Cox Cable San Diego, Inc. v. City of San Diego

On December 28, 1984, Cox gave City written notice under the act Cox intended to deregulate its subscriber rates and would “be exempt from control by [City] as to rates, charges and rate structures.” (§ 53066.1, subd. (a).) City acknowledged Cox’s notice January 11, 1985, and asserted as a charter city it was not bound by the provisions of the act; it would continue to regulate rates under the franchise. City warned Cox any attempt by Cox to deregulate rates would be considered a violation of the franchise which might result in legal action.

Representatives of Cox and City met February 14, 1985, to try to resolve the dispute. When such was not resolved, Cox filed its complaint for declaratory relief February 28, 1985, to determine the validity of the act. City answered April 2, 1985.

Cox sought and was granted an order shortening time for filing a summary judgment motion. In addition to Cox’s points and authorities and declarations in support of the motion and City’s opposition points and authorities, the County of San Diego (County) filed opposition as amicus curiae. Neither City nor County submitted declarations in opposition.

The motion was heard June 5, 1985, and judgment was entered in favor of Cox. The court specifically found:

“1. The development and regulation of cable television is a matter of statewide concern.

“2. On its face, California Government Code section 53066.1 is constitutional.

“3. California Government Code section 53066.1 applies to a chartered city.

“4. The State of California has preempted the regulation of cable television to the fullest possible extent by means of California Government Code section 53066.1.

“5. The attempt by the City to regulate cable television is a governmental function, not a proprietary function.

. “6. California Government Code section 53066.1 is constitutional as applied to the City of San Diego.

“7. The City of San Diego does not have standing to claim that California Government Code section 53066.1 impairs its franchise with Cox.

“8. The City of San Diego is a political subdivision of the state and, therefore, does not have standing to raise the defense of impairment of contract.

“9. The objections of the City of San Diego to evidence presented by Cox Cable San Diego, Inc. in support of its motion for summary judgment are overruled.”

On appeal, City challenges the court’s grant of summary judgment, contending the act is an unconstitutional attempt by the state Legislature to preempt a municipal affair, the act constitutes an unconstitutional impairment of contractual rights under the franchise, and the trial court erred in overruling City’s evidentiary objections to the declarations filed in support of the summary judgment motion. County has again filed an amicus curiae brief in support of City’s impairment of contract argument.

We shall conclude the act manifests a statewide concern and intent to occupy and exempt cable rate regulation by local government entities under certain conditions which have been satisfied here by Cox, the act does not unconstitutionally impair the contractual rights of the parties, and the trial court properly overruled objections to Cox’s supporting declarations.

The California Constitution provides a chartered city has autonomy over its “municipal affairs.” (Cal. Const., art. XI, § 5, subd. (a).) Thus, a chartered city’s ordinances which deal with purely municipal affairs are valid even if they conflict with general laws.

“As to matters which are of statewide concern, however, home rule charter cities remain subject to and controlled by applicable general state laws regardless of the provisions of their charters, if it is the intent and purpose of such general laws to occupy the field to the exclusion of municipal regulation (the preemption doctrine). [Citations.]” (Bishop v. City of San Jose (1969) 1 Cal.3d 56 , 61-62 [ 81 Cal.Rptr. 465 , 460 P.2d 137 ].) Although cities may legislate upon matters of statewide concern, in the event of conflict with the state law, state law controls. (Pipoly v. Benson (1942) 20 Cal.2d 366 , 369-370 [ 125 Cal.Rptr. 482 , 147 A.L.R. 515 ].)

Whether the Legislature intended to preempt the particular field to preclude local regulation is answered by looking to the whole purpose and scope of the legislative scheme. (Galvan v. Superior Court (1969) 70 Cal.2d 851 , 859 [ 76 Cal.Rptr. 642 , 452 P.2d 930 ]; In re Lane (1962) 58 Cal.2d 99 , 102-103 [ 22 Cal.Rptr. 857 , 372 P.2d 897 ].) “The task is ... to determine whether the state has occupied a relevant field—an area of legislation which includes the subject of the local legislation, and is sufficiently logically related so that a court, or a local legislative body, can detect a patterned approach to the subject.” (Galvan v. Superior Court, supra, 70 Cal.2d at p. 862.)

