City of Fishers, Indiana v. DIRECTTV
5f4th750
7th Cir.2021Background
- Indiana enacted the Video Service Franchises Act requiring anyone offering “video service” to secure a franchise and pay franchise fees to local units; revenues are deposited in local general funds.
- Several Indiana cities sued Netflix, Disney, Hulu, DIRECTV, and DISH in state court seeking a declaration that streaming platforms provide “video service” and owe past and future franchise fees.
- Defendants removed under diversity jurisdiction and CAFA; cities moved to remand based on comity abstention per Levin v. Commerce Energy.
- The district court granted the remand, applying Levin’s comity abstention factors; defendants appealed.
- The Seventh Circuit considered (1) whether comity abstention under Levin applies and (2) whether the district court abused its discretion in remanding.
- The court held the Tax Injunction Act did not bar jurisdiction here (cities initiated a collection suit) but affirmed the district court’s Levin-based comity abstention and remand; several defenses raised on appeal were deemed waived.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether federal court should abstain/remand under Levin comity | Cities: comity requires federal courts avoid interfering with state revenue collection and state courts are better suited | Streamers: federal courts have jurisdiction; comity doesn’t apply or is narrower post-Hibbs | Court: Levin comity applies; district court did not abuse discretion in remanding |
| Whether the Tax Injunction Act (TIA) bars federal adjudication | Cities: TIA/comity favor state forum for tax/revenue disputes | Streamers: TIA does not apply because this is a collection action by municipalities | Court: TIA does not defeat jurisdiction here, but comity abstention still counsels remand |
| Whether CAFA or removal rules preclude non‑statutory abstention/remand | Cities: CAFA does not displace longstanding abstention doctrines | Streamers: CAFA (and Thermtron) bars remand on non‑statutory discretionary grounds | Court: CAFA argument not preserved; court rejects view that CAFA displaces comity in principle |
| Whether appellate arguments (e.g., CAFA, need for pending state proceeding) are preserved | Cities: district court record adequate; remand sustainable | Streamers: raise new abstention-limiting arguments on appeal | Court: those arguments were waived for failure to raise in district court |
Key Cases Cited
- Levin v. Commerce Energy, Inc., 560 U.S. 413 (2010) (reaffirmed broad comity abstention for state taxation/revenue disputes)
- Hibbs v. Winn, 542 U.S. 88 (2004) (discussed post-Hibbs narrowing argument about comity’s reach)
- Quackenbush v. Allstate Ins. Co., 517 U.S. 706 (1996) (abstention-based remand orders are appealable)
- Colorado River Water Conservation Dist. v. United States, 424 U.S. 800 (1976) (federal courts generally obliged to exercise jurisdiction)
- Fair Assessment in Real Estate Ass’n, Inc. v. McNary, 454 U.S. 100 (1981) (comity bars federal suits attacking state tax systems)
- Thermtron Products, Inc. v. Hermansdorfer, 423 U.S. 336 (1976) (addressed limits on remand for discretionary reasons)
- Carnegie‑Mellon Univ. v. Cohill, 484 U.S. 343 (1988) (statutory silence does not necessarily preclude other forms of remand)
- Jefferson County v. Acker, 527 U.S. 423 (1999) (distinguishes collection suits from TIA restrictions)