Court Opinion

ID: 4705172
Source: CourtListenerOpinion
Date Created: 2021-07-21 15:01:08.630563+00
Date Added: 2024-06-11T08:06:09.257222
License: Public Domain

In the

    United States Court of Appeals
                 For the Seventh Circuit
                     ____________________
No. 20-3478
CITY OF FISHERS, INDIANA, et al.,
                                                 Plaintiffs-Appellees,
                                 v.

DIRECTV, et al.,
                                             Defendants-Appellants.
                     ____________________

         Appeal from the United States District Court for the
         Southern District of Indiana, Indianapolis Division.
          No. 1:20-cv-02351 — Jane Magnus-Stinson, Judge.
                     ____________________

       ARGUED APRIL 21, 2021 — DECIDED JULY 21, 2021
                 ____________________

   Before FLAUM, BRENNAN, and SCUDDER, Circuit Judges.
    SCUDDER, Circuit Judge. In the lawsuit underlying this ap-
peal, a group of Indiana cities seeks a declaration that Netﬂix
and other video streaming platforms owe them past and fu-
ture franchise fees under an Indiana statute. The cities ﬁled
the action in state court, but the defendant streaming plat-
forms removed the case to federal court. Relying on the doc-
trine of comity abstention, the district court declined to exer-
cise federal jurisdiction and remanded the case. At this early
2                                                   No. 20-3478

stage, the only question before us is whether the district court
properly abstained under the teachings of Levin v. Commerce
Energy, Inc., 560 U.S. 413 (2010), and like cases. We conclude
that it did and therefore aﬃrm.
                                I
    The Indiana Video Service Franchises Act of 2006 regu-
lates the way cable television companies do business within
the Hoosier state. See Ind. Code § 8-1-34. By the Act’s terms,
anyone oﬀering “video service” must enter into a franchise
agreement with the Indiana Utility Regulatory Commission
in exchange for use of a public right-of-way. Id. § 8-1-34-16(a),
(b). For years, traditional cable and communications compa-
nies like Comcast and AT&T have signed the franchise agree-
ments and paid the required fees.
    The direct beneﬁciaries of this arrangement are local gov-
ernments. Video service providers must pay quarterly fran-
chise fees to government “units,” including counties, munici-
palities, or townships within the provider’s service area. Id.
§§ 8-1-34-24(a), 36-1-2-23. Indiana law requires that the Com-
mission survey the participating units on an annual basis
about revenue from the franchise agreements. See id. § 8-1-34-
24.5(b). According to the Commission’s most recent annual
report, the units that responded to the survey earned fran-
chise fees totaling $19.4 million in 2019. The Commission also
reported that most units deposit the franchise fees into gen-
eral operating accounts, to be spent on public safety, road
maintenance, infrastructure, and the like.
   Although enacted in 2006, the Act is arguably behind the
times. Most people do not consume media today in the same
way they did 15 years ago. Traditional cable television, for
No. 20-3478                                                     3

example, has been supplanted in many ways by on-demand
streaming platforms like Netﬂix or Hulu. This modernization
has left municipalities questioning whether streaming plat-
forms, too, should be paying a fair share of franchise fees be-
fore enjoying the ﬁnancial beneﬁt of Hoosiers’ business. Many
cities seem to have concluded that these streaming platforms
oﬀer “video service” within the meaning of the Act and
should have applied for franchise agreements with the Com-
mission some time ago. To date, though, the streaming plat-
forms have not applied for franchise agreements, and thus
have avoided the Act’s fee obligations.
    In August 2020, the cities of Fishers, Indianapolis, Evans-
ville, and Valparaiso challenged that status quo by ﬁling a pu-
tative class action lawsuit in Marion Superior Court against
Netﬂix, Disney, Hulu, DIRECTV, and DISH Network. The cit-
ies sought a declaration that the streaming platforms provide
“video service” as deﬁned by the Act and therefore must pay
past and future franchise fees. For their part, the defendant
streaming platforms responded by removing the case to fed-
eral court under 28 U.S.C. §§ 1441 and 1453. The platforms ex-
plained that the district court had jurisdiction over the lawsuit
under both the traditional diversity jurisdiction statute, see
28 U.S.C. § 1332(a), and under the Class Action Fairness Act
of 2005, see 28 U.S.C. § 1332(d).
    The cities did not dispute the district court’s subject matter
jurisdiction over the case, but instead ﬁled a motion to re-
mand to state court on abstention grounds. Invoking the com-
ity abstention doctrine articulated most recently in Levin v.
Commerce Energy, Inc., 560 U.S. 413 (2010), the cities argued
that federal courts have long declined to exercise jurisdiction
over cases involving local revenue collection and taxation.
4                                                    No. 20-3478

