Petition for Writ of Certiorari — Weinberg v. Comcast Cablevision of Philadelphia

Supreme Court, U.S.

FIltLeEend

V 001859 JUN 13 2002

No. 00- OFFIGE OF THE CLERK

IN THE

Supreme Court of the United States

PAUL S. WEINBERG, General Partner,

t/a Hill House,

Petitioner,

v.

COMCAST CABLEVISION OF PHILADELPHIA, L.P.,

Respondent.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE SUPERIOR COURT OF PENNSYLVANIA

PETITION FOR A WRIT OF CERTIORARI

STEVEN M. CorEN

Counsel of Record

BRUCE BODNER

BRUCE BELLINGHAM

KAUFMAN, CoreEN, RESS

& WEIDMAN, P.C.

Attorneys for Petitioner

1525 Locust Street

17th Floor

Philadelphia, PA 19102

(215) 735-8700

167459 ce

COUNSEL PRESS

(800) 274-3321 + (800) 359-6859

tel

SLUR HN ERNE

a A MewRT

DT DPS RMN OS OUP ROMNEY ony cE orn NOR EVR EERO

ay ere Ng

i

QUESTIONS PRESENTED

Petitioner, General Partner Paul Weinberg, t/a Hill

House, owns a multiple dwelling apartment building in

Philadelphia, Pennsylvania. Respondent, Comcast Cablevision

of Philadelphia, is a cable television service provider. In this

case, the courts of the Commonwealth of Pennsylvania have

decided important questions of federal law that have not been,

but should be, settled by this Court. The questions presented in

this petition are as follows:

1. Whether Pennsylvania’s Tenants’ Right to Cable

Television Act is unconstitutional because, in violation of the

Fourteenth Amendment, it deprived Petitioner of due process

of law, by delegating judicial power to a private forum and by

compelling him to submit the question of just compensation

for the taking of his property to binding arbitration under a

statutory scheme devoid of expert administrative oversight and

without de novo judicial review.

2. Whether Pennsylvania’s Tenants’ Right to Cable

Television Act is unconstitutional because it effected a taking

of Petitioner’s property without just compensation, by arbitrarily

limiting the measure of damages to “loss of value,” thereby

creating, by legislative fiat, a fixed, nominal payment of $1 as

“just compensation” for the occupation of Petitioner’s property,

in violation of the Fifth and Fourteenth Amendments.

3. Whether Pennsylvania’s Tenants’ Right to Cable

Television Act is unconstitutional because the requirement that

Petitioner pay one-half of all expenses and fees for an arbitration

proceeding to which he did not consent, in and of itself,

constitutes “a taking without just compensation,” in violation

of the Fifth and Fourteenth Amendments.

i ak Ry

il

TABLE OF CONTENTS

Page

RII Gna cecuceeccccececteceos i |

I 2 wd bu aacseesddencucerees il |

Table of Cited Authorities ..............0.00.. iv

IO 6 kd. ob 6'vc'danwaacteeea sees’ ix |

I as eeu ccecauccbeebsdeaceee l

tMberGmt OF TUTIAGRCTION .. wc ccc ccc ccc cccese |

Constitutional and Statutory Provisions Involved .. . l

NE I OD oa cccetecusncccencecsies 4

Reasons for Granting the Writ ................. 8

A. This Case Presents Important, but Unsettled

Questions of Federal Constitutional Law That

Should be Settled By This Court ......... 8

B. Federal Court Precedents Cast Doubt on The

Constitutionality of Pennsylvania’s Tenants’

Right to Cable Television Act ........... 10

C. Pennsylvania’s CATV Act Does Not Stand

Up To Constitutional Scrutiny ........... 19

1. Pennsylvania’s CATV Act Deprives

Property Owners of Due Process by

Delegating Judicial Power to a Private

Forum Without Expert Administrative

Oversight or Meaningful Judicial

Review

ili

Contents

Page

2. Pennsylvania’s CATV Act Denies

Property Owners Just Compensation by

Ascribing Only a Nominal Value to

BO EOS Fi osain oS edk che des 24

3. Pennsylvania’s CATV Act Effects a

Second Uncompensated Taking by

Requiring Property Owners to Pay for

Puavele ASO. 5 io so a cick 28

CS oo i ec és ca al eee ee ee 29

iv

TABLE OF CITED AUTHORITIES —___-

Page

Cases:

Adelphia Cablevision v. University City Housing Co.,

755 A.2d 703 (Pa. Super. 2000) .............. 7,8

Allstate Ins. Co. v. Fioravanti, 299 A.2d 585

Soave aw ecw eu hs v0.06 565 se oheee es 8

AMSAT Cable Ltd. v. Cablevision of Ct., L.P., 6 F.3d

ee I SEE Ska vaxcaciwessecryanue 22, 23, 27

Bragg v. Weaver, 251 U.S. 57 (1919) ........... 15

Cablevision of the Midwest, Inc. v. Gross,

639 N.E.2d 1154 (Ohio 1994) ............... 27

Chicago, Burlington & Quincy R.R. Co. v. City of —

Ciicame, 16607.D. ZEOCIGST) 2 cccccccccaccs 8,9

City of Lansing v. Edward Rose Realty, Inc.,

502 N.W.2d 638 (Mich. 1993) ............... 27

Gilmer v. Interstate/Johnson Lane Corp., 500 U.S.

De OE i kid 00 ae ok eck le eee 9,19

Gulf Power Co. v. Federal Communications

Commission, 187 F.3d 1324 (11th Cir. 1999) ...

(taveecke SRA 0s CL eee ee heres 12, 13, 14, 15

Hawaii Housing Authority v. Midkiff, 467 U.S. 229

| SR ran sere Per rs ey a ree ee ee 10, 11

In Re Adoption of Dale A., 683 A.2d 297 (Pa. Super.

RPI onk5 hdc eae k edd ccepiaee ca ieaeeeanene 8

Cited Authorities

Page

Kirby Forest Indus., Inc. v. United States, 467 U.S.

SPIO 4 wna cwack ages chackdcke eds deere 24

Loretto v. Group W. Cable, 522 N.Y.S.2d 543

(1st Dept. 1987), cert. denied, 488 U.S. 827 (1988)

POOLE CEPT TET ECT CPO Tre rr ee 27

Loretto v. Teleprompter Manhattan CATV Corp.,

458 U.S. 419 (1982), on remand, 446 N.E.2d 428

i. 8 Me, eres re re rare rors passim

Mathews v. Elridge, 424 U.S. 319 (1976) ........ 8

Midkiff v. Tom, 471 F. Supp. 871 (1979) ......... 11

Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth,

Be. 473 GE. GEA CGE? ov 6.n vba et cas as 10

Monongahela Navigation Co. v. United States,

re A UI. SU CIE ocat bdacccccvasvectadas 13

NYT Cable TV v. Homestead at Mansfield, Inc.,

518 A.2d 748 (N.J. Super. 1986), aff'd, 543 A.2d

i Se ee error rer re Te Tere 22, 27

Olson v. United States, 292 U.S. 246 (1934) ..... 24

Princeton Cablevision, Inc. v. Union Valley Corp.,

478 A.2d 1234 (N.J. Super. Ch. 1983) ........ 27

Rodriguez de Quijas v. Shearson/American Express,

Bees. BIO US. S77 CEFR nec cvccaccccsncnens 9

vi

Cited Authorities

Page

Ruckelshaus v. Monsanto Co., 467 U.S. 986 (1984)

shabeednsdhesdacwannideunsanasaneel 16, 17, 18

Shearson/American Express Inc. v. McMahon,

Se Ss BPC deh dasSolicviastastsdst 9

Thomas v. Union Carbide Agricultural Products Co.,

oe eR ee ee ee 16, 18, 19

Times Mirror Cable Television v. First Bank of

Springfield, 582 N.E.2d 216 (Ill. App. 1991) ... 23, 24

United States v. 47.14 Acres of Land, 674 F.2d 722

Shh WEED Rakha Oe: 25

United States v. 564.54 Acres of Land, PA., 506 F.2d

nt oh PP a Ree eae at 25

United States v. 564.54 Acres of Land, PA., 441 U.S.

ce I Nr AT ae 25

United States v. Fuller, 409 U.S. 488 (1973) ..... 25

Williamson County Regional Planning Com'n v.

