MCC Iowa v. City of Iowa City , 887 F.3d 370 ( 2018 )

United States Court of Appeals
For the Eighth Circuit
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No. 16-3696
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MCC Iowa, LLC, doing business as Mediacom
lllllllllllllllllllll Plaintiff - Appellant
v.
City of Iowa City; ImOn Communications, LLC, formerly known as JB and SG
Communications, LLC
lllllllllllllllllllll Defendants - Appellees
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Charter Communications, Inc.
lllllllllllllllllllllAmicus on Behalf of Appellant(s)
Iowa League of Cities
lllllllllllllllllllllAmicus on Behalf of Appellee(s)
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Appeal from United States District Court
for the Southern District of Iowa - Davenport
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Submitted: October 19, 2017
Filed: April 4, 2018
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Before GRUENDER and BENTON, Circuit Judges, and TUNHEIM,1 District Judge.
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BENTON, Circuit Judge.
MCC Iowa, LLC, doing business as Mediacom, provides cable and
telecommunications services in Iowa City. Mediacom sued the City of Iowa City and
ImOn Communications, LLC. The district court2 granted summary judgment to the
City and ImOn. Mediacom appeals. Having jurisdiction under 28 U.S.C. § 1291, this
court affirms.
I.
Mediacom—the only cable provider in the City—has a franchise agreement
with the City, as required by federal and state law. See 47 U.S.C. § 541(b); Iowa
Code § 477A.2(1). The agreement requires Mediacom to pay fees and provide cable
services to almost all the City.
In 2015, ImOn—provider of cable and telecommunications in other Iowa
cities—publicly stated an intent to provide services, including cable, in the City. The
City Council passed three resolutions to facilitate ImOn’s construction of a fiber-optic
network, including access to public rights-of-way. The next month, ImOn began
providing internet to City residents. The next year, it began providing telephone
service. ImOn has not provided cable services in the City and has not applied for a
1
The Honorable John R. Tunheim, Chief Judge, United States District Court for
the District of Minnesota, sitting by designation.
2
The Honorable Charles R. Wolle, United States District Judge for the Southern
District of Iowa.
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cable franchise. It claims to have abandoned plans to provide cable services in the
City.
Mediacom believed the City and ImOn were colluding to its disadvantage. In
Iowa, if another cable provider applies for a franchise in a municipality, the
incumbent provider (here, Mediacom) can apply for a state certificate of franchise
authority for that municipality. Iowa Code § 477A.2(6). This guarantees the
incumbent provider the “same . . . terms and conditions” the new provider gets. Id.
Mediacom sued the City, later adding ImOn as a defendant. The lawsuit sought
declarations that the resolutions were void and that the City could not permit a
potential cable provider to construct a “cable system” without acquiring a cable
franchise. Mediacom also alleged contract violations, tortious interference, civil
conspiracy, and Equal Protection violations, all depending on whether ImOn could
lawfully build a fiber-optic network without a franchise.
Both parties moved for summary judgment. Mediacom also moved for
discovery. The district court denied the discovery motion and granted summary
judgment to the City and ImOn. The court ruled that “ImOn is not presently required
to seek a cable franchise” because it “is not now delivering cable programming.”
This court reviews de novo the district court’s grant of summary judgment.
Torgerson v. City of Rochester, 643 F.3d 1031, 1042 (8th Cir. 2011) (en banc).
Summary judgment is proper if the court finds “there is no genuine issue as to any
material fact and that the movant is entitled to judgment as a matter of law.” Fed. R.
Civ. P. 56(a).
II.
Title VI of the Communications Act requires a franchise only before providing
cable service, not before constructing the infrastructure to provide it. “[A] cable
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operator may not provide cable service without a franchise.” 47 U.S.C. § 541(b)(1)
(emphasis added). But Mediacom argues that local franchising authorities (LFAs)
may require a franchise earlier than federal law does. And Mediacom believes the
City, as an LFA, did so in its Cable Television Franchise Enabling Ordinance:
No person, firm, company, corporation or association shall construct, install,
maintain or operate within any public street in the city, or within any other
public property of the city, any equipment or facilities for the distribution of
cable service over a cable television system or an open video system to any
subscriber unless a franchise authorizing the use of the streets or properties
or areas has first been obtained pursuant to the provisions of this chapter, and
unless such franchise is in full force and effect.
