Maple Hts. v. Netlix, Inc. , 2022 Ohio 4174 ( 2022 )

[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as
Maple Hts. v. Netflix, Inc., Slip Opinion No. 2022-Ohio-4174.]
NOTICE
This slip opinion is subject to formal revision before it is published in an
advance sheet of the Ohio Official Reports. Readers are requested to
promptly notify the Reporter of Decisions, Supreme Court of Ohio, 65
South Front Street, Columbus, Ohio 43215, of any typographical or other
formal errors in the opinion, in order that corrections may be made before
the opinion is published.
SLIP OPINION NO. 2022-OHIO-4174THE CITY OF MAPLE HEIGHTS v. NETFLIX, INC., ET AL.
[Until this opinion appears in the Ohio Official Reports advance sheets, it
may be cited as Maple Hts. v. Netflix, Inc., Slip Opinion No. 2022-Ohio-4174.]
Civil actions—Fair Competition in Cable Operations Act—R.C. Chapter
1332.21—Director of commerce has the sole authority to grant video-
service authorizations and to investigate allegations that a video-service
provider is violating or failing to comply with R.C. Chapter 1332.21—R.C.
Chapter 1332.21 does not imply a private right of action.
(No. 2021-0864—Submitted April 13, 2022—Decided November 30, 2022.)
ON ORDER from the United States District Court for the Northern District of Ohio,
Eastern Division, Certifying Questions of State Law, No. 1:20-CV-01872.
__________________
DONNELLY, J.
{¶ 1} The United States District Court for the Northern District of Ohio,
Eastern Division, certified the following two state-law questions for our review:
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(1) “Are Netflix and Hulu video service providers under Ohio law?” and (2) “Can
Maple Heights sue Netflix and Hulu to enforce Ohio’s video service provider
provisions?” 164 Ohio St.3d 1440, 2021-Ohio-3233, 173 N.E.3d 1227. We agreed
to answer both questions. Id.{¶ 2} Respondent, city of Maple Heights, filed a federal class-action and
declaratory-judgment lawsuit against petitioners, the video-streaming services
Netflix Inc., and Hulu, L.L.C. In that lawsuit, Maple Heights asserts that Netflix
and Hulu are in violation of the Fair Competition in Cable Operations Act, R.C.
Chapter 1332.21, 2007 Am.Sub.S.B. No. 117 (“the Act”). Specifically, Maple
Heights argues that Netflix and Hulu are illegally providing video services in
Ohio—including in Maple Heights—without authorization from the director of
commerce and without paying the requisite fees to Maple Heights. Netflix and
Hulu separately filed motions to dismiss Maple Heights’s complaint against them
in federal court, arguing that their streaming services do not fall within the Act.
{¶ 3} As to the first certified state-law question, the federal court asks us to
determine whether Netflix and Hulu are video-service providers under the Act. As
to the second certified state-law question, the federal court asks us to determine
whether Maple Heights may sue Netflix and Hulu as a means of enforcing the Act,
particularly in light of Cort v. Ash, 422 U.S. 66, 95 S.Ct. 2080, 45 L.Ed.2d 26(1975), and Anderson v. Smith, 196 Ohio App.3d 540, 2011-Ohio-5619, 964 N.E.2d
468 (10th Dist.), which consider the circumstances under which a statute implies a
private right of action. For the following reasons, we hold that (1) Netflix and Hulu
are not video-service providers under the Act and (2) the Act does not expressly or
impliedly give Maple Heights the authority to bring a cause of action such as the
one at issue here.
{¶ 4} Accordingly, the answer to both certified state-law questions is “no.”
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I. BACKGROUND
{¶ 5} Netflix and Hulu are video-content providers that stream on-demand
shows and movies to their subscribers over the Internet. Netflix’s and Hulu’s
members may stream as much content as they want—anytime, anywhere, and on
any public Internet-connected device. Because Netflix and Hulu make their content
available through the public Internet,1 they do not maintain wires, cables, or other
infrastructure in any Ohio public rights-of-way. Netflix began its streaming media
service in 2007. Hulu began streaming to the public in 2008.
{¶ 6} Prior to the Act, businesses would enter into franchise agreements
with, and pay franchise fees to, local governments for the right to install wires in
the public rights-of-way to service their customers. See, e.g., Vernon v. Warner
Amex Cable Communications, Inc., 25 Ohio St.3d 117, 120, 495 N.E.2d 374 (1986)
(municipalities had home-rule authority to enter agreements with cable-service
providers to use municipal rights-of-way). However, effective September 24, 2007,
the Act abolished the authority of local governments to require new franchise
agreements from cable-service providers and established a statewide regulatory
scheme in which the director of commerce is the sole franchising authority of
certain video services in this state. R.C. 1332.23(A) and 1332.24(A).