The district court, the cities pressed, should chart that same
course here and return the case to Indiana state court.
    The district court agreed with the cities and remanded, re-
lying on the Levin comity abstention doctrine. The streaming
services now appeal from that determination.
                                II
    We begin with appellate jurisdiction. “An order remand-
ing a case to state court is a ﬁnal order that is reviewable on
appeal unless there is some other prohibition on review.”
Hammer v. United States Dep’t of Health & Human Servs.,
905 F.3d 517, 525 (7th Cir. 2018). That prohibition is ordinarily
found in 28 U.S.C. § 1447(d), which states that “[a]n order re-
manding a case to the State court from which it was removed
is not reviewable on appeal or otherwise.” But that is not the
case here. In Quackenbush v. Allstate Insurance Co., the Supreme
Court clariﬁed that § 1447(d) does not bar appellate jurisdic-
tion over abstention-based remand orders and held that such
orders are appealable under 28 U.S.C. § 1291. See 517 U.S. 706,
715 (1996).
   With conﬁdence in our own appellate jurisdiction to con-
sider the propriety of the district court’s abstention-based re-
mand order, we proceed to the merits.
                                A
    Federal courts have a “virtually unﬂagging obligation” to
exercise the jurisdiction given them. Colo. River Water Conser-
vation Dist. v. United States, 424 U.S. 800, 817 (1976). That duty
reﬂects the “undisputed constitutional principle that Con-
gress, and not the Judiciary, deﬁnes the scope of federal juris-
diction within the constitutionally permissible bounds.” New
Orleans Pub. Serv., Inc. v. Council of the City of New Orleans,
No. 20-3478                                                          5

491 U.S. 350, 359 (1989). Because a decision to abstain pushes
against this obligation, “[a]bstention from the exercise of fed-
eral jurisdiction is the exception, not the rule.” Colo. River,
424 U.S. at 813.
    Within the tax and revenue world, a federal court’s obli-
gation to stay its hand comes most often from the Tax Injunc-
tion Act. Enacted in 1867, the TIA provides that a district court
“shall not enjoin, suspend or restrain the assessment, levy or
collection of any tax under State law where a plain, speedy
and eﬃcient remedy may be had in the courts of such State.”
28 U.S.C. § 1341. In practice, then, the TIA ensures that chal-
lenges to state taxes are litigated, if at all, in the state courts. It
does not, however, bar federal adjudication of collection suits
initiated by states or municipalities. See Jeﬀerson County v.
Acker, 527 U.S. 423, 433–34 (1999) (“[A] suit to collect a tax is
surely not brought to restrain state action, and therefore does
not ﬁt the Act’s description.”). Because the cities initiated this
collection suit, all agree that the TIA does not defeat federal
jurisdiction.
    But our overview of the law in this area does not end there.
Alongside the TIA sits a judicially created and related doc-
trine: comity abstention. “[T]he comity doctrine is more em-
bracive than the TIA,” and “counsels lower federal courts to
resist engagement in certain cases falling within their jurisdic-
tion.” Levin, 560 U.S. at 421, 424. That class of cases includes
those presenting challenges to “state taxation of commercial
activity,” on the understanding that revenue collection is a
core function of state governments. Id. at 421.
   Because the comity abstention doctrine often overlaps
with the limitations imposed by the TIA, the doctrine is sel-
dom invoked. Leading treatises and casebooks on the law of
6                                                   No. 20-3478

