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Coastal Communications Service, Inc. v. City of New York

September 30, 2009

COASTAL COMMUNICATIONS SERVICE, INC. AND TELEBEAM TELECOMMUNICATIONS : DECISION AND ORDER CORPORATION, PLAINTIFFS,
v.
THE CITY OF NEW YORK, AND NEW YORK CITY DEPARTMENT OF INFORMATION TECHNOLOGY AND TELECOMMUNCATIONS, DEFENDANTS.



The opinion of the court was delivered by: VITALIANO, D.J.

In the 1978 film Superman, the renowned hero approaches a phone booth only to learn that the local telephone company had switched from the full, private booths of the era in which the comic book hero debuted to the more modern open kiosk-a style unsuited to his patented wardrobe changes. Not even Superman can roll back the tide of technology. Today, the Court confronts a number of aesthetically subtler but ultimately more critical changes within the marketplace of public telephone service. Plaintiffs Coastal Communications Service ("Coastal") and Telebeam Telecommunications ("Telebeam"), operators of public pay telephone ("PPT") services in the City of New York ("the City"), have moved for partial summary judgment on their federal law claims relating to the City's regulations which affect public pay telephone service.

These claims spring from a new marketplace delimited by pancaked layers of lawmaking. In the mid 1990s, legislation both on the national and local levels-most notably the 1996 Amendments to the federal Telecommunications Act of 1934 (the "TCA)"-served to deregulate the telecommunications industry, opening up telephone markets to competition where "the phone company" had reigned unchallenged for decades. Plaintiffs' chief claim, brought pursuant to the TCA, is that the City, specifically the New York City Department of Information Technology and Telecommunications ("DoITT"),*fn1 systematically and unlawfully hampered plaintiffs' efforts to gain access to the market through a prolix and capricious process for (a) determining franchises and (b) approving PPT permit applications, fueled by unabashed favoritism of the incumbent service provider, now Verizon, and also as a result of various acts of retaliation against plaintiffs for their seeking redress in the legal system.

Deregulation may have come a day late and a dollar short. A darker spectre was soon to haunt the fledgling PPT companies like Coastal and Telebeam. As opportunities to provide PPT service opened up as a matter of law, PPT service itself plummeted in popularity as a matter of reality. The emergence of mobile phone technologies gutted the demand for telephone booth service, forcing such companies to rely principally on revenue from advertisements placed on the sides of their booths. Defendants stake their opposition to plaintiffs' motion and support their own cross-motion for judgment largely on the notion that this development removes plaintiffs' business from the ambit of the TCA. Their essential argument is that telephone booth service is a figment of history, that the "market" in the City for PPT telecommunications services has hit a prolonged downturn with no foreseeable possibility of uplift, that plaintiffs' true business is in billboards rather than telecommunications and that the TCA is thus inapplicable.

Yet, the fact that the marketplace has withered does not warrant either its obituary or defendants' salient theme that Congress did not intend to regulate a withered market. Neither caselaw nor legislative history supports such a narrow interpretation of Congress's intent in enacting the TCA. For the reasons that follow, plaintiffs' motion is granted in part and denied in part, as is the City's cross motion.

BACKGROUND

I. The Shifting PPT Industry

A brief overview of the PPT industry and its regulatory framework is offered for context. First, a note on the New York City marketplace. PPTs in the City may be installed in one of three locations: (1) on private property-inside office buildings, for example, (2) on the building side of public sidewalks (called "on the building line", in industry parlance), or (3) on the curb side of sidewalks ("on the curb line"). DoITT (previously known as the Department of Telecommunications and Energy), currently requires, and at all relevant times required, a permit for the installation of sidewalk PPTs, which includes building line and curb line installations.

