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Newpath Networks, LLC v. City of Davis

March 18, 2010

NEWPATH NETWORKS, LLC, A NEW JERSEY LIMITED LIABILITY COMPANY, PLAINTIFF,
v.
THE CITY OF DAVIS, CALIFORNIA, A GENERAL LAW MUNICIPALITY, DEFENDANT.



The opinion of the court was delivered by: Garland E. Burrell, Jr. United States District Judge

ORDER DENYING PLAINTIFF'S MOTION FOR A PRELIMINARY INJUNCTION

This case concerns whether NewPath Networks, LLC ("NewPath") must first comply with the city of Davis' (the "City") Wireless Telecommunications Facilities Ordinance ("WTF Ordinance") before constructing a proposed distributed antenna system ("DAS") within the City. NewPath now seeks a preliminary injunction that would require the City to reinstate thirty-six revoked encroachment and building permits which authorize NewPath to construct its DAS, declare the City's "Stop Work Notice" "null and void" and enjoin the City, "its officers, agents, servants, employees and attorneys... from acting in any manner contrary [to the Court's order]." (Proposed Order 3:17-22.) NewPath argues this preliminary injunction should issue since "[t]he City's actions are contrary to[,] and preempted by state and federal law and immediate and irreparable injury will result to NewPath unless the [City's] activities... are enjoined pending trial of this action." (Not. of Mot. for Prelim. Inj. 2:16-18.) The City opposes NewPath's motion. Oral argument on NewPath's motion was held on March 8, 2010. For the reasons stated below, NewPath's motion for a preliminary injunction is DENIED.

I. LEGAL STANDARD

A plaintiff seeking a preliminary injunction must establish that he is (1) "likely to succeed on the merits"; (2) "likely to suffer irreparable harm in the absence of preliminary relief"; (3) "the balance of equities tips in his favor"; and (4) "a preliminary injunction is in the public interest." Sierra Forest Legacy v. Rey, 577 F.3d 1015, 1021 (9th Cir. 2009) (citing Winter v. Natural Res. Def. Council, Inc., --- U.S. ----, ----, 129 S.Ct. 365, 374, 172 L.Ed 2.d 249 (2008)); see also Am. Trucking Ass'ns, Inc. v. City of Los Angeles, 559 F.3d 1046, 1052 (9th Cir. 2009) (adopting the preliminary injunction standard articulated in Winter). A preliminary injunction is "an extraordinary remedy that may only be awarded upon a clear showing that the plaintiff is entitled to such relief." Winter, 129 S.Ct. at 376. "If a plaintiff fails to meet its burden on any of the four requirements for injunctive relief, its request must be denied." Sierra Forest Legacy v. Rey, --- F. Supp. 2d ----, 2010 WL 715846, at *1 (E.D. Cal. 2010) (citing Winter, 129 S.Ct. at 376). "In each case, courts must balance the competing claims of injury and must consider the effect on each party of the granting or withholding of the requested relief." Indep. Living Ctr. of S. Cal. Inc. v. Maxwell-Jolly, 572 F.3d 644, 651 (9th Cir. 2009) (quoting Winter 129 S.Ct. at 376).

The purpose of a preliminary injunction is to preserve the relative positions of the parties - the status quo - until a trial on the merits can be conducted. LGS Architects, Inc. v. Concordia Homes of Nev., 434 F.3d 1150, 1158 (9th Cir. 2006) (quoting Univ. of Tex. v. Camenisch, 451 U.S. 390, 395 (1981)). "Injunctions are classified as 'prohibitory' or 'mandatory,' depending on their effect on the party enjoined. A prohibitory injunction preserves the status quo, while a mandatory injunction goes beyond simply maintaining [the] status quo and compels the performance of an affirmative act." Bailey v. Clovis Unified Sch. Dist., No. 08-CV-0146-AWI-GSA, 2008 WL 410613, at *3 (E.D. Cal. Feb. 12, 2008) (citing Stanley v. Univ. of S. Cal., 13 F.3d 1313, 1320 (9th Cir. 1994)). "A party enjoined by a mandatory injunction must undo the wrong or injury with which he or she is charged." Id. Therefore, "[a] mandatory injunction goes well beyond simply maintaining the status quo pendente lite and is particularly disfavored. When a mandatory preliminary injunction is requested, the district court should deny such relief unless the facts and law clearly favor the moving party." Stanley, 1313 F.3d at 1320 (quotations and citations omitted).

The City argues NewPath seeks a "mandatory" injunction and that the facts and law do not clearly favor granting NewPath the relief it seeks. NewPath rejoins, arguing it is requesting an order prohibiting the City from interfering with the construction of its DAS. However, NewPath's proposed preliminary injunction order seeks to have the Court compel the City to reinstate the encroachment and building permits the City has revoked. The effect of such an order would require the City to take affirmative action. Cf. Bailey, 2008 WL 410613, at *3 (characterizing an injunction that would have compelled a school district to remove a ban and reinstate a student on a school's basketball team, as a request for mandatory relief).

