`
`
`
`In the
`United States Court of Appeals
`For the Seventh Circuit
`____________________
`
`No. 20-3478
`CITY OF FISHERS, INDIANA, et al.,
`
`Plaintiffs-Appellees,
`
`v.
`
`DIRECTV, et al.,
`
`Defendants-Appellants.
`____________________
`
`Appeal from the United States District Court for the
`Southern District of Indiana, Indianapolis Division.
`No. 1:20-cv-02351 — Jane Magnus-Stinson, Judge.
`____________________
`
`ARGUED APRIL 21, 2021 — DECIDED JULY 21, 2021
`____________________
`
`Before FLAUM, BRENNAN, and SCUDDER, Circuit Judges.
`SCUDDER, Circuit Judge. In the lawsuit underlying this ap-
`peal, a group of Indiana cities seeks a declaration that Netflix
`and other video streaming platforms owe them past and fu-
`ture franchise fees under an Indiana statute. The cities filed
`the action in state court, but the defendant streaming plat-
`forms removed the case to federal court. Relying on the doc-
`trine of comity abstention, the district court declined to exer-
`cise federal jurisdiction and remanded the case. At this early
`
`
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`No. 20-3478
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`stage, the only question before us is whether the district court
`properly abstained under the teachings of Levin v. Commerce
`Energy, Inc., 560 U.S. 413 (2010), and like cases. We conclude
`that it did and therefore affirm.
`I
`The Indiana Video Service Franchises Act of 2006 regu-
`lates the way cable television companies do business within
`the Hoosier state. See Ind. Code § 8-1-34. By the Act’s terms,
`anyone offering “video service” must enter into a franchise
`agreement with the Indiana Utility Regulatory Commission
`in exchange for use of a public right-of-way. Id. § 8-1-34-16(a),
`(b). For years, traditional cable and communications compa-
`nies like Comcast and AT&T have signed the franchise agree-
`ments and paid the required fees.
`The direct beneficiaries of this arrangement are local gov-
`ernments. Video service providers must pay quarterly fran-
`chise fees to government “units,” including counties, munici-
`palities, or townships within the provider’s service area. Id.
`§§ 8-1-34-24(a), 36-1-2-23. Indiana law requires that the Com-
`mission survey the participating units on an annual basis
`about revenue from the franchise agreements. See id. § 8-1-34-
`24.5(b). According to the Commission’s most recent annual
`report, the units that responded to the survey earned fran-
`chise fees totaling $19.4 million in 2019. The Commission also
`reported that most units deposit the franchise fees into gen-
`eral operating accounts, to be spent on public safety, road
`maintenance, infrastructure, and the like.
`Although enacted in 2006, the Act is arguably behind the
`times. Most people do not consume media today in the same
`way they did 15 years ago. Traditional cable television, for
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`No. 20-3478
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`3
`
`example, has been supplanted in many ways by on-demand
`streaming platforms like Netflix or Hulu. This modernization
`has left municipalities questioning whether streaming plat-
`forms, too, should be paying a fair share of franchise fees be-
`fore enjoying the financial benefit of Hoosiers’ business. Many
`cities seem to have concluded that these streaming platforms
`offer “video service” within the meaning of the Act and
`should have applied for franchise agreements with the Com-
`mission some time ago. To date, though, the streaming plat-
`forms have not applied for franchise agreements, and thus
`have avoided the Act’s fee obligations.
`In August 2020, the cities of Fishers, Indianapolis, Evans-
`ville, and Valparaiso challenged that status quo by filing a pu-
`tative class action lawsuit in Marion Superior Court against
`Netflix, Disney, Hulu, DIRECTV, and DISH Network. The cit-
`ies sought a declaration that the streaming platforms provide
`“video service” as defined by the Act and therefore must pay
`past and future franchise fees. For their part, the defendant
`streaming platforms responded by removing the case to fed-
`eral court under 28 U.S.C. §§ 1441 and 1453. The platforms ex-
`plained that the district court had jurisdiction over the lawsuit
`under both the traditional diversity jurisdiction statute, see
`28 U.S.C. § 1332(a), and under the Class Action Fairness Act
`of 2005, see 28 U.S.C. § 1332(d).
