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Crown Castle NG Atlantic LCC v. City of Newport News

United States District Court, E.D. Virginia, Newport News Division

August 8, 2016

CROWN CASTLE NG ATLANTIC LCC, Plaintiff,
v.
CITY OF NEWPORT NEWS, Defendant.

          ORDER AND OPINION

         This matter comes before the Court on a three-count Complaint filed by Crown Castle NG Atlantic LLC ("Crown Castle") seeking declaratory judgment and injunctive relief against the City of Newport News ("City"). Compl.. ECF No, 1. The parties' dispute concerns the terms and enforcement of a franchise agreement granting Crown Castle use of the public rights-of-way within the City of Newport News. On August 28, 2015. Crown Castle filed its Complaint alleging that the actions taken by the City to enforce its understanding of the franchise agreement: (1) Count I, violate the franchise agreement; (2) Count II. violate the Code of Virginia § 56-462(C): and (3) Count III. violate 47 U.S.C. § 253. The City filed its Answer on September 23, 2015 and cross-motions for summary judgment were fully briefed by the parties by May 9, 2016. After a hearing on the cross-motions for summary judgment, the Court determined there were material facts in dispute and therefore conducted a three-day bench trial from June 7, 2016 to June 9. 2016.

         As a result of the testimony and evidence presented a trial, and for the reasons set forth herein, the Court GRANTS declaratory judgment in favor of Crown Castle on Counts I and It of the Complaint The Court does not reach Crown Castle's claims presented in Count III pursuant to Bell Atlantic Maryland, Inc. v. Prince George's County, Maryland. 212 F.3d 863 (4th Cir. 2000). Accordingly, the Court FINDS that: (I) the City's actions requiring Crown Castle to obtain zoning or building approval for its four Node installations beyond the Right-of-Way and Electrical Permits already acquired are in violation of the Franchise Agreement; and (2) the City's actions requiring Crown Castle to obtain zoning approval beyond the Right-of-Way and Electrical Permits already acquired are in violation of the Code of Virginia § 56-462(C).

I. JURISDICTION

         The Court has original subject matter jurisdiction over this action pursuant to 28 U.S.C. § 1331, as Count III of Crown Castle's Complaint alleges a violation of the Communications Act of 1934, as amended by the Telecommunications Act of 1996 (the "Telecommunications Act"). Compl. at ¶¶ 69-74, ECF No. 1. The Court has supplemental jurisdiction over the state law claims found in Counts I and II of the Complaint because they relate to and form part of the same case or controversy arising from Count III. See 28 U.S.C. § 1367(a).

         After trial had concluded and initial post-trial briefs were filed, the City, for the first time, presented an argument in its Post-Trial Reply Memorandum that the Court should dismiss Crown Castle's federal claim and thereafter decline to exercise supplemental jurisdiction over the remaining state law claims raised in Co tints I and II of the Complaint. See Def.'s Post-Trial Reply at 12-14, ECF No. 51: Def.'s Reply to Sur-Reply, FCF No. 57. In support of this request, the City accurately contends that the Court has discretion under 28 U.S.C. § 1367(c) to decline supplemental jurisdiction over a claim if it "raises a novel or complex issue of state law" or "the district court has dismissed all claims over which it has original jurisdiction." 28 U.S.C. § 1367(e)(1), (3)- The City also argues that the Fourth Circuit has demonstrated a strong preference that suite law issues, particularly those involving questions regarding land use and zoning, be resolved by state courts. See Arrington v. City of Raleigh. 369 F.App'x 420, 423-24 (4th Cir. 2010) (unpublished) ("[O]ur precedents evince a strong preference that state law issues be left to state courts in absence of diversity or federal question jurisdiction .... That is to say, although we have consistently acknowledged that district courts enjoy wide latitude in determining whether or not to retain jurisdiction over state claims when all federal claims have been extinguished ... at the same time, we have taken heed of the Supreme Court's teaching . . . that a federal court should consider and weigh in each case, and at every stage of the litigation, the value of judicial economy, convenience, fairness, and comity in order to decide whether to exercise jurisdiction over a case brought in that court involving pendent state-law claims.") (emphasis in original) (internal quotations and citations omitted); Fralin & Waldron, Inc. v. City of Martinsville. Va, 493 F.2d 481. 482-83 (4th Cir. 1974) ("[T]he courts of Virginia have extensive familiarity and experience with . . . matters . . . [involving municipal zoning ordinances, the correct construction of local land use law. and the delineation of the proper scope and exercise of local administrative discretion], and we believe that they should have the initial opportunity to pass upon them.").

