Opinion
No. 3:03CV1895(DJS).
August 10, 2006
MEMORANDUM OF DECISION
On November 5, 2003, plaintiff Tel Comm Technologies, Inc., ("Tel Comm") filed this action against defendants the City of New Haven, Connecticut ("New Haven") and Andrew J. Rizzo, Jr., ("Rizzo") alleging that Section 17-24 of the City of New Haven Code is in violation of the Telecommunications Act of 1996, 47 U.S.C. § 253 et seq., as it acts as a prohibition and has the effect of prohibiting plaintiff from providing interstate and intrastate telecommunications services. Plaintiff seeks a permanent injunction as well as declaratory relief. On April 20, 2005, pursuant to Rule 56(a) of the Federal Rules of Civil Procedure, plaintiff filed a motion for summary judgment. (Dkt. # 27.) For the reasons set forth herein, plaintiff's motion is DENIED.
I. FACTS
The plaintiff, Tel Comm Technologies, Inc., is a Connecticut corporation in the business of installing and maintaining public pay telephones. Tel Comm currently operates approximately 550 pay telephones throughout the State of Connecticut. (See Dkt. # 30, Regensberger Aff., at ¶ 5.) The average gross revenue of each phone is $80.00 per month and the average net profit on each phone is $19.00 per month. (Id.) Tel Comm operates existing pay phones in the City of New Haven, and has submitted applications to install additional pay phones in the City. The parties dispute both the number of pay phones Tel Comm operates in New Haven and the number of pay phone applications submitted by Tel Comm, as there were numerous corporate transactions that resulted in plaintiff inheriting, by way of assignment, transfer, or otherwise, a number of applications and existing pay phones.Defendant the City of New Haven is a municipal corporation within the State of Connecticut. Defendant Andrew J. Rizzo, Jr., is the Building Official for the City as well as the director of the Livable City Initiative ("LCI"). As the director of LCI, Rizzo has the authority through Section 17-24 of the New Haven City Ordinance ("the Ordinance") to "issue, renew, or transfer an outdoor pay phone permit based upon a determination, in the Director's sole discretion, that issuance or renewal or transfer of a[n] Outdoor Pay Phone [sic] permit would be in the best interests of the City. . . ." New Haven, CT Ordinance § 17-24g (2005); see also id. § 17-24f(c).
The Ordinance, which was enacted in January of 2001, requires, as of July 1, 2000, any person or business who seeks to install, operate, or maintain an outdoor pay phone on a public right-of-way to enter into an agreement with the City and obtain a permit before doing so. If a permit is issued, it is valid for a period not to exceed two (2) years from the date of issue. The Ordinance requires all pay phone owners to register with the City and to furnish a service plan to LCI.
In addition, the Ordinance authorizes two fees to be charged to the outdoor pay phone operator. Section 17-20 of the New Haven Ordinance further specifies these fees: (1) an operating fee of $450.00 per phone per year; and (2) a permit fee of $100.00 per phone for processing of the application due once every two years.See New Haven, CT Ordinance § 17-20 (2005). The Ordinance also limits the locations where an outdoor pay phone may be installed and specifies the minimum allowable distance between the pay phones and traffic signs, bus stops, driveways, curblines, and other sites. Pay phone operators who are not in compliance with the Ordinance are subject to fines or a possible removal order.
As part of his review of pending applications, Rizzo forwards copies of each application to other City departments, including the Police Department, the Zoning Administration Department, the Department of Engineering, and the Department of Traffic and Parking. Each department reports back to Rizzo and indicates its approval or disapproval of an outdoor pay phone site, which Rizzo considers when he reviews the applications.
