Americable International, Inc. v. Department of Navy , 129 F.3d 1271 ( 1997 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued October 6, 1997 Decided November 21, 1997
No. 96-5050
Americable International, Inc.,
Appellant
v.
Department of Navy, et al.,
Appellees
No. 96-5131
Americable International, Inc.,
Appellant
v.
Department of Navy, et al.,
Appellees
---------
No. 96-5132
Americable International, Inc.,
Appellant
v.
Department of Navy, et al.,
Appellees
No. 96-5133
Americable International, Inc.,
Appellant
v.
Department of Navy, et al.,
Appellees
Appeals from the United States District Court
for the District of Columbia
(No. 94cv02096)
(No. 95cv00282)
(No. 95cv02214)
(No. 95cv02114)
Robert P. Parker argued the cause for the appellant.
Warren B. Rudman, Carl W. Hampe and G. Lindsay Sim-
mons were on brief.
Keith V. Morgan, Assistant United States Attorney, argued
the cause for the appellees. Mary Lou Leary, United States
Attorney, and R. Craig Lawrence, Assistant United States
Attorney, were on brief.
Before: Wald, Henderson and Garland, Circuit Judges.
Opinion for the court filed by Circuit Judge Henderson.
Karen LeCraft Henderson, Circuit Judge: Americable
International, Inc. (Americable), a cable television operator,
appeals the district court's summary judgments in four ac-
tions to enjoin the Department of the Navy (Navy) from
operating an "in-house" cable television system in four Navy-
owned communities previously served by Americable. In
each action, Americable asserted violations of federal procure-
ment law, the Cable Communications Policy Act of 1984, 47
U.S.C. ss 521 et seq., (Cable Act) and the First Amendment
to the United States Constitution. For the reasons set out
below, we affirm the district court's judgments on the Cable
Act and First Amendment claims and reverse the judgments
on the procurement claims.
In 1986 Americable won a competitive bid to build and
maintain a cable system serving various Navy facilities in the
San Diego area under a nonexclusive franchise agreement.
Under the agreement Americable provided service to a num-
ber of Navy residential complexes within the franchise area
and received compensation therefor from common funds de-
rived from each facility's rental payments. In 1988 service
was extended, at the Navy's request, to its nearby Marine
Corps Recruit Depot (MCRD).
In 1991 the Navy solicited bids for development of a
satellite/master antenna television system (SMATV) to pro-
vide cable service to its enlisted quarters at MCRD.1 The
new system began service in 1992 and Americable's group
subscriptions at the affected MCRD residences were canceled
at that time. The Navy later decided to contract for similar
SMATV service at the "bachelor quarters," high-density resi-
__________
1 "[A]n SMATV system typically receives a signal from a satellite
through a small satellite dish located on a rooftop and then retrans-
mits the signal by wire to units within a building or complex of
buildings." FCC v. Beach Communications, Inc., 113 S. Ct. 2096,
2100 (1993) (citing In re Definition of a Cable Television System, 5
F.C.C. Rcd. 7638, 7639 (1990)).
dential facilities housing temporarily assigned unmarried
Navy personnel, located at three other San Diego area sites:
North Island, the Long Beach Naval Station and the San
Diego Naval Submarine Base, all of which were then served
by Americable's system. No contracts have yet been entered
for those locations.2
Americable filed four actions in the district court seeking
declaratory, injunctive and mandamus relief on the grounds
that the conversion to SMATV at each of the four locations
violated, inter alia, federal procurement regulations, the Ca-
ble Act and Americable's First Amendment right of free
speech. By order and memorandum opinion filed February
8, 1996 the district court granted the Navy's motion to
dismiss or in the alternative for summary judgment in the
action challenging the cable conversion at North Island. Am-
ericable Int'l, Inc. v. United States Dep't of the Navy, 931
F. Supp. 1 (D.D.C. 1996). On April 17, 1996 the court issued
unpublished memorandum opinions and judgments granting
similar motions in the other three actions. Americable filed
appeals in each action. Because the parties submitted evi-
dence and statements of material facts pursuant to Local
Rule 108(h) 3 and because the district court expressly cited
__________
2 In fact, it appears that no SMATV systems will be installed at
these locations and that the actions involving them are therefore
moot. See Appellant's Br. at 10 n.2 (acknowledging Long Beach
Naval Base has closed and Americable has acquired cable system at
Submarine Base); Appellee's Br. at 5 (asserting Navy has aban-
doned plans for SMATV system at North Island).
