TEXARKANA -- Federal judges in Texarkana, Texas, and Texarkana, Arkansas, have dismissed lawsuits against Netflix and Hulu filed last year by cities in both states.
A suit filed on behalf of New Boston, Texas, was dismissed Thursday in an order issued by U.S. District Judge Robert Schroeder III in the Texarkana Division of the Eastern District of Texas. The plaintiff sought certification as a class action to include other Texas municipalities.
A suit filed on behalf of Ashdown, Arkansas, was dismissed the same day in an order issued by U.S. District Judge Susan O. Hickey in the Texarkana Division of the Western District of Arkansas. Like the Texas suit, it also sought certification as a class action to include municipalities in Arkansas.
Both lawsuits complained that the streaming giants should be paying franchise fees to the municipalities in which they offer services. Schroeder's order points to Texas law which gives the Texas Public Utility Commission authority over such matters.
"To allow a municipal plaintiff to bypass the PUC would undermine the regulatory scheme set forth in the statute and its overall purpose to centralize the issuance of franchises in one statewide body," Schroeder's order states. "The PUC has enforcement discretion, as well as options in imposing penalties for noncompliance."
The order leaves open the possibility that the lawsuit could be refiled if the defendants become holders of state-issued certificates of franchise authority.
Hickey's order points to the Video Service Act passed in 2013 by the Arkansas state legislature.
"The Arkansas legislature has not expressed any intent that individual municipalities are the ones who should ensure compliance with the VSA. Instead, it appears that the Arkansas legislature intended for the Arkansas Public Service Commission to ensure compliance," Hickey's order states.
Both judges found that state laws do not give municipalities the authority necessary to bring claims against Netflix and Hulu with respect to franchise fees.