Illinois Cable and Video Competition Law

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7^th Circuit Court of Appeals

Case Name: City of East St. Louis v. Netflix, Inc.

Case No.: 22-2905

Officials: Easterbrook, Hamilton, and Pryor, Circuit Judges.

Focus: Illinois Cable and Video Competition Law

The Illinois Cable and Video Competition Law mandates that operators must secure statewide authorization to be recognized as “holders,” while those wishing to offer cable or video services must obtain approval from state or local authorities and pay a fee for the privilege of utilizing public rights of way. Recent years have witnessed the emergence of streaming services as alternatives or supplements to traditional cable services, with content delivered over the Internet. In a case involving East St. Louis, the city argued that streaming services, reliant on cables either buried beneath streets or strung above them, should also be subject to fee payments. However, none of the defendants met the criteria of being considered “holders.” A magistrate judge dismissed the complaint, asserting that only the Attorney General of Illinois possesses the authority to bring legal action against entities lacking “holder” status.

The Seventh Circuit Court of Appeals upheld this decision, initially establishing its jurisdiction under 28 U.S.C. 1332(a). Typically, the citizenship of an entity, other than a corporation, is determined by the citizenship of its partners and members. However, under section 1332(d), as part of the Class Action Fairness Act, unincorporated entities are treated as corporations for jurisdictional purposes. The court then determined that the statutory framework applies exclusively to “cable service or video service” providers, which the defendants were not. In essence, the court concluded that just as “phone calls over landline cables, electricity over wires, and gas routed through pipes” do not constitute trespass on the city’s land, the electrons transmitting movies and videos also do not constitute trespass.

Affirmed.

Decided 10/13/23

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