Streaming Platforms Respond to Order to Show Cause in Illinois City’s Fee Litigation

Last Friday, DISH Network Corporation, DISH Network L.L.C., Netflix Inc., Hulu LLC, DIRECTV LLC, and Disney DTC LLC responded to the court’s sua sponte order to show cause as to why an Illinois city fee lawsuit should not be remanded to state court in light of a recent and related Seventh Circuit decision

The Village of Shiloh, the named plaintiff representing other Illinois municipalities, sued the streaming platform defendants for failing to register as video providers and pay corresponding dues for their use of public rights-of-way in connection with service delivery.

As previously reported, the Seventh Circuit ruled that pursuant to comity principles, state court was the more appropriate forum in a lawsuit brought by the City of Fishers, Illinois against several video streaming platforms. Some cases involving local revenue collection and taxation, the appellate court held, are more appropriately resolved by state rather than federal courts, in accordance with separation of power tenets.

In the Village of Shiloh’s case, the court asked the defendants to show cause on July 29. In last week’s filing, they put forward two arguments for why the case should remain in federal court. The streaming platforms first contended that remand is not required by the recent decision because the instant lawsuit is a “copy-cat” suit, meaning it “duplicates the same claims, against the same defendants, on behalf of the same class,” as another one filed in federal court by the City of East St. Louis.

In turn, remanding the case to state court would needlessly create a redundant federal and state track, the filing said. Among other reasons, the defendants stated that they “did not invoke federal court jurisdiction in this case to improve their competitive position, but rather to avoid duplicative litigation.”

The defendants then argued that the court should permit full briefing on the merits of remand or issue a stay. The streaming platforms warned that if this case is remanded and proceeds separately from the City of East St. Louis case, there will be great risk of “inconsistent adjudications and will impose substantial and duplicative burdens on the parties, witnesses, and judicial resources.”

DISH Networks is represented by Steptoe & Johnson LLP,  Cross Castle PLLC, and Armstrong Teasdale LLP, Netflix by Latham & Watkins, Hulu and Disney by Bryan Cave Leighton Paisner LLP,  Wilson Sonsini Goodrich & Rosati, and DIRECTV by Sandberg Phoenix & Von Gontard P.C. and Kilpatrick Townsend & Stockton LLP.