federal jurisdiction devote little attention to the doctrine. Yet
comity-based abstention enjoys deep roots in the Supreme
Court’s jurisprudence. In 1870, for instance, the Court under-
scored that “[i]t is upon taxation that the several States chieﬂy
rely to obtain the means to carry on their respective govern-
ments, and it is of the utmost importance to all of them that
the modes adopted to enforce the taxes levied should be in-
terfered with as little as possible.” Dows v. City of Chicago,
78 U.S. (11 Wall.) 108, 110 (1870). In the early twentieth cen-
tury, the Court again observed “that a proper reluctance to
interfere by prevention with the ﬁscal operations of the state
governments has caused [us] to refrain from so doing in all
cases where the Federal rights of the persons could otherwise
be preserved unimpaired.” Boise Artesian Hot & Cold Water Co.
v. Boise City, 213 U.S. 276, 282 (1909).
    The hesitance to interfere with state and municipal ﬁscal
matters animates more recent Supreme Court decisions as
well. See, e.g., Fair Assessment in Real Estate Ass’n, Inc. v.
McNary, 454 U.S. 100, 116 (1981) (holding that “taxpayers are
barred by the principle of comity from asserting § 1983 ac-
tions against the validity of state tax systems in federal
courts”).
   Many lower courts viewed one Supreme Court case, Hibbs
v. Wynn, as breaking from that tradition. See 542 U.S. 88
(2004). In Hibbs, the Court stated that comity principles “pre-
clude original federal-court jurisdiction only when plaintiﬀs
have sought district-court aid in order to arrest or counter-
mand state tax collection.” Id. at 107 n.9 (2004) (emphasis
added). In plainer terms, the comity doctrine—according to
Hibbs—imagines the plaintiﬀ as a disgruntled taxpayer trying
to cut down his own tax burden. The ﬂip side of the coin
No. 20-3478                                                       7

seemed to be that the doctrine does not prevent federal adju-
dication of controversies regarding state revenue collection
brought by other types of plaintiﬀs, including government
units or third parties. After Hibbs, then, several courts of ap-
peals—including our court—understood the Supreme Court
to have narrowed the comity doctrine’s reach. See, e.g., Levy v.
Pappas, 510 F.3d 755 (7th Cir. 2007); Wilbur v. Locke, 423 F.3d
1101 (9th Cir. 2005).
    In Levin, however, the Court rejected that interpretation of
Hibbs and reinforced the comity doctrine’s broad foundation.
The dispute in Levin stemmed from an Ohio tax exemption for
local energy distribution companies. See 560 U.S. at 418. A
California energy company sought to improve its own com-
petitive position in Ohio in part by ﬁling a federal complaint
asking the district court to declare the local tax beneﬁt uncon-
stitutional. See id. at 419. The district court declined to exercise
jurisdiction over the California corporation’s claims as a mat-
ter of comity. Id. at 419–20. But the Sixth Circuit reversed. Re-
lying on Hibbs, the court observed that the Levin plaintiﬀ did
not seek the aid of the district court to halt collection of a state
tax. To the contrary, the California energy company, acting as
a third party, sought to prevent a diﬀerent entity from enjoy-
ing a tax break. This distinction made all the diﬀerence to the
Sixth Circuit, which then rejected the district court’s “expan-
sive reading of [the Supreme Court’s] comity precedents.” Id.
at 420 (quotation marks omitted).
   The Supreme Court reversed, reiterated the value and
breadth of the comity doctrine, and remanded the case for dis-
missal. “The comity doctrine,” the Court emphasized, reﬂects
“a proper respect for state functions, a recognition of the fact
that the entire country is made up of a Union of separate state
8                                                    No. 20-3478

