DALLAS (Legal Newsline) - Lawyers have convinced 25 Texas cities to file a lawsuit against Netflix and Hulu, hoping to end the losing streak established in courts around the country.
The firms McKool Smith of Dallas, Ashcroft Sutton Reyes of Austin and Korein Tillery of St. Louis scored clients like Dallas, Houston and Austin as plaintiffs lawyers continue to try to sue Hulu and Netflix.
The cases pit contingency fee lawyers representing municipalities that want to force them to pay franchise fees that have traditionally been paid by cable companies to install wires in public rights-of-way.
But Netflix and Hulu aren't subject to these fees even though they are video service providers, courts in Texas, California and Nevada have found. The deposition of a Texas city's chief administrator showed that she didn't care if imposing a 5% fee on these companies meant customers' bills would go up.
She also testified she didn't consult with any other city officials before hiring private firms to sue. The case was thrown out last year after defendants argued Texas Utilities Code did not apply to them because they are not holders of state-issued certificates of franchise authority.
"The statute did not reserve to individual municipalities any authority to declare a provider a holder of a state-issued certificate of franchise authority," the decision said.
Still, 25 more cities are suing, even adding Disney as a defendant. Other plaintiffs include Beaumont, Irving and Waco.
On Sept. 16, the defendants removed the case to Dallas federal court.