         In contrast, Crown Castle contends that Fourth Circuit precedent requires the Court to resolve Crown Castle's state law claims before resolving its federal claim. See Bell Atlantic Maryland, Inc. v. Prince George's County Maryland, 212 F.3d 863 (4th Cir. 2000). Crown Castle also asserts that declining to exercise supplemental jurisdiction would constitute an abuse of discretion at this stage in the litigation as significant resources have been expended by both the parties and the Court during discovery, summary judgment motions, trial, and post-trial briefing. Finally, Crown Castle argues that the City waived this argument by waiting to raise it until after trial.

         Although the "discretionary aspect to supplemental jurisdiction is waivable, " Doe by Fein v. D.C., 93 F.3d 861, 871 (D.C. Cir. 1996), the cases cited by Crown Castle supporting this proposition merely establish that an objection to discretionary supplemental jurisdiction may be waived on appeal if not brought before the district court. At this point, the City has not waived any argument or objection related to supplemental jurisdiction before this Court; however, the Court dismisses the City's argument and chooses to exercise supplemental jurisdiction over the state law claims for the following reasons.

         The Court has proper supplemental jurisdiction over the two state law claims asserted by Crown Castle under 28 U.S.C. § 1367(a). Both claims are related to and form pan of the same controversy that provides this Court with original jurisdiction over this matter. The Court has discretion to decline to exercise proper supplemental jurisdiction if the claims '"raise [] a novel or complex issue of state law, " if the state law claims substantially predominate over the federal law claim over which the Court has original jurisdiction, if "the district court has dismissed all claims over which it has original jurisdiction." or "in exceptional circumstances, [where] there are other compelling reasons for declining jurisdiction." 28 U.S.C. § 1367(c). While "trail courts enjoy wide latitude in determining whether or not 10 retain jurisdiction over state law claims when all federal claims have been extinguished." the Court informs this discretionary decision by considering the "convenience and fairness to the parties, the existence of any underlying issues of federal policy, comity, and considerations of judicial economy." Shanaghan v. Cahill 58 F.3d 106. 110 (4th Cir. 1995); see also Peter Furrell Supercars, Inc. v. Monsen. 82 F.App'x 293. 297 (4th Cir. 2003); Semple v. City of Moundsville, 195 F.3d 708, 714 (4th Cir. 1999).

         This litigation has been pending before this Court for nearly one year and the parties and Court have expended substantial resources throughout the various stages of the litigation. including extensive discovery, fully briefed and argued cross-motions for summary judgment, a three-day bench trial, and post-trial briefing. The City's arguments unquestionably come late in the litigation and although Counts I and II may present novel or potentially complex issues of state law, the Court finds the well-established principles of contract law and statutory interpretation sufficient to guide its efforts in resolving the claims presented. In addition. Crown Castle's federal claim has not been extinguished and at least one underlying issue of federal policy appears to counsel against declining supplemental jurisdiction.

         In Bell Atlantic Maryland, Inc. v. Prince George's County. Maryland, 212 F.3d 863 (4th Cir. 2000), the plaintiff challenged the validity of a Prince George County ordinance on numerous state and federal grounds, including 47 U.S.C. § 253-the same provision of the Telecommunications Act Crown Castle asserts is violated by the City in this matter. Without reaching any of the plaintiffs state law claims, the district court found that 47 U.S.C. § 253 preempted the Prince George County ordinance and granted judgment on the pleadings in favor of the plaintiff. See Bell Atlantic. 212 F.3d at 864-65. On review, the Fourth Circuit vacated the judgment and remanded the case. The Fourth Circuit explained that the district court erred by reaching the constitutional question of preemption under 47 U.S.C. § 253 before deciding state law questions that provided alternate bases for granting the plaintiff the relief! I sought and that could have fully disposed of the case. Id. In particular, the Fourth Circuit noted that "courts should avoid deciding constitutional questions unless they are essential to the disposition of a case" and that ''determining whether a federal statute preempts a slate statute, is a constitutional question." Id. at 865.

