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CABLEVISION SYS. CORP. v. TOWN OF EAST HAMPTON

September 12, 1994

CABLEVISION SYSTEMS CORPORATION and CABLEVISION SYSTEMS EAST HAMPTON CORPORATION, Plaintiffs,
v.
TOWN OF EAST HAMPTON and TOWN BOARD OF THE TOWN OF EAST HAMPTON, Defendants.



The opinion of the court was delivered by: DENIS R. HURLEY

 HURLEY, District Judge

 In this action, Plaintiffs Cablevision Systems Corporation and Cablevision Systems East Hampton Corporation (collectively, "Cablevision") seek summary judgment (1) permanently enjoining Defendants Town of East Hampton (the "Town") and Town Board of the Town of East Hampton (the "Board") from revoking Cablevision's Cable Television Franchise Agreement with the Town, and (2) modifying the Franchise Agreement so as to bring it into compliance with federal law. The Town has cross-moved for summary judgment declaring that Cablevision materially breached the Franchise Agreement and that the Town Board appropriately rejected Cablevision's Request for Modification. For the reasons set forth below, Cablevision's application is granted, and the Town's application is denied.

 Factual and Procedural Background

 In July, 1985, the Town entered into a Cable Television Franchise Agreement with Sammons Communications, Inc. ("Sammons"), which authorized Sammons to construct and operate a cable television system for the residents of the Town. In August, 1987, the Town approved the transfer of the franchise from Sammons to Cablevision.

 When Cablevision succeeded Sammons as a party to the Franchise Agreement, Cablevision offered new customers an entry-level tier of cable service referred to as "Family Cable," which included 36 broadcast channels. (Pls.' Oct. 5, 1993 Mem. at 2.) "Family Cable" was the lowest-priced tier of service offered by Cablevision, and new customers were required to subscribe to this entry-level tier in order to receive cable service.

 Cablevision offered a slightly different entry-level tier to the existing subscribers who had been customers of Sammons. These subscribers were offered a "Grandfathered tier," which initially consisted of 27 channels, and later was upgraded to include 30 channels. (Id. at 2-3.)

 In February, 1993, Cablevision disclosed its plans to restructure its rates and its tiers "consistent with the anticipated guidelines to be issued . . . by the Federal Communications Commission" under the Cable Television Consumer Protection and Competition Act of 1992 (the "1992 Cable Act"), 47 U.S.C. §§ 521-59. (See Defs.' Post-Hearing Submission to Town Board Ex. G.) More specifically, Cablevision announced that: (1) it would introduce a new entry-level tier of service, referred to as "Broadcast Basic," consisting of 10 channels; (2) the Grandfathered tier would be eliminated; and (3) the rates for the Family Cable tier would be increased.

 After some correspondence and negotiation between the parties, the Board enacted a resolution that disclosed that the Board had arrived at a preliminary assessment, pursuant to Section 24 of the Franchise Agreement, *fn1" to revoke the Agreement for cause. The Town also scheduled a hearing before the Board upon which a final determination as to revocation would be made.

 Before the revocation hearing was conducted, and pursuant to § 545 of the 1992 Cable Act, Cablevision filed with the Town a "Request for Modification" of the Franchise Agreement. This Request sought to modify the Agreement so as to bring the Agreement into conformity with federal law. Cablevision also requested that the Board stay its revocation proceedings until it rendered a final decision regarding the Request for Modification. The Town replied that the scheduled hearing would serve as a forum for both modification and revocation issues.

 On October 5, 1993, Cablevision requested from this Court a temporary restraining order precluding the Town from conducting the proposed hearing on revocation, pending decision on their modification request and judicial review of that request. This Court denied Cablevision's request to restrain the hearing of the Town's legislative body, but added that the Town should not take any steps to implement any decision on revocation until review of the Request for Modification by the Court. Cablevision Systems Corp. v. Town of East Hampton, CV-93-4536 (E.D.N.Y. Oct. 5, 1993). The Board conducted its hearing on October 7, 1993, reserved decision on the issues of modification and revocation, and requested further submissions from each of the parties. Before the Town reached its decision regarding these issues, this Court denied Cablevision's request for a preliminary injunction preventing the Town from revoking its franchise. Cablevision Systems Corp. v. Town of East Hampton, CV-93-4536 (E.D.N.Y. Dec. 2, 1993).

 On April 1, 1994, the Board issued its decision. The Board denied Cablevision's Request for Modification, and revoked Cablevision's franchise with the Town. The effective date of the revocation is October 1, 1994. Cablevision renewed its application for a preliminary injunction, and this Court denied the application. Cablevision then orally requested that the Court consolidate the trial of this action with its application for preliminary injunctive relief, Fed. R. Civ. P. 65(a)(2), and moved for summary judgment. Fed. R. Civ. P. 56. The Defendants orally cross-moved for summary judgment. Both parties confirmed these requests in writing. (Pls.' Letter of Apr. 6, 1994; Defs.' Letter of Apr. 8, 1994.) By way of format, it was agreed that with the exception of certain materials that had been submitted to the Town Board concerning modification and revocation, the summary judgment requests would not entail the submission to the Court of any additional materials, each side relying on the materials previously furnished with respect to the declaratory and injunctive relief.

