American Tower Archives » Dr. Jonathan L. Kramer on Wireless Siting & Law

TriStar v. American Tower (It’s Over)

Posted on September 8, 2014 by Dr. Jonathan L. Kramer

After a few years (and no doubt millions of dollars in legal fees), TriStar and American Tower have agreed to an out of court settlement.

As you’ll recall from my original post on this lawsuit back on February 19, 2012 TriStar sued American Tower claiming

Count 1: Violation of the Lanham Act, 15 U.S.C. 1125(a)
Count 2: Unfair Competition
Count 3: Business Disparagement
Count 4: Tortious Interference with Existing Contract
Count 5: Tortious Interference with Prospective Business Relations
Count 6: Breach of Contract

Not surprisingly, the settlement stipulation does not disclose any of the material detailed of the agreement behind the agreement.

Here’s the stipulation resulting in the dismissal of the case: tristar.dismissal.17718294804.

Jonathan

Powerful Decision in American Tower v. San Diego

Posted on August 15, 2014 by Dr. Jonathan L. Kramer

The U.S. Court of Appeals for the Ninth Circuit has issued (and set for publication) what will inevitably become a heavily cited decision about wireless siting. This case is the logical next step in the line of MetroPCS v. San Francisco and T-Mobile v. Anacortes, albeit not as the wireless industry would have it.

From the Court’s summary (not a part of the case decision):

The panel affirmed in part and reversed in part the district court’s summary judgment on claims that the City of San Diego’s denial of continual use permit applications for telecommunications facilities violated the California Permit Streamlining Act, the federal Telecommunications Act, California Code of Civil Procedure § 1094.5, and the Equal Protection Clause.

Reversing the district court’s summary judgment in favor of the plaintiff on its claim that the City violated the time limits of the Permit Streamlining Act, the panel concluded that the permit applications were not deemed approved before the City denied them because “the public notice required by law” did not “occur.”

The panel affirmed the district court’s summary judgment in favor of the City on the other claims. The panel held that under the Telecommunications Act, the City’s decision to deny the permit applications was supported by substantial evidence, and the City did not misapply its Land Development Code. The permit denial did not constitute unreasonable discrimination among functionally equivalent service providers because the plaintiff and the City were not functionally equivalent providers. The permit denial did not constitute an effective prohibition of personal wireless services because the plaintiff did not demonstrate that its proposals were the least intrusive means of filling a significant gap in coverage.

The panel held that the plaintiff could not prevail under Cal. Civ. Proc. Code § 1094.5 because it did not have a fundamental vested right to the continued use of its facilities. The panel held that the permit denial did not violate equal protection because it was rationally related to the City’s legitimate interest in minimizing the aesthetic impact of wireless facilities and in providing public communications services.

Regarding the Telecommunications Act claims from the decision:

ATC advances three claims under the TCA. First, ATC claims that the City’s decision to deny the CUP applications was not supported by substantial evidence because the City misapplied its own Land Development Code. See 47 U.S.C. § 332(c)(7)(B)(iii). Second, ATC claims that the City’s denial of the CUP applications constituted unreasonable discrimination among providers of functionally equivalent services. See id. § 332(c)(7)(B)(i)(I). And third, ATC claims that the City’s denial of the CUP applications constituted an effective prohibition of personal wireless services. See id. § 332(c)(7)(B)(i)(II). We affirm the district court’s grant of summary judgment in favor of the City on all three claims. The City evaluated the CUP applications under the proper provision of the Land Development Code and supported its decision to deny the CUP applications with substantial evidence. In addition, the City did not unreasonably discriminate among providers of functionally equivalent services because ATC and the City are not functionally equivalent providers. Finally, ATC’s effective prohibition claim fails because ATC did not demonstrate that its proposals were the least intrusive means of filling a significant gap in coverage.

