Comcast of Sacramento I, LLC v. Sacramento Metropolitan Cable , 923 F.3d 1163 ( 2019 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
COMCAST OF SACRAMENTO I, LLC; Nos. 17-16847
COMCAST OF SACRAMENTO II, LLC; 17-16923
COMCAST OF SACRAMENTO III, LLC,
Plaintiffs-Appellants/ D.C. No.
Cross-Appellees, 2:16-cv-01264-
WBS-EFB
v.
SACRAMENTO METROPOLITAN OPINION
CABLE TELEVISION COMMISSION,
Defendant-Appellee/
Cross-Appellants.
Appeal from the United States District Court
for the Eastern District of California
William B. Shubb, District Judge, Presiding
Argued and Submitted December 17, 2018
San Francisco, California
Filed May 8, 2019
Before: Consuelo M. Callahan and N. Randy Smith,
Circuit Judges, and Fernando M. Olguin,* District Judge.
Opinion by Judge N.R. Smith
*
The Honorable Fernando M. Olguin, United States District Judge for
the Central District of California, sitting by designation.
2 COMCAST V. SMCTC
SUMMARY**
Cable Franchise Fees
The panel vacated the district court’s summary judgment
and held that 47 U.S.C. § 555a(a) barred the only relief
sought by Comcast of Sacramento in its lawsuit concerning
the calculation and payment of cable franchise fees.
Under 47 U.S.C. § 555a(a), local authorities and
municipalities, involved in the regulation of cable television
services within their boundaries, are exempted from civil
money damages liability in any lawsuit for any claim arising
from the regulation of cable services.
As an initial matter, the panel rejected Comcast’s
argument that the Sacramento Metropolitan Cable Television
Commission (the “Commission”) waived any argument
relying on 47 U.S.C. § 555a(a). The panel held that the issue
was raised and addressed by the district court sua sponte, and
the Commission’s briefs sufficiently raised the issue for
purposes of appeal.
The panel held that Comcast pleaded claims of conversion
and common count, both intended to obtain a return of the
security deposit paid to the Commission by Comcast’s
predecessor in interest under the terms of a franchise
agreement, and these claims seek an award of money
damages (and not injunctive or declaratory relief) and are
brought against a cable franchising authority. The panel
**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
COMCAST V. SMCTC 3
further held that Comcast’s lawsuit, as pleaded, arose from
cable regulation. The panel concluded that the lawsuit was
subject to the bar provided by § 555a(a), and must be
dismissed on that basis.
The panel instructed the district court to enter an order on
remand, dismissing the lawsuit without prejudice. The panel
rejected Comcast’s argument that it was left without any
possible means of obtaining the return of its security deposit.
COUNSEL
Fred A. Rowley, Jr. (argued), Jeffrey Y. Wu (argued), and
Aaron Pennekamp, Munger Tolles & Olson LLP, Los
Angeles, California; Donald B. Verrilli Jr., Munger Tolles &
Olson LLP, Washington, D.C.; Jill B. Rowe, Scott M.
McLeod, and Patrick M. Rosvall, Cooper White & Cooper
LLP, San Francisco, California; for Plaintiffs-
Appellants/Cross-Appellees.
Harriet A. Steiner (argued) and Joshua Nelson, Best Best &
Krieger LLP, Sacramento, California, for Defendant-
Appellee/Cross-Appellant.
Allison W. Meredith and Jeremy B. Rosen, Horvitz & Levy
LLP, Burbank, California, for Amicus Curiae California
Chamber of Commerce.
Karin Dougan Vogel, J. Aaron George, and Gardner
Gillespie, Sheppard Mullin Richter & Hampton LLP,
Washington, D.C., for Amicus Curiae California Cable &
Telecommunications Association.
4 COMCAST V. SMCTC
Jeffrey M. Bayne, Tillman L. Lay, and James N. Horwood,
Spiegel & McDiarmid LLP, Washington, D.C., for Amici
Curiae The Alliance for Community Media and The Alliance
for Communications Democracy.
Travis Van Ligten and Jeffrey T. Melching, Rutan & Tucker
LLP, Costa Mesa, California, for Amici Curiae League of
California Cities, California State Association of Counties,
and Scan Natoa, Inc.
OPINION
N.R. SMITH, Circuit Judge:
Under federal law, local authorities and municipalities,
involved in the regulation of cable television services within
their boundaries, are exempted from civil money damages
liability in any lawsuit for any claim arising from the
regulation of cable services. See 47 U.S.C. § 555a(a).