Hamilton Bank, 473 U.S. 172 (1985) ....9, 10, 12, 15

Wisconsin Central Limited v. Public Service

Commission of Wisconsin, 95 F.3d 1359 (7th Cir. —

SUED Sb upechU¥ss were ce eeuedteniicesstel 14, 15

vil

Cited Authorities

Page

United States Constitution:

i i>. Se | errr See a er 18

U.S. Const., Art. TT... 2.0.0... see e cece e ee eeeee 18

Fifth Amendment ............ i, 1, 8,9, 10, 13, 15, 17

Fourteenth Amendment ....................- i, 1,9, 15

Statutes:

2 N.Y. Jur. 2d Admin. Law § 314 .............. 23

2 N.Y. Jur. 2d Admin. Law § 317 .............. 23

New York’s Executive Law Art. 28, §§ 811-31 ... 23

Mow York Statute, § SEB . oo ccccccccccccccccecs 20

New York Statute, § 828(1)(b) ................. 20

5s eb. Lo ” BPP rrerr Trt Terr ere 4

GB PS. § ZSO.SOGB, C0 BOG. 2c cctccccnscccsseses .

CEPT, CAPS cb bade dcceendasacctadenes 2

GB PD. 6 ZOD SOG GD 6 ccc ccidocssersccccsess 20, 26

6B P.S. § 250.S06-BUGNS) .. 2c cccccccccccess 5

—

vill

Cited Authorities

Page

68 P.S. § 250.506-B(b)(4) ................ 5, 24, 26, 28

SS Fas © BOP OD os cd ce ccsasusnaceantwen 28

7 Glade @ POUUICEPTD sb cnvecvdcewdsasbeen 7

es RE sb i vake civ iebeseeeeseleeee 1

Sens BUD rncikdcdiendneteeente couas |

Rule:

United States Supreme Court Rule 29(c) ........ l

Other Authorities:

18 McKinney Exec. Law 811, et seg. (1982) ..... 23

18 McKinney Exec. Law 824 (1982) ............ 23

ix

TABLE OF APPENDICES

Appendix A — Opinion Of The Superior Court Of

Pennsylvania Dated And Filed August 30, 2000

ee@ 2 ORO a'RARAAA SE & OA A ABS#s.SA O18. 4.23. 42 2 4: 2S. OAS Oo.

Appendix B — Opinion Of The Court Of Common

Pleas, Trial Division, Civil Section Dated

BR eS ey ies Or mer

Appendix C — Order Of The Court Of Common

Pleas Of Philadelphia Dated February 12, 1999

Appendix D — Award Of The American Arbitration

Association, Commercial Arbitration Tribunal

BOGGS SOONG 7, BOO aka ncaa kb oi Sadwess

Appendix E — Order Of The Supreme Court Of

Pennsylvania, Eastern District Denying Petition

For Allowance Of Appeal And Post-Submission

Communication Dated March 15, 2001 .......

Page

la

24a

32a

33a

]

OPINIONS BELOW

1. The Opinion of the Superior Court is reported at

Weinberg v. Comcast Cablevision of Philadelphia, L.P., 759

A.2d 395, 2000 Pa. Super. 258 (Pa. Super. 2000) (App. A).

2. The Court of Common Pleas issued an unpublished

opinion in Weinberg v. Comcast Cablevision of Philadelphia,

L.P., Philadelphia County Court of Common Pleas, January

Term, 1999, No. 364 on May 17, 1999 (App. B).

3. An unpublished arbitration award was issued on

December 7, 1998 in Comcast Cablevision of Philadelphia, L.P.

v. Hill House Apartments, AAA No. 14E 181 00100 98 D/K

(App. D).

STATEMENT OF JURISDICTION

On March 15, 2001, the Supreme Court of Pennsylvania

denied Petitioner’s Petition for Allowance of Appeal from the

Superior Court’s decision. Weinberg v. Comcast Cablevision

of Philadelphia, L.P., _A.2d__, 2001 WL 256063 (Pa. 2001)

(App. E). This Court’s jurisdiction rests on 28 U.S.C. § 1257(a).

Since 28 U.S.C. § 2403(b) may apply, notification as required

by Rule 29(c) has been made.

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED |

The Fourteenth Amendment of the United States

Constitution provides, in relevant part:

[Nor shall any State deprive any person of life,

liberty or property without due process of law . . .

The Fifth Amendment of the United States Constitution

provides, in relevant part:

[N]or shall private property be taken for public use,

without just compensation.

se eine tie ere fat’

4

68 P.S. § 250.506-B provides, in relevant part:

(a) A landlord shall be entitled to just compensation

from the operator resulting from loss in value of

property resulting from the permanent installation

of CATV system facilities on the premises.

(b) If a landlord believes that the loss in value of

the property exceeds the compensation contained

in the proposal accompanying the original notice

... the issue of just compensation ... shall be

determined in accordance with the following

procedure:

(1) At any time prior to the end of the

forty-five day period from the date when

the landlord receives the original notice

that the operator intends to construct or

install a CATV system facility in multiple

dwelling premises, the landlord shall serve

upon the operator written notice that the

landlord demands a greater amount of

compensation ...

(2) Ifthe operator is dissatisfied with the

result of the negotiations at the conclusion

of the forty-five day negotiation period,

then he shall notify the landlord of the

terms which the operator believes to be

unreasonable and shall accompany this

notice with a formal request for

arbitration.

(3) Arbitration proceedings shall

be conducted in accordance with

the procedures of the American

Arbitration Association or any successor

thereto. ... Requirements of this act

relating to time, presumptions and

3

compensation for loss of value shall apply

in the proceedings. The cost of the

proceedings shall be shared equally by the

landlord and the operator. The arbitration

proceedings, once commenced, shall

be concluded and a written decision

by the arbitrator shall be rendered

within fourteen days of commencement.

Judgment upon any award may be entered

in any court having jurisdiction.

(4) Within thirty days of the date of the

notice of the decision of the arbitrators,

either party may appeal the decision of

the arbitrators in a court of common pleas,

regarding the amount awarded as

compensation for loss of value ...

During the pendency of an appeal, the

operator may not enter the multiple

dwelling premises to provide CATV

services ... The court shall order each

party to pay one-half of the arbitration

costs.

(c) In determining reasonable compensation,

evidence that a landlord has a specific alternative

use for the space occupied or to be occupied by

CATV system facilities, the loss of which will result

in a monetary loss to the owner, or that installation

of CATV system facilities upon such multiple

dwelling premises will otherwise substantially

interfere with the use and occupancy of such

premises to an extent which causes a decrease in

the resale or rental value thereof shall be considered.

