Comcast of Sacramento I, LLC et al v. Sacramento Metropolitan Cable Television Commission

Filing 43

ORDER denying 39 Motion for Reconsideration, signed by Senior Judge William B. Shubb on 8/11/17. (Kastilahn, A)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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COMCAST OF SACRAMENTO I, LLC;
COMCAST OF SACRAMENTO II,
LLC; and COMCAST OF
SACRAMENTO III, LLC;

Civ. No. 2:16-1264 WBS EFB
ORDER RE: MOTION FOR
RECONSIDERATION

Plaintiffs,

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v.
SACRAMENTO METROPOLITAN CABLE
TELEVISION COMMISSION and
DOES 1 through 20,
Defendant.

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Plaintiffs Comcast of Sacramento I, Comcast of

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Sacramento II, and Comcast of Sacramento III brought this action

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against defendant the Sacramento Metropolitan Cable Television

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Commission, seeking the return of a security deposit plaintiffs’

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predecessor-in-interest provided to defendant some thirty-three

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years ago.

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(Compl. (Docket No. 1).)

An issue of dispute in this action is whether defendant
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is entitled to offset the security deposit by state franchise

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fees that plaintiffs purportedly underpaid defendant for the 2011

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and 2012 calendar years.

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(See Docket No. 22-1 at 5, 7-9.)

Federal law caps the amount of “franchise fees paid by

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a cable operator with respect to any cable system . . . [at] 5

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percent of such operator’s gross [annual] revenues.”

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542(b).

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state franchise fee of five percent of their gross annual

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revenues to defendant.

47 U.S.C. §

Under California law, plaintiffs are required to pay a

See Cal. Pub. Util. Code § 5840(q);

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(Decl. of Ann Peling (“Peling Decl.”) ¶ 7 (Docket No. 21-2)).

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Plaintiffs are also required, under California law, to pay an

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annually determined administrative fee (“CPUC fee”) to the

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California Public Utilities Commission.

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§ 441; (Peling Decl. ¶ 6).

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See Cal. Pub. Util. Code

Plaintiffs contend that the CPUC fee is itself a

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“franchise fee” under federal law, and thus counts towards the

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federal five percent cap on franchise fees.

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at 7.)

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percent cap on franchise fees, plaintiffs contend, they were and

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are entitled to deduct that fee from the state franchise fee so

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that the total franchise fees they pay do not exceed five percent

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of gross revenues.

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contention, plaintiffs unilaterally deducted the CPUC fee from

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the state franchise fee for the 2011 and 2012 calendar years.

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(See Peling Decl. ¶ 7.)

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not a “franchise fee” under federal law, and thus plaintiffs were

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and are not entitled to deduct that fee from the state franchise

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fee pursuant to the federal five percent cap.

(See Docket No. 21-1

Because the CPUC fee counts towards the federal five

(See id. at 7-10.)

Pursuant to that

Defendant contends that the CPUC fee is

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(See Docket No.

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22-1 at 7-9.)

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Federal law defines “franchise fee” to include “any

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tax, fee, or assessment of any kind imposed by a franchising

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authority or other governmental entity on a cable operator . . .

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solely because of [its] status as such.”

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Excluded from “franchise fee” is “any tax, fee, or assessment of

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general applicability (including any such tax, fee, or assessment

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imposed on both utilities and cable operators or their services

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but not including a tax, fee, or assessment which is unduly

47 U.S.C. § 542(g)(1).

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discriminatory against cable operators . . . ).”

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542(g)(2)(A).

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Id. §

On April 5, 2017, the court issued an order (“April 5

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order”) in which it held that the CPUC fee is not imposed on

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cable operators “solely because of their status as such” and is a

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fee of “general applicability,” and thus is not a “franchise fee”

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under federal law.

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31).)

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operators “solely because of their status as such” and is a fee

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of “general applicability,” the court relied upon the premise

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that “it is possible to qualify for [the CPUC] fee without being

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a cable operator.”

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illustration of that premise, language from Cty. of Los Angeles

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v. Time Warner NY Cable LLC, No. CV 12-6655 SJO (JCx), 2013 WL

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12126774 (C.D. Cal. July 3, 2013) stating that “[the CPUC] fee is

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. . . imposed on such non-cable operator video service providers

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as Netflix, RedBox, and Blockbuster.”

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noted that its holding that the CPUC fee is not a “franchise fee”

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under federal law accords with Zayo Group, LLC v. Mayor & City

(Apr. 5, 2017 Order at 14-16 (Docket No.

In holding that the CPUC fee is not imposed on cable

(Id. at 14.)

The court cited, as an

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(Id.)

The court also

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Council of Baltimore, No. JFM-16-592, 2016 WL 3448261 (D. Md.

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June 14, 2016) and City of Eugene v. Comcast of Oregon II, Inc.,

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359 Or. 528 (2016), which each held fees that are not imposed

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only on cable operators to be excluded from the federal

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definition of “franchise fees.”

(Id. at 15-16.)

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Plaintiffs now move for reconsideration of the court’s

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holding that the CPUC fee is not a “franchise fee” under federal

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law.

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their Motion: (1) documents purporting to establish that Netflix,

(Pls.’ Mot. (Docket No. 39).)

They offer two grounds for

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RedBox, and Blockbuster are, in fact, not subject to the CPUC

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fee, and (2) arguments that the fees at issue in Zayo Group and

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City of Eugene are distinguishable from the CPUC fee.

