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GOLDSTEIN v. TIME WARNER NEW YORK CITY CABLE GROUP

April 24, 1998

AL GOLDSTEIN and MEDIA RANCH, INC.; LOU MALETTA and GAY CABLE NETWORK, INC.; and CABLE ACCESS NETWORK, INC., Plaintiffs, against TIME WARNER NEW YORK CITY CABLE GROUP and THE CITY OF NEW YORK, Defendants. STEVE GRUBERG and CABLE ACCESS NETWORK, INC., Plaintiffs, - against - TIME WARNER NEW YORK CITY CABLE GROUP, Defendant.


The opinion of the court was delivered by: SAND

OPINION

 SAND, District Judge.

 The Plaintiffs, Steve Gruberg and Cable Access Network, Inc. (collectively "Gruberg"), have brought two suits *fn1" against the Defendant, Time Warner Cable of New York City ("Time Warner"), *fn2" seeking equitable and declaratory relief, as well as damages, for claims arising out of the Cable Act *fn3" and various regulations promulgated thereunder. Presently before the Court are three motions: (1) the Plaintiffs' motion to compel discovery pursuant to Fed. R. Civ. P. 37(a); (2) the Defendant's motion to compel discovery pursuant to Fed. R. Civ. P. 34(b) & 37(a); and (3) the Defendant's motion for summary judgment pursuant to Fed. R. Civ. P. 56, the resolution of which involves several significant questions of first impression under § 612(d) of the Cable Act. For the reasons set forth below, the Defendant's motion for summary judgment is granted in part and denied in part, and both suits are hereby stayed in their entirety pending further action by the Court of Appeals for the District of Columbia Circuit. *fn4"

 I. BACKGROUND

 This Opinion represents the latest stage of the "leased access" litigation that has been on the Court's docket since 1990. *fn5" In the intervening years, however, the leased access landscape has been reshaped greatly by both congressional and regulatory action. *fn6" The pertinent developments are described below.

 A. The Cable Act

 Section 612 requires cable operators to designate a certain percentage of channel capacity for commercial use by unaffiliated programmers. See 47 U.S.C. § 532(b). At the present time, a programmer aggrieved by the failure of an operator to make "reasonable" channel capacity available for leased access use can either file suit in federal district court, or petition the Federal Communications Commission ("FCC") for relief. See 47 U.S.C. § 532(d).

 This choice of fora, however, was not always available. Under the initial regime established by the 1984 Act, Congress permitted cable operators to set the "price, terms and conditions" of leased access use, and the only avenue of relief for aggrieved programmers was through the district court. See. e.g., Media Ranch, Inc. v. Manhattan Cable Television. Inc., 757 F. Supp. 310, 313-14 (S.D.N.Y. 1991). Congress was advised, however, that during the ensuing decade commercial leased access use was, as a general matter, too infrequent in light of the clear statutory directives to encourage, inter alia, diversity in programming. Id. at 314. Suspicion arose that cable operators were systematically sabotaging leased access programmers by insisting on unreasonably high rates for carriage, especially where such leased access programming--which is available to the viewer, theoretically anyway, at no cost--was deemed by the operator to be a competitor of other cable programming in which the operator had a financial stake. See. e.g., H.R. Rep. No. 102-628, at 39-40 (1992), available at 1993 WL 166238 (Legis. Hist.).

 The 1992 Cable Act attempted to rectify these perceived injustices. In the 1992 legislation, Congress authorized the FCC to establish a pricing formula to determine the "maximum reasonable rates" for leased access use. The legislation also empowered the FCC to establish reasonable terms and conditions for leased access, as well as to create administrative procedures for the "expedited resolution" of any such disputes. See 47 U.S.C. § 532(c)(4)(a). *fn7"

 The FCC's execution of its mandate has been controversial since the outset. As one commentator put it, "the FCC's initial report and order--the infamous April 1, 1993 Rate Order --had established the 'highest implicit fee' formula for setting the maximum reasonable rates and adopted standards for access terms and conditions," although, to be sure, the leased access provisions were, at the time, "far overshadowed by the other rate regulatory provisions of the order." Jeffrey P. Cunard, FCC Revises Leased Access Rules, 14 No. 12 Cable Television & New Media L. & Fin. 1, 1-3 (Feb. 1997) (emphasis added). *fn8"

