throbber
VICTOR JIH, State Bar No. 186515
`RYAN S. BENYAMIN, State Bar No. 322594
`WILSON SONSINI GOODRICH & ROSATI, P.C.
`Professional Corporation
`633 West Fifth Street, Suite 1550
`Los Angeles, CA 90071-2027
`Telephone: (323) 210-2900
`Facsimile:
`(866) 974-7329
`Email:
`vjih@wsgr.com
`rbenyamin@wsgr.com
`DYLAN J. BYRD, State Bar No. 328029
`WILSON SONSINI GOODRICH & ROSATI, P.C.
`650 Page Mill Road
`Palo Alto, CA 94304-1050
`Telephone: (650) 493-9300
`Facsimile: (650) 565-5100
`Email:
`dbyrd@wsgr.com
`Attorneys for Defendant Hulu LLC
`
`SUPERIOR COURT OF THE STATE OF CALIFORNIA
`COUNTY OF LOS ANGELES
`
`CITY OF LANCASTER, CALIFORNIA,
`individually and on behalf of all others
`similarly situated,
`Plaintiffs,
`
`v.
`NETFLIX, INC. and HULU, LLC,
`Defendants.
`
`Case No.: 21STCV01881
`Complaint Served: January 23, 2021
`
`DEFENDANT HULU, LLC’S REPLY
`BRIEF IN SUPPORT OF DEMURRER
`
`Hearing Date: April 6, 2022
`Time:
`10:00am
`Department:
`9
`Before:
`Hon. Yvette M. Palazuelos
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`HULU’S REPLY IN SUPPORT OF DEMURRER
`
`CASE NO.: 21STCV01881
`
`Electronically FILED by Superior Court of California, County of Los Angeles on 03/28/2022 03:48 PM Sherri R. Carter, Executive Officer/Clerk of Court, by K. Martinez, Deputy Clerk
`
`

`

`TABLE OF CONTENTS
`
`Page
`INTRODUCTION ............................................................................................................... 6
`PLAINTIFF HAS NO PRIVATE RIGHT OF ACTION UNDER DIVCA ....................... 7
`DIVCA DOES NOT APPLY BECAUSE HULU DOES NOT CONSTRUCT OR
`OPERATE ITS OWN FACILITIES IN THE PUBLIC RIGHTS-OF-WAY ..................... 9
`DIVCA DOES NOT APPLY TO HULU’S “ON-DEMAND” VIDEO CONTENT
`BECAUSE THAT IS NOT “VIDEO PROGRAMMING” ............................................... 11
`DIVCA ALSO DOES NOT APPLY BECAUSE HULU PROVIDES VIDEO
`CONTENT OVER THE PUBLIC INTERNET ................................................................ 12
`CONCLUSION ................................................................................................................. 14
`
`I.
`II.
`III.
`
`IV.
`
`V.
`
`VI.
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`HULU’S REPLY IN SUPPORT OF DEMURRER
`
`2
`
`CASE NO.: 21STCV01881
`
`