Iowa City Code § 12-4-6(A) (emphasis added).
The Ordinance must be interpreted consistent with federal law. See Iowa Code
§ 477A.11(1) (“This chapter is intended to be consistent with [Title VI] . . . ”); Iowa
City Code § 12-4-2 (adopting, almost word-for-word, Title VI’s definition of “cable
system” as the definition of “cable television system or cable system”). Mediacom’s
interpretation—requiring a franchise before construction of ImOn’s fiber-optic
network—is inconsistent with Title VI and an FCC order.3
Common carriers—as relevant here, companies providing telecommunications
(internet and phone) service—are regulated under Title II of the Communications
Act. 47 U.S.C. §§ 201-76. Cable providers are regulated under Title VI of the Act.
3
Because ImOn was a common carrier in Iowa City when it began construction,
Mediacom’s interpretation is also foreclosed by the Ordinance without reference to
federal law. The Ordinance (like Title VI) expressly excludes from its definition of
cable systems “a facility of a common carrier which is subject, in whole or in part, to
the provision of title II of the [Communications Act], except . . . to the extent that
such facility is used in the transmission of video programming . . . .” Iowa City
Code § 12-4-2.
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§§ 521-73. At one time, Title II and Title VI did not overlap because
telecommunications and cable had different infrastructures. See National Cable
Television Ass’n, Inc. v. FCC, 33 F.3d 66, 69 (D.C. Cir. 1994) (discussing the history
of copper-wire, coaxial-cable, and fiber-optic technology). Today, “mixed-use”
infrastructure—such as fiber-optic networks—can provide both telecommunications
and cable. See id.Title VI grants LFAs franchising authority over cable systems. See § 541(a).
But this authority is limited. As relevant here, Title VI exempts common-carrier
facilities regulated under Title II from the definition of “cable system” unless they are
used to provide cable services:
[T]he term “cable system” means a facility . . . designed to provide cable
service . . . but such term does not include . . . (C) a facility of a common
carrier which is subject, in whole or in part, to the provisions of [Title
II], except that such facility shall be considered a cable system (other
than for purposes of section 541(c)(2) of this title) to the extent such
facility is used in the transmission of video programming directly to
subscribers . . . .
§ 522(7).
The FCC has stated:
We clarify that LFAs’ jurisdiction applies only to the provision of cable
services over cable systems . . . [A]n LFA has no authority to insist on
an entity obtaining a separate cable franchise in order to upgrade non-
cable facilities. For example, assuming an entity (e.g., a LEC[4]) already
possesses authority to access the public rights-of-way, an LFA may not
require the LEC to obtain a franchise solely for the purpose of upgrading
4
A “LEC”—“local exchange carrier”—is, as relevant here, a common carrier
providing telephone service. See 47 U.S.C. § 153(32).
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its network.[] So long as there is a non-cable purpose associated with
the network upgrade, the LEC is not required to obtain a franchise until
and unless it proposes to offer cable services. For example, if a LEC
deploys fiber optic cable that can be used for cable and non-cable
services, this deployment alone does not trigger the obligation to obtain
a cable franchise.
In re Implementation of Section 621(a)(1) of the Cable Communications Policy
Act of 1984, 22 F.C.C.R. 5101, 5155 (2007) (hereinafter FCC order). See also
Illinois Bell Tel. Co. v. Village of Itasca, 503 F. Supp. 2d 928, 937 (N.D. Ill. 2007)
(holding that a company upgrading its telecommunications network to fiber-optic “is
not a ‘cable operator’ under the terms of [Title VI] because it is not providing the
transmission of video programming. Right now it is simply constructing a local
distribution system capable of delivering video programming.”). See generally
Competitive Telecommc’ns Ass’n v. FCC, 117 F.3d 1068, 1071 (8th Cir. 1997)
(deference to FCC order interpreting Title II), citing Chevron USA Inc. v. Natural
Res. Def. Council, Inc., 467 U.S. 837, 843-44 (1984).