The Police Department is most regularly involved in reviewing applications, and the Director of the Livable City Initiative generally defers to the opinion of the Police Department in accepting or rejecting an application. Police Department representatives typically inspect the proposed location and consider the following factors when determining whether to convey a recommendation to LCI: (1) whether it is likely that the phone will place persons in or immediately adjacent to a driveway or an area of substantial foot traffic, such as a bus stop, business entrance, or waiting lines; (2) whether the phone will attract customers who park their vehicles at or immediately adjacent to a driveway, an area with parking restrictions, an area with limited street parking, a street with substantial motor vehicle use, a traffic intersection, or a business entrance; (3) whether senior citizens in the area may be adversely affected; or (4) whether it is likely the phone will attract criminal or other illegal activity, such as an illicit drug trade. If more than one provider has submitted an application to install a pay phone at the same location, the City may initiate an RFP process to select amongst one or more owners.See New Haven, CT Ordinance § 17-24(d)(1).
A previous lawsuit between plaintiff and the City of New Haven, Newtel, Inc., v. City of New Haven, Case No. 3:01CV1382 (JBA), concerned the same issues and was resolved in 2002 by a Stipulation for Dismissal. The settlement included an agreement that the managers or supervisors from the New Haven Police Department were to meet with plaintiff to review proposed locations for which plaintiff had submitted applications. In this lawsuit, both Tel Comm and the defendants agree that these meetings took place in late 2002 and early 2003. The parties agree that Police Department representatives reviewed many of the locations and found a number unobjectionable.
Tel Comm claims that it currently operates 26 pay phones on public rights-of-way in the City (dkt. # 44, Regensberger Aff., at ¶ 3), while defendants, citing a list prepared by Tel Comm, claim that Tel Comm operates over 100 pay telephones on public rights-of-way in the City (dkt. # 39, Ex. 3c). Since the Ordinance was enacted in 2001, plaintiff asserts that it has submitted approximately 264 applications for permits to install pay phones in New Haven (dkt. # 30, Regensberger Aff., at ¶ 7) under the names "Tel Comm", "Charity", "A-Tel", and "NewTel"; however, defendants' records show that plaintiff has submitted approximately 180 applications for permits in New Haven, excluding duplicates (dkt. # 39, Ex. 5a). In addition to plaintiff, other companies operating pay phones in the City include: SNET, RB, TT, and CPT.
Plaintiff, however, does not indicate how many of these applications are still pending with the City.
The defendants' figure was derived from the listings of pay phone applications kept by the record keeper for the Building Department for the City of New Haven and which are current through 8/2/2005.
Plaintiff claims, "[d]efendants have no intention of granting permits for the installation of pay telephones within its rights-of-way under Section 17-24 of the New Haven Code of Ordinances." (Dkt. # 28, 11, ¶ 2.) As such, plaintiff asserts, "[t]he ongoing refusal of the [d]efendant to act upon the [p]laintiff's applications constitutes, in effect, a complete ban on the [p]laintiff's ability to provide paytelephone [sic] service on the public rights-of-way of the City of New Haven without any justification under Sections 253(b) or (c) Title 47 U.S.C." (Dkt. # 1, ¶ 20.)
In addition, plaintiff attempts to show that the permit fee per telephone charged by the City "clearly has the effect of prohibiting telecommunication service . . ." (dkt. # 28 at 17) and that defendants "are unable to demonstrate that they have made any attempt to relate these fees to the fees to be generated through the use of rights-of-way in general and constitute `fair and reasonable' compensation for the use of said rights-of-way, pursuant to § 253(a) . . ." (Id. at 23) and as such should be declared invalid.
Plaintiff now asks the Court to enjoin the enforcement of the Ordinance and to issue an order that would require the defendants to grant plaintiff's existing permit applications. (Dkt. # 1 at 8.) Tel Comm concedes that some of the permits applied for during the period in question were granted. LCI also admits that it granted a number of permits, and denied other applications. (Dkt. # 39, Perrotti Aff., Ex. 5 at 8-9.) The parties, however, dispute which entity's applications were approved. In June 2001, the City issued 24 permits to Newtel to operate pay telephones on City rights-of-way, but plaintiff alleges that it never received notice that these applications were approved. Fifteen of those twenty-four sites are included in plaintiff's Schedule 1 of unobjectionable sites for which it seeks approval.
Plaintiff asserts that it was known as NewTel at that time.
