TV Pix, Inc. v. Taylor

• Decision Date: 02 December 1968
• Docket Number: 1827.,Civ. No. 1814
• Citation: 304 F. Supp. 459
• Parties: TV PIX, INC., a corporation, Plaintiff, v. Reese H. TAYLOR, Jr., Noel A. Clark and Evo A. Granata, Commissioners of the Public Service Commission of the State of Nevada, Defendants. WELLS TV, INC., a corporation, Plaintiff, v. Reese H. TAYLOR, Jr., Noel A. Clark and Evo A. Granata, Commissioners of the Public Service Commission of the State of Nevada, Defendants.
• Court: U.S. District Court — District of Nevada

304 F. Supp. 459

TV PIX, INC., a corporation, Plaintiff, v. Reese H. TAYLOR, Jr., Noel A. Clark and Evo A. Granata, Commissioners of the Public Service Commission of the State of Nevada, Defendants.

WELLS TV, INC., a corporation, Plaintiff, v. Reese H. TAYLOR, Jr., Noel A. Clark and Evo A. Granata, Commissioners of the Public Service Commission of the State of Nevada, Defendants.

Civ. Nos. 1814, 1827.

United States District Court D. Nevada.

December 2, 1968.

Paul A. Richards, Reno, Nev., McMillan and Browning, Salt Lake City, Utah, for plaintiffs.

Harvey Dickerson, Atty. Gen. of Nevada, for defendants.

Before MERRILL, Circuit Judge, FOLEY and THOMPSON, District Judges.

OPINION

THOMPSON, District Judge:

This three judge court was convened to consider the constitutionality of an act of the Legislature of the State of Nevada which unambiguously and unequivocally purposes to regulate as public utilities the community antenna television companies in this State.

In the classic mode of utility regulation, the Nevada statute declares community antenna television companies to be public utilities N.R.S. 704.020(1) (g), requires a certificate of public convenience and necessity N.R.S. 704.330, 711.090, 711.100, 711.130, requires just and reasonable rates under supervision of the Public Service Commission N.R. S. 704.040 et seq., compels safe and adequate service and facilities N.R.S. 711.150, and other incidental requirements Nevada Community Antenna Television System Law, 1967 St. 1231 et seq.; N.R.S. 711.010 et seq..

The facts are not in dispute. Plaintiff, TV Pix, Inc., owns and operates community antenna systems in Elko, Carson City and Stateline, Nevada. Plaintiff, Wells TV, Inc., owns and operates a community antenna system in Wells. TV Pix, Inc. owns and maintains certain reception equipment on Spruce Mountain in the State of Nevada by which it receives off-air the signals of the three commercial television stations in Salt Lake City. The signals received by its equipment are delivered by it to a federally regulated common carrier, Trans-American Microwave, Inc., and are transmitted by microwave equipment from the original reception point to the distribution center of plaintiff's systems in Elko and Wells. From such distribution centers, or head-ends, as they are sometimes referred to in the industry, the signals are distributed by means of coaxial cable, signal amplifiers and drop-lines to subscribers to the plaintiffs' services in these communities. Subscribers in Wells and Elko pay to the plaintiff a connection fee and a monthly service fee for the communications services rendered.

Plaintiff TV Pix, Inc. has a separate array of reception and antenna equipment located at Freel Peak in California. Such equipment picks up the signals of Stations KTVU, Oakland; KPIX, San Francisco; KVIE, Sacramento; KGO, San Francisco; KCRA, Sacramento; and KOVR, Sacramento. The signals are delivered from the plaintiff's reception equipment to microwave transmitting equipment owned by a common carrier licensed by the FCC, which transmits such signals to the distribution points of the TV Pix, Inc. CATV systems in Carson City, Nevada and in Tahoe, California. The signals are distributed in Carson City by a series of cables, amplifiers and drop-lines to the plaintiff's customers. A single community antenna system serves both Stateline, Nevada and the Tahoe-Bijou area of California. The distribution point for this system is located within the State of California.

Plaintiff's systems in Carson City and and in the Stateline-Bijou area also deliver to their subscribers the signals of KOLO and KCRL, Reno. The Reno signals are picked up within the State of Nevada for delivery to the Carson City subscribers. The pick-up point is in California for the system delivering the signals to Stateline-Bijou residents.