{¶ 7} R.C. 1332.23(A) prohibits any person from providing video services
in Ohio without a video-service authorization that has been issued by the director
of commerce. “ ‘Video service’ ” means the provision of video programming over
wires or cables located at least in part in public rights-of-way, regardless of the
technology used to deliver that programming, including internet protocol
technology or any other technology. The term includes cable service * * *.” R.C.
1. The phrase “public internet” is not defined in the Act; however, it has been defined as “the
delivery of data over the internet without using a closed dedicated pathway.” Sky Angel U.S., L.L.C.
v. Discovery Communications, L.L.C., 885 F.3d 271 (4th Cir.2018), fn. 1. But this definition “is
hardly precise.” Id.3
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1332.21(J). While the term “video service” includes cable service, it does not
include
video programming provided to persons in their capacity as
subscribers to commercial mobile service * * *; video programming
provided solely as part of and via a service that enables users to
access content, information, electronic mail, or other services
offered over the public internet.
Id.II. POSITIONS OF THE PARTIES
{¶ 8} Netflix and Hulu claim that the Act does not pertain to them because
neither Netflix nor Hulu construct or operate wires, cables, facilities, or networks
in the public rights-of-way. Rather, subscribers connect to Netflix’s and Hulu’s
services through the subscribers’ own Internet-connected devices. They further
argue that because they have never held video-services authorizations pursuant to
R.C. 1332.21 through 1332.34, they do not meet the statutory definition of a video-
service provider (a “ ‘[v]ideo-service provider’ means a person granted a video
service authorization under sections 1332.21 to 1332.34 of the Revised Code,” R.C.
1332.21(M)). Netflix and Hulu each assert that a business without that
authorization is, by definition, not a video-service provider. The parties agree that
neither Netflix nor Hulu have a video-service authorization.
{¶ 9} In Netflix’s and Hulu’s motions to dismiss in federal court, they each
asserted that (1) they do not offer video-programming services that are comparable
to broadcast television under R.C. 1332.21(I), 2 (2) they offer their programming
2. R.C. 1332.21(I) states that “ ‘[v]ideo programming’ has the same meaning as in the ‘Cable
Communications Policy Act of 1984’ * * *.” Accordingly, “the term ‘video programming’ means
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and content over the public Internet, which they assert is exempted from the
definition of “video service” under R.C. 1332.21(J), and (3) they do not own,
operate, or use video-service networks in the public-rights-of-way under R.C.
1332.21(J).
{¶ 10} Independently, Hulu asserted in its motion to dismiss that Maple
Heights is an improper party to file a complaint in federal court. Hulu argues that
Ohio’s General Assembly authorizes only the director of commerce to bring actions
to enforce the Act, not municipalities.
{¶ 11} Maple Heights countered that even if Netflix and Hulu do not own,
operate, or use video-service networks, they are video-service providers as defined
by R.C. 1332.21(J) because the services that they provide—i.e., shows, movies, and
other similar content—are comparable to broadcast television as provided in R.C.
1332.21(I). Maple Heights also asserted that Netflix and Hulu do not offer
programming over the public Internet and, even if they did, their programming is
not offered as “part of and via a service that enables users to access content,
information, electronic mail, or other services offered over the public internet,” as
required by R.C. 1332.21(J) to be excluded from the definition of “video service.”
{¶ 12} In its merit brief, Maple Heights also notes that to be considered a
video-service provider under the Act, the provider does not need to own the wires
and cables over which it streams, only that it provides video-service content over
cables and wires. In addition, Maple Heights asserts that “while the Act provides
authorization for video service providers to construct or operate video service
networks in the public rights-of-way, it does not mandate that only video service
providers who construct and operate networks in the public rights-of-way are
required to hold a video service authorization.”
programming provided by, or generally considered comparable to programming provided by, a
television broadcast station.” Cable Communications Policy Act of 1984, Pub.L. No. 98-549, 98Stat. 2779.
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{¶ 13} The parties also disagree about the reach of R.C. 1332.32, which
imposes a quarterly fee that video-service providers owe to municipalities. While
the Act precludes local governments from requiring the payment of franchise fees
from video-service providers, R.C. 1332.32(A) requires video-service providers to
pay “a video service provider fee to each municipal corporation and each township
in which it offers video service.” R.C. 1332.33(A) authorizes any local government
to perform annual audits at its own expense, and R.C. 1332.33(B) authorizes the
local government to recoup any underpayment found in the audit with interest. And
both the local government and the video-service provider have a right to challenge
the audit in a “court of competent jurisdiction.” R.C. 1332.33(D). This provision
of the Act authorizes local governments to collect video-service-provider fees, but
only against video-service providers.
{¶ 14} Indeed, the director of commerce has the sole authority to investigate
alleged violations of the video-service-authorization requirements, R.C.