In April 2002, the City issued five permits to Newtel and one to A-Tel. In November 2004, defendants state that they were in a position to issue permits for four of the plaintiff's requested locations, but plaintiff failed to pay the appropriate fees as required by Section 17-20 and so permits were not issued for those locations.
LCI has rejected some of plaintiff's applications for the following reasons: (1) the objections of the police department; (2) the insufficiency of the applications; or (3) the proposed phone was too close to another pay phone, a bus stop, or other similar fixture. In addition, other applications were denied because they were incomplete. Defendants also assert that some applications have not been approved because some of the locations for which plaintiff has submitted applications have applications from more than one pay phone provider. Plaintiff alleges defendant never initiated an RFP process to select among applicants.
Plaintiff has submitted a list of 118 locations which it claims were found unobjectionable by the New Haven Police Department ("Schedule A"). With respect to the 118 locations, defendants assert the following: (1) Tel Comm is currently operating phones at 27 of these locations; (2) other providers are already operating phones at 27 other locations; (3) no applications were ever submitted by Tel Comm for fifteen of the locations; (4) seven locations are listed twice; and (5) four of the locations are located on private property and not within the public right-of-way, whereby the City has no jurisdiction over them.
Defendants allege that no applications were submitted by Newtel, A-Tel, or Charity for these locations, either.
Defendants have voluntarily suspended enforcement of the Ordinance against plaintiff and any other City pay phone operator pending the outcome of this litigation. Defendants further assert that although none of the pay phones that plaintiff is operating in the City have valid permits, plaintiff has not been subject to daily fines or removal orders.
II. DISCUSSION
Tel Comm alleges that Section 17-24 of the New Haven City Ordinance violates the Federal Telecommunications Act of 1996, 47 U.S.C. § 253, because the Ordinance prohibits plaintiff from providing interstate and intrastate telecommunications service. Because plaintiff has not shown that it is entitled to summary judgment, its motion is denied.
A. STANDARD OF REVIEW
A motion for summary judgment may be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). Summary judgment is appropriate if, after discovery, the nonmoving party "has failed to make a sufficient showing on an essential element of [its] case with respect to which [it] has the burden of proof." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). "The burden is on the moving party `to demonstrate the absence of any material factual issue genuinely in dispute.'" American Int'l Group, Inc. v. London Am. Int'l Corp., 664 F.2d 348, 351 (2d Cir. 1981) (quoting Heyman v. Commerce Indus. Ins. Co., 524 F.2d 1317, 1319-20 (2d Cir. 1975)). A dispute concerning a material fact is genuine "`if evidence is such that a reasonable jury could return a verdict for the nonmoving party.'" Aldrich v. Randolph Cent. Sch. Dist., 963 F.2d 520, 523 (2d Cir. 1992) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). The court must view all inferences and ambiguities in a light most favorable to the nonmoving party. See Bryant v. Maffucci, 923 F.2d 979, 982 (2d Cir. 1991). "Only when reasonable minds could not differ as to the import of the evidence is summary judgment proper."Id.
B. PREEMPTION CLAIM
Plaintiff alleges that the New Haven Ordinance is preempted by the Telecommunications Act of 1996 ("TCA"). The TCA was enacted by Congress as a means to "promote competition and reduce regulation in order to secure lower prices and higher quality services for American telecommunications consumers. . . ." Preamble, Telecommunications Act of 1996, Pub.L. No. 104-104, 110 Stat. 56 (1996). The TCA provides, in pertinent part, the following:
(a) In general
No State or local statute or regulation, or other State or local legal requirement, may prohibit or have the effect of prohibiting the ability of any entity to provide any interstate or intrastate telecommunications service.
(b) State regulatory authority
Nothing in this section shall affect the ability of a State to impose, on a competitively neutral basis and consistent with section 254 of this section, requirements necessary to preserve and advance universal service, protect the public safety and welfare, ensure the continued quality of telecommunications services, and safeguard the rights of consumers.
(c) State and local government authority
Nothing in the section affects the authority of a State or local government to manage the public rights-of-way or to require fair and reasonable compensation from telecommunications providers, on a competitively neutral and nondiscriminatory basis, for use of public rights-of-way on a nondiscriminatory basis, if the compensation required is publicly disclosed by such government.47 U.S.C. § 253.
