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NEW JERSEY PAYPHONE ASS'N v. TOWN OF WEST NEW YORK

March 7, 2001

NEW JERSEY PAYPHONE ASSOCIATION INC., A NOT FOR PROFIT CORPORATION ORGANIZED UNDER THE LAWS OF NEW JERSEY, PLAINTIFF,
v.
TOWN OF WEST NEW YORK, DEFENDANT.



The opinion of the court was delivered by: Wolin, District Judge.

OPINION

This matter is opened before the Court upon the motion of plaintiff New Jersey Payphone Association, Inc. for summary judgment and the cross-motion of defendant the Town of West New York, also for summary judgment. The motion and cross-motion have been decided upon the written submissions of the parties pursuant to Federal Rule of Civil Procedure 78. For the reasons set forth below, plaintiff's motion will be granted and defendant's cross-motion will be denied. Summary judgment will be entered for plaintiff in this matter and the Town of West New York will be enjoined from enforcement of its ordinance that is the subject of this litigation.

BACKGROUND

This lawsuit concerns Ordinance 26/99 (the "Ordinance") adopted on February 16, 2000 by the Town of West New York (the "Town") regarding pay telephones in public rights of way. Plaintiff New Jersey Payphone Association (the "Payphone Association") is a not-for-profit association whose members maintain pay telephones in West New York. The Payphone Association challenges the Ordinance on a number of grounds, alleging that it violates the Unites States and New Jersey Constitutions, New Jersey statutory law, and that the ordinance is preempted by the express provisions of the Federal Telecommunications Act of 1996.

The Payphone Association moved before this Court for a preliminary injunction. This motion was denied in the Court's Letter Opinion and Order of June 7, 2000, on the ground that plaintiff failed to establish that waiting for a plenary adjudication would cause its members to suffer an irreparable injury. The merits of the arguments were not reached. Now, both parties move before this Court for summary judgment on the complaint.

Citing the need to control the placement of pay telephones for the benefit of pedestrian and vehicular traffic in the public rights of way, the Ordinance requires prospective pay telephone operators to obtain a permit for each pay telephone specifying that pay telephone's exact location. Section three of the Ordinance continues:

The Town reserves the right to award a Contract for replacement or operation of [pay telephones] in the public right-of-way of the Town and on Town owned property. If the Town exercises such rights no other permits or renewals for the operation of [pay telephones] shall be issued and any previously installed [pay telephones] shall be removed from the public right-of-way within thirty days.

Pursuant to this paragraph of the Ordinance, the Town promulgated a document titled "Franchise for Public Pay Telephones throughout the Town of West New York." This document invited bids for the contract to provide pay telephones. Included are substantive specifications for proposals. The document as a whole will be referred to hereinafter as the "Franchise Specification."

The Town is to evaluate the bids based upon a number of factors, including: the experience of the applicant, the ability of the applicant to maintain the pay telephones, the efficiency of the public service to be provided, the willingness of the applicant to provide pay telephones in residential neighborhoods that lack private telephones, the applicant's history of maintaining pay telephones in West New York, and the cost of a call to the public. Also considered is the compensation offered the Town by the applicant. Ronald Theobald, Purchasing Agent for the Town, testified by affidavit that he considered compensation to the Town to be the most important factor in evaluating the bids.

As it happened, three companies submitted proposals. Theobald testifies that the applications were equivalent with the exception of the compensation offered and the per-call cost to the public. Theobald determined that differences in billing methods between the bidding companies created difficulties in evaluating the bids. Accordingly, he recommended that all the bids be rejected. Due to the pendency of this action, the parties have agreed that no further action will be taken with regard to awarding the contract or otherwise putting into effect the Town's Ordinance.

In response to inquiries by the Court, the parties have clarified their positions in one important respect. The Town's Ordinance and Franchise Specification are contradictory in that the Ordinance expressly states that it applies to both public property and public rights of way. However, the Franchise Specification states it covers pay telephones on public property only. While the merits of this distinction are discussed infra, it suffices here to note that the Payphone Association only challenges the Ordinance to the extent it regulates pay telephones in public rights of way. The Payphone Association expressly disavows any challenge to the Town's ability to control whose pay telephones are installed in what is unequivocally Town property, such as the foyer of City Hall, or in a fire station.

The Town rejects the notion that any valid distinction exists. The Town argues that it owns the public rights of way as well as its own buildings and grounds. By extension, therefore, the Town claims the authority to contract for the installation of pay telephones essentially any place that is not private property. Specifically, this would include the right to grant a franchise to install pay telephones on the Town's sidewalks or on the sides of buildings abutting public rights of way.

