From: Evelyn Rodas
`
`Fax: 14159861474
`
`To: LA County Complex Fax-FiliFax: (442) 247-3769
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`Page: 3 of 20
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`01115I2021 4:02 PM
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`(DOONQU‘luD-wmr—d
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`Smmsbwwwccoooximmmwmr—o
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`[\J 00
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`Jennie Lee Anderson (SBN 203586)
`Andrus Anderson LLP
`
`155 Montgomerg Street, Suite 900
`
`alifornia 94104
`San Francisco,
`Tel: 415—986—1400
`jennie@andrusanderson.com
`
`Austin Tighe*
`NIX PATTERSON, LLP
`3600 North Capital of Texas Highway
`Buildin B, Suite 350
`Austin,
`exas 78746
`Tel: 512-328-5333
`atighe@nixlaw.com
`
`Adam J. Levitt
`Mark Hamill*
`Brittany Hartwig*
`DICELLO LEVITT GUTZLER LLC
`Ten North Dearborn Street, Sixth Floor
`Chicago, Illinois 60602
`Tel: 312314-7900
`alevitt@dicellolevitt.com
`
`Counsel for Plaintiffand the Other Class
`Members {additional counsel appear on the
`signature block)
`
`Su
`
`FILED
`rior Court of California
`unty of Los Angeles
`
`JAN 15 2021
`
`tlve Officer/Clerk of Court
`Sherri Riganer, E
`BYMAME2
`De
`1
`Tan a
`errera
`pu y
`
`Todd M. Schneider
`SCHNEIDER WALLACE COTTRELL
`KONECKY, LLP
`2000 Powell Street, Suite 1400
`Emeryville, California 94608
`Tel: 415-421—7100
`tschneider@schneiderwallacecom
`
`SUPERIOR COURT OF THE STATE OF CALIFORNIA
`FOR THE COUNTY OF LOS ANGELES
`
`CITY OF LANCASTER, CALIFORNIA,
`individually and on behalf of all others similarly
`situated,
`
`Plaintiff,
`
`V.
`
`NETFLIX, INC, and HULU, LLC,
`
`Defendants.
`
`Case Nomvo 1881
`
`CLASS ACTION COMPLAINT FOR
`VIOLATIONS OF:
`
`(1.) Failure to Pay Video Service Provider Fee
`(Public Utility Code § 5840); and
`(2) Declaratory Relief (Code of Civil
`Procedure § 1060)
`
`
`
`
`
`CLASS ACTION COMPLAINT
`
`City of'Lenmgmz wrongs: v. Netflix Inc. et a].
`
`
`
`
`

`

`From: Evelyn Rodas
`
`Fax:14159861474
`
`To: LA County Complex Fax-FillFax: (442) 247-3759
`
`Page: 4 of 20
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`01I1512021 4:02 PM
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`CLASS ACTION COMPLAINT
`
`Plaintiff, the City of Lancaster, California (“Plaintiff’ or “Lancaster“), individually and on
`
`behalf of all others similarly situated (the “Class,” as more fully defined below), brings this class action
`
`against Defendants Netflix, Inc. and Hulu, LLC (collectively “Defendants”). Plaintiff makes the
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`following allegations upon personal knowledge as to its own acts, upon information and belief and its
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`attorneys’ investigation as to all other matters, and alleges as follows:
`
`INTRODUCTION
`
`1..
`
`Defendants provide video service in California cities, counties, cities and counties, and
`
`joint powers authorities. When doing so, they use wireline facilities (1'. e, broadband wireline facilities)
`
`located at least in part in public rights-of—way.
`
`2.
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`Accordingly, Defendants should be and are required by law to pay each of those cities,
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`counties, cities and counties, or joint powers authorities a video service provider fee of up to 5%
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`percent of their gross revenue, as derived from their providing video service in that city, county, city
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`and county, or joint powers authority.
`
`3.
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`Defendants have failed to pay the required fee, necessitating this lawsuit, and entitling
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`Plaintiff and the putative class to the relief requested herein.
`
`PARTIES
`
`4.
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`Plaintiff, the City of Lancaster, is a lawfully—existing California municipal corporation,
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`located in Los Angeles County, California.
`
`5.
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`Defendant Netflix, Inc. ("Netflix”) is a Delaware corporation, headquartered in Los
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`Gatos, California. Netflix’s primary business is its video service, which offers online streaming of a
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`library of films and television programs, as well as the distribution and production of original films
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`and television series. Netflix does business in Lancaster, California, and has done so at all times
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`relevant to this action.
`
`6.
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`Defendant Hulu, LLC (“Hulu”) is a Delaware limited liability company, headquartered
`
`in Santa Monica, California. Hulu’s primary business is its video service, which offers online
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`streaming of live video programming and a library of films and television programs, as well as the
`
`
`1.
`CLASS ACTION COMPLAINT
`
`City ol'lmfimmimmu v. NetfliX Inc. et 31.
`
`
`
`
`
`