As to which side gets to decide “least intrusive means” the court said:

During the review process, ATC rejected relocation of the facilities or modifications that involved reduction in height or redesign of the towers. ATC essentially insisted that the City accept ATC’s conclusion that the existing facilities were the “least intrusive means,” without offering a feasibility analysis of alternative designs or sites for the City to reach its own conclusion. In effect, ATC would make the applicant—rather than the locality—the arbiter of feasibility and intrusiveness, gutting the “least intrusive means” standard with predictable, applicant-friendly results.

As we explained in MetroPCS, Inc., the “least intrusive means” standard “allows for a meaningful comparison of alternative sites . . . [and] gives providers an incentive to choose the least intrusive [means] in their first [ ] application[].” 400 F.3d at 734–35. To achieve these objectives, the applicant must make a prima facie showing of effective prohibition, which the locality may then rebut by demonstrating the existence of a potentially available and technically feasible alternative. City of Anacortes, 572 F.3d at 996–99. ATC did not adduce evidence allowing for a meaningful comparison of alternative designs or sites, and the City was not required to take ATC’s word that these were the best options. Consequently, ATC failed to show that its facilities were the least intrusive means of filling a significant gap in service coverage, and the City is entitled to judgment as a matter of law on the effective prohibition claim. Cf. id. at 989, 996–99 (finding a violation of § 332(c)(7)(B)(i)(II) where the provider made a prima facie showing of effective prohibition, including an analysis of eighteen alternative sites, and the locality failed to rebut the prima facie showing with evidence of available alternative sites).

There is a lot more to read, but you can see why this decision will become immensely important in guiding future siting cases at the state and local government level.

What’s next?

I expect American Tower to seek an en banc review of the decision by a larger 9th Circuit panel. I also expect that the request will be denied.

I believe other circuit courts will cite to this reasoned decision when reviewing the same types of issues that arise elsewhere.

Having lost big-time in the 9th Circuit, I expect the wireless industry to seek state legislation to try to effectively overturn portions of the 9th Circuit ruling. What happens at the federal level is as yet a wildcard.

An interesting question implied from this decision and raised by a really, really smart attorney in Orange County: Will no-notice administrative permits go out the window? I suspect that might well be the outcome!

Jonathan

Here is a link to the decision: http://cdn.ca9.uscourts.gov/datastore/opinions/2014/08/14/11-56766.pdf

TriStar Investors (a.k.a. “David”) v. American Tower (a.k.a. “Goliath”)

Posted on February 19, 2012March 18, 2012 by Dr. Jonathan L. Kramer

The Northern District of Texas is the home of a significant wireless law suit just filed, and one which will be of keen interest nationwide to both industry members, and to wireless site landlords. Heck, this case will fascinate the likes of Unison, Wireless Capital Partners, Communications Capital Group, Landmark, and the others who (like TriStar) purchase cell site leases and take easements in the property under cell sites.

In this case, David (TriStar Investors) is suing Goliath (American Tower and its various operating companies) for:

In Count 7, TriStar asks (under Texas law) for a permanent injunction commanding American Tower to refrain from doing three things.

Specifically it asks the court to permanently bar American Tower from:

(1) making false statements about its own services and commercial activities in negotiations with landowners;
(2) making false statements about TriStar’s services and commercial activities in negotiations with landowners; and
(3) making statements to landowners under contract with TriStar for purposes of inducing a breach of the TriStar contract.

As set out in the introduction to the case by TriStar:

This is a case about unfair competition and false advertising in the cell tower industry. American Tower, a massive corporation, has resorted to unfair and illegal tactics in negotiations with landowners for cell tower sites when faced with competition from a tiny competitor, TriStar. Rather than competing fairly and acquiring sites through superior offers, American Tower has systematically misinformed and deceived landowners to acquire sites under less favorable economic terms than those offered by TriStar, to the material detriment of TriStar and landowners nationwide.

