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Time Warner Cable Midwest LLC v. Pennyrile Rural Electric Cooperative Corp.

United States District Court, W.D. Kentucky, Paducah Division

July 21, 2015

TIME WARNER CABLE MIDWEST LLC, Plaintiff,
v.
PENNYRILE RURAL ELECTRIC COOPERATIVE CORPORATION, Defendant.

MEMORANDUM OPINION AND ORDER

THOMAS B. RUSSELL, Senior District Judge.

This matter comes before the Court on Defendant Pennyrile Rural Electric Cooperative Corporation's motions to dismiss. (Docket #11, 21). Plaintiff Time Warner Cable Midwest LLC has filed a response. (Docket #22). Defendant has replied. (Docket #23). For the following reasons, Defendant's motions to dismiss (Docket #11, 21) are GRANTED in part and DENIED in part.

BACKGROUND

Plaintiff Time Warner Cable Midwest LLC ("Time Warner") is a cable and telecommunications service provider. To deliver these services, Time Warner must attach its own cables and equipment to utility poles across the nation. Time Warner pays rental fees to the utility companies that own these poles.

Defendant Pennyrile Rural Electric Cooperative Corporation ("Pennyrile") owns poles in several Western Kentucky counties. In 2007, Pennyrile executed a Joint Use Agreement (the "Agreement") with New Wave Communication ("New Wave"). (Docket #1-1). The Agreement allowed New Wave to attach equipment to Pennyrile's poles in Logan, Muhlenberg, and Christian counties in exchange for a rental fee. In 2011, Time Warner assumed New Wave's rights and obligations under the Agreement.

For approximately two years, Time Warner has objected to the rental fees charged by Pennyrile. Rental fees are generally charged per pole. Pennyrile charges Time Warner $29.97 per pole. Time Warner claims similar entities charge "in the range of $4-$12." (Docket #1). Time Warner has paid Pennyrile $7.50 per pole "under protest" while allowing Pennyrile to "cash the check without prejudicing any argument that TWC still owes additional monies." (Docket #1-2).

Time Warner[1] also petitioned the Kentucky Public Service Commission ("Commission") asking the Commission to affirm its "exclusive, broad, ' and unquestionable' jurisdiction to regulate pole attachments rates." (Docket #1). Time Warner argues that if the Commission "affirms its jurisdiction, Pennyrile and other TVA cooperatives will be required to follow the Commission's pole rate methodology." (Docket #1). This petition has been pending before the Commission for approximately two years.

Pennyrile has regularly sent Time Warner invoices for the growing difference between Pennyrile's charged rate of approximately $30 and Time Warner's paid rate of $7.50. This difference has grown to approximately $150, 000. Pennyrile sent Time Warner an invoice for this amount on January 27, 2015.

On February 19, 2015, Pennyrile sent a letter which stated: "[i]f Pennyrile has not received payment in full from you by February 27, 2015 at 9:00 a.m. central standard time, Pennyrile will begin removal of all equipment and facilities attached to its poles within its territory." (Docket #1-3). Time Warner claims it did not initially receive the February 19 letter because it was sent to an address in Sikeston, Missouri.

Also on February 19, Pennyrile issued a press release which was published on ClarksvilleNow.com. This press release claimed Time Warner had failed to pay past bills and that if Time Warner did not pay by February 27, then Pennyrile would "disconnect Time Warner's equipment within its nine county service area." (Docket #16-5). Pennyrile also "request[ed] that cable company customers contact Time Warner Cable and urge them to settle this matter before services are affected." (Docket #16-5).

Time Warner filed this lawsuit, claiming Pennyrile is in breach of the Joint Use Agreement, committed libel per quod, and tortuously interfered with Time Warner's business, among other claims. (Docket #16). Time Warner also requested a preliminary injunction to prevent Pennyrile from cutting off Time Warner's service until the Kentucky Public Service Commission makes a ruling.

On March 20, 2015, this Court denied Time Warner's motion for a preliminary injunction. (Docket #12). Pennyrile now moves to dismiss all of Time Warner's claims.

STANDARD

"When considering a motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, the district court must accept all of the allegations in the complaint as true, and construe the complaint liberally in favor of the plaintiff." Lawrence v. Chancery Court of Tenn., 188 F.3d 687, 691 (6th Cir. 1999) (citing Miller v. Currie, 50 F.3d 373, 377 (6th Cir. 1995)). Denial of the motion is proper "unless it can be established beyond a doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Achterhof v. Selvaggio, 886 F.2d 826, 831 (6th Cir.1989) (citing Conley v. Gibson, 355 U.S. 41, 45-46 (1957)). Nonetheless, unwarranted factual inferences or legal conclusions masquerading as fact will not prevent a motion to dismiss. Blakely v. United States, 276 F.3d 853, 863 (6th Cir. 2002). A "complaint must contain either direct or inferential allegations respecting all the material elements to sustain a recovery under some viable legal theory." Andrews v. Ohio, 104 F.3d 803, 806 (6th Cir. 1997) (citing In re DeLorean Motor Co., 991 F.2d 1236, 1240 (6th Cir. 1993)).

DISCUSSION

Pennyrile argues this Court lacks subject matter jurisdiction over this dispute. The Court will first address the (I) jurisdiction argument. Moir v. Greater Cleveland Regional Transit Authority, 895 F.2d 266, 269 (6th Cir. 1990) ("we are bound to consider the 12(b)(1) motion first, since the Rule 12(b)(6) challenge becomes moot if this court lacks subject matter jurisdiction"). The Court will then address Pennyrile's argument that Time Warner has failed to state a claim for (II) breach of contract; (III) breach of implied covenant of good faith and fair ...


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