`

`From: Evelyn Rodas
`
`Fax: 14159861474
`
`To: LA County Complex Fax-FiliFax: (442) 247-3769
`
`Page: 5 of 20
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`0111512021 4:02 PM
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`(DOONCDU‘IvP-OJNt—t
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`gamhwwwowmummngp—‘o
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`distribution and production of original films and television series. Hulu does business in Lancaster,
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`California, and has done so at all times relevant to this action.
`
`[URISDICTION AND VENUE
`
`7.
`
`This class action is brought pursuant to the California Code of Civil Procedure § 382.
`
`The monetary damages and restitution sought by Plaintiff. exceeds the minimal jurisdiction limits of
`
`the Superior Court and will be established according to proof at trial.
`
`8.
`
`This Court has jurisdiction over this action pursuant to the California Constitution,
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`Article VI, Section 10, which grants the superior court “original jurisdiction in all other causes" except
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`those given by statute to other courts. The statutes under which this action is brought do not specify
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`any other basis for jurisdiction.
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`9.
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`This Court has jurisdiction over Defendants because, upon information and belief, each
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`Defendant is a citizen of California, has sufficient minimum contacts in California, or otherwise
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`intentionally avails itself of the California market so as to render the exercise ofjurisdiction over it by
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`California courts consistent with traditional notions of fair play and substantial justice.
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`10.
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`Venue is proper in this County pursuant to Ca]. Code of Civ. Proc. § 395(b).
`
`FACTUAL ALLEGATIONS
`
`l 1.
`
`Defendants provide video service to their subscribers to view television shows, movies,
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`documentaries, and other programming.1 They compete with other video service providers,2 offering
`
`1 “Video service” means the provision of video programming through wireiine facilities located, at
`least in part, in the public rights—of—way without regard to delivery technology, including Internet
`protocol
`technology or any other technology. “Video service" does not
`include any video
`programming provided by a commercial mobile service provider as defined in 47 U.S.C. § 332(d) or
`video programming provided as part of, and via, a service that enables end users to access content,
`information, electronic mail or other services offered over the public Internet. See Cal. Pub. Utility
`Code § 5830.
`
`2 “Video service provider” means a provider of video service. See Cal. Pub. Utility Code § 5830.
`
`2
`CLASS ACTION COMPLAINT
`
`City oftmammams V. Netflix Inc, eta].
`
`
`
`
`
`
`

