Westmarc Com. v. Conn. Dept. of Public Utility

• Decision Date: 20 June 1990
• Docket Number: Civ. No. H89-631(AHN).
• Citation: 807 F. Supp. 876
• Parties: WESTMARC COMMUNICATIONS, INC., et al. v. CONN. DEPT. OF PUBLIC UTILITY CONTROL, et al.
• Court: U.S. District Court — District of Connecticut

807 F. Supp. 876

WESTMARC COMMUNICATIONS, INC., et al. v. CONN. DEPT. OF PUBLIC UTILITY CONTROL, et al.

Civ. No. H89-631(AHN).

United States District Court, D. Connecticut.

June 20, 1990.

Allan B. Taylor, Day, Berry & Howard, Hartford, CT, for plaintiffs.

Robert S. Golden, Tatiana D. Sypko, Asst. Attys. Gen., James F. Meehan, Elaine M. Leon, Valerie J. Bryan, Consumer Counsel Office, New Britain, CT, for defendants.

NEVAS, District Judge.

After review and over objection, the Recommended Ruling is approved and adopted.

So ordered.

RECOMMENDED RULING ON PENDING MOTIONS

MARGOLIS, United States Magistrate Judge.

Plaintiffs, Westmarc Communications, Inc. and several of its subsidiaries, are owners and operators of a cable television service provider that operates in Connecticut, under the regulation of defendant Connecticut Department of Public Utility Control ("DPUC"). In their complaint, filed on September 29, 1989, plaintiffs allege that the defendants¹ have regulated plaintiffs' rates for the provision of cable television service, in violation of the Cable Communications Policy Act of 1984 ("Cable Act"), 47 U.S.C. §§ 521-59. Plaintiffs seek injunctive relief, including a declaration that the authority asserted by defendants is preempted by federal law. Defendants argue that this court should either abstain from exercising jurisdiction over this dispute, or find no preemption of defendants' authority as exercised.

On October 23, 1989, the Connecticut Office of Consumer Council ("OCC") filed a motion to intervene as a defendant (Dkt. # 8); this motion was granted by U.S. District Judge Alan H. Nevas on December 7, 1989. On December 26, 1989, defendant DPUC filed a motion to dismiss and brief in support with exhibits,² requesting that the court abstain from hearing this matter. (Dkt. # 13-14). The next day, defendant OCC filed a similar motion and brief in support with exhibits.³ (Dkt. ## 15-16). On January 16, 1990, plaintiffs filed their brief in opposition to these two motions. (Dkt. # 19).

That same day, plaintiffs also filed a motion for summary judgment, brief in support with an exhibit,⁴ Local Rule 9(c) Statement, and affidavit of Dundee Nestler ("Nestler Aff't"), with respect to the preemption issue. (Dkt. ## 20-23). On February 28, 1990, defendant OCC filed its brief in opposition with exhibits.⁵ (Dkt. # 29). That same day, defendant DPUC filed a cross-motion and brief in support with exhibits⁶ on this same issue. (Dkt. ## 27-28). Plaintiffs filed a brief in opposition to this motion, and in reply to their own motion, on March 26, 1990. (Dkt. # 32).

Lengthy oral argument was held on April 23, 1990. With permission of the Court, post-argument briefs were filed by the defendants on May 2, 1990. (Dkt. ## 33-34). For the reasons stated herein, plaintiffs' motion is granted and defendants' motions are denied.

I. FACTUAL BACKGROUND

The parties are in agreement as to the circumstances which gave rise to this litigation. The following facts are drawn from the DPUC Decision.

The instant dispute arose out of a deal in which plaintiffs acquired Taft Cable Partners ("TCP"), adding 210,000 new subscribers in five states to its existing 343,000 subscribers in nine states.⁷ (DPUC Decision at 2). TCP, operating in Connecticut under the name Haystack Cablevision ("Haystack"), served approximately 2,090 subscribers in northwestern Connecticut, and held a Certificate of Public Convenience and Necessity to provide cable television service to the towns of Salisbury, Canaan, North Canaan, Norfolk, Sharon and Cornwall. (Id.)

Under Conn.Gen.Stat. § 16-47,⁸ changes in the control of cable franchises operating within Connecticut may only occur with the approval of defendant DPUC. Plaintiffs applied for such approval on October 25, 1988, and closed the transaction on January 3, 1989, prior to any action by defendant. (Id. at 2-3). Plaintiffs attempted to structure the acquisition so as to delay any transfer of control until DPUC approval was obtained. (Id. at 4). On August 15, 1989, defendant DPUC issued its decision, which approved the acquisition of TCP by plaintiffs, but held that closing the transaction on January 3, 1989 was an ongoing violation of Conn.Gen.Stat. § 16-47, for the 210-day period from January 3 until August 15, 1989. (Id. at 12-13). Under Conn. Gen.Stat. § 16-41,⁹ defendants are empowered to impose fines of up to $5,000 per day for ongoing violations. Due to mitigating factors, a fine of $2,500 per day was imposed on plaintiffs, for an aggregate penalty of $525,000. (DPUC Ruling at 12-13). Defendant's decision provided that "the aggregate fine, a penalty, shall not be chargeable to Connecticut subscribers." See id. at 12, ¶ 7.

