Netflix and Hulu Failure to Pay Video Service Provider Fee Ohio Class Action

To operate in Ohio, video service providers must apply for and obtain authorization from the director of commerce of Ohio and also to provide ten days’ advance written notice to the municipalities in which it intends to provide service. Municipalities may impose video provider service fees on such companies, often 5%. The complaint for this class action alleges that Netflix, Inc. and Hulu, LLC never applied for this authorization, did not notify the municipalities where they offer services, and have never paid the required fees.

The class for this action is all Ohio municipalities in which Netflix and/or Hulu has provided video services.

The plaintiff in this class action is the City of Maple Heights, Ohio.

When Netflix and Hulu undertake to provide services to a place, they use wireline or broadband wireline facilities that are located at least partly in public rights-of-way. Municipalities charge service fees of up to 5% for this. The charge for operating in Maple Heights is 5%.

Both Netflix and Hulu provide video programming, such as movies, television shows, and original programming. They compete with other programming providers like cable companies and broadcast television stations. Netflix and Hulu both send programming to customers with Internet-connected devices that have software that allow them to stream or play the programming. This is done with Internet protocol technology, which makes use of the wireline or broadband wireline facilities.

The complaint says, “When a subscriber wants to watch Netflix or Hulu video programming, he or she uses an Internet-connected device to send a request to the Internet-service provider. The Internet-service provider then forwards that request to Netflix’s and Hulu’s dedicated Internet servers…”

To facilitate the delivery of Netflix material, the subscriber’s Internet service provider “connects the subscriber to the closest Netflix Open Connect server offering the fastest speeds and the best video quality.” The process is similar for Hulu material. The companies then deliver the video programming to the subscriber’s device “via Internet protocol technology (i.e., broadband wireline facilities located at least in part in public rights-of-way).”

The complaint says, “As video service providers, [Netflix and Hulu] were required to apply for and obtain prior authorization from the director of commerce of Ohio and provide ten days’ advance, written notice” to the municipalities in which it intended to operate. The complaint alleges that neither company did so and that they are providing services without legal authorization to do so, in contravention of the Ohio Revised Code.

The companies’ failure to follow these procedures, the complaint claims, does not “relieve [them] of the obligation to pay a video service provider fee of up to 5% of their gross revenues derived from providing such video service” in those areas.

The counts include violations of the Ohio Revised Code and asks for a declaratory judgment relating to Netflix’s and Hulu’s obligations as video service providers under Ohio law.

Article Type: Lawsuit
Topic: Permits and Authorizations and So On

Most Recent Case Event

Netflix and Hulu Failure to Pay Video Service Provider Fee Ohio Complaint

August 21, 2020

To operate in Ohio, video service providers must apply for and obtain authorization from the director of commerce of Ohio and also to provide ten days’ advance written notice to the municipalities in which it intends to provide service. Municipalities may impose video provider service fees on such companies, often 5%. The complaint for this class action alleges that Netflix, Inc. and Hulu, LLC never applied for this authorization, did not notify the municipalities where they offer services, and have never paid the required fees.

Netflix and Hulu Failure to Pay Video Service Provider Fee Ohio Complaint

Case Event History

Netflix and Hulu Failure to Pay Video Service Provider Fee Ohio Complaint

August 21, 2020

To operate in Ohio, video service providers must apply for and obtain authorization from the director of commerce of Ohio and also to provide ten days’ advance written notice to the municipalities in which it intends to provide service. Municipalities may impose video provider service fees on such companies, often 5%. The complaint for this class action alleges that Netflix, Inc. and Hulu, LLC never applied for this authorization, did not notify the municipalities where they offer services, and have never paid the required fees.

Netflix and Hulu Failure to Pay Video Service Provider Fee Ohio Complaint
Tags: Authorization to Do Business, Municipal Fees