1332.24(B)(1), to subpoena witnesses and order the production of documents
during the investigation, R.C. 1332.24(B)(2), and to seek injunctive relief for
uncured violations, R.C. 1332.24(C)(1)(a). Because Netflix and Hulu assert that
they are not video-service providers, neither has paid any video-service fees to any
of Ohio’s municipalities. And other than conducting an audit “for the purpose of
verifying the accuracy of a video service provider’s calculation of the video service
provider fees” not more than one time a year at its own expense, R.C. 1332.33(A),
the Act does not explicitly authorize a local government’s cause of action against
such providers.
{¶ 15} Maple Heights counters that because the legislature gives
municipalities the authority to bring actions against video-service providers who
fail to pay their full video-service-provider fees under R.C. 1332.33(A), Maple
Heights has the authority to bring the underlying action in federal court. Maple
Heights further argues that even if the underlying action falls outside the scope of
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R.C. 1332.33, the federal court should “infer” that the General Assembly intended
to give local governments the authority to bring enforcement actions against video-
service providers.
{¶ 16} According to Maple Heights, reading R.C. 1332.33(D) as limiting a
municipality’s ability to bring a cause of action only to recover an underpayment
based on an audit would lead to an absurd result—i.e., “allowing municipalities to
enforce the Act against those that fail to make full payment but not those that ignore
the requirements of the Act entirely.” Even if there is no express right, Maple
Heights argues that it has an implied right of action based on the three-part test set
forth in Cort, 422 U.S. 66, 95 S.Ct. 2080, 45 L.Ed.2d 26. “That test examines: (1)
whether the statute creates a right in favor of the plaintiff, (2) whether there is any
indication of legislative intent, explicit or implicit, to create or deny a remedy
through a private right of action, and (3) whether it is consistent with the underlying
purposes of the legislative scheme to imply such a remedy.” Anderson, 196 Ohio
App.3d 540, 2011-Ohio-5619, 964 N.E.2d 468, at ¶ 10. Maple Heights asserts that
because (1) the Act creates a right in its favor, (2) there is explicit legislative intent
to create a right of remedy to Maple Heights, and (3) it is consistent with the
underlying purpose of the Act to imply a right of remedy to Maple Heights.
Contrary to the assertions of Netflix and Hulu, Maple Heights quotes Upperman v.
Grange Indemn. Ins. Co., 135 Ohio Misc.2d 8, 2005-Ohio-6227, 842 N.E.2d 132,
¶ 11 (C.P.), and argues that Ohio courts imply a “private right of action” when the
“statute does not explicitly state that a private right of action ‘is not available as a
supplement to other remedies’ and those affected by non-compliance with the
statute will not have an adequate remedy.”
III. STANDARD OF REVIEW
{¶ 17} We begin by interpreting a series of statutes. “When the statutory
language is plain and unambiguous, and conveys a clear and definite meaning, we
must rely on what the General Assembly has said.” Jones v. Action Coupling &
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Equip., Inc., 98 Ohio St.3d 330, 2003-Ohio-1099, 784 N.E.2d 1172, ¶ 12. “The
question is not what did the general assembly intend to enact, but what is the
meaning of that which it did enact.” Slingluff v. Weaver, 66 Ohio St. 621, 64 N.E.
574 (1902), paragraph two of the syllabus. “The interpretation of a statute is a
question of law that we review de novo.” Stewart v. Vivian, 151 Ohio St.3d 574,
2017-Ohio-7526, 91 N.E.3d 716, ¶ 23.
IV. LEGAL ANALYSIS
A. Question No. 1
{¶ 18} First, the federal court asks us to determine whether Netflix and Hulu
are video-service providers under Ohio law. The answer is “no.” The Act makes
clear that only the director of commerce may determine whether an entity is a video-
service provider, and no portion of the Act authorizes a local government to
challenge that determination. The director of commerce is empowered to “issue to
any person, or renew, a video service authorization.” R.C. 1332.24(A)(1). The
video-service authorization permits the person “to provide video service in its video
service area; construct and operate a video service network in, along, across, or on
public rights-of-way for the provision of video service; and, when necessary to
provide that service.” Id. The director of commerce may also impose an annual
assessment on video-service providers and collect it from them. R.C.
1332.24(A)(3).
{¶ 19} R.C. 1332.21(J) states that “ ‘[v]ideo service’ means the provision
of video programming over wires or cables located at least in part in public rights-
of-way.” R.C. 1332.21(J) also states that the definition of video service includes
cable service but excludes “video programming provided solely as part of and via
a service that enables users to access content, information, electronic mail, or other
services offered over the public internet.” Because Netflix and Hulu provide
online-streaming services over the public Internet, they are not video-service
providers. They do not need to place their own wires or equipment in the public
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rights-of-way to provide their subscribers with their programming, and the
equipment used to access their services belongs to their customers, not to them.
