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`INDIANA COMMERCIAL COURT
`
`STATE OF INDIANA IN THE MARION SUPERIOR COURT
` SS:
`COUNTY OF MARION CAUSE NO. 49D01-2008-PL-026436
`
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`CITY OF FISHERS, INDIANA;
`CITY OF INDIANAPOLIS, INDIANA;
`CITY OF EVANSVILLE, INDIANA;
`and CITY OF VALPARAISO, INDIANA;
`on behalf of themselves and all others
`similarly situated,
`
` Plaintiffs,
`
` v.
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`NETFLIX, INC.; DISNEY DTC LLC;
`HULU, LLC; DIRECTV, LLC;
`DISH NETWORK CORP.;
`and DISH NETWORK L.L.C.;
`
` Defendants.
`
`PLAINTIFFS’ REPLY IN SUPPORT OF THEIR
`MOTION TO DISMISS NETFLIX’S COUNTERCLAIMS
`
`The plaintiff Cities have not—and are not alleged to have—done anything other than
`seek this Court’s judgment as to whether the VSF Act applies to Defendants. Netflix’s coun-
`terclaim therefore rests entirely on the premise that (a) Netflix has a constitutional right not
`to be named as a defendant, and (b) that the Cities may be penalized (pursuant to Section
`1983) for even asking the question. Netflix has no such right, and its opposition fails to sup-
`ply any support for such a notion. The counterclaim should be dismissed.1
`
`1 The counterclaim suffers from numerous other procedural and substantive deficiencies. But those
`deficiencies would not be appropriately resolved at the motion-to-dismiss stage.
`Filed: 4/10/2024 3:48 PM
`Clerk
`Marion County, Indiana
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`1. Netflix’s cited cases do not support the proposition that merely being named
`as a defendant in a declaratory judgment action violates constitutional rights.
`
`Netflix’s opposition offers a string of cases bearing no resemblance to Netflix’s assertion
`that simply being named a defendant in this case violates Netflix’s constitutional rights:
`• Indiana Education Employment Relations Board v. Benton Community School Corp., 365
`N.E.2d 752 (Ind. 1977), held that a party may seek a declaration that a statute affecting its
`rights violates the state constitution, even if no action has yet been taken against it. The
`Court did not suggest that a party had a federal constitutional right not to be named a de-
`fendant in a declaratory judgment action.
`• Indiana Hospital Licensing Council v. Women’s Pavilion of South Bend, 486 N.E.2d 1070,
`1071–72 (Ind. Ct. App. 1985), addressed only whether a fee award arising from a Section
`1983 claim was excessive. That case stemmed from a state agency’s seeking to shutter an
`abortion clinic. See Ind. Hosp. Licensing Council v. Women’s Pavilion of South Bend, 420 N.E.2d
`1301 (Ind. Ct. App. 1981). It did not suggest that a party had a constitutional right not to be
`named as a defendant in a declaratory judgment action.
`• United States v. Zimmer Paper Products, Inc., 733 F. Supp. 1265 (S.D. Ind. 1989), arose
`from the EPA’s effort to fine Zimmer for allegedly violating volatile organic compound
`standards. Zimmer counterclaimed, alleging that EPA’s regulations were being misapplied in
`a way that resulted in “immediate financial hardship,” leaving Zimmer “either to install an
`incinerator that is far more expensive than Zimmer thinks is required or incur mounting
`fines for noncompliance.” Id. at 1269. The district court explained that a claim against an
`agency (Section 1983 is not mentioned) is ripe “when an aggrieved party is necessarily forced
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`to choose between incurring immediate business costs or facing sanctions for noncompli-
`ance.” Id. at 1269. In this case, there is no threat of sanction against Netflix. Rather, the Cit-
`ies seek a declaration of the parties’ respective rights and obligations under the VSF Act. If a
`declaration is issued in Plaintiffs’ favor (which would necessarily mean that Defendants’ af-
`firmative defenses failed), equitable follow-on relief would result—but only such relief as is
`warranted by the normal application of the Act, not any punitive sanction.
`• City of East St. Louis v. Monsanto Co., 2023 WL 2972990 (S.D. Ill. Apr. 17, 2023), says
`nothing about the propriety of a Section 1983 counterclaim under the circumstances here. It
`concluded only that the timing of Monsanto’s proposed counterclaim would not unduly prej-
`udice the city. Id. at *3.
