AT & T case. Since AT & T had not been resolved, the Seventh Circuit left open the possibility that the Supreme Court of Illinois might disagree with its view of Illinois law.
The parties are now before this court on motions and cross motions for summary judgment, to amend the pleadings, for declaratory and injunctive relief and assessment of costs.
Effect of the Appellate Rulings
This case has already been resolved on the merits by the Court of Appeals subject only to a contrary ruling by the Illinois Supreme Court in the AT & T case. This Court's authority is very narrow. Barrow v. Falck, 1993 U.S. App. LEXIS 32217, No. 93-2004, slip op. at 2-3 (7th Cir. Dec. 9, 1993). In AT & T, a telephone company sought to enjoin several municipalities from interfering with installation of fiber optic cable under public streets across the state. The Illinois Appellate Court upheld injunctive relief. After reversing itself on rehearing, the Supreme Court of Illinois held that cities could not condition consent to allow installation of cable under public streets on the payment of franchise fees. The Supreme Court of Illinois announced the same views first expressed by the Seventh Circuit in Diginet. The author of the Supreme Court opinion, in his original dissent, cited the Seventh Circuit opinion with approval. See AT & T v. Village of Arlington Heights, 1992 WL 356097 *17 (Dec. 4, 1992) (Heiple, J., dissenting), superseded after rehearing, AT & T, supra. His views later became the views of the majority of the Supreme Court. There is no conflict between AT & T and Diginet. The same legal analysis underlies both opinions.
The City argues, nevertheless, that it is entitled to require franchise fees for ATS's use and occupation of the streets notwithstanding the Diginet and AT & T opinions. It contends that AT & T can be distinguished because there the fiber optic cables were only to pass through the municipalities, whereas here ATS seeks to serve customers by extensions within the city. The City relies on the fact that in its opinion the Supreme Court said that "all that plaintiffs seek here is to get from one side of town to the other." However, the City's position overlooks the rationale of the Supreme Court's opinion - that "municipalities do not possess proprietary powers over the public streets. They only possess regulatory powers." AT & T, 620 N.E.2d at 1044. The court also stated that "streets do not exist and were not created as either obstructions or revenue-producing property for municipalities." AT & T, 620 N.E.2d at 1047. Any payment to which a city would be entitled could only be for actual regulatory costs, including inspection, regulatory, administrative and repair costs associated with the tunneling under public streets.
Moreover, the City's position is directly contrary to Diginet. The Court of Appeals stated clearly that "neither is the impact here purely local." Diginet, 958 F.2d at 1400. Given the statewide and interstate character of the service ATS renders, it is not possible to carve out the exception for which the City contends, at least within the fiber optic cable business.
Accordingly, the City's claims for past and future franchise fees must be denied, and ATS is entitled to a declaration that the City may not withhold access to the streets because of failure on the part of ATS to pay any franchise fees.
There is also pending before the Court a petition of ATS for damages because of the effects of the preliminary injunction.
The parties are directed to meet to resolve or clarify any issues with respect to this matter.
IT IS THEREFORE ORDERED AS FOLLOWS:
1. The motion of ATS for summary judgment [170-1] is granted and the motion of the City for partial summary judgment [178-1] is denied.
2. The Clerk of the Court is directed to enter judgment as follows:
A. Granting declaratory relief to Western Union ATS on its cross-complaint as follows:
(1) The City of Chicago does not have a right to withhold access to the City streets because of refusal on the part of ATS to pay franchise fees or to negotiate for a franchise requiring the payment of franchise fees.
(2) The only charges the City of Chicago may seek to collect from ATS in connection with the installation of fiber optic cables under the streets of the City are for actual regulatory costs for inspection, regulation, administration and repairs associated with tunneling under public streets.