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City of Ellensburg v. King Videocable Co.

filed: March 19, 1996.

CITY OF ELLENSBURG, A MUNICIPAL CORPORATION, APPELLANT,
v.
KING VIDEOCABLE COMPANY, A WASHINGTON CORPORATION, RESPONDENT AND CROSS-APPELLANT.



Appeal from SUPERIOR COURT KITTITAS COUNTY. Superior Court No: 93-2-00304-1. Date filed in Superior Court: 6/20/94. Superior Court Judge signing: MICHAEL COOPER. This Opinion Substituted by the Court for Withdrawn Opinion of December 5,.

Philip J. Thompson, Dennis J. Sweeney & Ray E. Munson, concur

Author: Thompson

THOMPSON, C.J.-- The City of Ellensburg commenced this declaratory action against King Videocable Company, alleging a material breach of the parties' franchise agreement governing cable television services. King asserted a federal preemption defense. On cross-motions for summary judgment, King's motion was granted. Ellensburg appealed and King cross-appealed. We reverse and remand.

FACTS

The fifteen-year franchise agreement at issue was executed in April 1984, and codified at Ellensburg, Wash., Code (EC) ch. 11.8 (1984), as the Ellensburg/King Videocable Company Franchise Ordinance (herein franchise). Within four months of its effective date, the franchise required King to provide a minimum of seventeen channels of basic service and three channels of tiered service. EC § 11.8.30. Within thirty months, King was to provide a minimum of twenty channels of basic service. EC § 11.8.30(c). The franchise defines

basic service as channels provided to subscribers for the minimum fee charged. EC § 11.8.02(a). The term tiered service is defined as channels offered to subscribers for monthly charges in addition to those for basic service, but less than per-channel charges for pay service. EC § 11.8.02(s). The franchise specifies the types of programming to be carried as basic service and as tiered service,*fn1 although King has the right to replace its offerings from time to time subject to specified criteria. EC § 11.8.30.

In April 1993, King reduced the number of channels on its basic service from twenty-one to seventeen. Ellensburg notified King it was in violation of the franchise by failing to provide a minimum of twenty channels of basic service and five channels of programming required by EC § 11.8.30. King claimed the requirements were preempted by 47 U.S.C. § 543(b)(7), enacted as part of the Cable Television Consumer Protection and Competition Act of 1992, Pub. L. No. 102-385, 106 Stat. 1460 (1992 Cable Act), and refused to restore the four channels. Ellensburg thereupon commenced this action in Kittitas County Superior Court.

On November 5, 1993, King removed this action to the United States District Court for Eastern Washington. Ellensburg moved to remand on the basis the federal court lacked jurisdiction. Ellensburg's motion was granted and the action was remanded to the Kittitas County Superior Court. City of Ellensburg v. King Videocable Co., No. CY-93-3124-AAM (E.D. Wash. December 20, 1993) (order remanding).

After the Superior Court entered its order on the parties' cross-motions for summary judgment, both parties appealed. Permission to file an amicus brief was granted the Washington State Cable Communications Association.

PRIMARY JURISDICTION

We address first King's contention that the doctrine of primary jurisdiction precludes our review. [1, 2] The doctrine of primary jurisdiction applies to a claim which is originally cognizable in the courts, but its enforcement "requires the resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative body . . . ." United States v. Western P. Ry. Co., 352 U.S. 59, 77 S. Ct. 161, 162, 1 L. Ed. 2d 126 (1956). The doctrine of primary jurisdiction requires only that a court enable referral of a claim within the agency's special competence to an administrative agency. It does not deprive the court of jurisdiction. Reiter v. Cooper, 507 U.S. 258, 113 S. Ct. 1213, 1215, 122 L. Ed. 2d 604 (1993).

The question presented in this appeal is whether Congress retroactively preempted franchise provisions governing the number of cable television channels and general programming categories to be carried on a basic service tier. This is not a question Congress directed to the Federal Communications Commission (FCC), nor does it require interpretation of any FCC rule or regulation.*fn2 Further, unlike the situation in Action for Childrens Television v. F.C.C., 827 F. Supp. 4 (D.D.C. 1993), aff'd, 313 U.S. App. D.C. 261, 59 F.3d 1249 (D.C. Cir. 1995), Ellensburg is not claiming that an FCC policy, practice or order violates the Cable Acts, which triggers the exclusive jurisdiction provisions of 28 U.S.C. § 2342(1); 47 U.S.C. § 402(a). Our review is not precluded either on jurisdictional

grounds or pursuant to the doctrine of primary jurisdiction.*fn3

STANDARD OF REVIEW

[3] There are no disputed facts in these appeals. Only issues of law are presented. Issues of law decided on summary judgment are reviewed de novo. Rice v. Dow Chem. Co., 124 Wash. 2d 205, 208, 875 P.2d 1213 (1994).

OVERVIEW

Before addressing the parties' remaining contentions, it is helpful to begin with a brief overview of the regulation of cable television.

Statutory Background. Until 1984, the regulation of the cable television industry was an amalgam of local, state and federal regulations, with most regulation taking place through the local franchise process. H.R. Rep. No. 628, 102 Cong., 2d Sess. 29 (1992). See generally Robert F. Copple, Cable Television and the Allocation of Regulatory Power: A Study of Government Demarcation and Roles, 44 Fed. Comm. L.J. 1 (1991). In 1984, Congress passed the Cable Communications Policy Act, Pub. L. No. 98-549, 98 Stat. 2779 (codified at 47 U.S.C. §§ 521-559) (1984 Cable Act), thereby establishing a national policy concerning cable communications. The 1984 Cable Act retained the local, state and federal regulatory system established by the FCC in the 1970s, although the exercise of local authority was more restricted. Rates for basic cable television services were deregulated where there was "effective competition" as defined by the FCC.

By 1992, cable rates in approximately ninety-seven percent of the franchises were deregulated. 47 U.S.C. § 521 note (a)(20) (Supp. 1995) (Congressional Findings and Policy: Cable Television Consumer Protection and Competition Act of 1992). With deregulation came a substantial increase in monthly rates and most subscribers had no opportunity to select between competing cable television systems. 47 U.S.C. § 521 note (a)(1), (2) (Supp. 1995). Such occurrences provided the impetus for passage of the 1992 Cable Act. 47 U.S.C. § 521 note (a)(20) (Supp. 1995).

The 1992 Cable Act repealed the deregulatory framework of the 1984 Cable Act, although its provisions go beyond the arena of rate regulation. See Nicholas W. Allard, The 1992 Cable Act: Just the Beginning, 15 Hastings Comm/Ent L.J. 305 (1993); Rafael G. Prohias, Longer than the Old testament, More Confusing than the Tax Code: An Analysis of the 1992 Cable Act, 2 CommLaw Conspectus 81 (1994). Congress expressed the purposes of the 1992 Cable Act in the following terms:

"(1) promote the availability to the public of a diversity of views and information through cable television and ...


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