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BellSouth Telecommunications, LLC v. Metropolitan Government of Nashville and Davidson County, Tennessee

United States District Court, M.D. Tennessee, Nashville Division

November 21, 2017

BELLSOUTH TELECOMMUNICATIONS, LLC d/b/a AT&T TENNESSEE, Plaintiff,
v.
METROPOLITAN GOVERNMENT OF NASHVILLE AND DAVIDSON COUNTY, TENNESSEE, et al., Defendants. COMCAST OF NASHVILLE I, LLC, Plaintiff,
v.
METROPOLITAN GOVERNMENT OF NASHVILLE AND DAVIDSON COUNTY, TENNESSEE, et al., Defendants.

         ORDER: (1) GRANTING IN PART, DENYING IN PART, AND RESERVING RULING IN PART ON PLAINTIFFS' MOTIONS FOR SUMMARY JUDGMENT [DOCS. 44, 49] AND DEFENDANTS' MOTION FOR SUMMARY JUDGMENT [DOC. 77]; AND (2) DENYING DEFENDANTS' MOTION FOR TIME TO TAKE DISCOVERY [DOC. 65]

          Victoria A. Roberts, United States District Judge

         I. INTRODUCTION

         Plaintiffs provide telecommunications services in Nashville, Tennessee. Components of their networks are attached to utility poles located in the public rights-of-way. In this highly competitive business, potential competitors to AT&T and Comcast need access to these same utility poles to attach their own equipment. These consolidated lawsuits center around an Ordinance adopted by the Metro Nashville Council to streamline this access process.

         Plaintiffs challenge the Ordinance under both state and federal law. They seek a judgment declaring the Ordinance unlawful and a permanent injunction restraining its enforcement. Specifically, Plaintiffs say the Ordinance: (1) is preempted by federal law; (2) contravenes the Metro Nashville Charter in violation of state law; and (3) violates the Contract Clauses of the United States and Tennessee Constitutions.

         Among other things, Defendants argue that: (1) Plaintiffs lack standing and have no private right of action to assert their second claim; and (2) all of Plaintiffs' claims fail as a matter of law because the Ordinance is a valid exercise of Metro Nashville's authority to manage its public rights-of-way.

         The Court GRANTS IN PART, DENIES IN PART, and RESERVES RULING IN PART on Plaintiffs' motions for summary judgment [Docs. 44, 49] and Defendants' motion for summary judgment [Doc. 77], as follows:

1. Plaintiffs' motions are GRANTED, and Defendants' motion is DENIED on Claim I. The Court DECLARES that the Ordinance is preempted by federal law as applied to utility poles owned by AT&T and other private parties. Defendants are PERMANENTLY ENJOINED from applying the Ordinance to utility poles owned by AT&T and other private parties;
2. On Count II, the Court RESERVES RULING on the motions. Plaintiffs may amend their complaints by December 6, 2017, to add NES as a party and to invoke the Tennessee Declaratory Judgment Act. Plaintiffs must serve NES with the amended complaint and this Order within one week of filing the amended complaints. NES must file a preliminary response - as explained on pages 30-32, below - within one week of being served, and may further answer or respond as permitted by the Federal Rules of Civil Procedure;
3. The Court GRANTS Defendants' motion and DENIES Plaintiffs' motions on Count III. The Court grants Defendants summary judgment on Plaintiffs' claims under the Contract Clause of the United States and Tennessee Constitutions.

         Defendants' motion to allow time for discovery [Doc. 65] is DENIED.

         II. BACKGROUND

         A. Definitions

         The Court believes it would be useful to set forth the definitions of terminology that will be used throughout this Order:

Attachment Agreement - an agreement between a utility pole owner and an Existing Attacher covering, inter alia, the terms of Attachments to poles and process for performing Make-Ready Work;
Attachments - wires, antennas, lines, and other communications equipment attached to utility poles;
Complex Make-Ready Work - Make-Ready Work that will cause or would reasonably be expected to cause a customer outage;
Defendants - Metro Nashville; the Mayor of Metro Nashville, Megan Barry; and the Interim Director of Metro Nashville's Department of Public Works, Mark Sturtevant;
Electric Power Board - the Electric Power Board of Metro Nashville; operates as NES;
Existing Attacher - a telecommunications provider with Existing Attachments on a particular utility pole;
Existing Attachments - Attachments already affixed to a utility pole;
FCC - the Federal Communications Commission;
Make-Ready Work or Make-Ready Process - rearranging, transferring, altering, or otherwise moving Existing Attachments so that a utility pole can accommodate a New Attacher's Attachments;
Metro Charter or Charter - the Metro Nashville Charter;
Metro Nashville - Metropolitan Government of Nashville and Davidson County;
NES - Nashville Electric Service; a municipal public utility managed and controlled by the Electric Power Board;
New Attacher - a telecommunications provider seeking to add Attachments to a utility pole;
One-Touch Make-Ready Policy or Climb Once Policy - a policy which seeks to avoid delays by having all Make-Ready Work performed at the same time by a single crew or contractor, as opposed to having each Existing Attacher perform its own Make-Ready Work at different times;
Ordinance - Ordinance No. BL2016-343;
Plaintiffs - BellSouth Telecommunications, LLC (“AT&T”) and Comcast of Nashville I, LLC (“Comcast”);
The Act - the Federal Communications Act of 1934.

         B. Plaintiffs' Networks and the Make-Ready Process in Metro Nashville

         Components of Plaintiffs' telecommunications network are attached to over 100, 000 utility poles in the Metro Nashville area, a significant number of which are in the public rights-of-way. NES owns approximately 80 percent of the utility poles in the Metro Nashville area; AT&T owns the majority of the remaining 20 percent.

         When a new telecommunications provider enters a market, it needs access to existing utility poles to attach its equipment. Typically, if not always, a New Attacher cannot attach equipment to a utility pole until Existing Attachers rearrange their Attachments to create sufficient space.

         Regulation of Attachments on poles owned by NES and AT&T is largely controlled by Attachment Agreements. Plaintiffs each operate under Attachment Agreements with NES. Plaintiffs' agreements with NES, like most Attachment Agreements, require that the Existing Attacher move its own Attachments.

         Among other things, AT&T's agreement with NES (“AT&T Agreement”) states, “[e]xcept as herein otherwise expressly provided, each party shall place, maintain, rearrange, transfer and remove its own attachments, and shall at all times perform such work promptly.” AT&T Agreement, Art. VI(B). If AT&T fails to perform this obligation, “[NES] may elect to do such work, and [AT&T] shall reimburse [it] for the cost.” Id., Art. XIV(B).

         Under Comcast's agreement with NES (“Comcast Agreement”), when NES determines that Make-Ready Work to Comcast's Attachments is necessary, Comcast must perform the required work within 30 days after receiving notice from NES. Comcast Agreement, Art. 12.1. If Comcast does not move its Attachments within 30 days, it is subject to a five-dollar penalty per Attachment for each day after the thirtieth (30th) day in which the work remains incomplete. Id., Exhibit A. Moreover, beginning on the sixtieth (60th) day after Comcast receives notice, NES may perform the Make- Ready Work or delegate that authority to a New Attacher using a qualified contractor. See Comcast Agreement, Art. 12.1, 12.1.1.

         Because of the highly competitive nature of the industry and different types of service providers (e.g., telephone, cable, and internet), there can be as many as fourteen different Existing Attachments on a single utility pole. When each Existing Attacher performs its own Make-Ready Work at different times, the process can take months to complete and can involve numerous road or sidewalk closures when the pole being worked on is in a public right-of-way.

         C. Metro Nashville Adopts the Ordinance

         The Metro Nashville Council passed the Ordinance on September 20, 2016; Mayor Barry signed it into law the following day. The Ordinance amends the Metro Nashville Code of Laws by adding Chapter 13.18 titled “Management of Public Rights-of-Way for Make Ready Work.” Generally, the Ordinance adopts a One Touch Make Ready/Climb Once Policy.

         Under the Ordinance, a New Attacher must submit an Attachment application to the utility pole owner and get the owners' approval. Upon approval, the Ordinance authorizes a New Attacher to perform Make-Ready Work, so long as it complies with two limitations: (1) the New Attacher may not perform Make-Ready Work “without first providing fifteen (15) days' prior written notice . . . to the applicable [Existing Attacher]”; and (2) the New Attacher may not perform Complex Make-Ready Work “without first providing thirty (30) days' prior written notice . . . to the applicable [Existing Attacher].” See Ordinance, § 13.18.020(A)(1), (4).