Title VI, by itself, says that a common carrier’s mixed-use facility is a cable
system once the “facility is used” to provide cable services. See § 522(7)(C);
MediaOne Grp., Inc. v. County of Henrico, 257 F.3d 356, 364 (4th Cir. 2001)
(“[Title VI] therefore contemplates that multi-purpose facilities will receive different
regulatory classification and treatment depending on the service they are providing
at a given time.” (citing § 522(7)(C))). As the FCC order says, LFAs must have
franchise authority before actual use, i.e., when a company “proposes” to provide
cable services. See FCC order, 22 F.C.C.R. at 5155. Together, Title VI and the FCC
order establish that LFAs may regulate a common carrier’s mixed-use facilities
consistent with Title VI only when the operator provides or proposes to provide cable
services. Because ImOn has not provided or proposed to provide cable services,
deployment of its mixed-use, fiber-optic network does not require it to obtain a cable
franchise.
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III.
Mediacom argues that neither § 522(7)(C) nor the FCC order applies here,
where a common carrier constructing a mixed-use, fiber-optic network was not then
providing telecommunications in the area. But § 522(7)(C) and the FCC order apply
to a common carrier’s facilities “subject . . . to” Title II, regardless whether they have
yet been used to provide telecommunications services. See § 522(7)(C); FCC order
at 5155 (“[D]eployment [of mixed-use facilities] alone does not trigger the obligation
to obtain a cable franchise.”). Mediacom’s argument conflicts with the FCC order’s
stated objective of alleviating the “unreasonable barrier to entry [caused by the
previous franchising process] that impedes the achievement of the interrelated federal
goals of enhanced cable competition and accelerated broadband deployment.” FCC
order, 22 F.C.C.R. at 5102. See also id. at 5103 (“We believe this competition for
delivery of bundled services will benefit consumers by driving down prices and
improving the quality of service offerings. We are concerned, however, that
[competitors] seeking to enter the video market face unreasonable regulatory
obstacles, to the detriment of competition generally and cable subscribers in
particular.”). This objective implements Title II and Title VI. See 47 U.S.C. § 253(a)
(“No State or local statute or regulation . . . may prohibit or have the effect of
prohibiting the ability of any entity to provide any interstate or intrastate
telecommunications service.”); § 541(b)(3)(B) (“A franchising authority may not
impose any requirement under this subchapter that has the purpose or effect of
prohibiting, limiting, restricting, or conditioning the provision of a
telecommunications service by a cable operator . . . .”).
Mediacom argues that ImOn “proposed” to provide cable service when its CEO
“publicly conveyed ImOn’s intent to offer cable TV services in Iowa City.” But
Mediacom conflates “proposes” with “intends.” Compare “propose,” Webster’s
Dictionary 1819 (unabridged 3d ed. 1961) (“to offer for consideration, discussion,
acceptance, or adoption”), with “intend,” Webster’s Dictionary 1175 (unabridged 3d
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ed. 1961) (“to have in mind as a design or purpose”). In the FCC order, the term
“propose” means “apply for a cable franchise.” See FCC order, 22 F.C.C.R. at 5139
(“[I]f an LFA has not made a final decision within the time limits . . . the LFA will be
deemed to have granted the applicant an interim franchise based on the terms
proposed in the application.” (emphasis added)); id. at 5138 (cable franchise
applications must contain information including “the geographic area that the
applicant proposes to serve,” and “the applicant’s proposed PEG channel capacity”
(emphasis added)). While ImOn stated an intent to provide cable service in the City,
it never proposed to do so.
Mediacom also believes that the City, before granting access to public rights-
of-way, should be required to ask how entities intend to use them. If the entity
intends, as ImOn stated, to use them for cable services, Mediacom argues, the entity
must obtain a cable franchise.
Mediacom relies on San Juan Cable LLC v. Telecommunications Regulatory
Board of Puerto Rico. There, a company had applied for a cable franchise, but before
the approval of its application, wanted to construct and operate (mixed-use) facilities
in a “trial phase.” 598 F. Supp. 2d 233, 234-35 (D.P.R. 2009). The company, citing
the FCC order, argued that the franchise requirement was not triggered because it had
not “propose[d] to offer cable services.” Id. at 236. The district court disagreed:
[The FCC] did not hold . . . that just because a telephone company uses
the same cable system for a different activity, it should be exempt from
complying with [Title VI]’s franchise requirement where, as in the
present case, such company intends to upgrade existing facilities in
order to make the provision of cable services viable.
