may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (1996).
STATE OF MINNESOTA
IN COURT OF APPEALS
Triax Midwest Associates, L.P.,
City of Nashwauk,
Filed December 15, 1998
Nashwauk City Council
Ordinance No. 200
James J. Thomson, Jr., Karen R. Cole, Kennedy and Graven, Chartered, 470 Pillsbury Center, 200 South Sixth Street, Minneapolis, MN 55402 (for respondent)
Considered and decided by Shumaker, Presiding Judge, Crippen, Judge, and Klaphake, Judge.
Relator Triax Midwest Associates, L.P. challenges respondent City of Nashwauk's ordinance granting Range TV Cable a nonexclusive cable television franchise, arguing that the ordinance should be set aside because Nashwauk failed to comply with the procedural guidelines of Minn. Stat. § 238.081 (1996). We reverse.
Under a nonexclusive franchise that expires in 2008, Triax Midwest, L.P. currently provides Nashwauk with cable television service. Because of concerns about the quality of service provided by Triax, the Nashwauk City Council adopted a resolution at its May 27, 1997 meeting that directed the cable committee to research other options for cable television service. Over the months that followed, the Nashwauk City Council and its cable committee gathered information about the possibility of granting a second, nonexclusive cable television franchise. Nashwauk's efforts to locate potential grantees of a second franchise focused on Range TV Cable.
At the December 23, 1997, city council meeting, the city attorney expressly advised that, in order to properly grant an additional cable franchise, the council would have to publish notice for two weeks and then wait seven days after the public hearing date before enacting an ordinance granting the franchise.
The city council published its notice of intent to grant a franchise in the Eastern Itascan newspaper on January 1, 1998. This was the only publication of the requisite notice. Range TV Cable, the sole applicant for the second cable television franchise, submitted its application to the city council by January 22, 1998. In the application, Range TV Cable included information regarding its investors, its financial resources, and its technical ability.
At 4:00 p.m. on January 26, 1998, the Nashwauk City Council held a public hearing to consider Range TV Cable's application for a cable television franchise. During the hearing, the council reviewed Range TV Cable's application and posed questions to its representatives. No one at the hearing opposed the application. At the conclusion of the hearing, the city council voted unanimously at 4:30 p.m. to pass Ordinance No. 200, which granted a nonexclusive cable television franchise to Range TV Cable. The franchise permits Range TV Cable to provide cable television service within the corporate city limits of Nashwauk.
Triax received notice of the city council's decision on February 12, 1998, when a summary of the ordinance was published in a local newspaper. On March 26, 1998, Triax filed a writ of certiorari challenging the ordinance.
"Standing is a jurisdictional question to be determined by this court." In re Implementation of Util. Energy Conservation Improvement Programs, 368 N.W.2d 308, 312 (Minn. App. 1985). In an administrative proceeding, "[s]tanding may be conferred by statute or it may exist by reason of judicial recognition of a particular relationship between a person and an actionable controversy." In re Complaint Against Pappas Senate Comm., 488 N.W.2d 795, 797 (Minn. 1992). If standing is not conferred by statute, and there is no discernable legislative intent to the contrary, a party has standing if the party "suffers 'injury in fact' as a consequence of that action." Id. (citation omitted).
A review of Chapter 238 reveals that the legislature did not confer standing on parties such as Triax. However, because there is no legislative intent to the contrary, and because Triax's potential economic injury is a sufficient "injury in fact," we hold that Triax did have standing to bring this action. See Twin Ports Convalescent, Inc. v. Minnesota State Bd. of Health, 257 N.W.2d 343, 346 (Minn. 1977) (holding that a relator's allegation that its business generated lower profits since an agency issued a license to a competitor was sufficient to establish the requisite "injury in fact"). See also In re Application of Black for Certificate of Trust Powers, 522 N.W.2d 352, 355 (Minn. App. 1994) (holding that a relator challenging "an application for a proposed trust company in its vicinity falls within the ambit of an aggrieved party" because the relator was a competitor of the proposed trust), review denied (Minn. Nov. 29, 1994).
Triax's first challenge to Nashwauk's decision to grant a second cable television franchise is that the failure of Nashwauk to comply with the procedural requirements of Minn. Stat. § 238.081 mandates that the grant be set aside. This court will not overturn a municipal agency's quasi-judicial decision unless it is in violation of a constitutional provision; is in excess of the commission's statutory authority or jurisdiction; is made upon unlawful procedure; is affected by other error of law; is unsupported by substantial evidence in view of the entire record; or is arbitrary or capricious. Huygen v. Plums Enters. , 355 N.W.2d 149, 153 (Minn. App. 1984).
Chapter 238 sets forth procedural guidelines to be followed in granting cable franchises. The public notice provision states:
The franchising authority shall have published once each week for two successive weeks in a newspaper of general circulation in each municipality within the cable service territory, a notice of intent to franchise, requesting applications for the franchise.
Minn. Stat. § 238.081, subd. 1 (1996). In addition, the statute requires that "[a] public hearing before the franchising authority * * * must be completed at least seven days before the introduction of the franchise ordinance." Id., subd. 6 (1996).
It is undisputed that Nashwauk failed to comply with the procedural requirements of these provisions. Nashwauk admits that it published the notice of intent to franchise only once and that it passed the ordinance the same day as the public hearing, seven days before the statute allows. Nashwauk argues, however, that these errors are not fatal to the franchising ordinance because the process used to enact the ordinance constituted substantial compliance with a directory statute.
Although Minn. Stat. § 238.081 uses "shall" and "must," those words are not necessarily conclusive as to whether the statute is mandatory or directory. State v. Jones, 234 Minn. 438, 440, 48 N.W.2d 662, 663 (1951). A factor that weighs heavily in favor of construing a statute as directory is the failure of the statute to declare the consequences of noncompliance. See In re Application of Crown CoCo, Inc., 458 N.W.2d 132, 138 (Minn. App. 1990) (holding that this court will construe statutory language as directory if a rule contains no penalty for failure to comply with its provisions); see also State by Lord v. Frisby, 260 Minn. 70, 76, 108 N.W.2d 769, 773 (1961). Since Chapter 238 fails to provide for the consequences of its violation, the statute is directory.
The violation of a directory statute does not automatically invalidate action taken under the statute. Sullivan v. Credit River Township, 299 Minn. 170, 176-177, 217 N.W.2d 502, 507 (1974). The action might be sustained despite a failure of strict and literal procedural compliance:
Technical defects in compliance which do not reflect bad faith, undermine the purpose of the procedures, or prejudice the rights of those intended to be protected by the procedures will not suffice to overturn governmental action * * *.
City of Minneapolis v. Wurtele, 291 N.W.2d 386, 391 (Minn. 1980).
Nashwauk's action cannot be viewed as a good faith omission of a minor technical directive. The city attorney told the council precisely what it had to do in order to comply with the law. The advice was clear and uncomplicated. The council ignored it. The council's failure to comply evinces bad faith.
Moreover, Nashwauk's failure to publish the requisite notice for two weeks limited the opportunity for the submission of competitive applications and deprived the citizens of Nashwauk the benefit of a meaningfully competitive application process. The council's failure to wait seven days before enacting the franchise grant ordinance similarly deprived citizens and prospective franchise holders of the opportunity to scrutinize the governmental action. The procedures provided in Minn. Stat. § 238.081 are intended to safeguard open, deliberate and responsible governmental conduct on a matter of importance and concern to the ordinary citizen. Nashwauk's conduct undermined the intent and purpose of the law. Because our decision on this issue is dispositive, we need not address Triax's argument as to the sufficiency of the evidence to support the franchise grant to Range TV Cable.