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LAMB ENTERPRISES v. CITY OF ERIE

July 28, 1967

LAMB ENTERPRISES, INC., a Delaware corporation (Dispatch, Inc.), Plaintiff,
v.
CITY OF ERIE and Council of the City of Erie, Defendants, and Erie Television Corporation, Intervenor



The opinion of the court was delivered by: WILLSON

 This civil action was remanded to this Court for further proceedings in accordance with the direction of the Court of Appeals, Dispatch, Inc. v. City of Erie, 364 F.2d 539 (3 Cir.1966). When the judgment was vacated, the case proceeded in due course. Plaintiff filed interrogatories directed to defendants and intervenor. Answers were filed and certain objections were heard and determined. Pretrial narrative statements were filed by all parties. A pretrial conference was held. The case then came on for trial which was originally fixed for May 8, 1967. But on that date, Mr. Walsh, attorney for the city, indicated that Erie City Council was expected to repeal Ordinance 39-1965, which is the basis for the subject suit. Trial was then postponed for one week, but on May 15th it was indicated that City Council awaited the decision of this Court. An evidentiary trial was then held on July 24, 1967 at which time all evidence which any of the parties sought to present was received and witnesses heard. In my first decision, D.C., 249 F. Supp. 267, on motions for summary judgment, the injunction was denied and the complaint dismissed. In the Court of Appeals' opinion, Judge Biggs said -

 
"We deem the record here to be inadequate to permit the adjudication of the issues presented for the reasons set out hereinafter."
 
"* * * must be given an opportunity to present a full and adequate record in order that the constitutional questions which are asserted may be passed upon adequately." [ 364 F.2d p. 542].

 It is this Court's considered judgment that the record made before me is so meager and inadequate that there is no legal basis for the issuance of an injunction. No amendment to the complaint was offered although the footnote, page 542, was called to plaintiff's attention. The parties were given full opportunity to present evidence on all issues of the case. Plaintiff's pretrial narrative indicated that it would present evidence in the first four categories mentioned in Judge Biggs' opinion. But the evidence presented was scanty. Neither defendants nor the intervenor offered any evidence. The Clerk's record indicates that the trial commenced at 1:30 p.m. and was concluded at 3:15 p.m. But 2 witnesses were sworn and testified. In this Court's view neither witness presented any relevant factual evidence. Evidence was introduced that the proposed installation by a CATV franchise holder authorized under the ordinance would install equipment of the category mentioned in United Artists Tele., Inc. v. Fortnightly Corp., 255 F. Supp. 177, a CATV case decided by Judge Herlands, (S.D.N.Y.), at a cost of $2,000,000.00 within 5 years. (Answer to Interrogatory No. 7). The city offered no evidence as to the installation costs. An area suggested by the Court of Appeals for exploration is the constitutionality of the franchise payment or tax, depending on whether Erie CATV is purely a matter of local suzerainty or whether the proposed tax is of such a nature as to impose a burden on interstate commerce. The parties did not present any factual evidence on this issue. The reason is obvious. For one thing, the city ordinance does not fix a charge fee or tax. It provides that the applicant in his bid for a CATV franchise, [Section 5], set the fee for the use of the cityowned facilities. But the intervenor answered by estimating that the revenue to the city would probably run between $10,000.00 and $30,000.00 per year. No bids have been opened or accepted by the city. It is to be kept in mind that any one bidder may not receive an exclusive franchise covering the whole city. Such then is this trial record on the point made by Judge Biggs -

 
"* * * that the record furnishes no adequate description of how the CATV system in the City of Erie might be arranged or how much it would cost." [ 364 F.2d p. 542].

 Plaintiff presented but meager evidence relating to the third, fourth and fifth areas mentioned by Judge Biggs. The witness was Arthur M. Ingram, Vice President and General Manager of plaintiff Dispatch, Inc., which, as stipulated, has been merged with Lamb Enterprises, Inc., a Delaware corporation, and the caption of the case is amended accordingly. This witness was interrogated with regard to whether plaintiff would suffer material or irreparable harm if an injunction be not granted. His answers were speculative and conjecture only. He apparently was not permitted by his superiors to testify of record as to any financial figures of the plaintiff Dispatch, Inc. He talked in generalities and stated personal opinions. He was certain that a cable system, which would pick up distant signals and relay them to subscriber's homes via cable, would result in a "definite dilution of plaintiff's audience followed, axiomatically I believe, by a dilution of income. The evidence of this witness was the principal support of plaintiff's contention that plaintiff would suffer material and irreparable harm if an injunction was not granted. His opinion is a partisan one and not based on supporting facts. His opinion carries but little weight and is not persuasive on the issue of irreparable harm.