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Mot., Mem. (“Pls.’ Mem.”) at 4, 10 (Docket No. 39-1).)

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such grounds, plaintiffs ask the court to reconsider its decision

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and enter judgment in their favor for the full security deposit.

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(Id. at 2.)

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(See Pls.’
Citing

Federal Rule of Civil Procedure 59(e) allows a party to

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move for reconsideration of an order granting summary judgment

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within twenty-eight days of entry of judgment.1

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reconsideration seek an “extraordinary remedy,” one “to be used

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sparingly in the interests of finality and conservation of

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judicial resources.”

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229 F.3d 877, 890 (9th Cir. 2000).

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granted, absent highly unusual circumstances, unless the district

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court is presented with newly discovered evidence, committed

Motions for

Kona Enterprises, Inc. v. Estate of Bishop,
Such motions “should not be

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It is undisputed that plaintiffs’ Motion was timely

filed.
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clear error, or . . . there is an intervening change in the

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controlling law.”

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656, 665 (9th Cir. 1999).

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reconsideration of an order must be “of such magnitude that

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production of it earlier would have been likely to change the

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disposition of the case.”

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744, 746 (9th Cir. 2008) (internal citation omitted).

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389 Orange St. Partners v. Arnold, 179 F.3d
Newly discovered evidence meriting

Cranmer v. Tyconic, Inc., 278 F. App’x

The documents plaintiffs offer for the assertion that

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Netflix, RedBox, and Blockbuster are, in fact, not subject to the

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CPUC fee would not have changed the court’s holding that the CPUC

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fee is not a “franchise fee” under federal law.

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RedBox, and Blockbuster may not be subject to the CPUC fee does

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not undermine the broader premise that the CPUC fee does not

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apply only to cable operators.

That Netflix,

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Federal law defines a “cable operator” as “any person

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or group of persons (A) who provides cable service over a cable

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system and directly or through one or more affiliates owns a

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significant interest in such cable system, or (B) who otherwise

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controls or is responsible for, through any arrangement, the

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management and operation of such a cable system.”

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522(5).

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seeks to provide” “video programming services, cable service, or

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[open video system] service . . . through facilities located at

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least in part in public rights-of-way without regard to delivery

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technology.”

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5840(c).

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not fall under federal law’s definition of “cable operator.”

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entity that provided video programming using publicly-located

47 U.S.C. §

The CPUC fee applies to “[a]ny person or corporation who

See Cal. Pub. Util. Code §§ 441, 5830(s), and

By definition, the CPUC fee may reach entities that do

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An

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cables it did not own, control, or have responsibility for, for

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example, was held not to be a “cable operator” under federal law,

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see City of Chicago v. F.C.C., 199 F.3d 424, 427, 431-33 (7th

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Cir. 1999), but would appear to fall within the definition of

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entities subject to the CPUC fee.2

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programming using a publicly-located “open video system,” and not

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a cable system, would also appear to fall within the definition

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of entities subject to the CPUC fee without meeting federal law’s

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definition of “cable operator.”

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An entity that provides video

See 47 U.S.C. § 522(7)

(excluding “open video system” from “cable system”).

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Plaintiffs claim that the Federal Communications

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Commission (“FCC”) has interpreted “cable operator” to encompass

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all the entities that may be subject to the CPUC fee.

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Reply at 4 (Docket No. 41).)

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plaintiffs expands the definition of “cable operator,” however.

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One report states that 47 U.S.C. § 542, which sets forth

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franchise fee requirements for “cable operators,” “do[es] not

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distinguish between incumbent[ cable operators] and new

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entrants.”

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of the Cable Commc’ns Policy Act of 1984 As Amended by the Cable

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Television Consumer Prot. & Competition Act of 1992, 22 F.C.C.

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Rcd. 5101, 5165 (2007).

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of are entities that meet federal law’s definition of “cable

(See Pls.’

Nothing in the FCC reports cited by

In the Matter of Implementation of Section 621(a)(1)

But the “new entrants” the report speaks

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Plaintiffs represented at oral argument that the entity
at issue in City of Chicago did not provide video programming
using publicly-located cables. That representation is incorrect.
See City of Chicago, 199 F.3d at 427 (noting that the entity at
issue transmitted “video signals [to customers] . . . by fiber
optic and coaxial cables, which are located in the public rightof-way”).
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operator.”

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‘cable service’ as a ‘cable operator’ becomes subject to the

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requirements of [federal franchising law].” (emphasis added)).

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The FCC reports plaintiffs cite do not show that the term “cable

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operator” is synonymous with the set of entities that may be

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subject to the CPUC fee.

See id. at 5104 (“Any new entrant seeking to offer

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Plaintiffs’ arguments that the fees at issue in Zayo

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Group and City of Eugene are distinguishable from the CPUC fee

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are also insufficient to change the court’s determination that

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the CPUC fee is not a “franchise fee.”

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the April 5 order that its holding with respect to the CPUC fee

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“accords with the position of [those cases].”

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Order at 15-16.)

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The court merely noted in

(Apr. 5, 2017

Neither case was necessary to the holding.

IT IS THEREFORE ORDERED that plaintiffs’ Motion for

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reconsideration of the April 5, 2017 order be, and the same

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hereby is, DENIED.

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Dated:

August 11, 2017

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