City of Parma v. Cingular Wireless, LLC

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 06a0682n.06
Filed: September 8, 2006
No. 05-4107
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
CITY OF PARMA, OHIO, on behalf of itself and all )
others similarly situated, )
) ON APPEAL FROM THE
Plaintiff-Appellee, ) UNITED STATES DISTRICT
) COURT FOR THE
v. ) NORTHERN DISTRICT OF
) OHIO
CINGULAR WIRELESS, LLC, )
)
Defendant-Appellant. )
___________________________________________
BEFORE: GILMAN and GRIFFIN, Circuit Judges, and DUGGAN, District Judge.*
GRIFFIN, Circuit Judge.
Defendant-appellant Cingular Wireless, LLC (“Cingular”), which maintains a national
wireless communications network, entered into a licensing agreement with plaintiff-appellee City
of Parma, Ohio (“Parma”), pursuant to which Cingular was authorized to construct and operate a
tower cell site on Parma’s property. The agreement provides that Cingular will pay rent and license
fees to Parma for a five-year renewable term.
The instant case arises from Cingular’s alleged attempts to reduce its license costs, following
a merger with AT & T Wireless Services, Inc. (“AWS”), by forcing Parma, and others similarly
*
The Honorable Patrick J. Duggan, United States District Judge for the Eastern District of
Michigan, sitting by designation.
No. 05-4107
City of Parma v. Cingular Wireless
situated, to amend their existing agreements with Cingular on threat of termination. Parma initiated
this putative class action lawsuit, setting forth claims for anticipatory breach of contract and
declaratory judgment. Plaintiff filed a motion for class certification. Cingular filed a motion for
judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c). The district court
thereafter attempted to broker a settlement via three off-the-record telephone conference calls,
resulting in three corresponding orders purportedly resolving the case by agreement of the parties.
Pursuant to the orders, Cingular agreed to certain terms, including sending “corrective letters” to
Parma and the putative class, stating that Cingular has no intention of terminating its current
licensing agreements prior to expiration, other than in accordance with existing terms and conditions.
In light of this presumed resolution as expressed in the orders, the district court dismissed the case
without prejudice and denied, in pertinent part, Cingular’s pending motion for judgment on the
pleadings as moot. Both parties, however, have expressed dissatisfaction with the purported
settlement and thus have sought to alter or amend the dismissal orders.
Cingular now appeals, claiming that the district court erred in denying its motion for
judgment on the pleadings as moot. For the reasons set forth below, we reverse the finding of
mootness by the district court and remand for a hearing on the merits of Cingular’s motion for
judgment on the pleadings.
I.
On July 30, 1997, AWS entered into a license agreement (the “Agreement”) with Parma,
pursuant to which AWS, or its successor, agreed to pay Parma a fee in exchange for authorization
-2-
No. 05-4107
City of Parma v. Cingular Wireless
to construct and operate a cellular tower site on Parma’s property. In accordance with the
Agreement’s terms, Cingular, which acquired AWS in 2004, currently makes monthly payments
(consisting of license fees and rent) to Parma in the amount of $4,414.93. The Agreement has an
initial term of five years, but automatically renews for additional five-year terms:
Upon execution of this Agreement, Licensor grants to Licensee a “License” of the
Premises to Licensee for a term of Five (5) years, with a “Commencement Date” of
the date Notice is given and terminating at midnight on the last day of the month in
which the fifth (5th) anniversary of the Commencement Date occurs. This License
shall automatically renew on the same terms, for five (5) successive “Additional
Terms” of five (5) years each, unless Licensee gives Licensor written notice during
the initial term or any Additional Terms stating Licensee will terminate the License
at the end of the initial term or Additional Term then in effect.
Emphasis added.1
Thus, Cingular has the right to terminate the Agreement at the end of the present term by
giving Parma written notice of its intent to terminate prior to the end of the term. The Agreement
is currently in its second term, having first expired and automatically renewed on July 31, 2002. The
present term ends on July 31, 2007.
As a result of the merger, the combined Cingular and AWS network contains areas of
overlapping cellular coverage. In an apparent effort to make its acquisition of AWS profitable,
1
Other than the notice provisions providing for cancellation of the Agreement upon the
expiration of any of the five-year terms, the Agreement permits premature termination only if
Cingular loses any necessary governmental approval, or if the cell site, in Cingular’s “good faith
judgment, [is] or become[s] unacceptable or unusable under [Cingular’s] then-current design or
engineering specifications . . . .” Parma alleges that these circumstances are not applicable to the
present dispute.