 In the face of enormous industry and consumer pressure, the FCC revisited its initial Rate Order through the issuance of the 1996 Reconsideration Order. *fn9" In this Reconsideration Order, the FCC clarified a host of issues that had arisen pursuant to its designation of the "highest implicit fee" formula as the controlling rate mechanism for leased access use. *fn10"

 Then, on February 4, 1997, the FCC released its Second Order11 on leased commercial access. In this latter order, the FCC adopted a new pricing formula entitled the "average implicit fee" formula. Thus, the pricing formula currently governing the maximum reasonable rate that an operator can charge leased access programmers is the "average implicit fee" formula, not the "maximum implicit fee" formula first articulated in 1993.

 The legality of the "average implicit fee" formula is now squarely before the D.C. Court of Appeals in a consolidated appeal, the lead case of which is entitled ValueVision Int'l. Inc. v. FCC, 1998 U.S. App. LEXIS 16921, App. No. 97-1138 (D.C. Cir.) ("ValueVision "). The resolution of that appeal is, for reasons explained more fully below, of great consequence to the litigation presently before this Court.

 B. The Instant Actions

 1. The Parties

 The Plaintiffs are producers of adult-oriented cable television programming that has become a fixture of late-night New York television during this past decade. (See Grier Aff. of 9/19/97 ("Grier Aff."), PP 9, 11.) Titles of their broadcast programs include "Titillations," "NY Nightlife," "Hot Talk," "Blurbs," "Loops," "Sparkling," "Hot Spots" and "Spicy Stuff." (Id. P 10.)

 The Defendant is the operator of two cable systems in Manhattan, the Southern Manhattan system and the Northern Manhattan system. (Berman Aff. of 9/19/97 ("Berman Aff."), P 2.) Time Warner has designated Channel 35 on each system for use by part-time leased-access programmers such as Gruberg. (Id. P 4.) *fn12"

 According to the Defendant, a "significant number" of part-time leased access programmers on Channel 35 on both cable systems produce programming "that regularly features explicit material, such as nudity, intercourse, oral sex, and carries commercials advertising adult-oriented services, including phone lines for sexually oriented conversations and escort services." (Grier Aff. P 6.) Well-known producers include Al Goldstein and Media Ranch, Inc.; Lou Maletta and Gay Cable Network, Inc.; Robin Byrd and Key Byrd Productions, Inc.; David Eisenberg and Real Life Productions, Inc.; Ben Levine and Temptations Publishing, Inc.; and Richard Ditlevsen. (Id. P 8.)

 Time Warner claims that Gruberg is "the most prolific producer of sexually explicit part-time leased access programming" on both of Time Warner's Manhattan cable systems. (Id. P 11.) The Plaintiffs counter that Time Warner, through its carriage of, and direct financial interest in, "pay channels" such as Playboy and Adultvision, *fn13" is itself a "prolific and pervasive purveyor" of sexually explicit, if not "indecent," programming. (Gruberg I Compl. P 47.) *fn14"

 In any event, it is undisputed that the Plaintiffs' programming has been carried on the Southern Manhattan system since 1990 and on the Northern Manhattan system since 1996. (Grier Aff. P 10.) Currently, the Plaintiffs' airtime exceeds twenty hour per week on each system, (id. P 11), and his programs are cablecast virtually every day of the week. (Norwick Aff. of 11/14/97 ("Norwick Aff."), P 20.)

 2. The Litigation

 a. Proceedings Before the FCC

 On April 27, 1995, Gruberg submitted a petition for relief to the FCC ("FCC Petition") requesting an investigation of alleged overcharging by Time Warner on the Southern Manhattan system. See Gruberg v. Time Warner, 12 F.C.C.R. 4946 (Apr. 25, 1997), 1997 WL 199483 (FCC). That petition was in the form of a letter, with attached affidavit, from Gruberg's attorney at the time. Without ever holding a hearing, the FCC dismissed the petition nearly two years later in a Memorandum Order and Opinion released on April 25, 1997. Id. PP 10-11. *fn15"

 b. Proceedings Before the Court

 While the FCC Petition was pending, the Plaintiffs filed two suits in this Court. The first suit was filed on October 1, 1996, seeking broad relief with respect to Gruberg's carriage on the Northern Manhattan system. See Gruberg I, No. 96 Civ. 7462. The Complaint therein asserts five Causes of Action, (Gruberg I Compl. PP 56-60), only two of which, however, are pertinent to the present motions. Specifically, the Fourth and Fifth Causes of Action, *fn16" which concern the "prices, terms and conditions" of Gruberg's carriage on the Northern Manhattan system, are the only "active" claims at the present moment. *fn17"

