Detroit, City of v. Comcast of Detroit

Filing 91

ORDER granting in part 87 Motion for Certificate of Appealability; granting in part 88 Motion to Stay. Signed by District Judge David M. Lawson. (DTof)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
CITY OF DETROIT,
Plaintiff,

Case Number 10-12427
Honorable David M. Lawson

v.
STATE OF MICHIGAN and COMCAST OF
DETROIT,
Defendants,
and
MICHIGAN ATTORNEY GENERAL,
Intervening defendant.
__________________________________________/
ORDER GRANTING IN PART MOTION TO CERTIFY ORDERS
FOR INTERLOCUTORY APPEAL
The City of Detroit filed a complaint alleging that defendant Comcast of Detroit, the City’s
cable television provider, was subject to and violated the terms the terms of a franchise agreement
between Comcast and the City, which expired on February 28, 2007. The City contended that the
expired franchise agreement was effective because no new agreement had been reached. Comcast
contended that Michigan’s Uniform Video Services Local Franchise Act (the Michigan Act), Mich.
Comp. Laws § 484.3301 et seq., established a new franchise agreement by operation of law, the
terms of that agreement governed after February 2007, and Comcast was in compliance. The City
responded that the Michigan Act is preempted by the Cable Communications Policy Act (“the Cable
Act”), 47 U.S.C. § 521 et seq.
On July 10, 2012, the Court filed an opinion and order granting in part and denying in part
the parties’ motions for partial summary judgment. The Court found that the City of Detroit has

standing to challenge the validity of certain aspects of the Michigan Act on federal preemption
grounds, but that it has no standing to challenge the Act’s removal of municipalities’ authority to
enforce customer service and anti-discrimination provisions in existing franchise agreements, and
that controversy is not ripe. The Court also held that the provisions of the Michigan Act addressing
the modification of existing franchise agreements and barring enforcement provisions relating to
public, government, and education channels are invalid on federal preemption grounds. However,
the Court also held that the Act’s renewal procedures and its failure to require universal build-outs
are not preempted by federal law. The Court also held that the state attorney general offered a
construction of the Act that avoids a conflict with the state constitution, that is, that municipalities
may refuse to approve a franchise renewal application and negotiate acceptable terms with the cable
provider, without the standard form agreement prescribed by the Michigan Act automatically taking
effect. Therefore, the Court held that the Act does not violate the Michigan constitution. The Court
then concluded that Comcast and the City have no current franchise agreement in place. Because
Michigan law does not permit a franchisee to be regarded as a holdover tenant, the Court held that
Comcast must be found to be a trespasser.
Comcast filed a motion for reconsideration of the Court’s order, which the Court denied on
August 7, 2012.
Thereafter, the Court directed the parties to file briefs on the appropriate remedies to address
Comcast’s status as a trespasser. The City takes the position that it is entitled to damages from
Comcast consisting of the obligations Comcast failed to fulfill under the expired agreement, and
damages resulting from operating its cable system in the City without a franchise agreement.
Comcast responds that the City is entitled to no more than nominal damages because it never treated

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Comcast as a trespasser and it accepted some of the benefits under Comcast’s version of the
franchise agreement that Comcast had deemed effective. The Court held a status conference to
discuss discovery issues. Comcast concedes that damages discovery could include information on
the profitability of Comcast’s Detroit cable system, the effect of Comcast’s cable system on the
value of the City’s rights-of-way, payments Comcast made to the Detroit Public Benefits
Corporation, and the uses the City made of those payments. Because discovery during the damage
phase of the lawsuit could be extensive and costly, Comcast proposed that the liability issue be
vetted in the court of appeals first.
On January 7, 2013, Comcast filed a motion to certify the Court’s orders on the motions for
partial summary judgment and for reconsideration for interlocutory appeal. Comcast argues that the
following three legal questions render the Court’s orders appropriate for certification: whether the
Michigan Act allows local franchising authorities to deny a uniform franchise application, whether
the federal Cable Act preempts the provision of the Michigan Act that modifies existing franchise
agreements, and whether Michigan law requires that Comcast be deemed a trespasser.
The City argues that certification is not appropriate because there is no substantial ground
for difference of opinion with respect to either the Court’s summary judgment order or its order on
Comcast’s motion for reconsideration. The City also argues that certification would not advance
the outcome of litigation because if the Sixth Circuit were to agree with Comcast’s argument as to
the correct interpretation of the Michigan Act’s renewal provision, it would be compelled to find that
the renewal provision is invalid under the Michigan Constitution and preempted by the Cable Act
because the provision strips Detroit of its authority to deny a franchise application and sidesteps the
Cable’s Acts notice and participation requirements. Finally, the City argues that if the Court grants