The prequel differs. For decades, the laws of the City, like those of so many across the country, dictated that the only recipients of such permits for curb line PPTs would be the local, regulated monopoly telephone company. In New York, it was the appropriately named the New York Telephone Company. Antitrust concerns and corporate reorganizations brought a series of successors. The incumbent successor is Verizon, which holds licenses for many but, it is undisputed, not all of the PPTs on City sidewalks. In the mid 1980s, other companies unaffiliated with the monopoly phone company's genealogy, known as "independent" phone companies at the time, began to install payphones on the building line with the permission of the adjoining property owner. Dial tone service for such PPTs would be drawn from an existing telephone line to the building. Apparently, the City did little for decades to police these unlicensed building line PPTs, and a fledging independent industry developed against the exterior walls of New York's buildings. No independent companies were licensed to run curb line PPTs.

In the mid 1990s, the landscape changed radically. The New York City Council enacted Local Law 68 and adopted Resolution No. 439-A, subsequently amended by Resolution 2298, (together the "City PPT Law"), creating a system for the non-exclusive franchising, permitting and administration of sidewalk PPTs. When the City PPT Law took effect in January 1996, DoITT acquired the authority to manage payphones and related enclosures that were installed, maintained or operated on the streets of the City at either the building or curb line. Regulatory authority was exercised by requiring a permit and a franchise with the City that met certain conditions. The City PPT Law gave the municipality wide discretion over payphone applications, and also required that DoITT notify the Department of Transportation and the Landmarks Preservation Commission, the former an executive agency of the City and the latter a quasi-independent one, of new PPT applications and offering them time to comment.

When the City PPT Law was enacted, the City estimated that there were some 35,000 PPTs installed and operating on New York City sidewalks. Of these, Verizon operated 9,500, mostly at the curb line. Chief among the remainder were independent PPTs that had been installed on the building line-unlicensed but unmolested by the City.

The City PPT Law brought dramatic change. The curb line was essentially deregulated. No longer the exclusive domain of NYNEX, New York Telephone's progeny operating at the time, the City opened up the curb line to permit applications from independent companies, in part because it recognized the need to "promote competition in the public pay telephone industry." Resolution No. 439-A. By becoming subject to the same permit application process, the building line was, in essence, reined in. Like curb line phones, building line phones, including those already in existence, would now be required to undergo a licensing process by the City. Recognizing that the majority of PPTs in New York had operated for years without licenses, the City established something of an amnesty program for them. During an interim period between the enactment of the City PPT Law and the issuance of the new franchise agreements it required, existing independent payphones would be allowed to remain if (1) they were registered with the City on or before March 31, 1996, (2) interim occupancy fees were paid to the City, and (3) their continued existence was not objected to by the Commissioner of DoITT. These phones would be grandfathered into the regulated PPT system after the eventual issuance of a franchise to the independent company.

By May 1996, DoITT counted 32,679 registered PPTs owned by over 150 independent companies, including 1085 registered payphones of Telebeam and 79 of Coastal. The sheer scope of such a revolutionary operation suggested that not everything would go smoothly, and, indeed, little did. Somewhat predictably, independent companies launched a run on building line payphone locations in advance of and, defendants maintain, well after, the March 1996 deadline in an effort to get as many phones grandfathered as possible. Defendants maintain that the rushed applications subject of this suit include many post-deadline, and others that would be incapable of being installed and operational prior to the amnesty deadline. Defendants also represent that many of the applications from plaintiffs and other independent companies contained errors and omissions that prompted a correction period, during which Telebeam, among others, submitted several corrections and additional registry entries.

Advertising introduced yet another wrinkle in the complex inter-era transition in PPT management and oversight in New York City. Although the phone booths of Clark Kent's comic book day, through the infancy of television and on to his 70's movie were not plastered with advertisements for radio stations, injury lawyers, pimple removers and the like, such adornments became an important part of the industry in the mid-1980s. In 1988, the City granted what was still New York Telephone a franchise to place advertising on its licensed PPTs on City sidewalks. That agreement was renewed for another five years in 1993, subject to the execution of a new PPT franchise by New York Telephone. Under the agreement, New York Telephone was required to pay 26% of its net commission to the City. A holdover provision of the agreement allowed the company to continue to place advertising on its PPTs after the expiration of the franchise provided that the company continued to pay its commissions. The agreement also disclaimed that the franchise it granted conveyed "any right or authority of the [New York Telephone Company] to install or maintain telephone booths on City sidewalks, and is subject to any limitation or revocation of such right."