`

`TABLE OF AUTHORITIES
`
`CASES
`
`Page(s)
`
`Animal Legal Defense Fund v. Mendes,
`160 Cal. App. 4th 136 (2008) .............................................................................................. 8
`Anytime Fitness, LLC v. Roberts,
`No. 12-cv-02913-SRN-JJG, 2013 WL 1760950 (D. Minn. Apr. 24, 2013) ..................... 13
`City of Ashdown v. Netflix, Inc.,
`No. 4:20-cv-4113, 2021 WL 4497855 (W.D. Ark. Sept. 30, 2021), appeal
`filed, No. 21-3435 (8th Cir. Oct. 29, 2021) ............................................................. 9, 13, 14
`City of Fishers v. Netflix, Inc.,
`No. 49D01-2008-PL-026436 (Ind. Super. Ct. Jan. 18, 2022) ................................. 7, 11, 12
`City of New Boston v. Netflix, Inc.,
`No. 5:20-cv-00135, 2021 WL 4771537 (E.D. Tex. Sept. 30, 2021) ................................... 9
`City of Reno v. Netflix, Inc.,
`No. 3:20-cv-00499-MMD-WGC, 2021 WL 4037491 (D. Nev. Sept. 3,
`2021), appeal filed, No. 21-16560 (9th Cir. Sept. 23, 2021) ..................................... passim
`Cmty. Commc’ns Co. v. City of Boulder,
`660 F.2d 1370 (10th Cir. 1981) ......................................................................................... 11
`Comcast of Cal. I, Inc. v. City of Walnut Creek,
`371 F. Supp. 2d 1147 (N.D. Cal. 2005) ............................................................................ 11
`Comcast of Cal. II, L.L.C. v. City of San Jose,
`286 F. Supp. 2d 1241 (N.D. Cal. 2003) ............................................................................ 11
`Erie Telecommc’ns, Inc. v. City of Erie,
`659 F. Supp. 580 (W.D. Pa. 1987), aff’d as amended, 853 F.2d 1084 (3d
`Cir. 1988) .......................................................................................................................... 11
`Gordon v. Virtumundo, Inc.,
`575 F.3d 1040 (9th Cir. 2009) ........................................................................................... 13
`Gwinnett Cty. v. Netflix, Inc.,
`No. 20-A-07909-10, 2022 WL 678784 (Ga. Super. Ct. Feb. 18, 2022) .................... passim
`In the Matter of Entm’t Connections, Inc.,
`13 FCC Rcd. 14277 (1998) ............................................................................................... 10
`Kentucky v. Netflix, Inc.,
`No. 15-CI-01117 (Ky. Cir. Ct. Aug. 23, 2016) ................................................................. 12
`Kovacs v. Cooper,
`336 U.S. 77 (1949) ............................................................................................................ 11
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`HULU’S REPLY IN SUPPORT OF DEMURRER
`
`3
`
`CASE NO.: 21STCV01881
`
`

`

`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`Lauder, Inc. v. City of Houston,
`751 F. Supp. 2d 920 (S.D. Tex. 2010), aff’d, 670 F.3d 664 (5th Cir. 2012) ..................... 11
`Lehman v. City of Shaker Heights,
`418 U.S. 298 (1974) .......................................................................................................... 11
`Mabry v. Super. Ct.,
`185 Cal. App. 4th 208 (2010) .............................................................................................. 8
`Members of City Council of the City of L.A. v. Taxpayers for Vincent,
`466 U.S. 789 (1984) .......................................................................................................... 11
`Metromedia, Inc. v. City of San Diego,
`453 U.S. 490 (1981) .......................................................................................................... 11
`Omega Satellite Prods. v. City of Indianapolis,
`694 F.2d 119 (7th Cir. 1982) ............................................................................................. 11
`Pac. Bell Tel. Co. v. City of Walnut Creek,
`428 F. Supp. 2d 1037 (N.D. Cal. 2006) ............................................................................ 11
`Pac. W. Cable Co. v. City of Sacramento,
`798 F.2d 353 (9th Cir. 1986) ............................................................................................. 11
`Phelps v. Stostad,
`16 Cal. 4th 23 (1997) ......................................................................................................... 10
`RTM Media, L.L.C. v. City of Houston,
`584 F.3d 220 (5th Cir. 2009) ............................................................................................. 11
`Sandvig v. Barr,
`451 F. Supp. 3d 73 (D.D.C. 2020) .................................................................................... 14
`Telesat Cablevision, Inc. v. City of Riviera Beach,
`773 F. Supp. 383 (S.D. Fla. 1991) ..................................................................................... 11
`Time Warner Entm’t Co. v. FCC,
`93 F.3d 957 (D.C. Cir. 1996) ............................................................................................ 11
`ZooBuh, Inc. v. Savicom, Inc.,
`No. 2:17-cv-01098, 2019 WL 1466285 (D. Utah Apr. 3, 2019) ....................................... 13
`STATUTES
`Ga. Code Ann. § 36-76-2(15) ........................................................................................................ 12
`47 U.S.C. § 151 note (2018), Leg. Hist. § 1101(a) ....................................................................... 13
`47 U.S.C. § 151 note (2018), Leg. Hist. § 1101(d)(3)(D) ............................................................. 13
`47 U.S.C. § 151 note (2018). Leg. Hist. § 1105(5)(A) ................................................................. 13
`Pub. Util. Code § 444 .............................................................................................................. 6, 7, 8
`Pub. Util. Code § 2101 .................................................................................................................... 8
`
`HULU’S REPLY IN SUPPORT OF DEMURRER
`
`4
`
`CASE NO.: 21STCV01881
`
`

