Exclusives Challenged

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A legal challenge brought by RCN Corp. and working its way through the courts in Pennsylvania could affect future exclusive contracts struck between telecommunications providers and developers.

Last month, a federal court judge ruled in favor of RCN in a partial summary judgment, affirming that the cable provider has a right to bring a private action against a developer who prevented the company from laying plant in a new 130-acre development in the state’s Lehigh Valley.

The irony: RCN had attempted to negotiate an exclusivity agreement between itself and the same developer, DeLuca Enterprises Inc., elsewhere in the Pennsylvania.

RCN officials did not return calls seeking comment on the case.

LAWSUIT IN 2004

RCN filed suit against the developer and another housing builder, Sellvaggio Enterprises, in 2004. Both initially refused to let RCN into trenches as they built developments that year. The Sellvaggio suit was settled when that developer let the telecommunications company into the trenches.

But according to pleadings in the DeLuca suit, filed in U.S. District Court for the Eastern District of Philadelphia, this dispute was a bit more complicated. The exclusivity arrangement had actually been struck with the original landowner, Jaindl Land Co. The incumbent operator, Service Electric Corp. (not a party in the suit), paid Jaindl $183,000 to be the development’s exclusive cable company, according to court documents.

The developer inherited the exclusivity commitment along with the land purchase.

RCN attorneys argued the easements for the development had been dedicated to a locality, Hanover Township, but DeLuca continued to wield control over them.

RCN sued the developer access, monetary damage and court fees. The Princeton, N.J.-based operator has a private right to sue under the federal Cable Act, attorneys said.

DeLuca attorneys countered that RCN had “unclean hands” because it had sought the same exclusivity agreements elsewhere, according to the court record.

Judge Lawrence Stengel sided with rulings in past legal challenges, in which other jurists found that Congress had intended to provide a private right of action in the Cable Act for parties in disputes such as this.

The easement was dedicated for compatible uses, and RCN’s plant fit that definition, he indicated.

RCN 'INCONSISTENCY’

As for RCN’s pursuit of exclusive access, “inconsistency” in the plaintiff’s actions is not enough to derail the DeLuca suit, the judge determined.

RCN sought a permanent injunction against the developer, which could have meant the company would have to pay to reopen the trenches and lay in RCN plant. Because the case had not been subjected to a full trial, the judge said he needed more information to justify such a ruling.

Instead RCN got only a partial summary judgment in its favor from the court.

The judge has scheduled a one-day hearing early in October for the parties to argue over what now constitutes equitable relief for RCN, since most of the trenches were completed and covered in March, according to court documents.

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