`

`From: Evelyn Rodas
`
`Fax: 14159861474
`
`To: LA County Complex Fax-FillFax: (442) 247-3769
`
`Page: 6 of 20
`
`01/15/2021 4:02 PM
`
`
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`
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`video programming3 that is comparable to that provided by cable companies and televisionebroadcast
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`stations.
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`12.
`
`Customers view Netflix’s and Hulu’s video programming—such as television shows,
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`movies, and documentaries—using an Internet-connected device.
`
`Internet—connected devices are
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`electronic devices that have software enabling them to stream Defendants’ video programming,
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`including smart televisions, streaming media players like Roku or Apple TV, smartphones, tablets,
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`video game consoles, set-top boxes from cable and satellite providers, Blu— ray players, and personal
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`computers.
`
`13.
`
`When a subscriber wants to watch Netflix or Hulu video programming, he or she uses
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`an Internet—connected device to send a request to the Internet-service provider. The Internet—service
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`provider then forwards that request to Netflix’s and Hulu’s dedicated Internet servers, which, in turn,
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`provide a response. This response is then relayed back to the subscriber’s device, and Netflix and
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`Hulu deliver the video programming via Internet protocol
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`technology (129., broadband wireline
`
`facilities located at least in part in public rights-of-way).
`
`1.4.
`
`During the relevant time period, Netflix has used a content delivery network called
`
`Netflix Open Connect to deliver 100% of its video traffic to its subscribers. When a Netflix subscriber
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`wants to view Netflix programming,
`
`the subscriber’s Internet service provider will connect the
`
`subscriber to the closest Netflix Open Connect server offering the fastest speeds and best video quality.
`
`15.
`
`According to Netflix, that means that most of its subscribers receive Netflix’s video
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`programming from servers either inside of, or directly connected to, the subscriber’s Internet service
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`provider’s network within their local region. Netflix has “end-to-end" control of its entire Open
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`Connect system, including any servers located in Lancaster and/or in other California cities, counties,
`
`cities and counties, and joint powers authorities.
`
`3 “Video programming” means programming provided by, or generally considered comparable to
`programming provided by a television broadcast station, as set forth in 47 U.S.C. § 522(20). See Cal.
`Pub. Utility Code § 5830.
`
` 3
`
`CLASS ACTION COMPLAINT
`
`City Of'llmfiolzfillimrm V. Netflix Inc, et a].
`
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`E®M>waHOCDOONCDO1AwNMO
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`[\J 00
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`From: Evelyn Rodas
`
`Fax: 14159861474
`
`To: LA County Complex Fax-FlliFax: (442) 247-3769
`
`Page: 7 of 20
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`01115I2021 4:02 PM
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`16.
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`Similar to Netflix, when a Hulu subscriber wants to View Hulu’s video programming,
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`the subscriber’s Internet service provider will connect the subscriber to the Hulu server. Hulu receives
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`the directive and checks the subscriber‘s entitlement, the location, and the content availability. It then
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`delivers the program through the Internet to the subscriber’s Internet-connected device.
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`17.
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`Defendants’ subscribers typically use a broadband Internet connection, such as DSL or
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`fiber optic cable to receive Defendants’ programming. In Lancaster, common providers of broadband
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`Internet include AT&T, Frontier Communications, and Spectrum Broadband. These broadband
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`Internet connections rely upon wireline facilities located in whole or in part in the public right(s)-of~
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`way to deliver Internet service to subscribers. That means that Defendants operate and provide their
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`video service to Defendants’ subscribers through wireline facilities located, at least in part, in the
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`public right-of-way.
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`18.
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`As video service providers using these wireline facilities, Defendants were required to
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`apply for and receive a state—issued certificate of franchise authority from the California Public
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`Utilities Commission. See Cal. Pub. Utility Code § 5840(q).
`
`19.
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`Defendants failed to apply for and receive a state issued certificate of franchise
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`authority and, therefore, are providing video service throughout California—including in Lancaster——
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`without authorization and in contravention of the California Public Utilities Code.
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`20.
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`Had Defendants sought to obtain a certificate of franchise authority, the California
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`Public Utilities Commission would have authorized Video service providers such as Defendants to use
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`public rights—of-way, as long as said video service providers make a quarterly video service provider
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`payment to each city, county, city and county, or joint powers authority in which it provides video
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`service. The required video service provider payment is 5% of gross revenues“ received by the
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`4 “Gross revenue" means, with respect to a holder of a state—issued certificate of franchise authority,
`all revenue actually received by the holder of a state franchise, as determined in accordance with
`generally accepted accounting principles, that is derived from the operation of the holder’s network to
`provide cable or video service within the jurisdiction of the local entity. Cal. Pub. Utility Code
`§ 5840(d).
`
`4
`CLASS ACTION COMPLAINT
`
`City ol'limfimmjdrm v. Netflix Inc, et a].
`
`
`
`
`
`