Therefore, neither Netflix nor Hulu is required to obtain a video-service
authorization.
B. Question No. 2
{¶ 20} Second, the federal court asks us to determine whether Maple
Heights has authority to bring an action against Netflix and Hulu to enforce Ohio’s
video-service-provider provisions. The answer is “no.”
{¶ 21} As previously stated, R.C. 1332.24(A)(2) is unambiguous: the
director of commerce is the sole franchising authority. He or she is empowered to
investigate allegations or complaints against a video-service provider if that
provider is failing to comply with the Act’s requirements. R.C. 1332.24(B)(1).
Indeed, the purpose of the Act was to eliminate local governments’ control over
video-service providers. R.C. 1332.22(H) and (K).
{¶ 22} The Act also limits the authority of local governments. Local
governments are authorized to conduct an annual audit to verify the “accuracy” of
a video-service provider’s calculation of the fees to be paid to local governments.
R.C. 1332.33(A). And local governments may bring an action in a court of
competent jurisdiction “to dispute the amount of video service provider fee due
based on the audit results.” R.C. 1332.33(D). R.C. 1332.33 does not state or infer
what Maple Heights would like for it to state or infer; Maple Heights simply does
not have express statutory authority to bring the underlying action to enforce the
Act. The legislature knows how to grant local governments such authority and
chose not to do so here. See former R.C. 1332.09, Am.Sub.S.B. No. 67, 148 Ohio
Laws, Part IV, 8593, 8601 (expressly providing local governments with a cause of
action).
{¶ 23} Maple Heights also asks this court to infer an unwritten right to bring
suit. Citing Anderson, 196 Ohio App.3d 540, 2011-Ohio-5619, 964 N.E.2d 468, at
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¶ 10, Maple Heights argues that “a private right of action should be inferred from a
statute” based on “a three-part test adapted from the United States Supreme Court
decision in Cort, [422 U.S. 66, 95 S.Ct. 2080, 45 L.Ed.2d 26].” The three-part test
established in Cort and echoed in Anderson examines (1) whether the plaintiff is
within the class for whose benefit the statute was enacted, (2) whether the statute
reflects the legislature’s intent to create or deny a remedy through a private right of
action, and (3) whether inferring such a remedy is consistent with the purposes of
the statute. Cort at 78; Anderson at ¶ 10. All these factors weigh against Maple
Heights.
{¶ 24} First, Maple Heights is not within the class meant to benefit from the
Act. The purpose of the Act is to take away a local government’s power to regulate
video-service-franchise agreements for the benefit of the video-service market,
Ohio’s infrastructure and economy, and Ohio’s consumers. R.C. 1332.22(J).
{¶ 25} Second, nothing in the Act indicates that the General Assembly
intended to create a right of remedy for a local government to enforce the video-
service-authorization and franchise-fee requirements of the Act against a business
that the local government thinks ought to be designated as a video-service provider.
In fact, the plain language of the Act indicates that the General Assembly intended
to foreclose rights of remedy for local governments and to leave the director of the
Ohio Department of Commerce with the sole authority to issue video-service
authorizations and to investigate alleged violations of the Act. R.C. 1332.22(H)
and 1332.24.
{¶ 26} To the extent that local governments have any power at all under the
Act, it is extremely limited in scope. Regarding businesses that have already
received state authorization to provide video services under R.C. 1332.24, local
governments have the option to use their own funds to audit a video-service
provider’s calculation of fees, R.C. 1332.33(A); they also have the limited authority
to sue video-service providers over disputes about those fees, R.C. 1332.33(D).
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The fact that the General Assembly provided a narrow right of remedy to local
governments in R.C. 1332.33(D) and nowhere else in the Act indicates that all other
rights of remedy are unavailable to local governments. See Thomas v. Freeman, 79
Ohio St.3d 221, 225, 680 N.E.2d 997 (1997).
{¶ 27} Third, inferring the right of remedy for a local government like
Maple Heights would be inconsistent with the Act’s purpose of eliminating the
patchwork authority previously exercised by local governments and instead
centralizing the authority with the director of commerce. See R.C. 1332.22. There
is no way to infer that creating a right of action to local governments would further
the goal of eliminating local governments’ authority.
{¶ 28} Therefore, in response to the second certified state-law question
asking us to apply the test established by the United States Supreme Court in Cort,
422 U.S. 66, 95 S.Ct. 2080, 45 L.Ed.2d 26, the answer is “no.” Maple Heights has
no right, either express or implied, to bring a cause of action against Netflix or Hulu
under the Act.