`

`Pub. Util. Code § 5830(f) .............................................................................................................. 10
`Pub. Util. Code § 5830(s) .................................................................................................... 9, 12, 14
`Pub. Util. Code § 5840(b) ............................................................................................................... 9
`Pub. Util. Code § 5860(d) ............................................................................................................. 10
`MISCELLANEOUS
`Black’s Law Dictionary (11th ed. 2019) ....................................................................................... 14
`H.R. Rep. No. 110-372, 2007 WL 2979639 (2007) ...................................................................... 13
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`HULU’S REPLY IN SUPPORT OF DEMURRER
`
`5
`
`CASE NO.: 21STCV01881
`
`

`

`I.
`
`INTRODUCTION
`The Opposition confirms there are no new facts alleged in the First Amended Complaint
`(“FAC”). Instead of correcting factual defects, Plaintiff has chosen to double-down on the old
`facts and to urge the Court to reconsider its prior ruling. With no new facts, the FAC is nothing
`more than an improper reconsideration request that can be summarily rejected. The Court’s ruling
`still applies and Plaintiff’s claims should still be dismissed.
`That said, Plaintiff’s arguments do not undermine the Court’s prior decision.
`There still is no private right of action. The Opposition argues that the Court erred because
`Public Utilities Code Section 444 does not apply to municipal franchise fees (as opposed to annual
`fees owed to the Public Utilities Commission (“PUC”)). But the Court never said it did. Section
`444 is proof the legislature knows how to provide for an express right of action, but simply did not
`do so here. That remains true whether Section 444 applies to municipal franchise fees or not.
`Section 444 also refutes Plaintiff’s hypothetical argument that a provider can obtain immunity by
`never applying for or obtaining a state franchise. A provider who never applies for a franchise
`will also, by definition, be one who fails to pay any fees to the PUC. The Court correctly noted
`that Section 444 would apply, authorizes the PUC to take action, and prevents immunity.
`Hulu still does not construct or operate facilities in the public rights-of-way. Plaintiff
`argues the Court erred because “use” of the public rights-of-way should be interpreted broadly.
`Digital Infrastructure and Video Competition Act (“DIVCA”) does not turn on the interpretation
`of “use” but the requirement that “video service” be “provided through facilities located at least in
`part in public rights-of-way.” Even if the word “use” can be construed broadly through dictionary
`definitions, it does not change the fact that—in the franchise context—“use” of the rights of way
`has traditionally required the placement or operation of one’s own facilities. The Court’s ruling
`referenced that understanding as one of many reasons why DIVCA does not apply to Hulu. Even
`without it, the other reasons leave no doubt that the statute’s “through facilities” language must
`require the construction or operation of a provider’s own network in the public rights of way—
`something Hulu does not do.
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`HULU’S REPLY IN SUPPORT OF DEMURRER
`
`6
`
`CASE NO.: 21STCV01881
`
`

