our own calendar is comcast of california versus sacramento metropolitan cable and we have two cases one seven dash one six eight four seven one seven dash one six nine two three and my understanding before we start the clock running is just so that i have it on the record is some sort of agreement as to how you're going to split your time can you please state and then five minutes from my colleague mr wu to address s m c t c s arguments on the cross appeal so that's how we'd like to divide our time all right so and the clock that added to that added up to fifteen eighteen to one five right yes your honor so you're only going to get up now yes your honor and you say eight that's right and then sit down or i pull you down yes you're on ok and then you'll come back with your two minute son exactly and that your colleague will speak on the cross appeal that's right just telling ok all right then we're ready to go with respect to the appeal the district court erred as a matter of law in concluding that the use fee that the devkit statute applies to cable operators like comcast we call the c p u sci fi in our briefs that that fee is not a franchise fee for purposes of the cable act but the plain language of the cable lacked the c p u sci fi is a franchise fee because the only reason it's imposed on cable operators like comcast and the only reason why comcast pays that fee is because of its status as a cable operator for that reason the c p u sci fi properly counts toward the five percent cap on the franchise fees that the state of california may charge cable operators like comcast the controlling language can be found at section i guess the big question i have is one that gets to get to before i even get to this issue which is why doesn't this cause of action arise from cable regulation so your honor that is a matter that is part of the cross appeal that mike my colleague mr wu you're going to present for him i am judge smith but i can i can quickly address it by saying i mean to read to be fair it seems to me if that is the truth then we're done your honor my i'm a low worry to you up here talking and i knew you and yet that seems to be the big issue your honor on the cross appeal and with respect to that particular issue michael i'm glad to let him talk  just telling you why i asked that question first the reason why it doesn't apply to regulation i'll let my colleague mr amplify with his five minutes is that it really arises out of the seizure of the security deposit by us c with respect to the issues on appeal the reason why the the c p u sci fi is a franchise fee is because there's only one reason why comcast pays it and it pays it because it's a cable operator the cable act requires well aren't all in of these regulated by the california public utilities commission assess similar fees they you are to whatever services they offer judge smith those fees like utility fees or common carrier fees are imposed under separate statutes they are deposited in two distinct accounts they go to address different regulatory objectives they cover different regulatory i sifi the plain language of section four four to be of the public utilities code that the references section five for two of the cable act and that is the franchise fee provision under the cable act it's hard to see how that fee given that it references the cable act could be a law of general applicability the other thing is if you look at some of that actually applied to other entities besides cable company so it does it does judge again it can apply on its face to open video service operators but that doesn't matter because the test under section five for two g one just ask why the tax or the fee is imposed on a cable operator so the only reason why it's imposed on cable operat comcast is because their cable operators the fact that it might also apply in theory and judge will gain we're talking about in theory because he hasn't pointed to a single operator that would not be in the state of california that wouldn't be subject to the but even if in theory it could put applied beyond cable operators it doesn't matter because the test is why the tax or fee is imposed on cable operators and in fact i have to why can't i find that comcast pays out i look through these huge trying to determine how to deal with this but i guess if i couldn't find that statute which would say i couldn't suggested it was just regulated in so your honor it's just the plain text of the cable act first the definition of franchise fee it asks why a tax or fee is imposed on a cable operator i would note that both the provision governing franchise fees and the provision that governs the cap on the five percent cap on franchise fees and i'm speaking here of section five four to be which is extra at appendix a nine both of those provisions focus on a cable operator so we're not even talking about cable operators as a category it's why is the tax imposed on a cable operator and this tax or fee has to be paid by comcast as a condition of its franchise and comcast has to have that franchise under the cable act to provide cable services so there's only one reason why comcast pays this fee and it's because it's a cable operator i would note judge smith to your to your question that if you construed the statute to  reason why you can see that is consider what you would do to both the statutory text into the structure of the diff statute and the cable act if you read it the way the district court did which is which goes to judge smith's question why can't you read it not to be a franchise fee because california has devolved to defined its franchise a little more differently and a little more broadly than the cable act here's what you're basically doing you're taking the word solely right which right now modifies the phrase because of their status as science as well that text that test ask why is this fee imposed on a cable operator in you're moving it several words before that phrase so that it says sol imposed quote solely on a cable operator or cable subscriber that's the interpretation that the district court adopted and it rewrites the statutory text the text doesn't ask whether the tax or fees imposed solely on a cable operator so i'm just trying to make sure sure and you don't want to talk about the deposit at this point well you're on at this point i just want to make sure we use our time and i think i've heard what you had to say here now i have some question for the observation i guess  it bars this lawsuit then do you have any recourse on the security deposit well your honor that's why that's why we brought the suit because they seized