Plaintiff claims that Section 17-24 of the New Haven Ordinance violates the TCA because both the permit requirement for the installation of public pay phones on City rights-of-way, and the application and operation fee requirements, effectively prohibit plaintiff from providing interstate and intrastate telecommunications service. The determining factor of whether a local ordinance violates Section 253(a) is "whether the ordinance materially inhibits or limits the ability of any competitor or potential competitor to compete in a fair and balanced legal and regulatory environment." TCG New York, Inc. v. City of White Plains, 305 F.3d 67, 76 (2d Cir. 2002) (quoting In re Cal. Payphone Ass'n, 12 F.C.C.R. 14191, 14206 (1997)). Courts must look at whether a local regulation "as a whole" violates Section 253 when a party is seeking a declaration of preemption of the local ordinance, as it is possible that "a town could effectively prohibit telecommunications services through a combination of individually non-objectionable provisions." TCG New York, 305 F.3d at 77.
Section 253 does not completely eliminate the power of a state or town to regulate telephone or telecommunications services. "The plain terms of § 253 preempt many local laws; however, notwithstanding this general prohibition, local governments retain some regulatory authority." TC Sys., Inc., v. Town of Colonie 263 F. Supp. 2d 471, 480 (N.D.N.Y. 2003). A distinction must be made between those regulations that are intended to manage the public rights-of-way themselves, and are therefore permissible under 253(c), and those that extend beyond rights-of-way management into the purview of regulation of telecommunications services. As the Federal Communications Commission ("FCC") has indicated, "right-of-way management means control over the right-of-way itself, not control over companies with facilities in the right-of-way. . . ." City of Auburn v. Qwest Corp., 260 F.3d 1160, 1177 (9th Cir. 2001) (citing In re TCI Cablevision of Oakland County, Inc., 12 F.C.C.R. 21396, 21441 (F.C.C. 1997)). Examples of permissible management of public rights-of-way as stated by the FCC include "vital tasks necessary to preserve the physical integrity of streets and highways . . . [such as] coordination of construction schedules . . . establishment and enforcement of building codes, and keeping track of the various systems using the rights-of-way to prevent interference between them." In re TCI Cablevision, 12 F.C.C.R. at 21414.
When analyzing whether a local ordinance is preempted by the TCA, a court may take into consideration decisions made by the FCC, but such decisions are not controlling. TCG New York, 305 F.3d at 76.
Another way in which a local government may permissibly manage public rights-of-way is by charging "fair and reasonable compensation from telecommunications providers, on a competitively neutral and nondiscriminatory basis." 47 U.S.C. § 253(c). To establish preemption on the basis of an unreasonable fee, the plaintiff must come forward with evidence showing that the charges have or may materially inhibit the provision of services and act as a prohibition within the meaning of Section 253(a). See Pacific Bell Tel. Co. v. Cal. Dep't of Transp., 365 F. Supp. 2d 1085, 1090 (N.D. Cal. 2005). A city may not, however, regulate "in a way that is unrelated to the management of and compensation for . . ." the use of the city rights-of-way, such as by charging an excessive fee. ATT Commc'ns of the Sw. v. City of Dallas, 8 F. Supp. 2d 582, 588-589 (N.D. Tex. 1998),vacated, 243 F.3d 928 (5th Cir. 2001) (holding that a city ordinance was preempted by an intervening state statute); see also Puerto Rico Tel. Co. v. Municipality of Guayanilla, 450 F.3d 9, 21 (1st Cir. 2006). ("[T]he most favored interpretation requires that the fees charged by a municipality be related to the degree of actual use of the public rights-of-way, but need not be limited to recoupment of the added costs to the municipality resulting from such use.") (quoting Puerto Rico Tel. Co. v. Municipality of Guayanilla, 283 F. Supp. 2d 534, 543 (D.P.R. 2003)).
