Tcg Detroit v. City of Dearborn

• Decision Date: 14 August 1998
• Docket Number: No. 96-CV-74338-DT.,96-CV-74338-DT.
• Citation: 16 F.Supp.2d 785
• Parties: TCG DETROIT, Plaintiff, v. CITY OF DEARBORN, Defendant and Third-Party Plaintiff, v. AMERITECH MICHIGAN, Third-Party Defendant.
• Court: U.S. District Court — Eastern District of Michigan

16 F.Supp.2d 785

TCG DETROIT, Plaintiff, v. CITY OF DEARBORN, Defendant and Third-Party Plaintiff, v. AMERITECH MICHIGAN, Third-Party Defendant.

No. 96-CV-74338-DT.

United States District Court, E.D. Michigan, Southern Division.

August 14, 1998.

Richard C. Marsh, Clark Hill, Detroit, MI, for TCG Detroit, a New York general partnership, Plaintiff & Counter-Defendant.

John W. Tanner, III, Debra C. Walling, Dearborn City Legal Department, Dearborn, MI, William Malone, Miller, Canfield, Washington, DC, for City of Dearborn, Defendant, Counter-Claimant & Third-Party Plaintiff.

William D. Parsley, Gary L. Field, Loomis, Ewert, Lansing, MI, for Telephone Association of Michigan, Movant.

Joseph A. Fink, Peter H. Ellsworth, Dickinson, Wright, Lansing, Bruce R. Byrd, Dickinson, Wright, Detroit, MI, for Ameritech Michigan, a successor of Michigan Bell Telephone, for Third-Party Defendant.

MEMORANDUM OPINION AND ORDER

ZATKOFF, District Judge.

I. INTRODUCTION

This matter is before the Court on cross-motions for summary judgment, filed by all of the parties, pursuant to Fed.R.Civ.P. 56. Responses and replies have been filed. The Court finds that the facts and legal arguments are adequately presented in the parties' briefs and the decisional process would not be significantly aided by oral argument. Therefore, pursuant to E.D. Mich. Local R. 7.1(e)(2), it is hereby ORDERED that the motions be resolved on the briefs submitted. For the reasons set forth below, Plaintiff's motion is denied and Defendant's motion is granted. Additionally, the Third-party Plaintiff's motion is denied and the Third-party Defendant's motion is granted.

II. BACKGROUND

Plaintiff, TCG Detroit (hereinafter "TCG"), is a telecommunications provider licensed by the Michigan Public Service Commission to provide basic local telecommunications service in certain areas of Southeastern Michigan, including within the city limits of the Defendant, City of Dearborn (hereinafter "City" or "Dearborn"). TCG competes with Ameritech, the incumbent local exchange carrier.

TCG, although presenting owning no facilities in Dearborn's public right-of-ways, planned to construct, install and maintain facilities within the city limits of Dearborn. These facilities were to be constructed in electrical conduit in Detroit Edison's right-of-way. Pursuant to a contract entered into on February 17, 1994, between Detroit Edison and TCG, TCG agreed to install for Edison, fiber optic cable in Edison's inner duct, which resides within existing electrical conduit, in Dearborn's right-of-way. Pursuant to the contract, the fiber optic cable as installed by TCG would be owned by Edison but some of the fiber optic cable would be leased back to TCG for it to provide telecommunications services.

According to TCG, when Detroit Edison informed the City of Dearborn of this plan on February 24, 1994, Dearborn objected. It was, and is, Dearborn's position that TCG needed to enter into a franchise agreement before entering into the City's right-of-ways to install facilities providing telecommunications services. Thereafter, in the first quarter of 1995, Detroit Edison stopped the installation of cable by TCG within its conduit until the issue between the City of Dearborn and TCG was resolved. According to the TCG, at the time installation was stopped, approximately 7-8 miles of cables had been installed out of a planned 27 miles.

Dearborn and TCG had been negotiating to settle their dispute since mid-1994. At that time, Dearborn did not have an ordinance with respect to telecommunications. However, on August 16, 1994, while settlement negotiations were progressing, Dearborn did enact such an ordinance requiring telecommunications providers who wished to utilize the City's right-of-ways, to enter into a franchise agreement with the City (Plaintiff's Ex. I). Thereafter, the negotiations between the City and TCG culminated in a negotiated franchise agreement proposal offered by the City, to TCG, in June 29, 1995.

