Southern Walk Case Brief

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Apr 3, 2024

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Southern Walk at Broadlands Homeowner’s Association v. OpenBand at Broadlands Citation S. Walk at Broadlands Homeowner’s Ass’n v. OpenBand at Broadlands, LLC, 713 F.3d 175 (2013). Parties Petitioner/Appellant/Defendant: OpenBand at Broadlands, a telecommunications services provider. Respondent/Appellees/Plaintiffs: Southern Walk at Broadlands Homeowner’s Association, a residential development with more than 1,100 individually owned properties. History of the litigation/Procedural posture The plaintiff filed a suit alleging that an order from the Federal Communications Commission (FCC) rendered the exclusive rights in the TSA for wire-based video services between the two parties void and sought declaratory judgement against OpenBand. The complaint was amended a few months later to allege that the TSA gave OpenBand exclusivity. OpenBand moved to dismiss the amended complaint and the district court granted the dismissal without prejudice. The plaintiff challenges the lower court’s dismissal of its suit against prejudice and OpenBand challenges the court’s refusal to be awarded attorney fees. Key facts  In 2001, Southern Walk, a planned residential development, was incorporated as a VA non-stock corporation by the community developer, Broadlands Homeowners Association. Soon after it entered into a Telecommunications Services Agreement ("TSA") with OpenBand to receive certain "platform" telephone, internet, and video services for the member households.  This agreement required for each household in the community to purchase platform services from OpenBand even if they did not use those services. OpenBand services are charged through the homeowner’s association assessments. If a household did not pay, it was up to Southern Walk to pay.  Under the TSA, households could obtain other services from other providers but could not replace the services OpenBand provided. Southern Walk was also not allowed to “engage” with other platform service providers for the community.  At the same time, Broadlands entered into an agreement (“easement”) with OpenBand for the exclusive provision of telecommunication services to Southern Walk and the exclusive right to operate utilities for those services.  In 2007, the Federal Communications Commission (FCC) issued the Exclusivity Order related to contracts granting one provider exclusivity of services to multiple homes. The order focused on clauses that prohibited access to other service providers and stated that “Any such exclusivity clause shall be null and void.”  After the FCC’s order, Southern Walk began to engage with other service providers and in 2010, wrote to OpenBand stating that their agreement (TSA) was in violation of the FCC’s Exclusivity Order and requested modifications.

 OpenBand replied that the TSA would remain the same.  Southern Walk attempted to engage with other service providers but were informed that the TSA prevented them from providing services to the community. In 2011, Southern Walk filed suit. Issue(s) Whether Southern Walk at Broadlands Homeowner’s Association both individually and on behalf of its members to be able to establish standing against OpenBand in a claim to render an exclusivity contract between the two parties as null and void according to a Federal Communications Commission (FCC) Exclusivity Order. Rule  2007 Federal Communications Commission order  Fed. R. Civ. P. 41(b): Effect . Unless the notice or stipulation states otherwise, the dismissal is without prejudice. But if the plaintiff previously dismissed any federal- or state-court action based on or including the same claim, a notice of dismissal operates as an adjudication on the merits. (b) I NVOLUNTARY D ISMISSAL ; E FFECT . If the plaintiff fails to prosecute or to comply with these rules or a court order, a defendant may move to dismiss the action or any claim against it. Unless the dismissal order states otherwise, a dismissal under this subdivision (b) and any dismissal not under this rule— except one for lack of jurisdiction, improper venue, or failure to join a party under Rule 19—operates as an adjudication on the merits.  Plaintiffs bear the burden of establishing standing. Lujan v. Defenders of Wildlife  Article III standing – cause or controversy. Standing must be proven by an “injury in fact” (a particularized, concrete legally protected interest whose threat is imminent or actual, not hypothetical where causal relationship exists between the harmful actions and alleged injury and can be redressed favorably). Reasoning/Rationale/Analysis/Application The Court first looked at Southern Walk’s standing and whether it demonstrated personal injury with causal relationship to the TSA. Southern Walk alleged that the injury was paying solely to OpenBand for service provision but the Court replied that economic injuries is not able to be redressed because bulk billing provisions are legally permissible. Southern Walk would be paying for OpenBand’s services even if the Court were to agree with them on this point and does not satisfy redressability under Article III standing. Also, this does not fulfill the personalized harm requirement under Article III since it is the households who pay for OpenBand’s services. Southern Walk also claims that standing on the basis that the TSA interferes with its ability to engage with other service providers for the benefits of its members. The Court referred to Sierra Club v. Morton and Havens Realty Corp. v. Coleman where it was determined that interests must be particularized and cannot be general to the public or a group. For Southern Walk to have standing on its own right, its members would have to have standing own their own right, the harm claimed be tied to the organization’s

purpose and the claim or relief sought would not require the participation of the individual members in the lawsuit. Md. Highways Contractors Ass'n . Southern Walk attempted to argue against this by referring to Summers v. Earth Island Inst ., where “at least one identified [member’s]” specific allegations for standing would suffice for the whole organization. But the Court strikes down this reasoning for two reasons: 1. Summers did not create an exception in the manner in which Southern Walk is asking of this court. It would best serve for an individual plaintiff to bring forth the claim and then assert in favor of Southern Walk than for Southern Walk to bring forth the claim and then assert on behalf of its individual homeowners. 2. Southern Walk failed to allege that all of its members are harmed and instead only stated that the homeowners association, not the homeowners themselves, are harmed. Regarding the amending to the complaint, the Court referred to Car Carriers, Inc. v. Ford Motor Co., where it was established that complaints cannot be amended through briefs or oral advocacy. Rule 12(b) would not apply in this situation. The Court determined that it was unable to reach a disposition on the merits of the claim (lack of standing) and this dismissed the amended complaint without prejudice. Regarding OpenBand’s request to be granted attorney’s fees, the court looked to the TSA agreement between the two parties where it was written that "[t]he prevailing Party in any litigation, proceeding or action commenced in connection with enforcing any of the provisions of this Agreement shall recover any and all legal expenses incurred in pursuing such litigation, proceeding or action from the non-prevailing Party." The Court determined that OpenBand is not the “prevailing party” because a dismissal for lack of standing is not a determination on the merits, it is simply a dismissal. Holding(s) The Court affirmed the district court’s judgement that the plaintiff failed to allege facts to support standing and remanded the case with instructions for it to be dismissed without prejudice. The court affirmed the denial of attorney fees to the defendant.

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