`

`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`Hulu’s “On-Demand” Service Is Not “Video Programming” Under DIVCA. The
`Opposition also re-argues “video programming.” The arguments remain the same, but Plaintiff
`cites as additional authority the recent ruling in City of Fishers v. Netflix, Inc., No. 49D01-2008-
`PL-026436 (Ind. Super. Ct. Jan. 18, 2022).1 The Indiana state court, however, never decided what
`“video programming” means but ruled based on Indiana pleading procedures. The more relevant
`recent authority is Gwinnett Cty. v. Netflix, Inc., No. 20-A-07909-10, 2022 WL 678784 (Ga.
`Super. Ct. Feb. 18, 2022), where the Georgia state court did reach the issue, cites this Court’s
`“video programming” holding, and adopts it.
`The Public Internet Exception Also Applies. The FAC also fails to state a claim because
`Hulu’s streaming service is expressly excluded from DIVCA. Plaintiff tries to limit the exclusion
`to Internet Service Providers (“ISPs”), but that argument is based on an incomplete and false
`comparison to ITFA, advances an interpretation that has been rejected by numerous courts, and
`creates nonsense outcomes that serve no conceivable policy purpose.
`For these reasons, the Court should dismiss the FAC without leave to amend.
`PLAINTIFF HAS NO PRIVATE RIGHT OF ACTION UNDER DIVCA
`Plaintiff claims the Court misread Public Utilities Code Section 444. The Opposition
`points out that Section 444 “relates to annual fees payable to the PUC”—not the quarterly
`“franchise fees” payable to municipalities. Opp’n at 5. But the Court never said otherwise, nor
`does its ruling depend on Section 444’s applicability to the franchise fees sought in this case.
`The discussion about Section 444 first appears in the part of the Court’s opinion finding no
`express right of action. The Court explains how Section 444 applies when there are “defaults in
`payment of state franchise fees.” September 20, 2021 Order (“Order”), at 6.2 The Court never
`said, however, whether the defaulted state franchise fees refer only to those payable to the PUC or
`
`II.
`
`1 City of Fishers is attached as Exhibit 1 to the Declaration of Jason H. Kim in Support of
`Plaintiff City of Lancaster, California’s Oppositions to Defendants Netflix, Inc. and Hulu, LLC’s
`Demurrers to Amended Complaint, filed on Feb. 28, 2022.
`2 The Order is attached as Exhibit 1 to the Declaration of Ryan S. Benyamin in support of
`Defendant Hulu, LLC’s Demurrer to Plaintiff’s First Amended Complaint, filed on January 14,
`2022.
`
`HULU’S REPLY IN SUPPORT OF DEMURRER
`
`7
`
`CASE NO.: 21STCV01881
`
`

`

`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`also to fees payable to municipalities. Nor does it matter. The “plain language” shows “the
`Legislature knew how to authorize a private right of action against a ‘video service provider’ that
`is subject to DIVCA but that may not yet hold a state franchise.” Id. It simply did not do so.
`Plaintiffs’ claim of error is pointless, since Plaintiff no longer argues there is an express right.
`The Court’s reasons for rejecting an implied right of action also remain unchanged. Courts
`will find such a right only if (1) the statute is completely silent as to private rights and (2)
`compelling public policy reasons require a court to do so. See Mabry v. Super. Ct., 185 Cal. App.
`4th 208, 217, 219 (2010); Animal Legal Defense Fund v. Mendes, 160 Cal. App. 4th 136, 142
`(2008). First, because DIVCA provides limited (but inapplicable) express rights of action to
`municipalities and to other actors, “the Court may not find an implied private right of action”
`beyond those expressly offered. Order at 8. Section 444 is just one of many such examples. It
`does not matter if it applies to these franchise fees or not. The mere existence of any municipal
`express right of action—regardless of scope—makes it inappropriate to add others by implication.
`Second, there is no compelling policy reason for extending to local entities the authority to
`compel compliance with DIVCA. Plaintiff argued (as it does again now) that a hypothetical video
`service provider that fails to obtain a franchise would become immune. Not so. The Court
`rightfully points to Section 444 to show why this absurdity would not result. Order at 6-7. The
`PUC can take action against a hypothetical video service provider who refuses to obtain a
`franchise; Section 444 applies because that provider would also necessarily fail to pay any of the
`fees it would otherwise owe to the PUC. The Court never said that Section 444 applies to the
`failure to pay franchise fees to municipalities, since the hypothetical concerns a provider who fails
`to obtain a state franchise—not one who only fails to pay franchise fees to municipalities.
`Even without Section 444, there is no “enforcement gap.” Public Utilities Code Section
`2101 provides broad enforcement powers to the PUC. The PUC “shall see that the . . . statutes of
`[California] affecting public utilities . . . are enforced and obeyed, and that violations thereof are
`promptly prosecuted and penalties due the State therefor recovered and collected.” Pub. Util.
`Code § 2101. “Upon the request of the [PUC], the Attorney General or the district attorney . . .
`shall institute and prosecute actions … for the enforcement of . . . statutes . . . affecting public
`
`HULU’S REPLY IN SUPPORT OF DEMURRER
`
`8
`
`CASE NO.: 21STCV01881
`
`

