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SATELLITE TV OF NEW YORK ASSOCS. v. FINNERAN

February 15, 1984

SATELLITE TELEVISION OF NEW YORK ASSOCIATES and RIVERBAY CORPORATION, Plaintiffs,
v.
WILLIAM B. FINNERAN, JERRY A. DANZIG, BRIAN A. LUDDY, and THEODORE E. MULFORD, as Members of the New York State Commission on Cable Television, Defendants



The opinion of the court was delivered by: GOETTEL

GOETTEL, D.J.:

 In this action, plaintiffs Satellite Television of New York Associates ("Satellite") and Riverbay Corporation ("Riverbay") seek an order from the Court enjoining the defendants, four members of the New York State Commission on Cable Television (the "NYSCCT"), *fn1" both from enforcing the NYSCCT's recent cease and desist orders restraining Satellite from continuing its construction of a Satellite Master Antenna Television system, or SMATV system, at Co-op City in the Bronx, New York, and from taking any further actions that might interfere with the construction of that SMATV system (the "Riverbay System"). *fn2" Now, in support of a motion for a preliminary injunction, the plaintiffs set forth three arguments for so enjoining the defendants: first, that the NYSCCT lacked the authority to issue the relevant cease and desist orders because such authority has been preempted by the Federal Communications Commission (the "FCC"); second, that the NYSCCT's actions are prohibited by the first amendment of the United States Constitution; and third, that the NYSCCT lacks authority under Article 28 of New York's Executive Law to issue orders regulating the Riverbay System because it was not an operating cable television system.

 The defendants respond by opposing the plaintiffs' motion for preliminary injunction and by moving for dismissal of the action. The defendants argue: first, that the FCC has not preempted New York's power to regulate a cable television system such as the Riverbay System; second, that the plaintiffs have failed to state a first amendment claim; third, that the NYSCCT is empowered to regulate such a cable television system before it goes into operation; and finally, that no actions taken by any officials of the State of New York were, as the plaintiffs allege, of such a nature as to estop the NYSCCT from enforcing its cease and desist orders or from taking any future actions to regulate Satellite's design, construction, and operation of the Riverbay System. In addition, the City of New York (the "City") has moved to intervene as a defendant on the grounds that its interests in the regulation of cable television systems in the Bronx requires that it be a party to this action.

 For reasons discussed below the Court concludes that it must grant the plaintiffs' motion for preliminary injunction with respect to the NYSCCT's cease and desist orders and deny the defendants' motion to dismiss and the City's motion to intervene.

 FACTS

 Plaintiff Satellite is a partnership established for the purpose of installing and operating the Riverbay System at Co-op City, which is a cooperative housing development of approximately 50,000 tenant cooperators. Pursuant to Satellite's contract with plaintiff Riverbay, which owns and operates Co-op City, Satellite is to install a system that will receive and distribute satellite television signals and provide a better security and communications system connecting the many buildings that make up Co-op City. This contract was entered into at the end of 1982 and became effective in early 1983. Thereafter, Satellite commenced the planning and construction of the Riverbay System.

 In relation to this dispute, the physical aspect of Co-op City that takes on particular significance is the configuration of public streets and highways that enter or cross Co-op City. Co-op City can be thought of as two self-contained sections separated from one another by the Hutchinson River Parkway (the "Parkway"). The larger section lies to the north of the Parkway and the smaller to the south. Each of these sections is either partially or entirely circumscribed by a smaller perimeter street and entered at a number of points by short loops and cul-de-sacs, which do not traverse the entire section. Thus, the only public highways that cross a part of Co-op City in such a way as to cut off some residents from others are the Parkway and the two perimeter streets.

 Under the present plan for the Riverbay System, each of the two sections of Co-op City will have its own receiving antenna. Because of the placement of these two antennae and the configuration of public streets in and around Co-op City, there will be no absolute need to place television cables over or under any public thoroughfare in order to distribute satellite signals to the residents in either of the two sections. Rather, it will be possible for the cables from the receiving antenna in each section to run only to the residences located within that section and hence avoid crossing any streets. *fn3"

 The same, however, cannot be said of the optional aspect of the Riverbay System that is intended to provide local programming channels and an improved security system. For those purposes, it appears that signals will have to be transmitted under, or over, at least the Parkway and the perimeter streets. Presently, though, the means of transmission for these signals and the time when such means will be installed are undetermined. (Indeed, Riverbay apparently has until October 8, 1987, to elect to exercise its option of having Satellite install these secondary aspects of the system. See Defendants' Exhibit A at 59 & 78.) Yet, how and when these optional services are to be provided is crucial in this dispute because these factors may be determinative of the ultimate question now before this Court, namely: whether the NYSCCT had, or has, jurisdiction to regulate the Riverbay System.

 On August 24, 1983, the NYSCCT clearly believed that it did have jurisdiction, for on that date it issued a temporary order for Satellite to cease and desist construction and an order to show cause why a permanent cease and desist order should not be issued. These orders were based upon the NYSCCT's conclusions that an on-site inspection at Co-op City had revealed the construction of a "cable television system," as defined under Article 28 of New York's Executive Law, N.Y. Exec. law § 812(2) (McKinney 1982), *fn4" and that such system had not been franchised by the NYSCCT, as required under N.Y. Exec. Law § 819(1) (McKinney 1982), *fn5" or granted a confirmation of franchise, as required under N.Y. Exec. Law § 821(1) (McKinney 1982). *fn6"

 A hearing followed on September 6, 1983, which led to the issuance of a report by the presiding hearing officer on September 21, 1983. In his report, the hearing officer concluded as a matter of law that the system being constructed was a "cable television system," as that phrase is defined under Article 28, and that, whether or not Satellite's system might also be denominated a "SMATV" or "private cable system," *fn7" the NYSCCT had jurisdiction to regulate the system because there had been no federal premption of jurisdiction over SMATV systems. Plaintiff's Supplemental Reply Affidavit, Exhibit A, Report of Hearing Officer at 2. *fn8" Primarily on the basis of these two conclusions, the hearing officer recommended to the NYSCCT that its temporary cease and desist order be made permanent. Id. at 3.

 Of the greatest importance for this Court's purposes, the hearing officer's report contains no findings of fact that might help to answer the crucial question of whether signals would have to be transmitted across public thoroughfares. His decision not to consider this question appears to have been premised upon his assumption that whether or not public thoroughfares were crossed had no bearing on the question of whether the Riverbay System was a cable television system over which the NYSCCT had jurisdiction. Id. at 2. That assumption, in turn, was premised upon his view of the law that the federal government had not preempted state and local regulation of SMATV systems, which he obviously viewed as being the same as regular cable television systems, at least for jurisdictional purposes. Indeed, the only factual findings explicitly made by the hearing officer were that Satellite and Riverbay had a contract and that construction of a telecommunications system pursuant to that contract had commenced sometime before August 3, 1983. Id. at 1-2.

 On the basis of the hearing officer's report, the NYSCCT issued a permanent cease and desist order on September 23, 1983. It is the defendants' enforcement of that order, as well as any future regulation of the ...


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