Generally, the doctrine of state preemption will not apply unless: “(1) the subject matter has been so fully and completely covered by general law as to clearly indicate that it has become exclusively a matter of state concern; (2) the subject matter has been partially covered by general law couched in such terms as to indicate clearly that a paramount state concern will not tolerate further or additional local action; or (3) the subject matter has been partially covered by general law, and the subject is of such a nature that the adverse effect of a local ordinance on the transient citizens of the state outweighs the possible benefit to the municipality.” (In re Hubbard (1964) 62 Cal.2d 119 , 128 [ 41 Cal.Rptr. 393 , 396 P.2d 809 ], overruled on other grounds in Bishop v. City of San Jose, supra, 1 Cal.3d 56 at p. 63, fn. 6.)

“The issue of ‘paramount state concern’ also involves the question ‘whether substantial, geographic, economic, ecological or other distinctions are persuasive of the need for local control, and whether local needs have been adequately recognized and comprehensively dealt with at the state level.’ [Citation.]” Galvan v. Superior Court, supra, 70 Cal.2d 851 at pp. 863-864.)

Section 53066 is specific legislation covering the development and regulation of cable television systems within California and does not distinguish between general law counties and cities and chartered counties and cities. City thus falls under the class of entities covered by section 53066.

In 1979, the Legislature added section 53066.1 (Stats. 1979, ch. 1086, § 1, pp. 3920-3924) prescribing terms and conditions under which a cable television franchisee could elect to be exempt from a franchisor’s regulation or control of rates, charges and rate structures or to adjust its rates within certain time limits. Section 53066.1 was amended in 1982 (Stats. 1982, ch. 679, § 2, pp. 2770-2779), repealed (Stats. 1982, ch. 1256, § 1, p. 4610), and again added (Stats. 1982, ch. 1256, § 3, pp. 4613-4622), revising the conditions enabling a franchisee to elect to continue to be exempt from local rate regulation or to unilaterally adjust its rates. In 1983, the Legislature again amended this section to add more stringent criteria with which a franchisee must comply before electing to deregulate. (Stats. 1983, ch. 1142, § 2, pp. 4318-4327.)

In an investigation conducted before the August 30, 1982, amendment to the act, the Legislature found that: “(1) The cable television industry is an important news, entertainment, and information service whose economic health and continued growth and development are in the best interests of the people of the State of California and are matters of statewide concern.

“(2) Cable television is an important source of news, information, culture, and ideas, entitled to the full protections afforded by the First Amendment to the United States Constitution and subdivision (a) of Section 2 of Article I of the California Constitution.

“(4) The expansion of cable television channel and service capacity and the provision of community service programming is in the best interests of the people of the State of California.

“(5) The regulation of subscriber rates, charges, or rate structures established by a cable television system is a matter of statewide concern; accordingly, the state hereby preempts under the terms and conditions prescribed by this act any control or regulation of subscriber rates, charges, or rate structures heretofore or hereinafter established by any franchisor . . . .” (Stats. 1982, ch. 679, p. 2770.)

Under the current rendition of section 53066.1, subdivision (m)(5), “franchise” is defined as “any franchise or license granted pursuant to Section 53066, or any other authority, for the construction or operation of a cable television system.” Under subdivision (m)(6), “franchisor” means “any city, county, or city and county, including any chartered city, county or city and county, granting a franchise.” Thus, the Legislature has specifically shown its intent to include City within its scheme of cable television regulations.

In subdivision (p), the Legislature recognizes the statewide concern of cable television regulation and “finds and directs that the exercise of the police power of the State of California concerning cable television should, except as otherwise directed by the Legislature, remain in the cities, counties, or cities and counties____” Subdivision (p) also sanctions the right of local entities to contract with cable television companies, subject to the proper limits of the entities’ police power.