Further, granting NewPath's request for injunctive relief would allow NewPath to construct its DAS prior to the resolution of its claims at trial, altering the current status quo. Therefore, NewPath seeks mandatory relief which is governed by the heightened standard articulated in Stanley.

The City's opposition to NewPath's motion includes a request that judicial notice be taken of four documents: 1) an "Order Denying Plaintiff's Motion for Summary Judgment" filed on December 23, 2009, in NewPath Networks, LLC, v. City of Irvine, Case No. SACV 06-550-JVS (Anx), in the United States District Court for the Central District of California; 2) City of Davis Resolution No. 10-010, Series 2010, Resolution Adopting Findings and Determinations re: NewPath Networks, LLC's Appeal of Permit Rescission; 3) Exhibit 5 to NewPath's supplemental appeal letter to the City Council, dated January 14, 2009; and 4) the Petition to the City of Davis City Council to Disallow the Cell Tower Installation in Village Homes submitted to the City Clerk for the January 19, 2010 City Council meeting. (Request for Judicial Notice ("RJN") Exs. 1-4.) NewPath does not oppose the City's request for judicial notice of these documents.

Under Federal Rule of Evidence 201, a district court may take judicial notice of a fact "not subject to reasonable dispute" because "it is either (1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned." Fed. R. Evid. 201(b). A court "may take judicial notice of a record of a state agency not subject to reasonable dispute." City of Sausalito v. O'Neil, 386 F.3d 1186, 1223 n.2 (9th Cir. 2004) (citations omitted); see also Mack v. S. Bay Beer Distribs., Inc., 789 F.2d 1279, 1282 (9th Cir. 1986) (stating that a court may take judicial notice of "matters of public record"), overruled on other grounds by, Astoria Fed. Sav. & Loan Ass'n v. Solimino, 501 U.S. 104, 111 (1991). Further, a district court may take judicial notice of "a doctrine or rule of law" from an unpublished district court opinion. M/V Am. Queen v. San Diego Marine. Constr. Corp., 708 F.2d 1483, 1491 (9th Cir. 1983) (finding judicial notice of unpublished district court order proper).

The City of Davis Resolution No. 10-010, NewPath's supplemental appeal letter to the City Council and the Petition to the City Council are matters of "public record" and are appropriate for judicial notice. Further, judicial notice may be taken of the existence of litigation in NewPath Networks, LLC v. City of Irvine, as well as the "doctrine[s] or rule[s] of law" discussed therein. See M/V Am. Queen, 708 F.2d at 1491; see also BP West Coast Prods. LLC v. Greene, 318 F. Supp. 2d 987, 994 (E.D. Cal. 2004) (taking judicial notice of "opinions, complaints, briefs and evidence filed in other actions... not for the truth of the facts asserted" but rather to "show that various contentions and arguments have been raised in other actions and review how other courts have addressed [those] issues"). Therefore, the City's request for judicial notice of these four documents is granted.

II. BACKGROUND

NewPath is a competitive local exchange carrier, authorized by the California Public Utilities Commission ("CPUC"), under a Certificate of Public Convenience and Necessity ("CPCN"), to provide "full facilities-based competitive local exchange and access services... for the entire state of California." In re Application of NewPath Networks, LLC (U-6928-C) for a Modification to its Certificate of Public Convenience and Necessity, 2006 Cal. PUC LEXIS 118 (Apr. 13, 2006). NewPath provides wireless carriers ("Customer Carriers") with access to its distributed antenna systems ("DAS"). (Kavanagh Decl. ¶¶ 3-4.) A DAS is a network typically comprised of "small, low-power antennas," referred to as "nodes," connected to a "central hub" by "fiber optic cable." (Id. ¶¶ 13-15.) Each node is located on or in light standards, traffic signals or other vertical structures. (Id. ¶15.) NewPath's DAS receives and transmits the wireless telephone and data communication signals of its Customer Carriers. (Id. ¶¶ 5-6.) NewPath describes its DAS as a "dumb pipe," which its Customer Carriers can use to provide wireless communications to their subscribers; Newpath thus characterizes itself as a "carrier's carrier." (Id. ¶¶ 1, 16.)

