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HomeMy WebLinkAbout10B - Stay Request ~o~ p~ F-. ~ U ~ ~ MEETING DATE: AGENDA #: PREPARED BY: AGENDA ITEM: DISCUSSION: 4646 Dakota Street S.E. Prior Lake, MN 55372-1714 CITY COUNCIL AGENDA REPORT August 17, 2009 10B John M. Baker and Suesan L. Pace Consideration of request for a stay pending appeal from Mediacom Introduction When a party asks the Minnesota Court of Appeals to review a decision, that party generally may request that the action under review be "stayed" while the appeal is pending. When that appeal seeks review of a city's quasi-judicial decision (such as the grant of a cable franchise) a procedural rule1 makes the body that made the challenged decision (in this case, the Prior Lake City Council) the body that decides, in the first instance, whether to grant such a stay. Mediacom has made such a request, so the Council is required to consider it and decide whether or not to grant such a stay. We recommend that the City Council deny the request. Historv On June 24,2009, the City received a letter from Jane Bremer, counsel for Mediacom, requesting reconsideration of its grant of a franchise to Integra Telecom ("Integra"), and stating that, "in the event Prior Lake denies reconsideration, pursuant to Rule 115.02, subd. 2 of the Minnesota Rules of Civil Appellate Procedure, Mediacom requests that Prior Lake grant a stay of the Integra Franchise, pending review by the Minnesota Court of Appeals." The June 24 letter did not provide any further basis for the stay request, and gave no reasons why the City should grant it. It was only after Mediacom filed its petition for certiorari to the Minnesota Supreme Court on July 28, 2009 that its request for a stay became ripe for a decision by the Council. However, because the City had still not received any supporting grounds for the stay request from Mediacom, the request was not included on the August 3 Council agenda. Instead, the City indicated to Mediacom and Integra that the request would be included on the Council's August 17 agenda, and both sides were requested to provide their written submissions to the Council by 4:30 p.m. on August 10, 2009. That request was intended to ensure that the agenda report could be prepared with the benefit of those submissions. On August 10, Integra provided a letter, which is attached. That letter also incorporates by reference an earlier letter dated June 29, 2009, which is also attached. On August 11, Mediacom also provided a letter. 1 Minnesota Rule of Civil Appellate Procedure 115.03 subd. 2(b). www.cityofpriorlake.com Phon~.95g,447.9SQO / Fa?<952.447.4245 Current Circumstances The reasons given by Mediacom to support its request are as follows: A stay will maintain the status quo pending a determination by the Minnesota Court of Appeals. It will prevent the incurring of potentially needless capital expenditures and will protect the City's taxpayers from the City's possible breach of the Mediacom Franchise. Integra's letter argues, in essence, that it would be a breach of the franchise that the City has issued to Integra for the City to grant a stay of its effectiveness. It also argues that the elements that Minnesota law requires an applicant to establish to obtain a stay are not present in this case. Mediacom also asks that, if the City grants the stay, it not require as a condition of that stay, that Mediacom post a bond. A stay or injunction is typically conditioned on the requesting party's ability to provide a specified type of security to protect the restrained party (in this case, Integra) in case the appeal fails. If the Council is inclined to grant the stay, then as it decides whether to require such a bond and if so, in what amount, it should review the reasons given by Mediacom in its letter on this point. In disagreement with Mediacom, we believe that granting a stay could likely result in losses to the City and to Integra for which a bond would be needed to protect, so that a sizable bond, rather than no bond, would be most appropriate in that setting. Analvsis Based on the parties' written submissions and our analysis of governing law, we recommend that the City Council deny the stay request, and adopt the attached resolution. First, we believe that the City lacks the power to grant the request without risking a violation of the terms of the Integra franchise. The terms of the Integra franchise and the governing statutes do not reserve to the City the power to unilaterally suspend the rights conveyed under the franchise based on such a request, and the franchise has very limited termination provisions. Thus, while the City is required as a matter of procedure to consider the stay request, we recommend that the Council deny the request in part because granting it would risk a violation of the terms of the Integra franchise. Second, even