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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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 ----oo0oo---- 11 12 13 14 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, 15 16 17 18 v. SACRAMENTO METROPOLITAN CABLE TELEVISION COMMISSION and DOES 1 through 20, Defendant. 19 20 21 ----oo0oo---- 22 Plaintiffs Comcast of Sacramento I, Comcast of 23 Sacramento II, and Comcast of Sacramento III brought this action 24 against defendant the Sacramento Metropolitan Cable Television 25 Commission, seeking the return of a security deposit plaintiffs’ 26 predecessor-in-interest provided to defendant some thirty-three 27 years ago. 28 (Compl. (Docket No. 1).) An issue of dispute in this action is whether defendant 1 1 is entitled to offset the security deposit by state franchise 2 fees that plaintiffs purportedly underpaid defendant for the 2011 3 and 2012 calendar years. 4 (See Docket No. 22-1 at 5, 7-9.) Federal law caps the amount of “franchise fees paid by 5 a cable operator with respect to any cable system . . . [at] 5 6 percent of such operator’s gross [annual] revenues.” 7 542(b). 8 state franchise fee of five percent of their gross annual 9 revenues to defendant. 47 U.S.C. § Under California law, plaintiffs are required to pay a See Cal. Pub. Util. Code § 5840(q); 10 (Decl. of Ann Peling (“Peling Decl.”) ¶ 7 (Docket No. 21-2)). 11 Plaintiffs are also required, under California law, to pay an 12 annually determined administrative fee (“CPUC fee”) to the 13 California Public Utilities Commission. 14 § 441; (Peling Decl. ¶ 6). 15 See Cal. Pub. Util. Code Plaintiffs contend that the CPUC fee is itself a 16 “franchise fee” under federal law, and thus counts towards the 17 federal five percent cap on franchise fees. 18 at 7.) 19 percent cap on franchise fees, plaintiffs contend, they were and 20 are entitled to deduct that fee from the state franchise fee so 21 that the total franchise fees they pay do not exceed five percent 22 of gross revenues. 23 contention, plaintiffs unilaterally deducted the CPUC fee from 24 the state franchise fee for the 2011 and 2012 calendar years. 25 (See Peling Decl. ¶ 7.) 26 not a “franchise fee” under federal law, and thus plaintiffs were 27 and are not entitled to deduct that fee from the state franchise 28 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 2 (See Docket No. 1 22-1 at 7-9.) 2 Federal law defines “franchise fee” to include “any 3 tax, fee, or assessment of any kind imposed by a franchising 4 authority or other governmental entity on a cable operator . . . 5 solely because of [its] status as such.” 6 Excluded from “franchise fee” is “any tax, fee, or assessment of 7 general applicability (including any such tax, fee, or assessment 8 imposed on both utilities and cable operators or their services 9 but not including a tax, fee, or assessment which is unduly 47 U.S.C. § 542(g)(1). 10 discriminatory against cable operators . . . ).” 11 542(g)(2)(A). 12 Id. § On April 5, 2017, the court issued an order (“April 5 13 order”) in which it held that the CPUC fee is not imposed on 14 cable operators “solely because of their status as such” and is a 15 fee of “general applicability,” and thus is not a “franchise fee” 16 under federal law. 17 31).) 18 operators “solely because of their status as such” and is a fee 19 of “general applicability,” the court relied upon the premise 20 that “it is possible to qualify for [the CPUC] fee without being 21 a cable operator.” 22 illustration of that premise, language from Cty. of Los Angeles 23 v. Time Warner NY Cable LLC, No. CV 12-6655 SJO (JCx), 2013 WL 24 12126774 (C.D. Cal. July 3, 2013) stating that “[the CPUC] fee is 25 . . . imposed on such non-cable operator video service providers 26 as Netflix, RedBox, and Blockbuster.” 27 noted that its holding that the CPUC fee is not a “franchise fee” 28 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 3 (Id.) The court also 1 Council of Baltimore, No. JFM-16-592, 2016 WL 3448261 (D. Md. 2 June 14, 2016) and City of Eugene v. Comcast of Oregon II, Inc., 3 359 Or. 528 (2016), which each held fees that are not imposed 4 only on cable operators to be excluded from the federal 5 definition of “franchise fees.” (Id. at 15-16.) 6 Plaintiffs now move for reconsideration of the court’s 7 holding that the CPUC fee is not a “franchise fee” under federal 8 law. 9 their Motion: (1) documents purporting to establish that Netflix, (Pls.’ Mot. (Docket No. 39).) They offer two grounds for 10 RedBox, and Blockbuster are, in fact, not subject to the CPUC 11 fee, and (2) arguments that the fees at issue in Zayo Group and 12 City of Eugene are distinguishable from the CPUC fee. 13 Mot., Mem. (“Pls.’ Mem.”) at 4, 10 (Docket No. 39-1).) 