Between January 2009 and October 2009, NewPath engaged in discussions with City officials concerning NewPath's proposal to build a DAS within the City, which included discussions with the City's Chief Information Officer, Principal Planner, Assistant Director of Public Works, Electrician and Engineer. (Sears Decl. ¶¶ 4-14.) NewPath's proposed DAS calls for the installation of twenty-four wireless antenna facilities ("nodes") within the City. (Marshall Decl. ¶ 4.) NewPath would construct seventeen wooden or metal poles, approximately forty-two feet high, to host nodes, while the other nodes would be placed on existing telephone or electric poles. (Id.) Each node would be connected to the other nodes and a central hub by fiber optic cable. (Kavanagh Decl. ¶ 10.) NewPath explained to City officials that "under the CPUC's rules... [NewPath only] need[ed] [to] obtain... encroachment permits from the City" and did not need to comply with the City's WTF Ordinance. (Sears Decl. ¶¶ 5, 16, 17; Garcia Decl. ¶ 3.) NewPath also spoke with City officials about the best location and configuration for each node, in order to minimize the impact on local residents. (Sears Decl. ¶ 17.)

Following these discussions, the City issued NewPath thirty-six encroachment and related building permits between September 2, 2009 and November 13, 2009, for the construction of the proposed DAS. (Marshall Decl. ¶ 2.) NewPath obtained a "Notice to Proceed" ("NTP"), from the Energy Division of the CPUC on November 25, 2009, which granted NewPath "authority to proceed with the construction" of the Davis DAS project. (Mot. for Prelim. Inj. Ex. 7.) The NTP states: "[t]he Energy Division has reviewed NewPath's proposal to construct the Davis DAS project in the City of Davis, California and has determined that the proposed construction activities are consistent with the activities found by the Commission to be categorically exempt from the requirements of [the California Environmental Qualify Act ('CEQA')]." (Id.)

The City Manager issued a "Stop Work Notice," on November 30, 2009, ordering NewPath to "cease and desist all work" authorized by the thirty-six permits, "to allow for investigation of potential conflicts with the City's [WTF Ordinance] and to determine whether [the] permits were issued properly." (Mot. for Prelim. Inj. Ex. 3.) Shortly thereafter, the City Manager rescinded all thirty-six of NewPath's permits in a letter dated December 5, 2009 (the "Rescission Letter"), stating the permits were improperly issued because:

(1) NewPath did not, and has not, complied with the City's [WTF] Ordinance; (2) Certain of the permits for ground based fiber and conduit rely on the location of the wireless facilities, which... have not been approved and which may not meet the local requirements for wireless facilities in the City's ordinances; (3) other permits rely on access to public property that is not within the public rights of way for which no agreements have been reached to permit access and use by NewPath, and (4) certain poles and other above ground facilities (including proposed monopoles) are proposed for locations that do not permit above ground facilities. Further, there has been no showing that the proposed locations of the wireless facilities are each necessary given the impacts of these facilities on the public, including both public safety and aesthetic impacts.

(Mot. for Prelim. Inj. Ex. 5.) The Rescission Letter also states that "NewPath [may] file an appeal of [the permit revocations] to the City Council within 10 calendar days," or alternatively, may "apply for permits" in compliance with the City's WTF Ordinance. (Id.)

NewPath filed a timely appeal of the City Manager's permit revocation with the City Council, raising the following four arguments:

1. NewPath has worked with the City for eleven months on all aspects of the project ensuring that the design of NewPath's distributed antenna system ("DAS") was acceptable to the City and that NewPath has complied with all City requirements for obtaining the permits.

2. NewPath relied in good faith on the permits and, to date, has expended over $1 million in material and construction costs and incurred contractual obligations in that good faith reliance.

3. NewPath has obtained a vested property right to proceed with the proposed DAS project.

4. The City's Telecommunications Ordinance... does not apply to NewPath... and, even if it did, its 500-foot setback provisions for residential and mixed use areas constitutes both actual and effective prohibition of telecommunications services under federal law.

(Mot. for Prelim. Inj. Ex. 10.) In support of its appeal, NewPath submitted to the City Council numerous reports, surveys and other documentation, allegedly demonstrating the existence of significant gaps in coverage and the alternative locations for its nodes that NewPath had considered prior to the City's issuance of the Stop Work Notice. (Hall Decl. Exs. 1-5.)

The City Council held a public meeting on NewPath's appeal on January 19, 2010, following which the City Council issued and adopted Resolution No. 10-010, Series 2010, which denies NewPath's appeal of the City Manager's decision to rescind NewPath's encroachment and building permits. (Mot. for Prelim. Inj. Ex. 6.) The Resolution includes the following pertinent findings of fact in support of the City Council's decision:

11. The City has a Wireless Telecommunications Facilities Ordinance, DMC 40.29.0 ("Wireless Ordinance") that was, and continues to be, in effect at the time NewPath submitted its application....