This lawsuit concerns the calculation and payment of
cable franchise fees. Because Comcast of Sacramento
(“Comcast”) seeks money damages in this suit, brings it
against a municipality, and the suit arises out of the regulation
of cable services, 47 U.S.C. § 555a(a) bars the only relief
sought by Comcast. Thus, we vacate the district court’s
grants of summary judgment and remand with instructions to
dismiss Comcast’s lawsuit.
COMCAST V. SMCTC 5
I. FACTUAL AND PROCEDURAL BACKGROUND
Cable Industry Background
Historically, cable operators pay a fee to local and/or state
governments in order to provide service within a particular
jurisdiction, usually referred to as a franchise fee. These fees
have been justified by the fact that cable operators use public
rights-of-way, maintained by the local governmental entities,
to deliver their services.
Prior to the 1980s, the Federal Communications
Commission (“FCC”) largely left cable franchise regulation
to local governments. However in 1984, the FCC determined
that many local authorities were imposing varying and often
high franchise fees, and that those fees were impeding the
growth of the cable television industry. Thus, Congress
enacted the Cable Communications Policy Act (the “Cable
Act”) of 1984.
The Cable Act imposes a uniform set of franchise
procedures and standards, authorizes local authorities to
collect fees in connection with the grant of a cable franchise,
but caps those fees at 5% of a cable company’s gross
revenues. See 47 U.S.C. § 542(a), (b). Franchise fees are
defined, and include any tax, fee, or assessment imposed on
“a cable operator or cable subscriber, or both, solely because
of their status as such.” Id. § 542(g)(1); see also § 542(b).
Franchise fees do not include “any tax, fee, or assessment of
general applicability (including any such tax, fee, or
assessment imposed on both utilities and cable operators or
their services but not including a tax, fee, or assessment
which is unduly discriminatory against cable operators or
6 COMCAST V. SMCTC
cable subscribers).” Id. § 542(g)(2)(A). The Cable Act also
expressly preempts any inconsistent state law. Id. § 556(c).
Several years later, Congress determined that the
delegation of cable franchising authority had resulted in an
unanticipated development: municipalities were being sued
for damages by cable operators in connection with cable
franchising decisions. See Jones Intercable of San Diego,
Inc. v. City of Chula Vista, 80 F.3d 320, 326 n.5 (9th Cir.
1996) (citing S. Rep. No. 92, 102d Cong., 2d Sess. 48–49
(1992), as reprinted in 1992 U.S.C.C.A.N. 1133, 1181–82);
see also id. (“[T]he mere pendency of these large damage
claims has had significant adverse effects on the functioning
of local governments. These claims represent a potentially
crippling burden on local government treasuries . . . .”
(alterations in original)). In response, Congress enacted the
Cable Television Consumer Protection and Competition Act
of 1992. Among other things, that Act provides that:
In any court proceeding pending on or
initiated after October 5, 1992, involving any
claim against a franchising authority or other
governmental entity, or any official, member,
employee, or agent of such authority or entity,
arising from the regulation of cable service or
from a decision of approval or disapproval
with respect to a grant, renewal, transfer, or
amendment of a franchise, any relief, to the
extent such relief is required by any other
provision of Federal, State, or local law, shall
be limited to injunctive relief and declaratory
relief.
47 U.S.C. § 555a(a) (emphasis added).
COMCAST V. SMCTC 7
Then in 1996, Congress enacted the Telecommunications
Act, which sought to increase competition by allowing non-
traditional cable companies to enter state cable markets.
However, few were able to successfully enter the California
market. This inability to enter that market resulted, in part,
from a number of traditional cable companies being well
established in California. The inability was also partly
attributable to the fact that local and municipal governments
within California imposed varied, often onerous franchise
requirements that, in effect, created barriers to new market
entrants.
In order to encourage competition in the cable television
market, the California legislature enacted the Digital
Infrastructure and Video Competition Act (“DIVCA”) in
2006. DIVCA stripped local governments of their ability to
grant cable franchises and established the California Public
Utilities Commission (“CPUC”) as “the sole franchising
authority for a state franchise to provide video service.” Cal.