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Comcast’s motion, it should certify the entire summary judgment order rather than isolated issues
contained in the order.
A district court may certify an order not otherwise appealable for interlocutory appeal where
the Court finds that the order “involves a controlling question of law as to which there is substantial
ground for difference of opinion and that an immediate appeal from the order may materially
advance the ultimate termination of the litigation.” 28 U.S.C. § 1292(b). The statute contains three
requirements: first, that the legal issues involved are controlling; second, that there is substantial
ground for difference of opinion as to those issues; and third, that appeal would materially advance
the ultimate termination of litigation. However, Ҥ 1292(b) should be sparingly applied and used
only to avoid protracted and expensive litigation.” West Tennessee Chapter of Associated Builders
and Contractors, Inc. v. City of Memphis, 138 F. Supp. 2d 1015, 1018 (W.D. Tenn. 2000) (citing
Cardwell v. Chesapeake & Ohio Ry. Co., 504 F.2d 444, 446 (6th Cir. 1974)).
“A legal issue is controlling if it could materially affect the outcome of the case.” In re City
of Memphis, 293 F.3d at 351, 345 (6th Cir. 2002). The plaintiff apparently does not dispute that the
Court’s orders involve controlling questions of law.
Substantial grounds for difference of opinion exist where “(1) the question is difficult, novel
and either a question on which there is little precedent or one whose correct resolution is not
substantially guided by previous decisions; (2) the question is difficult and of first impression; (3)
a difference of opinion exists within the controlling circuit; or (4) the circuits are split on the
question.” Newsome v. Young Supply Co., 873 F. Supp. 2d 872, 876-77 (E.D. Mich. 2012) (quoting
City of Dearborn v. Comcast of Michigan III, No. 08-10156, 2008 WL 5084203, at *3 (E.D. Mich.
Nov. 24, 2008)). The City argues that there is no substantial ground for difference of opinion with

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respect to either the Court’s summary judgment order or its order on Comcast’s motion for
reconsideration. The City contends that the Court’s decision was well-founded and beyond
reasonable dispute, especially with respect to the Court’s finding that the Cable Act’s franchise
modification procedure conflicts with the state act’s automatic modification of existing franchises.
The City also points out that the Court adopted the Michigan Attorney General’s “plausible
construction” of the state act’s renewal provision. The City also argues that the Court correctly
applied Local Rule 7.1(h)(3) to Comcast’s motion for reconsideration.
The Court denied Comcast’s motion for reconsideration because it was an attempt to rehash
issues already addressed in the summary judgment motions, except for the question whether
Comcast must be considered a trespasser under Michigan law. However, the trespass ruling flowed
directly from established precedent laid down by the Michigan Supreme Court, and Comcast’s
failure to brief the question did not justify reconsideration of the summary judgment order. The
Court does not see much difference of opinion — much less a substantial one — on that score.
There are two questions that are novel and therefore have little precedent to provide
guidance: whether the Cable Act preempts the sections of the Michigan Act addressing the
modification of existing franchise agreements and barring enforcement provisions relating to public,
government, and education channels; and whether the Court correctly interpreted the Michigan Act
in the manner suggested by the state attorney general to conclude that municipalities may refuse to
approve a franchise renewal application and negotiate acceptable terms with the cable provider,
without the standard form agreement prescribed by the Michigan Act automatically taking effect.
As a result, there may be substantial grounds for difference of opinion with the Court’s holding on
those points. The issues of the interpretation of the Michigan Act and its potential preemption have

