The District Court for the Southern District of Indiana published an order on November 18, 2020 remanding the Class Action lawsuit against Netflix, Disney, Hulu, DirectTV and Dish to Marion County Superior Court.
The city of Fishers, Indianapolis, Evansville and Valparaiso filed a class action lawsuit on behalf of all units entitled to receive franchise fees to compel the streaming services pay franchise fees governed by Indiana’s Video Service Franchises Act in Ind. Code §8-1-34-4 “VSF Act.” The VSF Act requires companies that provide video service in Indiana to apply and receive certificates of franchise authority. The companies must pay a quarterly franchise fee to certain governmental units. The units include counties, municipalities and townships under Ind. Code §8-1-34-12. The streaming services (“Defendants”) sent the case to federal court under Class Action Fairness Act under 28 USC §1332(d) and diversity jurisdiction under 28 USC §1322(a). The Cities filed a motion to send the case back to state court, arguing under comity principles, the matter is more appropriate for Indiana courts to decide.
The Cities argued the case should move back to Marion County because the enforcement and franchise fee collection is “a commercial matter over which the Indiana legislature and Indiana Unit have traditional enjoyed wide regulatory latitude, that does not implicate any fundamental right of Defendants.” ·
The issue is whether the VSF Act applies to online providers, including but not limited to, Netflix, Disney and Hulu. The Court agreed with the Cities and applied the Levin factors from Levin v. Commerce Energy, Inc., 560 U.S. 413 (2010). The Court first noted that VSF Act is an area of law where the State and municipalities have “traditionally ‘enjoy[ed] wide regulatory latitude.”‘ The matter at issue does not involve fundamental rights or a suspect classification requiring heightened judicial scrutiny. Second, Defendants removed the case to “improve their competitive position.” Third, the matter is about interpretation of Indiana state law, which the federal courts do not have previous cases to rely on the interpretation and state courts are better equipped with familiarity of state law to handle the claims.
Based on those reasons, the District Court for the Southern District determined the state court is best to decide the matter and sends the case back to Marion County Superior Court.
Jeremy Fetty is a partner in the law firm of Parr Richey Frandsen Patterson Kruse with offices in Lebanon and Indianapolis. He often advises businesses and utilities (for profit, non-profit and cooperative) on organizational, human resources, and transactional matters and drafts and reviews commercial contracts.
The statements contained herein are matters of opinion and general information only and are not to be considered legal advice and should not be construed to form an attorney-client relationship. If you have any questions regarding this article, please contact an attorney.