The agreement was still in effect when the City PPT Law was enacted. As a result, Verizon and its predecessors continued to carry advertising on the company's phones from 1996 onward. Independent companies, now operating wholly within the City's regulatory framework but not yet blessed with franchise agreements, were kept from displaying advertising on their PPTs from 1996 until late 1999, when their franchises were approved. Between 1996 and 1999, Verizon's predecessor paid the City $20.63 million in advertising commissions, a figure that suggests gross revenue from advertising of approximately $80 million during that period.

In October 2004, after accepting public comment, DoITT amended its rules concerning advertising on PPTs (the "2004 advertising amendment"). The 2004 advertising amendment prohibited advertising on PPTs installed after the effective date of the amendment in eight of the Borough of Manhattan's community districts.*fn2 These eight districts comprise the area in Manhattan south of 110th Street on the West Side and south of 96th Street on the East Side. Of course, Verizon, pursuant to its prior agreements, had already penetrated these territories with PPT advertising. At the time of passage of the 2004 advertising amendment, plaintiffs had more than 75% of the pending applications for PPTs in those eight community districts.

Plaintiffs point to the have and have not figures, among others, in describing the heavy cost they had to bear as a result of the City's pattern of unfair treatment. They claim that DoITT wrongfully delayed and denied applications for permits for PPT locations, and wrongfully preferred Verizon and its predecessors in aspect after aspect of the transition to a post-City PPT Law world, coddling them with unique and favorable rules and punishing plaintiffs with retroactive rules that only further slanted the playing field in New York Telephone Company's successors' favor and in violation of the TCA. Plaintiffs allege that once they challenged their unfair treatment, a round of retaliatory roadblocks befell them, all of which were exacerbated by repeated due process violations.

Defendants respond that their actions with regard to PPT management are not subject to the TCA, that any such claims are barred by res judicata anyway, and that their actions during the pendency of this action were reasonable, not retaliatory. They further argue that the plaintiffs are not entitled to damages in this action under the TCA even if it does apply, and that a number of plaintiffs' claims brought pursuant to Article 78 of the New York Civil Practice Law and Rules lack a jurisdictional peg and should not be entertained by discretion if the Court determines it could exercise jurisdiction over them.

II. Allegations of Retaliation

Contending the City's malfeasance went beyond simply coddling the incumbent phone company, plaintiffs argue that, starting in 1996, they communicated their concerns to DoITT only to incur the wrath of retaliation. Specifically, they allege that, in response to DoITT's "blanket" rejection of a number of plaintiffs' permit applications for PPTs in a particular community district, Robert Brill, plaintiffs' counsel, wrote letters to DoITT in December 2001 (the "Brill letters") to question the rejections, only to prompt a series of threats by DoITT officials intended to pressure plaintiffs into withdrawing the letter and foregoing suit. John Sweeney, president of Coastal, avers further that he complained to Stanley Shor ("Shor"), assistant Commissioner of DoITT, on January 23, 2002 about DoITT's rejections.*fn3 In that conversation, Shor, according to Sweeney, stated that DoITT wanted the Brill letters withdrawn because taking the time to explain the bases for the rejections would gum up the permit-reviewing machinery. During the call, Shor also stated, Sweeney asserts, that any reason given would be a pretext in any event, for the true reason for the denial was powerful political opposition to the PPTs from the district's community board. Finally, Shor allegedly informed Sweeney that Assistant Deputy Commissioner Agostino Cangemi had a message for plaintiffs: seek redress in court and they would see no more permits. Cangemi's alleged threat was not only echoed to Sweeney but also to Raymond Mastroianni, Telebeam's CEO, by Carl Figiola, a public relations specialist retained by plaintiffs to communicate with DoITT officials.