(Complaint @ 1)

Some interesting assertions taken from TriStar’s complaint:

“[B]eginning in 1999, carriers began to outsource their towers by transferring control of the towers to a new market entity: the
tower company.” (Compliant @ 25) “The first transaction in which a carrier transferred control of its towers occurred in 1999. Under the terms of that transaction, Bell Atlantic sold actual ownership of the tower steel to Crown Castle.” (Compliant @ 28)

“The tower companies, in exchange for their investment of capital to control a tower site, were the beneficiaries of two critical opportunities: (1) the lease-back payment from the carrier that had previously owned the tower, and (2) the option to lease additional space on the tower to other wireless carriers.” (Complaint @ 26)

“Today, there are more than 100,000 cell towers in the United States. Over half of those towers are controlled by three major public tower companies.” (Complaint @ 27)

“American Tower recently disclosed that approximately 86% of the communications sites in its portfolio are located on leased land. In order to establish or maintain their control of tower sites and generate revenue, American Tower must negotiate new ground leases, or renewals of current ground leases, with landowners on an individualized basis.” (Compliant @ 30)

Here’s a biggie: “Since the formation of the cell tower industry in the mid-1990s, the total cash flow produced by a typical cell tower has increased by more than $50,000 per year, while the total cash flow received by a typical landowner in the form of ground rent has increased by less than $10,000 per year. Whereas the typical landowner previously received approximately 40% of a cell tower location’s total cash flow, landowners now typically receive less than 15% from the tower companies. Over the course of the past 15 years, the total cash flow from a typical cell tower has increased by more than 400%, while the share of total cash flow that is typically received by a landowner has declined by more than 50%.” (Complaint @ 33) “A typical cell tower operated by American Tower produces annual gross cash flow in excess of $80,000 for the company, whereas the landowner of such site typically receives less than $15,000.” (Compliant @ 34)

Fascinating, eh?

Now, about TriStar, formed in 2005:

“Most commonly through execution of an easement with the landowner, but occasionally via a fee purchase or successor lease, TriStar acquires the right to manage a communications site once the underlying ground lease with the existing tower company expires. The tower company enjoys the full benefit of its lease for the duration of the existing term without interference from TriStar. Upon lease expiration, TriStar takes over the management of the tower property from the tower company and endeavors to maximize benefit to the landowner.” (Complaint @ 39). [See my comments below for more on this. -jlk]

“TriStar has acquired (or has fully executed agreements to acquire) control of over 600 tower locations throughout the continental United States.” (Complaint @ 41)

Why is American Tower ticked at TriStar?

“Since entering the industry, TriStar has acquired property rights underlying several hundred tower locations leased or subleased by American Tower. TriStar’s business model is to not renew leases with American Tower when they expire, but instead to operate each tower site for wireless communications purposes upon expiration of the respective lease (either by acquiring rights to the existing tower or constructing a replacement tower at the same location, which is typically permitted by local zoning regulations).” (Complaint @ 43)

If the snippets above have not made you want to read the entire complaint then I don’t know what will. The full complaint is linked below. You really should read it if you’re into wireless as anything more than a

As a wireless attorney working for site landlords (both private parties and governments), I’ll be particularly interested in following this case. I have some tower site landlord clients that have been warned by American Tower that if they sell their sites to anyone by American Tower, they face the wrath of Goliath’s legal department. That’s even if the landlord today sells an interest that does not commence until after American Tower’s interest completely terminates.

Apparently, American Tower believes that one of its rights today, is to have the future opportunity to enter into a new contract after the current one expires. That’s a legal stretch somewhat equivalent to you telling your office landlord that if today he enters into a new lease with a different tenant for your office space, and that new lease does not commence until after the final expiration date of your lease, you can sue the landlord claiming …. ah …. ah ….

I wonder how long it will take for some enterprising attorney to try to form a class of site landlords who have been ‘dissuaded’ by American Tower, but that’s for a different post.

Read the complaint…Don’t wait for the movie: David v. Goliath