In determining the damages to any landlord in an

action under this section, compensation shall be

measured by the loss in value of the landlord’s

4

property. An amount representing increase in value

of the property occurring by reason of the installation

of CATV system facilities shall be deducted from

the compensation .. .

STATEMENT OF THE CASE

This case presents a challenge to the constitutionality of

the Pennsylvania Tenants’ Right to Cable Television Act

(“the Act”). In Loretto v. Teleprompter Manhattan CATV Corp.,

458 U.S. 419 (1982), this Court held that a statute authorizing a

cable television operator to install its cable and switch boxes

on the roof and side of an apartment building in order to supply

services to tenants constituted a permanent physical occupation

and thus a compensable taking that triggers substantive and

procedural protections guaranteed by the United States

Constitution. In this case, respondent Comcast Philadelphia, a

cable operator, invoked the condemnation powers delegated to

it by the Pennsylvania Tenants’ Right to Cable Television Act,

68 P.S. § 250.504-B, et seq., in order to permanently occupy a

portion of Petitioner Paul S. Weinberg’s apartment building,

Hill House.

The Act provides that a tenant may request service from

a cable operator who holds the franchise granted by

the municipality where the premises are located. The cable

operator may then, without the consent of the property owner,

enter and permanently occupy a portion of the premises for

the purpose of hooking up the tenants to the operator’s service.

Id. at § 250.503-B. The Act supplies no standards or rules

governing the private cable operator’s decision to take an

owner’s property, vests sole discretion on the subject in the

cable operator, and provides no mechanism for government

review of the cable operator’s decision to provide (or not

provide) cable service. Jd.

The Act further provides that if, after notice and an

opportunity for negotiation, an owner does not consent to the

5

cable operator’s demands, the cable operator can force the owner

into a non-judicial proceeding sponsored by the American

Arbitration Association (AAA) to enforce the mandates of

the Act. The arbitrator, in turn, is empowered to determine,

within the valuation constraints set forth in the Act, what

just compensation for the taking of the owner’s property

shall be. Adding constitutional insult to injury, the Act makes

the owner liable for half of the AAA arbitration costs, even

if the arbitration is conducted without the owner’s consent.

Id. at § 250.506-B(b)(3).

If either party is dissatisfied with the arbitrator’s decision,

the Act affords the aggrieved party very narrow rights of

appeal, which are limited to “appeal[ing] the decision of the

arbitrator in a court of common pleas, regarding the amount

awarded as compensation for the Joss of value” of the property.

Id. at § 250.506-B(b)(4) (emphasis added). The Act does not

permit an owner to argue to the arbitrator or to challenge in

court the adequacy of the legislatively-determined “loss of

value” measure as compensation for the taking. Jd. Moreover,

the Act precludes any judicial determination of just

compensation for the taking which may vary from the

legislatively-set, nominal “loss of value” measure.

In 1997, 5 of Hill House’s. 189 tenants requested that

Comcast Cablevision of Willow Grove, Inc. (“Comcast Willow

Grove’’) provide them with cable television services. At the

time, Hill House tenants received cable programming services

through a satellite-based provider, ACS Enterprises, which paid

petitioner a commission of 5% of ACS’s revenues. In January

1998, Comcast Cablevision of Philadelphia, Inc. (“Comcast

Inc.”), sent Hill House a Notice of Intention to Provide Cable

Television Service under the Act. Comcast Inc. submitted with

the notice a proposed contract pursuant to which, on the payment

of $1, Comcast Philadelphia would permanently occupy Hill

House to install wires and other facilities throughout the building

and in all 189 apartments.

6

In March 1998, respondent, Comcast Philadelphia

(“Comcast”), filed a Demand for Arbitration with the AAA.

Petitioner objected, but reluctantly participated in the arbitration

proceeding. The AAA conducted a non-record arbitration and

entered an award in favor of Comcast awarding Comcast

permanent occupancy for $1. It also directed Hill House to pay

Comcast $1,115.40 (half of Comcast’s expenses to accomplish

the taking of Petitioner’s property in arbitration).' Petitioner

therefore suffered a net loss of $1,114.40 for the privilege of

surrendering his property to Comcast under Pennsylvania’s

compulsory arbitration statute.

The Court of Common Pleas of Philadelphia County

subsequently confirmed the arbitration award based on its

holding that the Act did not effect a Constitutional taking. On

appeal, the Superior Court, by order entered August 30, 2000,

reversed — as contrary to Loretto — the lower court’s holding

that the Act did not effect a Constitutional “taking.”

The Superior Court found, on the contrary, that Petitioner

suffered a taking which triggers Constitutional due process and

just compensation concerns. But the Superior Court nonetheless

affirmed the lower court’s decision on the basis that the Act

provided for due process and just compensation. On March 15,

2001, the Pennsylvania Supreme Court denied Hill House’s

Petition for Allowance of Appeal. This petition for certiorari

follows.

The constitutional issues raised in this petition were argued

during all stages of the state court proceedings below. In the

-Court of Common Pleas, Philadelphia County, the constitutional

questions were presented in a Petition to Vacate the arbitrator’s

award. In its Civil Docketing Statement on appeal to the Superior

1. The arbitrator also imposed ongoing “contractual” obligations

on Hill House in the form of a mandatory injunction, requiring Petitioner

to assist Comcast in its future marketing and other business activities,

indefinitely; i.e., supplying tenants with literature, permitting Comcast

to solicit customers in the lobby, and allowing Comcast employees on

the premises to audit, maintain and service the system.

7

Court, and its in brief, Petitioner, again, raised the constitutional

issues presented here. In its opinion, the Superior Court of

Pennsylvania summarized Petitioner’s contentions in support

of its argument that the Act infringes on a landowner’s

constitutional right against deprivation of property without due

process and just compensation. Weinberg, supra, 759 A.2d at

399. Among other things, the court noted the following defects

identified by Petitioner with respect to the constitutionality of

the Act: (1) the Act requires the parties to submit to arbitration

even though the parties have not agreed to arbitration; (2) the

Act is an unconstitutional delegation of judicial power; (3) the

Act does not provide for de novo judicial review; (4) the Act

provides a statutory measure of damages that is in effect “a

decrease in the resale or rental value of the property,” thereby

limiting just compensation to only symbolic or incidental loss,

and (5) the Act unconstitutionally requires the property owner

to pay for the costs associated with the arbitration proceedings.

Id. at 400.

The Superior Court rejected Petitioner’s arguments as to

the unconstitutionality of the statute and concluded that

Hill House was afforded adequate opportunity to

be heard, through statutory arbitration, regarding its

right to just and timely compensation . . . [T]he Act

need not provide for de novo review or a jury trial

as required by the Eminent Domain Code. Moreover,

the Act does not limit compensation to “incidental

or symbolic loss.”

Id. at 403. As to the allegations that the statute unconstitutionally

delegates judicial power and mandates arbitration in violation

of due process, the Superior Court concluded that its decision

in Adelphia Cablevision adequately addressed these issues.’

Id. at 404.

2. In Adelphia Cablevision, the Superior Court upheld the

arbitration scheme, reasoning that “[d]ue process is a flexible concept

(Cont'd)

8

REASONS FOR GRANTING THE WRIT

The requirement that property shall not be taken for

public use without just compensation is. . . founded

in natural equity, and is laid down as a principle of

universal law. Indeed, in a free government, almost

all other rights would become worthless if the

government possessed an uncontrollable power over

the private fortune of every citizen.

