City of Los Angeles v. Preferred Communications, Inc.

476 U.S. 488, 106 S. Ct. 2034, 90 L. Ed. 2d 480, 1986 U.S. LEXIS 81, 12 Media L. Rep. (BNA) 2244, 60 Rad. Reg. 2d (P & F) 792, 54 U.S.L.W. 4542
Supreme Court of the United States·Decided June 2, 1986·No. 85-390·Published·Cited by 178 cases

Opinions

[490]*490Justice Rehnquist

delivered the opinion of the Court.

Respondent Preferred Communications, Inc., sued petitioners City of Los Angeles (City) and the Department of Water and Power (DWP) in the United States District Court for the Central District of California. The complaint alleged a violation of respondent’s rights under the First and Fourteenth Amendments, and under §§ 1 and 2 of the Sherman Act, by reason of the City’s refusal to grant respondent a cable television franchise and of DWP’s refusal to grant access to DWP’s poles or underground conduits used for power lines. The District Court dismissed the complaint for failure to state a claim upon which relief could be granted. See Fed. Rule Civ. Proc. 12(b)(6). The Court of Appeals for the Ninth Circuit affirmed with respect to the Sherman Act, but reversed as to the First Amendment claim. 754 F. 2d 1396 (1985). We granted certiorari with respect to the latter issue, 474 U. S. 979 (1985).

Respondent’s complaint against the City and DWP alleged, inter alia, the following facts: Respondent asked Pacific Telephone and Telegraph (PT&T) and DWP for permission to lease space on their utility poles in order to provide cable television service in the south central area of Los Angeles. App. 6a. These utilities responded that they would not lease the space unless respondent first obtained a cable television franchise from the City. Ibid. Respondent asked the City for a franchise, but the City refused to grant it one, stating that respondent had failed to participate in an auction that was to award a single franchise in the area. Id., at 6a-7a.1

[491]*491The complaint further alleged that cable operators are First Amendment speakers, id., at 3a, that there is sufficient excess physical capacity and economic demand in the south central area of Los Angeles to accommodate more than one cable company, id., at 4a, and that the City’s auction process allowed it to discriminate among franchise applicants based on which one it deemed to be the “best.” Id., at 6a. Based on these and other factual allegations, the complaint alleged that the City and DWP had violated the Free Speech Clause of the First Amendment, as made applicable to the States by the Fourteenth Amendment, §§ 1 and 2 of the Sherman Act, [492]*492the California Constitution, and certain provisions of state law. Id., at lla-19a.

The City did not deny that there was excess physical capacity to accommodate more than one cable television system. But it argued that the physical scarcity of available space on public utility structures, the limits of economic demand for the cable medium, and the practical and esthetic disruptive effect that installing and maintaining a cable system has on the public right-of-way justified its decision to restrict access to its facilities to a single cable television company. 754 F. 2d, at 1401.

The District Court dismissed the free speech claim without leave to amend for failure to state a claim upon which relief could be granted. See Fed. Rule Civ. Proc. 12(b)(6). It also dismissed the antitrust claims, reasoning that petitioners were immune from antitrust liability under the state-action doctrine of Parker v. Brown, 317 U. S. 341 (1963). Finally, it declined to exercise pendent jurisdiction over the remaining state claims.

The Court of Appeals for the Ninth Circuit affirmed in part and reversed in part. 754 F. 2d 1396 (1985). It upheld the conclusion that petitioners were immune from liability under the federal antitrust laws. Id., at 1411-1415. But it reversed the District Court’s dismissal of the First Amendment claim, and remanded for further proceedings. Id., at 1401-1411. It held that, taking the allegations in the complaint as true, id., at 1399, the City violated the First Amendment by refusing to issue a franchise to more than one cable television company when there was sufficient excess physical and economic capacity to accommodate more than one. Id., at 1401-1405, 1411. The Court of Appeals expressed the view that the facts alleged in the complaint brought respondent into the ambit of cases such as Miami Herald Publishing Co. v. Tornillo, 418 U. S. 241 (1974), rather than of cases such as Red Lion Broadcasting Co. v. FCC, 395 U. S. 367 (1969), [493]*493and Members of City Council v. Taxpayers for Vincent, 466 U. S. 789 (1984). 754 F. 2d, at 1403-1411.

We agree with the Court of Appeals that respondent’s complaint should not have been dismissed, and we therefore affirm the judgment of that court; but we do so on a narrower ground than the one taken by it. The well-pleaded facts in the complaint include allegations of sufficient excess physical capacity and economic demand for cable television operators in the area which respondent sought to serve.2 The City, while admitting the existence of excess physical capacity on the utility poles, the rights-of-way, and the like, justifies the limit on franchises in terms of minimizing the demand that cable systems make for the use of public property. The City characterizes these uses as the stringing of “nearly 700 miles of hanging and buried wire and other appliances necessary for the operation of its system.” Brief for Petitioners 12. The City also characterizes them as “a permanent visual blight,” ibid., and adds that the process of installation and repair of such a system in effect subjects city facilities designed for other purposes to a servitude which will cause traffic delays and hazards and esthetic unsightliness. Respondent in its turn replies that the City does not “provide anything more than speculations and assumptions,” and that the City’s “legitimate concerns are easily satisfied without the need to limit the right to speak to a single speaker.” Brief for Respondent 9.

We of course take the well-pleaded allegations of the complaint as true for the purpose of a motion to dismiss, see, e. g., Kugler v. Helfant, 421 U. S. 117, 125-126, n. 5 (1975). Ordinarily such a motion frames a legal issue such as the one which the Court of Appeals undertook to decide in this case. [494]*494But this case is different from a case between private litigants for two reasons: first, it is an action of a municipal corporation taken pursuant to a city ordinance that is challenged here, and, second, the ordinance is challenged on colorable First Amendment grounds. The City has adduced essentially factual arguments to justify the restrictions on cable franchising imposed by its ordinance, but the factual assertions of the City are disputed at least in part by respondent. We are unwilling to decide the legal questions posed by the parties without a more thoroughly developed record of proceedings in which the parties have an opportunity to prove those disputed factual assertions upon which they rely.

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City of Los Angeles v. Preferred Communications, Inc., 476 U.S. 488, 106 S. Ct. 2034, 90 L. Ed. 2d 480, 1986 U.S. LEXIS 81, 12 Media L. Rep. (BNA) 2244, 60 Rad. Reg. 2d (P & F) 792, 54 U.S.L.W. 4542 (1986).

476 U.S. 488 (City of Los Angeles v. Preferred Communications, Inc.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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