If a local ordinance is found to be in violation of Section 253(a), it may still avoid preemption by way of Section 253(c).See TCG New York, 305 F.3d at 77. The initial burden is on the plaintiff to prove that Section 253(a) acts as a prohibition before determining whether the regulation is saved by Section 253(c). See Pacific Bell Tel. Co., 365 F. Supp. 2d at 1090;City of Auburn, 260 F.3d at 1177; Town of Colonie, 263 F. Supp. 2d at 484. Once a violation of Section 253(a) has been established, "[t]he burden of proving that the regulation is saved by § 253(c) is on the party claiming that the `safe harbor' applies." Id.
In support of its argument that the Ordinance violates Section 253 and should therefore be declared null and void, plaintiff relies heavily on TCG New York, Inc. v. City of White Plains ("TCG"). In that case, the White Plains ordinance required a telecommunications company to obtain a franchise before it could construct telecommunications facilities and install equipment on city rights-of-way. Further, the ordinance gave the city complete discretion to grant or reject franchise applications. The franchise broadly governed the use of the city rights-of-way, permitted telecommunications providers to sell or resell telecommunications service to city residents, and did not allow equipment to be installed on city rights-of-way without a franchise. TCG New York, Inc., 305 F.3d at 71. The Court of Appeals for the Second Circuit found that the White Plains ordinance violated Section 253(a) because the provision gave the city the right to reject an application based on any "public interest factor," and White Plains had committed "extensive delays" in processing the plaintiff's request for a franchise. The court found that these factors amounted to an impermissible "right to prohibit providing telecommunications services" in violation of Section 253(a).Id. at 76. In addition, the Second Circuit held that "a prohibition does not need to be complete or `insurmountable' to run afoul of § 253(a)." Id. at 76 (quoting RT Commc'ns, Inc., v. FCC, 201 F.3d 1264, 1268 (10th Cir. 2000)).
In order to begin providing telecommunications services within the City of White Plains, the plaintiff in TCG sought to build new conduits on city rights-of-way and to run a network of fiber optic cables both through these new conduits and through those already existing on city rights-of-way.
Having found that the White Plains ordinance violated § 253(a), the court then examined whether certain provisions of the ordinance were saved by Section 253(c). The court held that these provisions were not saved by Section 253(c) because they were not applied in a competitively neutral and nondiscriminatory manner. Id. at 80. Indeed, in TCG, the incumbent provider was not required to abide by the terms of the ordinance or required to pay the 5% gross revenue fee that the plaintiff, as a new provider, was required to pay. Thus, the City of White Plains had sought "a variety of forms of compensation from TCG, while not exacting any compensation from [the incumbent telecommunications provider.]" Id.
Although the Second Circuit found that the TCA does not require identical treatment of all telecommunications providers, the court observed that "a municipality may not, as White Plains sought to do, impose a host of compensatory provisions on one service provider without placing any on another." Id. Because the court found that the charges were not administered in a competitively neutral way, the court did not reach the issue of whether a percentage of gross revenue fees may constitute "reasonable compensation" as required by Section 253(c), and if so, what percentage of gross revenue is permissible. See Id. at 79.
The case presently before the Court is distinguishable fromTCG. The court in TCG found that the specific provision of the White Plains ordinance that gave city officials complete discretion to grant or deny a franchise "in particular . . . amount[ed] to a right to prohibit providing telecommunications services. . . ." Id. at 76. The discretion given to city officials by the White Plains ordinance concerned the granting of a franchise agreement to providers, which was a prerequisite to installing their network of fiber optic cables on city rights-of-way and providing telecommunications service in the City of White Plains. In addition, as the telecommunications providers were unable to begin to provide any service until a franchise was granted, the city's delays in processing the plaintiff's request for a franchise resulted in a prohibition from providing any service whatsoever. Other courts have recognized that in TCG it was the combination of (1) the city's discretionary authority to reject a franchise on any public interest factor; and (2) the city's "extensive delays" in processing the telecommunications provider's franchise applications that violated Section 253(a). See e.g. Cox Commc'ns v. City of San Marcos, 204 F. Supp. 2d 1260, 1265 (S.D. Cal. 2002) ("regulations coupled with long approval process are a prohibition"); Level 3 Commc'ns v. City of St. Louis, 405 F. Supp. 2d 1047, 1062 (E.D. Mo. 2005) (emphasizing the "sweeping breadth" of the White Plains ordinance which forced each new telecommunications provider "to receive the city's blessing before offering services" that amounted to a prohibition). In the present case, this combination of factors is not present.