Pub. Util. Code § 5840(a). Under DIVCA, local governments
continued to impose and collect “franchise fees” as a form of
rent for video service providers’ use of public rights-of-way,
but those fees were and are capped at 5% of the providers’
gross revenues. Id. § 5840(q)(1). DIVCA also permits cable
operators to “identify and collect the amount of the state [or
local] franchise fee as a separate line item on the regular bill
of each subscriber.” Id. § 5860(j). Sacramento County has
enacted an ordinance that requires each cable franchise
operating within the county to pay a franchise fee “equal to
five (5) percent per year of the Franchisee’s annual Gross
Revenues.” Sac. Cty. Code § 5.50.602.
DIVCA also authorizes the CPUC to collect from each
cable franchise an annual fee in an amount necessary “to
8 COMCAST V. SMCTC
carry out the provisions of [DIVCA].” Cal. Pub. Util. Code
§ 441. This is known as a “CPUC fee.” However, DIVCA
requires that the CPUC fee must be applied in a manner
consistent with the Cable Act’s 5% franchise fee cap. Id.§ 442(b).
DIVCA additionally permits local governments to assess
public, educational and governmental (“PEG”) fees in a
manner consistent with federal law, id. § 5870(n), and in an
amount not to exceed “1 percent of the holder’s gross
revenues, as defined in Section 5860.” Id. Cable operators
may pass those fees on to their subscribers and thereby
recover “any fee remitted to a local entity under this section
by billing a recovery fee as a separate line item on the regular
bill of each subscriber.” Id. § 5870(o). The city of
Sacramento has enacted an ordinance imposing such a fee.
See Sac. Mun. Code § 5.28.2670(C)(1).1
The Present Dispute
Both before and after the enactment of DIVCA,
Sacramento Metropolitan Cable Television Commission
(“SMCTC”) regulated the provision of cable television
services in Sacramento and the surrounding area. Comcast
(or Comcast’s predecessors in interest, all entities hereafter
referred to as “Comcast”) offered cable television services in
the Sacramento area for years prior to the enactment of
DIVCA. Prior to 2008, Comcast was the beneficiary of a
franchise issued by SMCTC. As part of that franchise,
1
The Sacramento ordinance actually imposes a PEG fee equal to 3%
of a cable operator’s gross revenue, but the parties do not dispute that
DIVCA limits the fee to 1% of gross revenue, and SMCTC has not
attempted to collect any amount greater than that from Comcast.
COMCAST V. SMCTC 9
Comcast’s predecessor had been required to pay a deposit to
SMCTC. Following the enactment of DIVCA, Comcast
transitioned over to a franchise issued by the CPUC, and the
franchise agreement with SMCTC terminated by operation of
law in 2011. Comcast was not required to pay a deposit
under the CPUC franchise agreement, and the parties do not
dispute that the pre-existing deposit (paid to SMCTC) was to
be returned to Comcast upon expiration of the SMCTC
franchise agreement. However, SMCTC did not return the
deposit following the termination of the SMCTC franchise
agreement; instead SMCTC continued to hold the deposit in
an interest bearing trust account. Though the record does not
suggest that SMCTC had any legal authority to continue to
hold Comcast’s deposit, Comcast did not immediately request
its return.
After the SMCTC franchise had terminated, Comcast
continued to pay its annual franchise fee to SMCTC (as rent
for use of the public rights-of-way), as required by DIVCA.
However, in October 2011, Comcast informed SMCTC by
letter that it would deduct the CPUC fee from the franchise
fees paid during the 3rd quarter of 2011 and going forward
thereafter because, in Comcast’s view, the CPUC fee
“qualifies as a ‘franchise fee’ under federal law” that counted
towards the Cable Act’s 5% franchise fee cap. Additionally,
Comcast informed SMCTC that it would not include the PEG
fees it paid to SMCTC as part of the “gross revenues”
calculation that formed the basis for Comcast’s annual
franchise fee obligations.
Though SMCTC does not appear to have responded
immediately to Comcast’s October 2011 letter, SMCTC
eventually informed Comcast that it disagreed with
Comcast’s interpretation of applicable provisions of state and
10 COMCAST V. SMCTC
federal law. Following an audit performed in 2014, SMCTC
demanded that Comcast remit the withheld amounts for that
period, an amount totaling $334,610. The parties exchanged
several additional letters over the months that followed,
outlining their disagreement concerning the appropriate
calculation of CPUC and PEG fees due under state and
federal law. In an October 2014 letter sent by SMCTC,
SMCTC informed Comcast that, because Comcast had paid
less in franchise fees than SMCTC believed was due for fiscal
years 2011 and 2012, SMCTC would begin offsetting the
amount Comcast owed against Comcast’s security deposit
unless Comcast promptly paid the amounts it had withheld.