Chicago, Burlington & Quincy R.R. Co. v. City of Chicago,

166 U.S. 226, 236 (1897).

A. This Case Presents Important, but Unsettled Questions

of Federal Constitutional Law That Should be Settled

By This Court

This case raises important questions of federal law that have

not been, but should be, settled by this Court. Petitioner asks

this Court to consider the constitutionality of statutory schemes

compelling property owners to submit to binding arbitration, at

their own expense, the Fifth Amendment question of just

(Cont'd)

that calls for such procedural protections as the situation demands.”

See Adelphia Cablevision v. University City Housing Co., 755 A.2d

703, 712 (Pa. Super. 2000). However, none of the cases cited by the

Court in Adelphia Cablevision involved a statutory mandate to submit

the constitutional question of just compensation to private, binding

arbitration. See In Re Adoption of Dale A., 683 A.2d 297, 300

(Pa. Super. 1996) (termination of parental rights by an orphan’s court

with counsel, but not parent, present) (citing Mathews v. Elridge, 424

U.S. 319, 334 (1976) (administrative agency hearing over termination

of statutorily created interest in social security benefits); Allstate Ins.

Co. v. Fioravanti, 299 A.2d 585, 586-87 (Pa. 1973) (upholding

contractual arbitration award relating to automobile insurance policy).

In fact, as we shall demonstrate, infra, there is no federal authority for

the proposition that private arbitration satisfies constitutional due

process with respect to a dispute involving a property owner’s right to

“just compensation” under the Fifth Amendment.

9

compensation for the taking of their property, without the right

to de novo judicial review and under a statutory framework

that, for all intents and purposes, limits the arbitrator’s discretion

to an award of nominal damages.’

On numerous occasions this Court has held that the Fifth

Amendment does not proscribe the taking of property; it merely

proscribes a taking of property without just compensation.

Williamson County Regional Planning Com’n v. Hamilton

Bank, 473 U.S. 172, 194 (1985). To avoid the prohibitions of

the Fifth Amendment,

all that is required is that a reasonable, certain, and

adequate provision for obtaining compensation exist

at the time of the taking. If the government has

provided an adequate process for obtaining

compensation, and if resort to that process yields

just compensation, then the property owner has no

claim against the Government for a taking.

Id. at 194-95. Pennsylvania’s cable access statute denies

property owners both “adequate process” and “just

compensation.”

Over the past two decades, federal courts, including this

Court, have steadily extended the reach and legitimacy of private

arbitration as a forum for settling a wide array of disputes

implicating contractual and/or statutory rights. See, e.g., Gilmer

v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991) (statutory

age discrimination claim subject to binding arbitration pursuant

to provision in securities registration form); Rodriguez de Quijas

v. Shearson/American Express, Inc., 490 U.S. 477 (1989)

(agreement to arbitrate claims under the Securities Act

enforceable); Shearson/American Express Inc. v. McMahon, 482

U.S. 220 (1987) (agreement between customer and broker to

3. The “just compensation” component of the Takings Clause is

applicable to the several States through the Fourteenth Amendment.

Chicago, Burlington & Quincy, supra, 166 U.S. at 235-41.

10

arbitrate, enforceable as to RICO claim); Mitsubishi Motors

Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (1985)

(anti-trust claim subject to binding arbitration per agreement

between international business entities). However, all of these

cases involved parties who had voluntarily entered into

contractual agreements to arbitrate; and none tested the

constitutionality of the arbitral forum as a state mandated

mechanism for vindicating constitutional, as opposed to

statutory, rights.

In fact, we can find no federal authority sanctioning the

use of compulsory arbitration as a means of resolving disputes

implicating rights guaranteed to citizens by the just

compensation clause of the Fifth Amendment. On the contrary,

several federal courts, including this Court, have called such

schemes into question, while others have found them

unconstitutional on their face. It therefore remains an unsettled

question as to whether, or by what means, a compulsory scheme

for binding arbitration can satisfy the “adequate process”

requirement announced in Williamson County. With this case

the Court has the opportunity to address this important, but yet

unsettled question of constitutional law.

B. Federal Court Precedents Cast Doubt on The

Constitutionality of Pennsylvania’s Tenants’ Right to

Cable Television Act

Federal court cases reviewing the constitutionality of

legislatively mandated compulsory arbitration schemes to

determine “just compensation” in Fifth Amendment takings

cases, though not conclusive, cast grave doubt on the

constitutionality of Pennsylvania’s cable access statute.

In Hawaii Housing Authority v. Midkiff, 467 U.S. 229

(1984), this Court considered the constitutionality of an

Hawaiian takings statute that originally contained a compulsory

arbitration provision to settle questions of just compensation in

connection with the transfer of private land holdings authorized

by the Land Reform Act of 1967. Hawaii’s Land Reform Act,

11

designed to break up highly concentrated land ownership in

Hawaii, created a mechanism for condemning residential tracts

of land and transferring ownership of the condemned fees simple

to the current lessees of the property. Jd. at 232-33.

As originally enacted, the statute provided that mandatory

arbitration be held in advance of any action in eminent domain

for the purpose of establishing the amount of compensation

that would be paid to lessors for the lessor’s leased fee interest

in the event of condemnation. Lessor and lessee had to engage

in compulsory arbitration if they could not reach a negotiated

agreement on a price for the fee simple title with the lessor

paying half the costs of the arbitration proceedings. Statutory

formulae were provided for fixing what “just compensation”

would be. /d. at 235. In short, Hawaii’s Land Reform statute

contained all of the substantive and procedural defects contained

in Pennsylvania’s Tenants’ Right to Cable Television Act.

In May 1979, the United States District Court for the

District of Hawaii declared the compulsory arbitration

provisions and the Act’s compensation formulae

unconstitutional on their face, even though, under the Hawaiian

statute property owners were ultimately afforded the right to a

jury trial on the issue of just compensation. Midkiff v. Tom, 471

F. Supp. 871, 883 (1979). The district court also expressed the

view that the provision of the statute requiring property owners

to pay one-half of all expenses and fees in connection with the

arbitration proceeding itself constituted an unconstitutional

taking without just compensation. /d. at 884. No appeal was

taken from these rulings. Instead, the legislature amended the

statute to provide for mandatory negotiations, not compulsory

arbitration, and for compensation formulae that were strictly

advisory. As a result, the constitutionality of the statute’s

compulsory arbitration scheme did not reach this Court when

the remaining provisions of Hawaii’s Land Reform Act were

upheld in 1984. See Midkiff, 467 U.S. 229, 235 n.3 (1984).

12

More recently, two federal appellate courts considered

constitutional challenges to statutory schemes mandating the

use of a non-judicial forum to determine just compensation

for the taking of private property; one involved the

Telecommunications Act of 1996, the other, a Wisconsin statute

giving utility companies access to railroad right-of-ways. Unlike

Pennsylvania’s compulsory arbitration scheme, both statutes

relied on administrative agency expertise to make an initial

determination of just compensation. Nevertheless, these statutes

received mixed reviews with respect to the due process

protections of Williamson County. As discussed, infra, the

Telecommunications Act passed constitutional muster because,

unlike Pennsylvania’s cable access statute, it provided de novo

judicial review following an administrative agency hearing.