Mastroianni also claims to have attended a meeting in February 2002 with DoITT officials where Cangemi allegedly stated that "if [Sweeney] thinks he is going to sue DoITT and the City, he will have another thing coming to him, and that if [Sweeney] sues he will never see another permit again." (Mastroianni Rep. Decl. ¶ 34). Mastronianni contends that Cangemi repeated these threats at several subsequent meetings as well, with Cangemi clearly intimating that he could manipulate DoITT rules and regulations to Telebeam's detriment. Finally, Mastroianni alleges that, in June 2003, John Greeney, DoITT's Director of Enforcement, informed him that the "marching orders" at DoITT (allegedly given by Cangemi and Shor) were to "come after" plaintiffs. (Mastronianni Decl. ¶ 41; see also Pls. Ex. 45). Greeney denies having made this statement. (Defs. Ex. 167). Shor, meanwhile, acknowledges that he asked plaintiffs to withdraw the Brill letters, but claims that he merely informed plaintiffs that it would be too time-consuming for DoITT to provide reasons for rejections of applications. Cangemi, concurring in the alleged reason for the requested withdrawal of the Brill letters, categorically denied making any threats against plaintiffs.

Of course, plaintiffs, apparently undaunted by these threats, filed this action in April 2002. At that point, plaintiffs contend, DoITT made good on its threats. First, plaintiffs claim that there was a marked uptick in the number of permit rejections they received after the lawsuit. Coastal alleges that before the lawsuit, it had received 675 PPT permits and 1365 rejections related to permit applications filed before November 1998, while afterwards, the ratio shifted to only 25 permits received and 3557 rejections. Telebeam claims that for permit applications filed before November 1998, it received 2000 pre-lawsuit application grants versus only 35 grants post-lawsuit. The referenced rejections were done en masse and were largely attributed to DoITT's policy against "district saturation", a policy, plaintiffs say, that was spawned purely by this litigation. DoITT insists that the significant number of rejections resulted from the agency's having deferred notification of previously rejected applications until a later date (coincidentally after filing of this lawsuit) in order to focus on processing pending permit applications and that it had announced this policy to the PPT industry, without objection, years before.

Additionally, plaintiffs allege that DoITT adopted harsh new rules after the filing of the lawsuit, all targeted at plaintiffs. Chief among these allegedly retaliatory rules was the 2004 advertising amendment. Plaintiffs attempt to tie the 2004 advertising amendment to their retaliation claims by alleging that more than 75% of the permit applications pending at the time the amendment was passed belonged to either Coastal or Telebeam and an e-mail sent on January 13, 2004 by Fernando DeGuia Jr., Special Assistant to the Deputy Commissioner of DoITT, in which DeGuia Jr. wrote: "The legal team is anxious to start the CAPA process for the Rule change which includes the fees because its publication in the City Record will help the City in a lawsuit the ppt group is involved in." (Pls. Ex. 61).

Finally, plaintiffs claim that after the Brill letters and the filing of this lawsuit, DoITT also stepped up intimidation in other ways. Coastal claims that it did not receive a single notice of violation ("NOV") from DoITT before the filing of the lawsuit, but that a flood of NOVs followed filing. DoITT counters that it ramped up enforcement generally in the PPT area around that time period and that after the lawsuit, plaintiffs' competitors (particularly Verizon) were issued more NOVs than plaintiffs. Telebeam alleges a different sort of persecution, claiming that DoITT "instigated" audits of Telebeam, including by the New York City Comptroller's office.

III. Procedural History

With the lawsuit bringing matters to a head, pre-answer, plaintiffs brought a motion for partial summary judgment on those claims relating to delays in processing over 7000 permit applications. Judge Raymond J. Dearie referred the motion to Magistrate Judge Steven M. Gold. In a detailed and thoughtful opinion adopted almost entirely by Judge Dearie, Judge Gold denied the motion, ruling that because discovery had yet to yield much information about the relative viability of private property, building line and curb line PPTs, defendants' claim that plaintiffs were still able to compete meaningfully in the New York City PPT market (by virtue of their existing access to the PPT market) could not be meaningfully evaluated. Defendants' cross motion was granted to the extent that certain due process claims were dismissed.