         The Fourth Circuit's ruling in Bell Atlantic is directly relevant to the instant action. Here. Crown Castle seeks declaratory judgment and injunctive relief under state law and 47 U.S.C. § 253. The state law claims, if resolved in Crown Castle's favor, provide alternate bases for granting Crown Castle the relief it seeks without reaching the constitutional question of preemption under 47 U.S.C. § 253. As a result. Bell Atlantic, as discussed, articulates a relevant federal policy that when applied to the instant action favors retention of supplemental jurisdiction over the stale law claims raised by Crown Castle. In addition, many of the fourth Circuit decisions favoring a district court's declination of supplemental jurisdiction arc premised on the fact that all federal claims were dismissed. As already noted, the federal claim in this case has not been dismissed and the Court endeavors to follow the process and principles described in Bell Atlantic. If the Court initially declined to exercise jurisdiction over the state law claims or considered the federal claim before the state law claims, the Court's actions would in and of themselves violate Bell Atlantic.

         After consideration of 28 U.S.C. if 1367(c), the convenience and fairness to the parties, the existence of any underlying issues of federal policy, comity, and considerations of judicial economy, the Court finds it appropriate to retain supplemental jurisdiction over Crown Castle's state law claims and consider them before reaching the constitutional question presented by 47 U.S.C. § 253.

         II. FACTUAL FINDINGS

         The parties stipulated to a number of relevant facts as set forth in the final Pretrial Order entered by the Court on May 31. 2016. See Final Pretrial Order at 1-7. FCP No. 36. In addition to recounting relevant stipulated facts, the Court makes additional factual findings based on the evidence and testimony presented at trial.

         A. The Parties

         The City of Newport News is a municipal corporation that operates, in relevant part, under the direction of the City Council. City Mayor, and City Manager.

         Crown Castle is a corporation that provides telecommunications services and does so in the Commonwealth of Virginia pursuant to a Certificate of Public Convenience and Necessity ("CPCN") issued by the Virginia State Corporation Commission ("Commission"). Stip. Facts at ¶¶ 1-2, ECF No. 36. The Commission originally granted Crown Castle, then known as NextG Networks Atlantic. Inc., a CPCN to furnish local exchange and interexchange telecommunication services on June 16, 2004. Id. at ¶ 2; Pl's Ex. 1. At some point thereafter. Crown Castle NG Atlantic Inc. became Crown Castle NG Atlantic LLC and on October 22. 2014 the Commission cancelled Crown Castle's existing CPCN and reissued it in the name of Crown Castle NG Atlantic LLC. Stip. Facts at ¶ 2; Pl's Ex. 1.

         Although Crown Castle's service and network incorporates wireless reception devices. Crown Castle is not a wireless provider. Stip. Facts at § 4. Instead, Crown Castle acts as an intermediary for wireless carriers-transporting carriers' communication signals between designated endpoints of die carriers' choosing. Id. at ¶¶ 3-4: Day 1 Trial Tr. 53:23-54:23. Crown Castle, under the CPCN, provides this telecommunications service by creating and using networks generally referred to as Distributed Antenna Systems ("DAS"). Stip. Facts ¶ 3. Crown Castle's typical DAS consist of: (I) "Nodes, " which are typically located on utility or streetlight poles in the public rights of way and consist of small, low-power antennas. lasers, and electronic equipment that convert Radio Frequency format communication to light signals: (2) fiber optic cables; (3) "Flubs." which are central locations typically located on private property and contain routers, switches, and signal conversion equipment: and (4) other equipment. Id.: see also Day 1 Trial Tr. 58:20-59:13, The telecommunications service typically provided by Crown Castle allows carriers' to hand off communication signals to Crown Castle at either the Nodes or Hubs, at which point Crown Castle transports the communication signals to a distant point- typically another Crown Castle-operated Node or Hub, Stip. Facts at ¶ 3; Day 1 Trial Tr. 58:20-59:13, Thereafter, Crown Castle hands the communication signals back to the carrier. See Day 1 Trial Tr. 53:23-54:23; 58:20-59:13.

