City of Ashdown, Arkansas v. Netflix, Inc. ( 2022 )

United States Court of Appeals
For the Eighth Circuit
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No. 21-3435
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City of Ashdown, Arkansas, individually and on behalf of all others
lllllllllllllllllllllPlaintiff - Appellant
v.
Netflix, Inc.; Hulu, LLC
lllllllllllllllllllllDefendants - Appellees
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City of Creve Coeur; Gwinnett County, Georgia; City of Brookhaven, Georgia;
Unified Government of Athens-Clarke, Georgia
lllllllllllllllllllllAmici on Behalf of Appellant(s)
DirecTV LLC; DISH Network, L.L.C; Sling TV, L.L.C.
lllllllllllllllllllllAmici on Behalf of Appellee(s)
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Appeal from United States District Court
for the Western District of Arkansas - Texarkana
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Submitted: September 20, 2022
Filed: November 8, 2022
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Before COLLOTON, WOLLMAN, and STRAS, Circuit Judges.
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WOLLMAN, Circuit Judge.
The Arkansas Video Service Act of 2013 (VSA) establishes a statewide
franchising scheme for authorizing video service providers to provide services in
political subdivisions within the state. Providers may either negotiate franchises with
individual political subdivisions or obtain a certificate of franchise authority from the
Secretary of State, which can cover multiple political subdivisions. Ark. Code Ann.
§ 23-19-203(a), (c). The certificate authorizes providers to use public rights-of-way
to deliver their video service and requires the provider to pay a fee as required by
each political subdivision in which service is provided. Ark. Code Ann. § 23-19-
205(b), 206(b).
Netflix and Hulu were already providing online video streaming services prior
to the passage of the VSA; they have not applied for certificates of franchise
authority. The City of Ashdown, Arkansas, filed a putative class action against
Netflix and Hulu in 2020, seeking both a declaration that they must comply with the
VSA and damages for their failure to pay the required fee. The district court1 granted
Netflix and Hulu’s motions to dismiss, concluding, among other things, that the VSA
does not give Ashdown a right of action to bring this suit. Ashdown appeals, arguing
that the district court misinterpreted the VSA. We affirm.
We review the dismissal of claims de novo, “accepting the allegations
contained in the complaint as true and drawing all reasonable inferences in favor of
the nonmoving party.” Cockram v. Genesco, Inc., 680 F.3d 1046, 1056 (8th Cir.
1
The Honorable Susan O. Hickey, Chief Judge, United States District Court for
the Western District of Arkansas.
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2012) (quoting Express Scripts, Inc. v. Aegon Direct Mktg. Servs., Inc., 516 F.3d
695, 698 (8th Cir. 2008)). We apply Arkansas rules of statutory construction to
interpret the VSA. See Behlmann v. Century Sur. Co., 794 F.3d 960, 963 (8th Cir.
2015). The Arkansas Supreme Court has explained those rules as follows:
The primary rule of statutory interpretation is to give effect to the intent
of the legislature. We first construe the statute just as it reads, giving the
words their ordinary and usually accepted meaning in common
language. In conducting this review, we will reconcile statutory
provisions to make them consistent, harmonious, and sensible in an
effort to give effect to every part. Furthermore, we will not read into a
statute language that was not included by the legislature.
Ark. Dep’t of Corr. v. Shults, 541 S.W.3d 410, 412 (Ark. 2018) (internal citations
omitted).
Ashdown argues that the VSA creates an express right of action for
municipalities to bring claims. It points to the provision titled “Applicability of other
laws,” which states that the VSA “shall not be interpreted to prevent . . . a political
subdivision . . . from . . . seeking clarification of its rights and obligations under . . .
state law or to exercise a right or authority under . . . state law.” Ark. Code Ann.
§ 23-19-210(b). Ashdown asserts that the VSA is a “state law” under which it seeks
to clarify and exercise its rights, so this provision gives it an express right of action
to do so.