The discretion to grant a franchise differs from the discretion to grant a permit to install a single pay phone at one location.See cf. Cox Commc'ns, 204 F. Supp. 2d at 1268 (distinguishing the necessity for holding a public hearing before a franchise was issued as opposed to before a permit was issued). The case of New Jersey Payphone Association v. Town of West New York, 299 F.3d 235 (3d Cir. 2002), is also instructive. There, the Court of Appeals for the Third Circuit, in examining a local ordinance, found that the discretion to grant or deny a request for a franchise for an entire geographic zone constituted a violation of Section 253(a). Indeed, the court held that the exclusivity of the franchises that the Town required a telecommunications company to obtain before it could install any pay phones on city rights-of-way constituted a barrier to entry, as it could recreate a monopoly in the city. New Jersey Payphone Ass'n, 299 F.3d at 242. ("There can be no question that designating a single company as authorized to provide pay phones in the public rights of way in a large geographical area which is currently served by multiple companies . . . reduces competition and constitutes a barrier to entry."). As compared to both TCG and New Jersey Payphone, the New Haven Ordinance itself does not give the City the right to impede a telecommunications company's entrance into the market. The Court here is not faced with the delay in the granting of a franchise request, but with the processing of individual applications for single pay phones which plaintiff seeks to install in addition to its existing pay phones in the City. The Ordinance is site-specific, and not carrier-specific, and plaintiff has not, at this stage in the proceedings, met its burden of showing that the Ordinance necessarily permits impermissible regulation of the carriers themselves or has the effect of regulating the carriers themselves.
The local ordinance in question read in part: "The Town reserves the right to award a Contract for replacement or operation of [payphones] in the public right-of-way of the Town and on Town owned property. If the Town exercises such rights no other permits or renewals for the operation of [payphones] shall be issued and any previously installed [payphones] shall be removed form the public rights-of-way within thirty days." New Jersey Payphone, 299 F.3d at 237-238.
To the extent Tel Comm claims the City has not processed its applications and seeks injunctive relief, the Court finds that there are genuine issues of material fact because neither party can agree on how many applications have been submitted to the City, which entity submitted the applications, how many of the submitted applications have been processed (and approved or denied) by the City, and how many are still pending.
Although the New Haven Ordinance grants the director of LCI the discretion to issue, renew, or transfer an outdoor pay phone permit, this discretion pertains only to the installation of one pay phone at one particular site and is not a prohibition within the meaning of Section 253(a), as the plaintiff has not shown that it has the effect of prohibiting its ability to provide telecommunications service. The discretion to grant or deny single pay phone applications, when approximately 200 applications were submitted by Tel Comm, does not serve as a barrier to entry to the telecommunications market, and is unlike the discretion to grant or deny a franchise request that is required before any telecommunications service whatsoever may be provided. As such, this Court cannot find that, as a matter of law, defendant has prevented plaintiff from providing service in violation of Section 253.
As previously stated, the parties do not agree on the actual number of applications submitted.
Plaintiff contends that "the [d]efendants have no interest in complying with their own regulations," (dkt. # 28, at 15) because the City has not implemented fines against plaintiff or any other service provider even though it is authorized to do so under the Ordinance. The City's decision to stay the fines and removal orders pending the outcome of this case is not a lack of compliance on its part but rather a temporary deferral based on prudential concerns and should not be the basis for invalidating the City regulation.
Plaintiff would need to show more systematic obstacles to providing telecommunications service in order to establish that the Ordinance is in violation of Section 253(a). Although TCG holds that a prohibition does not need to be complete in order to violate Section 253(a), the record presently before the Court does not show that the defendants have "materially inhibited" plaintiff's ability to provide telecommunications service in the City. It is conceivable that if the City denied all of plaintiff's applications while granting those of competing companies, that may have amounted to an impermissible regulation of City rights-of-way, but plaintiff has not yet met its burden of showing such a prohibition.