`• Village of Riverdale v. American Transloading Services, 2023 WL 3070111 (Ill. App. Ct. Apr.
`25, 2023), did nothing more than to reverse the entry of a preliminary injunction in the Vil-
`lage’s favor because the trial court failed to perform a required balancing of potential harms.
`Id. at *4–5.
`Separately, the “pre-enforcement” cases Netflix cite have no bearing on this case for two
`reasons: (1) unlike the claimants in those cases, Netflix has not confessed that its conduct is
`proscribed by statute; and (2) there is no threat of criminal sanction or related “administra-
`tive action, like arrest or prosecution” attendant to the Cities’ declaratory judgment action.
`See Lorillard Tobacco Co. v. Reilly, 533 U.S. 525 (2001) (tobacco companies intended to engage
`in proscribed conduct); ACLU v. Alvarez, 679 F.3d 583, 593–94 (7th Cir. 2012) (eavesdrop-
`ping statute imposed criminal penalties, and ACLU announced its intention to disobey);
`Shirmer v. Nagode, 621 F.3d 581, 586 (7th Cir. 2010) (to demonstrate injury, plaintiff must
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`show an intention to engage in proscribed conduct that comes with a credible threat of pros-
`ecution); 520 Mich. Ave. Assocs., Ltd. v. Devine, 433 F.3d 961, 962–63 (7th Cir. 2006) (hotel un-
`derstood that its employment of replacement workers likely violated state law and that it
`faced a risk of criminal prosecution); Hulse v. Ind. State Fair Bd., 94 N.E.3d 726 (Ind. Ct. App.
`2018) (pre-enforcement claim viable when plaintiff “alleges an intention to engage in a
`course of conduct … proscribed by a statute” and there is a credible threat of criminal pen-
`alty, arrest, or prosecution).
`In sum, Netflix has failed to provide the Court with a single case standing for the propo-
`sition that merely being named a defendant in a case seeking the Court’s construction of the
`VSF Act violates Netflix’s constitutional rights. There is no alleged Section 1983 violation
`here. Therefore, the counterclaim should be dismissed.
`2. The Cities have the right to seek a construction of the VSF Act by this Court
`without Netflix’s threat of Section 1983 sanctions.
`
`The Real Estate Bar Association for Massachusetts, Inc. v. National Real Estate Information Services,
`608 F.3d 110 (1st Cir. 2010), held that the Section 1983 counterclaim was unconstitutional
`because it sought to punish a plaintiff simply for filing a lawsuit seeking the answer to a good
`faith disputed legal question. Id. at 123–24. Netflix does not deny either the point of the
`holding or that the same principles are at play here; rather, its main response is to argue that
`cities have no First Amendment rights.
`One of the cases Netflix cites (at 9 n.2) suggests otherwise, noting that because “a munic-
`ipality is the voice of its residents—is, indeed, a megaphone amplifying voices that might not
`otherwise be audible—a curtailment of its right to speak might be thought a curtailment of
`the unquestioned First Amendment rights of those residents.” Creek v. Village of Westhaven, 80
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`F.3d 186, 193 (7th Cir. 1996). Similarly, California has recognized for nearly 30 years that the
`First Amendment can serve as a shield for state actors. Nadel v. Regents of Univ. of Cal., 28 Cal.
`App. 4th 1251, 1266–67 (Cal. Ct. App. 1st Dist. 1994) (holding that the New York Times
`standard for proving malice in a defamation action by a public figure also applies to defama-
`tion actions against government defendants). Nadel concluded that government “has a legiti-
`mate role to play in the interchange of ideas” and therefore “government should have some
`measure of protection in performing that role, at least as to matters of public interest.” Id. at
`1266.
