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CITY OF OTTAWA v. SAMMONS COMMUNS.

June 29, 1992

CITY OF OTTAWA, ILLINOIS; CITY OF MARSEILLES, ILLINOIS; VILLAGE OF NAPLATE, ILLINOIS; CITY OF STREATOR, ILLINOIS; and VILLAGE OF SENECA, ILLINOIS, Plaintiffs,
v.
SAMMONS COMMUNICATIONS, INC.; SAMMONS COMMUNICATIONS OF ILLINOIS, INC.; and ARTHUR J. KRAUS, Defendants.



The opinion of the court was delivered by: CHARLES RONALD NORGLE, SR.

 ORDER

 Before the court are the defendants' motions for summary judgment, and the plaintiffs' motion to remand to state court. For reasons that follow, the motions for summary judgment are denied and the motion to remand is denied.

 FACTS

 The plaintiffs, five Illinois municipalities -- the cities of Ottawa, Marseilles and Streator and the villages of Naplate and Seneca (together the "municipalities") -- receive cable television service from one or more of the defendants, Sammons Communications, Inc., Sammons Communications of Illinois, Inc. (together "Sammons"), and Arthur J. Kraus ("Kraus"). *fn1" The implementing agreements were all entered into prior to December 29, 1984, the date the Cable Act, 47 U.S.C. § 521 et seq., was enacted. The agreements generally required the municipalities' approval before increased service rates in those municipalities could take effect.

 The Cable Act, however, prohibited municipalities or other cable franchising authorities from regulating cable television service rates after December 29, 1986. Id., § 543(b), (c). Local regulation of cable service rates, however, would be allowed in areas deemed "not subject to effective competition" as defined in regulations issued by the Federal Communications Commission ("FCC"). Id., § 543(b)(1). Additionally, some local rate regulation of pre-existing cable systems was allowed for the first two years after the effective date of the Cable Act, October 30, 1984. Id., §§ 543(c), 557. The Cable Act specifically superseded inconsistent provisions in any state law or local franchise agreement. Id., § 556(c).

 The FCC, in promulgating its initial regulations, listed each of the plaintiff municipalities as being within areas with "effective competition." Report and Order, 50 Fed. Reg. 18,637 (May 2, 1985); 47 C.F.R. §§ 76.33, 76.54 (1986). Prior to January 1, 1987, Sammons notified Ottawa and Marseilles that their cable service rates would increase effective on January 1, 1987. On that date, Sammons raised its rates from $ 7.28 to $ 9.50 in Ottawa and Marseilles, and by 37.9% in Streator. Also that day, Kraus raised his rates from $ 8.00 to $ 10.00 in Seneca. At some point, Sammons raised its rates in Naplate as well. These rate increases in the municipalities, and subsequent raises during the period in question, were implemented without the municipalities' approval.

 On July 17, 1987, the District of Columbia Circuit found "arbitrary and capricious" the signal availability standard which the FCC utilized to determine whether there was "effective competition" within an area. ACLU v. FCC, 823 F.2d 1554, 1573 (D.C. Cir. 1987), cert. denied, 485 U.S. 959, 108 S. Ct. 1221, 99 L. Ed. 2d 422 (1988). The matter was remanded to the FCC either to provide "a reasoned explanation" of its signal availability standard or develop a new standard. Id. The FCC opted to revise the standard but, in announcing both the revision process and other rule changes, stated that "apart from these immediate amendments, we note that our existing rules remain in effect, as the court's decision in ACLU did not reverse them." Further Notice of Proposed Rule Making, MM Docket No. 84-1296, 2 FCC Rcd. 5888, 5892 n.5 (adopted September 17, 1987).

 The FCC announced a new signal availability standard on April 29, 1988, but delayed implementation of the new standard for six months. Second Report and Order, MM Docket No. 84-1296, 3 FCC Rcd. 2617. Under the new standard, the municipalities were not considered areas with "effective competition."

 The plaintiffs' complaint was initially filed in the Circuit Court of LaSalle County, Illinois on February 6, 1987, and was then removed to this court by the defendants on February 13, 1987. The only counts still pending from the complaint are Counts I, III, V, VII and IX, all of which allege breaches of franchise contract provisions restricting rate increases to cable subscribers in the plaintiff municipalities.

 DISCUSSION

 The plaintiffs' present motion to remand the case to state court essentially repeats arguments which this court rejected in denying their earlier remand motion over three years ago. City of Ottawa v. Sammons Communications, Inc., No. 87 C 1325 (N.D. Ill. February 17, 1989). The latest motion is construed as a belated and unwarranted motion for reconsideration of the earlier ruling, and as such is denied.

 Sammons's and Kraus's summary judgment motions, which are directed at all of the remaining counts, argue that they are entitled to retain the proceeds from the rate increases they imposed between January 1987 and November 1988. During that period, they contend, their franchises were deregulated under the applicable FCC regulations. The municipalities, however, contend that the ACLU decision finding the FCC's "effective competition" criteria "arbitrary and capricious," as well as the amended FCC regulations adopted as a result, should be applied retroactively. Therefore, the municipalities argue, the Sammons and Kraus franchises should not be considered deregulated during the period at issue as a matter of law, and factual issues remain regarding the amount of any refunds to which cable subscribers in the municipalities may be entitled.

 Summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). A dispute about a material fact is "genuine" if the evidence would allow a reasonable jury to return a verdict for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). A plaintiff cannot rest on mere allegations of a claim without any significant probative evidence in support. Id. "One of the principal purposes of the summary judgment rule is to isolate and dispose of factually unsupported claims or defenses . . ." Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986). Accordingly, the non-moving party must go beyond the pleadings, affidavits, depositions, answers to interrogatories and admissions on file to designate specific facts showing a genuine issue for trial. Id. at 324. A "scintilla of evidence" is insufficient; the non-movant must offer evidence on which a jury could reasonably find ...


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