upon a percentage of revenue generated by the pay telephones.
West New York is to be split into two districts with contracts
granted to the two successful bidders. At least 75 pay telephones
must be installed by the winning bidder at locations to be
approved by a Town official. A security deposit of $250 per
proposed telephone must be paid to qualify to bid. This would
amount to a payment of at least $18,750 assuming the bidder
proposes to install the minimum of 75 telephones.
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
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
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.
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 constitutional
aspects of the interrelation between the Telecommunications Act
and the Ordinance are not truly "issues" in this case at all. The
only issue here is the statutory one of whether the Town's
actions contravene a federal law.
Therefore, the Court will address first the arguments of
plaintiffs that the Ordinance is preempted by the federal
Telecommunications Act. Because the Court finds below that
preemption does exist and that the Ordinance and the Franchise
Specification are void on that ground, the Court will reach
neither the constitutional nor state law grounds raised by
The Town argues that the Payphone Association's challenge is
not ripe for judicial review. The Town makes this argument solely
with reference to the Payphone Association's state law challenge
to the Ordinance under N.J.S.A. 54:30A-124. Although the Court
does not reach this substantive ground in this Opinion, in an
excess of caution and to settle any uncertainty regarding the
justiciability of this matter, the Court will briefly address the
federal doctrine of ripeness. It is plain that all of the
substantive issues raised in this matter, whether actually
reached by the Court or not, are ripe for review in this Court.
The Third Circuit addressed the ripeness doctrine in
Philadelphia Federation of Teachers v. Ridge, 150 F.3d 319,
322-23 (3d Cir. 1998). The doctrine prevents the federal courts
from entanglement in abstract disputes. Id. (quoting Abbott
Laboratories v. Gardner, 387 U.S. 136, 148, 87 S.Ct. 1507, 18
L.Ed.2d 681 (1967), overruled on other grounds, Califano v.
Sanders, 430 U.S. 99, 97 S.Ct. 980, 51 L.Ed.2d 192 (1977)). Two
factors comprise the analysis: whether the issues are fit for
judicial resolution and whether the parties will suffer hardship
if a decision is withheld. Id.; see also Step-Saver Data Sys.,
Inc. v. Wyse Technology, 912 F.2d 643 (3d Cir. 1990) (using a
three-part test, weighing: (1) the adversity of the parties'
interests; (2) the conclusiveness of the judgment; and (3) the
utility of the judgment).
In Philadelphia Federation of Teachers, the Court of Appeals
wrote that the "fitness for judicial review" prong of its
ripeness test depended upon whether the issues presented were
primarily legal or contingent on hypothetical facts, and whether
the decision would decisively resolve the controversy at hand.
150 F.3d at 323. The Court has already noted the legal character
of the issues at bar. Plainly a ruling for the Payphone
Association would be conclusive with respect to the Ordinance and
its effect upon plaintiff.
The hardship to the parties, or whether a lack of decision
would create "a `direct and immediate' dilemma for the parties,"
id., is clear here. Absent a ruling, the Town and the Payphone
Association will remain at loggerheads and the Town will be
forced to decide whether to withdraw or to proceed with its
franchise scheme at the risk of offending federal law. It matters
not that no contract has actually been signed; indeed, the
parties have represented to the Court that the Town has delayed
its bidding process pending the decision by this Court.
Therefore, both prongs of the ripeness test having been met. The
Town's argument that the case is not yet justiciable must be
3. The Federal Telecommunications Act
Section 253 of Title 47 of the United States Code provides:
(a) In general
No State or local statute or regulation, or other
State or local legal requirement,
may prohibit or have the effect of prohibiting the
ability of any entity to provide any interstate or
intrastate telecommunications service.
(b) State regulatory authority
Nothing in this section shall affect the ability of a
State to impose, on a competitively neutral basis and
consistent with section 254 of this section,
requirements necessary to preserve and advance
universal service, protect the public safety and
welfare, ensure the continued quality of
telecommunications services, and safeguard the rights
(c) State and local government authority