Judge Dearie later declined to exercise federal jurisdiction over plaintiffs' proposed state law claims concerning DoITT's 2004 rule changes prohibiting certain advertisements. With closure of the federal forum, plaintiffs commenced an Article 78 proceeding in state court (the "Article 78 proceeding"). There, plaintiffs advanced many of the same arguments they do here, including that some of the City's policies placed plaintiffs at a competitive disadvantage. The state court rejected plaintiffs' Article 78 claims on July 5, 2006, but, despite the City's insistence, the court expressly declined to consider the plaintiffs' claims under the TCA. Meanwhile, discovery continued in this matter, leading to the instant cross motions for summary judgment.

DISCUSSION

I. Summary Judgment Guideposts

A motion for summary judgment is granted only if "the pleadings, the discovery and disclosure materials on file, and any affidavits show that 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(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The Court's responsibility in assessing the merits of a summary judgment motion is thus not to try issues of fact, but rather to "determine whether there are issues of fact to be tried." Sutera v. Schering Corp., 73 F.3d 13, 16 (2d Cir. 1995) (quoting Katz v. Goodyear Tire & Rubber Co., 737 F.2d 238, 244 (2d Cir. 1984)). In deciding such motions, the moving party bears the burden of demonstrating that there is no genuine issue as to any material fact, see, e.g.,Jeffreys v. City of New York, 426 F.3d 549, 554 (2d Cir. 2005), and the evidence presented will be construed liberally in favor of the party opposing the motion, see, e.g., Sec. Ins. Co. of Hartford v. Old Dominion Freight Line. Inc., 391 F.3d 77, 83 (2d Cir. 2004). "If, as to the issue on which summary judgment is sought, there is any evidence in the record from which a reasonable inference could be drawn in favor of the opposing party, summary judgment is improper." Hetchkop v. Woodlawn at Grassmere, Inc., 116 F.3d 28, 33 (2d Cir. 1997).

If the moving party meets its initial burden of demonstrating the absence of a disputed issue of material fact, the burden shifts to the nonmoving party to present "specific facts showing a genuine issue for trial." Fed. R. Civ. P. 56(e). The nonmoving party may not then rely solely on "conclusory allegations or unsubstantiated speculation" in order to defeat a motion for summary judgment. Scotto v. Almenas, 143 F.3d 105, 114 (2d Cir. 1998). Rather, the nonmoving party must "make a showing sufficient to establish the existence of [each] element to that party's case . . . since a complete failure of proof concerning an essential element of . . . [the] case necessarily renders all other facts immaterial." Celotex, 477 U.S. at 322-23. If the evidence favoring the nonmoving party is "merely colorable . . . or is not significantly probative, summary judgment may be granted." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50 (1986).

II. Res Judicata & Collateral Estoppel

Before turning to the difficult terrain at the crossroads of the TCA and the City's PPT laws, the Court must initially decide what, if any, claims plaintiffs are entitled to advance. The City argues that plaintiffs are barred from advancing their "federal claims", presumably meaning plaintiffs' TCA and federal constitutional claims, by the doctrines of res judicata and collateral estoppel. Plaintiffs, of course, contest and contend that their federal claims are unencumbered by any previous state court judgment.

The City argues that there is a significant and, indeed, almost total overlap between the issues decided by the state court in the Article 78 proceeding and the claims advanced by plaintiffs now. Thus, the City says, because New York adopts the transactional view of res judicata, plaintiffs are barred from advancing their claims here. Plaintiffs counter that the state court explicitly carved out their federal claims from its judgment and that, in any event, res judicata is inapplicable because the state court was not empowered to give the full relief available in federal court.