governments, and a continuance of the belief that the National
Government will fare best if the States and their institutions
are left free to perform their separate functions in separate
ways.” Id. at 421 (quoting Fair Assessment, 454 U.S. at 112).
These comity principles, the Court continued, have “particu-
lar force when lower federal courts are asked to pass on the
constitutionality of state taxation of commercial activity.” Id.
   The Court then went further and explained that a “conﬂu-
ence of factors” supported abstention in Levin:
    •   First, “respondents seek federal-court review of
        commercial matters over which [the state] enjoys
        wide regulatory latitude; their suit does not involve
        any fundamental right or classiﬁcation that attracts
        heightened judicial scrutiny.”
    •   Second, “while respondents portray themselves as
        third-party challengers to an allegedly unconstitu-
        tional tax scheme, they are in fact seeking federal-
        court aid in an endeavor to improve their competi-
        tive position.”
    •   Third, “[state] courts are better positioned than their
        federal counterparts to correct any violation be-
        cause they are more familiar with state legislative
        preferences and because the [Tax Injunction Act]
        does not constrain their remedial options.”
Id. at 431–32.
    Levin—and the history of comity abstention more
broadly—delivered a clear message that federal courts should
think twice before taking too couched a view of the comity
abstention doctrine. See, e.g., Joseph v. Hyman, 659 F.3d 215,
218 (2d Cir. 2011) (observing that “[i]n Levin, the Court
No. 20-3478                                                      9

abrogated the post-Hibbs cases that had crimped the comity
doctrine and held that comity is ‘more embracive’ than the
TIA”).
                                B
   The parties dispute the threshold question whether this
case qualiﬁes for a Levin-based comity abstention analysis.
Determining whether an abstention doctrine applies in the
ﬁrst instance is a question of law that we review de novo. See
R.R. St. & Co. v. Vulcan Materials Co., 569 F.3d 711, 714 (7th Cir.
2009). Our analysis requires considering at least two factual
diﬀerences between this dispute and the one at issue in Levin.
    First, the state law in question here, the Indiana Video Ser-
vice Franchises Act, does not impose a direct tax. The Act in-
stead allows local governments to levy franchise fees upon
video service providers conducting business within the state.
But we can dispatch this distinction without much diﬃculty,
as the defendant streaming platforms conceded at oral argu-
ment that the fee here—which is most often deposited in the
government units’ general accounts—can be understood as a
tax for Levin purposes. This concession was in no way surpris-
ing, as the franchise fee imposed under the Act, much like a
tax, yields revenue for municipalities in Indiana. See
DIRECTV, Inc. v. Tolson, 513 F.3d 119, 125 (4th Cir. 2008) (“Be-
cause the principle of comity reﬂects the recognition that
states should be free from federal interference in the admin-
istration of their ﬁscal operations, we interpret the term ‘tax’
broadly for purposes of our jurisdictional inquiry.”); see also
Collins Holding Corp. v. Jasper County, 123 F.3d 797, 800 (4th
Cir. 1997) (observing that “the line between ‘tax’ and ‘fee’ can
be a blurry one,” but adding that “[i]f the revenue is paid into
the state’s (or county’s) general fund and provides a general
10                                                    No. 20-3478

beneﬁt to the public, it sounds like a tax”). The comity doc-
trine is implicated by the cities’ demand for fees in this case.
    Second, remember that unlike in Levin, where an ag-
grieved third-party taxpayer sought to chip away at another
entity’s tax beneﬁt, the cities themselves initiated this collec-
tion lawsuit. But this distinction, too, is of little moment. Re-
gardless of who brought the underlying suit, the district
court’s resolution of the merits issues will risk or result in fed-
eral court interference with the ﬁscal aﬀairs of local govern-
ment—the principal concern of Levin. See Levin, 560 U.S. at
422. Indeed, the district court’s involvement will impact the
cities’ ability to generate revenue, either by permitting the col-
lection of franchise fees or by cutting oﬀ a line of potential in-
come. We are not convinced that the cities’ role as plaintiﬀs in
this lawsuit makes any diﬀerence to the Levin abstention cal-
culus. See id. (“[A] proper reluctance to interfere by injunction
with [a state’s] ﬁscal operations[ ] require[s] that such relief
should be denied in every case where the asserted federal right
may be preserved without it.” (quoting Matthews v. Rodgers,
284 U.S. 521, 525 (1932) (emphasis added))).
   On balance, we conclude that the comity doctrine has
something to say about the propriety of a federal court adju-
dicating this dispute, and the district court did not err by ap-
plying the Levin abstention factors.
                                C
     Conﬁdent that this case calls for a Levin abstention analy-
sis, the question becomes whether the district court abused its
discretion by concluding that the factors identiﬁed in Levin
support abstention here. See Hammer, 905 F.3d at 530. It did
not.
No. 20-3478                                                    11