We are unpersuaded by Ashdown’s argument. The fact that the VSA does not
“prevent” a party from exercising a right does not, itself, confer a right. This
provision is more logically read to preserve existing rights of action. The reference
to “other laws” in the section title supports this conclusion. In addition, the
legislature knew how to explicitly confer a right of action onto municipalities, as the
VSA clearly conferred a right of action onto the Public Service Commission. See
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Ark. Code Ann. § 23-1-104 (“The commission shall have the right . . . to file suit . . .
to compel compliance with the provisions of this act or . . . to prevent violations of
this act”). The legislature’s failure to use such explicit language with regard to
municipalities supports the conclusion that it did not intend to create an express right
of action.
Ashdown next argues that even if there is no express right of action, a right of
action is implied. The Arkansas Supreme Court has recognized an implied right of
action when “the legislature explicitly expressed an intent to protect . . . a special
class of citizens” and when recognizing a right of action would not “circumvent the
clear intent of the statut[e].” Cent. Okla. Pipeline, Inc. v. Hawk Field Servs., LLC,
400 S.W.3d 701, 712 (Ark. 2012).
Municipalities are not a “special class” that the legislature intended to protect
through the VSA. Ashdown points to the legislature’s explanation for passing the
VSA on an emergency basis, which stated in part “that perhaps the lack of uniformity
in the laws governing video service providers is inequitable to certain citizens and
government entities[.]” 2013 Ark. S.B. 101, 89th Gen. Assemb., Reg. Sess. (Ark
2013), Sec. 3. Such qualified language lacks the specificity and force that the
Arkansas Supreme Court has elsewhere found significant in identifying a special
class. For example, in two cases related to alcohol sales, the Arkansas Supreme Court
emphasized that the statutes at issue (1) explicitly stated that alcohol vendors had a
“high duty of care in the operation of the licensed establishment” and an affirmative
obligation to operate the establishment in the public interest and (2) explicitly
outlawed sales to high-risk groups. See Shannon v. Wilson, 947 S.W.2d 349, 357
(Ark. 1997) (quoting Ark. Code Ann. § 3-3-218(a)) (establishing liability for
negligence in selling alcohol to a minor); see also Jackson v. Cadillac Cowboy, Inc.,
986 S.W.2d 410 (Ark. 1999) (establishing liability for negligence in selling alcohol
to an intoxicated person). The VSA does not establish such a “high duty of care” for
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video service providers, nor does it signal a strong public policy of protecting
municipalities.
Ashdown further argues that it is part of a special class because it is owed fees
and has other rights under the VSA, such as the ability to inspect the records of video
service providers to ensure the fee is calculated correctly. The VSA’s imposition of
duties on video service providers, however, does not automatically create a private
right of action in the beneficiary. See Young v. Blytheville School Dist., 425 S.W.3d
865, 871 (Ark. Ct. App. 2013) (holding that an act that imposed a duty on school
districts to provide a safe program did not create a private right of action for
students).
As noted above, the Public Service Commission has the right and duty to bring
suit to enforce the VSA. Ark. Code Ann. § 23-1-104. The statute limits the
Commission to mandamus and injunction proceedings, which do not allow relief in
the form of compelling payment of past-due fees by a private corporation. Ashdown
argues that this lack of a remedy undercuts the purpose of the statute, so we should
recognize an implied right of action to allow municipalities to pursue their own
remedies. Whether the failure to recognize an implied right of action would
circumvent the statute’s intent is an inversion of the question at issue, however, which
is focused on the effects of recognizing an implied right of action.
We conclude that recognizing a right of action would circumvent the intent of
the VSA. Read as a whole, the statute aims to establish and regulate a statewide
franchising system. The legislature stated that “this act is immediately necessary
because it ensures uniform regulation of video service providers, assures equality of
treatment of video service providers, and encourages new video service providers to
enter the state.” 2013 Ark. S.B. 101, Sec. 3. The VSA’s clear intent to create
uniformity across the state would be undermined if individual municipalities
possessed authority to bring enforcement suits independently of the state body
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charged with enforcement. Because Ashdown is not part of a special class intended
to be protected by the VSA and allowing Ashdown to bring this suit would
circumvent the intent of the statute, we conclude that the VSA does not create an
implied right of action in municipalities to enforce the statute.
The judgment is affirmed.
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