The parties do agree, however, that the Ordinance and the Franchise Specification are intended to cover both rights of way and Town buildings, grounds and other property, notwithstanding the ambiguity in their language. The Court requested supplemental submissions on the parties' positions on this issue and has carefully considered the parties' arguments.

DISCUSSION

Summary judgment shall be granted if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c); see Hersh v. Allen Prods. Co., 789 F.2d 230, 232 (3d Cir. 1986). This Court noted in its opinion denying Payphone Association's application for a preliminary injunction that the issues presented by this case are primarily legal. See also NE Hub Partners, L.P. v. CNG Transmission Corp., 239 F.3d 333, 344, (3d Cir. 2001) (factual issues obviated by presence of preemption issue).

1. The Preemption Issue

The moving papers argue several alternative grounds for decision. Most prominently, plaintiff argues that the Ordinance is preempted by the Telecommunications Act of 1996, Pub.L. No. 104-104, 110 Stat. 56, codified in relevant part at 47 U.S.C. § 253. Plaintiff also contends that the Ordinance violates the substantive due process rights of the United States and New Jersey Constitutions, and constitutes a taking of private property without compensation in violation of the Fifth Amendment of the United States Constitution. Finally, according to plaintiff, the Ordinance creates a "fee, assessment or levy" contrary to New Jersey statute N.J.S.A. 54:30A-124.

"Longstanding practice calls for federal judges to explore all non-constitutional grounds of decision before addressing constitutional ones. . . ." United States v. Serafini, 167 F.3d 812, 815 (3d Cir. 1999). Likewise, the federal courts do not resolve difficult or important matters of state law where it is not necessary to do so. See, e.g., 28 U.S.C. § 1367(c)(1) (court may decline to exercise supplemental jurisdiction over novel or complex issues of state law); Louisiana Power & Light Co. v. City of Thibodaux, 360 U.S. 25, 27-28, 79 S.Ct. 1070, 3 L.Ed.2d 1058 (1959) (federal courts to stay proceedings involving state law issues regarding city and state relations); Planned Parenthood of Central New Jersey v. Farmer, 220 F.3d 127, 149 (3d Cir. 2000) (avoidance of "needless friction" with important state policies one prong of Pullman abstention doctrine). The Court should not be understood to decline jurisdiction or to abstain from considering the state constitutional and statutory issues raised by the parties. However, where a matter may be decided by a straightforward application of a federal statute, the Court believes that this is the preferable course for a federal court to take.

The Court notes that the Fourth Circuit vacated a decision by the District of Maryland in a similar case, on the ground that preemption under the Telecommunications Act was itself a constitutional issue and that certain state-law issues should have been reached first. The Court respectfully disagrees with this approach, however.

Our own Third Circuit has written, "the basic question involved in [preemption claims under the Supremacy Clause] is never one of interpretation of the Federal Constitution but inevitably one of comparing two statutes." United Services Auto. Ass'n v. Muir, 792 F.2d 356, 363 (3d Cir. 1986) (quoting Swift & Co. v. Wickham, 382 U.S. 111, 120, 86 S.Ct. 258, 15 L.Ed.2d 194 (1965)) (alteration in original), cert. denied sub nom., Grode v. United Services Auto Ass'n, 479 U.S. 1031, 107 S.Ct. 875, 93 L.Ed.2d 830 (1987). This is particularly true where preemption is of the express, statutory variety, as opposed to either the doctrines of field or conflict preemption. Such preemption is pursuant to an explicit statutory command that state law be displaced. Orson, Inc. v. Miramax Film Corp., 189 F.3d 377, 381 (3d Cir. 1999), cert. denied, 529 U.S. 1012, 120 S.Ct. 1286, 146 L.Ed.2d 232 (2000). The inquiry is one of statutory intent. Morales v. Trans World Airlines, Inc., 504 U.S. 374, 383, 112 S.Ct. 2031, 119 L.Ed.2d 157 (1992).

Preemption of state law pursuant to an express provision of a federal statute is only a constitutional issue in the sense that the authority for such preemption rests in part upon the Supremacy Clause of the United State Constitution. Every federal statute must be bottomed upon a grant of power in the federal Constitution; this does not convert every federal statutory question into a constitutional one. See Hotel Employees & Restaurant Employees Int'l Union v. Nevada Gaming Comm'n, 984 F.2d 1507, 1512 (9th Cir. 1993) (Pullman abstention not appropriate "because preemption is not a constitutional issue"); United Services Auto. Ass'n, 792 F.2d at 363 (preemption not the type of constitutional issue to be avoided under Pullman abstention doctrine). Here there is no dispute over Congress' power to legislate in the field of telecommunications, nor over whether federal law trumps an ordinance of the Town of West New York. The ...


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