Id. at 237.
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San Juan Cable does not support Mediacom’s investigate-intent requirement.
First, the company there had already applied for a franchise and was attempting “to
perfect [its] cable system before approval of the franchise.” Id. at 238. Thus, the
company had proposed to provide cable services. See id. at 237 (“[The company]
would have this court believe that it does not ‘propose to offer cable services,’ when
it is precisely for that reason that it wishes to conduct a beta-testing trial of its
system.”). Second, the district court found that the company’s “trial phase” was “the
provision of cable services” under Title VI. See id. at 237 n.2 (“What is before the
court is a petition . . . to bar the Regulatory Board from allowing [the company] to use
such facilities for the provision of cable services if and until it acquires a franchise
as required by federal law, nothing more.”); id. at 236 (“[T]he court finds that [the
company] is indeed offering a ‘cable service,’ as defined in [Title VI], through the
implementation of its limited test trial.”). Here, Imon has not proposed a trial phase
or to provide cable services without a franchise.
In the alternative, Mediacom argues that the City granted ImOn a de facto cable
franchise that failed to comply with the franchise requirements of Title VI and Iowa
law. See, e.g., Iowa Code § 364.2(4)(g) (“If a city grants more than one cable
television franchise, the material terms and conditions of any additional franchise
shall not give undue preference or advantage to the new franchisee.”). According to
Mediacom, because the City knew ImOn’s intent to provide cable services and issued
resolutions allowing construction of mixed-use equipment, the resolutions were a
cable franchise.
But this is not true as a matter of state or federal law. Cities in Iowa have
general authority over rights-of-way, subject to state and federal limits. See Iowa
Code § 364.1 (“A city may,” except as provided in Iowa law, “exercise any power
and perform any function it deems appropriate . . . .”); City of Hawarden v. US West
Commc’ns, Inc., 590 N.W.2d 504, 506 (Iowa 1999) (cities have “the authority to
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regulate a utility’s use of streets, highways, rights-of-way and other public grounds
within the city limits to the extent not inconsistent with federal communication law
or [Iowa law]”). The federal and state limits that Mediacom cites apply to cable
“franchises,” defined as:
an initial authorization . . . issued by a franchising authority, whether
such authorization is designated as a franchise, permit, license,
resolution, contract, certificate, agreement, or otherwise, which
authorizes the construction or operation of a cable system.
47 U.S.C. § 522(9) (emphasis added); see also Iowa Code § 477A.1(7) (nearly
identical).
As discussed, ImOn’s fiber-optic network is not a “cable system,” because
ImOn has not provided or proposed to provide cable services. Thus, the agreements
authorizing ImOn’s construction of a fiber-optic network are not a de facto cable
franchise.
IV.
In its Equal Protection claim, Mediacom argues it is similarly situated to ImOn.
Mediacom cites Time Warner Cable, Inc. v. Hudson, 667 F.3d 630, 639 (5th Cir.
2012), where a law favored new cable providers over a “small and identifiable
number of [incumbent] cable providers.” The constitutional injury stemmed from the
differing treatment of similarly situated cable providers. Here, the district court
properly concluded that ImOn and Mediacom are not similarly situated because only
Mediacom is a cable provider in the City.
Finally, Mediacom asserts that the district court abused its discretion in
denying Mediacom’s motion for discovery. See Toben v. Bridgestone Retail Ops.,
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LLC, 751 F.3d 888, 894 (8th Cir. 2014) (denial of a discovery motion is reviewed for
abuse of discretion). Mediacom alleges there are disputed fact issues requiring
discovery, including: whether ImOn intended to provide cable services despite its
public retraction; whether ImOn was offering telecommunications services in the City
before entering the agreements with the City; and whether ImOn’s system is fully
cable-ready. Because this court has assumed all facts favorably to Mediacom, the
district court did not abuse its discretion in denying further discovery and granting
summary judgment for ImOn and the City.
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The judgment is affirmed.
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