Wisconsin’s arbitration scheme survived, but only because the

issue before the Seventh Circuit was plaintiff's petition for

injunctive relief, rather than the constitutionality of the

administrative determination of just compensation.

In Gulf Power Co. v. Federal Communications

Commission, 187 F.3d 1324 (11th Cir. 1999), a group of utility

companies challenged the constitutionality of the

Telecommunications Act of 1996 (“the Act”). They alleged that

the federal statute failed to provide a constitutionally adequate

process for obtaining just compensation in connection with

a “takings” provision in the Act giving cable television

(“CATV”) providers mandatory access to plaintiffs’ utility

poles. The plaintiffs challenged the statute on grounds similar

to those raised here. First, they argued that the Act violated

separation of powers principles by delegating to the Federal

Communication Commission (FCC), instead of a court, the task

of determining the compensation a utility would receive for

access to its property. Second, they asserted that the Act’s

provision limiting the FCC to awarding a “just and reasonable”

rate within the range of rates set by Congress prevented a

utility from receiving the constitutionally required rate of

“just compensation.” Jd. at 1331-32.

13

The Eleventh Circuit agreed, in part, with the contentions

of the utility companies on the separation of powers issue.

While acknowledging that it is for the legislative branch to

determine what private property is needed for public purposes,

the Court agreed that, when a taking has been ordered, the

question of just compensation is a judicial, not a legislative

one. It is not the province of the public, taking property through

the Congress or a state legislature, to say “what compensation

shall be paid, or even what shall be the rule of compensation.”

Id. at 1332 (emphasis added). The Fifth Amendment requires

that just compensation shall be paid, and the ascertainment of

that is a judicial inquiry. Jd. (citing Monongahela Navigation

Co. v. United States, 148 U.S. 312 (1893)).

In the end, the Eleventh Circuit upheld the constitutionality

of the Act because, unlike Pennsylvania’s cable statute, the

federal telecommunications statute provided for meaningful

judicial review and it delegated responsibility to an agency with

expertise in the field rather than a private arbitrator. “The fact

that our constitutional scheme dictates that the judicial branch

is entrusted with the ultimate responsibility for ensuring that

just compensation is awarded does not mean the other branches

of government must be excluded from the process of

determining the proper level of just compensation.” Gulf Power,

187 F.3d at 1333. The Court cited the practical advantages of

having an administrative body with technical expertise assisting

the judiciary in arriving at a more reliable determination of the

proper level of just compensation. Jd. So long as an

administrative agency’s decision concerning the level of

compensation owed remains subject to meaningful judicial

review, an administrative hearing can be a legitimate part of

providing an “adequate process” for obtaining just

compensation. Jd.

Under the Telecommunications Act, the FCC’s rate order

compensating a utility company for the use of its poles was

subject to review by a federal appellate court which had the

+

authority both to determine the proper level of just compensation

and to ensure that the utility received just compensation.* Had

the Act narrowed the scope of judicial review and made the

FCC the final arbiter of a utility’s compensation, the Eleventh

Circuit indicated that it may have reached a different conclusion

regarding the statute’s constitutionality.° See id. at 1337.

In Wisconsin Central Limited v. Public Service Commission

of Wisconsin, 95 F.3d 1359 (7th Cir. 1996), the United States

Court of Appeals for the Seventh Circuit denied plaintiff railroad

company’s request for injunctive relief to stop the installation

of utility transmission facilities in and around railroad right-of-

ways. The transmission facilities were being installed pursuant

to a Wisconsin statute that authorized an administrative body,

namely, Wisconsin’s Public Service Commission (PSC), to

establish, in the first instance, by rule making, the level of

compensation plaintiffs would receive for the taking of their

property. The PSC set the rate of compensation at a one time

4. Central to the court’s decision in Gulf Power was the extent to

which the appellate court could gather information needed to review

an FCC determination of just compensation: (1) The court could

rely on evidentiary submissions in the record from the FCC hearing;

(2) if the record was insufficient, it could remand the case and direct

the FCC to supplement the record; (3) the case could be transferred to

a district court for a full hearing; (4) the court could appoint a special

master to hold hearings and gather any additional information before

deciding the just compensation issue; (5) the court could fashion any

other “appropriate modes of procedure” to gather evidence pursuant to

its authority under the All Writs Act. The Eleventh Circuit found these

provisions for review sufficient to afford a utility a full and fair

opportunity to submit for judicial consideration all relevant evidence

bearing on the question of just compensation. Jd. at 1334-35.

5. The Court did not consider the challenge to the statute’s

rate structure ripe for review because the FCC had yet to determine

the “reasonable rate of compensation” for access to appellant’s utility

poles, but the Court noted that in a regulated industry the level of

compensation set by the government must not be so low as to be

confiscatory. Jd. at 1338.

ical

15

payment of $500. Under the statute, the railroad could petition

the commission for compensation greater than $500 if the

railroad incurred extraordinary direct expenses as a result of

the construction of the facilities or believed that special

circumstances existed, as defined in the rule. Jd. at 1364.

The railroads challenged the PSC’s determination of just

compensation, alleging, among other things, that the process

violated the Takings Clause of the Fifth Amendment and the

Due Process Clause of the Fourteenth Amendment. Jd. at 1367.

The railroads sought a declaratory judgment and injunctive

relief, relying in part on this Court’s decision in Bragg v.

Weaver, 251 U.S. 57 (1919), which they cited for the proposition

that “due process requires that an owner may obtain a full

hearing in a court of justice . . . before the compensation is finally

determined.” /d. at 1370.

The Seventh Circuit affirmed the decision of the district

court denying the railroad’s request for injunctive relief.

But the court’s decision rested more on the absence of

irreparable harm than on its conviction that Wisconsin’s

administrative procedure for determining just compensation

satisfied the due process requirements of Williamson County.

Id. at 1369-70. On the contrary, the court agreed with the

railroads, that decisions concerning “just compensation owed

one whose property is taken as a result of a legislative act is the

province of judicial — not legislative — determination.”

Id. The court went on to express its misgivings about the use of

a rule making procedure to determine just compensation in light

of the limited nature of judicial review aggrieved parties are

afforded following administrative rule-making procedures.

Under the Wisconsin statute, the court pointed out, judicial

review entailed deference to the administrative agency’s

findings of fact, and just compensation is essentially a factual

inquiry. Jd. “We do not share the district court’s conclusion

that judicial review by Wisconsin state courts would suffice

under the rule of decision in Bragg.” Id.

16

In Ruckelshaus v. Monsanto Co., 467 U.S. 986 (1984),

and in Thomas v. Union Carbide Agricultural Products Co.,

473 U.S. 568 (1985), this Court considered several challenges

to the constitutionality of certain provisions of the Federal

Insecticide, Fungicide, and Rodenticide Act (FIFRA)

mandating binding arbitration to settle disputes among

participants in a federally regulated pesticide registration and

licensing program. While this Court ultimately upheld the

constitutionality of the statute’s alternate dispute resolution

regime, what is most significant for our purposes is that, in

doing so, the Court distinguished a property owner’s “ability

to vindicate its constitutional right to just compensation” and

the “ability to vindicate its statutory right to obtain

compensation” under the terms of the pesticide registration

program. See Monsanto, 467 US. at 1019.

Under the FIFRA, pesticide manufacturers are required

to submit research data to the Environmental Protection

Agency (“EPA”) concerning their product’s health, safety,

and environmental effects as a precondition for registering

and marketing pesticide products in the United States.