the security deposit well now but that's not answer my question if we say you barred is there any other way you can get your security deposit or your honor because they've transferred it to the general fund well just a minute it seems to me that all you have to do is deduct it from deduct whatever funds is that they have from payments which will come in the future will judge smith we've already we have been deducting it well that's what you're doing now but and if we say that's ok then you continue to do it right well you're on if if you're if the court construe the statutes the way that we urge then we would be intitled to the to the money your honor and we don't think that five five day bars the lawsuit at all that and on and on top of that i didn't should just why did you just request happened was that we had been deducting the p u c fee from the five percent franchise fee we had also been excluding the p e g fees from the gross revenues that were the basis for the calculation  honor we asked for the return of the security to security deposit after the passage of the diff to statute and after the c p you see became the franchising authority mad one more point quick not unless you quickly to judge right if you're answering question but then i'm going to have you sit down absolutely the point i wanted to make in this is to your original question judge smith about what in what in the statute prevents you from reading it that way i would say in addition to rewriting section five for two g one if you read the statute to get to not apply to the c p u see fit to not treat it as a franchise fee simply because it goes beyond a cable operator you would rendered subsection g to peer surplusage if it applied only a franchise fee applied only to taxes that were imposed solely on cable operators there be no need for an exception for  laws of general application it would also permit states to circumvent the five percent cap just by framing their franchise a little bit differently that's not only contrary to congress intent but the california legislature understood i just emphasize that this would be treated as a franchise fee that's why the good morning good morning may it please the court i'm not i'm not going to don't start the time quite yet till i get your name and then tell me how you're going to share time ok thank you your honor my name is harriet steiner i'm with the firm i guess we may have i don't think we thought that it i thought that we well i guess my biggest problem is if it wasn't raised the district court evidently addressed it but i didn't see any place where you argued it why should i allow you to raise that argument here when it was when you didn't want to raise it below so i think that we raised all the issues that we thought we did as he thought yeah i'll go and all that but where did you arise five hundred to five a and why should i think about that now since you didn't raise it the only one to talk about it was the district court and now you're saying they're  yeah it was our understanding that when we raised the peg fee we raised it based on the oss set that they took because we felt that the peg feeble was an ob we know that the  improper in calculating gross revenues and so well let's let's talk about that if the peg fee doesn't fall squarely within the past through exemption provided for by fifty eight sixty six we d i think that it does well i understand your argument but i guess i'm not high i don't find any reason for this argument seems to fall directly through that exemption provided by that section we think and we believe under five eight six zero as you walk work your way through that step statute which is the one that talks about the payments it talks about how there will be a franchise fee and it talks about how local government  can charge fees aren't included in the division in that division which is ok so if we find that section five eight six zero just not actually impose fees then do lose or what is your argument for why peg fees are included in gross revenues so arguing in determining looking out franchise fees looks to all revenue except that revenue that i'm asking no that's not exact i'm saying if we find that section five six zero of just not actually impose pet pig fees if we don't agree with you go hypothetical here what is your argument for why peg fees are included in gross revenues i assume that you lose on your first prong there what's your next argument because we think that they are next argument would be that they were against i guess i'm going to take a little we think is an argument ok we think is what you think but you need to say what your argument is what case law supports that i guess i don't want to say we don't care what you think but we don't care w said that in my own way i you know so if you if we were not in a courtroom i would care what you think but here i want to i want your past legal argument we care what you think but we don't necessarily give it cre cleated and when it gets to the section that we're arguing about it talks about recovering taxes and fees not included in the section but theoretic but we believe that  we believe that that is just illustrated and when it says any other pheno imposed by the section it's you should look at the other things that it's talking about sales tax gross receipts tax to users tax those are fees  in consistencies the two but then a five in this language of fifty eight sixty aren't they explainable if i say as the district court did that the fees are actually imposed by section fifty eight seventy instead of fifty eight sixty well i don't believe so i think that why those fees are imposed why why it seems to me that if the district court said that the p g a fees were actually opposed by section fifty eight seventy and not fifty eight sixty and they said that and the district court said that was an exception to all these in consistencies that you're finding in fifty eight sixty and therefore the different chords suggested that fifty eight seventy was the approach she was going to take and that's where it was and i'm trying to figure out why that wasn't a good approach well the statute uses the word division and subsection c when it's talking about the other fees that go with the that are part of the franchise fee and we think that when you section we think that that includes fifty eight seventy it also includes fifty eight forty which is the application section that requires that the applicant agreed to pay the peg fee and we think that all and i think under the statute all of those sections are brought into fifty eight sixty through the use of the word division