Comcast declined to pay the amounts SMCTC claimed it
owed; instead, it demanded a return of its security deposit.
SMCTC refused and instead responded to Comcast’s demand
in March 2015 by moving Comcast’s deposit out of the trust
account and into SMCTC’s general fund.
In June 2016, Comcast brought suit against SMCTC,
asserting state law claims for conversion and common count.
Both claims ultimately seek a return of Comcast’s security
deposit, which, with accrued interest, totaled $227,639.45.
SMCTC did not contest those counts but instead argued as
affirmative defenses that: (1) the CPUC fees did not
constitute “franchise fees” for purposes of the Cable Act’s
5% cap, and that Comcast therefore was not permitted to
offset those fees against the franchise fees due to SMCTC;
and (2) PEG fees counted towards “gross revenues” from
which the franchise fee would be determined, and Comcast
COMCAST V. SMCTC 11
could not exclude those fees when calculating its franchise
fee obligations.2
The parties filed cross-motions for summary judgment,
and the district court granted each motion in part following a
hearing. It found for SMCTC on the franchise fee issue,
reasoning that the CPUC fee did not constitute a “franchise
fee” and had been improperly withheld by Comcast. Comcast
of Sacramento I, LLC v. Sacramento Metro. Cable Television
Comm’n, 250 F. Supp. 3d 616, 626 (E.D. Cal. 2017).
However, the district court found for Comcast on the PEG fee
issue, determining that Comcast had properly excluded those
fees from its “gross revenue” calculations, because those fees
fell within DIVCA’s express exclusion for “amounts billed
to, and collected from, subscribers to recover . . . [a] . . . fee
imposed by [a] governmental entity.” Id. (alterations in
original and quotation marks omitted).
Though SMCTC hadn’t raised the issue, the district court
considered sua sponte whether Comcast’s lawsuit was barred
under 47 U.S.C. § 555a(a). After considering that provision,
the district court found that § 555a(a) did not bar Comcast’s
suit. The court was not convinced “that this action ‘aris[es]
from the regulation of cable service’ under section 555a.” Id.
at 627 n.5 (alterations in original). However, the district
court noted that it had found few precedential appellate
decisions concerning the application of § 555a(a).
Nonetheless, the few decisions the court located “indicate that
section 555a was meant to bar claims arising directly out of
2
SMCTC also raised a statute of limitations defense and a statutory
immunity defense but both arguments were rejected by the district court.
SMCTC has not challenged the district court’s findings regarding either
of these defenses on appeal.
12 COMCAST V. SMCTC
cable regulation, as opposed to claims that are only
tangentially related to cable regulation.” Id. (citation
omitted). Comcast moved for reconsideration regarding the
CPUC fee finding, but that motion was denied.
Both parties timely appealed, and this appeal followed.
We have jurisdiction under 28 U.S.C. § 1291.
II. STANDARD OF REVIEW
We review de novo a district court’s decision on cross-
motions for summary judgment. Center for Bio-Ethical
Reform Inc. v. Los Angeles Cty. Sheriff Dep’t, 533 F.3d 780,
786 (9th Cir. 2008) (“When presented with cross-motions for
summary judgment, we review each motion for summary
judgment separately, giving the nonmoving party for each
motion the benefit of all reasonable inferences.”). “The
interpretation and construction of statutes are questions of
law reviewed de novo.” Soltani v. W. & S. Life Ins. Co.,
258 F.3d 1038, 1041 (9th Cir. 2001).
III. DISCUSSION
Because Comcast’s lawsuit must be dismissed as pleaded
if 47 U.S.C. § 555a(a) bars the relief sought, we first consider
the application of that provision to Comcast’s lawsuit for the
return of the security deposit. Because § 555a(a) applies and
bars Comcast’s lawsuit as pleaded, we resolve this appeal on
that basis.
A.
As an initial matter, Comcast argues that SMCTC has
waived any argument relying on 47 U.S.C. § 555a(a), either
COMCAST V. SMCTC 13
by failing to raise such an argument before the district court
or by failing to raise such an argument in its opening brief.
Though “[w]e apply a ‘general rule’ against entertaining
arguments on appeal that were not presented or developed
before the district court,” In re Mercury Interactive Corp.