`

`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`utilities and for the punishment of all violations thereof.” Id.3 The Opposition attempts to
`downplay the PUC’s role as ministerial. It cites Public Utilities Code Section 5840(b), which
`states that “the authority granted to the [PUC] under this section shall not exceed the provisions
`set forth in this section.” Opp’n at 5. But Plaintiff leaves out the critical part—the franchise
`authority granted to the PUC in Section 5840(b) is total; the PUC is the “sole franchising
`authority” for the state. That leaves no room for municipal disagreement. In fact, the whole
`point of DIVCA was to take franchise authority away from municipalities in favor of state actors.
`III.
`DIVCA DOES NOT APPLY BECAUSE HULU DOES NOT CONSTRUCT OR
`OPERATE ITS OWN FACILITIES IN THE PUBLIC RIGHTS-OF-WAY
`Plaintiff’s Opposition argues that this Court erred in finding that “use” of the public right-
`of-way requires the construction and operation of facilities in that right-of-way. Opp’n at 7-10.
`Plaintiff argues that this Court should instead adopt a broad interpretation of “use” that
`encompasses the term’s “usual and ordinary” definition. Id. at 7-8.
`The Opposition’s focus on the term “use” misapprehends DIVCA. DIVCA does not turn
`on the meaning of the word “use.” The statute turns instead on whether a person provides video
`content “through facilities located at least in part in public rights-of-way.” See Pub. Util. Code §
`5830(s) (definition of “video service”). The question is whether “through facilities” refers to
`one’s own facilities or whether anyone’s facilities can trigger the franchise requirements.
`The Court examined how “use” has traditionally been understood in the franchising
`context. Its Order analyzed “use” as just one piece of evidence of “legislative intent so as to
`effectuate the purpose of [DIVCA].” Order at 8. As this Court noted, the FCC and the Seventh
`
`3 For similar reasons, franchise-fee cases have denied a private right of action to municipalities
`against Hulu and Netflix in favor of state enforcement. See Opp’n at 7 n.8; City of Ashdown v.
`Netflix, Inc., No. 4:20-cv-4113, 2021 WL 4497855, at *5 (W.D. Ark. Sept. 30, 2021)
`(enforcement with Arkansas Public Service Commission), appeal filed, No. 21-3435 (8th Cir.
`Oct. 29, 2021); City of New Boston v. Netflix, Inc., No. 5:20-cv-00135, 2021 WL 4771537, at *4
`(E.D. Tex. Sept. 30, 2021) (enforcement with Public Utilities Commission of Texas); City of
`Reno v. Netflix, Inc., No. 3:20-cv-00499-MMD-WGC, 2021 WL 4037491, at *6-7 (D. Nev. Sept.
`3, 2021) (enforcement with Attorney General of Nevada), appeal filed, No. 21-16560 (9th Cir.
`Sept. 23, 2021); Gwinnett Cty. , 2022 WL 678784, at *11 (enforcement with Attorney General of
`Georgia).
`
`HULU’S REPLY IN SUPPORT OF DEMURRER
`
`9
`
`CASE NO.: 21STCV01881
`
`

`

`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`Circuit found that “use” of the right-of-way is premised on construction and maintenance of
`facilities in that right-of-way. Order at 12–13 (citing In the Matter of Entm’t Connections, Inc., 13
`FCC Rcd. 14277, ¶ 62 (1998) (“ECI”)). ECI found (and the Seventh Circuit agreed) that a
`provider who relies on another’s facilities has no need to obtain a franchise and pay fees because
`the “underlying premise” behind the franchise is the construction, maintenance, and operation of
`those facilities. ECI ¶ 62. Plaintiff cites no case where a franchise has ever been required from
`someone who does not construct, maintain, or operate its own facilities in the public rights of way.
`Even if one puts aside how “use” has traditionally been understood in the franchising
`context, DIVCA itself makes clear “through facilities” must refer to a provider’s own facilities.
`Order at 14 (citing Phelps v. Stostad, 16 Cal. 4th 23, 32 (1997)).4 This Court provided a chart of
`DIVCA provisions that require that interpretation, and Plaintiff does nothing to reconcile its
`position with those provisions. See Order at 14-15. For example, DIVCA defines the franchise as
`that which “authorizes the construction and operation of any network in the right-of-way.” Pub.
`Util. Code § 5830(f). It makes no sense to require a franchise from those who never construct or
`operate such a network. Similarly, DIVCA defines gross revenues as “all revenue actually
`received . . . that is derived from the operation of the holder’s network to provide cable or video
`service within the jurisdiction of the local entity.” Pub. Util. Code § 5860(d) (emphasis added).
`As this Court noted, “franchise holders who do not operate their own networks would not generate
`any ‘gross revenues’ as defined by DIVCA.” Order at 15 (quoting Pub. Util. Code § 5860(d)).5
`Construing DIVCA as anything but a facilities-based statute creates clear constitutional
`problems. There can be no question that the online distribution of video content is protected
`First Amendment activity. The legitimacy of imposing a franchise regime turns on whether the
`government can insist on prior permission before engaging in that protected activity. As Plaintiff
`
`4 A Georgia court recently reached the same result. Citing this Court’s Order as support, it held
`that “[b]ecause Plaintiffs do not allege that [Hulu and Netflix] construct or operate their own
`networks in Plaintiffs’ rights-of-way, this Court concludes that [Hulu and Netflix] are not
`required to obtain franchises or pay franchise fees.” Gwinnett County, 2022 WL 678784, at *7.
`5 Nor would this construction-and-operation requirement create a “video service monopoly” that
`allows only one franchisee per right-of-way. See Opp’n at 10. If multiple providers wish to
`construct facilities, they can each apply for and receive a franchise.
`
`HULU’S REPLY IN SUPPORT OF DEMURRER
`
`10
`
`CASE NO.: 21STCV01881
`
`

