Law Street Media

Netflix and Hulu Prevail in Another Franchise Fee Decision by 8th Cir.

A remote control selects from a variety of options on a television.

Multimedia video concept on TV set in dark room. Man watching TV with remote control in hand.

An opinion issued Tuesday by the Eighth Circuit Court of Appeals found in favor of Netflix and Hulu over arguments by the City of Ashdown, Ark. that the streaming service providers owe the municipality fees under the Arkansas Video Service Act of 2013 (VSA). The court ruled that enforcement of the VSA belongs solely to the state’s Public Service Commission.

The six-page precedential opinion explained that the VSA “establishes a statewide franchising scheme for authorizing video service providers to provide services in political subdivisions within the state.” The decision added that Netflix and Hulu were providing online video streaming services prior to the passage of the VSA and did not apply for franchise authority once the law was passed.

In a putative class action, Ashdown argued that Netflix and Hulu were bound by the statute and owed it damages for their failure to pay the required fees. The district court dismissed the case, finding among other things, that the VSA does not afford Ashdown a right of action.

Ashdown appealed, contending that the district court misinterpreted the VSA. This week’s opinion said that the VSA clearly confers a right of action onto the Public Service Commission but neither explicitly nor implicitly confers one on municipalities.

The court considered two circumstances under which an implied right of action can be read into the statute, but found neither present. “Because Ashdown is not part of a special class intended to be protected by the VSA and allowing Ashdown to bring this suit would circumvent the intent of the statute, we conclude that the VSA does not create an implied right of action in municipalities to enforce the statute,” the panel said.

The decision follows on the heels of a near-identical Ninth Circuit ruling last week. In that opinion, the panel affirmed the district court’s decision to dismiss the City of Reno, Nev.’s case against Netflix and Hulu as without a private right of action. Prior to that, an Illinois federal court ruled similarly when interpreting its state’s law.

The City of Ashdown is represented by Trammell Piazza Law Firm PLLC and Nix Patterson LLP, Netflix by Haltom & Doam and Latham & Watkins LLP, and Hulu by Gillam & Smith LLP and Wilson Sonsini Goodrich & Rosati PC.

Exit mobile version