Traditionally, the doctrine of res judicata requires that "a valid, final judgment, rendered on the merits, constitutes an absolute bar to a subsequent action between the same parties, or those in privity with them, upon the same claim or demand." Epperson v. Entertainment Express, Inc., 242 F.3d 100, 108 (2d Cir. 2001) (internal quotation omitted). In measuring the applicability of the doctrine, "a federal court must give to a state-court judgment the same preclusive effect as would be given that judgment under the law of the State in which the judgment was rendered." Migra v. Warren City Sch. Dist., 465 U.S. 75, 76 (1984). However, res judicata is, as plaintiffs say, inapplicable where the initial forum was not empowered to grant the full measure of relief available in the subsequent lawsuit. See Burka v. New York City Transit Auth., 32 F.3d 654, 657 (2d Cir. 1994).

Here, neither plaintiffs' TCA nor constitutional claims are barred by res judicata. As for the TCA claim, the state court explicitly declined to consider plaintiffs' claims under the TCA and left them to this Court to resolve. Matter of Coastal Communication Serv., Inc. v. New York City Dept. of Info. Tech. & Telecom, 12 Misc. 3d 1179A, 824 N.Y.S.2d 761 (Sup. Ct., New York County, 2006) ("[T]his Court declines to consider [the TCA] issue here and defers to the federal court.") (hereinafter "Coastal I") aff'd 44 A.D.3d 309, 843 N.Y.S.2d 23 (1st Dep't 2007). As a consequence, this Court will not give any res judicata effect to the Article 78 proceeding with respect to plaintiffs' TCA claim. Cf. McLearn v. Cowen & Co., 60 N.Y.2d 686; 455 N.E.2d 1256; 468 N.Y.S.2d 461 (1983) (declining to preclude plaintiff from pursuing a state claim previously brought in federal court where the federal court's judgment explicitly did not reach the state claim). The same holds for the claims brought pursuant to 42 U.S.C. § 1983 for alleged violations of plaintiffs' constitutional rights. Indeed, "[i]t is well settled that res judicata does not apply to bar a § 1983 action where a plaintiff has previously brought an Article 78 proceeding." Hachamovitch v. Debuono, 159 F.3d 687, 695 (2d Cir. 1998).

But, there is more to issue preclusion than the doctrine of res judicata. The City also argues that plaintiffs are collaterally estopped from re-litigating all of their TCA and constitutional claims because the Article 78 court necessarily and adversely decided issues common both to plaintiffs' federal and Article 78 claims.*fn4 Although the Article 78 decision cuts more surgically through plaintiffs' claims than the broad swath the City asserts, by virtue of its collateral estoppel effects, plaintiffs are barred by the Article 78 decision from asserting the anticompetitive effect of DoITT's 2004 advertising amendment to establish their TCA claim.

When properly invoked, the doctrine of collateral estoppel bars a party from relitigating an issue decided against the party in a prior proceeding. See Roe v. City of Waterbury, 542 F.3d 31, 41 (2d Cir. 2008). As with res judicata, a federal court is required to give the same preclusive effect to a state court's treatment of an issue as the law of that state requires. Jenkins v. City of New York, 478 F.3d 76, 85 (2d Cir. 2007). In New York, there are two requirements to be satisfied for invocation of the doctrine: 1) "[t]here must be an identity of issue which has necessarily been decided in the prior action and is decisive of the present action" and 2) "there must have been a full and fair opportunity to contest the decision now said to be controlling." Buechel v. Bain, 97 N.Y.2d 295, 304; 740 N.Y.S.2d 252; 766 N.E.2d 914 (2001).

