Spectrum Ne., LLC v. Frey

• Citation: 22 F.4th 287
• Decision Date: 04 January 2022
• Docket Number: No. 20-2142,20-2142
• Parties: SPECTRUM NORTHEAST, LLC; Charter Communications, Inc., Plaintiffs, Appellees, v. Aaron FREY, in his official capacity as Attorney General of the State of Maine, Defendant, Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (1st Circuit)

22 F.4th 287

SPECTRUM NORTHEAST, LLC; Charter Communications, Inc., Plaintiffs, Appellees,

v.Aaron FREY, in his official capacity as Attorney General of the State of Maine, Defendant, Appellant.

No. 20-2142

United States Court of Appeals, First Circuit.

January 4, 2022

Paul E. Suitter, Assistant Attorney General, with whom Aaron M. Frey, Attorney General, and Christopher C. Taub, Chief Deputy Attorney General, were on the brief, for appellant.

Matthew S. Hellman, with whom Howard J. Symons, Jonathan A. Langlinais, Allison M. Tjemsland, Joshua D. Dunlap, Jenner & Block LLP, and Pierce Atwood LLP were on the brief, for appellee.

Before Thompson, Dyk,^* and Barron Circuit Judges.

DYK, Circuit Judge.

The Cable Communications Act of 1984 ("Cable Act") preempts state laws that regulate "rates for the provision of cable service" if the Federal Communications Commission ("FCC") has determined that cable operators in that state are "subject to effective competition." 47 U.S.C. §§ 543(a)(2), 556(c). Recently, Maine, a state that has effective competition, see 47 C.F.R. § 76.906 (2020), enacted a statute that requires cable operators to grant subscribers, if they cancel their cable service three or more days prior to the end of a billing period, pro rata credits or rebates for the days remaining in the billing period after the termination of cable service. We must decide whether this Maine statute is preempted by the Cable Act. We hold that it is not because it does not regulate "rates for the provision of cable service." We do not reach the question whether it is also a "customer service requirement" exempt from preemption.

I.

On March 18, 2020, Maine adopted "An Act to Require a Cable System Operator to Provide a Pro Rata Credit When Service Is Cancelled by a Subscriber" ("Pro Rata Act") into law. As relevant here, the legislation amended Me. Stat. tit. 30-A, § 3010, titled "Consumer rights and protection relating to cable television service," to add: "A franchisee shall grant a subscriber a pro rata credit or rebate for the days of the monthly billing period after the cancellation of service if that subscriber requests cancellation of service 3 or more working days before the end of the monthly billing period." Me. Stat. tit. 30-A, § 3010(1-A) (2021). The Pro Rata Act also requires that cable providers notify consumers of their right to a pro rata credit in "nontechnical language, understandable by the general public." Id. § 3010(2-A). The Act was to become effective on June 16, 2020. According to the Pro Rata Act's sponsor in the Maine House of Representatives, the purpose of the statute was to "reform unfair cable company billing practices" by requiring Maine "cable providers ... to pro-rate charges when a customer disconnects service." In the legislator's view, the Pro Rata Act would "protect cable customers from paying for service they do not receive."

II.

The Cable Act expressly preempts state regulation of "rates for the provision of cable service." 47 U.S.C. § 543(a)(2). Specifically, "the rates for the provision of cable service ... shall not be subject to regulation" by the FCC, states, or local authorities when "a cable system is subject to effective competition." Id. If there is not effective competition,¹ local authorities may regulate "rates for the provision of basic cable service" pursuant to regulations promulgated by the FCC pursuant to § 543. § 543(a) – (b). Basic cable service constitutes the minimum tier of service and generally includes, for each locality, all over-the-air broadcast television channels, required public access channels, and additional channels added to the basic tier by the cable operator. See 47 C.F.R. § 76.901(a). Rates for cable programming services beyond basic cable service, i.e., nonbasic, higher-tier program packages or premium, pay-per-channel offerings, cannot be regulated even if there is not effective competition. § 543(a)(1)–(2), (b)(1), (c)(4). However, "customer service requirements" are exempt from preemption under 47 U.S.C. § 552(d)(2).

On May 11, 2020, Spectrum Northeast, LLC and Charter Communications, Inc. ("Spectrum") filed suit in the United States District Court for the District of Maine, challenging the new law, requesting a declaratory judgment that the law is preempted by the Cable Act, and moving to preliminarily enjoin enforcement of the law. Spectrum argued that the FCC has determined that cable providers in Maine are "subject to effective competition" and that the Pro Rata Act is preempted by the Cable Act because it is an attempt to regulate "rates for the provision of cable service." § 543(a)(2). The Attorney General moved to dismiss the complaint, contending that the Pro Rata Act was not preempted.