`

`From: Evelyn Rodas
`
`Fax: 14159861474
`
`To: LA County Complex Fax-FillFaX: (442) 247-3769
`
`Page: 8 of 20
`
`01/1512021 4:02 PM
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`woo—qmwuswtvi—t
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`NNNNNNNNt—‘t-‘I-‘t-‘F—‘l—‘F—‘HHF‘
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`franchise holder from the provision of services in that city, county, city and county, or joint powers
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`authority.
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`21.
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`Defendants were required to receive a certificate of authority from the California Public
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`Utilities Commission before providing video service in Lancaster and the other California cities,
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`counties, or joint powers authorities in which they provide their video services. Defendants’ failure to
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`receive a certificate of authority, however, did not relieve Defendants of the obligation to pay a
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`franchise fee of 5% of their gross revenues derived from providing such video service in those cities,
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`counties, and joint powers authorities.
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`22.
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`By failing to obtain the required authorization for providing video service in Lancaster
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`and in other California cities, counties, cities and counties, and joint powers authorities, Defendants
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`have avoided their obligation to pay the franchise fee.
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`23.
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`In sum, Defendants are in violation of the California Public Utility Code because they
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`have failed to pay Lancaster and other California cities, counties, and joint powers authorities the
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`required franchise fee of 5% of gross revenues for the privilege of using public broadband
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`infrastructure to convey their product to their customers throughout California.
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`24.
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`Plaintiff,
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`individually and on behalf of other California cities, counties, and joint
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`powers authorities, seeks to require Defendants to abide by the California Public Utilities Code, and
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`pay the fees they owe to these cities, counties, and joint powers authorities.
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`CLASS ACTION ALLEGATIONS
`
`25.
`
`Plaintiff brings this class action pursuant to California Code Civil Procedure § 382,
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`California Civil Code § 1781, and all other applicable laws and rules, individually, and on behalf of
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`class defined as:
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`All California cities, counties, and/or joint powers authorities in which one or
`more of the Defendants has provided video service (the “Class”).
`
`26.
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`Excluded from the Class are Defendants and any of their members, affiliates, parents,
`
`subsidiaries, officers, directors, employees, successors, or assigns; and the Court staff assigned to this
`
`5
`CLASS ACTION COMPLAINT
`
`City ol'fiamorzmimrw v. Netflix Inc, et a1.
`
`
`
`
`
`

