The City of Kenner, Louisiana, cannot sue Netflix and Hulu for franchise fees for providing video content via the Internet.
In 2021, the City of Kenner imposed a 5% fee on certain entities that operate in the city and filed a class action lawsuit against Netflix and Hulu in order to collect those fees. That lawsuit was dismissed by the Louisiana Trial Court, and the Louisiana Fifth Circuit Court of Appeals affirmed the Trial Court’s decision.
The court sided with the streamers, with their argument hinging on the Consumers’ Choice for Television Act (CCTA). First enacted by the state of Louisiana in 2008 and most relevantly amended in 2022, this act lets local jurisdictions charge franchise fees from video or cable services providers in the area. The 2022 amendment explicitly stated that streaming content does not fall under this definition.
In addition, Netflix and Hulu do not provide or maintain the utility infrastructure used to access the Internet. Louisiana RS 1362 defines a franchise as a decision “that authorizes the construction and operation of a cable system, or other wireline facilities used to distribute video programming services.”
While Netflix and Hulu do provide video services, neither entities, nor any streamer for that matter, construct or maintain the physical utilities that allow them to transfer video.
Alongside the CCTA, the other major roadblock for the City of Kenner was the fact that Netflix and Hulu are also not certified by the Secretary of State as a franchise. The city was attempting to secure franchise fees where they were irrelevant, as neither Netflix nor Hulu function as a franchise. In order to be charged franchise fees by the state of Louisiana, the targeted entity must be certified as a franchise, which the streamers were not.
(NO. 22-CA-466 The City of Kenner v. Netflix, Inc., and Hulu, LLC
LA RS 45:1363)