Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. 82 C 339 -- Cale J. Holder, Judge.
Before CUDAHY, Circuit Judge, SWYGERT, Senior Circuit Judge, and POSNER, Circuit Judge.
POSNER, Circuit Judge. This is an appeal from the denial of a preliminary injunction in a suit under the First Amendment and the Sherman Act (15 U.S.C. §§ 1 et seq. ) to prevent the City of Indianapolis (which is coterminous with Marion County, Indiana, and thus extends beyond the old city limits to take in the surrounding suburbs) from enforcing the provisions of its cable television ordinance that relate to the award of cable television franchises.
Enacted in November 1979 as chapter 8 1/2 of the Code of Indianapolis and Marion County, the ordinanace provides that any cable television system using any of the public ways of the City of Indianapolis must obtain a franchise from the City. The ordinance creates the following procedure for awarding such franchises. Applications are accepted only "following action by the [City-County] Council determining that a franchise should be granted for all or a portion of the City," and must be filed within a specified time after the Council's action. The application, which must be accompanied by a nonrefundable fee of $3,000, is referred to the Cable Television Committee of the Council for at least two days of hearings, and it then goes, along with the Committee's evaluation, to the Board of Public Works. The Board "may recommend a franchising contract with the Committee's evaluation, to the Board of Public Works. The Board "may recommend a franchising contract with the applicant whose application represents the most desirable of all applications submitted for each area of the City," but the contract must not be exclusive, that is, must not forbid the City to franchise other cable television systems that would compete with an existing franchisee.
In determining which is "the most desirable" of all the applications, the Cable Television Committee and the Board must consider "all factors normally considered in any case in which the Committee or Board must make such a determination," including various technical and financial factors, the applicant's reputability, the quality of his promised service, and "any special factors ensuring that the applicant will carry out the purposes of this chapter and that an award of the franchise to the applicant is in the best interest of the City." Those purposes are elsewhere described as "orderly and responsible development of a system which will provide the people of the City with cable television service which is versatile, reliable, and efficient and which is available at affordable rates."
The Board's recommendation for the grant of a franchise goes to the City-County Council to be confirmed or denied by ordinance. If the franchise is confirmed, the franchise must pay a fee of $25,000. Applicants rejected by the Board may appeal to the Council, which may direct the Board to reconsider its action.
In 1967, when Marion County was still an autonomous political subdivision, its governing body had awarded a cable television franchise (later assigned to the present franchisee, Indianapolis Cablevision, Inc.) for the unincorporated suburban areas outside what were then the city limits of Indianapolis. Since this franchise is not exclusive, it does not prevent the City of Indianapolis from franchising other cable television systems in those areas. But when, shortly after chapter 8 1/2 was passed, the City-County Council exercised its power to "open up" areas of the City of Indianapolis for franchising, it did so only for the old city and the incorporated towns outside it; the area served by Indianapolis Cablevision was excluded. Four companies applied for franchises in the areas that were opened up, but only one franchise was awarded, to American Cablevision of Indianapolis, Inc. Since its franchise covered the entire area not served by Indianapolis Cablevision, this meant that neither company faced competition from another cable television system. The City-County confirmed the award of the franchise to American Cablevision in February 1981.
Enter the plaintiff, Omega Satellite Products Company. A limited partnership that has operated in Indianapolis since May 1980, Omega resembles and competes with cable television systems but at first was not subject to chapter 8 1/2 because it did not use any public way. A conventional cable television system receives television signals at a satellite earth station located some distance from its subscribers and transmits the signals to them over a grid of cables either strung on telephone poles or run under the streets. Omega, in contrast, installs small satellite earth stations on the roofs of apartment house complexes where its subscribers live, which means that all of the cables that connect the earth station to the subscribers' television sets are located on private property rather than above or below the public streets. Omega provides the usual cable television mixture of local television stations, distant "superstations" such as WGN in Chicago, cable television networks for sports and other specialized programming, and a modest amount of original programming. The corporation that is the general partner in Omega has interests in conventional cable television systems elsewhere in the country, but Omega itself has never operated such a system, and although it was operating in Indianapolis during the period in which applications for cable television franchises were being considered under the new ordinance neither it nor any of its sister systems expressed an interest in getting a franchise.