-3-
No. 05-4107
City of Parma v. Cingular Wireless
Cingular sought to reduce the combined capital costs of the new entity by between $600 million and
$900 million in 2005. As a key component of its cost-cutting plan, Cingular implemented a
campaign to reduce its license fees by negotiating amendments to its license agreements for cell sites
in overlapping coverage areas. In conjunction with this effort, Cingular entered into a discussion
with Parma to amend the Agreement. On March 10, 2005, Cingular’s representative, Kib Pearson,
discussed with Parma’s Service Director, Brian Higgins, Cingular’s desire to amend the terms and
conditions of the Agreement. Later that day, Pearson faxed to Higgins a letter with an attached “term
sheet” and “sample amendment.” The letter stated in pertinent part:
As part of the effort to merge the two national networks into one, thousands of
cellular antenna sites will be eliminated in areas where there is overlapping coverage
between the two companies. Cingular is currently evaluating both its existing and
newly acquired sites to determine which are no longer needed as part of the new
combined network.
Your site is part of an overlapping coverage area. Cingular plans to terminate
approximately half of the sites in your market based on a number of variables,
including proximity to other sites as well as the cost of operating the site (e.g. rent,
utilities) both now and in the future.
The decision on which sites will be terminated is underway. In order for your site to
be considered for inclusion in the new combined network, significant changes need
to be made to the existing contract. Cingular intends that the current lease agreement
between you and Cingular be amended to include the following terms and conditions
attached herewith.
Fortunately, the attached terms will allow your site to strengthen its position to those
who are making the final decision.
This effort is urgent. Please review the terms and contact me with any questions you
may have.
-4-
No. 05-4107
City of Parma v. Cingular Wireless
The term sheet accompanying the above letter provided for a fifty percent rent reduction,
from $4,414.93 to $2,250.00 per month. Other proposed changes to the Agreement included
decreasing the rate at which the license fee increases per term from roughly fifteen percent to three
percent, and adding a “rent abatement period” and a “rent guarantee period.”2
Interpreting the letter as a threat to terminate the Agreement if Parma refused to renegotiate,
Parma challenged what it perceived as Cingular’s “strong-arm tactic” by filing a two-count class
action complaint on April 18, 2005, in the Court of Common Pleas, Cuyahoga County, Ohio, in
which it asserted anticipatory breach of contract and sought a declaratory judgment that the
Agreement did not permit termination for “overlapping coverage” or economic convenience. Parma
moved for class certification contemporaneously with the filing of its complaint, seeking certification
of a nationwide class consisting of Cingular’s landlords who received letters substantially similar
to the letter sent to Parma. Parma alleges that the letter is part of an aggressive campaign on the part
of Cingular to reduce its payments on over 15,000 lease and license agreements for cellular antenna
sites by threatening to terminate for overlapping coverage unless its landlords agree to fifty percent
rent reductions. Parma filed an amended class action complaint in the state court on April 21, 2005.
On May 24, 2005, Cingular removed the case to federal district court on the basis of diversity
jurisdiction, 28 U.S.C. §§ 1332(a)(1) and (d)(2)(A), and pursuant to the Class Action Fairness Act
of 2005, Pub. L. No. 109-2, 119 Stat. 4 (2005). Cingular filed an answer, responded to Parma’s
2
After sending the March 10 letter, Cingular continued to make the requisite rent payments
to Parma, including payments on March 29 and April 28, 2005. Parma has negotiated and cashed
all of Cingular’s payments under the Agreement.
-5-
No. 05-4107
City of Parma v. Cingular Wireless
motion for class certification under federal law, and filed a motion for judgment on the pleadings
pursuant to Federal Rule of Civil Procedure 12(c).3
On July 13, 2005, the district court conducted an off-the-record telephone conference with
counsel for both parties, which culminated, on July 19, 2005, in the court’s issuance of an order
entitled “Stipulated Dismissal Without Prejudice.” The order dismissed the case without prejudice
in light of the parties’ apparent agreement, during the July 13 telephone conference, to the following
terms enumerated in the order:
1. Cingular shall send a letter to Parma and all cell site lessors and licensors
informing them that Cingular has no intention of terminating its lease or licensing
agreement prior to its expiration, other than in accordance with any lease or license
provision.