and subsection c and the use of the words included in so let me turn back to five fifty five may and i'm talking about the argument about as a derived from a cable regulation and you make that argument here right yes why didn't you argue it below why should i hear it here i mean it's an end game it's an end game if it applies it's all over for the other side so well to the extent it was brought up through the  don't think it's a very strong argument because she said well we didn't really they didn't emphasize it because we really didn't think that this it was barred by that it came under the purview of section five fifty five  i mean we always have to think about these things but if you didn't think it was a very good argument and we should we pull your bacon out of the fire here well i would like you pull our big you know the fire but i think we made the arguments judicial remedy for a cable service franchise challenging a government entities withholding of a security deposit that was issued to ensure the franchise provides its cable service function well y question is that they can't have damages and they can't use self help they have to come in for declaratory relief and do it prospectively and i think once if they had filed that action then they could have gotten relief because if they  not you know to move forward with what they thought was the appropriate way of doing franchisees said that there is relief there it's just not a relief in damages going backwards they have to make that decision and the proactively do it well did they too would have the question i have here is that it seems to me that if i if i take the the if you will the reasoning to its end that it would make comcast have to wait to be sued by sacramento malak metropolitan cable for the underpayment of franchise fees to have this disagreement resolved so they don't have to be seen if they were sued and raised as of affirmative defense or a counter claim at that time that's the only way they could have to really make this make this argument and then would you again say five fifty five april bars of consideration so i think that's the cable act and the prohibition against damages was intended to prohibit cable operators from going backwards and asking for damages and using self help and doing their you know getting their damages upfront without ever asking or determining whether that is appropriate or not what happened here is you know we go back with independent auditors and we ask them to audit our franchise fees you know the franchise fees that are paid to the commission and at that point if there's a problem we or we think that there is a problem we tell comcast we think there's a problem but they have put the burden on us to find the needle in the haystack so to speak in this case a pretty big needle  as opposed to a weapon hard to find this three hundred thousand yeah so in this case you know so so i think what they are you know what they have to do is come forward and say you know we think the law says x and if we don't disagree at that if we disagree at that point then i think it's up to them to take affirmative action through declaratory and injunction injunctive relief to see what the law says as opposed to just doing it not telling anybody about it doing self help two you know and waiting for us to audit it two or three years later and see if we find it i mean so i think that what they're doing is creating their own damages remedy you know sort of sub rosa in the way that they approach this and that's why i think it falls within the case and falls within that statute as we look at the c p u sifi i'm going to change because i think there's a big question we haven't really talked about that if the c p u sci fi apply just not to cable operators but to video service providers and the district court found this terminology to be significant it seems to me then how does that finding effective five percent franchise fee cap effect it doesn't affect the five percent it just makes that see a fee of general up likeability that's not imposed solely on the cable operator because their cable operator well but is isn't what you're really saying that the only that the way states and municipalities can get around this cap is simply describing the fees they impose by language that differs from that found in the cable act isn't that what you're really arguing so i've read time the states in the minutes policies can get around the cap because they just label it something different you know we really are we have we have been taught that labeling isn't necessarily good enough you know that when i think every but i therefore i'm for having a tough time understanding your argument so so here i think there are two there are two issues at play when california adopted it was looking forward it looked at cable operators look at vs operators and it looked at other types of technologies  and potential regulatory entities who were providing video services but doing it in a different way from cable operators but it just seems that your argument if we accept your argument then you can actually get eight percent out of people as opposed to the five percent cap because she just circumvented what you can do through the front door you do to the back door i don't think that we can do that because i think this is a regulatory fee for the application the for franchises and for ongoing regulation of the franchise and i think it has to be done in a way and the law has to be done in a way that moves it forward with that group and i think that there is both so i think that there are more than the five percent cap if we go with your argument right well i think that they're in a totally different category but it would be above the five percent if we buy our argument it would be in addition to the five percent of the five percent all right well that one last question are you familiar with the case of liberty cablevision the first circuit wait all right so two minutes he has two minutes now ok i do but i can also just yield my time i don't want to i want to make sure that there's enough time right tollways or just stop talking for a second ok it's lawyers the lips are always moving let the two minute clock on for us by the way while we're getting the two minute clock this site is ma'am the site is for seventeen fed third to nineteen ok let's move thanks just so with respect to the c p u sifi just a couple of quick points if you listen to my friend's presentation you'll see exactly why the district court's interpretation of the statute and the interpretation that's urged by s m c t c is wrong she said that the that the