In order to reduce redundant and costly research on the part

of secondary producers of the same or similar pesticides and

to streamline pesticide registration procedures, the FIFRA

authorized secondary manufacturers to use previously

submitted data in support of the registration of their own

pesticide products.

The FIFRA also instituted a scheme for sharing the costs

of data generation, with a later registrant required to

compensate the initial registrant for its fair share of the costs

of product safety research. The statute required the affected

parties to negotiate the amount of compensation owed, and

if negotiations failed, either could invoke final and binding

arbitration to settle the dispute. If the original data submitter

refused to participate in either the negotiations or arbitration,

it would forfeit its claim to compensation. By the terms of

‘

|

;

17

the Act, arbitral decisions were not subject to judicial review,

absent “fraud, misrepresentation, or other misconduct.”

7 U.S.C. § 136a(c)(1)(D)(i1).

Monsanto Company, a developer and producer of various

kinds of chemical products, including pesticides, challenged

the constitutionality of the FIFRA’s data disclosure provisions

and the use of binding arbitration to détermine its entitlement

to compensation under the Act’s data sharing provisions.

Monsanto alleged that the challenged provisions: (1) effected a

“taking of property without just compensation;” (2) violated

the original data submitter’s due process rights by compelling

binding arbitration; and (3) constituted an unconstitutional

delegation of judicial power.®° Monsanto, 467 U.S. at 999.

This Court held that insofar as the pesticide statute

authorized the EPA to make public trade secrets submitted

between 1972 and 1978, a period during which the registrant

entertained a reasonable, investment-backed expectation that

its trade secret data would be kept confidential, the Act effected

a “taking” for which Monsanto would be entitled to just

compensation under the Fifth Amendment. /d. at 1011.

However, because the Tucker Act remained available as a

remedy for any uncompensated taking, this Court concluded

that Monsanto’s constitutional challenge to the arbitration

and compensation scheme was not yet ripe for resolution.’

6. The district court found the binding arbitration scheme

unconstitutional on its face; being arbitrary and vague and not allowing

for judicial review, except in cases of fraud. Monsanto, 467 U.S. at

1000. However, the district court mistakenly concluded that Tucker

Act remedies were not available to pursue plaintiff's Fifth Amendment

takings claims. /d.

7. In Monsanto, this Court reasoned that the data originator must

first complete arbitration and, in the event of a shortfall, exhaust

its Tucker Act remedies against the United States before it can

be ascertained whether it has been deprived of just compensation.

Id. at 1019.

18

Id. at 1019. Unlike Petitioner in our case, Monsanto did not

allege or establish that it had actually been injured by an

arbitration proceeding under the statute.* Jd.

In contrast to the due process and just compensation claims

presented in Monsanto, the constitutional challenge to the

FIFRA’s compulsory arbitration scheme in Union Carbide had

a somewhat different focus. Union Carbide alleged that the use

of private arbitration violated Article III of the Constitution, an

injury that was not a function of whether the designated tribunal

awarded a reasonable amount of compensation, but of whether

an arbitrator had the authority to adjudicate the dispute at all.

Union Carbide, 473 U.S. at 580.

In deciding to uphold the constitutionality of the FIFRA’s

compulsory arbitration scheme against an Article III attack, this

Court relied on considerations that distinguish Union Carbide

from the dispute that gives rise to this petition.’ First and

foremost, like Monsanto, Union Carbide could avail itself of a

federal judicial forum under the Tucker Act to seek

compensation for any uncompensated “taking” resulting from

the data disclosure provisions of the Act. In our case, Petitioner

is denied a judicial forum by the statute. Second, the right to

compensation from subsequent registrants was not a purely

private right, but bore many of the characteristics of a public

right which did not demand an Article III judicial forum.

Id. at 589. Third, under Article I of the Constitution, the

legislative branch had the power to set up a dispute resolution

mechanism to settle a question of entitlement created by statute.

Id. Finally, historically, judicial review of agency decision

making is required when it results in the use of judicial process

8. In our case, Petitioner suffered a net loss of $1,114 as “just

compensation.”

9. In Union Carbide, this Court did not have to identify the extent

to which due process may require review of determinations by an

arbitrator because, in the proceedings below, the parties abandoned

their due process claims.

DN ci lil a it

ey

TEN) VERS)

AP AAS

OS RT TED

Pee Se ee es

19

to enforce an obligation upon an unwilling defendant.

Id. at 590. Under the FIFRA, all of the participants in the

pesticide program chose to engage in the data registration

process and the only potential object of judicial enforcement

power was the follow-on registrant who explicitly consents to

have his rights determined by arbitration."° /d. In contrast, under

Pennsylvania’s compulsory arbitration statute, Petitioner was

an unwilling partizipant in a non-judicial adjudicative process.

This review of the federal precedents demonstrates that

there is no authority supporting Pennsylvania’s use of

compulsory arbitration to determine what just compensation

shall be in connection with the taking of Petitioner’s property.

To the contrary, all of the cited cases cast doubt on the

constitutionality of the Pennsylvania statute.

C. Pennsylvania’s CATV Act Does Not Stand Up To

Constitutional Scrutiny

In Loretto v. Teleprompter Manhattan CATV Corp., this

Court held that a state may not require a building owner to

grant access te a cable operator to permanently occupy the

premises without just compensation. 458 U.S. at 441. While

the Pennsylvania appeals court conceded that the Act effects a

constitutional taking in our case, it concluded that the provision

under the Act for the payment of damages satisfied any due

process and just compensation requirements implicit in Loretto

even though that amount is determined by a private arbitrator

pursuant to a statutory provision for payment of only nominal

damages. |

In assessing the constitutionality of the Pennsylvania Act

under Loretto’s mandate for just compensation, we note that

10. The voluntary nature of participation in the pesticide program

is akin to the voluntary nature of a private contract to arbitrate, making

this Court’s decision in Union Carbide an extension of the Gilmer line

of cases, while distinguishing it from the case of Petitioner, who has

been compelled to submit to an arbitral forum.

20

the New York statute found by this Court to work an

unconstitutional taking in Loretto also purported to provide

compensation on terms much like that of the Pennsylvania

statute. The New York Statute, § 828 of the Executive Law,

provided that a landlord may not “demand payment from

any CATV company ‘in excess of any amount which the

[State Commission on Cable Television] shall, by regulation,

determine to be reasonable.’ ” Loretto, 458 U.S. at 423. Pursuant

to § 828(1)(b), the State Commission ruled that a one-time

$1 payment was the normal fee to which a landlord was entitled

“in the absence of a special showing of greater damages

attributable to the taking.” Jd. at 424. Prior to the statute, the

cable company customarily paid the landlords a fee of 5% of

gross revenues. /d. at 423.

It is striking that the nominal $1 payment, which was

unconstitutional in Loretto, is identical to the nominal payment

assessed by the arbitrator in the present case, some seventeen

years later. In both instances, moreover, the unconstitutional

nominal fee was arrived at despite empirical evidence that the

owner was deprived of substantially more valuable revenue due

to the taking. The 5% fee that the cable company would have

customarily paid but for New York’s taking statute is identical

to the fee that ACS Enterprises pays to Hill House. In our case,

the statute itself directs the arbitrator to deduce an artificially

low value of what was taken. The statute states “[a] landlord

shall be entitled to just compensation from the operator resulting

from Joss in value of property resulting from the permanent

installation of CATV ...” 68 P.S. § 250.506-B(a) (emphasis

added). The statutory measure of these damages is “‘a decrease

in the resale or rental value of the property resulting from the

installation.” In Loretto, the Commission similarly based its

nominal fee on an assessment of what the landlord would receive

if the property were condemned. As the amount of property

physically occupied is slight, the value of the taking,

disregarding revenue, is deemed always nominal.

