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In August of this year the City of Creve Coeur, the named party in a class action, filed an action against the video streaming services Netflix and Hulu for failing to comply with the Video Services Providers Act, which was enacted by the state of Missouri in 2007. The Act enables a “franchise entity,” such as a town, to collect a fee from video service providers that were previously authorized by the public commission. The plaintiffs in this suit are at minimum 40 Missouri municipalities. This month Netflix responded with a motion to dismiss for failure to state a claim. Netflix contends that the service they provide does not fall under the purview of what the statute is meant to regulate. The motivation for the lawsuit is clear: less money is coming in from the existing authorized video service providers due to the fact that more people are switching over to using such services, and that loss is not being made up for because the streaming services are not paying any fee to the municipalities. According to the petition for declaratory judgment and other relief, by not paying such fees, the political subdivisions in Missouri are being “deprive[d] . . . of much- needed revenue.” Whether or not Netflix is correct in believing the statute does not apply to their services, and whether or not the municipalities are actually entitled to that, comes down to reading and interpreting the actual statute at the center of the action.

This post was originally published on the Cardozo Arts & Entertainment Law Journal website on September 27, 2018. The original post can be accessed via the Archived Link button above.

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