`

`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`notes, “courts consistently affirm . . . municipal authority to regulate use of public rights-of-way
`for video distribution.” Plaintiff’s Opposition to Netflix’s Demurrer at 6. They have done so,
`though, where that activity involves some new physical intrusion, interference, or occupation of
`public property. Every case Plaintiff cites involves something physical.6 The problem with
`Plaintiff’s position here, however, is that it seeks to trigger the franchise requirements even if
`there is no physical intrusion, interference, or occupation. It is one thing to require permission
`before installing wires or facilities on public property. It is another to require permission before
`anyone can speak online. Plaintiff’s argument goes too far. Its expansive interpretation drives
`DIVCA into uncharted and unconstitutional territory that this Court has rightfully avoided.
`IV.
`DIVCA DOES NOT APPLY TO HULU’S “ON-DEMAND” VIDEO CONTENT
`BECAUSE THAT IS NOT “VIDEO PROGRAMMING”
`There is no factual basis to disturb this Court’s ruling that Hulu and Netflix’s “on-demand
`services” are not “video programming” under DIVCA. See Order at 16-20. The Opposition tries
`to reopen this issue by citing the recent City of Fishers decision in Indiana state court. That
`decision, however, did not decide the meaning of “video programming” but was driven by the
`“minimal pleading standards” under Indiana law. See City of Fishers, No. 49D01-2008-PL-
`
`6 Time Warner Entm’t Co. v. FCC, 93 F.3d 957 (D.C. Cir. 1996) (laying cables); Pac. W. Cable
`Co. v. City of Sacramento, 798 F.2d 353 (9th Cir. 1986) (stringing cables on utility poles and
`laying cables in conduits); Omega Satellite Prods. v. City of Indianapolis, 694 F.2d 119 (7th Cir.
`1982) (removing cable laid in culvert); Cmty. Commc’ns Co. v. City of Boulder, 660 F.2d 1370
`(10th Cir. 1981) (stringing cable); Comcast of Cal. I, Inc. v. City of Walnut Creek, 371 F. Supp.
`2d 1147 (N.D. Cal. 2005) (integrating coaxial cables); Comcast of Cal. II, L.L.C. v. City of San
`Jose, 286 F. Supp. 2d 1241 (N.D. Cal. 2003) (trigger, equipment, location, and management of
`PEG channels); Pac. Bell Tel. Co. v. City of Walnut Creek, 428 F. Supp. 2d 1037 (N.D. Cal.
`2006) (removing bridge taps on existing copper lines); Telesat Cablevision, Inc. v. City of
`Riviera Beach, 773 F. Supp. 383 (S.D. Fla. 1991) (wiring franchise areas); Erie Telecommc’ns,
`Inc. v. City of Erie, 659 F. Supp. 580 (W.D. Pa. 1987) (physical intrusion of cables), aff’d as
`amended, 853 F.2d 1084 (3d Cir. 1988); Metromedia, Inc. v. City of San Diego, 453 U.S. 490
`(1981) (outdoor advertising displays within city); Members of City Council of the City of L.A. v.
`Taxpayers for Vincent, 466 U.S. 789 (1984) (attaching signs to utility poles); Lehman v. City of
`Shaker Heights, 418 U.S. 298 (1974) (placing advertisements on city transit vehicles); Kovacs v.
`Cooper, 336 U.S. 77 (1949) (broadcasting out of sound truck on public streets); RTM Media,
`L.L.C. v. City of Houston, 584 F.3d 220 (5th Cir. 2009) (billboard advertising); Lauder, Inc. v.
`City of Houston, 751 F. Supp. 2d 920 (S.D. Tex. 2010) (newsracks placed in rights-of-way),
`aff’d, 670 F.3d 664 (5th Cir. 2012).
`
`HULU’S REPLY IN SUPPORT OF DEMURRER
`
`11
`
`CASE NO.: 21STCV01881
`
`