`The cities did not dispute the district court’s subject matter
`jurisdiction over the case, but instead filed a motion to re-
`mand to state court on abstention grounds. Invoking the com-
`ity abstention doctrine articulated most recently in Levin v.
`Commerce Energy, Inc., 560 U.S. 413 (2010), the cities argued
`that federal courts have long declined to exercise jurisdiction
`over cases involving local revenue collection and taxation.
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`No. 20-3478
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`The district court, the cities pressed, should chart that same
`course here and return the case to Indiana state court.
`The district court agreed with the cities and remanded, re-
`lying on the Levin comity abstention doctrine. The streaming
`services now appeal from that determination.
`II
`We begin with appellate jurisdiction. “An order remand-
`ing a case to state court is a final order that is reviewable on
`appeal unless there is some other prohibition on review.”
`Hammer v. United States Dep’t of Health & Human Servs.,
`905 F.3d 517, 525 (7th Cir. 2018). That prohibition is ordinarily
`found in 28 U.S.C. § 1447(d), which states that “[a]n order re-
`manding a case to the State court from which it was removed
`is not reviewable on appeal or otherwise.” But that is not the
`case here. In Quackenbush v. Allstate Insurance Co., the Supreme
`Court clarified that § 1447(d) does not bar appellate jurisdic-
`tion over abstention-based remand orders and held that such
`orders are appealable under 28 U.S.C. § 1291. See 517 U.S. 706,
`715 (1996).
`With confidence in our own appellate jurisdiction to con-
`sider the propriety of the district court’s abstention-based re-
`mand order, we proceed to the merits.
`A
`Federal courts have a “virtually unflagging obligation” to
`exercise the jurisdiction given them. Colo. River Water Conser-
`vation Dist. v. United States, 424 U.S. 800, 817 (1976). That duty
`reflects the “undisputed constitutional principle that Con-
`gress, and not the Judiciary, defines the scope of federal juris-
`diction within the constitutionally permissible bounds.” New
`Orleans Pub. Serv., Inc. v. Council of the City of New Orleans,
`
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`No. 20-3478
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`5
`
`491 U.S. 350, 359 (1989). Because a decision to abstain pushes
`against this obligation, “[a]bstention from the exercise of fed-
`eral jurisdiction is the exception, not the rule.” Colo. River,
`424 U.S. at 813.
`Within the tax and revenue world, a federal court’s obli-
`gation to stay its hand comes most often from the Tax Injunc-
`tion Act. Enacted in 1867, the TIA provides that a district court
`“shall not enjoin, suspend or restrain the assessment, levy or
`collection of any tax under State law where a plain, speedy
`and efficient remedy may be had in the courts of such State.”
`28 U.S.C. § 1341. In practice, then, the TIA ensures that chal-
`lenges to state taxes are litigated, if at all, in the state courts. It
`does not, however, bar federal adjudication of collection suits
`initiated by states or municipalities. See Jefferson County v.
`Acker, 527 U.S. 423, 433–34 (1999) (“[A] suit to collect a tax is
`surely not brought to restrain state action, and therefore does
`not fit the Act’s description.”). Because the cities initiated this
`collection suit, all agree that the TIA does not defeat federal
`jurisdiction.
`But our overview of the law in this area does not end there.
`Alongside the TIA sits a judicially created and related doc-
`trine: comity abstention. “[T]he comity doctrine is more em-
`bracive than the TIA,” and “counsels lower federal courts to
`resist engagement in certain cases falling within their jurisdic-
`tion.” Levin, 560 U.S. at 421, 424. That class of cases includes
`those presenting challenges to “state taxation of commercial
`activity,” on the understanding that revenue collection is a
`core function of state governments. Id. at 421.