On September 8, 1989, plaintiffs filed an appeal in the Hartford Superior Court, making multiple challenges to the validity of defendants' procedures and to the constitutionality of the penalty statute on which the DPUC relied. (State Court Complaint). Plaintiffs also raised their pending claim of federal preemption in the State court. Id. A Stipulation for Partial Stay Pending Appeal was filed in the Superior Court on October 3, 1989, which stayed payment of the civil penalty pending the outcome of the state court appeal. (State Court Stipulation).

II. DISCUSSION

A. Motions to Dismiss

The DPUC's and OCC's motions ask this court to dismiss plaintiff's complaint, under the doctrine of abstention.¹⁰ "The burden placed upon one seeking a stay or dismissal of a federal court action in favor of a state action is a heavy one." Connecticut Fund for the Environment, Inc. v. Upjohn Co., 660 F.Supp. 1397, 1404 (D.Conn.1987) ("CFE"), citing Landis v. North American Co., 299 U.S. 248, 255, 57 S.Ct. 163, 166, 81 L.Ed. 153 (1936).¹¹ There is a "virtually unflagging obligation of the federal courts to exercise the jurisdiction given them." Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 817, 96 S.Ct. 1236, 1246, 47 L.Ed.2d 483, reh. denied, 426 U.S. 912, 96 S.Ct. 1236, 48 L.Ed.2d 839 (1976). A federal court may abstain from adjudicating a claim only if it can thereby

(1) avoid deciding an issue of federal constitutional law by allowing a state court to resolve an issue of state law, see Railroad Comm'n of Texas v. Pullman Co., 312 U.S. 496 61 S.Ct. 643, 85 L.Ed. 971 (1941); (2) avoid interfering with the conduct of ongoing state court proceedings, see Younger v. Harris, 401 U.S. 37 91 S.Ct. 746, 27 L.Ed.2d 669 (1971); Pennzoil Co. v. Texaco Inc., 481 U.S. 1, 107 S.Ct. 1519, 95 L.Ed.2d 1 (1987); or (3) avoid resolving difficult state law issues involving important public policies or avoid interfering with state efforts to maintain a coherent policy in an area of comprehensive regulation or administration, see Burford v. Sun Oil Co., 319 U.S. 315 63 S.Ct. 1098, 87 L.Ed. 1424 reh. denied, 320 U.S. 214, 63 S.Ct. 1442, 87 L.Ed. 1851 (1943).

American Disposal Services, Inc. v. O'Brien, 839 F.2d 84, 87 (2d Cir.1988). An alternative basis for abstention is a finding of "exceptional circumstances" which justify the refusal to exercise concurrent federal jurisdiction in favor of a parallel state proceeding. Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 19-29, 103 S.Ct. 927, 938-44, 74 L.Ed.2d 765 (1982) ("Cone").

1. Younger abstention

Defendant DPUC contends that the abstention doctrine of Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971), and its progeny, including Middlesex County Ethics Comm. v. Garden State Bar Ass'n, 457 U.S. 423, 432-34, 102 S.Ct. 2515, 2521-22, 73 L.Ed.2d 116 (1982), and Pennzoil Co. v. Texaco Inc., 481 U.S. 1, 107 S.Ct. 1519, 95 L.Ed.2d 1 (1987), require the dismissal of plaintiffs' federal action. Under those cases, abstention is appropriate only if there is an ongoing state judicial proceeding, in which important state interests are implicated, and the party seeking the injunction will have a full and fair opportunity to raise his federal statutory or constitutional arguments in the state forum. CECOS International, Inc. v. Jorling, 895 F.2d 66, 70 (2d Cir. 1990), citing Middlesex, supra, 457 U.S. at 432, 102 S.Ct. at 2521.

Plaintiffs rely principally on New Orleans Public Service, Inc. v. Council of New Orleans, 491 U.S. 350, 109 S.Ct. 2506, 105 L.Ed.2d 298 (1989) ("NOPSI"). In NOPSI, the plaintiff public utility company argued that federal law prohibited the defendant ratemaking authority from preventing the plaintiff from passing its full share of federally allocated costs associated with a failed nuclear generating facility along to its customers. Id. at 360, 109 S.Ct. at 2514. The Supreme Court found that district court abstention was not proper under either Younger or Burford.¹²

In its Younger analysis, the NOPSI Court found that the state court action was, if viewed in isolation, plainly not the kind of proceeding to which Younger applies. Id. at 366, 109 S.Ct. at 2517. The Court explained:

It has never been suggested that Younger requires abstention in deference to a state judicial proceeding reviewing legislative or executive action. Such a broad abstention requirement would make a mockery of the rule that only exceptional circumstances justify a federal court's refusal to decide a case in deference to the States.

Id. at 368, 109 S.Ct. at 2518, citing Colorado River, supra, 424 U.S. at 817, 96 S.Ct. at 1246. The NOPSI defendants argued that the state court action was a continuation of the Council proceeding, so that as long as that initial proceeding qualified for Younger treatment the proceeding was not complete until judicial review was completed. 491 U.S. at 368, 109 S.Ct. at 2518. The court disagreed, relying on the traditional distinction between judicial inquiries, which "enforce liabilities as they stand on present or past facts and under laws supposed already to exist" and legislation which necessarily

looks to the future and changes existing conditions by making a new rule to be

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