Ninth Circuit Upholds California Net Neutrality Law in Preemption Challenge

In a published opinion issued last Friday, a unanimous appellate panel said that California’s open-internet law requiring Internet Service Providers to treat all web traffic equally was enacted within the state’s right. The decision comes after an Eastern District of California judge upheld the statute nearly a year ago and denied the broadband provider association plaintiffs’ bid for a preliminary injunction.

The case finds its roots in a 2018 Federal Communications Commission (FCC) decision eliminating federal net-neutrality rules during the Trump administration. Specifically, the FCC “decided to stop treating broadband internet services as ‘telecommunications services’ subject to relatively comprehensive, common-carrier regulation pursuant to Title II of the Communications Act, and to classify them instead under Title I as lightly regulated ‘information services,’ which had the result of terminating federal net neutrality rules,” the opinion explained.

Then, the FCC’s decision came under judicial scrutiny and the part barring states from enacting net neutrality laws was stricken by the D.C. Circuit in Mozilla Corp. v. FCC.

In the wake of the federal net-neutrality repeal, California enacted the Internet Consumer Protection and Net Neutrality Act of 2018. Broadband provider association groups and the federal government challenged it, arguing that California was overstepping its authority by regulating broadband internet services. The government voluntarily dismissed its suit against the state, but the industry groups continued to argue that the federal regulation preempts states from adopting their own net neutrality laws.

Last week’s decision affirmed the trial court’s denial of the plaintiffs’ request for a preliminary injunction. Writing for the court, Circuit Judge Mary M. Schroeder found that by reclassifying broadband internet services as information services, the FCC abdicated its authority to regulate in the same manner that it did when they were classified as telecommunications services. As such, the agency could not preempt state action protecting net neutrality.

The panel batted down the industry groups’ field preemption arguments, finding them foreclosed by case law, including Mozilla Corp. v. FCC, and various Communications Act provisions.

Circuit Judge J. Clifford Wallace wrote separately cautioning against appeals like the one at hand. The concurrence expressed concern that parties may appeal unfavorable preliminary injunction decisions to obtain an appellate court’s view of the merits despite knowing that the court’s decision is confined by the scope of its review. This often leads to unnecessary delay in the litigation and the waste of judicial resources, the concurrence said.

The broadband provider associations are represented by Latham & Watkins LLP, Kellogg, Hansen, Todd, Figel & Frederick PLLC, and MoloLamken LLP. California is represented by Attorney General Rob Bonta.