`Because the comity abstention doctrine often overlaps
`with the limitations imposed by the TIA, the doctrine is sel-
`dom invoked. Leading treatises and casebooks on the law of
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`No. 20-3478
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`federal jurisdiction devote little attention to the doctrine. Yet
`comity-based abstention enjoys deep roots in the Supreme
`Court’s jurisprudence. In 1870, for instance, the Court under-
`scored that “[i]t is upon taxation that the several States chiefly
`rely to obtain the means to carry on their respective govern-
`ments, and it is of the utmost importance to all of them that
`the modes adopted to enforce the taxes levied should be in-
`terfered with as little as possible.” Dows v. City of Chicago,
`78 U.S. (11 Wall.) 108, 110 (1870). In the early twentieth cen-
`tury, the Court again observed “that a proper reluctance to
`interfere by prevention with the fiscal operations of the state
`governments has caused [us] to refrain from so doing in all
`cases where the Federal rights of the persons could otherwise
`be preserved unimpaired.” Boise Artesian Hot & Cold Water Co.
`v. Boise City, 213 U.S. 276, 282 (1909).
`The hesitance to interfere with state and municipal fiscal
`matters animates more recent Supreme Court decisions as
`well. See, e.g., Fair Assessment in Real Estate Ass’n, Inc. v.
`McNary, 454 U.S. 100, 116 (1981) (holding that “taxpayers are
`barred by the principle of comity from asserting § 1983 ac-
`tions against the validity of state tax systems in federal
`courts”).
`Many lower courts viewed one Supreme Court case, Hibbs
`v. Wynn, as breaking from that tradition. See 542 U.S. 88
`(2004). In Hibbs, the Court stated that comity principles “pre-
`clude original federal-court jurisdiction only when plaintiffs
`have sought district-court aid in order to arrest or counter-
`mand state tax collection.” Id. at 107 n.9 (2004) (emphasis
`added). In plainer terms, the comity doctrine—according to
`Hibbs—imagines the plaintiff as a disgruntled taxpayer trying
`to cut down his own tax burden. The flip side of the coin
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`No. 20-3478
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`7
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`seemed to be that the doctrine does not prevent federal adju-
`dication of controversies regarding state revenue collection
`brought by other types of plaintiffs, including government
`units or third parties. After Hibbs, then, several courts of ap-
`peals—including our court—understood the Supreme Court
`to have narrowed the comity doctrine’s reach. See, e.g., Levy v.
`Pappas, 510 F.3d 755 (7th Cir. 2007); Wilbur v. Locke, 423 F.3d
`1101 (9th Cir. 2005).
`In Levin, however, the Court rejected that interpretation of
`Hibbs and reinforced the comity doctrine’s broad foundation.
`The dispute in Levin stemmed from an Ohio tax exemption for
`local energy distribution companies. See 560 U.S. at 418. A
`California energy company sought to improve its own com-
`petitive position in Ohio in part by filing a federal complaint
`asking the district court to declare the local tax benefit uncon-
`stitutional. See id. at 419. The district court declined to exercise
`jurisdiction over the California corporation’s claims as a mat-
`ter of comity. Id. at 419–20. But the Sixth Circuit reversed. Re-
`lying on Hibbs, the court observed that the Levin plaintiff did
`not seek the aid of the district court to halt collection of a state
`tax. To the contrary, the California energy company, acting as
`a third party, sought to prevent a different entity from enjoy-
`ing a tax break. This distinction made all the difference to the
`Sixth Circuit, which then rejected the district court’s “expan-
`sive reading of [the Supreme Court’s] comity precedents.” Id.
`at 420 (quotation marks omitted).
`The Supreme Court reversed, reiterated the value and
`breadth of the comity doctrine, and remanded the case for dis-
`missal. “The comity doctrine,” the Court emphasized, reflects
`“a proper respect for state functions, a recognition of the fact
`that the entire country is made up of a Union of separate state
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`No. 20-3478
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`governments, and a continuance of the belief that the National
`Government will fare best if the States and their institutions
`are left free to perform their separate functions in separate
`ways.” Id. at 421 (quoting Fair Assessment, 454 U.S. at 112).
`These comity principles, the Court continued, have “particu-
`lar force when lower federal courts are asked to pass on the
`constitutionality of state taxation of commercial activity.” Id.
`The Court then went further and explained that a “conflu-
`ence of factors” supported abstention in Levin:
`• First, “respondents seek federal-court review of
`commercial matters over which [the state] enjoys
`wide regulatory latitude; their suit does not involve
`any fundamental right or classification that attracts
`heightened judicial scrutiny.”