The district court stayed the preliminary-injunction briefing while it considered the Attorney General's motion to dismiss. On October 7, 2020, the district court denied the Attorney General's motion to dismiss, concluding that the Pro Rata Act "regulates ‘rates for the provision of cable service,’ which is prohibited by § 543(a)(2) of the Cable Act." In reaching this conclusion, the district court found "Maine's Pro Rata Law does not regulate a one-time cancellation or deinstallation fee but operates directly on the rate that Charter may charge for providing a certain quantity of cable service before a customer cancels service." Spectrum Ne. LLC v. Frey, 496 F. Supp. 3d 507, 514 (D. Me. 2020). The court accepted Spectrum's argument that "it provides cable service at a monthly, not daily, rate" and that the "whole-month billing policy effectively charges a higher daily rate to subscribers who cancel their service mid-month than to subscribers who do not cancel, because Charter sells cable service in monthly increments." Id. at 513. Despite acknowledging that "the Pro Rata Law applies only to the month in which a subscriber cancels her cable service," the district court nonetheless found the law's "prohibition on charges for service that was not provided [has] the effect of prescribing a daily rate for the service that was provided before the cancellation." Id. at 514.

The court also rejected Maine's argument that the law is a "customer service requirement" exempted from preemption in § 552(d)(2) of the Cable Act.² The court noted the same section of the Cable Act requires the FCC to set minimum "customer service requirements" governing "(1) cable system office hours and telephone availability; (2) installations, outages, and service calls; and (3) communications between the cable operator and the subscriber (including standards governing bills and refunds)." Spectrum, 496 F. Supp. 3d at 515 (citing 47 U.S.C. § 552(b) ). The court held that Maine's "Pro Rata Law cannot be characterized as a ‘law concerning customer service’ " (exempted from preemption). Id., at 515–16. The court acknowledged that "customer service requirements" are not limited to the minimum federal standards and confirmed both that "some laws requiring cable operators to grant credits, rebates, or refunds might meet" a dictionary definition of customer service and that the legislative history, discussed in detail infra, "may" support reading customer service to encompass rebates and credits. Id. at 516. But the court nonetheless concluded that the Pro Rata Act "goes well beyond" customer service and "directly regulates the rates" that Spectrum charges. Id.

In light of the district court's conclusion that the Pro Rata Act was "preempted by the [Cable Act] as a matter of law," the parties stipulated that "there [were] no remaining genuine issues of fact for the [district court] to resolve and that [Spectrum] [was] entitled to judgment as a matter of law." Joint Mot. to Grant Summ. J. to Pls. & Enter Final J. 1, 4, No. 20-cv-168, ECF No. 33 (internal citations omitted).

The district court entered judgment for Spectrum, granting declaratory relief that the Pro Rata Act is preempted by the Cable Act.³

The Attorney General now appeals. We have jurisdiction under 28 U.S.C. § 1291.⁴

III.

The sole issue in this case is whether Maine's Pro Rata Act is preempted by federal law. The parties agree that this question is purely one of law. We review a district court's legal conclusions de novo. Lawless v. Steward Health Care Sys., LLC, 894 F.3d 9, 21 (1st Cir. 2018).

A.

"In any preemption analysis, ‘[t]he purpose of Congress is the ultimate touchstone.’ " Philip Morris Inc. v. Harshbarger, 122 F.3d 58, 67 (1st Cir. 1997) (quoting Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 138, 111 S.Ct. 478, 112 L.Ed.2d 474 (1990) ); see also Gobeille v. Liberty Mut. Ins. Co., 577 U.S. 312, 324, 136 S.Ct. 936, 194 L.Ed.2d 20 (2016) ("[P]re-emption claims turn on Congress's intent.").

The parties agree that the question here is one of express preemption as the Cable Act contains a specific preemption provision. There is no issue as to congressional authority to preempt state law regulating the provision of cable service. Our task is to determine the scope of the federal statute and "to identify which state laws are preempted." Brown v. United Airlines, Inc., 720 F.3d 60, 63 (1st Cir. 2013). That inquiry "start[s] with the text and context of the provision itself," and "[o]ur analysis is informed by the statutory structure, purpose, and history." Tobin v. Fed. Express Corp., 775 F.3d 448, 452 (1st Cir. 2014).

B.

The parties disagree as to whether the general presumption against preemption applies in this case. Because we conclude that the structure and legislative history of the Cable Act and its amendments compel a finding of no preemption of the Pro Rata Act, we need not address whether the presumption against preemption applies here.

C.

The Cable Act includes both general and specific preemption provisions. The general preemption provision states, "any provision of law of any State ... or franchising authority ... which is inconsistent with this chapter shall be deemed to be preempted and superseded." 47 U.S.C. § 556(c). This...