         The Ordinance preamble states that its purpose is “to facilitate the efficient construction or upgrade of communications networks on utility poles located in the public rights-of-way while promoting and protecting public safety and reducing inconvenience to [Metro Nashville] residents and businesses from the construction.” Metro Nashville says it adopted the Ordinance: (1) to reduce the number of traffic disruptions, road closures and sidewalk closures caused by the traditional Make-Ready Process - during which numerous Existing Attachers typically move their own facilities at different times; and (2) to correspondingly increase safety.

         D. Plaintiffs Challenge the Ordinance

         AT&T filed suit challenging the Ordinance on September 22, 2016; Comcast filed its case in October 2016. Because the challenges are on the same grounds, the Court consolidated the cases.

         Plaintiffs allege that the Ordinance: (1) is preempted by federal law to the extent it applies to AT&T's utility poles and other privately owned poles; (2) violates the Metro Charter as it applies to NES-owned poles; and (3) substantially impairs their agreements with NES, in violation of the Contract Clauses of the United States and Tennessee Constitutions.

         Plaintiffs say the Ordinance upsets their expectations and conflicts with their rights under federal law and their agreements with NES by, among other things, reducing the amount of time they have to perform Make-Ready Work on their own Attachments from 60 days to 15 days for normal Make-Ready Work. This, Plaintiffs say, will make it less feasible, and in some cases impossible, to move their own Attachments. As a result, they claim that the Ordinance effectively permits a New Attacher to temporarily seize their property and alter or rearrange it without consent and with little notice. Further, Plaintiffs say that because the Ordinance deprives them of an adequate opportunity to assess possible network disruption, and because the New Attacher moving their Attachments will have less knowledge about their networks, it will increase the risk of outages and disruptions to their networks.

         III. STANDARD OF REVIEW

         Under Federal Rule of Civil Procedure 56(a), “[t]he Court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” The movant bears the initial burden to inform the Court of the basis for the motion, and must identify particular portions of the record which demonstrate the absence of a genuine dispute as to any material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the movant satisfies its burden, the non-moving party must set forth specific facts showing a genuine issue for trial. Id. at 324.

         In deciding a summary judgment motion, the Court “views the factual evidence and draws all reasonable inferences in favor of the nonmoving party.” McLean v. 988011 Ontario, Ltd., 224 F.3d 797, 800 (6th Cir. 2000). The Court need consider only the cited materials, but it may consider other evidence in the record. Fed.R.Civ.P. 56(c)(3). “[O]n cross-motions for summary judgment, the court must evaluate each party's motion on its own merits, taking care in each instance to draw all reasonable inferences against the party whose motion is under consideration.” B.F. Goodrich Co. v. U.S. Filter Corp., 245 F.3d 587, 692 (6th Cir. 2001) (citation and internal quotation marks omitted).

         IV. ANALYSIS

         A. Count I - The Ordinance is Preempted by Federal Law

         The first of Plaintiffs' three challenges is that the Ordinance - as applied to privately owned utility poles, such as AT&T's - is preempted because it conflicts with federal law, including 47 U.S.C. § 224 and the pole attachment rules and regulations promulgated by the FCC, 47 C.F.R. § 1.1401, et seq. The Court agrees.

         State laws are “naturally preempted” to the extent they conflict with federal law. Crosby v. Nat'l Foreign Trade Council, 530 U.S. 363, 372 (2000). “This includes cases where compliance with both federal and state regulations is a physical impossibility, and those instances where the challenged state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.” Arizona v. United States, 567 U.S. 387, 399-400 (2012) (internal citations and quotation marks omitted).

         What constitutes a “sufficient obstacle” is “a matter of judgment, to be informed by examining the federal statute as a whole and identifying its purpose and intended effects. . . .” Crosby, 530 U.S. at 373. In deciding whether federal law preempts a state law, the Court “assume[s] that the historic police powers of the States are not superseded unless that was the clear and manifest purpose of Congress.” Arizona, 568 U.S. at 400 (citations and internal quotation marks omitted).

         The Act grants the FCC authority to “regulate the rates, terms, and conditions for pole attachments” and to promulgate rules and regulations to that effect. See 47 U.S.C. § 224(b).

         A state can opt out of FCC jurisdiction over pole attachments - and render the FCC rules and regulations on pole attachments non-binding - if it certifies to the FCC that it regulates pole attachments. See 47 U.S.C. § 224(c). In this “reverse-preemption” provision, the FCC acknowledges that it “retains jurisdiction over pole attachments only in states that do not so certify.” See In re ...


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