B. The Parties' Negotiations tor a Franchise Agreement

         On December 11, 2012, Crown Castle's Director of Government Relations, at the lime Mr. Christopher Sinclair, submitted a letter with attachments to the City Manager of Newport News, with courtesy copies to the City Attorney. City Clerk, and Director of Public Works. regarding "Formal Application to Access The Public Right of Way for the Provision of Telecommunications Services"' ("Formal Application"). Stip. Facts at ¶ 5: Stip. Ex. 3: Day 1 Trial Tr. 59:23-66:21. The Formal Application submitted by Crown Castle included a request to access the public rights-of-way within the City o\' Newport News and guidance on the City's process for allowing Crown Castle to place and maintain communications facilities in the public way. Stip. Ex. 3 at CITY000196-97. The Formal Application also included a brief description of Crown Castle and its services, hi. Lastly, the application package contained three attachments, consisting of a reprint of an article entitled "Providing Wireless Coverage Where Towers Are Not Welcome, " a "We Arc Solutions: Focal Officials Guide." and a copy of the CPCN issued by the Commission to Crown Castle. See Stip. Ex. 3; Day 1 Trial Tr. 60:13-19.

         The letter and attachments included as part of the Formal Application are straight forward and speak for themselves. Among the relevant topics and descriptions contained in the application letter. Crown Castle noted its Nodes are "typically attached to existing infrastructure, such as a utility distribution pole or street light pole, where available" and that deployment of its services "is not premised on the construction of new towers or monopoles." Slip. Ex. 3 at CITY000196. The Local Officials Guide, a thirteen-page document attached to the letter application, slated among many features that "Crown Castle will generally seek to collocate its facilities on existing utility or streetlight poles, typically located in the public rights of way, " but that "if there is no available infrastructure, or if the Municipality docs not wish to allow Crown Castle to attach to its streetlight or traffic signal poles. Crown Castle may need to install its own utility poles." Stip. fix. 3 at CITY000193-94. This attachment to the letter application also indicated that if such a circumstance arises, "Crown Castle will comply with all lawful local regulations governing such installations." Id. It is important to note that this attachment and language contained therein was not incorporated into the Franchise Agreement which was subsequently executed by the City and the Plaintiff.

         On January 15, 2013, Deputy City Attorney Joseph DuRant responded to Crown Castle's Formal Application by sending a letter and draft franchise agreement to Mr. Sinclair. Stip. Facts at ¶ 6; Stip. Ex. 10. Mr. DuRant's letter indicated that the draft franchise agreement was enclosed pursuant to Virginia Code §56-462 and that the draft "references the permitting section of the City Code and includes a hyperlink to the City's permitting application." Stip. Ex. 10. In order to expedite the application process, Mr. DuRant provided Crown Castle an editable electronic copy of the draft franchise agreement. See Slip. Fix. 77; Day 2 Trial Tr. 377:7-378:4. On April 30. 2013, Mr. Sinclair, acting on behalf of Crown Castle, sent Mr, DuRant proposed edits to the draft franchise agreement and a copy of "Exhibit A, :' which he proposed lo be included as an exhibit to the franchise agreement. Stip. Facts at ¶ 7: Stip. Ex. 4, Among Crown Castle's edits to the draft franchise agreement was a lengthy addition to the first paragraph detailing the types of equipment Crown Castle intended to deploy on the public rights of way and its intent to place equipment on facilities owned by Crown Castle or utility companies. See Stip. Ex. 4 at ¶ 1. In the second paragraph, Crown Castle added language indicating the City agreed, as prescribed in Virginia Code § 56-462(C)(ii). not to impose any requirements, fees, or processes regarding Crown Castle's use of public rights of way that are not functionally equivalent to the requirements, fees, or process imposed on other telecommunications services providers. Id. at ¶ 2. The attached Exhibit A included a number of depictions and descriptions of Crown Castle equipment that, as Mr, Sinclair explained at trial and as Exhibit A itself indicates, "'arc intended to be representative in nature" and "[a]etual installations may differ somewhat [from the depictions and descriptions contained in Exhibit A] based upon various factors, including, but not limited to. the coverage and/or capacity objective, final equipment selection. Held and pole conditions, existing pole attachments, utility construction standards, and future changes in technology." Stip. Ex. 4 at ¶ 000206; see also Day 1 Trial Tr. 78:8-79:22.