if the Council believes it may have authority to grant such a request, Mediacom has failed to carry its burden of proof under the criteria that apply to such requests. In seeking a stay pending appeal, Mediacom bears a heavy burden. C.A. Wright, A. Miller and M. Kane, Federal Practice and Procedure: Civil Procedure, 92904 at 50203 (interpreting the federal equivalent to the governing rule). The requested stay is tanamount to an injunction against Integra exercising its rights under the franchise, and injunctive relief pending appeal "is an extraordinary remedy best used sparingly." Lehnert v. Ferris Faculty Association MEA NEA, 707 F.Supp. 1490, 1492 (W.O. Mich. 1989). Under Minnesota law, as under federal law, the availability of a stay pending appeal "depends on the ability of the applicant to establish: (1) a strong likelihood of success on the merits of the appeal; (2) the occurrence of irreparable injury, (3) the lack of substantial harm affecting other interested parties, and (4) the. lack of harm resulting to the public interest." David F. Herr & Roger S. Haydock, Minnesota Practice: Civil Rules Annotated, 962.7 at 134 (2005). Here, Mediacom's letter does not address the merits of its appeal, and does not begin to establish "a strong likelihood of success on the merits" of its appeal. Its letter also fails to argue, let alone show, that Mediacom would suffer irreparable injury absent a stay. Its letter also fails to argue, let alone show, that Integra and the City would not suffer substantial harm if a stay were granted. Nor does it argue, let alone show, that there would be a lack of harm resulting to the public interest. ISSUES: At most, Mediacom's letter addresses factors that are tangential to those that the law requires the Council to consider when making such a decision. While the Council may not be forbidden to consider them, it appears clear that Mediacom has failed to carry its legal burden in this setting. Whether the City should grant or deny Mediacom's request that it stay the cable television franchise granted to Integra on June 15, 2009. We do believe it is reasonable under the circumstances to allow both Mediacom and Integra up to five minutes each to state their position on the stay. At the conclusion of the testimony, the Council should ask questions, conduct their deliberations, and act upon the request. FINANCIAL IMPACT: Denial of the request is unlikely to result in a financial impact to the City. While Mediacom claims that the stay would "protect the City's taxpayers from the City' possible breach of the Mediacom Franchise," City staff and counsel have previously concluded that granting Integra's franchise does not breach the Mediacom franchise. ALTERNATIVES: Granting the request, by contrast, is relatively more likely to result in a financial impact to the City. Because of the risk that the stay would be considered a breach of the Integra franchise, granting the stay could expose the City to relatively greater litigation risk. 1. Deny the request for the stay through the adoption of the accompanying Resolution. 2. Direct counsel to prepare a different resolution containing findings consistent with the grant of a stay, accompanied by a recommendation regarding the amount of a bond that the City should require Mediacom to post. 3. Defer action and provide staff with direction. RECOMMENDED MOTION: R~:Jb Frank B Ie Alternative NO.1. '- 4646 Dakota Street S.E. Prior Lake, MN 55372-1714 RESOLUTION 09-xxx A RESOLUTION DENYING A STAY PENDING APPEAL Motion By: Second By: WHEREAS, Mediacom Minnesota LLC ("Mediacom") has filed a petition for certiorari with the Minnesota Court of Appeals challenging the City's grant of a cable television franchise to Integra Telecom ("Integra"); and WHEREAS, Mediacom has also requested that the City grant a stay of the Integra franchise pending appeal; and WHEREAS, Minnesota Rule of Appellate Procedure 115.02 subd. 2(b), as interpreted by the Court of Appeals' staff, makes the body whose decision is being challenged (in this case, the Prior Lake City Council) the body that must consider and act on requests for stays in certiorari proceedings; WHEREAS, The City has requested and received written submissions regarding Mediacom's request from Mediacom and Integra, which the Council has considered in making its decision on the Stay, in addition to the Agenda Report, the terms of which are incorporated herein by reference. NOW THEREFORE, BE IT HEREBY RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE, MINNESOTA as follows: 1. The recitals set forth above are incorporated herein. 