    Recall the Levin factors: whether the subject of an action is
one over which a state enjoys “wide regulatory latitude,”
whether a party is seeking federal aid to improve their com-
petitive position, and whether a state court is better posi-
tioned to resolve the dispute due to familiarity with “state leg-
islative preferences” and because the TIA poses no con-
straints. 560 U.S. at 431–32.
   The district court considered these factors with care, rea-
soning that:
   •   First, the streaming companies “seek federal-court
       intervention over matters over which the State of
       Indiana and its municipalities have traditionally
       ‘enjoyed wide regulatory latitude’—speciﬁcally,
       utility regulation and state revenue.”
   •   Second, the streaming companies “invoke the
       Court’s jurisdiction ‘to improve their competitive
       position,’ namely over traditional cable television
       and landline telephone providers that pay fran-
       chise fees under the VSF Act.”
   •   Third, “this matter involves interpretation of Indi-
       ana state law—speciﬁcally, certain provisions of
       the VSF Act—for which this Court could identify
       no precedent from any Indiana court.” The district
       court also added that “Indiana state courts are bet-
       ter positioned than the Court to correct any poten-
       tial constitutional or other violation [the streaming
       services] may raise because ‘they are more familiar
       with state legislative preference’ concerning the
       VSF Act and because the TIA constrains remedial
       options available to the Court.”
12                                                 No. 20-3478

    We agree that each factor weighs in favor of abstention. On
the ﬁrst, the State of Indiana and its municipal governments
exercise broad authority over utility and right-of-way regula-
tion within the State. The Indiana General Assembly, by en-
acting the Indiana Video Service Franchises Act, designed an
administrative scheme under which the Indiana Utility Regu-
latory Commission has sole licensing and franchise authority
over video services—franchise authority that, in the end, ben-
eﬁts local governments. See Ind. Code § 8-1-34-16(a), (b). By
asking a federal court to interpret the Act, the streaming plat-
forms seek to inject a federal court into matters aﬀecting local
revenue over which the State of Indiana and its municipalities
enjoy wide regulatory latitude.
    On the second, we agree with the district court’s observa-
tion that the streaming platforms removed the case and op-
pose the cities’ demand for fees as part of an attempt to main-
tain a competitive advantage over traditional cable providers.
See Levin, 560 U.S. at 431 (reasoning that the plaintiﬀ sued “in
an endeavor to improve their competitive position”). If
streaming platforms, like cable companies, are compelled to
pay franchise fees under the Act, that requirement will reduce
proﬁts and, in turn, may aﬀect the price of video streaming
services to consumers.
   As for the third, Indiana courts are well positioned to ad-
dress remedial questions that might arise in the context of ad-
judicating both the cities’ state law claims and the streaming
platforms’ defenses, including those defenses rooted in fed-
eral law. The federal defenses—all of which the streaming
platforms invoke to avoid paying the franchise fees called for
by the Act—are not hypothetical. To date, the streaming plat-
forms have raised the following arguments in state court:
No. 20-3478                                                   13