V. CONCLUSION
{¶ 29} Netflix and Hulu are online-streaming businesses that service their
subscribers over the public Internet. The General Assembly defined video service
to the exclusion of those who provide “video programming * * * solely as part of
and via a service that enables users to access content, information, electronic mail,
or other services offered over the public internet.” R.C. 1332.21(J). And the
purpose of the Act as expressed by its language is to eliminate the authority of local
governments, like Maple Heights, over video-service franchises. The director of
commerce has the sole authority to grant video-service authorizations and to
investigate allegations that a video-service provider is violating or failing to comply
with the Act. To read the Act as granting Maple Heights an implied right to bring
the underlying action under Cort would be contrary to its stated intent.
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{¶ 30} Therefore, we answer both certified state-law questions in the
negative.
So answered.
O’CONNOR, C.J., and STEWART and BRUNNER, JJ., concur.
KENNEDY, J., concurs in judgment only, with an opinion joined by FISCHER
and DEWINE, JJ.
_________________
KENNEDY, J., concurring in judgment only.
{¶ 31} The United States District Court for the Northern District of Ohio,
Eastern Division, certified two state-law questions for our review: (1) “Are Netflix
and Hulu video service providers under Ohio law?” and (2) “Can Maple Heights
sue Netflix and Hulu to enforce Ohio’s video service provider provisions?” 164
Ohio St.3d 1440, 2021-Ohio-3233, 173 N.E.3d 1227. I agree with the majority that
petitioners, Netflix, Inc., and Hulu, L.L.C., are not video-service providers and that
the Fair Competition in Cable Operations Act, R.C. Chapter 1332.21, 2007
Am.Sub.S.B. No. 117 (“the Act”), does not allow local governments to bring an
action to enforce its requirements.
{¶ 32} I write separately, however, because this court should not entertain
respondent city of Maple Height’s request that we read between the lines of the Act
to create an implied cause of action that the General Assembly itself chose not to
enact. Because the idea of a court recognizing an implied statutory cause of action
is contrary to our rules of statutory interpretation and to basic concepts of our
tripartite form of government that separates the legislative function from the
judicial, I concur in the majority’s judgment, but neither its reasoning nor its
analysis.
I. Implied Causes of Action
{¶ 33} Maple Heights asks this court to infer an unwritten right to bring suit,
invoking caselaw that says, “a private right of action should be inferred from a
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statute” based on a three-part test adapted from the United States Supreme Court
decision in Cort v. Ash, 422 U.S. 66, 95 S.Ct. 2080, 45 L.Ed.2d 26 (1975). “That
test examines: (1) whether the statute creates a right in favor of the plaintiff,
(2) whether there is any indication of legislative intent, explicit or implicit, to create
or deny a remedy through a private right of action, and (3) whether it is consistent
with the underlying purposes of the legislative scheme to imply such a remedy.”
Anderson v. Smith, 196 Ohio App. 3d 540, 2011-Ohio-5619, 964 N.E.2d 468, ¶ 10
(10th Dist.). It is true that Anderson and other lower courts have employed the first
three factors of Cort’s test for an implied right of action. See Anderson at ¶ 10
(citing cases). But this court has never done so and should not now.
{¶ 34} Rather, this court has described creating an “implied private
statutory cause of action” as “trying to fit a round peg into a square hole.” Biddle
v. Warren Gen. Hosp., 86 Ohio St. 3d 395, 400, 715 N.E.2d 518 (1999). In one
rare instance when this court considered finding a cause of action implied in a
statute, we stated that “the General Assembly” must have “by ‘clear implication’
intended to create a civil action.” Fawcett v. G. C. Murphy & Co., 46 Ohio St. 2d
245, 249, 348 N.E.2d 144 (1976). There, the “clear implication” cut decidedly
against inferring a cause of action because “the Department of Industrial Relations
[was] vested with authority to enforce” the law in question. Id. The same result
would follow here because, as explained in more detail below, the Act vests the
director of commerce with authority to enforce the Act. R.C. 1332.24(C)(1).
{¶ 35} Moreover, the Supreme Court itself has backed away from creating
implied causes of action in statutes. Since the Cort decision, in which the United
States Supreme Court declined to find an implied cause of action, id. at 85, the court
has clarified that “private rights of action to enforce federal law must be created by
Congress,” Alexander v. Sandoval, 532 U.S. 275, 286, 121 S. Ct. 1511, 149 L.Ed.2d
517 (2001). Therefore, when Congress has not stated a cause of action, one “does
not exist and courts may not create one, no matter how desirable that might be as a
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policy matter, or how compatible with the statute.” Id.; see also Ziglar v. Abbasi,
___ U.S. ___, ___, 137 S.Ct. 1843, 1856, 198 L.Ed.2d 290 (2017); Nestle USA, Inc.
v. Doe, ___ U.S. ___, ___, 141 S.Ct. 1931, 1937, 210 L.Ed.2d 207 (2021) (plurality)
(“[federal] courts must refrain from creating a cause of action whenever there is
even a single sound reason to defer to Congress”).