`• Second, “while respondents portray themselves as
`third-party challengers to an allegedly unconstitu-
`tional tax scheme, they are in fact seeking federal-
`court aid in an endeavor to improve their competi-
`tive position.”
`• Third, “[state] courts are better positioned than their
`federal counterparts to correct any violation be-
`cause they are more familiar with state legislative
`preferences and because the [Tax Injunction Act]
`does not constrain their remedial options.”
`Id. at 431–32.
`Levin—and the history of comity abstention more
`broadly—delivered a clear message that federal courts should
`think twice before taking too couched a view of the comity
`abstention doctrine. See, e.g., Joseph v. Hyman, 659 F.3d 215,
`218 (2d Cir. 2011) (observing that “[i]n Levin, the Court
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`No. 20-3478
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`abrogated the post-Hibbs cases that had crimped the comity
`doctrine and held that comity is ‘more embracive’ than the
`TIA”).
`
`B
`The parties dispute the threshold question whether this
`case qualifies for a Levin-based comity abstention analysis.
`Determining whether an abstention doctrine applies in the
`first instance is a question of law that we review de novo. See
`R.R. St. & Co. v. Vulcan Materials Co., 569 F.3d 711, 714 (7th Cir.
`2009). Our analysis requires considering at least two factual
`differences between this dispute and the one at issue in Levin.
`First, the state law in question here, the Indiana Video Ser-
`vice Franchises Act, does not impose a direct tax. The Act in-
`stead allows local governments to levy franchise fees upon
`video service providers conducting business within the state.
`But we can dispatch this distinction without much difficulty,
`as the defendant streaming platforms conceded at oral argu-
`ment that the fee here—which is most often deposited in the
`government units’ general accounts—can be understood as a
`tax for Levin purposes. This concession was in no way surpris-
`ing, as the franchise fee imposed under the Act, much like a
`tax, yields revenue for municipalities in Indiana. See
`DIRECTV, Inc. v. Tolson, 513 F.3d 119, 125 (4th Cir. 2008) (“Be-
`cause the principle of comity reflects the recognition that
`states should be free from federal interference in the admin-
`istration of their fiscal operations, we interpret the term ‘tax’
`broadly for purposes of our jurisdictional inquiry.”); see also
`Collins Holding Corp. v. Jasper County, 123 F.3d 797, 800 (4th
`Cir. 1997) (observing that “the line between ‘tax’ and ‘fee’ can
`be a blurry one,” but adding that “[i]f the revenue is paid into
`the state’s (or county’s) general fund and provides a general
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`No. 20-3478
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`benefit to the public, it sounds like a tax”). The comity doc-
`trine is implicated by the cities’ demand for fees in this case.
`Second, remember that unlike in Levin, where an ag-
`grieved third-party taxpayer sought to chip away at another
`entity’s tax benefit, the cities themselves initiated this collec-
`tion lawsuit. But this distinction, too, is of little moment. Re-
`gardless of who brought the underlying suit, the district
`court’s resolution of the merits issues will risk or result in fed-
`eral court interference with the fiscal affairs of local govern-
`ment—the principal concern of Levin. See Levin, 560 U.S. at
`422. Indeed, the district court’s involvement will impact the
`cities’ ability to generate revenue, either by permitting the col-
`lection of franchise fees or by cutting off a line of potential in-
`come. We are not convinced that the cities’ role as plaintiffs in
`this lawsuit makes any difference to the Levin abstention cal-
`culus. See id. (“[A] proper reluctance to interfere by injunction
`with [a state’s] fiscal operations[ ] require[s] that such relief
`should be denied in every case where the asserted federal right
`may be preserved without it.” (quoting Matthews v. Rodgers,
`284 U.S. 521, 525 (1932) (emphasis added))).
`On balance, we conclude that the comity doctrine has
`something to say about the propriety of a federal court adju-
`dicating this dispute, and the district court did not err by ap-
`plying the Levin abstention factors.
`C
`Confident that this case calls for a Levin abstention analy-
`sis, the question becomes whether the district court abused its
`discretion by concluding that the factors identified in Levin
`support abstention here. See Hammer, 905 F.3d at 530. It did
`not.