2. Cingular shall send a letter to all cell site lessors and licensors with whom
they renegotiated their lease or license after January 1, 2005, informing them that if
they wish to reinstate their prior lease or license agreements, they may do so by
contacting a Cingular agent, to be identified in the letter.
3. Cingular shall copy the Court with the two form letters.
3
In its Rule 12(c) motion, Cingular argued that it is entitled to judgment on the pleadings
because Parma’s amended complaint does not adequately set forth a claim of anticipatory repudiation
of the Agreement under Ohio law. Specifically, Cingular argued that Parma’s amended complaint
does not allege that the March 10 letter unequivocally states: (1) that Cingular refused to perform
its obligations under the Agreement unless Parma accepted Cingular’s proposed amendments; (2)
that Cingular was terminating the Agreement; or (3) that Cingular had any intention to terminate the
Agreement prior to the end of the current term. In addition, Cingular maintained that, even if the
amended complaint sufficiently alleges a claim for anticipatory repudiation, Cingular’s subsequent
performance of the Agreement, i.e., uninterrupted rental payments even after sending the letter and
initiation of the lawsuit, and Parma’s acceptance of Cingular’s performance, nullifies any
conceivable repudiation. Cingular also argued that it is entitled to judgment on the pleadings with
regard to Parma’s declaratory judgment claim because no controversy exists.
-6-
No. 05-4107
City of Parma v. Cingular Wireless
4. Cingular shall submit to the Court for in camera review the name and
location of all lessors and licensors to whom they mailed these form letters.
5. Cingular shall send a letter to Parma informing Parma of the number of letters
Cingular mailed to its lessors and licensors.
6. Based on Cingular’s agreement to perform one through five above, Parma
agreed to a dismissal of this case without prejudice.
Given the apparent resolution of the case pursuant to the above terms, the district court, in
the July 19 Order, dismissed the case without prejudice for lack of a case or controversy and thus
denied as moot both parties’ pending motions.
Thereafter, on July 25, 2005, Parma received a corrective letter from Cingular dated July 14,
2005, which advised Parma that “while Cingular Wireless LLC does not believe that any of its prior
communications have indicated otherwise, Cingular will not terminate the Leases in any manner
inconsistent with the terms of the Leases.”
Neither party was satisfied with the terms of the July 19 Order. On July 25, 2005, Parma
filed a motion to amend the judgment pursuant to Federal Rule of Civil Procedure Rule 59(e).
Parma moved the district court to: (1) remove from the July 19 Order all statements indicating that
Parma or its counsel agreed or stipulated to the order or its component parts, (2) direct Cingular to
send Parma copies of each form letter sent pursuant to the July 19 Order, (3) reference attorney fees
in the order, and (4) expand the class of recipients of the corrective letters to include landlords who
had renegotiated their leases prior to January 1, 2005. Additionally, Parma argued that Cingular’s
July 14 letter was not in accordance with the July 19 Order and that the class action should not be
dismissed simply because Parma’s claim was mooted.
-7-
No. 05-4107
City of Parma v. Cingular Wireless
Cingular responded to Parma’s Rule 59(e) motion and filed its own motion to alter the
stipulated dismissal without prejudice or, in the alternative, to reconsider Cingular’s motion for
judgment on the pleadings. Cingular argued that the scope of the corrective letter recipients
identified in the July 19 Order was significantly broader than was discussed during the July 13
telephone conference.
In light of the parties’ respective motions to correct the court’s July 19 Order, the district
court, on August 4, 2005, held another off-the-record telephone conference. The next day, the court
issued a nunc pro tunc order that modified the description of the recipients of the corrective letters
to include only landlords who had received a letter similar to the March 10 letter. The order also
omitted references to any agreement or stipulation by Parma to the dismissal. The order
acknowledged the court’s receipt of Cingular’s proposed corrective letters and directed Parma to
submit proposed corrective letters to the court no later than August 15, 2005; the court would then
draft proposed corrective letters to be discussed by the court and the parties at a subsequent
conference call to be held on August 16, 2005. The order also directed Cingular to submit to the
court “all versions of the March 10, 2005 letter received by Parma, which Cingular sent to other cell
site lessors and licensors.” The nunc pro tunc order expressly superseded the court’s July 19 Order,
provided for dismissal of the case without prejudice, and denied as moot Cingular’s motion for
judgment on the pleadings and Parma’s motion for class certification. Cingular’s subsequent motion
to alter the nunc pro tunc order was denied on August 10, 2005.