{¶ 36} The idea that a court should read between the lines of statutory text
to recognize an implied cause of action is a relic from a different time. Alexander
at 287. It had once been the rule that “[w]here the plain meaning of words used in
a statute produce[d] an unreasonable result, ‘plainly at variance with the policy of
the legislation as a whole,’ we [could] follow the purpose of the statute rather than
the literal words.” (Emphasis added.) United States v. N. E. Rosenblum Truck
Lines, 315 U.S. 50, 55-56, 62 S.Ct. 445, 86 L.Ed. 671 (1942), quoting United States
v. Am. Trucking Assns., 310 U.S. 534, 543, 60 S.Ct. 1059, 84 L.Ed. 1345 (1940).
Indeed, when deciding whether to imply a cause of action, “it [was] the duty of the
courts to be alert to provide such remedies as [were] necessary to make effective
the congressional purpose” when the legislature enacted the statute at issue, J.I.
Case Co. v. Borak, 377 U.S. 426, 433, 84 S.Ct. 1555, 12 L.Ed.2d 423 (1964),
abrogation recognized by Zigler v. Abbasi, ___ U.S. ___, ___, 137 S.Ct. 1843,
1855, 198 L.Ed.2d 290 (2017). This purposivism reflected “[t]he false notion that
when a situation is not quite covered by a statute, the court should reconstruct what
the legislature would have done had it confronted the issue.” (Boldface omitted.)
Scalia & Garner, Reading Law: The Interpretation of Legal Texts 349 (2012).
{¶ 37} But that is no longer how courts approach statutory interpretation.
As the Supreme Court recently explained:
This Court normally interprets a statute in accord with the
ordinary public meaning of its terms at the time of its enactment.
After all, only the words on the page constitute the law adopted by
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Congress and approved by the President. If judges could add to,
remodel, update, or detract from old statutory terms inspired only by
extratextual sources and our own imaginations, we would risk
amending statutes outside the legislative process reserved for the
people’s representatives. And we would deny the people the right
to continue relying on the original meaning of the law they have
counted on to settle their rights and obligations.
Bostock v. Clayton Cty., Georgia, ___ U.S. ___, ___, 140 S.Ct. 1731, 1738, 207
L.Ed.2d 218 (2020). As Justice Elena Kagan has famously put it, “we’re all
textualists now.” Harvard Law School, The Antonin Scalia Lecture Series: A
Dialogue with Justice Elena Kagan on the Reading of Statutes, available at
https://www.youtube.com/watch?v=dpEtszFT0Tg (accessed Oct. 10, 2022) [at
08:29] [https://perma.cc/3LX6-PBBL].
{¶ 38} The test in Cort, 422 U.S. 66, 95 S.Ct. 2080, 45 L.Ed.2d 26, is not
just inconsistent with the textualist approach to interpreting statutes. A court’s
decision to create an implied cause of action in a statute that does not provide one
runs counter to the basic theory of our tripartite form of government. An implied
cause of action exists when a court believes the legislature should have created a
right of action but did not, and then supplies the cause of action through judicial
lawmaking. But the people of Ohio, in adopting our Constitution, separated the
powers of government and vested the legislative power in the General Assembly,
Article II, Section 1, the executive power in the Governor, Article III, Section 5,
and the judicial power in the courts, Article IV, Section 1. To recognize an implied
cause of action in a statute is to judicially amend that statute to provide a cause of
action that the General Assembly did not enact. That power is denied to the courts.
Adding words to a statute is a legislative function reserved solely to the General
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Assembly under the American form of government. The majority’s willingness to
read something into a statute that does not exist threatens our form of government.
A. The General Assembly Did Not Give Maple Heights Express Statutory
Authority to Bring an Action to Enforce the Act
{¶ 39} The Act clearly and unambiguously denies local governments an
express right of action to enforce its requirements. In fact, history and the statutory
text reveal that the General Assembly intended to eliminate the role local
governments once played in the regulation of video programming in Ohio. See
R.C. 1332.22(H) and (K).
{¶ 40} The relevant history begins with the Communications Act of 1934,
which combined the Interstate Commerce Commission’s regulatory authority over
wired communication (telegraph and telephone) with the Federal Radio
Commission’s oversight of radio broadcasting into one agency: the Federal
Communications Commission (“FCC”). Scripps-Howard Radio v. Fed.
Communications Comm., 316 U.S. 4, 6, 62 S.Ct. 875, 86 L.Ed. 1229 (1942);
Robinson, The “New” Communications Act: A Second Opinion, 29 Conn.L.Rev.
289, 291 (1996).
{¶ 41} Preempting conflicting state laws, the Communications Act gave the
FCC exclusive jurisdiction to regulate over-the-air broadcasting. See Natl.