`

`From: Evelyn Rodas
`
`Fax:14159861474
`
`To: LA County Complex Fax-FIIiFax: (442) 247-3769
`
`Page: 9 of 20
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`01/1512021 4:02 PM
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`case and their immediate family members. Plaintiffs reserve the right to modify or amend the Class
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`definition, as appropriate, during the course of this litigation.
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`27.
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`This action has been brought and may properly be maintained on behalf of the Class
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`proposed herein under the criteria of California Code Civil Procedure § 382 because there is a well—
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`defined community of interest in the litigation and the proposed class is easily ascertainable.
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`28.
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`Numerosity. The proposed Class is sufficiently numerous that individual joinder of
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`all Class members is impracticable. Indeed, the Class size is believed to be in excess of one hundred
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`members. Class members may be notified of the pendency of this action by recognized, Court-
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`approved notice dissemination methods, which may include US. Mail, electronic mail, Internet
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`postings, and/or published notice.
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`29.
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`Communig of Interests. There is a community of interest among the Class members
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`because there are questions of law and fact common to the Class that relate to and affect the rights of
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`each member of the Class that will drive the resolution of this action. These questions include, but are
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`not limited to, the following:
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`a. Whether Defendants provide video service, as defined by California Public Utility
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`Code §3830, within Plaintiff’s and the other Class members' geographic areas;
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`b. Whether Defendants are video service providers, as defined by California Public
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`Utility Code §5830;
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`c. The appropriate measure of damages to award Plaintiff and the other Class
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`members; and
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`d. The appropriate declaratory relief to which Plaintiff and the other Class members
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`are entitled.
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`
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`30.
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`Typicalig. Plaintiff’s claims are typical of the other Class members’ claims because
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`Plaintiff and each of the other Class members is entitled to franchise fee payments from Defendants
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`pursuant to the California Public Utilities Code, and Defendants have failed to pay Plaintiff and each
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` 6
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`CLASS ACTION COMPLAINT
`
`City allamfiorz (21133141515 v. Netllix Inc, et a1.
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`From: Evelyn Rodas
`
`Fax: 14159861474
`
`To: LA County Complex Fax-FillFax: (442) 247-3769
`
`Page: 10 of 20
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`01/15/2021 4:02 PM
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`
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`of the other Class members those franchise fees. Plaintiffs are asserting the same claims and legal
`
`theories individually and on behalf of the other Class members.
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`31.
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`Adguacy of Representation. Plaintiffs are adequate Class representatives because
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`their interests do not conflict with the interests of the other Class members who they seek to represent,
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`Plaintiffs have retained counsel competent and experienced in complex class action litigation,
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`including successfully litigating class action cases similar to this one, where defendants breached
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`statutory obligations, and Plaintiffs intend to prosecute this action vigorously. Class members’
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`interests will be fairly and adequately protected by Plaintiffs and their counsel.
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`32.
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`Declaratory and Injunctive Relief. Defendants acted or refused to act on grounds
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`generally applicable to Plaintiffs and the other Class members, thereby making appropriate final
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`injunctive relief and/or declaratory relief, as described below, with respect to the Class members.
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`33.
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`Superiority. A class action is superior to any other available means for the fair and
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`efficient adjudication of this controversy, and no unusual difficulties are likely to be encountered in
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`the management of this class action.
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`Individualized litigation creates a potential for inconsistent or
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`contradictory judgments and increases the delay and expense to all parties and the court system. By
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`contrast, the class action device presents far fewer management difficulties, and provides the benefits
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`of single adjudication, economy of scale, and comprehensive supervision by a single court.
`
`FIRST CAUSE OF ACTION
`
`Violation of the Di ital Infrastructure and Video Competition
`Act of 2006 Cal. Pub. Utility; Code § 5800, et seq.)
`(On Behalf of
`e Class)
`
`34.
`
`Plaintiff repeats, realleges, and incorporates by reference Paragraphs 1—33, as if fully
`
`set forth herein.
`
`35.
`
`Defendants provide video service, and are video service providers, in Lancaster and
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`each city, county, and/or joint powers authority comprising the Class. See Cal. Pub. Utilities Code
`
`§5830. Defendants derive gross revenues from providing these video services.
`
`36.
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`Defendants are thus required, by statute, to pay each city, county, city and county,
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`and/or joint powers authority in which they provide video service, a video service provider fee of 5%
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` 7
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`CLASS ACTION COMPLAINT
`
`City ofimfimmjmms V. Netflix Inc, et a1.
`
`p—k
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`LDOOKICSU‘Iu-ROJN
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`From: Evelyn Rodas
`
`Fax: 14159861474
`
`To: LA County Complex Fax-FiliFax: (442) 247-3769
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`Page: 11 of 20
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`01/1512021 4:02 PM
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`1
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`of their gross revenues derived from their operations in that city, county, and/orjoint powers authority.
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`2 See Cal. Pub. Utilities Code § 5840.
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`3
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`4
`5
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`37.
`
`Defendants have failed to comply with the California Public Utilities Code because
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`they have failed to pay Plaintiff and the other Class members 5% of gross revenues, as required.
`38.
`Plaintiff and the other Class members are, therefore, entitled to damages as a result of
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`6 Defendants' violations of the California Public Utilities Code, along with pre— and post~judgment
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`7
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`interest, in an amount to be determined at trial.
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`SECOND CAUSE or ACTION
`California Declaratory Jud ment Act
`(Cal. Code Civ Proc. § 106 , et seq.)
`(On Behalf of the Class)
`
`39.
`
`Plaintiff repeats, realleges, and incorporates by reference Paragraphs 1-33, as if fully
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`set forth herein.
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`40.
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`An actual controversy has arisen and now exists between Plaintiff and the other Class
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`1 4 members, on the one hand, and Defendants on the other.
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`19 Plaintiff, the other Class members, and Defendants is necessary and appropriate at this time.
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`RE UEST FOR RELIEF
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`WHEREFORE, Plaintiff, individually and on behalf of the other Class members, respectfully
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`requests that the Court enter judgment in their favor and against Defendants as follows:
`
`a.
`
`b.
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`Enter an Order certifying the above-defined Class and designating Plaintiff as Class
`
`Representative, and Plaintiff’s counsel as Class Counsel;
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`Grant declaratory relief as set forth in Plaintiff’s Second Cause of Action above,
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`including ordering Defendants to cure their noncompliance with the California Public
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`Utilities Code;
`
`
`
`8
`CLASS ACTION COMPLAINT
`
`City ofjmmfiwmms v. Netflix Inc, eta].
`
`
`
`
`
`
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`16 obligations under the California Public Utilities Code by failing to obtain a certificate of franchise
`
`41.
`
`As described above, Plaintiff contends that Defendants have failed to comply with their
`
`authority and failing to pay the required franchise fees to Plaintiff and the other Class members.
`
`42.
`
`A judicial determination of these issues and of the legal rights and respective duties of
`
`15
`
`17
`
`18
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`