`Consistent with the authorities above, the Supreme Court has suggested that the First
`Amendment provides protection for States. See Walker v. Texas Division, Sons of Confederate
`Veterans, Inc., 576 U.S. 200, 219 (2015) (“[J]ust as Texas cannot require SCV to convey the
`State’s ideological message, … SCV cannot force Texas to include a Confederate battle flag
`on its specialty license plates.”). The Supreme Court in Walker held that “Texas’s specialty
`license plate designs constitute government speech and that Texas was consequently entitled
`to refuse to issue plates featuring SCV’s proposed design.” Id. at 219–220.2
`At a minimum, the Cities have a statutory right to pursue this case under the Indiana De-
`claratory Judgment Act (I.C. § 34-14-1-2), see Netflix, Inc. v. City of Fishers, 212 N.E.3d 188,
`193 (Ind. Ct. App. 2023)3—a right that Netflix’s counterclaim seeks to unfairly burden.
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`2 Netflix relies on a concurring opinion in Columbia Broadcast System, Inc. v. Democratic National Commit-
`tee, 412 U.S. 94, 139 (1973), that no other Justice joined (unlike Walker).
`3 The Cities also have a statutory right to pursue this case under the VSF Act for reasons previously
`briefed but not decided by the Court of Appeals.
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`There is no reason why the rationale underlying Real Estate Bar Association should not apply
`to rights of court access grounded in statute as well.
`The fundamental problem with Netflix’s position is that it improperly attempts to trans-
`form Netflix’s affirmative defenses into counterclaims. But doing so makes no sense. It
`would be one thing if this Court were to conclude (though the Cities believe there is no sup-
`port for the conclusion) that the VSF Act cannot constitutionally apply to Netflix. It would
`be quite another—and an extraordinary departure from the American Rule—for this Court
`to conclude that, merely by asking the question, the Cities somehow violated Netflix’s con-
`stitutional rights and should pay its attorneys’ fees.
`The most recent authority on this issue goes against Netflix. In the last month, a Mis-
`souri court rejected an identical Section 1983 counterclaim, in similar litigation under Mis-
`souri’s version of the VSF Act. In that case, the trial court initially granted Hulu leave to file
`a Section 1983 counterclaim against the named plaintiff, City of Creve Coeur, and all 421 ab-
`sent class member cities. The Supreme Court of Missouri issued a preliminary writ of prohi-
`bition requiring the trial court either to vacate that order or to argue why the writ should not
`be made permanent. See Ex. 1, State ex rel. City of Creve Coeur v. Ribaudo, No. SC 100448 (Mo.
`Mar. 5, 2024) (Preliminary Writ of Prohibition). In response, the trial court vacated the or-
`der.4 See Ex. 2, City of Creve Coeur v. Netflix, Inc., No. 18SL-CC02819 (Mo. Cir. Ct. St. Louis
`County Apr. 2, 2024) (Order).
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`4 The Supreme Court of Missouri was not asked to rule on Netflix’s Section 1983 counter-
`claim, but the Court’s views concerning Hulu’s counterclaim suggests that Netflix’s will be
`terminated as well.
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`7
`CONCLUSION
`Asking a Court to construe a statute is not a constitutional violation. Without a constitu-
`tional violation, there is no injury giving rise to a Section 1983 claim. Because Netflix asserts
`no plausible Section 1983 claim, its counterclaim should be dismissed.
`
`Dated: April 10, 2024 Respectfully submitted,
`/s/ Michael R. Limrick
` Andrew W. Hull (11218-49)
` Michael R. Limrick (23047-49)
` HOOVER HULL TURNER LLP
` 111 Monument Circle, Suite 4400
` P.O. Box 44989
` Indianapolis, IN 46244-0989
` Tel: (317) 822-4400
` Fax: (317) 822-0234
` awhull@hooverhullturner.com
` mlimrick@hooverhullturner.com
`
`George Zelcs (pro hac vice)
`Korein Tillery, LLC
`205 North Michigan Avenue, Suite 1950
`Chicago, IL 60601
`Tel: (312) 641-9750
`gzelcs@koreintillery.com
`
` Steven M. Berezney (pro hac vice)
` Garrett R. Broshuis, (pro hac vice)
` Korein Tillery, LLC
` 505 N. 7th Street, Suite 3600
` St. Louis, MO 63101
` Tel. (314) 241-4844
` Fax. (314) 241-1854
` sberezney@koreintillery.com
` gbroshuis@koreintillery.com
`
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`CERTIFICATE OF SERVICE
`The undersigned hereby certifies that on April 10, 2024, a copy of the foregoing docu-
`ment was served on all counsel of record via the Court’s electronic case management system.
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`/s/ Andrew W. Hull
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