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`No. 20-3478
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`Recall the Levin factors: whether the subject of an action is
`one over which a state enjoys “wide regulatory latitude,”
`whether a party is seeking federal aid to improve their com-
`petitive position, and whether a state court is better posi-
`tioned to resolve the dispute due to familiarity with “state leg-
`islative preferences” and because the TIA poses no con-
`straints. 560 U.S. at 431–32.
`The district court considered these factors with care, rea-
`soning that:
`• First, the streaming companies “seek federal-court
`intervention over matters over which the State of
`Indiana and its municipalities have traditionally
`‘enjoyed wide regulatory latitude’—specifically,
`utility regulation and state revenue.”
`• Second, the streaming companies “invoke the
`Court’s jurisdiction ‘to improve their competitive
`position,’ namely over traditional cable television
`and landline telephone providers that pay fran-
`chise fees under the VSF Act.”
`• Third, “this matter involves interpretation of Indi-
`ana state law—specifically, certain provisions of
`the VSF Act—for which this Court could identify
`no precedent from any Indiana court.” The district
`court also added that “Indiana state courts are bet-
`ter positioned than the Court to correct any poten-
`tial constitutional or other violation [the streaming
`services] may raise because ‘they are more familiar
`with state legislative preference’ concerning the
`VSF Act and because the TIA constrains remedial
`options available to the Court.”
`
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`No. 20-3478
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`We agree that each factor weighs in favor of abstention. On
`the first, the State of Indiana and its municipal governments
`exercise broad authority over utility and right-of-way regula-
`tion within the State. The Indiana General Assembly, by en-
`acting the Indiana Video Service Franchises Act, designed an
`administrative scheme under which the Indiana Utility Regu-
`latory Commission has sole licensing and franchise authority
`over video services—franchise authority that, in the end, ben-
`efits local governments. See Ind. Code § 8-1-34-16(a), (b). By
`asking a federal court to interpret the Act, the streaming plat-
`forms seek to inject a federal court into matters affecting local
`revenue over which the State of Indiana and its municipalities
`enjoy wide regulatory latitude.
`On the second, we agree with the district court’s observa-
`tion that the streaming platforms removed the case and op-
`pose the cities’ demand for fees as part of an attempt to main-
`tain a competitive advantage over traditional cable providers.
`See Levin, 560 U.S. at 431 (reasoning that the plaintiff sued “in
`an endeavor to improve their competitive position”). If
`streaming platforms, like cable companies, are compelled to
`pay franchise fees under the Act, that requirement will reduce
`profits and, in turn, may affect the price of video streaming
`services to consumers.
`As for the third, Indiana courts are well positioned to ad-
`dress remedial questions that might arise in the context of ad-
`judicating both the cities’ state law claims and the streaming
`platforms’ defenses, including those defenses rooted in fed-
`eral law. The federal defenses—all of which the streaming
`platforms invoke to avoid paying the franchise fees called for
`by the Act—are not hypothetical. To date, the streaming plat-
`forms have raised the following arguments in state court:
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`No. 20-3478
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`• Federal law preempts state and local attempts to
`impose franchise fees on the streaming platforms;
`• The federal Internet Tax Freedom Act prohibits dis-
`criminatory treatment of e-commerce;
`• The Indiana Video Service Franchises Act violates
`the First Amendment to the United States Constitu-
`tion;
`• The state court should defer to the Indiana Utility
`Regulatory Commission under the primary juris-
`diction doctrine.
`Levin and the Tax Injunction Act counsel that state court is
`the appropriate forum for review of federal challenges to state
`taxes. See id. at 429 (explaining that “if the Ohio scheme is in-
`deed unconstitutional, surely the Ohio courts are better posi-
`tioned to determine—unless and until the Ohio legislature
`weighs in—how to comply with the mandate of equal treat-
`ment”).