2. The City Council finds as follows: a. The City lacks the power to grant the request without risking a violation of the terms of the Integra franchise. The terms of the Integra franchise and the governing statutes do not reserve to the City the power to unilaterally suspend the rights conveyed under the franchise based on such a request, and the franchise has very limited termination provisions. b. Even if the City Council had the authority to grant such a request in these circumstances, Mediacom has failed to carry its burden of proof under the criteria that apply to such requests. c. Under Minnesota law, the availability of a stay pending appeal "depends on the ability of the applicant to establish: (1) a strong likelihood of success on the merits of the appeal; (2) the occurrence of irreparable injury, (3) the lack of substantial harm affecting other interested parties, and (4) the lack of harm resulting to the public interest." David F. Herr & Roger S. Haydock, Minnesota Practice: Civil Rules Annotated, S 62.7 at 134 (2005). d. Here, Mediacom's letter does not address the merits of its appeal, and does not begin to establish "a strong likelihood of success on the merits" of its appeal. e. Its letter also fails to argue, let alone show, that Mediacom would suffer irreparable injury absent a stay. www.cityofpriorlake.com Phone 952.447.9800 / Fax 952.447.4245 f. Its letter also fails to argue, let alone show, that Integra and the City would not suffer substantial harm if a stay were granted. g. Nor does it argue, let alone show, that there would be a lack of harm resulting to the public interest. 3. Based upon these findings, the Council denies Mediacom's stay request. PASSED AND ADOPTED THIS 1 ih DAY OF AUGUST 2009. YES NO I Hau~en I Erickson I Hedberg I leMair I Millar Haugen Erickson Hedberg leMair Millar Frank Boyles, City Manager R:\Council\2009 Agenda Reports\08 17 09\stay pending appeal resolutionDOC Bremer Law, RC. August 11, 2009 John Baker, Esq. Greene Espel, P.L.L.c. 200 South Sixth Street Suite #1200 Minneapolis, MN 55402 VIA E-MAIL ibaken'WlITeeneesoel.com Re: Mediacom Minnesota, LLC v. City of Prior Lake Case No. A09-1379 Dear Mr. Baker: Mediacom hereby requests that the City of Prior Lake (the "City") grant a stay of the Cable Television Franchise Agreement granted to Integra Telecom on June 15, 2009 (the "Integra Franchise"). Under Rule 115.03, Subd. 2 of the Minnesota Rules of Civil Appellate Procedure, the City has the authority to stay the matter pending appeal. The application for a stay must be brought first to the City. See, Minnesota Rules Civil Appellate Procedure 108.01, Subd. 1. As such, Mediacom respectfully requests that the City grant a stay. A stay will maintain the status quo pending a determination by the Minnesota Court of Appeals. It also will prevent the incurring of potentially needless capital expenditures and will protect the City's taxpayers from the City's possible breach of the Mediacom Franchise. Mediacom also requests that no supersedeas bond be required. Such bonds, as you know, are typically required when a monetary judgment has been ordered by the trial court. Here, no monetary judgment is in issue; only the granting of the Integra Franchise. As such, there is no "loss" for which a supersedeas bond would be needed to protect. Thank you. ane E. Bremer, for BREMER LAW, P.C. cc: Bill Jensen Tom Bordwell August 7, 2009 ..... Moss & Barnett A Professional Association VIA E-MAIL ONL Y Frank Boyles Prior Lake City Manager 4646 Dakota Street SE Prior Lake, MN 55372-1714 Re: Application of Scott Rice Telephone Company d/b/a Integra Telecommunications for Cable Television Franchise in the City of Prior Lake Dear Frank: This firm represents Scott Rice Telephone Company d/b/a Integra Telecommunications ("Integra"). This letter is in response to the request by the City of Prior Lake ("City") for supplemental briefing on the alternative request of Mediacom Minnesota, LLC ("Mediacom") in the letter dated June 24, 2009, from Jane Bremer for a stay of the Integra franchise pending review by the Minnesota Court of Appeals. The City should deny Mediacom's request for a stay for the reasons outlined in Integra's letter of June 29, 2009, which Integra incorporates by reference. Succinctly stated, Mediacom has offered no reason to support the City's grant of a stay blocking Integra from implementing the franchise awarded by the City. The franchise awarded to Integra is a binding contract which Integra expects the City to honor. Moreover, Integra has acted in reliance on the City's award of the franchise. The City cannot eliminate, impair or stay Integra's contractual rights unless Integra has breached the terms of the franchise and the City enters into the franchise termination process. No such breach has occurred, nor has Mediacom alleged any transgression by Integra. Indeed, neither the Federal Cable Act! nor the Minnesota Cable Act2 provides procedural authority for the stay requested by Mediacom. Furthermore, neither the Administrative Procedure Act ("APA") nor the Minnesota Rules of Civil Appellate Procedure ("Minn. R. Civ. App. Pro.") supports the issuance of a stay. Despite Mediacom's repeated reference to the APA, it is clear that this statute does not apply as the action at issue in this case is an action by a local governmental unit that does not have statewide jurisdiction. See e.g., Heideman v. Metropolitan Airports Commission, 555 N.W.2d 322-323-24 (Minn. App. 1996) (indicating that the APA does 1 The Cable Communications Policy Act of 1984, Pub. L. No. 98-549, 98 Stat. 2779 (1984) (codified at 47 U.S.c. 99521-611 (1982 & Supp. V 1987)) as amended by the Cable Television Consumer Protection and Competition Act of 1992, Pub. L. No. 102-385 and the Telecommunications Act of 1996, Pub. L. No. 104-458. 