Sec. Litig., 618 F.3d 988, 992 (9th Cir. 2010) (internal
quotation marks omitted), this issue was raised and addressed
by the district court sua sponte. As the application of
47 U.S.C. § 555a(a) to this lawsuit was “raised sufficiently
for the trial court to rule on it,” In re Mercury Interactive
Corp. Sec. Litig., 618 F.3d at 992 (internal quotation marks
omitted), the waiver rule does not have obvious application
here. Even if a colorable argument for waiver could be made,
“[s]uch waiver is a discretionary, not jurisdictional,
determination.” Id. Where, as here, “the issue presented is
purely one of law and either does not depend on the factual
record developed below, or the pertinent record has been fully
developed,” Davis v. Elec. Arts Inc., 775 F.3d 1172, 1180
(9th Cir. 2015) (citations omitted), we may exercise our
discretion and consider it. See also United States v.
Hernandez-Rodriguez, 352 F.3d 1325, 1328 (10th Cir. 2003)
(finding that “when the district court sua sponte raises and
explicitly resolves an issue of law on the merits” it may be
considered on appeal even if the party relying on that issue
“failed to raise the issue in district court”).
Additionally, SMCTC’s opening brief addresses the
district court’s finding that the lawsuit did not arise from the
regulation of cable services and by extension its finding that
§ 555a does not apply here. SMCTC also expands upon that
argument in its reply brief. Thus SMCTC’s briefs sufficiently
raise this issue for purposes of appeal.
14 COMCAST V. SMCTC
B.
As we have previously explained, “prior to passage of
section 555a(a), municipalities [faced] unexpected and
‘potentially crippling’ civil damage liability claims in relation
to their regulation of cable operators.” Jones, 80 F.3d at 326(quoting Daniels Cablevision, Inc. v. United States, 835 F.
Supp. 1, 11–12 (D.D.C. 1993)). In response, Congress
enacted § 555a(a), and thereby “exempted municipalities
from civil damages liability arising out of the local regulation
of cable services in order to ‘preserve the municipal
franchising and regulation scheme envisioned by the [Cable
Act].’” Id. (quoting Daniels, 835 F. Supp. at 12).
Section 555a(a) applies “[i]n any court proceeding . . .
involving any claim against a franchising authority . . . arising
from the regulation of cable service,” and limits the relief
available in such actions to “injunctive relief and declaratory
relief.” See Jones, 80 F.3d at 324 (noting that “damages are
precluded if section 555a(a) applies”); Caprotti v. Town of
Woodstock, 721 N.E.2d 957, 960 (N.Y. 1999) (“By its plain
and unconditional terms, section 555a(a) grants a local
municipality broad immunity from monetary liability that
arises out of any of the municipality’s regulatory decisions
involving cable television.” (internal quotation marks
omitted)).
In this case, Comcast pleaded claims of conversion and
common count, both intended to obtain a return of the
security deposit paid to SMCTC by Comcast’s predecessor in
interest under the terms of Comcast’s prior (and now expired)
franchise agreement. As these claims both seek an award of
money damages (and not injunctive or declaratory relief) and
are unquestionably brought against a cable franchising
COMCAST V. SMCTC 15
authority, Comcast’s lawsuit would be barred by this statute
if it arises from cable regulation.
We find that Comcast’s lawsuit, as pleaded, does indeed
arise from cable regulation. Though Comcast’s complaint
does not mention or obviously concern cable regulation,
Comcast’s complaint cannot be viewed in isolation, nor can
the claims pleaded therein be accepted at face value. See
Bright v. Bechtel Petroleum, Inc., 780 F.2d 766, 769 (9th Cir.
1986) (“A plaintiff will not be allowed to conceal the true
nature of a complaint through artful pleading.” (internal
quotation marks and citation omitted)); see also Turtle Island
Restoration Network v. U.S. Dep’t of Commerce, 438 F.3d
937, 945 (9th Cir. 2006). Comcast argues that its lawsuit
merely seeks a return of a security deposit, but this argument
glosses over the fact that the security deposit at issue was
paid pursuant to a cable franchising agreement that
established the terms under which Comcast could offer cable
television services in Sacramento and the surrounding area.
Thus, however pleaded, Comcast’s lawsuit arises from a
franchising agreement that plainly regulated cable services
and has more than a tangential connection with cable
regulation.