13. The permits issued to NewPath violated the City's Wireless Ordinance.... The Wireless Ordinance prohibits telecommunication projects in residential, school, and public park and/or greenbelt zones. The Wireless Ordinance also requires an additional 500 foot setback requirement from residential and school zones, with specified exceptions.

a. All of the proposed antennas are located in or within 500 feet of residential, park, greenbelt, or corresponding planned development zones.

b. In addition, Permit #09-777700192... is located on City-owned property outside the right of way and public utility easements. But NewPath does not have an approved lease to utilize that site....

c. One site... is located in Planned Development for Neighborhood Commercial uses, but within 500 feet of a residential zone. However, the Wireless Ordinance has an exception from the 500 foot setback requirement, but any telecommunication facility at this site would be required to go through the [conditional use permit] process, including notice to the public and a public hearing, and be fully stealthed.... This exemption process was not followed.

14. Neither NewPath's CPCN nor NTP fall within the exemption in DMC § 40.29.060(j) or the Wireless Ordinance; nor do they preempt application of the Wireless Ordinance to NewPath's proposed DAS project. Neither the CPCN nor the NTP contain any express preemption of local authority. The NewPath CPCN is not site-specific; rather, it applies state-wide. The NTP is site-specific; however, by its terms, it is limited to the issue of whether the DAS project comes under a CEQA categorical exemption and does not address the applicability of local regulations. The City's Wireless Ordinance does not conflict with the CPCN or NTP, but is instead a local time, place and manner regulation expressly authorized by the Public Utilities Code. Pub. Util. Code § 7901.1.... Accordingly, the City Manager did not err in rescinding NewPath's permits for the DAS project....

17. Rescission of the improperly issued encroachment and related building permits at issue does not mean NewPath is effectively prohibited from utilizing its CPCN to access the public rights of way. Rescission of the permits simply means NewPath must apply for permits pursuant to the City's Wireless Ordinance. If NewPath shows that particular proposed sites prohibited under the Wireless Ordinance are necessary to eliminate significant gaps in coverage, i.e., there are no reasonable alternative locations permissible under the Wireless Ordinance, then NewPath may seek an exemption from the Wireless Ordinance that is consistent with the City's aesthetic and safety concerns, including consideration of collocation on existing poles or light stanchions.

(Mot. for Prelim. Inj. Ex. 6.) After the hearing, the City sent NewPath a letter dated January 21, 2010, enclosing a certified copy of the Davis City Council Resolution, and stating "[t]h[e] Resolution reflects the final action taken January 19, 2010." (Id.)

On January 28, 2010, NewPath filed a complaint in this federal court, alleging that the City's revocation of the thirty-six encroachment and building permits violates both state and federal law. Shortly thereafter, NewPath filed its preliminary injunction motion sub judice.

III. DISCUSSION

A. Likelihood of Success on the Merits

1. Preemption of The City's WTF Ordinance by State Law

NewPath argues that the City's application of the WTF Ordinance to NewPath exceeds the City's authority under the California Constitution and the California Public Utilities Code. Specifically, NewPath argues, "[u]nder the California Constitution, state law, and related rulings of the CPUC, the City does not retain the authority to require that NewPath submit to the discretionary permitting process outlined in the WTF Ordinance as a precondition of construction of telecommunication facilities or, in the alternative, require that NewPath submit to an unspecified exemption process that is neither codified nor contemplated in the City's WTF Ordinance." (Mot. for Prelim. Inj. 2:10-14) (emphasis omitted).

"The California Constitution authorizes local governments to make and enforce within their limits all local, police, sanitary, and other ordinances and regulations not in conflict with general laws." Sprint PCS Assets, L.L.C. v. City of Palos Verdes Estates, 583 F.3d 716, 722 (9th Cir. 2009) (quoting Cal. Const. art. XI, § 7). These "police powers" of local government, however, are limited by article XII of the California Constitution which vests the California legislature with "broad authority to regulate public utilities." Cal. Apartment Ass'n v. City of Stockton, 80 Cal. App. 4th 699, 708 (2000). Section 8 of Article XII provides that "[a] city, county, or other public body may not regulate matters over which the Legislature grants regulatory power to the [California Public Utilities] Commission." Cal. Const. art. XII, § 8. Section 5 of Article XII vests the legislature with "plenary power, unlimited by other provisions of [the California] constitution... to confer additional authority and jurisdiction upon the [Public Utilities Commission]." Cal. Const. art. XII, § 5. "Article XII, section 5 and 8 expressly authorize the Legislature to confer authority upon the [CPUC] which is unlimited by other provisions of the constitution and which is superior to the charter powers of a city or county over municipal affairs...." Cal. Apartment Ass'n, 80 Cal. App. 4th at 709. However, sections 5 and 8 merely give the California legislature the authority to preempt a municipality's police powers over a ...


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