Goldstein v. Time Warner New York City Cable Group

3 F. Supp. 2d 423, 1998 U.S. Dist. LEXIS 5797, 1998 WL 199322
CourtDistrict Court, S.D. New York
DecidedApril 24, 1998
Docket96 CIV. 7462(LBS), 97 CIV. 0673(LBS)
StatusPublished
Cited by23 cases

This text of 3 F. Supp. 2d 423 (Goldstein v. Time Warner New York City Cable Group) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Goldstein v. Time Warner New York City Cable Group, 3 F. Supp. 2d 423, 1998 U.S. Dist. LEXIS 5797, 1998 WL 199322 (S.D.N.Y. 1998).

Opinion

OPINION

SAND, District Judge.

The Plaintiffs, Steve Gruberg and Cable Access Network, Inc. (collectively “Gru-berg”), have brought two suits 1 against the Defendant, Time Warner Cable of New York City (“Time Warner”), 2 seeking equitable and declaratory relief, as well as damages, for claims arising out of the Cable Act 3 and various regulations promulgated thereunder. Presently before the Court are three motions: (1) the Plaintiffs’ motion to compel discovery pursuant to Fed.R.Civ.P. 37(a); (2) the Defendant’s motion to compel discovery pursuant to Fed.R.Civ.P. 34(b) & 37(a); and (3) the Defendant’s motion for summary judgment pursuant to Fed.R.Civ.P. 56, the resolution of which involves several significant questions of first impression under § 612(d) of the Cable Act. For the reasons set forth below, the Defendant’s motion for summary judgment is granted in part and denied in part, and both suits are hereby *426 stayed in their entirety pending further action by the Court of Appeals for the District of Columbia Circuit. 4

I. BACKGROUND

This Opinion represents the latest stage of the “leased access” litigation that has been on the Court’s docket since 1990. 5 In the intervening years, however, the leased access landscape has been reshaped greatly by both congressional and regulatory action. 6 The pertinent developments are described below.

A. The Cable Act

Section 612 requires cable operators to designate a certain percentage of channel capacity for commercial use by unaffiliated programmers. See 47 U.S.C. § 532(b). At the present time, a programmer aggrieved by the failure of an operator to make “reasonable” channel capacity available for leased access use cari either file suit in federal district court, or petition the Federal Communications Commission (“FCC”) for relief. See 47 U.S.C. § 532(d).

This choice of fora, however, was not always available. Under the initial regime established by the 1984 Act, Congress permitted cable operators to set the “price, terms and conditions” of leased access use, and the only avenue of relief for aggrieved programmers was through the district court. See, e.g., Media Ranch, Inc. v. Manhattan Cable Television, Inc., 757 F.Supp. 310, 313-14 (S.D.N.Y.1991). Congress was advised, however, that during the ensuing decade commercial leased access use was, as a general matter, too infrequent in light of the clear statutory directives to encourage, inter alia, diversity in programming. Id. at 314. Suspicion arose that cable operators were systematically sabotaging leased access programmers by insisting on unreasonably high rates for carriage, especially where such leased access programming — which is available to the viewer, theoretically anyway, at no cost — was deemed by the operator to be a competitor of other cable programming in which the operator had a financial stake. See, e.g., H.R.Rep. No. 102-628, at 39-40 (1992), available at 1992 WL 166238 (Legis.Hist.).

The 1992 Cable Act attempted to rectify these perceived injustices. In the 1992 legislation, Congress authorized the FCC to establish a pricing formula to determine the “maximum reasonable rates” for leased access use. The legislation also empowered the FCC to establish reasonable terms and conditions for leased access, as well as to create administrative procedures for the “expedited resolution” of any such disputes. See 47 U.S.C. § 532(c)(4)(a). 7

The FCC’s execution of its mandate has been controversial since the outset. As one *427 commentator put it, “[t]he FCC’s initial report and order — the infamous April 1, 1993 Rate Order — had established the ‘highest implicit fee’ formula for setting the maximum reasonable rates and adopted standards for access terms and conditions,” although, to be sure, the leased access provisions were, at the time, “far overshadowed by the other rate regulatory provisions of the order.” Jeffrey P. Cunard, FCC Revises Leased Access Rules, 14 No. 12 Cable Television & New Media L. & Fin. 1, 1-3 (Feb.1997) (emphasis added). 8

In the face of enormous industry and consumer pressure, the FCC revisited its initial Rate Order through the issuance of the 1996 Reconsideration Order. 9 In this Reconsideration Order, the FCC clarified a host of issues that had arisen pursuant to its designation of the “highest implicit fee” formula as the controlling rate mechanism for leased access use. 10

Then, on February 4, 1997, the FCC released its Second Order 11 on leased commercial access. In this latter order, the FCC adopted a new pricing formula entitled the “average implicit fee” formula. Thus, the pricing formula currently governing the maximum reasonable rate that an operator can charge leased access programmers is the “average implicit fee” formula, not the “maximum implicit fee” formula first articulated in 1993.

The legality of the “average implicit fee” formula is now squarely before the D.C. Court of Appeals in a consolidated appeal, the lead case of which is entitled ValueVision Int'l. Inc. v. FCC, App. No. 97-1138 (D.C.Cir.) (“ValueVision”). The resolution of that appeal is, for reasons explained more fully below, of great consequence to the litigation presently before this Court.

B. The Instant Actions

1. The Parties

The Plaintiffs are producers of adult-oriented cable television programming that has become a fixture of late-night New York television during this past decade. (See Grier Aff. of 9/19/97 (“Grier Aff.”), ¶¶9, 11.) Titles of their broadcast programs include “Titillations,” “NY Nightlife,” “Hot Talk,” “Blurbs,” “Loops,” “Sparkling,” “Hot Spots” and “Spicy Stuff.” (Id. ¶ 10.)

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3 F. Supp. 2d 423, 1998 U.S. Dist. LEXIS 5797, 1998 WL 199322, Counsel Stack Legal Research, https://law.counselstack.com/opinion/goldstein-v-time-warner-new-york-city-cable-group-nysd-1998.