town's rights-of-way as well as installing, constructing, operating or maintaining equipment in the Town's rights-ofway.
On or about September 11, 2000, in an attempt to facilitate the initiation of construction during the pendency of its application, TC Systems sent the Town a proposed interim agreement which the Town subsequently rejected. By letter dated September 22, 2000, the Town informed TC Systems that it had misplaced its application and requested that TC Systems submit another application pursuant to Local Law No. 13. TC Systems did not resubmit the application as requested. It is undisputed that TC New York has never submitted an application for a franchise or license to the Town.
Pursuant to Local Law No. 13, because Plaintiffs do not have the mandatory franchise, they are prohibited from using, occupying, or constructing facilities in the Town's rights-of-way. However, notwithstanding their failure to procure a franchise, Plaintiffs concede that they are currently providing telecommunications services to at least one customer in the Town. Moreover, Plaintiffs admit that some of their facilities were constructed within the Town as early as 2001.3
The present motions concern the validity of Local Law No. 13 and the Town's Draft Franchise, as well as Plaintiffs' unauthorized usage of the Town's rights-of-way.
Local Law No. 13 prohibits any telecommunications provider from (1) using or occupying the Town's rights-of-way, (2) installing, constructing, operating and maintaining equipment in the rights-of-way, and (3) offering telecommunications services for sale or resale to any other person without a franchise and/or license granted by the Town. See Local Law No. 13, § 173-3(B).
Pursuant to Local Law No. 13, in order to obtain a franchise from the Town, a telecommunications provider must complete an application form which must include, inter alia, (1) the applicant's name, address, and telephone number; (2) a description of the telecommunications services proposed to be provided; (3) a description of the proposed franchise and/or license area or a description of the specific rights-of-way and/or portions thereof proposed to be used; (4) a proposed construction schedule; (5) plans and profiles showing the proposed location of the telecommunications system and all existing utilities within the rights-of-way; (6) the ownership of the applicant and identification of all affiliated persons; and (7) an engineer's estimated cost of the proposed project. See id. at § 173-6(C). There is also a non-refundable application fee. See id. at § 173-6(D).
Completed applications are then in the hands of the Department of Public Works (the "DPW"), which "may then consider" such factors it deems "appropriate in the public interest," provided that such factors are "consistent with applicable law," including, inter alia, (1) the applicant's legal, financial, technical and other appropriate qualifications; (2) the applicant's ability to maintain the property of the Town in good condition throughout the term of the franchise or license; (3) any services or uses of the rights-of-way that may be precluded by the grant of the franchise or license; (4) the adverse impact of the proposed franchise or license on the efficient use of the rights-of-way or utilities in the present and the future; (5) the applicant's willingness and ability to meet construction and physical requirements and town highway and drainage standards and to, abide by all lawful conditions, limitations, requirements and policies with respect to the franchise or license; (6) the adequacy of the terms and conditions of the proposed franchise agreement or license to protect the public interest, consistent with applicable law; and (7) any other public interest factors or considerations that the Town has a lawful right to consider and that the Town deems pertinent for safeguarding the interests of the Town and the public. See id. at § 173-7. The DPW is then empowered to make "such investigations and take ... such other steps as the town deems necessary or appropriate to consider and act on applications for franchises[.]" Id. at § 173-8. The DPW "may [also] require the applicant to furnish additional information[.]" Id.
The applicant and the Town will then negotiate an agreement in accordance with the Local Law. See id. at § 173-9. However, the Town may still "reject any application which is incomplete or otherwise fails to comply with applicable law[s], ... rules, [and] regulationsf.]" Id. A public hearing will then be held and then, upon completion of these steps, "the Town Board may grant or deny the franchise ... and may specify the conditions under which the franchise or license is granted." Id. at § 173-10(B).
Once the Franchise Agreement is executed and approved, it is subject to several conditions and requirements. Most notably, § 173-11(B) enumerates the records/reports that the franchisee must provide to the Town, including an outside audit of revenue for the system in the Town and "such other information relating to the franchisee or licensee as the town may consider useful." Id. at § 17311(B)(1)-(9). Further, pursuant to Local Law No. 13, the franchisee is required to "keep the town fully informed as to all matters in connection with or affecting the installation, construction, reconstruction, removal, maintenance ... and repair of [the] franchisee's ... telecommunications system, franchisee's accounting methods ... and the recording and reporting by franchisee of all revenues[.]" Id. at § 173-11(B).
Local Law No. 13 also requires a provider to obtain the Town's consent prior to any assignment or transfer of a franchise. Local Law No. 13 further provides that such an assignment or transfer will occur "only on such conditions as may therein be prescribed." Id. at § 173-11(E)(2).
Finally, Local Law No. 13 contains a fee provision that requires a franchisee to pay $5,000 or 5% of gross revenues, whichever is greater. See id. at § 173-13.
Plaintiffs also challenge provisions of the Draft Franchise that the Town seeks to impose on all prospective telecommunications providers. Plaintiffs challenge the Draft Franchise's material terms and conditions including, inter alia, the provisions that (1) restate the requirements of Local Law No. 13, (2) require Plaintiffs to give the Town two dark single model fiber conductors and pay all third-party costs that the Town has incurred during the franchise process, (3) require Plaintiffs to waive their right to any claim or proceeding challenging the terms of the Local Law or Draft Franchise as a prerequisite to obtaining a franchise, and (4) reserve the Town's right to terminate the franchisee's service at any time.
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