Massachusetts Bay Transportation Authority v. Clear Channel Outdoor, Inc. (Lawyers Weekly No. 09-006-18)
COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. SUPERIOR COURT.
1884CV00268-BLS2
____________________
MASSACHUSETTS BAY TRANSPORTATION AUTHORITY
v.
CLEAR CHANNEL OUTDOOR, INC.
____________________
MEMORANDUM AND ORDER DENYING CLEAR CHANNEL’S MOTION FOR A TEMPORARY RESTRAINING ORDER
In 2003 the Massachusetts Bay Transportation Authority granted Clear Channel Outdoor, Inc., a 15-year license to operate billboards on MBTA property. That license will expire in early March 2018.1 The MBTA recently issued a request for responses by parties willing to enter into a six month license to operate the same billboards beginning after the Clear Channel license expires. The MBTA received bids from Outfront Media LLC, which agreed to enter into a six-month license, and Clear Channel, which refused to accept a term that short. The MBTA disqualified Clear Channel. It intends to award a six-month license to Outfront Media.
The MBTA brought this action. It seeks declarations that its recent request for responses is lawful, Clear Channel is not entitled to enforce a right of first refusal contained in its 2003 license, and neither of these disputes is subject to the arbitration clause in the 2003 license. It also seeks certain preliminary injunctive relief to enforce terms of the parties’ existing license. The parties agreed upon a schedule for the filing of cross-motions for a preliminary injunction, with a hearing on those motions now scheduled for February 22.
Clear Channel has filed an emergency motion seeking a temporary restraining order that would bar the MBTA from taking any steps to license its billboards to or contract with Outfront Media, or from “interfering in any way with Clear Channel’s rights in the billboards themselves or the permits necessary to operate those billboards.”
The Court will DENY this motion for a TRO because Clear Channel has not met its burden of showing that it is entitled to the requested relief. “A preliminary
1 The parties have submitted two different versions of their license. One states that it terminates on March 3, the other says March 5.
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injunction [or a TRO] is an extraordinary remedy never awarded as of right.” Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 24 (2008). To the contrary, “the significant remedy of a preliminary injunction should not be granted unless the plaintiffs [have] made a clear showing of entitlement thereto.” Student No. 9 v. Board of Educ., 440 Mass. 752, 762 (2004). Clear Channel has not yet made such a showing.
1. Clear Channel Has Asserted No Claims. Clear Channel’s request for injunctive relief is premature because Clear Channel has not asserted any counterclaims or any other kind of affirmative claim against the MBTA.
To obtain preliminary injunctive relief, “the applicant must show a likelihood of success on the merits of the underlying claim; actual or threatened irreparable harm in the absence of injunction; and a lesser degree of irreparable harm to the opposing party from the imposition of an injunction.” Wilson v. Commissioner of Transitional Assistance, 441 Mass. 846, 860 (2004). Since Clear Channel seeks to enjoin governmental action, the Court must also consider whether the requested injunctive relief will promote or at least not adversely affect the public interest. See Siemens Bldg. Technologies, Inc. v. Division of Capital Asset Management, 439 Mass. 759, 762 & 765 (2003) (affirming denial of injunction sought by disappointed bidder because injunction would adversely affect the public interest).
Thus, the filing of a meritorious claim or counterclaim is a condition precedent to seeking injunctive relief. See, e.g., Litton Industries, Inc. v. Colon, 587 F.2d 70, 74 (1st Cir. 1979) (injunction “must be based on a valid cause of action alleged in the complaint”); Goerlitz v. City of Maryville, 333 S.W.3d 450, 455 (Mo. 2011) (en banc) (“an injunction is a remedy and not a cause of action; therefore, it must be based on some recognized and pleaded legal theory”). “[A]ny motion or suit for either a preliminary or permanent injunction must be based upon a cause of action…. ‘There is no such thing as a suit for a traditional injunction in the abstract. For a traditional injunction to be even theoretically available, a plaintiff must be able to articulate a basis for relief that would withstand scrutiny under’ ” a motion to dismiss for failure to state a claim. Alabama v. U.S. Army Corps of Engineers, 424 F.3d 1118, 1127 (11th Cir. 2005), quoting Klay v. United Healthgroup, Inc. 376 F.3d 1092, 1097 (11th Cir.2004).
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The Court will not deny the TRO motion on this basis, however. Instead, it will assume that Clear Channel is prepared to assert counterclaims consistent with the legal theories outlined in its motion papers. In its memorandum, Clear Channel asserts two distinct theories under which it seeks relief against the MBTA. As explained below, neither theory supports the issuance of the requested TRO.
2. Claim that the MBTA Sought Commercially Unreasonable Terms. Clear Channel asserts that “the MBTA has violated its own contractual obligation to Clear Channel to afford it a right to bid on a solicitation that does not include terms that are commercially unreasonable or intended to defeat Clear Channel’s option,” meaning its right of first refusal.