 Discussion

 I. Standard for Review of Motion for Summary Judgment

 A motion for summary judgment may be granted only when it is shown that "there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 323, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986); Donahue v. Windsor Locks Bd. of Fire Comm'rs, 834 F.2d 54, 57 (2d Cir. 1987); Winant v. Carefree Pools, 709 F. Supp. 57, 59 (E.D.N.Y.), aff'd, 891 F.2d 278 (2d Cir. 1989). The party seeking summary judgment "bears the initial responsibility of informing the district court of the basis for its motion," and identifying which materials "it believes demonstrate the absence of a genuine issue of material fact." Celotex, 477 U.S. at 323; see also Trebor Sportswear Co., Inc. v. The Limited Stores, Inc., 865 F.2d 506, 511 (2d Cir. 1989); Pariente v. Scott Meredith Literary Agency, Inc., 771 F. Supp. 609, 612 (S.D.N.Y. 1991). The substantive law governing the case will identify those facts which are material, and "only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986).

 Once the moving party has come forward with support demonstrating that no genuine issue of material fact remains to be tried, including pleadings, depositions, interrogatory answers, and affidavits, the burden shifts to the non-moving party to provide similar support setting forth specific facts about which a genuine triable issue remains. Fed. R. Civ. P. 56(e); Anderson, 477 U.S. at 250; Borthwick v. First Georgetown Sec., Inc., 892 F.2d 178, 181 (2d Cir. 1989); Donahue, 834 F.2d at 57. The Court must resolve all ambiguities and draw all reasonable inferences in favor of the non-moving party. Donahue, 834 F.2d at 57.

 "The mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson, 477 U.S. at 247-48. Moreover, "conclusory allegations will not suffice to create a genuine issue. There must be more than a 'scintilla of evidence,' and more than 'some metaphysical doubt as to the material facts.'" Delaware & Hudson Ry. Co. v. Consolidated Rail Corp., 902 F.2d 174, 178 (2d Cir. 1990) (quoting Anderson, 477 U.S. at 252, and Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986)), cert. denied, 111 S. Ct. 2041 (1991); see also Carey v. Crescenzi, 923 F.2d 18, 21 (2d Cir. 1991). "The non-movant cannot 'escape summary judgment merely by vaguely asserting the existence of some unspecified disputed material facts,' or defeat the motion through 'mere speculation or conjecture.'" Western World Ins. Co. v. Stack Oil, Inc., 922 F.2d 118, 121 (2d Cir. 1990) (quoting Borthwick, 892 F.2d at 181, and Knight v. U.S. Fire Insurance Co., 804 F.2d 9, 12 (2d Cir. 1986), cert. denied, 480 U.S. 932, 94 L. Ed. 2d 762, 107 S. Ct. 1570 (1987)). With the above principles in mind, the Court turns to a discussion of the case at bar.

 II. Asserted Grounds for Revocation

 In support of its decision to revoke the franchise, the Town contends that, in implementing certain tiering and rate changes, Cablevision has breached material provisions of the Franchise Agreement. In response, Cablevision asserts that each of its actions were "consonant with, authorized and/or dictated by the . . . 1992 Cable Act." (Pls.' October 5, 1993 Mem. at 17.) To determine whether summary judgment is appropriate in this case, the Court will examine each of the alleged grounds for revocation: the establishment of a basic cable service with fewer than 23 channels; the rate increase for the Family Cable tier; and the elimination of the Grandfathered tier. *fn2"

 The first alleged ground for revocation is Cablevision's introduction of the "Broadcast Basic" entry-level service tier, which includes fewer than 23 channels. The Town claims that the introduction of the Broadcast Basic tier violates the Franchise Agreement, in that the Agreement provides that "the lowest priced package of programming that a subscriber can purchase . . . shall include a minimum of twenty-three (23) channels. " (Fr. Agmt. at § 2(e) (emphasis added).)

 In response, Cablevision contends that the contents requirement of Section 2(e) is preempted by Section 543(b)(7)(A) of the 1992 Cable Act, which provides that cable operators must offer a "basic service tier," *fn3" and sets forth certain "minimum contents" requirements for that tier.

 Section 543 provides that

 
Each cable operator of a cable system shall provide its subscribers a separately available basic service tier to which subscription is required for access to any other tier of service. Such basic service tier shall, at a minimum, consist of the following:
 
(i) All signals carried in fulfillment of the requirements of sections 534 and 535 of this title. *fn4"
 
(ii) Any public, educational, and governmental access programming required by the franchise of the cable system to be provided to subscribers.
 
(iii) Any signal of any television broadcast station that is provided by the cable operator to any subscriber, except a signal which is secondarily transmitted by a satellite carrier ...

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