 The Plaintiffs filed the second suit on January 31, 1997, see Gruberg II, No. 97 Civ. 0673, asserting two Causes of Action with respect to the "prices, terms and conditions" of Gruberg's carriage on Time Warner's Southern Manhattan cable system. (Gruberg II Compl. PP 18-20.) Among other forms of relief, the Plaintiffs seek the refund of all overcharges on the Manhattan system since 1990. *fn18" The present motions implicate both Causes of Action in Gruberg II.

 On March 31, 1997, the Court ordered the consolidation of Gruberg I and Gruberg II for purposes of discovery only. Moreover, a comprehensive confidentiality order--pertaining to both suits-was endorsed by the Court on April 24, 1997.

 3. The Motions

 On September 19, 1997, Time Warner filed its present motion for summary judgment, as well as its motion to compel discovery. Time Warner designated most of its submissions as "confidential" and thus filed them under seal. (See, e.g., Def.'s Mem. at 1-53 (marking every page of legal memorandum to Court as "confidential").)

 The Plaintiffs filed their motion to compel discovery on November 21, 1997. After granting several adjournments, the Court held extended oral argument on all three motions on January 8, 1998. (See Tr. of 1/8/98, at 1-80.) The Court notes that Time Warner originally designated a considerable number of its submissions as "confidential" and thus submitted them under seal. Pursuant to colloquy motivated by the Plaintiffs' allegations of corporate paranoia, (see e.g., Pls.' Mem. Mots. Compel Disc. ("Pls.' Mem. Disc.") at 7), Time Warner agreed to reconsider its confidentiality designations, (Tr. of 1/8/98, at 2-6), and in a letter to the Court dated January 12, 1998, dropped most of them. (See Letter from Gold to Court of 1/12/98, P 2.) Upon receipt of that letter and certain other exhibits, all three motions became fully submitted.

 II. DISCUSSION

 In extraordinarily thorough submissions, Time Warner presses a barrage of arguments against the Plaintiffs' Complaints in both Gruberg I and Gruberg II. At bottom, however, four principal legal issues, three of which involve substantial questions of first impression under the Cable Act, govern the resolution of these motions. The three issues of first impression concern: (1) the statute of limitations applicable to actions under § 612(d); (2) whether the continuing violation theory applies to "overcharge" claims brought pursuant to § 612(d); (3) whether federal actions under § 612(d) are subject to dismissal under the doctrine of res judicata because of the entry of a final judgment in an earlier FCC proceeding. The fourth principal issue concerns the impact of an appeal of the FCC's most recent pricing formula for leased-access rates, which appeal currently is pending before the Court of Appeals for the District of Columbia. See infra Part II.D (discussing ValueVision Int'l, Inc. v. FCC, App. No. 97-1138 (D.C. Cir.)). Each issue is considered below.

 A. Legal Standard

 Summary judgment is appropriate when, viewing the evidence in a light most favorable to the non-moving party, there is no genuine issue of material fact. Brown v. City of Oneonta, 106 F.3d 1125, 1130 (2d Cir. 1997). This device is a "drastic procedural weapon because 'its prophylactic function, when exercised, cuts off a party's right to present his case to the jury,'" and thus the Court must apply the aforementioned standard to all evidentiary facts, regardless of whether such facts are ascertained directly or inferentially. Garza v. Marine Trans. Lines, Inc., 861 F.2d 23, 26 (2d Cir. 1988) (citation omitted).

 To defeat the motion, however, the non-moving party must "do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986). Instead, the non-moving party must point to evidence sufficient to establish each element of its claims. The question of whether appropriate discovery has been undertaken is, of course, always a relevant consideration; a party should never be "railroaded" by a premature motion. Cramer v. Devon Group, Inc., 774 F. Supp. 176, 180 ...


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