Clear Channel has not demonstrated that such a claim is likely to succeed. And Clear Channel is not entitled to preliminary injunctive relief if it cannot prove that it is likely to succeed on the merits of its claims. See Fordyce v. Town of Hanover, 457 Mass. 248, 265 (2010) (vacating preliminary injunction on claim brought under public bidding statutes).
It seems unlikely that Clear Channel can prevail on a claim that it had some contractual right to have the opportunity to bid on a new billboard license on terms that Clear Channel considers to be commercially viable. To the contrary, the license agreement between Clear Channel and the MBTA specifies, in the same right-of-first-refusal provision upon which Clear Channel relies, that the MBTA could “publish a solicitation of bids” to license the billboards after Clear Channel’s contract expires “under such terms and conditions deemed to be in the best interests of the MBTA.” The only commercially reasonable interpretation of this unambiguous provision is that the MBTA retained the discretion to decide what terms and conditions for a new billboard license would be in its best interests. Clear Channel has no contractual right to dictate to the MBTA what license terms would be acceptable to Clear Channel, and then require the MBTA to grant a license on those terms. See generally Robert and Ardis James Foundation v. Meyers, 474 Mass. 181, 188 (2016) (court must construe contracts in manner that gives them “effect as … rational business instrument[s] and in a manner which will carry out the intent of the parties”) (quoting Starr v. Fordham, 420 Mass. 178, 192 (1995)); Seaco Ins. Co. v. Barbosa, 435 Mass. 772, 779 (2002) (“If a
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contract … is unambiguous, its interpretation is a question of law that is appropriate for a judge to decide on summary judgment.”); Eigerman v. Putnam Investments, Inc., 450 Mass. 281, 287 (2007) (“Whether a contract is ambiguous is also a question of law.”); Indus Partners, LLC v. Intelligroup, Inc., 77 Mass. App. Ct. 793, 795 (2010) (“ambiguity is not created simply because a controversy exists between parties, each favoring an interpretation contrary to the other’s.”) (quoting Jefferson Ins. Co. v. Holyoke, 23 Mass. App. Ct. 472, 475 (1987)).
Clear Channel could not circumvent the provision quoted above by invoking the implied covenant of good faith and fair dealing, which “is implied in every contract.” See Weiler v. PortfolioScope, Inc., 469 Mass. 75, 82 (2014), quoting Uno Restaurants, Inc. v. Boston Kenmore Realty Corp., 441 Mass. 376, 385 (2004). The implied covenant “does not create rights or duties beyond those the parties agreed to when they entered into the contract.” Boston Med. Ctr. Corp. v. Secretary of Executive Office of Health & Human Servs., 463 Mass. 447, 460 (2012) (affirming dismissal of claim), quoting Curtis v. Herb Chambers I-95, Inc., 458 Mass. 674, 680 (2011). Instead, the implied covenant only governs “the manner in which existing contractual duties are performed.” Eigerman v. Putnam Investments, Inc., 450 Mass. 281, 289 (2007).
Nor is Clear Channel likely to be able to prove that the MBTA crafted unreasonable terms in a deliberate effort to nullify Clear Channel’s right of first refusal, and thereby violated the implied covenant. Cf. Weiler, 469 Mass. at 82, (“The implied covenant provides ‘that neither party shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract….’ ”) (quoting Druker v. Roland Wm. Jutras Assocs., Inc., 370 Mass. 383, 385 (1976)).
It appears to be undisputed that Outfront Media is able to perform and is prepared to accept the terms proposed by the MBTA. Although Clear Channel insists that those terms are not commercially reasonable, Outfront Media apparently disagrees. Under these circumstances it will be hard for Clear Channel to establish that the MBTA’s request for responses was a charade, rather than a good faith effort to enter into a short, six-month lease of the billboards for reasons that make sense to
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the MBTA and Outfront even if they make no sense to Clear Channel. In any case, Clear Channel has not made any such showing yet.
3. Claim that Clear Channel has a Right of First Refusal. Clear Channel’s other legal theory is that the MBTA has breached the parties’ license agreement by refusing to give Clear Channel any chance to exercise its right of first refusal.
This claim cannot justify issuing a temporary restraining order because Clear Channel has not shown that it will suffer any irreparable harm if the TRO does not issue.2 As the moving party, Clear Channel has the “burden of showing it would suffer an irreparable harm absent an injunction.” GTE Products Corp. v. Stewart, 414 Mass. 721, 726 (1993). A party may not obtain preliminary injunctive relief without proving that it will suffer irreparable harm in the absence of such an order, and that such harm to the plaintiff from not granting the preliminary injunction would outweigh any irreparable harm that defendants or the public interest are likely to suffer if the injunction issues. See, e.g., American Grain Products Processing Institute v. Department of Pub. Health, 392 Mass. 309, 326-329 (1984) (vacating preliminary injunction on this ground); Nolan v. Police Comm’r of Boston, 383 Mass. 625, 630 (1981) (same).
The right-of-first-refusal provision in the parties’ existing license provides that: (1) before the MBTA awards any bid or accepts any proposal to license its billboards for a term beginning after the termination of Clear Channel’s license, the MBTA shall provide notice to Clear Channel “of all material terms and conditions offered by and such third person’s bid or proposal;” and (2) Clear Channel will then “have the right for a period of three calendar days to notify the MBTA that it accepts each and every term and condition offered by such third person.”