`

`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`026436, at 21. The Court explained that “the extent [to which] Defendants provide programming
`that is sufficiently different” is “an inquiry to be taken up at [a] later stage in [the] proceedings.”
`Id. at 22. The Court also stated that “[w]hether Defendants may be considered MVPDs currently
`remains an unanswered question of law.” Id. Thus, it simply did not reach these issues.
`Since this Court’s Order and City of Fishers, a Georgia court found that “on-demand”
`content is not video programming.7 Gwinnett Cty., 2022 WL 678784, at *9. The Georgia court
`cited this Court’s Order, and held that because “Plaintiffs [did] not allege that Netflix or Disney’s
`video content is live, linear, channelized, scheduled, or programmed . . . Defendants’ streaming
`cannot be subject to” the video service act. Gwinnett Cty., 2022 WL 678784, at *9 (citing Order
`at 16-20; Kentucky v. Netflix, Inc., No. 15-CI-01117, at 14-15 (Ky. Cir. Ct. Aug. 23, 2016)).
`Thus, recent authorities confirm that this Court’s prior ruling on “video programming” is correct.
`V.
`DIVCA ALSO DOES NOT APPLY BECAUSE HULU PROVIDES VIDEO
`CONTENT OVER THE PUBLIC INTERNET
`The FAC also fails because Hulu is excluded from DIVCA under its public-Internet
`exception. That exception excludes content that is “provided as part of, and via, a service that
`enables users to access content, information, electronic mail, or other services offered over the
`public Internet.” Pub. Util. Code § 5830(s). The plain language of this section clearly applies to
`Hulu because Hulu enables subscribers to access its content through subscribers’ ISPs. See
`Hulu’s Demurrer at 11. As Plaintiff admits, “the subscriber’s Internet service provider will
`connect the subscriber to the Hulu server” and Hulu’s content will subsequently be delivered
`“through the Internet to the subscriber’s Internet-connected device.” FAC ¶ 33. That admission
`is fatal to Plaintiff’s claim. See Opp’n at 13-14. Allegations that “customers access [Hulu’s]
`streaming services via third-party ISPs . . . confirm that [Hulu] provides access to streaming
`video content over the public Internet.” Gwinnett County, 2022 WL 678784, at *8; see also City
`of Reno, 2021 WL 4037491, at *4.
`
`7 In Georgia’s video service statute, “video programming” is defined identically to California: as
`“programming provided by, or generally considered comparable to programming provided by, a
`television broadcast station.” Ga. Code Ann. § 36-76-2(15).
`
`HULU’S REPLY IN SUPPORT OF DEMURRER
`
`12
`
`CASE NO.: 21STCV01881
`
`