`Likewise here. The Indiana courts are well positioned to
`interpret (for the first time) the state’s Video Service Fran-
`chises Act and, in turn, to resolve any federal defenses raised
`by the streaming platforms along the way. See Burt v. Titlow,
`571 U.S. 12, 19 (2013) (highlighting “a foundational principle
`of our federal system: State courts are adequate forums for the
`vindication of federal rights”). Because we agree with the dis-
`trict court that all signs point to the need for comity-based ab-
`stention, we find no abuse of discretion in that determination.
`III
`The streaming platforms advance several counterpoints
`opposing abstention. But none strikes us as persuasive, and,
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`No. 20-3478
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`in any event, the companies failed to preserve these argu-
`ments in the district court.
`The platforms’ primary contention on appeal is that the
`Class Action Fairness Act of 2005 had the effect of eliminating
`federal courts’ ability to apply preexisting abstention doc-
`trines to class actions otherwise authorized for removal under
`the statute. This position has some surface appeal. After all,
`CAFA created “original jurisdiction over cases that previ-
`ously were beyond federal diversity subject-matter jurisdic-
`tion,” and expanded “the universe of cases that may be re-
`moved pursuant to the general removal statute.” Charles
`Alan Wright & Arthur R. Miller, Federal Practice and Procedure
`§ 3724 (4th ed. 2021). Mindful of this expansion, Congress also
`took care in CAFA to limit the reach of federal jurisdiction to
`class actions with meaningful interstate ramifications. In two
`express exceptions—the local-controversy exception and the
`home-state exception—Congress refused to extend federal ju-
`risdiction over class actions rooted in a single state. See
`28 U.S.C. § 1332(d)(4)(A)–(B). Congress’s inclusion of these
`express exceptions, without any reference to more general
`comity or federalism concerns, the streaming platforms con-
`tend, effectively eliminates a federal court’s authority to re-
`mand putative class actions on non-statutory grounds.
`The streaming platforms seek to bolster their position by
`directing us to the Supreme Court’s 1976 decision in
`Thermtron Products, Inc. v. Hermansdorfer, 423 U.S. 336. In
`Thermtron, the Court concluded that a district court exceeded
`its authority when it remanded a properly removed case to
`state court on the basis of an overcrowded docket—a ground
`not permitted by the applicable federal removal statute,
`28 U.S.C. § 1447(c). See id. at 345. The Court’s reasoning was
`
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`No. 20-3478
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`plain: “[C]ases properly removed from state to federal court
`within the federal court’s jurisdiction may not be remanded
`for discretionary reasons not authorized by the controlling
`statute.” Id. at 345 n.9. Seizing upon this language, the stream-
`ing platforms posit that CAFA provides an exhaustive list of
`exceptions under which a federal court may decline the exer-
`cise of jurisdiction.
`We doubt it. For starters, the Supreme Court has limited
`Thermtron’s holding in more recent years. In Carnegie-Mellon
`University v. Cohill, the Court rejected the argument that be-
`cause “the removal statute explicitly authorizes remands in
`two situations,” Congress must have “intended to preclude
`district courts from remanding” on any other ground.
`484 U.S. 343, 353 (1988). Such an interpretation, the Court rea-
`soned, “is based not on the language of Congress, but on its
`silence.” Id. We think the same interpretive flaw undermines,
`if not defeats, the streaming platforms’ argument here. The
`fact that Congress considered federal-state comity in the
`CAFA exceptions does not mean that it swept decades of ab-
`stention doctrines off the table.
`Even more, abstention doctrines reflect foundational fea-
`tures of our federal constitutional system, including respect
`for dual sovereignty and caution against interfering with tra-
`ditional state functions, like taxation. See Levin, 560 U.S. at
`421. To be sure, CAFA’s express exceptions reflect Congress’s
`judgment that it would be unwise to reroute a class action
`with deep roots in a single state to federal court. But those
`exceptions complement—and do not displace—preexisting
`comity concerns. See id. We are unwilling to say that CAFA
`eliminates a federal court’s ability, if not obligation, to con-
`sider the comity abstention principles at the heart of Levin and
`
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`No. 20-3478
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`like cases. As we recently observed, “the Supreme Court has
`repeatedly cautioned that statutes conferring federal jurisdic-
`tion . . . should be read with sensitivity to federal-state rela-
`tions and wise judicial administration. CAFA is such a juris-
`dictional statute.” Saskatchewan Mut. Ins. Co. v. CE Design, Ltd.,
`865 F.3d 537, 542 (7th Cir. 2017) (cleaned up).