14 such grounds, plaintiffs ask the court to reconsider its decision 15 and enter judgment in their favor for the full security deposit. 16 (Id. at 2.) 17 (See Pls.’ Citing Federal Rule of Civil Procedure 59(e) allows a party to 18 move for reconsideration of an order granting summary judgment 19 within twenty-eight days of entry of judgment.1 20 reconsideration seek an “extraordinary remedy,” one “to be used 21 sparingly in the interests of finality and conservation of 22 judicial resources.” 23 229 F.3d 877, 890 (9th Cir. 2000). 24 granted, absent highly unusual circumstances, unless the district 25 court is presented with newly discovered evidence, committed Motions for Kona Enterprises, Inc. v. Estate of Bishop, Such motions “should not be 26 27 28 1 It is undisputed that plaintiffs’ Motion was timely filed. 4 1 clear error, or . . . there is an intervening change in the 2 controlling law.” 3 656, 665 (9th Cir. 1999). 4 reconsideration of an order must be “of such magnitude that 5 production of it earlier would have been likely to change the 6 disposition of the case.” 7 744, 746 (9th Cir. 2008) (internal citation omitted). 8 389 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 9 Netflix, RedBox, and Blockbuster are, in fact, not subject to the 10 CPUC fee would not have changed the court’s holding that the CPUC 11 fee is not a “franchise fee” under federal law. 12 RedBox, and Blockbuster may not be subject to the CPUC fee does 13 not undermine the broader premise that the CPUC fee does not 14 apply only to cable operators. That Netflix, 15 Federal law defines a “cable operator” as “any person 16 or group of persons (A) who provides cable service over a cable 17 system and directly or through one or more affiliates owns a 18 significant interest in such cable system, or (B) who otherwise 19 controls or is responsible for, through any arrangement, the 20 management and operation of such a cable system.” 21 522(5). 22 seeks to provide” “video programming services, cable service, or 23 [open video system] service . . . through facilities located at 24 least in part in public rights-of-way without regard to delivery 25 technology.” 26 5840(c). 27 not fall under federal law’s definition of “cable operator.” 28 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 5 An 1 cables it did not own, control, or have responsibility for, for 2 example, was held not to be a “cable operator” under federal law, 3 see City of Chicago v. F.C.C., 199 F.3d 424, 427, 431-33 (7th 4 Cir. 1999), but would appear to fall within the definition of 5 entities subject to the CPUC fee.2 6 programming using a publicly-located “open video system,” and not 7 a cable system, would also appear to fall within the definition 8 of entities subject to the CPUC fee without meeting federal law’s 9 definition of “cable operator.” 10 An entity that provides video See 47 U.S.C. § 522(7) (excluding “open video system” from “cable system”). 11 Plaintiffs claim that the Federal Communications 12 Commission (“FCC”) has interpreted “cable operator” to encompass 13 all the entities that may be subject to the CPUC fee. 14 Reply at 4 (Docket No. 41).) 15 plaintiffs expands the definition of “cable operator,” however. 16 One report states that 47 U.S.C. § 542, which sets forth 17 franchise fee requirements for “cable operators,” “do[es] not 18 distinguish between incumbent[ cable operators] and new 19 entrants.” 20 of the Cable Commc’ns Policy Act of 1984 As Amended by the Cable 21 Television Consumer Prot. & Competition Act of 1992, 22 F.C.C. 22 Rcd. 5101, 5165 (2007). 23 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 24 2 25 26 27 28 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”). 6 1 operator.” 2 ‘cable service’ as a ‘cable operator’ becomes subject to the 3 requirements of [federal franchising law].” (emphasis added)). 4 The FCC reports plaintiffs cite do not show that the term “cable 5 operator” is synonymous with the set of entities that may be 6 subject to the CPUC fee. See id. at 5104 (“Any new entrant seeking to offer 7 Plaintiffs’ arguments that the fees at issue in Zayo 8 Group and City of Eugene are distinguishable from the CPUC fee 9 are also insufficient to change the court’s determination that 10 the CPUC fee is not a “franchise fee.” 11 the April 5 order that its holding with respect to the CPUC fee 12 “accords with the position of [those cases].” 13 Order at 15-16.) 14 The court merely noted in (Apr. 5, 2017 Neither case was necessary to the holding. IT IS THEREFORE ORDERED that plaintiffs’ Motion for 15 reconsideration of the April 5, 2017 order be, and the same 16 hereby is, DENIED. 17 Dated: August 11, 2017 18 19 20 21 22 23 24 25 26 27 28 7

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