`

`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`To save the claim, Plaintiff argues that the public-Internet exception was only intended to
`apply to ISPs. See Opp’n at 14. According to Plaintiff, the language used in the exception
`originated from a definition in the federal Internet Tax Freedom Act (“ITFA”) that refers to ISPs.
`Plaintiff is wrong. ITFA actually contains two similar but materially different definitions. The
`federal law separately defines “Internet access” and “Internet access service”:
`
`Internet Access - “[A] service that enables users to connect to the Internet to access
`content, information, or other services offered over the Internet.”
`47 U.S.C. § 151 note, (2018) (Leg. Hist. § 1105(5)(A)) (emphasis added).
`
`Internet Access Service - “[A] service that enables users to access content, information,
`electronic mail, or other services offered over the Internet.”
`Id. § 1101(d)(3)(D). There are two definitions because ITFA contains two prohibitions: (1) no
`taxes on internet access and (2) no taxes that discriminate against electronic commerce. See 47
`U.S.C. § 151 note, (2018), (Leg. Hist. § 1101(a)). The prohibition on access taxes uses the term
`“Internet Access,” a “more narrowly focused definition” intended to apply only to ISPs. H.R.
`Rep. No. 110-372, 2007 WL 2979639, at *5 (2007). The prohibition on discriminatory taxes uses
`the term “Internet Access Service,” a broader term not limited to ISPs. Id. DIVCA uses the
`broader language.
`Numerous courts have confirmed that the language at issue is broad. The Ninth Circuit has
`held that the language is “not limited to traditional ISPs.” Gordon v. Virtumundo, Inc., 575 F.3d
`1040 (9th Cir. 2009). It can refer to social media platforms, websites, and online services.
`ZooBuh, Inc. v. Savicom, Inc., No. 2:17-cv-01098, 2019 WL 1466285, at *2 (D. Utah Apr. 3,
`2019); Anytime Fitness, LLC v. Roberts, No. 12-cv-02913, 2013 WL 1760950, at *3 (D. Minn.
`Apr. 24, 2013). Its breadth includes Hulu’s video content. City of Reno, 2021 WL 4037491, at
`*4; City of Ashdown, 2021 WL 4497855, at *4; Gwinnett Cty., 2022 WL 678784, at *9.
`Otherwise, Plaintiff recycles arguments made in the briefing for the initial demurrer.
`Plaintiff argues that the public-Internet exception only applies when video programming is “part
`of” the service offered, but not when it is the entire service. Opp’n at 13. Not true. The “part of”
`phrase simply requires that the video content be linked to the provider’s service; it does not mean
`that a provider cannot offer a video-only service. When a customer watches The Handmaid’s Tale
`
`HULU’S REPLY IN SUPPORT OF DEMURRER
`
`13
`
`CASE NO.: 21STCV01881
`
`

`

`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`on Hulu, the customer accesses video content that is “part of” Hulu’s service, which remains true
`whether Hulu offers a video-only service or a multifaceted one.8
`Plaintiff argues that “public” requires that any service be free of charge. See Opp’n at
`13-14. Not so. Public is commonly understood to mean “for the use and benefit for all.” City of

This document is available on Docket Alarm but you must sign up to view it.


Or .

Accessing this document will incur an additional charge of $.

After purchase, you can access this document again without charge.

Accept $ Charge
throbber

Still Working On It

This document is taking longer than usual to download. This can happen if we need to contact the court directly to obtain the document and their servers are running slowly.

Give it another minute or two to complete, and then try the refresh button.

throbber

A few More Minutes ... Still Working

It can take up to 5 minutes for us to download a document if the court servers are running slowly.

Thank you for your continued patience.

This document could not be displayed.

We could not find this document within its docket. Please go back to the docket page and check the link. If that does not work, go back to the docket and refresh it to pull the newest information.

Your account does not support viewing this document.

You need a Paid Account to view this document. Click here to change your account type.

Your account does not support viewing this document.

Set your membership status to view this document.

With a Docket Alarm membership, you'll get a whole lot more, including:

  • Up-to-date information for this case.
  • Email alerts whenever there is an update.
  • Full text search for other cases.
  • Get email alerts whenever a new case matches your search.

Become a Member

One Moment Please

The filing “” is large (MB) and is being downloaded.

Please refresh this page in a few minutes to see if the filing has been downloaded. The filing will also be emailed to you when the download completes.

Your document is on its way!

If you do not receive the document in five minutes, contact support at support@docketalarm.com.

Sealed Document

We are unable to display this document, it may be under a court ordered seal.

If you have proper credentials to access the file, you may proceed directly to the court's system using your government issued username and password.


Access Government Site

We are redirecting you
to a mobile optimized page.





Document Unreadable or Corrupt

Refresh this Document
Go to the Docket

We are unable to display this document.

Refresh this Document
Go to the Docket