— \;-.e. en

:

a

21

We recognize that in concluding Loretto’s artificially

limited compensation regime worked an unconstitutional taking,

this Court did not “presuppose that the fee which many landlords

had obtained from Teleprompter prior to the law’s enactment

is a proper measure of the value of the property taken.” Jd. at

441. While Loretto expressed no opinion as to the proper amount

of compensation due, it plainly stated that the question was one

for the “state courts” to consider. Jd. The two related

implications are that: (1) a procedural regime for compensating

takings that lacks provision for a judicial determination of just

compensation fails to provide an adequate process to value loss

from a taking; and (2) the a priori calculation of loss as nominal

was an inadequate measure of damages.

1. Pennsylvania’s CATV Act Deprives Property

Owners of Due Process by Delegating Judicial

Power to a Private Forum Without Expert

Administrative Oversight or Meaningful Judicial

Review

In the aftermath of Loretto, other states have enacted cable

access laws that have purported to satisfy the just compensation

requirements of Loretto. The Pennsylvania Act pushes the

constitutional envelope farther than any other, presenting by

far the boldest challenge to a building owner’s property rights

and the requirements of due process. The Act deprives owners

subject to physical takings of the due process afforded by

eminent domain proceedings. The Act unconstitutionally

delegates state judicial power to the AAA, a private

organization. This has two consequences. First, it deprives

building owners of procedural due process due to the lack of

expert administrative oversight of the taking process. Second,

the Act restricts judicial review.

Cable access laws in other jurisdictions have been upheld

because some courts have held they provided constitutionally

adequate alternatives to eminent domain and judicial

proceedings in the form of hearings before an expert

a

22

administrative tribunal with broad authority to regulate taking

entities in the public interest. NYT Cable TV v. Homestead at

Mansfield, Inc., 518 A.2d 748, 755 (N.J. Super. 1986), aff'd,

543 A.2d 10 (N.J. 1988); AMSAT Cable Ltd. v. Cablevision of

Ct., L.P., 6 F.3d 867, 874 (2d Cir. 1993); Loretto v. Teleprompter

Manhattan CATV Corp., 446 N.E.2d 428, 433 (N.Y. 1983) (on

remand). But the Pennsylvania Act is utterly unique in

delegating the power to condemn to a private forum without

any administrative or regulatory oversight. States that delegate

cable takings to agencies do not just off-load property owners

from the civil justice system for convenience and out of

contempt for the Constitutional interests at stake. For example,

New Jersey’s alternative to eminent domain allegedly satisfies

due process because of “the specialized nature and regulatory

requirements of the cable television industry . . .” The Cable

Television Act “recognizes these factors and reflects a legislative

intent that the BPU determine all matters necessary to the

enforcement of the act.” NYT Cable at 755. In upholding the

New Jersey statute’s due process provisions, the court

specifically rested its decision on the fact of a comprehensive

regulatory regime that severely constrains cable providers to

standards of public service and accountability. Jd. at 755

(“the administrative power under the Cable Television Act is

very broad” and “expressly includes the power to ‘supervise

and regulate’ the ‘contracts’ entered into by every CATV

company.”)

The constitutionality of Connecticut’s alternative to judicial

process and eminent domain was similarly premised on the

diversion to an administrative tribunal of disputes concerning

matters within the jurisdiction of the agency that conducts the

tribunals: the Department of Public Control. AMSAT at 874

(owners may petition the department for additional

compensation). Moreover, the AMSAT court makes much of

the owner’s recourse, under Connecticut’s scheme of

administrative justice, to judicial review of “all facts presented

in the administrative record.” Thus, the court stressed, “any

-23

alleged constitutionally under-compensated taking approved

by the administrative agency can be challenged on appeal.”

Id. at 875. In dramatic contrast, the Pennsylvania statute only

allows appeal of the amount of lost value resulting from the

taking which, as discussed below, will always be a nominal

value.

The alleged constitutionality of New York’s process is

premised on the aforementioned factors of administrative

oversight absent from the Pennsylvania statute. Loretto on

remand, 446 N.E.2d at 433 (N.Y. 1983), stresses that the statute

satisfies due process by virtue of providing an expert

administrative alternative to a judicial forum, and by broad

judicial review following disputed administrative adjudications.

New York law provided for independent judicial determination

of any constitutional issue raised in an administrative hearing,

and provided for review of any regulation or determination

(such as a nominal method of valuing just compensation).

2 N.Y. Jur. 2d Admin. Law §§ 314, 317. The Loretto statute,

New York’s Executive Law Art. 28, §§ 811-31, 18 McKinney

Exec. Law 811, et seq. (1982) (repealed 1995), gave the Cable

Commission broad power to regulate cable providers, including

the power to ensure that providers did not “unreasonably delay”

the provision of service to “any person or area” within

the franchise territory. 18 Executive Law § 824 (1982).

The Commission is specifically entitled to order service that

it deemed “in the public interest.” Compare this to the

Pennsylvania case where the power of condemnation is

delegated to the cable company with no corresponding public

duties, and where the AAA adjudicator has no peculiar

jurisdiction over cable matters or power to regulate and enforce

standards on the cable provider.

In Illinois, the court in Times Mirror Cable Television v.

First Bank of Springfield, 582 N.E.2d 216 (Ill. App. 1991) found

that the cable access statute’s diversion of cable cases from

eminent domain proceedings satisfied due process because the

24

owner was entitled to a judicial proceeding and trial by jury to

determine just compensation. /d. at 219. The holding is simply

that the owner is not entitled to stay access during the pendency

of his suit, as he would be able to in an eminent domain

proceeding. The procedural issue in 7imes Mirror is entitlement

to a pre-deprivation hearing, a very modest constraint compared

to that under the Pennsylvania law.

The cases that find cable access laws that deprive owners

of eminent domain proceedings constitutional turn on the

premise that deprivation of a right to judicial procedure is

justified by access to administrative agency hearings and

by broad, if not de novo, rights of judicial appeal. But

Pennsylvania’s access law provides no such hearing. And while

judicial review might conceivably solve the due process problem

of consigning owners’ claims to non-contractual arbitration, the

Act impermissibly limits judicial review of just compensation.

The Act limits the right of appeal to the court of common

pleas merely to the issue of the determination of lost value.

See 68 P.S. § 250.506-B(b)(4). That provision fails to comply

with the constitutional mandate of due process, unless the

streamlined adjudicative process has first been agreed to by the

parties or the owner has a right to a judicial determination on

appeal. Compulsory arbitration, coupled with limited review,

is all that the Act provides owners in terms of due process.

2. Pennsylvania’s CATV Act Denies Property Owners

Just Compensation by Ascribing Only a Nominal

Value to Their Loss

This Court has held that “just compensation” for a physical

taking should put the owner in as good a pecuniary position as

he would have been but for the taking, and no eminent domain

doctrine is to the contrary. Olson v. United States, 292 U.S.

246 (1934); see Kirby Forest Indus., Inc. v. United States, 467

U.S. 1, 11 (1984) (though not mandated, interest on takings

may be needed to put owner in as good a position pecuniarily).