The thrust of plaintiffs' claims in the Article 78 proceeding was that the 2004 advertising amendment was improper. See Coastal I, 12 Misc. at1179A, 824 N.Y.S.2d at 761. Plaintiffs asserted several reasons in state court why the 2004 advertising amendment was improper- among them was the plaintiffs' contention that the 2004 advertising amendment placed them at a competitive disadvantage vis a vis Verizon in contravention of the City's own stated policy to promote competition in the PPT industry. (See, e.g., Defs. Exs. Vol. VI, Jacoby Aff. at ¶ 15). Specifically, plaintiffs argued that because Verizon had been allowed to advertise for years unmolested (and on illegal PPTs according to plaintiffs), the 2004 advertising amendment impermissibly favored the "incumbent monopolist", Verizon. (See Defs. Exs. Vol. VI, Plaintiffs' Memorandum of Law at pg. 19-20; Jacoby Aff. at ¶ 19). Thus, they argued, the 2004 advertising amendment was in direct conflict with other City pay phone resolutions that were intended to promote competition in the PPT industry. Moreover, plaintiffs asserted that the 2004 advertising amendment was passed with an "awareness" by DoITT that it would disproportionately affect Coastal and Telebeam. In support of their argument that the amendment was anti-competitive, plaintiffs presented a full panoply of evidence to the Article 78 court, including discovery obtained in this action. (See Defs. Exs. Vol. VI, Jacoby Aff. at ¶¶ 16-23).

The Article 78 court specifically rejected as a matter of fact plaintiffs' contention that they were placed at a competitive disadvantage by the 2004 advertising amendment. First off, it noted that Verizon was subject to the same regulation, notwithstanding that it already had PPTs with advertising located in the affected community districts. See Coastal I at 12 Misc. at 1179A; 824 N.Y.S.2d at 761. Furthermore, the court found, the 2004 advertising amendment did not impinge on plaintiffs' ability to maintain advertising on PPTs they had installed prior to passage of the amendment. See id. Moreover, the Article 78 court determined that the 2004 advertising amendment was grounded in DoITT's rational concern over visual clutter, rejecting plaintiffs' argument that the 2004 advertising amendment was targeted at them. See id. Finally, the Article 78 court found that both plaintiffs and Verizon were still entitled to install new PPTs with advertising in community districts not affected by the 2004 advertising amendment. See id. Therefore, the Article 78 court held that plaintiffs "ha[d] not demonstrated that [the 2004 advertising amendment] places petitioners at a competitive disadvantage in installing reliable public pay telephone service." Id.

Plaintiffs are now barred from demanding another bite at the apple. First, the identical issue front and center here was presented by plaintiffs in the Article 78 proceeding: the alleged anti-competitive effect of the 2004 advertising amendment. In both cases, plaintiffs argue that the regulation's alleged anti-competitive effect was void as incompatible with legislation intended to promote competition in the PPT industry-in the Article 78 proceeding, it was the City's pay phone authorizing resolutions and here it is the TCA. As far as plaintiffs' allegations concerning advertising and Verizon's competitive edge are concerned, litigation of the alleged anti-competitive effect of the 2004 advertising amendment was necessary to the Article 78 court's decision and the outcome of that litigation decisive for plaintiffs' advertising-themed TCA claims here. See generally, TCG New York, Inc. v. City of White Plains, 305 F.3d 67, 76 (2d Cir. 2002) (hereinafter "TCG"). Plaintiffs were given, and of their own choice took, their full and fair opportunity to prove that the 2004 advertising amendment was anti-competitive. They failed to convince the Article 78 court of that fact. That judgment is the final word on this argument. Plaintiffs are, accordingly, now barred from again asserting the anti-competitive effect of the 2004 advertising amendment in this action.

III. Other Claims Under the TCA

A. Background of the TCA

The TCA became law on February 8, 1996. Its stated purpose is "to promote competition and reduce regulation in order to secure lower prices and higher quality services for American telecommunications consumers and encourage the rapid deployment of new telecommunications technologies." Pub.L. 104-104, 110 Stat. 56 (1996). Among the tools Congress made available to hasten this wave of national telecommunications deregulation is § 253, a provision tellingly entitled, "Removal of Barriers to Entry." Section 253 reads, in relevant part, as follows:

(a) In general

No State or local statute or regulation, or other State or local legal requirement, may prohibit or have the effect of prohibiting the ability of any entity to provide any ...


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