Federal Judge Rejects Displaced Cable Company Suit Against Town of Houlton

Second Major Legal Setback in Two Months for Cable Providers in Maine; Court Decision to Reverberate in Municipalities Throughout the State

BANGOR, Maine - A federal judge's ruling upholding the Town of Houlton's decision to discard its long-time cable TV operator in favor of another provider in a dispute over quality and services may loosen the hold cable operators have over communities throughout Maine, a lawyer for the town said.

The decision by U.S. Magistrate Judge Margaret J. Kravchuk dismissed the final counts of a lawsuit filed last year by Houlton Cable against the Town of Houlton after town officials sought bids and then came to terms with a new cable TV operator.

The ruling should send a message to all cable TV providers in Maine, said Houlton's attorney, Lee K. Bragg of Bernstein, Shur, Sawyer & Nelson. "It's difficult for a town to divorce itself from its cable TV provider, and towns across the state have generally felt that they have no choice other than to renew the franchise of the existing company," Bragg said. "The Houlton case establishes a procedure which should help other towns create a level playing field with cable companies."

The judge's decision is the second major legal victory for a municipality embroiled in a dispute with its cable TV provider over a franchise agreement. (Media note: The case, 00-CV-130, is on file in U.S. District Court in Bangor. For a faxed copy of the decision, call 775-5115.)

Houlton Cable had provided service to Houlton residents for 15 years, but negotiations on a new franchise agreement broke down and the town sought a new provider. The town's action is believed to mark the first time in Maine that a community has succeeded in dropping its cable TV provider during a franchise renewal, against that provider's wishes.

"As a result of this decision, cable operators all over Maine should know that it is in their best interest to provide quality service and negotiate in an even-handed way with towns and cities when cable franchise contracts come up for renewal," said Joseph J. Hahn, a top litigator at Bernstein, Shur who along with Kate S. Debevoise assisted Bragg in successfully defending the lawsuit.

Houlton's legal victory comes on the heels of a federal judge's March dismissal of a lawsuit brought by cable giant Adelphia Communications against the small town of Naples. The judge's ruling in the Naples case, defended as well by Bernstein, Shur municipal lawyers, permits that town to seek competing proposals for cable services.

As a result of the two recent court cases, Bragg said, cable providers across Maine are now on notice that towns can seek competing proposals and can refuse to renew franchises with current providers in certain situations.

In the Houlton case, Houlton Cable and the town negotiated for nearly a year before the Town Council decided that the cable company could not meet the needs of the community in several areas, including quality of programming, quality of service and high-speed Internet access, Bragg said. After receiving input from citizens at public hearings, the council decided to solicit proposals from other cable providers based on a model franchise agreement that the council determined would meet the town's needs.

Pine Tree Cablevision, a company with 26 franchises in the Machias area and numerous franchises outside of Maine, was awarded a contract. Houlton Cable filed a four-count complaint in U.S. District Court in Bangor seeking to preserve its franchise. But, through a combination of dismissal and summary judgement motions, each of the company's claims were rejected. The judge's final order was handed down in mid-April.

The new legal clout given municipalities comes as Adelphia, one of the nation's largest cable companies, is trying to renegotiate the terms of an historic transfer agreement with towns across the state.

In 1999, Bragg and one of his partners, Patrick J. Scully, represented a consortium of 56 towns throughout Maine that had been asked to approve the transfer of existing franchises as part of Adelphia's $2.1 billion purchase of FrontierVision. That effort concluded with the signing of a transfer agreement that gave the towns a number of benefits that had not existed in the individual franchise agreements. Those benefits included an agreement to rebuild the cable systems in Maine within three years to state-of-the-art fiber optic systems, and Adelphia's agreement to provide free high-speed Internet access to all of the towns' schools, libraries and other public buildings. It was hailed as a major victory for the Maine towns.

The Town of Houlton's legal victory may be viewed as an incentive for Adelphia, which currently has approximately 200 franchises in Maine, to live up to the terms of that agreement in those communities, Bragg said.

Cities in the 1999 agreement include Lewiston, Auburn, Augusta, Waterville, Gardiner and Hallowell. The towns include Anson, Baileyville, Baldwin, Bethel, Buxton, Camden, Carrabassett Valley, Coplin, Damariscotta, Glenburn, Greenbush, Harrison, Hiram, Hollis, Jay, Limerick, Limington, Lisbon, Litchfield, Manchester, Mechanic Falls, Mount Vernon, Naples, New Portland, Newcastle, Newry, Norway, Oxford, Paris, Parsonsfield, Poland, Porter, Readfield, Searsport, Sidney, St. George, Smithfield, Standish, Tremont, Vinalhaven, Waldoboro, Waterboro, West Paris, Windham, Windsor, Winslow, Winterport, Winthrop, Wiscasset and Woodstock.

Lee K. Bragg is a senior municipal lawyer at Bernstein, Shur and manages the largest municipal law practice in Maine, representing more than 40 municipalities as general or special counsel on a wide range of municipal issues.

Joseph J. Hahn of Freeport is one of the state's leading labor litigation attorneys and is chair of the Employment Law Practice Group at Bernstein, Shur. Kate S. Debevoise, a resident of Yarmouth, is a member of the firm=s Employment Law Practice Group and concentrates her practice in employment law, labor and business-related litigation in state and federal courts and agencies.

Bernstein, Shur, Sawyer & Nelson is one of northern New England's largest law firms, with more than 65 attorneys in offices in Portland and Augusta. The firm practices in a number of areas, including corporate and commercial law, litigation and trials, municipal and governmental affairs, tax and estate planning, international and immigration matters, health law, employment and labor law, legislative representation and intellectual property, construction law, high technology and e-commerce practice.

Bernstein, Shur's web site at http://www.mainelaw.com was the first of its kind when launched in 1995, and is now available in six languages for the convenience of its many foreign clients. Bernstein, Shur also is the only Maine law firm that is a member of Lex Mundi, an international association of 151 law firms located in all major economic centers in the world.

# # #