Not till March 1981, the month after the Council had awarded a franchise to American Cablevision, did Omega begin to express such an interest. It wrote letters to the City's general counsel, the chairman of the City-County Council, and other officials inquiring whether it might get a franchise. It received no encouragement. It could not actually apply for a franchise; the time for applying ran from the date on which the Council had opened up a part of the City of Indianapolis for franchises, and had expired long ago. But Omega made no effort, beyond perfunctory correspondence, to persuade the Council to open up all or part of the City of Indianopolis for new franchises, though chapter 8 1/2 appeared to give the Council the power to do so -- and if it did not, the council could easily rectify the oversight by passing an amending ordinance, as it was later to do.
Omega became impatient and in May 1981, without getting the required permit from the City's Department of Transportation to use a public right of way, it ran a cable through a drainage culvert under West 38th Street in Indianapolis to connect two apartment complexes so that it would not have to put a separate earth station on the second. It took the law into its own hands because it knew that the Department of Transportation would not grant it a permit to use the culvert. The Department may not allow the public ways of Indianapolis to be used in violation of an ordinance, and Omega's use of the drainage culvert under West 38th Street was contrary to chapter 8 1/2 because by using a public way in this manner Omega became a cable television system within the meaning of the ordinance, yet had no franchise. The City argues that Omega's lawless behavior is sufficient reason to deny the preliminary injunction that it seeks. Of course Omega did not have to obey chapter 8 1/2 if it violates federal law, but the Department of Transportation might have denied a permit for independent and valid reasons, such as safety. While not happy with Omega's surreptitious violation of the permit requirement, we do not think it bears on whether a preliminary injunction should have been issued. Evidently the cable does not create any safety hazard or other problem apart from chapter 8 1/2 becuase the City has consented to the cable's being allowed to remain in place until this lawsuit is finally decided, which we take to be a concession that the only ground on which the Department culd have denied a permit was chapter 8 1/2. In any event, it is not the proper office of the federal courts to punish Omega for its failure to get a permit. That is for the City to do if it wants to; evidently it does not want to.
The City discovered the illegal cable in a routine inspection of public ways and in January and February 1982 wrote Omega ordering it to remove the cable but also advising it that it could apply for a cable television franchise under chapter 8 1/2. The legal basis for this invitation is a little unclear but is apparently an ordinance, passed in July 1981, which amends chapter 8 1/2 by setting up a new unit of local government, the Cable Communications Office, and inviting it to refer to either of two committees of the City-County Council "specific applications for the granting or renewal of a franchise."
Omega neither filed an application for a franchise nor removed the cable but instead brought this lawsuit on March 11, 1982, and moved for a preliminary injunction forbidding the City to remove Omega's cable or to enforce the limitations in chapter 8 1/2 on the award of new franchises. Two weeks later, after an evidentiary hearing, the district court denied the motion. Trial was originally scheduled to begin on September 7, but by agreement of counsel has been postponed to March of next year. The City has agreed not to disturb the cable under West 38th Street until a final judgment is entered.
The decision to grant or deny a preliminary injunction involves a comparison of the probabilities, and consequences (public as well as private), of two types of error: granting an injunction to an undeserving plaintiff, that is, one who will not be able to establish a legal right to an injunction when the case is tried in full rather than in the necessarily hasty and incomplete hearing on the motion for preliminary injunction; and denying an injunction to a deserving plaintiff. See 11 Wright & Miller, Federal Practice and Procedure § 2948 (1973). When the consequences and probabilities point in the same direction the decision is easy. If the plaintiff is more likely than the defendant to prevail in the full trial and would be harmed more by the denial of the preliminary injunction than the defendant would be harmed by its grant, clearly the preliminary injunction should be granted. If the defendant is more likely to prevail in the full trial and would be harmed more by the grant of the preliminary injunction than the plaintiff would be harmed by its denial, clearly it should be denied. But the two cases are not exactly parallel, and not only because the plaintiff has the burden of proof. In measuring the harm to the plaintiff if the preliminary injunction is denied the court must consider whether the harm can be repaired completely by an award of damages after trial -- in which event even a deserving plaintiff will not be hurt by being denied a preliminary injunction.
If the consequences and probabilities do not point in the same direction, the analysis is more complex. If the harm to the plaintiff from denial of the preliminary injunction would be very great and the harm to the defendant from granting it very small, then the injunction should be granted even if the defendant has a better chance of prevailing on the merits than the plaintiff, provided the plaintiff's chances are better than negligible; and vice versa. "In general, the likelihood of success that need be shown will vary inversely with the degree of injury the plaintiff will ...