   •   Federal law preempts state and local attempts to
       impose franchise fees on the streaming platforms;
   •   The federal Internet Tax Freedom Act prohibits dis-
       criminatory treatment of e-commerce;
   •   The Indiana Video Service Franchises Act violates
       the First Amendment to the United States Constitu-
       tion;
   •   The state court should defer to the Indiana Utility
       Regulatory Commission under the primary juris-
       diction doctrine.
    Levin and the Tax Injunction Act counsel that state court is
the appropriate forum for review of federal challenges to state
taxes. See id. at 429 (explaining that “if the Ohio scheme is in-
deed unconstitutional, surely the Ohio courts are better posi-
tioned to determine—unless and until the Ohio legislature
weighs in—how to comply with the mandate of equal treat-
ment”).
    Likewise here. The Indiana courts are well positioned to
interpret (for the ﬁrst time) the state’s Video Service Fran-
chises Act and, in turn, to resolve any federal defenses raised
by the streaming platforms along the way. See Burt v. Titlow,
571 U.S. 12, 19 (2013) (highlighting “a foundational principle
of our federal system: State courts are adequate forums for the
vindication of federal rights”). Because we agree with the dis-
trict court that all signs point to the need for comity-based ab-
stention, we ﬁnd no abuse of discretion in that determination.
                               III
   The streaming platforms advance several counterpoints
opposing abstention. But none strikes us as persuasive, and,
14                                                No. 20-3478

in any event, the companies failed to preserve these argu-
ments in the district court.
    The platforms’ primary contention on appeal is that the
Class Action Fairness Act of 2005 had the eﬀect of eliminating
federal courts’ ability to apply preexisting abstention doc-
trines to class actions otherwise authorized for removal under
the statute. This position has some surface appeal. After all,
CAFA created “original jurisdiction over cases that previ-
ously were beyond federal diversity subject-matter jurisdic-
tion,” and expanded “the universe of cases that may be re-
moved pursuant to the general removal statute.” Charles
Alan Wright & Arthur R. Miller, Federal Practice and Procedure
§ 3724 (4th ed. 2021). Mindful of this expansion, Congress also
took care in CAFA to limit the reach of federal jurisdiction to
class actions with meaningful interstate ramiﬁcations. In two
express exceptions—the local-controversy exception and the
home-state exception—Congress refused to extend federal ju-
risdiction over class actions rooted in a single state. See
28 U.S.C. § 1332(d)(4)(A)–(B). Congress’s inclusion of these
express exceptions, without any reference to more general
comity or federalism concerns, the streaming platforms con-
tend, eﬀectively eliminates a federal court’s authority to re-
mand putative class actions on non-statutory grounds.
    The streaming platforms seek to bolster their position by
directing us to the Supreme Court’s 1976 decision in
Thermtron Products, Inc. v. Hermansdorfer, 423 U.S. 336. In
Thermtron, the Court concluded that a district court exceeded
its authority when it remanded a properly removed case to
state court on the basis of an overcrowded docket—a ground
not permitted by the applicable federal removal statute,
28 U.S.C. § 1447(c). See id. at 345. The Court’s reasoning was
No. 20-3478                                                   15

plain: “[C]ases properly removed from state to federal court
within the federal court’s jurisdiction may not be remanded
for discretionary reasons not authorized by the controlling
statute.” Id. at 345 n.9. Seizing upon this language, the stream-
ing platforms posit that CAFA provides an exhaustive list of
exceptions under which a federal court may decline the exer-
cise of jurisdiction.
    We doubt it. For starters, the Supreme Court has limited
Thermtron’s holding in more recent years. In Carnegie-Mellon
University v. Cohill, the Court rejected the argument that be-
cause “the removal statute explicitly authorizes remands in
two situations,” Congress must have “intended to preclude
district courts from remanding” on any other ground.
484 U.S. 343, 353 (1988). Such an interpretation, the Court rea-
soned, “is based not on the language of Congress, but on its
silence.” Id. We think the same interpretive ﬂaw undermines,
if not defeats, the streaming platforms’ argument here. The
fact that Congress considered federal-state comity in the
CAFA exceptions does not mean that it swept decades of ab-
stention doctrines oﬀ the table.
    Even more, abstention doctrines reﬂect foundational fea-
tures of our federal constitutional system, including respect
for dual sovereignty and caution against interfering with tra-
ditional state functions, like taxation. See Levin, 560 U.S. at
421. To be sure, CAFA’s express exceptions reﬂect Congress’s
judgment that it would be unwise to reroute a class action
with deep roots in a single state to federal court. But those
exceptions complement—and do not displace—preexisting
comity concerns. See id. We are unwilling to say that CAFA
eliminates a federal court’s ability, if not obligation, to con-
sider the comity abstention principles at the heart of Levin and
16                                                   No. 20-3478

