Second Circuit Victory Limits Intervention in Telecom Act Cases

Cuddy & Feder’s telecommunications litigation team earned a significant victory in the Second Circuit Court of Appeals involving the Telecommunications Act (TCA).  The Circuit Court affirmed a ruling out of the Eastern District of New York in which the district court denied a motion to intervene brought by a group of residents opposed the deployment of small wireless facilities and a preliminary injunction directing the municipality to issue all permits and approvals required for deployment.

In the underlying case, ExteNet Systems sued the Village of Kings Point challenging the Village’s denial of ExteNet’s applications to install a small cell network in the Village to provide improved wireless services to the community. Soon after filing the action, ExteNet moved for a preliminary injunction and separately, a group of residents moved to intervene in the action. After the District Court issued its ruling denying the motion to intervene and granted ExteNet’s preliminary injunction motion, ExteNet and Kings Point negotiated a settlement resolving the litigation under which ExteNet installed small cells throughout the community. A group of residents that had sought to intervene appealed the denial of their motion and sought to re-open the litigation.

The Second Circuit affirmed the District Court’s denial of the motion for intervention finding that the Appellants had not demonstrated that their interests were inadequately represented in the litigation by the defendant Village of Kings Point, as required to intervene as of right under Federal Rule of Civil Procedure 24(a). Critically, the Second Circuit re-affirmed that a private party seeking to intervene in a case where it shares that same interest in the outcome of the litigation as a party to the litigation is presumed to have its interests adequately represented and must rebut that presumption. The Court found that the residents’ interests and the defendant Village’s interests for purpose of the litigation were identical—a ruling upholding the Village’s denial of permits—and the Appellants had not presented any evidence to rebut the presumption of adequate representation.

The Second Circuit’s opinion in the matter ExteNet Systems, LLC v. Village of Kings Point, 22-165 (2d Cir. June 16, 2023) establishes appropriate limits on the intervention of residents opposed to wireless facilities in TCA cases brought by telecommunications companies. The argument regularly presented by would be intervenors, and advanced by Appellants in Kings Point, is that their particular interest as a property owner is somehow unique and that municipalities cannot fully represent those specific interests because the municipality has a broader range of considerations. The Second Circuit rejected this argument.

The Court found that since the defendant Village and the Appellants shared the identical interest in the outcome of the litigation, the Appellants were required to show something approaching “collusion, adversity of interest, nonfeasance, or incompetence” on behalf of the Village to demonstrate a right to intervene.  The Court held it was not an abuse of the district court’s discretion finding that Appellants had presented no such evidence. We expect the Second Circuit’s opinion will greatly restrict interventions in TCA litigations moving forward since every TCA case challenging the denial of a wireless application involves a defendant municipality looking to uphold its decision, the identical ruling opponents to the project would seek.