Subdivision (q) explicitly states section 53066.1 “shall establish the state’s preemption ... of the control and regulation of cable television subscriber rates, charges, and rate structures heretofore or hereinafter established by any franchisor pursuant to Section 53066, to the extent that such control or regulation is inconsistent with this section.” With this subdivision, the Legislature plainly expresses its intent to exclude the field of cable television regulation except in areas it specifically grants to local governments like City.

Other sections of the act set forth specific procedures and remedies open to local government, and for the benefit of individual subscribers, to contest deregulation, and police violations of noncompliance by cable companies

At the time the franchise agreement was made, section 53066 allowed City to regulate subscriber rates under the franchise/ordinance. When section 53066.1 was enacted, the Legislature expressly provided Cox with the right to deregulate its rates if it met certain conditions. City does not contest the fact Cox has met these conditions.

Given the Legislature’s patterned approach to cable television development, which recognizes the geographical need to have local authority oversee the development of and services provided by cable companies, the nationwide concern of cable communications, and the parties’ awareness state or federal law could in the future preempt the parties’ rights and obligations under the franchise agreement, we find the act constitutionally legislates a matter of statewide concern and its cable rate deregulation provisions constitutionally preempt City’s right to regulate Cox’s subscriber rates.

V

The granting by City of a cable franchise is a legislative act (Orange County Cable Communications Co. v. City of San Clemente (1976) 59 Cal.App.3d 165 , 171 [ 130 Cal.Rptr. 429 ]), and establishes a contractual relationship between City and Cox (City of Lafayette v. American Television & Communication Corp., supra, 98 Cal.App.3d 27 at p. 31). City complains the application of section 53066.1 unconstitutionally impairs the obligation of that contract.

It is well settled the constitutional prohibition against impairment of contractual obligations is not absolute; “contract rights, as all other property rights, may be altered by legislation validly enacted under the states’ police power.” (Donlan v. Weaver (1981) 118 Cal.App.3d 675 , 682 [ 173 Cal.Rptr. 566 ].) The question becomes whether the change in contractual rights and obligations effected by the statute, the impairment, is “ ‘ “sufficiently necessary to the public welfare as to justify the impairment.” ’ [Citations.]” (In re Marriage of Bouquet (1976) 16 Cal.3d 583 , 592 [ 128 Cal.Rptr. 427 , 546 P.2d 1371 ]; see Olson v. Cory (1980) 27 Cal.3d 532 , 539 [ 178 Cal.Rptr. 568 , 636 P.2d 532 ].) And “the single most important factor to be considered in determining whether a particular impairment is constitutionally permissible is the nature and extent of the impairment.” (Donlan v. Weaver, supra, 118 Cal.App.3d at p. 682.) Other factors to consider are the nature and importance of the interest served by the challenged legislation and whether the legislation is “appropriately tailored and limited” to the purpose for its enactment. (Ibid.)

Weighing these factors here, we conclude section 53066.1 does not unconstitutionally impair the obligation of contracts; any impairment is minimal and a proper exercise by the state of its police power in an industry affected with a public interest.

The reasonable governmental regulation of rates and tariffs in industries affected with the public welfare has long been established as a proper exercise of the police power. (Law v. Railroad Commission (1921) 184 Cal. 737 , 739 [ 195 P. 423 , 14 A.L.R. 249 ]; Ray v. Parker (1940) 15 Cal.2d 275 , 280-281 [ 101 P.2d 665 ].) Cable television has been determined to be an industry affected with the public welfare. (See 66 Ops.Cal.Atty.Gen. 418 (1983); 54 Ops.Cal.Atty.Gen. 135 (1971).) For the same reasons section 53066.1 preempts City’s conflicting rate regulation provision, section 53066.1 serves substantially and significantly the interest of the state.

Wiener, Acting P. J., and Work, J., concurred.