Plaintiff also maintains that the application and operating fees mandated by Section 17-20 are arbitrary and excessive. Tel Comm alleges that the fees comprise "more than fifty (50%) percent of the total revenues of the [plaintiff's] average phone . . ." (dkt. # 28 at 17), and therefore have the effect of prohibiting telecommunication service. Supporting this contention, plaintiff advances two arguments. It asserts that (1) the Ordinance "does not base the fee upon any standard," (Id. at 18) and (2) other courts have approved fees "of only four (4%) percent of gross revenue" (Id. at 17). Plaintiff does not produce evidence regarding the impact the New Haven Ordinance has on its average gross revenue for pay phones in the City of New Haven. Indeed, plaintiff's figure of 50% is based on the total number of pay phones it operates throughout the State of Connecticut. As in Pacific Bell Telephone Company v. California Department of Transportation, without a showing by the plaintiff of the actual profits on its New Haven phones, the plaintiff cannot meet its burden of coming forward with sufficient evidence to show that the New Haven's fees have the effect of prohibiting plaintiff from providing telecommunications service and are a prohibition within the meaning of Section 253(a). Therefore, plaintiff's figure does not show that the New Haven's fee prohibits entry into the market or acts as a prohibition, as defined by Section 253(a).
The fees charged by the New Haven may in fact be reasonably related to the City's rights-of-way management, which is permissible under 253(c). New Haven, however is only required to demonstrate that its imposed fees are reasonable under 253(c) as an affirmative defense if a violation of 253(a) has been proven by the plaintiff. Since this Court finds that the plaintiff has not, at this stage in the proceedings, met its burden of proving that the fees act as a prohibition under 253(a), New Haven is not required to show that the fees are saved by 253(c). Thus, the New Haven does not have to show that its fees were reasonably related to rights-of-way management through a city-wide study. See e.g. NextG Networks of New York, Inc., v. City of New York, No. 03CIV9672RMB/JCF, 2006 WL 538189, at *13 (S.D.N.Y. March 6, 2006).
Finally, plaintiff relies on Puerto Rico Telephone Co. v. Guayanilla in which the district court found that the municipal ordinance "may very well result in making the offering of telecommunications service prohibitive" as the 5% gross revenue fee charged by the municipality did not meet the burden of "fair and reasonable compensation" as required by Section 253(c).Puerto Rico Tel. Co., 354 F. Supp. 2d at 113, aff'd, 450 F. 3d 9(1st Cir. 2006). Plaintiff claims that the City's fees amount to 50% of its gross revenue on all of its Connecticut pay phones and thus cannot constitute "fair and reasonable compensation" in light of the invalidation in Puerto Rico Telephone of a five percent gross revenue fee. However, inPuerto Rico Telephone, it was clear that the ordinance was invalidated based on the combination of several factors. In that case, (1) the plaintiff offered specific evidence, which tended to demonstrate that the five percent fee would make its business unprofitable; (2) the municipality admitted it did not conduct a cost study of any kind concerning the value of its rights-of-way; and (3) there was evidence that the plaintiff telephone company could be subject to double liability in the form of a number of taxes required to be paid to the city in addition to the gross revenue fees. Id. at 111-114. Without any data by plaintiff supporting its contention that the New Haven's fees are excessive, the Court is not in a position to make a judgment on this issue. Here, plaintiff offers statistics that provide little guidance, as the numbers are based on the gross revenues of all of plaintiff's pay phones in the State. This Court cannot find prohibition as a matter of law without all of the relevant financial data. New Haven need only prove that its fees are "fair and reasonable compensation" under Section 253(c) if a violation of Section 253(a) has been found, a burden plaintiff has not met. Therefore, summary judgment is denied.
III. CONCLUSION
For the foregoing reasons plaintiff's motion for summary judgment (dkt. # 27) is DENIED.
So ordered this 10th day of August, 2006.