Moreover, both SMCTC’s responsive pleadings and the
course of this litigation to date further underscore the
connection. SMCTC’s answer includes (as an affirmative
defense) a setoff claim under California law, arguing that
SMCTC retained Comcast’s security deposit to offset
Comcast’s underpayment of its franchise fees in the years
(i.e., fiscal years 2011 and 2012) following the expiration of
the previous SMCTC issued franchise agreement. SMCTC’s
answer also alleges that the parties were unable to agree what
cable franchise fees were due for that period of time, and how
16 COMCAST V. SMCTC
those fees should be calculated under the applicable
provisions of state and federal law. Those particular
allegations are bourne out in the pleadings, arguments, and
evidentiary materials produced by the parties during the
course of this litigation. These materials demonstrate that
both parties have colorable arguments for their respective
franchise fee calculations, but these materials also
demonstrate that the relief sought by Comcast, however
pleaded, is inextricably intertwined with a wider, ongoing
disagreement between the parties that plainly arises from the
interpretation of federal and state laws that govern the
calculation of cable franchise fees under the current CPUC-
issued franchise agreement.
Given the underlying disputes concerning the
interpretation of both the current and prior franchise
agreements, and the fees and payments due in connection
with Comcast’s provision of cable services, Comcast’s
lawsuit arises from the regulation of cable television services.
As was the case in City of Glendale v. Marcus Cable
Associates, LLC, 180 Cal. Rptr. 3d 726 (Cal. Ct. App. 2014),
Comcast’s lawsuit is properly understood as an artful attempt
to plead around § 555a(a). 180 Cal. Rptr. 3d at 743. To hold
otherwise would allow parties, through creative pleading, to
do precisely what § 555a(a) bars them from doing, i.e., bring
suit for damages against a franchising authority for claims
that arise from cable regulation merely by omitting any
mention of the regulatory dispute from their pleadings. See
Turtle Island, 438 F.3d at 945 (“To allow parties to avoid this
limitation through manipulation of form . . . while in
substance challenging the regulations, would permit parties
‘through careful pleading . . . [to] avoid the . . . limits
imposed by Congress.’”) (alteration in original) (citations
omitted); see also Brown v. Gen. Servs. Admin., 425 U.S.
COMCAST V. SMCTC 17
820, 833 (1976) (“It would require the suspension of disbelief
to ascribe to Congress the design to allow its careful and
thorough remedial scheme to be circumvented by artful
pleading.”).
The district court recognized the potential applicability of
§ 555a(a) but determined that it did not apply to Comcast’s
suit. Instead, it determined that Comcast’s lawsuit had only
a tangential connection with cable regulation. The problem
with this finding is that, as explained above, this lawsuit does
not have a merely tangential connection to cable regulation;
artfully pled or not, this lawsuit is in substance one that arises
from cable regulation.3
Comcast also suggests that Congress did not intend to
immunize municipalities in circumstances such as these when
it enacted § 555a(a). We disagree. Though § 555a(a) is
undoubtedly broad, its terms are not ambiguous or unclear.
See Satterfield v. Simon & Schuster, Inc., 569 F.3d 946, 951
3
It also appears that the district court to some degree misconstrued
our decision in Jones, and the Eighth Circuit’s decision in Coplin v.
Fairfield Public Access Television Committee, 111 F.3d 1395 (8th Cir.
1997). Both in Jones and Coplin, the lawsuit at issue clearly and
obviously arose from or concerned cable regulation. See Jones, 80 F.3d
at 324 (“It is difficult to see what the City was doing, if not regulating,
when it precluded Jones from installing more cable infrastructure and from
servicing customers unless Jones first obtained a city-wide franchise.”);
Coplin, 111 F.3d at 1408 (lawsuit concerned “a governmental entity’s
right to regulate the content carried on a public access cable service”). As
a result, neither court considered a lawsuit where the connection to cable
regulation was somewhat more attenuated. We are hesitant to attribute to
either decision the holding that the district court drew from them, namely
that § 555a(a) applies only where the claims brought against the
franchising authority have a direct and obvious connection to cable
regulation.