         Mr, DuRant responded to Mr. Sinclair's proposed edits on May 14, 2013. Stip, Facts at ¶ 7; Stip. Ex. 5. In its response, the City proposed deleting the web links to Chapter 38 of the Newport News City Code and the City's Department of Engineering website. Stip. Ex. 5 at CC000168; Day 1 '['rial Tr. 81:17-22. In place of the deleted link to the Department of Engineering, the City added a commenting indicating that information regarding application for the right-of-way permit may be obtained "from the Permits Office of the City's Department of Engineering." Stip. Ex. 5 at CC000168. The City also deleted the language added to Paragraph 1 in Crown Castle's previous edit allowing Crown Castle to install equipment on facilities owned by utility companies, Id. As Mr. DuRant explained in his written comment, he believed the City could not "contract as to the rights of non-City owned utilities not a party to the franchise [agreement]." Id. Finally, although the City made a number of additional comments and edits. the last edit relevant to this litigation was the City's proposal to strike the entirely of Crown Castle's additions to the final sentence of the second paragraph regarding Virginia Code §§ 56-462(C)(ii) and 56-45$(D). Id. In explaining this proposed edit, Mr. DuRant indicated the language was "superfluous as the state law sets the standards"[1] and "the addition was unnecessary, ., because it essentially requoted the statutes involved."[2] In addition to the City's proposed edits and comments. Mr. DuRant attached "Exhibit B" to the draft franchise agreement. which detailed certain insurance requirements for permits, and requested a second copy of Exhibit A. Stip. Ex. 5. That same day, Mr. Sinclair provided Mr. DuRant with another copy of Exhibit A. See Stip. Facts at ¶ 7: Slip. Ex. 6: Day 1 Trial Tr. 83:8-14; Day 2 Trial Tr. 386:22-387:15.

         Mr. Sinclair responded to the City's comments and edits in an itemized email on July 1, 2013. Stip. Facts at ¶ 7; Stip. Ex. 7. In relevant part, Mr. Sinclair's email requested to retain the language in Paragraph One regarding use of utility-owned facilities. Stip. Ex. 7 at CC000151, Mr. Sinclair also requested that the final sentence of Paragraph 2 regarding Virginia Code §§ 56-458 and 56-462 be retained "to avoid confusion in the future for individuals involved in the administration of the agreement." Id. On July 22. 2013, Mr. DuRant responded to Mr. Sinclair's suggested changes and accepted and incorporated the edits relevant to this ease. Stip. Ex. 61; Day 2 Trial Tr, 397:6-398:5. Mr. Durant and Mr, Sinclair exchanged additional email communications regarding proposed changes to the draft franchise agreement. See Stip. Exs. 60. 62; Def. Ex. 3. These communications ultimately led to the finalization of a draft franchise agreement, with Exhibit A and Exhibit B attached, to be submitted to the City Council for approval. Def. Ex. 3.

C. The Franchise Agreement

         At its public meeting on November 26. 2013. the City Council passed Ordinance No. 7014-13. granting Crown Castle a franchise agreement to construct, maintain and operate a telecommunications system in the City of Newport News, Virginia. Slip. Facts at ¶ 8; Slip. Ex. 89. In preparation for the public hearing, the City Council received a package containing, among other materials, an agenda for the meeting, the finalized franchise agreement and attached exhibits, and a memorandum from the City Manager dated November 20. 2013 regarding the proposed franchise agreement. Slip. Facts at ¶ 8; Stip. Ex. 15. A Crown Castle representative attended the public hearing in order to respond to any questions posed regarding the franchise agreement, though no questions or comments were directed to the representative by the City Council. Day 2 Trial Tr. 402:21-24; 416:22-417:3.

         Subsequent to the City Council passing Ordinance No. 7014-13. Crown Castle and the City executed the Franchise Agreement For Use of Public Right s-of-Way In the City of Newport News. Virginia ("Franchise Agreement"), which became effective on December 17. 2013. Stip. Facts at ¶ 9: Stip. Ex. 9. The Franchise Agreement consists of the main agreement and attached ...


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