Court sides with Lansdowne HOA in OpenBand lawsuit
At the same time, the panel dismissed a similar suit filed by a Broadlands homeowner's association.
The Lansdowne on the Potomac Homeowners Association filed suit against OpenBand in August 2011, claiming a series of exclusive easements that kept competitors from providing cable service to the community was illegal.
OpenBand holds an exclusive easement contract with Broadlands developer Van Metre, which was agreed on in May 2001, that allows the firm to provide service for four communities for at least 25 years, with an option for an extension of up to 75 years. In addition to Lansdowne on the Potomac, those communities include Lansdowne Village Green, Leisure World and Southern Walk.
OpenBand has been the target of sharp criticism from residents of the communities it serves for years who have complained about poor cable television service.
In June, a federal judge ruled in favor of Lansdowne on the Potomac, but OpenBand appealed the case.
In June 2011, Southern Walk Homeowners Association sued OpenBand, also alleging the exclusive easements violated Federal Communication Commission laws.
U.S. District Judge Gerald Lee dismissed the suit in February without prejudice, meaning the HOA could refile at any time. Two weeks later, the HOA filed an amended complaint. That complaint was struck down in August 2011.
Southern Walk, in turn, filed an appellate brief with the Fourth Circuit Court of Appeals.
In August, a federal judge agreed to allow the two HOAs to argue their cases separately before the same panel of judges.
The cases were heard in U.S. Appellate Court on Jan. 29.
One suit upheld, one dismissed
In upholding the Lansdowne HOA lawsuit, U.S. Judge J. Harvie Wilkinson III called the structure of OpenBand's exclusive agreements "convoluted."
"The record is replete with evidence that [OpenBand's] exclusivity agreement caused competing cable companies not to offer [the Lansdowne on the Potomac HOA] their services," Wilkinson wrote in his opinion.
The opinion goes on to say that other cable providers, such as Verizon and Comcast, based decisions to not offer services to the Lansdowne community solely because of the exclusive agreements.
The decision was based mostly on the 1992 Cable Television Consumer Protection Act, which says that a lack of competition had led to "unfair methods of competition or unfair or deceptive acts or practices" that specifically hindered any other operator from providing services.
OpenBand has 90 days to request the Supreme Court hear the appeal of the Fourth Circuit Court's opinion.
In the Southern Walk case, U.S. Circuit Court of Appeals Judge Diana Motz wrote that the HOA "failed to allege facts supporting standing in this case." The ruling was overturned without prejudice and remanded back to the circuit court, meaning that HOA can re-file its lawsuit.
The opinion also says that Southern Walk did not mention “any individual member’s injury” and that “the allegations in the complaint provide no indication that every Southern Walk member household actually desires alternative wire-based video services.”
"This has been a protracted legal battle for our homeowners. The Southernwalk at Broadlands Homeowners Association is pleased with the Fourth Circuit Court of Appeals ruling. At the end of the day, all our homeowners ever wanted is what nearly every other homeowner has in the Commonwealth of Virginia; reliable telecommunication services at a reasonable and competitive rate and more importantly the ability to choose which telecommunications provider earns their business," Southern Walk HOA President Erika Cotti said in a prepared statement. "… The Federal Judicial system has clearly stated that OpenBand business model simply wipes out competition, their exclusive easements violate public policy and the HOA contract causes significant harm to unsuspecting homeowners. Many of our homeowners never received the proper or any disclosure of OpenBand's decades long contract that Van Metre Homes (our community's Developer) signed on behalf of the future homeowners.”
The lawsuit is one of several that has been filed against OpenBand and by the telecommunication firm against the HOAs in the last year.
In October, OpenBand filed a $50 million lawsuit in Loudoun County Circuit Court against 15 defendants, including the HOAs, their board of directors and Loudoun Supervisors Ralph Buona and Shawn Williams. The lawsuit says the supervisors acted beyond their lawful authority in attempting to force a compromise between the business and two homeowners associations.
The lawsuit came on the heels of a Sept. 18 vote by the Loudoun Board of Supervisors that denied OpenBand a franchise agreement with the county, which would have given the firm access to the public right-of-ways to continue service.
That case is still working its way through the legal system. In January, the judges of the 20th Judicial Circuit recused themselves from presiding over any hearing related to a lawsuit filed by OpenBand against the Loudoun County Board of Supervisors and the two HOAs.
The judges said it was improper for them to hear the case because one of the defendants, John Whitbeck, is an attorney who regularly practices before the circuit.
Editor’s Note: OpenBand is a subsidiary of M.C. Dean, a Dulles-based engineering firm. M.C. Dean is the former owner of the Loudoun Independent, which merged with the Loudoun Times-Mirror in July 2010. Bill Dean, M.C. Dean CEO and president, holds a minority interest in Times Community Media and sits on its Board of Directors.