3 Rule 108(h) provides in part:
Each motion for summary judgment shall be accompanied by a
statement of material facts as to which the moving party
contends there is no genuine issue, which shall include refer-
ences to the parts of the record relied on to support the
statement. An opposition to such a motion shall be accompa-
nied by a separate concise statement of genuine issues setting
forth all material facts as to which it is contended there exists a
genuine issue necessary to be litigated, which shall include
references to the parts of the record relied on to support the
statement.
the absence of record evidence in its North Island memoran-
dum opinion, 931 F. Supp. at 3, we construe the district
court's decision in that action as having granted summary
judgment. In addition, as the district court dismissed the
complaints in the other three actions "for each of the reasons
set forth in" the North Island opinion,4 we construe the other
three decisions in like manner.5 Accordingly, in reviewing all
four decisions, we "must grant the appellant[ ] the benefit of
all reasonable evidentiary inferences that can be drawn in
[its] favor and can uphold the summary judgment only where
there is no genuine issue of material fact, and, viewing the
evidence in the light most favorable to the nonmoving party,
the movant is entitled to prevail as a matter of law." Beckett
v. Air Line Pilots Ass'n, 59 F.3d 1276, 1279 (D.C. Cir. 1995)
__________
D.D.C. R. 108(h).
4 See Americable Int'l, Inc. v. United States Dep't of the Navy,
No. 95cv00282, mem. order at 1-2 (D.D.C. filed Apr. 17, 1996);
Americable Int'l, Inc. v. United States Dep't of the Navy, No.
95cv002114, mem. order at 1-2 (D.D.C. filed Apr. 17, 1996); Ameri-
cable Int'l, Inc. v. United States Dep't of the Navy, No. 95cv002214,
mem. order at 1-2 (D.D.C. filed Apr. 17, 1996).
5 We therefore reject Americable's assertion that we should re-
view the district court's decisions as dismissals for failure to state a
claim under Federal Rule of Civil Procedure 12(b)(6). Given that
the motions were in the alternative for summary judgment and that
the parties had the opportunity to submit and submitted materials
in support and in opposition, it is not unfair to Americable to treat
the decisions as summary judgments. See Tele-Communications
of Key West, Inc. v. United States, 757 F.2d 1330, 1334 (D.C. Cir.
1985) ("[T]he reviewing court must assure itself that summary
judgment treatment would be fair to both parties in that the
procedural requirements of the applicable rules were observed.").
In any event, we would also affirm dismissal of the Cable Act and
First Amendment claims under Rule 12(b)(6) because, as our dis-
cussion below illustrates, the allegations of the complaint, construed
in the light most favorable to Americable, reveal that Americable
can prove no set of facts that would entitle it to relief on the two
claims. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974), overruled on
other ground by Davis v. Scherer, 468 U.S. 183 (1984).
(internal quotations omitted). We apply this standard to each
of Americable's claims in turn.
First, Americable asserts that the Navy's SMATV conver-
sion at each location violates statutory and regulatory pro-
curement requirements. The Congress has directed that
the Secretary of Defense shall procure each supply or
service necessary for or beneficial to the accomplishment
of the authorized functions of the Department of Defense
(other than functions which the Secretary of Defense
determines must be performed by military or Govern-
ment personnel) from a source in the private sector if
such a source can provide such supply or service to the
Department at a cost that is lower (after including any
cost differential required by law, Executive order, or
regulation) than the cost at which the Department can
provide the same supply or service.