The current factual record suggests that the MBTA’s failure to give Clear Channel three days to exercise its right of first refusal will never cause Clear Channel
2 As a result the Court need not address the MBTA’s arguments or Clear Channel’s counterarguments regarding whether the right-of-first-refusal provision is void and unenforceable because it is against public policy as reflected in the Commonwealth’s public bidding statutes, or whether Clear Channel has forfeited any right of first refusal by failing to submit a responsive bid expressing a willingness to accept the terms and conditions proposed by the MBTA.
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any harm. That is Clear Channel has made clear that it is unwilling to accept all of the material terms that Outfront Media is prepared to accept. Clear Channel did so first in its own response to the MBTA’s request for responses. It reiterated the point in the declaration filed in support of its TRO motion. In all of these submissions Clear Channel has expressly stated that it refuses to enter into a six-month license, or to agree to other terms that the MBTA considers to be material. Clear Channel cannot show that it will be harmed if it never has the opportunity to exercise its right of first refusal without showing that Clear Channel is in fact willing to do so on the terms specified in its license. To date Clear Channel has not made such a showing.
Even assuming that Clear Channel may change its mind and agree to accept all the material terms agreed to be the winning bidder if given the opportunity to do so, however, Clear Channel is unlikely to suffer any irreparable harm if the Court denies the request for a TRO and waits to address the same issues in a few weeks on the parties cross-motions for a preliminary injunction and with the benefit of a more complete record.
The mere fact that the MBTA is moving forward execute a contract with Outfront Media and to make plans to transition its billboard license away from Clear Channel is unlikely to cause Clear Channel any irreparable harm in the next few weeks. If the Court is convinced at the preliminary injunction stage that any new license with Outfront Media is unlawful because the MBTA has breached its contractual obligation to give Clear Channel a right of first refusal, it can grant Clear Channel appropriate relief that will prevent any irreparable harm. The execution of a contract with Outfront Media, or work by Outfront Media to apply for billboard permits that would take effect after Clear Channel’s current license expires, would not interfere with any of Clear Channel’s existing rights in the billboards or its existing permits to operate those billboards. It appears to be undisputed that if Clear Channel’s existing license from the MBTA expires on the current termination date then Clear Channel’s existing permits will in effect be void.
The mere fact that Clear Channel finds itself in limbo, uncertain as to whether it will still be the MBTA’s billboard licensee after its current license expires, is not causing Clear Channel any irreparable harm. Clear Channel has known from the
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moment it entered into the current 15-year license that its rights under that agreement would terminate in early March 2018 and may not be renewed. Although the current license provides that the MBTA must give Clear Channel three days to exercise its right of first refusal, the MBTA could comply with that provision by triggering the refusal period four days before the current license expires. The mere fact that Clear Channel finds itself facing a period of uncertainty that was clearly contemplated in its existing license is not the sort of irreparable harm that would justify issuing the requested TRO.
Although Clear Channel also argues that it will suffer irreparable loss of good will and harm to existing customer relationships if it is unable to enter into a new billboard license with the MBTA, that claim is not relevant to the pending motion for a temporary restraining order. The parties have agreed upon a schedule for the briefing and hearing of cross-motions for a preliminary injunction that will give the Court some time before the current license expires to decide whether the MBTA should be allowed to transfer its billboard license from Clear Channel to Outfront Media. If the Court were to rule in Clear Channel’s favor, it could grant relief that would prevent this kind of alleged irreparable harm. As a result, Clear Channel will not suffer this kind of allegedly irreparable harm merely because it does not obtain a TRO. Cf. Packaging Indus. Group, Inc. v. Cheney, 380 Mass. 609, 617 n.11 (1980) (“Irreparable harm is absent if trial on the merits can be conducted before the injury occurs.”).
Finally, Clear Channel has not met its burden of showing that the proposed TRO would promote or at least would not be inconsistent with the public interest. If the MBTA is correct in its view that Clear Channel is not entitled to enforce its contractual right of first refusal, or if Clear Channel remains unwilling to accept all the material terms and conditions that the one successful bidder is prepared to accept, then the MBTA needs to be prepared to have its successor licensee in place and ready to manage the MBTA billboards. The requested TRO would prevent the MBTA from doing the planning and preparations needed effectively to manage this part of its physical plant.
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Since Clear Channel has not shown that it will suffer irreparable harm over the next few weeks if the MBTA continues to move forward with its plans to contract with Outfront Media, and the public interest may be harmed if the Court bars the MBTA from doing so, the Court will exercise its discretion to deny Clear Channel’s request for a TRO. Cf. Lightlab Imaging, Inc. v. Axsun Technologies, Inc., 469 Mass. 181, 194 (2014) (“Trial judges have broad discretion to grant or deny injunctive relief.”).
ORDER
Defendant’s motion for a temporary restraining order is DENIED.
January 31, 2018
___________________________
Kenneth W. Salinger
Justice of the Superior Court