496 F.Supp.3d 507
D. Me.2020Background
- In March 2020 Maine enacted the "Pro Rata Law," requiring cable providers to grant a pro rata credit or rebate when a subscriber cancels service more than three working days before the end of a monthly billing period, and to notify consumers of that right.
- Charter (Spectrum Northeast LLC and Charter Communications, Inc.) uses a whole-month billing policy: subscribers pay monthly in advance and receive no mid-month rebates.
- Charter sued (May 2020), asserting the Pro Rata Law is preempted by the Cable Communications Policy Act of 1984 (the Cable Act) and sought declaratory and injunctive relief; the Maine Attorney General moved to dismiss.
- The FCC has found Charter subject to "effective competition" under its regulations, activating the Cable Act provision (47 U.S.C. § 543(a)(2)) that bars state regulation of "rates for the provision of cable service" where effective competition exists.
- The court treated Charter’s factual allegations as true and held that the Pro Rata Law (by forcing daily proration rather than monthly billing) functions as rate regulation "for the provision of cable service" and is therefore preempted by §§ 543(a)(2) and 556(c) of the Cable Act; the Attorney General’s motion to dismiss was denied (Charter’s preemption claim survives).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Pro Rata Law is preempted as a state regulation of "rates" under § 543(a)(2) of the Cable Act | The law alters the units of sale (forces daily proration) and thus regulates the price charged for a quantifiable amount of service — i.e., rates | The law does not set or regulate Charter's rates; it merely requires rebates after cancellation and does not mandate a fixed daily rate | The court: Pro Rata Law regulates rates because it changes how quantity is measured and billed (daily vs. monthly) and thus constitutes rate regulation under § 543(a)(2) (plausibly alleged) |
| Whether the Pro Rata Law regulates "rates for the provision of cable service" (vs. fees after service termination) | Pro rata credits affect the effective price of provided service by prescribing a daily rate for the month when cancellation occurs | The law regulates only post-termination charges (service not provided) and so is not regulation "for the provision" of service; relies on Finneran distinction | The court: Unlike downgrade or deinstallation fees, the statute directly alters the rates charged for a period of service and therefore governs rates "for the provision of cable service" |
| Whether the statute is saved as a permissible state "consumer protection" or "customer service" law under § 552(d) of the Cable Act | § 552(d) permits consumer-protection/customer-service laws; the Pro Rata Law addresses refunds/credits and communications with subscribers | The Pro Rata Law is a customer-service/consumer-protection rule (rebates/refunds) allowed under § 552(d) and FCC customer-service examples | The court: § 552(d)(1) does not save a law that is "specifically preempted" by § 543(a)(2); § 552(d)(2)'s customer-service scope does not cover rules that effectively regulate billing units/rates. Thus § 552 does not rescue the law |
Key Cases Cited
- Tobin v. Fed. Exp. Corp., 775 F.3d 448 (1st Cir. 2014) (preemption framework and Supremacy Clause principles)
- Cable Television Ass’n of N.Y., Inc. v. Finneran, 954 F.2d 91 (2d Cir. 1992) (distinguishing downgrade/deinstallation fees from rate regulation)
- Time Warner Entm’t Co. v. FCC, 56 F.3d 151 (D.C. Cir. 1995) (Congress intended market forces to control cable rates)
- Altria Group, Inc. v. Good, 555 U.S. 70 (2008) (presumption against preemption where Congress legislated in field traditionally occupied by states)
- Medtronic, Inc. v. Lohr, 518 U.S. 470 (1996) (presumption against preemption principles)
- Grant’s Dairy–Me., LLC v. Comm’r, 232 F.3d 8 (1st Cir. 2000) (express preemption analysis)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standard: disregard legal conclusions; accept plausible factual allegations)