 It is to be emphasized again that the claim for relief in this case is for injunction only. This injunction is sought against a legislative body in the third largest city in the State of Pennsylvania, a city of some 130,000 inhabitants. CATV is in the process of mushroom growth. This is shown in several decisions in the various courts. The law on the subject of CATV is likewise in the process of development. This Court is frank to say that it is unable to project with any certainty the final decision of the regulatory bodies and the appellate courts on this subject. But a very recent decision - Buckeye Cablevision, Inc. v. Federal Communications Commission, 128 U.S. App. D.C. 262, 387 F.2d 220, Court of Appeals for the District of Columbia - handed down June 30, 1967 seems to point to the ultimate regulation of CATV by the Federal Communications Commission, if not by the Congress direct. At the onset of this trial, the Court inquired of counsel as to whether Erie was in one of the largest 100 television markets as mentioned in Buckeye. Release G No. 79,927 of the Federal Communications Commission relates to the issue of preemption which is the first area mentioned by Judge Biggs for examination by this Court. FCC determines the top 100 television markets by ratings made by the American Research Bureau. The attorneys who appeared in this case indicated to the Court that the City of Erie stands close to but is not in the top 100 markets as determined by ARB. It was said that Erie stands at perhaps 102 but at least no higher than 106 after the top 100. Even after the issuance of the regulation, it is still uncertain as to the extent which FCC now regulates CATV stations in television markets outside the top 100. It says in the regulation that it may do so under its own initiative. It says also that no CATV system may operate without notice to a competing licensed television station which in turn may object. The Buckeye decision is concerned with a CATV system in a 100 market. But FCC reserves the right unto itself to increase the area by adding television markets to the top 100. As counsel for the plaintiff indicated, the dividing line may not always remain 100, and Erie may be ultimately in a fully regulated area. In this respect, FCC has indicated in its regulations that no CATV system outside the top 100 markets is free from regulation, but the Commission will examine these various situations on an ad hoc basis. This Court is reluctant to issue an injunction in this case. It is axiomatic that - "The power of the courts to issue injunctions should be exercised with great caution and only where the reason and necessity therefor are clearly established." See 43 C.J.S. Injunctions ยง 15. It is dangerous in a doubtful case. In Law Week for July 11th, it is indicated that the Government will seek Supreme Court review of a Ninth Circuit decision which conflicts with the Buckeye case. The question then remains whether the evidence before me shows such a probable violation of a clear right vested in plaintiff that an injunction against the City of Erie should issue because it passed the ordinance. In Buckeye it is said that there is no First Amendment violation in regulating CATV although as it said -

 
"It is true that CATV systems disseminate programs carrying a wide range of information. But we think the restraint imposed by the rules is no more than is reasonably required to effectuate the public interest requirements of the Act." [Citing cases].

 The rights of plaintiff in the areas under discussion are doubtful. For instance, it has no legal right to claim that it is to remain one of 3 television stations authorized for Erie. When this case was filed there were but 2 stations in the City of Erie. The complaint was filed September 24, 1965. The FCC authorized Station WJET to commence business in the spring of 1966 after the inception of this suit. Plaintiff's audience has been diluted in a legal manner. One thing plaintiff asks this Court to do is to project the impact of CATV upon its receiving audience when, according to Mr. Ingram, plaintiff is unable to state clearly the extent of the impact. For instance it seems conceded by plaintiff under Mr. Ingram's testimony that in cities where CATV competes with local stations the majority of the homes will stay tuned to the local television station rather than get television through CATV from a distant city. An injunction in this case is not needed in all instances to prevent dilution because the ordinance, Section 18, prohibits duplication of programming by CATV with the 3 local stations. It is well to mention here also that the ordinance provides that if it has regulated matters within the ultimate authority of FCC the ordinance is considered to be repealed pro tanto.

 It seems to this Court that it is but an exercise in common sense to deny an injunction under the evidence in this case. The application for an injunction is premature in many respects. For instance, plaintiff lays great stress upon the unconstitutionality of the ordinance with respect to taxing interstate commerce, citing Chicago v. Atchison, T. & S.F.R. Co., 357 U.S. 77, 78 S. Ct. 1063, 2 L. Ed. 2d 1174, and a later case of the Supreme Court decided March 27, 1967 - Railroad Trans. Service Inc., v. City of Chicago, 386 U.S. 351, 87 S. Ct. 1095, 18 L. Ed. 2d 143. But in Atchison, the Court concludes -

 
"Similarly the City may require registration of these vehicles and exact reasonable fees for their use of the ...

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