10 U.S.C. s 2462(a). To implement this mandate the Depart-
ment of Defense has promulgated a regulation requiring:
When performance by a commercial source is permissi-
ble, a comparison of the cost of contracting and the cost
of in-house performance shall be performed to determine
who shall provide the best value for the Government,
considering price and other factors included in the solici-
tation.
32 C.F.R. s 169a.4(d). Americable asserts that the Navy
violated both the statute and the regulation by failing to
conduct a cost comparison before deciding to establish an "in-
house" cable system. The Navy maintains that it never
moved the cable service "in-house" but simply entered into
private contracts for the installation and operation of the
SMATV system. If the Navy is correct, there may well be no
genuine issue of material fact with respect to the applicability
s 2462 to this case. On the other hand, Americable contests
the Navy's characterization of the conversion, asserting that
substantial Navy personnel will be required to operate and
maintain the programing delivery system now operated and
maintained by Americable. Unfortunately, neither we nor
the district court are in a position to decide as a matter of law
whether there is a genuine dispute here because the district
court did not permit Americable any discovery before issuing
its ruling. Although Americable cited the need for discovery,
inter alia, to "find out what the nature of the service is going
to be," Tr. of 2/27/95 hearing at 48; see also id. at 30-31, 36,
the district court granted summary judgment without permit-
ting any. As a consequence, there is no evidence in the
record as to who will perform those functions that may be
necessary to "operate" and "maintain" the new system and
any inferences that exist must be construed in the appellant's
favor.
Under these circumstances, it was inappropriate for the
district court to grant summary judgment without first giving
Americable a chance to conduct discovery to determine pre-
cisely what services Defense Department personnel would be
performing after acquiring the SMATV system and whether
those services were sufficiently substantial to invoke the
mandate of s 2462(a). As we have stated before, summary
judgment ordinarily "is proper only after the plaintiff has
been given adequate time for discovery." First Chicago Int'l
v. United Exch. Co., 836 F.2d 1375, 1380 (D.C. Cir. 1988); see
Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (summary
judgment appropriate only "after adequate time for discov-
ery"); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 257
(1986) (plaintiff must have "a full opportunity to conduct
discovery"). If after discovery the district court determines
that the relevant services are no more than those asserted by
the Navy in this court, summary judgment may well be in
order. If something more turns out to have been envisioned,
more difficult line-drawing may be required. But neither is
appropriate, or possible, at this stage of the proceedings.
Americable next asserts that the Navy's conversion to
SMATV violates section 541(a)(1) and section 541(a)(4)(A) of
the Cable Act, which, Americable maintains, were intended to
prevent cable providers from "cherry-picking" only the most
lucrative portions of a cable franchise area. We do not agree
with Americable's construction of either provision's meaning.
Section 541(a)(4)(A) does not, as Americable contends, require
that cable providers extend service "throughout the franchise
area," see Appellant's Br. at 31, but instead imposes a specific
duty on the franchising authority that "[i]n awarding a
franchise, [it] shall allow the applicant's cable system a rea-
sonable period of time to become capable of providing cable
service to all households in the franchise area." 47 U.S.C.