18 COMCAST V. SMCTC
(9th Cir. 2009) (“The preeminent canon of statutory
interpretation requires us to presume that [the] legislature
says in a statute what it means and means in a statute what it
says there. Thus, our inquiry begins with the statutory text,
and ends there as well if the text is unambiguous.” (alteration
in original and citations omitted)). Section 555a(a) simply
does what it says, i.e., it exempts local authorities from civil
damages in lawsuits arising from cable regulation. Based on
the expansive and unrestricted terms used here by Congress,
there is no reason for us to conclude that disputes concerning
the calculation of fees due or owed under the provisions
governing the provision of cable services were ever intended
to be excluded from the scope of § 555a(a).4
As Comcast seeks a monetary award and has brought
claims against a cable franchising authority that arise from
cable regulation, we hold that its lawsuit is subject to the bar
4
Even if we were persuaded that the terms Congress chose when it
enacted § 555a(a) are in some way ambiguous, Comcast’s argument finds
little support in that provision’s legislative history. Congress considered,
but ultimately did not enact, a more narrow version of § 555a(a). See
Caprotti, 721 N.E.2d at 960 (noting that the original version of § 555a(a)
“passed by the Senate immunized local franchising authorities from
monetary liability solely ‘in cases where the franchising authorities are
charged with violating a cable operator’s First Amendment rights arising
from actions authorized or required by [the Cable Act]’”) (quoting H.R.
Rep. No. 102-862, at 98 (1992) (Conf. Rep.), as reprinted in 1992
U.S.C.C.A.N. 1231, 1280). That version, had it been enacted, would
plainly not have applied to Comcast’s lawsuit. However, Congress didn’t
enact that version, or include any other language that specifically limits
the scope of this exemption to claims or lawsuits concerning content
regulations, the scope of services being offered, or to any other particular
sort of regulatory action. Instead, Congress enacted a provision that
simply exempts municipalities from claims for civil damages that “aris[e]
from the regulation of cable service.” § 555a(a). We are bound to give
full effect to those plain unambiguous terms.
COMCAST V. SMCTC 19
provided by § 555a(a) and must be dismissed on that basis.
Considering the full record and the entire scope of this
litigation, it is clear that this lawsuit has sufficient connection
with cable regulation to trigger the application of § 555a(a).
Because we find that Comcast’s lawsuit is barred by
§ 555a(a), we vacate the district court’s grants of summary
judgment, and remand with instructions that Comcast’s
lawsuit be dismissed.5
Though we find that Comcast’s lawsuit must be dismissed
as pleaded and instruct the district court to enter an order to
that effect on remand, that dismissal should be without
prejudice. See Stoyas v. Toshiba Corp., 896 F.3d 933, 939
(9th Cir. 2018) (“Dismissal with prejudice and without leave
to amend is not appropriate unless it is clear . . . that the
complaint could not be saved by amendment.” (citations
omitted)).
C.
Comcast argues that a finding that their lawsuit is barred
by § 555a(a) leaves them without any possible means of
obtaining the return of its security deposit. Because our
holding is narrow in scope, we disagree. We have considered
here only the application of § 555a(a) to the present lawsuit
and determine only that the particular relief requested in
Comcast’s complaint as pleaded is subject to that bar. We
have not considered whether a claim for equitable relief
5
Because we find that Comcast’s complaint must be dismissed on this
basis, we do not address the other arguments raised on appeal by the
parties.
20 COMCAST V. SMCTC
would also be subject to § 555a(a)’s bar.6 Nor have we
considered whether this bar would apply were Comcast
defending a suit for underpayment of franchise fees brought
by SMCTC—as would likely occur were Comcast to deduct
the deposit as an overpayment from its franchise fee
payments, see California Public Utilities Code
Section 5860(h)—instead of bringing suit for damages.
IV. CONCLUSION
For the foregoing reasons, we hold that Comcast’s lawsuit
is barred by 47 U.S.C. § 555a(a). We therefore vacate the
district court’s grants of summary judgment and remand with
instructions that Comcast’s suit be dismissed without
prejudice. The parties shall bear their own costs on appeal.
VACATED and REMANDED.
6
Section 555a(a) specifically permits parties to bring suits requesting
declaratory or injunctive relief. Comcast hasn’t sought such relief here,
but an amended complaint that seeks declaratory or injunctive relief would
not necessarily be subject to § 555a(a)’s bar. See Fed. R. Civ. P. 15(a)(2)
(“The court should freely give leave [to amend] when justice so
requires.”); see also Hoang v. Bank of America, NA, 910 F.3d 1096,
1102–03 (9th Cir. 2018) (explaining that “[l]eave to amend can and should
generally be given, even in the absence of such a request by the party,”
unless “the pleading could not possibly be cured by the allegation of other
facts”) (quoting Ebner v. Fresh, Inc., 838 F.3d 958, 963 (9th Cir. 2016)).