`

`From: Evelyn Rodas
`
`Fax: 14159861474
`
`To: LA County Complex Fax-FiliFaX: (442) 247-3769
`
`Page: 12 of 20
`
`01/15/2021 4:02 PM
`
`
`
`
`
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`c,
`
`(1,
`
`e.
`
`f.
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`Award all monetary relief to which Plaintiff and the other Class members are entitled,
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`including as set forth in Plaintiff’5 First Cause of Action above;
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`Award pre— and post~judgment interest;
`
`Award reasonable attorneys’ fees and costs to Plaintiff’s counsel; and
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`Grant such further and other relief as this Court deems appropriate.
`
`Dated: January 15, 2021
`
`Respectfully submitted,
`
`/5/ Zennie Lee Anderson
`Jennie Lee Anderson (SBN 203586)
`Lori E. Andrus (SBN 205816)
`ANDRUS ANDERSON LLP
`155 Montgomer Street, Suite 900
`San Francisco,
`alifornia 94104
`Tel: 415-986—1400
`
`{ennie@andrusanderson.com
`
`ori@andrusanderson.com
`
`Adam J . Levitt
`Mark Hamill“
`Brittany Hartwig*
`DICELLO LEVITT GUTZLER LLC
`Ten North Dearborn Street, Sixth Floor
`Chicago, Illinois 60602
`Tel: 312314-7900
`alevitt@dicellolevittcom
`mhamill@dicellolevitt.com
`bhartwig@dicellolevitt.com
`
`Austin Tighe*
`Michael Angelovich*
`NIX PATTERSON, LLP
`3600 North Capital of Texas Highway
`Buildin B, Suite 350
`Austin,
`exas 78746
`Tel: 512—328—5333
`atighe@nixlaw.com
`mangelovich@nixlaw.com
`
`Todd M. Schneider
`
`Jason H. Kim
`SCHNEIDER WALLACE COTTRELL
`KONECKY, LLP
`2000 Powell Street, Suite 1400
`Emeryville, California 94608
`Tel: 415-421-7100
`tschneider@schneiderwallace.com
`jkim@schneiderwallace.com
`
` 9
`
`CLASS ACTION COMPLAINT
`
`City Ol'flmfimmifilrw V. NetiIiX Inc, (at a].
`
`
`
`
`
`0701»th
`
`N
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`10
`
`ll
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`12
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`

`

`From: Evelyn Rodas
`
`Fax: 14159861474
`
`To: LA County Complex Fax-FlliFax: (442) 247-3769
`
`Page: 13 of 20
`
`01/15/2021 4:02 PM
`
`
`
`
`
`
`’—L
`
`cooowcacnusww
`
`NNNNNNNt—tp—np—np—nt—AHI—dr—tr—n—n
`EGWQCANHOLOOOKIGEMu-tht—‘O
`
`N 00
`
`Peter Schneider*
`SCHNEIDER WALLACE COTTRELL
`KONECKY, LLP
`3700 Buffalo Speedway, Ste. 1100
`Houston, Texas 77098
`Tel: 713-338-2560
`pschneider@schneiderwallace.com
`
`Counsel for Plaintiffand the Proposed Class
`
`* Pro Hac Vice applications to be filed
`
`
`
`
`
`10
`CLASS ACTION COMPLAINT
`
`City offlmmmxmrw v. Netihk Inc, et a].
`
`