Broadcasting Co. v. United States, 319 U.S. 190, 214, 63 S.Ct. 997, 87 L.Ed. 1344(1943); Robinson and Nachbar, Communications Regulation 10 (2008). The FCC
assigned specific frequencies to broadcasters to prevent one station from interfering
with another’s signal. Turner Broadcasting Sys., Inc. v. Fed. Communications
Comm., 512 U.S. 622, 637, 114 S.Ct. 2445, 129 L.Ed.2d 497 (1994). However, to
ensure that every community would be served by at least one local station, the FCC
discouraged the development of high-powered stations that could reach regional or
national audiences, leaving rural and midsized communities with few channels to
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watch. 1 Telecommunications & Cable Regulation, The Development of Cable in
[the] 1950s, Section 5.03 (2021).
{¶ 42} The first cable systems stepped into this void “to improve reception
of over-the-air broadcast signals for subscribers in locations far removed from local
television stations, or where topographical barriers prevented the clear reception of
television signals.” 1 Brenner, Price, and Meyerson, Cable Television and Other
Nonbroadcast Video, Section 1.2 (2022). Because they simply retransmitted
broadcast television signals from other markets through cables without interfering
with over-the-air broadcasts, they were generally not regulated by the FCC.
Telecommunications & Cable Regulation, at Section 5.03. Instead, local
governments became the principal regulators of cable-television systems, using
their home-rule powers to grant franchises to cable companies to operate within
their boundaries and exacting franchise fees from cable companies to attach wires
to utility poles in the public rights-of-way to provide cable-television service to
customers. See Brenner, Price, and Meyerson, at Sections 3.4, 3.5, and 5.2; see
also Vernon v. Warner Amex Cable Communications, Inc., 25 Ohio St.3d 117, 120,
495 N.E.2d 374 (1986) (recognizing that municipalities have home-rule authority
to enter agreements with cable providers to use municipal rights-of-way).
{¶ 43} This changed in Ohio effective September 24, 2007, when the Act
abolished the authority of local governments to require new franchise agreements
from video-service providers and established a statewide regulatory scheme in
which the director of commerce is the sole franchising authority for the provision
of video services in this state. R.C. 1332.23(B); R.C. 1332.24(A). The Act was
intended to be a “comprehensive legislative enactment operating uniformly
throughout this state, setting forth police regulations, and prescribing a rule of
conduct upon citizens generally,” R.C. 1332.22(K), thereby eliminating the power
of local governments to regulate video service.
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{¶ 44} A video-service authorization is issued by the director of commerce
and permits the holder “to provide video service in its video service area; construct
and operate a video service network in, along, across, or on public rights-of-way
for the provision of video service; and, when necessary to provide that service,
exercise the power of a telephone company.” R.C. 1332.24(A)(1). The director
may impose an annual assessment on video-service providers and collect it from
them. R.C. 1332.24(A)(3). The director also has the authority to investigate
alleged violations of the video-service-authorization requirements, R.C.
1332.24(B)(1), to subpoena witnesses and order the production of documents
during the investigation, R.C. 1332.24(B)(2), and to seek injunctive relief for
uncured violations, R.C. 1332.24(C)(1)(a). If the director finds that a person has
violated or failed to comply with the Act and the person has failed to cure the
violation, the director may (1) bring an action in a court of common pleas to enjoin
the person’s activity, R.C. 1332.24(C)(1)(a), (2) enter into a “written assurance of
voluntary compliance with the person,” R.C. 1332.24(C)(1)(b), or (3) assess a civil
penalty against the person pursuant to R.C. Chapter 119, R.C. 1332.24(C)(1)(c).
{¶ 45} The authority of local governments is far more limited. A video-
service provider that offers video service in a municipal corporation or township is
required to pay video-service-provider fees to the local government at the end of
each calendar quarter. R.C. 1332.32(A). The percentage of gross revenue that is
collectible as a fee is set forth in R.C. 1332.32(C)(1)(a) and (b), and the timing of
when a local government is required to provide written notice to the video-service
provider of that percentage under R.C. 1332.32(C)(1)(a) or (b) is set forth in R.C.
1332.32(C)(2). The legislature established a formula for calculating gross revenue
for the preceding calendar quarter, R.C. 1332.32(A) through (B)(1)(a) through (d),
and provided specific exemptions from being considered “gross revenue.” R.C.
1332.32(B)(2)(a) through (h).
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January Term, 2022
{¶ 46} The Act permits locals government to perform annual audits, at their
own expense, to verify the “accuracy” of the video-service provider’s calculation
of the fees owed, R.C. 1332.33(A), and R.C. 1332.33(B) grants local governments
the right to recoup any underpayment found in the audit with interest. The Act
provides a specific remedy to local governments: “An action by the municipal
corporation or township” may be brought in a court of competent jurisdiction to
litigate “the amount of video service provider fee due based on the audit results.”