-8-
No. 05-4107
City of Parma v. Cingular Wireless
On August 16, 2005, the district court held another off-the-record telephone conference with
the parties to discuss the various proposals for the form letters. This conference generated another
order (the “August 16 Order”), which set September 7, 2005, as the deadline for Cingular to send
the corrective letters. The order further instructed Cingular to report the names and addresses of
recipients of the corrective letters to the court, to submit a report of all licensors who requested
reinstatement of their prior leases, and to report to Parma the actual number of corrective letters sent
to these licensors. The district court retained jurisdiction to enforce the August 16 Order and the
nunc pro tunc order.
On August 18, 2005, Parma filed a notice of appeal. In its appeal, Parma objected to various
aspects of the district court’s orders, including the fact that the corrective letters directed by the
district court did not refer to the litigation and permitted Cingular’s reports or submissions to be
made ex parte or in camera. Cingular responded by filing in the district court a motion for stay of
the court’s orders pending appeal and a notice of cross appeal in this court. On September 1, 2005,
the district court denied Cingular’s motion for a stay, and Cingular immediately filed in this court
an emergency motion for a stay pending appeal in light of the rapidly approaching September 7,
2005, deadline to send the corrective letters required by the district court’s orders, which both sides
were appealing. On September 7, 2005, a panel of this court granted Cingular’s request for a stay.
On September 22, 2005, Parma filed a motion to voluntarily dismiss its appeal pursuant to
Federal Rule of Civil Procedure 42(b). On September 22, 2005, this court granted Parma’s motion
to dismiss, leaving only Cingular’s appeal pending.
-9-
No. 05-4107
City of Parma v. Cingular Wireless
II.
On appeal, Cingular contends that the district court erred in denying its motion for judgment
on the pleadings. Cingular urges this court to address the merits of the motion and maintains, in this
regard, that Parma’s amended complaint neither supports a claim for anticipatory breach of contract
nor alleges a substantial controversy to support a claim for a declaratory judgment, in the absence
of an allegation that a breach of contract was imminent or even likely. In the alternative, Cingular
argues that this court should vacate the district court’s orders because, despite the fact that a class
was never certified, the orders improperly require Cingular to send letters to putative class members
and allow them to renegotiate the terms of their leases. Cingular argues that the district court, in
effect, improperly ordered permanent, mandatory class-wide “injunctive” relief that was never sought
in Parma’s amended complaint. Finally, Cingular further maintains that, if this case is remanded,
the case should be re-assigned to a different judge.
Cingular’s argument that the district court improperly denied its motion for judgment on the
pleadings raises the issue of mootness. Following each of the telephone conferences, the district
court issued orders which it believed represented the terms by which counsel agreed to dismissal of
the case without prejudice. Consequently, the district court held that there was no case or
controversy to be adjudicated, dismissed the case, and dismissed Cingular’s motion for judgment on
the pleadings as moot, without ever ruling substantively on it.
We review de novo a district court’s decision pertaining to mootness. Ammex, Inc. v. Cox,
351 F.3d 697, 704 (6th Cir. 2003). As a general rule,
- 10 -
No. 05-4107
City of Parma v. Cingular Wireless
[a] federal court has no authority to render a decision upon moot questions or to
declare rules of law that cannot affect the matter at issue. Church of Scientology v.
United States, 506 U.S. 9, 12, 113 S. Ct. 447, 121 L. Ed. 2d 313 (1992). A case
becomes moot “‘when the issues presented are no longer ‘live’ or parties lack a
legally cognizable interest in the outcome.’” County of Los Angeles v. Davis, 440
U.S. 625, 631, 99 S. Ct. 1379, 59 L. Ed. 2d 491 (1979) (quoting Powell v. McCormack,
395 U.S. 486, 496 (1969)). In other words, a case becomes moot only when
subsequent events make it absolutely clear that the allegedly wrongful behavior
cannot reasonably be expected to recur and “interim relief or events have completely
and irrevocably eradicated the effects of the alleged violation.” Id. The heavy
burden of demonstrating mootness rests on the party claiming mootness. Id.