s 541(a)(4)(A). There is no evidence, and Americable has
never claimed, that the Navy afforded it too little time to
develop its cable system throughout the San Diego franchise
area. Nor can we accept Americable's contention that the
Navy violated section 541(a)(1) of the Cable Act, which pro-
vides that "a franchising authority may not grant an exclusive
franchise and may not unreasonably refuse to award an
additional competitive franchise." Id. s 541(a)(1). America-
ble neither alleged nor demonstrated that the Navy did
either. Accordingly, there was no violation of the plain
language of either cited provision.6
Finally, Americable asserts that the conversion to SMATV
infringes its First Amendment right "to provide cable service
within its franchise area" because it "foreclose[s] America-
ble's opportunity to speak to a portion of the audience within
its franchise area." Appellant's Br. at 36. In City of Los
Angeles v. Preferred Communications, Inc., 476 U.S. 488 (1986), the United States Supreme Court recognized that the
provision of cable television service "plainly implicate[s] First
__________
6 Even were the meaning of the statutory language not plain,
Americable's claims would be foreclosed by the legislative history of
the Cable Act which makes it clear that each section was intended
to protect the interests of new franchise applicants and not existing
cable operators such as Americable. See S. Rep. No. 102-92, at 91
(1991), reprinted in 1992 U.S.C.C.A.N. 1133, 1224 (section
541(a)(4)(A) "requires local franchising authorities to grant the
second or third cable system in a community sufficient time actually
to construct its system and provide service" and "is intended to
ensure that the purpose of [section 541(a)(1)] is not thwarted");
S. Rep. No. 102-92, at 91 (1991), reprinted in 1992 U.S.C.C.A.N.
1133, 1224 ("This section amends section 621(a)(1) of the 1934 Act to
add a new provision prohibiting franchising authorities from unrea-
sonably refusing to award additional franchises.") (emphasis add-
ed).
Amendment interests" because "through original program-
ming or by exercising editorial discretion over which stations
or programs to include in its repertoire" a cable operator
"seeks to communicate messages on a wide variety of topics
and in a wide variety of formats." 476 U.S. at 494. Ameri-
cable seizes on this language and on our opinion in Tele-
Communications of Key West, Inc. v. United States, 757
F.2d 1330 (D.C. Cir. 1985), (TCI) to argue that the SMATV
installation works a violation of its First Amendment rights.
Neither case helps Americable's challenge. In TCI we ac-
knowledged the First Amendment interests implicated in the
provision of cable television services and thus held that the
plaintiff cable operator, which had been providing cable ser-
vice for some years at a Florida Air Force base, had stated a
First Amendment claim sufficient to withstand a motion to
dismiss by alleging that the Air Force had awarded a new
exclusive franchise to another operator and denied the plain-
tiff access to "facilities essential to operating on the base."
757 F.2d at 1335. Here, by contrast, Americable has pro-
duced no evidence to show that the SMATV installation will
impair its ability to deliver programming anywhere in the
franchise area. In fact, the Navy's evidence affirmatively
established the contrary. See Affidavit of Joseph F. Calcara
(Naval Housing Acquisitions Division Director in San Diego,
California) at 1 (stating "Americable's cable and rights of way
are unaffected by the SMATV system installation" and "Am-
ericable remains free to offer a programming/cost structure
and solicit individual and government subscribers at North
Island without restriction").
Because the installation and operation of SMATV will not
prevent Americable from providing its cable service through-
out the franchise area, we conclude that Americable has failed
to establish a First Amendment injury arising from the
Navy's proposed actions. See Warner Cable Communica-
tions, Inc. v. City of Niceville, 911 F.2d 634, 636-41 (11th Cir.
1990). Americable asserted only that the SMATV service
would "displace Americable entirely as the provider of cable
TV services" because it will no longer receive bulk subscrip-
tion payments from the Navy for providing basic cable ser-
vice. Hermanowski Declaration at 4, 6. Americable remains
free, however, to market its cable service in whatever pack-
ages it chooses to individual residents. Whether the resi-
dents choose to purchase Americable's service is beyond the
scope of our inquiry. The First Amendment does not require
that the Navy itself pay for Americable's service or ensure
that it is free from economic competition. See Warner Cable
Communications, Inc., 911 F.2d at 637-38; cf. Regan v.
Taxation With Representation of Washington, 461 U.S. 540,
544-45 (1983) (government not required to subsidize constitu-
tionally protected lobbying through tax exemption or deduc-
tions).
For the preceding reasons, we affirm the district court's
dismissals of the Cable Act and First Amendment claims and
reverse the court's dismissals of the procurement law claims.
So ordered.