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not been addressed by the Sixth Circuit or the Michigan courts, and there is little precedent on the
issue of Comcast’s status. Therefore, the Court finds that there is substantial grounds for difference
of opinion on those issues.
Finally, the Court finds that an immediate appeal of its rulings may materially advance the
ultimate termination of the litigation. “An interlocutory appeal materially advances litigation when
it ‘save[s] judicial resources and litigant expense.’” Newsome, 873 F. Supp. 2d at 878 (quoting West
Tennessee Chapter of Associated Builders and Contractors, Inc., 138 F. Supp. 2d at 1026). “When
litigation will be conducted in substantially the same manner regardless of [the court’s] decision,
the appeal cannot be said to materially advance the ultimate termination of the litigation.” In re City
of Memphis, 293 F.3d at 351 (quoting White v. Nix, 43 F.3d 374, 378-79 (8th Cir. 1994)) (alteration
in original). However, that is not the case here. Instead, resolution of the liability issues on appeal
could allow the parties to “avoid protracted and expensive litigation.” In re Baker & Getty
Financial Services, Inc., 954 F.2d 1169, 1172 (6th Cir. 1992). The case is poised to enter the
damage discovery phase and potentially to proceed to trial on the issues of breach of contract and
damages. If the Court’s decisions on the issues highlighted are reversed, litigation in this Court
might be terminated, and the need for discovery would either be obviated or greatly diminished.
The plaintiff makes another valid point: a certification order generally is not confined to
discrete issues; rather, it addresses an entire opinion or order entered by the district court. See
Yamaha Motor Corp., U.S.A. v. Calhoun, 516 U.S. 199, 205 (1996) (“As the text of § 1292(b)
indicates, appellate jurisdiction applies to the order certified to the court of appeals, and is not tied
to the particular question formulated by the district court. . . . [T]he appellate court may address any
issue fairly included within the certified order because it is the order that is appealable, and not the

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controlling question identified by the district court.” (internal quotation marks and citation omitted)).
The plaintiff apparently would like the opportunity to challenge portions of the order adverse to it
— for example, the Court’s determination that the state act is not entirely preempted by the Cable
Act. The Court agrees that once the summary judgment order is certified for appeal, there is no
reason the City could not seek permission to appeal under Federal Rule of Appellate Procedure 5.
The Court finds that its opinion and order granting in part and denying in part the cross
motions for summary judgment satisfies the provisions of 28 U.S.C. § 1292(b) and therefore should
be certified to the court of appeals for its consideration. The order denying Comcast’s motion for
reconsideration does not meet the requirements of the statute.
Accordingly, it is ORDERED that defendant Comcast’s motion to certify orders for
interlocutory appeal [dkt. #87] is GRANTED IN PART.
It is further ORDERED that the Court’s opinion and order granting in part and denying in
part the cross motions for summary judgment entered July 10, 2012 [dkt. #76] is AMENDED to
include a certification of appealability, in accordance with 28 U.S.C. § 1292(b).
It is further ORDERED that defendant Comcast’s motion to stay proceedings [dkt. #88] is
GRANTED IN PART.
It is further ORDERED that the case is STAYED for a period of thirty (30) days, until May
4, 2013, to permit any party to file a motion in the United States Court of Appeals for the Sixth
Circuit for permission to appeal under Federal Rule of Appellate Procedure 5. See Fed. R. App. Pro.
4(a)(1)(A), 5(a)(2). If no such motion is filed within that time, the stay will be dissolved. If such
a motion is filed, the stay will continue until the motion is resolved by the court of appeals.

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s/David M. Lawson
DAVID M. LAWSON
United States District Judge
Dated: April 3, 2013

PROOF OF SERVICE
The undersigned certifies that a copy of the foregoing order was served
upon each attorney or party of record herein by electronic means or first
class U.S. mail on April 3, 2013.
s/Deborah R. Tofil
DEBORAH R. TOFIL

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