`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
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`HULU’S REPLY IN SUPPORT OF DEMURRER
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`CASE NO.: 21STCV01881
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`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
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`
`
`TABLE OF CONTENTS
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`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.
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`IV.
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`V.
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`VI.
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`CASE NO.: 21STCV01881
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`
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`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
`
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`HULU’S REPLY IN SUPPORT OF DEMURRER
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`CASE NO.: 21STCV01881
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`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
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`HULU’S REPLY IN SUPPORT OF DEMURRER
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`CASE NO.: 21STCV01881
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`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
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`HULU’S REPLY IN SUPPORT OF DEMURRER
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`CASE NO.: 21STCV01881
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`
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`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.
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`HULU’S REPLY IN SUPPORT OF DEMURRER
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`CASE NO.: 21STCV01881
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`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.
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`HULU’S REPLY IN SUPPORT OF DEMURRER
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`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
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`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).
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`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.
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`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).
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`HULU’S REPLY IN SUPPORT OF DEMURRER
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`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).
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`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”:
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`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).
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`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
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`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