Because “the basic principle” of takings compensation is

25

indemnity, measures other than diminution in market value of

remaining property are often needed for Constitutionally

adequate just compensation. United States v. 564.54 Acres of

Land, PA., 506 F.2d 796, 799 (3d Cir. 1974); see also United

States v. 564.54 Acres of Land, PA., 441 U.S. 506, 512 (1979).

Where taken property interests “have no marketplace,” a fair

measure of the government’s obligation to indemnify “may be

the present value of capitalized future earnings.” 564.54 Acres,

506 F.2d at 799. Indeed, departure from the indemnity principle

is justified only by need for an objective, workable measure of

loss. 564.54 Acres, 441 U.S. at 512. Under United States v.

Fuller, 409 U.S. 488, 490 (1973) and 564.54 Acres, 441 U.S. at

512, the legislature may not arbitrarily rule out from judicial

consideration the only form of compensation appropriate to

indemnify the pecuniary in question: fair market value measured

as the present value of the revenue stream from the taken

property."

While there is no “marketplace” for the space in Hill

House’s wall cavities and on the exterior of its building

that Comcast proposes to occupy, the commercial value of

that property is shown by the 5% commission that

ACS Enterprises contracts to pay Hill House for exclusive

access. When franchised cable is installed in a building, the

owner is prevented from exclusively contracting to provide his

tenants with comparable satellite-based service such as that of

ACS Enterprises. A court, engaged in the judicial determination

of just compensation, might find that the true measure of

economic loss to apartment building owners is not the reduction

of property value but the value of lost revenue stream that the

owner was realizing by contracting for provision of private

cable. Such contractual earning potential increases present value

11. For example, in cases involving land containing minerals,

value of mineral-bearing land is determined by the “income

capitalization method, in which the income stream from the sale of

minerals over a number of years is capitalized in terms of present worth.”

United States v. 47.14 Acres of Land, 674 F.2d 722, 726 (8th Cir. 1982).

26

of the property. Such increase in present value is the subject

of the taking. At the very least, the owner must have some

ability to argue to a court that just compensation for taking

his or her right to grant exclusive use of the property is the

pecuniary value of revenue lost thereby.

But, under the Act, the owner is denied any ability

even to argue for that measure of just compensation to

a court. The Act provides only that, “A landlord shall

be entitled to just compensation from the operator resulting

from Joss in value of property resulting from the permanent

installation of CATV system facilities on the premises.”

68 P.S. § 250.506-B(a). The statutory measure of these

damages is “a decrease in the resale or rental value of the

property resulting from the installation.” Thus, loss of

revenue is arbitrarily defined as non-compensable. Moreover,

this is a strictly a legislative determination. While the statute

provides for appeal to a court of common pleas, such appeal

is limited to “to amount awarded for loss of value or for

physical damages to the property.” Jd. at § 250.506-B(b)(4).

The Act does not provide for any judicial challenge to the

legislatively-determined “loss of value” measure of damages.

In Loretto, this Court declined to rule on the

Constitutional adequacy of the valuation of the loss before

the state court did so on remand. Loretto, 458 U.S. at 441.

The court’s comment that it did not presuppose that just

compensation would be the same 5 percent royalty on the

cable company’s receivables does not imply that a legislative

determination that merely nominal valuation is available

would suffice. But that is the conclusion that some courts

have drawn. Some post-Loretto cable access cases, including

Loretto on remand to the New York courts, uphold statutes

that effectively ascribe a nominal value to owners’

Constitutionally protected property interests (but, as noted

above, these cases all provide additional procedural due

27

process that may redeem the statutes).'? Loretto v. Teleprompter

Manhattan CATV Corp., 446 N.E.2d 428 (N.Y. 1983);

NYT Cable TV v. Homestead at Mansfield, Inc., 518 A.2d 748,

752-53 (N.J. Super. 1986), aff'd, 543 A.2d 10 (N.J. 1988);

Cablevision of the Midwest, Inc. v. Gross, 639 N.E.2d 1154

(Ohio 1994); Princeton Cablevision, Inc. v. Union Valley Corp.,

478 A.2d 1234 (N.J. Super. Ch. 1983). The statutes are upheld

as providing an individualized determination of compensation,

as opposed to a fixed provision for nominal compensation.

Loretto, 446 N.E.2d at 433 (provision for nominal compensation

“by regulation” was the only constitutional problem). AMSAT

Cable Ltd. v. Cablevision of Ct., 1.P., 6 F.3d 867, 875 (2d Cir.

1993) holds that the Connecticut mandatory cable access statute

provides just compensation because it “does not appear to

prescribe a binding rule with respect to the ascertainment of

just compensation.” See also Michigan Court of Appeals in

City of Lansing v. Edward Rose Realty, Inc., 502 N.W.2d 638

(Mich. 1993) (condemnation proceedings to gain access to

easements for a cable company was unconstitutional where

landlord already provided comparable programming.)

The Pennsylvania statute is constitutionally flawed because

it prescribes a “binding rule” that owners may receive only

nominal compensation, with no possibility of overcoming that

presumption. An award of nominal damages is never

constitutionally adequate compensation for the taking of

demonstrably valuable property interests such as that here.

12. Neither the Loretto plaintiff nor any member of the certified

class ever made application to the Cable Commission for just

compensation. Loretto v. Group W. Cable, 522 N.Y.S.2d 543, 545

(1st Dept. 1987). The plaintiff did, however, seek attorney fees as a

prevailing Section 1983 litigant. The court held that the fee claim was

unripe because the plaintiff would have to apply for compensation and

be disappointed in order to prove deprivation, and this Court denied

certiorari on this unrelated issue. Loretto v. Group W. Cable, 488 U.S.

827 (1988).

28

3. Pennsylvania’s CATV Act Effects a Second

Uncompensated Taking by Requiring Property

Owners to Pay for Private Arbitration

Not only does the Act arbitrarily rule out appropriate forms

of just compensation, it penalizes the owner by forcing him to

pay for half the costs of the proceedings by which his property

is taken involuntarily. See 68 P.S. § 250.506-B(b)(4),(5).

By cynical design, the Act nullifies the owner’s right —

inadequate in the first instance — to a determination of

just compensation. It does so by always imposing a de facto

penalty on the disputing owner that vastly exceeds the nominal

compensation he may recover. The effect is to coerce

acquiescence by penalizing the assertion of what Pennsylvania

admits are constitutional rights.

Petitioner has noted above that decisions in several states

uphold statutes that artificially ascribe nominal value to owners’

Loretto rights. However, there is no precedent at all for imposing

a financial penalty — a second taking — on property owners

who have the temerity to demand an individualized accounting

of compensation. On this, the Pennsylvania requirement that

owners pay half of the cable company’s costs of taking the

owners’ property is uniquely infirm. Pennsylvania’s statute not

only artificially imposes a nominal value on an owner’s

constitutionally protected interests, it also makes him or her

pay a substantial penalty for exercising an admittedly quixotic

right to just compensation.

29 ee

CONCLUSION

In light of the foregoing, Petitioner respectfully requests

that this Court grant its Petition for Certiorari.

Respectfully submitted,

STEVEN M. CorREN

Counsel of Record

BRUCE BODNER

BRUCE BELLINGHAM

KAUFMAN, COREN, REss

& WEIDMAN, P.C. |

Attorneys for Petitioner |

1525 Locust Street :

17th Floor

Philadelphia, PA 19102

(215) 735-8700