2 Minn. Stat. ~~ 238.01-.43. "1800 WELLS IA,R,CO Cl~JTER I 90 South Sc,venth Street Minll";q)()lls, l'lN 5',4U2 '11)9 P: 12 [377 ~)O(JO F 612 -877 5999 'vV:moss Ddrnett (0 Frank Boyles Prior Lake City Manager August 7, 2009 Page 2 ..... Moss & Barnett not apply to actions by the Metropolitan Airports Commission as it is not an entity with statewide jurisdiction). As the APA does not apply to actions by the City, Mediacom can only petition for certiorari based upon the general provisions of Chapter 606 of the Minnesota Statutes, Writ of Certiorari, which itself does not address the granting of a stay pending appeal. See Minn. Stat. 99 606.01-.06. The Minnesota Rules of Civil Appellate Procedure, however, provide that an agency or governmental body whose decision is subject to certiorari review "may stay enforcement of the decision in accordance with Rule 108," which governs supersedeas (security) bonds and stays. Minn. R. App. P. 115.03, subd. 2(d). For the most part, Minn. R. Civ. App. P. 108 provides little guidance to the City as it largely involves appeals from matters materially different than the granting of a cable franchise. Nonetheless, Minnesota courts have explained that a stay pending appeal should only be granted where it appears that without the stay the object of the appeal may be defeated or that the stay is reasonably necessary to protect the appellant from irreparable injury in the case of reversal, while appellee will sustain no disproportionate injury in case of an affirmance. See e.g. State v. Northern Pac. Ry. Co., 22 N.W.2d 569 ( Min. 569). In that regard, the standard for a stay pending appeal is similar to that for an injunction established by Dalberg Brothers v. Ford Motor Company, 137 N.W.2d 314 (Minn. 1965), and which considers the following factors: 1. The nature and background of the relationship between the parties pre- existing the dispute giving rise to the request for relief; 2. The likelihood that one party over the other will prevail on the merits; 3. The relative harm to each party; 4. Public policy; and 5. The administrative burdens involved. Whether viewed under the multi-stepped analysis of Dalberg or the more focused inquiry of Northern Pacific, a stay simply should not issue. Indeed, under either standard the most critical analysis is the balancing of the harms and Mediacom cannot establish that it faces the irreparable harm necessary for a stay. Frank Boyles Prior Lake City Manager August 7, 2009 Page 3 ..... Moss & Barnett Assuming that the franchise is not stayed, the one and only "harm" that Mediacom can allege is the competition which it faces from Integra while the appeal is pending. And, while Mediacom would certainly prefer to prevent competition from entering the marketplace, it truly cannot argue that public policy (or the residents of Prior Lake) supports the suppression of competition. On the other hand, Integra does face substantial harm if a stay is issued. Integra has invested substantial resources towards the establishment of this franchise and its ability to offer competitive video services to the marketplace. A stay for an indeterminate period of time while this matter is litigated before the Court of Appeals may have the same effect as the denial of the franchise. A stay would prevent Integra from offering the triple-play option (voice, video and data services) which consumers desire. During the period necessary for Mediacom's appeal to make its way through the appellate process, Mediacom would have the luxury of time and full knowledge of Integra's video offering to target Integra's potential customers with long-term contracts offers. Indeed, Mediacom's request for a stay is really just a ploy to prevent competition while Mediacom locks up the market and makes it harder for the residents of Prior Lake to enjoy the choices which competition brings. For the foregoing reasons, Integra requests the City deny Mediacom's request for a stay of the franchise. Very truly yours, 7J~! h~ Brian T. Grogan /I Attorney At Law (612) 877-5340 GroganB@moss-barnett.com BTG/blm Susan Lea Pace, Prior Lake City Attorney John Baker Ginny Zeller, Integra Dave Kunde, Integra 1443946vl