Town of Naples Wins Legal Battle Against Adelphia Communications

Federal Court Rejects Cable Company's Lawsuit Against Town; Court Decision to Have Statewide Impact

A small town in Maine quietly prevailed against one of the nation's largest cable companies this week when a federal judge dismissed a lawsuit brought by Adelphia Communications against the Town of Naples in U.S. District Court.

"The lawsuit was a classic example of a cable company trying to bully a small town after negotiations broke down over the renewal of the cable television franchise agreement," said municipal attorney Patrick J. Scully of Bernstein, Shur, Sawyer & Nelson, who represents Naples in the cable franchise renewal process. The franchise agreement would allow Adelphia to provide cable service in Naples.

The court decision is likely to have far reaching impact, benefiting other Maine towns in their franchise renewal negotiations with Adelphia, which provides cable service to more than 200,000 Maine homes in more than 100 towns and cities.

A U.S. District Court judge in Portland rejected all of the legal claims asserted by Adelphia in the lawsuit, which was filed by the Pennsylvania-based communications company earlier this year.

"After 18 months of negotiations, the Town of Naples was unable to reach an agreement with Adelphia. But instead of working it out with the town, Adelphia sued Naples in a heavy handed attempt to bully this small town into accepting Adelphia's terms," said Scully. "So we are very happy the court decided in our favor and to throw the case out, as it had absolutely no merit. It's a real David and Goliath story."

Litigators Kate S. Debevoise and Joseph J. Hahn of Bernstein, Shur also represented the Town of Naples in the Adelphia lawsuit. "It was clear going into the case that Adelphia did not want to negotiate in good faith with the town," said Hahn. "So when the town refused to accept Adelphia's terms, Adelphia ran to court in an effort to prevent the Town from voting to reject Adelphia's one-sided proposal. We were able to show the court that the town had acted lawfully and in good faith throughout the renewal process."

The town's franchise agreement with Adelphia's predecessor, FrontierVision, expired in March 2000, a few months after Adelphia's $2.1 billion purchase of cable systems in Maine and other states, including the system serving Naples.

After 18 months of negotiations without reaching an agreement, the Town of Naples scheduled a meeting of its Board of Selectmen on January 22 of this year to decide whether to deny Adelphia's formal franchise renewal proposal and to adopt a cable ordinance. The morning before the meeting, however, Adelphia filed a lawsuit in federal court, seeking a court order blocking the meeting, in order to prevent the Town from acting to deny the Adelphia renewal proposal and to prevent the Town's Selectmen from acting to adopt the ordinance.

In his decision, U.S. Magistrate Judge David M. Cohen rejected all of Adelphia's claims. The court found that the town's delay in acting on Adelphia's 1999 formal renewal proposal while the parties engaged in months of informal negotiations did not violate Adelphia's rights, that Adelphia had waived any objection to the delay and that the delay was harmless error. The court further rejected Adelphia's request that the town be blocked from adopting a cable ordinance, concluding that courts cannot block, in advance, the action of towns in adopting ordinances.

"The decision really rejects all of Adelphia's arguments and supports the process the Town has followed in good faith over the last two years," added Scully. "Other towns served by Adelphia should take note, however, because the message this case sends is clear. Adelphia has proven to be very difficult to negotiate with, and appears to prefer to sue towns rather than to sit down and deal with them fairly. But in this case, the town won."

A prime example of Adelphia's stalling measures, he said, was Adelphia's refusal to comply with the terms of an agreement it negotiated and signed with 56 Maine towns at the time Adelphia bought its systems in Maine, an agreement Scully negotiated on behalf of the towns. The 16-page agreement with Adelphia in which the towns approved Adelphia's acquisition of the Maine cable systems was finalized in August 1999. In exchange, Adelphia agreed to several major benefits for the towns and their residents, including 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 a major victory for the towns and hailed as an historic agreement for the Maine towns.

"Towns beware, as Adelphia now refuses to honor those commitments, and will not sign new cable franchise agreements unless the towns agree to waive all of their benefits under that 1999 agreement," Scully said.

"How can towns negotiate with a company that refuses to comply with its past agreements? We can only hope that the court's decision will encourage Adelphia to begin dealing with its communities in good faith as a partner rather than an adversary," Scully added.

Cities included in the 1999 agreement include Lewiston, Auburn, Augusta, Waterville, Gardiner and Hallowell, and 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.

Scully, a resident of Brunswick, concentrates his practice in the areas of municipal and administrative law, telecommunications and public utilities. He serves numerous Maine towns in legal and public finance matters. He is a 1984 magna cum laude graduate of the University of Maine School of Law and a 1979 graduate of Dartmouth College in Hanover, New Hampshire.

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 on 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 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.
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