c p c is a franchise fee because it was imposed soley on cable operators solely because they are cable operators so again it requires rewriting the statute and moving the word soley so that the tax applies solely to cable operators that is not what the statute says and it makes sense that congress really congress would write it that way congress understood that there were going to be particularly after the telecommunications act of  six that there would be telephone companies and potentially other facilities based providers a video service and yet it didn't change the definition of franchise fee to turn on how a state defined its franchises  structured its franchise fee it wanted to establish a uniform five percent cap in so it makes good sense that the definition of franchise fee doesn't turn on state law i would note that there is no effort to circumvent that definition here because california recognize in the c p u sci fi that it would be subject to the requirements of section five for two and that's the definition of franchise fee under federal law so even california recognized that with respect to whether it's a law of general applicability that provision section has to be construed together with the definition of franchise fee they are complimentary and because this falls squarely within the scope of a franchise fee it's not a lot of general application  to section five or two of the cable act that itself tells you that it's not a general law it's certainly not like a business tax or an entertainment tax as the legislative history illustrated it's not a utilities fee there are other statutory provisions de mint requiring that in times that thank you your honor five five five day to challenge what it calls comcast unilateral deductions its pre lit occasion calculation of the fee payments five five five day on its face applies to court proceedings so the challenge to the pre litigation how could the district court award relief the return of this security deposit without resolving them what because the district court address and if they resolve them then five five five a day applies this record address the issues that were raised by the parties in their pleadings and essence e t c did not plead as a defense five five five a day he pled a different california state statute claiming government immunity so this issue was never raised below and c there was no dispute that when the local franchise terminated some c t c was entitled to the return of its deposit in essence he did before there was any court proceedings demand the return of the for confiscation of private property with no recourse for the property owner city of glendale did not involve that circumstance in city of glendale the cable company had overpaid his fees because the local government had u it says seems to me to say that you cannot plead around forty seven u s c five five a suit when the effect of your pleading is simply to seek an award of damages now i'm  in a suit that effectively arises from cable regulation which is exactly what happened here so what happened here does not arise from cable regulation because what happened was not any regulatory action but th to you thought were pluggable from the fees that you were going to pay because of the security deposit that was taken so again i'm trying to figure out how do i save five fifty five a does not apply so the to deposit was tendered under the prior legacy local franchise that franchise expired in two thousand and eleven the sea dispute pertains to fees owed under the subsequent state franchise so the local government was not actually exercising regulatory authority under the local franchise when it sees the deposit for purposes of the separate state friends like you you would agree with me wouldn't you the disputes over franchise fee payments that arise from cable that you really effectively tried to played around that and you affectively the other side didn't catch it but the district court caught it so that it seems like you're plating was quite careful to try to avoid it and talking five five a what in fact i think you i think comcast knows well of five five a your honor in the district are proceeding go ahead thank you your honor i guess i would note first off that we did not confiscate their security deposit we offset it based on what we believe to be improper unilateral deductions of the franchise fee that us so and we you know and so so this case came up in oh well that's a matter of semantics if i don't get my refund back because she just say i'm not going to let you make deductions i didn't get my refund back and the california law allows for offset if someone sues you or you know if there is a dispute and the other side has both sides have claims then it allows for offset and so so we think that we followed what california how do they get their money back well if they had come in two thousand and eleven or before there was a dispute and asked for the money back and we had gone back and said i want to do you have that your limitations gone why how can they get their money back if we they will get what you want to say they will get you say you can't bring this suit here because of five fifty five what are you going to give their money back they will get their money back as part of the judgment of this lawsuit because then there would have if they were correct and we were incorrect then they then there by the very nature of the offset they will get a return of their money from the security deposit so they are not apply the same principles they apply there in determining whether this is a fee of general a pledge ability or not that's what they were determining and they developed a test why shouldn't i apply that test here because if i apply that test here you lose i think what they were looking at is multiple charges for the same but they did apply have a test right and they put a test together and if i apply that test here you lose on that issue why should i think we would still win because if you pull specifically to each regulated that covers their cost of regulation and it all every single one of the entities whether it's electric company the gas company the railroad they all pay the same kind of fee the only reason it's slightly different is because they don't charge the video service providers what it cost to regulate railroads so i think that in that this is clearly something that's applied to apply to comic your ears and apply to video request went over evenly so it all worked out even though probably everyone said happy but that being said this matter will be submitted and we'll get our decision out to you thank you