`But we can stop short of reaching any definitive conclu-
`sion, for the streaming platforms’ CAFA-based argument
`faces an insurmountable and independent hurdle—waiver.
`“It is a well-established rule that arguments not raised to the
`district court are waived on appeal.” Puffer v. Allstate Ins. Co.,
`675 F.3d 709, 718 (7th Cir. 2012). The streaming platforms’
`CAFA argument falls squarely within that rule and falls out
`of this appeal. The platforms failed to cite Thermtron in their
`district court filings. And they never argued that federal
`courts lack authority under CAFA to remand properly re-
`moved cases on non-statutory grounds. We will not reverse
`the district court’s determination on a ground not presented
`to it. See Duncan Place Owners Assoc. v. Danze, Inc., 927 F.3d
`970, 974 (7th Cir. 2019).
`Waiver problems also plague the streaming platforms’ re-
`maining arguments in opposition to abstention. For the first
`time on appeal, the platforms posit that Levin comity requires
`the existence of a pending state proceeding. That seems far
`from certain. Indeed, nowhere in the Levin “confluence of fac-
`tors” did the Supreme Court condition comity abstention on
`the presence of pending state proceedings. See 560 U.S. at
`431–32.
`The streaming platforms’ final argument fares no better.
`On appeal, the streaming platforms invoke Quackenbush for
`the proposition that “federal courts have the power to dismiss
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`No. 20-3478
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`17
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`or remand cases based on abstention principles only where
`the relief being sought is equitable or otherwise discretion-
`ary.” 517 U.S. at 731. But, again, they failed to present this ar-
`gument to the district court, so it is waived.
`Even so, we are far from persuaded that Quackenbush
`should be read as broadly as the streaming platforms suggest.
`The Supreme Court has permitted abstention in at least one
`case involving a request for declaratory relief tied to a dam-
`ages action. See Fair Assessment, 454 U.S. at 111 (concluding
`that abstention was appropriate in a § 1983 damages action
`where the availability of damages turned on initial declara-
`tory relief). Quackenbush itself acknowledged and distin-
`guished Fair Assessment because “[t]he damages action in [Fair
`Assessment] was based on the unconstitutional application of
`a state tax law, and the award of damages turned first on a
`declaration that the state tax was in fact constitutional.”
`Quackenbush, 517 U.S. at 719. That logic tracks in this statutory
`context too: any damages award will depend on the district
`court first determining that the streaming platforms are sub-
`ject to the Indiana Video Service Franchises Act. In this case,
`though, we need not plant our feet firmly on either side of this
`debate. The streaming platforms’ failure to raise the issue
`with the district court dooms any chance of success on appeal.
`All told, we have heard no argument—preserved or oth-
`erwise—that convinces us to depart from our earlier conclu-
`sions. Levin comity applies to this dispute and the district
`court did not abuse its discretion by returning the case to state
`court.
`
`
`
`18
`
`No. 20-3478
`
`IV
`In closing, we reiterate that federal courts are duty-bound
`to exercise the jurisdiction granted by Congress. See Colo.
`River, 424 U.S. at 817. But we must remember, too, that the
`Supreme Court placed the comity abstention doctrine—first
`recognized more than a century ago—on a firm foundation in
`Levin. By clarifying that Hibbs v. Wynn “has a more modest
`reach,” the Court reaffirmed that federal courts should exer-
`cise substantial caution before adjudicating disputes with
`meaningful impacts on matters of state taxation and revenue
`collection. Levin, 560 U.S. at 424; see also Fair Assessment,
`454 U.S. at 111; Boise Artesian Hot & Cold Water Co., 213 U.S. at
`282.
`The Supreme Court is sure to say more about the limits of
`comity abstention in years to come. Today, though, informed
`in part by substantial issues of waiver, we are satisfied that
`the district court did not abuse its discretion by granting the
`cities’ motion to remand to Indiana state court.
`We therefore AFFIRM.
`
`