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9th Circuit Affirms Dismissal of Reno’s Franchise Fee Suit Against Netflix and Hulu

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The Ninth Circuit affirmed the findings of a Nevada federal judge last week, concluding that the City of Reno had no right to assess defendants Netflix and Hulu franchise fees for the video streaming services they provide. The published opinion dismissed the Nevada Video Service Law (VSL) claim after finding that the law does not provide a private right of action. Notably, an Illinois federal court found similarly in a recent lawsuit brought under that state’s video service law.

The Nevada suit claims that the defendants owe franchise fees to state municipalities as video service providers, likening them to traditional cable providers who use public rights-of-way or municipal infrastructure to provide access. Reno, on behalf of all Nevada cities and towns, sought damages, including 5% of the defendants’ gross revenues derived from operations in each municipality.

After Reno lost and appealed the case, several amici, streaming services who were not named as defendants, voiced their opinions in favor of dismissal. Two municipalities, one from Missouri and one from Georgia weighed in on behalf of the plaintiff-appellant.

In last week’s opinion, the San Francisco, Calif.-based panel agreed with the defendants that the VSL does not provide a private right of action, neither expressly nor impliedly. Under Nevada’s three-part test, the court said that the third factor was essentially dispositive: the VSL’s express provisions for enforcement by the Nevada Attorney General and its consumer advocate “strongly suggest that the legislative scheme does not include other rights of action.”

In addition, the panel dismissed the plaintiff’s attendant Declaratory Judgment Act for lack of an independent cause of action.

On appeal, Reno is represented by Schneider Wallace Cottrell Konecky LLP and Shook & Stone Chtd. Netflix is represented by Latham & Watkins LLP and Parsons Behle & Latimer and Hulu by Wilson Sonsini Goodrich & Rosati PC and Guild Gallagher & Fuller Ltd.

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