R.C. 1332.33(D).
{¶ 47} That is all the authority that the Act grants to local governments. The
Act plainly and unambiguously denies Maple Heights statutory authority to bring
an action to enforce its provisions. It grants the primary responsibility for enforcing
its requirements to the director of commerce. The director is the sole franchising
authority, and he or she is empowered to investigate any allegation or complaint
that a video-service provider is failing to comply with the Act’s requirements. At
the same time, the Act removes the prior authority that had belonged to local
governments—i.e., the power to regulate video-service providers and to require
franchise agreements from them. It also replaces the franchise fees local
governments once exacted from cable companies with a fee set by statute, and it
affords local governments the limited remedy of an audit that they may seek to
vindicate in court.
{¶ 48} By taking local governments’ power and granting it to the director
of commerce while reserving to local governments only a limited right to audit the
calculation of the video-service-provider fee, the General Assembly has plainly and
unambiguously denied local governments any other power to enforce the Act’s
requirements.
B. The Majority Goes beyond the Statute’s Text
{¶ 49} Since the majority agrees that “Maple Heights simply does not have
express statutory authority to bring the underlying action to enforce the Act,”
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SUPREME COURT OF OHIO
majority opinion, ¶ 22, the analysis should end there. However, the majority does
not do so and instead shows its willingness to go beyond the plain language of the
Act and infer an unwritten right to bring suit.
{¶ 50} Although the majority does not formally adopt the Cort, 422 U.S.
66, 95 S.Ct. 2080, 45 L.Ed.2d 26, test, it misses a prime opportunity to make clear
that the factors in the Cort test have no relevance in Ohio. And in failing to
definitively reject the Cort test, it creates confusion for future litigants who may be
tempted to make creative arguments for causes of actions that the General
Assembly has not deemed fit to create.
II. Conclusion
{¶ 51} As today’s decision shows, inferring the existence of a cause of
action from a statute that does not create one is not just a matter of statutory
misinterpretation. It is the work of judges who are guided by their own public-
policy choices, not text. It is the very definition of judicial activism: “A philosophy
of judicial decision-making whereby judges allow their personal views about public
policy, among other factors, to guide their decisions, usu[ually] with the suggestion
that adherents of this philosophy tend to find constitutional violations and are
willing to ignore governing texts and precedents.” Black’s Law Dictionary 974
(10th Ed.2014).
{¶ 52} The majority therefore moves Ohio in the wrong direction. The
General Assembly’s intent, as reflected in the words of the Act, should be this
court’s lodestar. To give authority to local governments to enforce any provision
of the Act beyond what the legislature has authorized would subvert the
legislature’s intent. For this reason, Maple Heights has no cause of action against
Netflix or Hulu under the Act, express on implied.
{¶ 53} Consequently, I concur in the majority’s answers to the certified
questions of state law only and join none of its analysis or reasoning.
FISCHER and DEWINE, JJ., concur in the foregoing opinion.
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January Term, 2022
_________________
DiCello, Levitt & Gutzler, L.L.C., Mark A. DiCello, and Justin J. Hawal,
for respondent.
Ulmer & Berne, L.L.P., Amanda Martinsek, and Gregory C. Djordjevic;
and Latham & Watkins, L.L.P., Mary Rose Alexander, Robert C. Collins III, and
Jean A. Pawlow, for petitioner Netflix, Inc.
Brouse McDowell and Kerri L. Keller; and Wilson, Sonsini, Goodrich &
Rosati, P.C., Victor Jih, and Eric T. Kohan, for petitioner Hulu, L.L.C.
Tucker Ellis, L.L.P., and Jeffrey C. Sindelar Jr.; and Kilpatrick, Townsend
& Stockton, L.L.P., and Adam H. Charnes, in support of petitioners for amicus
curiae DIRECTV, L.L.C.
Public Knowledge and John Bergmayer; and Calfee, Halter & Griswold,
L.L.P., James F. Lang, and Colleen M. O’Neil, in support of petitioners for amicus
curiae Public Knowledge.
Calfee, Halter & Griswold, L.L.P., James F. Lang, Colleen M. O’Neil, and
Madeline H. Shanahan; Steptoe & Johnson, L.L.P., Pantelis Michalopoulos, and
Matthew R. Friedman; and Crosscastle, P.L.L.C., and Jared R. Butcher, in support
of petitioners for amici curiae DISH Network Corp. and DISH Network, L.L.C.
Dave Yost, Attorney General, Benjamin M. Flowers, Solicitor General, and
Mathura J. Sridharan, Deputy Solicitor General, in support of petitioners for amicus
curiae state of Ohio.
_________________
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