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03/29/88 Satellink of Chicago, Inc. v. the City of Chicago Et Al.

March 29, 1988

SATELLINK OF CHICAGO, INC., PLAINTIFF-APPELLEE AND CROSS-APPELLANT

v.

THE CITY OF CHICAGO ET AL., DEFENDANTS-APPELLANTS AND CROSS-APPELLEES



APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, SECOND DIVISION

523 N.E.2d 13, 168 Ill. App. 3d 689, 119 Ill. Dec. 545 1988.IL.445

Appeal from the Circuit Court of Cook County; the Hon. Earl Arkiss, Judge, presiding.

APPELLATE Judges:

PRESIDING JUSTICE HARTMAN delivered the opinion of the court. STAMOS and BILANDIC, JJ., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE HARTMAN

Summary judgment was entered for plaintiff invalidating an amendment of the Chicago amusement tax (the amendment) affecting "transmission or broadcast of programs by means of wire, radiowaves, microwaves . . . by subscription television service," which defendants appeal. (See Chicago Municipal Code ch. 104, § 104 -- 1 (1984 -- 85).) Plaintiff cross-appeals denial of attorney fees. The issues raised for review include whether: (1) the amendment denied plaintiff the equal protection of the law; and (2) the circuit court improperly denied attorney fees to plaintiff. Other issues raised need not be considered in light of our determination of the appeal.

Plaintiff, Satellink of Chicago, Inc. (Satellink), installs and operates satellite master antenna television systems for high-rise apartment buildings and provides television programming to residents of such buildings who subscribe and pay a fee. Satellink uses a central dish antenna that receives television signals from a fixed-orbit geostationary satellite. Satellite antennas may be located at the building site or signals may be received by microwave through small receiving antennas on top of the building. The signal is thereafter distributed by wire to resident subscribers. All plaintiff's equipment and operations are located within Chicago.

As of November 30, 1985, plaintiff provided service to 1,461 subscribers at 27 buildings within the City of Chicago, who received VHF channels 2, 5, 7, 9 and 11 and UHF channels 22, 26, and 32 only some also received UHF channels 60 and 66. Additionally, eight cable stations were available through five different service packages. Package fees ranged from $11.95 to $31.90 per month. During the year ending June 30, 1985, plaintiff's gross income of $584,825.98 included $335,437.78 from subscription and installation fees for programming and $249,388.20 from installation and maintenance of master antenna systems.

The amusement tax ordinance was amended effective March 3, 1985 (Chicago Municipal Code ch. 104, § 104 -- 1 (1984-85)), and reads, in part, as follows:

"(3) any transmission or broadcast of programs by means of wire, radiowaves, microwaves or otherwise for public entertainment, including but not limited to transmissions or broadcasts by subscription television service, but excluding any such transmission or broadcast offered by any entity with whom the City has entered into or enters into a franchise agreement with respect to such transmissions or broadcasts."

The purpose of the amendment was "to provide for an expansion of the tax to subscription and cable television." (Journal of Proceedings of the City Council of the City of Chicago 13845 (February 20, 1985), 12270 (December 31, 1984).) The 4% admission fee tax is imposed on patrons of amusements and is to be collected by amusement operators. (Chicago Municipal Code ch. 104, §§ 104 -- 2, 104 -- 3 (1984).) Only cable systems are franchised by the city (Chicago Municipal Code ch. 113.1, 113.1 -- 2, 113.1 -- 4 (1984)), which pay a 5% gross receipts fee (Chicago Municipal Code ch. 113.1, § 113.1 -- 17A (1984)).

Plaintiff's verified complaint, seeking declaratory and injunctive relief against defendants City of Chicago and Charles Sawyer, acting director of the Department of Revenue, alleged the amendment of the ordinance was preempted by Federal legislation and regulations, constituted an impermissible tax on interstate commerce, a violation of freedom of speech, a denial of equal protection, a violation of the Illinois Antitrust Act (Ill. Rev. Stat. 1985, ch. 38, par. 60-3(3)), an unreasonable classification in defiance of article IX, section 2, of the Illinois Constitution, and a tax on income or earnings and on occupations violating article VII, section 6(e), of the Illinois Constitution. All Federal claims were filed under 42 U.S.C. § 1983 (1982). In addition, plaintiff sought attorney fees under 42 U.S.C. 1988 (1982).

Plaintiff's motion for a preliminary injunction and defendants' motion to strike and dismiss every count of the complaint were both denied by the circuit court except for the dismissal of the antitrust count of the complaint, count V. Defendants filed a verified answer on September 26, 1985.

Following discovery, both sides filed motions for summary judgment. On June 20, 1986, the circuit court granted summary judgment to plaintiff on count III on the basis of a first amendment violation, declared the amendment discriminatory on its face since it excluded cable operations with a franchise, and found that plaintiff's protected ...


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