PHILADELPHIA (Legal Newsline) - The U.S. Court of Appeals for the Third Circuit has joined other appellate courts in rejecting the idea streaming providers like Netflix and Hulu must pay franchise fees originally designed to be imposed on cable TV companies.
The fees compensate municipalities for use of their land to place cables, but courts around the country have rejected the notion streaming services need to pay them. The Third Circuit's Feb. 29 decision represents a loss for New Jersey municipalities Longport and Irvington and their lawyers at Carella Byrne and Kessler Topaz.
The Third Circuit found the state's Cable Television Act creates no cause of action for the litigation and that enforcing the fees is the job of state regulators.
"To find a right of action for the municipalities would mean the (Board of Public Utilities) would no longer hold all enforcement authority," Judge Jane Richards Roth wrote.
"Because this would change the plain meaning of the CTA, we find no constitutional basis for finding a private right of action for municipalities. To find otherwise would conflict with the CTA."
The Seventh Circuit in Chicago reached a similar conclusion in October and adds to a string of losses by private lawyers - some of whom are heavy contributors to state and local political campaigns - who convinced government officials to hire them on contingency fees.
“If phone calls over landline cables, electricity over wires, and gas routed through pipes are not trespasses on the City’s land— and they are not—neither are the electrons that carry movies and other videos,” Seventh Circuit Judge Frank Easterbrook wrote in an Oct. 13 decision.
The Eighth Circuit has also rejected an Arkansas case, and a California state court of appeal on Feb. 22 ruled against a city there.