Cleveland Branch, N.A.A.C.P. v. City of Parma, Ohio, 263 F.3d 513, 530-31 (6th Cir. 2001).
“‘Settlement of a plaintiff’s claims moots an action.’” Brunet v. City of Columbus, 1 F.3d
390, 399 (6th Cir. 1993) (quoting Lusardi v. Xerox Corp., 975 F.2d 964, 974 (3d Cir. 1992)).
“‘[T]he settlement of an individual claim typically moots any issues associated with it[.]’” Southern
Ohio Coal Co. v. Donovan, 774 F.2d 693, 699 (6th Cir. 1985), amended 781 F.2d 57 (6th Cir. 1986)
(quoting United Airlines, Inc. v. McDonald, 432 U.S. 385, 400, 97 S. Ct. 2464, 2472, 53 L. Ed. 2d 423
(1977) (Powell, J., dissenting)). However, “‘[t]he general rule is now well settled: the case is not
moot unless the parties intended to settle, or unless it is not possible to take any effective action to
undo the results of compliance.’” Id. (quoting Wright, Miller, and Cooper, Federal Practice and
Procedure § 3533.2 (1984)).
In the instant case, despite the district court’s diligent attempt to broker an expedient
resolution to this case, it is readily apparent from the record that, from a practical standpoint, this
laudable goal has not been achieved. In fact, the parties have agreed on little since the inception of
this lawsuit. After each off-the-record telephone conference, both parties expressed dissatisfaction
- 11 -
No. 05-4107
City of Parma v. Cingular Wireless
with the resultant dismissal orders and immediately challenged various substantive aspects of those
orders. In sum, the dismissal orders have spawned nothing but discontent. Cingular, in its
protestations, has consistently reiterated its argument to the district court that it should consider the
merits of its motion for judgment on the pleadings.
The parties’ persistent challenges to the dismissal orders, in addition to the fact that the
district court explicitly retained jurisdiction to enforce the July 19, August 5, and August 16, 2005,
orders, lead us to conclude that Cingular’s potentially dispositive motion for judgment on the
pleadings is not moot. Under these particular circumstances, given the unsettled posture of this case,
we cannot conclude that the issues presented in Cingular’s motion are no longer “live” or that
“subsequent events make it absolutely clear that the allegedly wrongful behavior cannot reasonably
be expected to recur and interim relief or events have completely and irrevocably eradicated the
effects of the alleged violation.” Cleveland Branch, N.A.A.C.P., 263 F.3d at 530-31 (internal
quotation omitted).
We therefore reverse the district court’s finding of mootness and remand for an expedited
hearing on the merits of Cingular’s motion for judgment on the pleadings. In doing so, we decline
Cingular’s request that we forgo a remand to the district court and reach the substantive merits of
its motion. “We exercise our discretion to rule on an issue not decided below only in ‘exceptional
cases.’” St. Marys Foundry, Inc. v. Employers Ins. of Wausau, 332 F.3d 989, 996 (6th Cir. 2003)
(quoting Estate of Quirk v. Comm’r, 928 F.2d 751, 756-57 (6th Cir. 1991)). Such exceptional
- 12 -
No. 05-4107
City of Parma v. Cingular Wireless
circumstances are not present here, and we will not usurp the role of the district court to exercise its
initial discretion to rule on this pivotal motion. Id.
Cingular also requests that, upon remand, we assign this case to a different district court
judge. “Although we have the authority pursuant to 28 U.S.C. § 2106 to remand the case to a
different district court judge, ‘this is an extraordinary power and should rarely be invoked. . . .’”
Brown v. Crowley, 312 F.3d 782, 791 (6th Cir. 2002) (quoting Armco, Inc. v. United Steelworkers
of Am., 280 F.3d 669, 683 (6th Cir. 2002)). Because Cingular has failed to present grounds to
question the district court judge’s impartiality or his judicial competence, and because the relevant
factors militate against removing the original judge from the case, see id. at 792, there is absolutely
no basis to grant this request.
For the reasons set forth above, we reverse the order of the district court as it pertains to
Cingular’s motion for judgment on the pleadings, and remand for an expedited hearing and decision
on the substantive merits of Cingular’s motion.
- 13 -