It is uncontradicted that the reasonable replacement costs of the various systems owned and operated by the plaintiffs in the State of Nevada greatly exceed the sum of $10,000. The values placed upon these systems by the evidence are as follows:

                Wells          $ 47,500
                Carson City     136,000
                Elko           $125,000
                Stateline        95,000
                

The plaintiffs operate their systems in the Nevada communities pursuant to the contracts and proprietary rights which they have acquired from the owners of the rights of way and telephone poles involved in their business. The City of Elko, for example, has granted to TV Pix, Inc. the right to use its streets, ways, alleys and places within the corporate limits of the City for lines, wires and coaxial cables for the distribution of television and radio signals (Stipulation of Facts, Exhibit 1). Plaintiff has agreed to pay to the City for the rights obtained two per cent of its gross annual receipts arising from the antenna service furnished to its subscribers. The City recited that in granting the rights to the plaintiff, it "is in no way undertaking to supervise or police the business of the grantee nor is the city guaranteeing television reception or the degree of any signal to the residents or any resident of the city * * *" (Exhibit A, p. 4, sec. 10). The plaintiff is required, however, to construct its lines in accordance with the provisions of the National Electric Code (Ibid. sec. 11(a)). TV Pix, Inc. has an agreement with California Pacific Utilities Company relating to the use of telephone poles in Elko (Stipulation of Facts, Exhibit B). It pays a fee to the company based upon the number of poles it uses in the communications services it renders (Ibid. p. 6). Similar arrangements are made with Carson City and Wells for the use of the public streets and the telephone and power companies owning the poles in those communities. Inasmuch as there was no incorporated City at Stateline, no rights were obtained other than from the owners of the utility poles in the area to which the plaintiff's cables were attached.

Plaintiffs pose a three pronged attack against Nevada's proposed regulation of their businesses: That the statute imposes an unconstitutional burden on interstate commerce; that Congress has preempted the field of television communications; and that the statute deprives plaintiffs of their property without due process of law.

In two recent cases, United States v. Southwestern Cable Co., 1968, 392 U.S. 157, 88 S.Ct. 1994, 20 L.Ed.2d 1001, and Fortnightly Corp. v. United Artists, 1968, 392 U.S. 390, 88 S.Ct. 2084, 20 L.Ed.2d 1176, the Supreme Court has thoroughly described the operations and activities of community antenna companies consistently with the conduct of plaintiff companies in the instant case. There is no doubt that plaintiffs are engaged in interstate commerce. "Nor can we doubt that CATV systems are engaged in interstate communication, even where, as here, the intercepted signals emanate from stations located within the same State in which the CATV system operates. We may take notice that television broadcasting consists in very large part of programming devised for, and distributed to, national audiences; respondents thus are ordinarily employed in the simultaneous retransmission of communications that have very often originated in other States. The stream of communication is essentially uninterrupted and properly indivisible. To categorize respondents' activities as intrastate would disregard the character of the television industry, and serve merely to prevent the national regulation that `is not only appropriate but essential to the efficient use of radio facilities.' Federal Radio Comm'n v. Nelson Bros. Co., 289 U.S. 266, 279 53 S.Ct. 627, 77 L.Ed. 1166." United States v. Southwestern Cable Co., supra.

The pristine constitutional issue presented under the commerce clause of the Constitution is whether state regulation as a public utility of a business engaged in interstate commerce is forbidden by the commerce clause itself, regardless of action or inaction by the Congress in implementation of its powers. Plaintiffs argue that the State has no power to prohibit a person from engaging in interstate commerce and that a state statute, which requires a certificate of public convenience and necessity, must fall as an unconstitutional obstruction of commerce. Our review of the authorities does not support this conclusion.

In Gibbons v. Ogden, 1824, 9 Wheat. 1, 6 L.Ed. 23, the Court held that New York legislation, which purported to exclude from the navigable waters of the State vessels licensed under an Act of Congress unless also licensed by state authority was void, but subsequent decisions pioneered by Cooley v. Board of Wardens, 1851, 12 How. 299, 13 L.Ed. 996, have clarified the broad language of Chief Justice Marshall in the Gibbons case, leading the Court in Olsen v. Smith, 1904, 195 U.S. 332, 341, 25 S.Ct. 52, 53, 49 L.Ed. 224, to state the following positive expression of the principle:

"The first contention in effect is that the state was without power to legislate concerning pilotage, because any enactment on that subject is necessarily a regulation of commerce within the provision of the Constitution of the United States. The unsoundness of this contention is demonstrated by the previous decisions of this court, since it has long since been settled that even although state laws concerning pilotage are regulations of commerce, `they fall within that class of powers which may be exercised by the states until Congress has seen fit to act `upon the subject.' Cooley v. Board of Wardens, 12 How. 299 13 L.Ed. 996; Ex parte McNiel, 13 Wall. 236 20 L.Ed. 624; Wilson v. McNamee, 102 U.S. 572 26 L.Ed. 234."

Nevertheless, in Buck v. Kuykendall, 1925, 267 U.S. 307, 45 S.Ct. 324, 69 L.Ed. 623, and the companion case, Bush & Sons Co. v. Maloy, 1925, 267 U.S. 317, 45 S.Ct. 326, 69 L.Ed. 627, the Court voided a Washington public utility regulation of motor truck common carriers in the one case and a similar Maryland statute in the other, stating in the Buck...