This proposed agreement required TCG to pay Dearborn a franchise fee of 4% of TCG's gross revenues, a $50,000 one time payment (in lieu of providing the City with four fiber optic strands), and up to $2500 of the costs incurred by the City of Dearborn in connection with granting the franchise. In addition, the proposal called for TCG, if it should ever install its own conduit within the City, to install an inner conduit for use by the City (City's Ex. 8). TCG's regional counsel responded by letter dated September 22, 1995, wherein he agreed with the substance of the proposal, while noting some minor changes (City's Ex. 10).

While these talks between the City and TCG were being conducted, Congress enacted the Federal Telecommunications Act (FTA), 47 U.S.C. § 253, effective February 6, 1998, which made significant changes to the telecommunications laws. Thus, Plaintiff, TCG, felt that this Act conflicted with the authority of the City to require the franchise agreement it sought to have TCG enter into. Accordingly, TCG rejected the franchise proposal which it had preliminarily negotiated with the City. After continuing talks were unsuccessful, TCG filed the present suit alleging that the City of Dearborn ordinance requiring telecommunications providers to enter into a franchise agreement is in violation of the Act. In addition, the Plaintiff claimed that the City's actions violated the Michigan Telecommunications Act, M.C.L. § 484.2251, as well. The Court struck the state claim, thus the only claims pending before the Court concerns the federal claims relating to the Federal Telecommunications Act.

Additionally, Plaintiff alleges that prior to the institution of this suit, the City of Dearborn was discriminating in favor of the incumbent local carrier, Ameritech, by not requiring it to enter into a franchise agreement. However, once TCG filed suit, Dearborn approached Ameritech about entering into a franchise agreement. Ameritech rejected that request and Dearborn filed a third-party action against Ameritech for refusing to enter into such an agreement. That claim is the subject of currently pending motions which will be addressed separately in this opinion infra. Nonetheless, this forms the basis of TCG's claim against the City of Dearborn that the City was discriminating against it by not requiring Ameritech, at least initially, to enter into a franchise agreement.

In addition, the Court notes that this is a case of first impression. The Sixth Circuit has not had an opportunity to address the issues before this Court, or the Federal Telecommunications Act of 1996 in general.

III. STANDARD OF REVIEW

Summary judgment is appropriate only where no genuine issue of material fact remains to be decided and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). A genuine issue of material fact exists when "there is sufficient evidence favoring the non-moving party for a jury to return a verdict for that party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986) (citations omitted). In applying this standard, "the Court must view all materials offered in support of a motion for summary judgment, as well as all pleadings, depositions, answers to interrogatories, and admissions properly on file in the light most favorable to the non-moving party." Id. 106 S.Ct. at 2510. Where "the moving party has carried its burden under 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986) (footnote omitted); Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986).

IV. OPINION

A. TCG v. City of Dearborn

Plaintiff, TCG, alleges that Dearborn's regulatory ordinance, and the way it is being applied to them, is in violation of the Federal Telecommunications Act of 1996. Specifically, TCG's suit alleges that the City of Dearborn's requirements are in violation of 47 U.S.C. § 253(a) (Count I) and 253(c) (Count II). In addition, Plaintiff brings a § 1983 claim as well (Count III). TCG requests, inter alia, that the Court declare the City of Dearborn's ordinance invalid, enjoin Dearborn from enforcing its ordinance, direct Dearborn to issue it a license, and award it damages, costs and attorney fees.

In Counts I and II of its complaint, TCG alleges that the City of Dearborn's ordinance, and the way it's applied, violates 47 U.S.C. § 253 on the grounds that: (1) the compensation is not fair and reasonable under the Act, (2) the City is not requiring compensation in a competitively neutral and nondiscriminatory manner, and (3) the City's ordinance is in violation of the Act because it has the effect of prohibiting Plaintiff's entry into the market. The statute at issue provides as follows:

(a) IN GENERAL

No State or local statute or regulation, or other State or local legal requirement, may prohibit, or have the effect or prohibiting the ability of any entity to provide any interstate or intrastate telecommunications service.

(b) STATE REGULATORY AUTHORITY

Nothing in this section shall affect the ability of a State to impose, on a competitively neutral basis and consistent with section 254 of this section, requirements necessary to preserve and advance universal service, protect the public safety and welfare, ensure the continued quality of telecommunications services, and safeguard the rights of consumers.

(c) STATE AND LOCAL GOVERNMENT AUTHORITY

Nothing in this section affects the authority of a state or local government to manage the public rights-of-way or to require fair and reasonable compensation from telecommunications providers, on a competitively neutral and nondiscriminatory basis, for use of the public rights-of-way on a nondiscriminatory basis, if the compensation required is publicly disclosed by such government.

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