like cases. As we recently observed, “the Supreme Court has
repeatedly cautioned that statutes conferring federal jurisdic-
tion . . . should be read with sensitivity to federal-state rela-
tions and wise judicial administration. CAFA is such a juris-
dictional statute.” Saskatchewan Mut. Ins. Co. v. CE Design, Ltd.,
865 F.3d 537, 542 (7th Cir. 2017) (cleaned up).
    But we can stop short of reaching any deﬁnitive conclu-
sion, for the streaming platforms’ CAFA-based argument
faces an insurmountable and independent hurdle—waiver.
“It is a well-established rule that arguments not raised to the
district court are waived on appeal.” Puﬀer v. Allstate Ins. Co.,
675 F.3d 709, 718 (7th Cir. 2012). The streaming platforms’
CAFA argument falls squarely within that rule and falls out
of this appeal. The platforms failed to cite Thermtron in their
district court ﬁlings. And they never argued that federal
courts lack authority under CAFA to remand properly re-
moved cases on non-statutory grounds. We will not reverse
the district court’s determination on a ground not presented
to it. See Duncan Place Owners Assoc. v. Danze, Inc., 927 F.3d
970, 974 (7th Cir. 2019).
    Waiver problems also plague the streaming platforms’ re-
maining arguments in opposition to abstention. For the ﬁrst
time on appeal, the platforms posit that Levin comity requires
the existence of a pending state proceeding. That seems far
from certain. Indeed, nowhere in the Levin “conﬂuence of fac-
tors” did the Supreme Court condition comity abstention on
the presence of pending state proceedings. See 560 U.S. at
431–32.
    The streaming platforms’ ﬁnal argument fares no better.
On appeal, the streaming platforms invoke Quackenbush for
the proposition that “federal courts have the power to dismiss
No. 20-3478                                                    17

or remand cases based on abstention principles only where
the relief being sought is equitable or otherwise discretion-
ary.” 517 U.S. at 731. But, again, they failed to present this ar-
gument to the district court, so it is waived.
    Even so, we are far from persuaded that Quackenbush
should be read as broadly as the streaming platforms suggest.
The Supreme Court has permitted abstention in at least one
case involving a request for declaratory relief tied to a dam-
ages action. See Fair Assessment, 454 U.S. at 111 (concluding
that abstention was appropriate in a § 1983 damages action
where the availability of damages turned on initial declara-
tory relief). Quackenbush itself acknowledged and distin-
guished Fair Assessment because “[t]he damages action in [Fair
Assessment] was based on the unconstitutional application of
a state tax law, and the award of damages turned ﬁrst on a
declaration that the state tax was in fact constitutional.”
Quackenbush, 517 U.S. at 719. That logic tracks in this statutory
context too: any damages award will depend on the district
court ﬁrst determining that the streaming platforms are sub-
ject to the Indiana Video Service Franchises Act. In this case,
though, we need not plant our feet ﬁrmly on either side of this
debate. The streaming platforms’ failure to raise the issue
with the district court dooms any chance of success on appeal.
   All told, we have heard no argument—preserved or oth-
erwise—that convinces us to depart from our earlier conclu-
sions. Levin comity applies to this dispute and the district
court did not abuse its discretion by returning the case to state
court.
18                                                  No. 20-3478

                               IV
    In closing, we reiterate that federal courts are duty-bound
to exercise the jurisdiction granted by Congress. See Colo.
River, 424 U.S. at 817. But we must remember, too, that the
Supreme Court placed the comity abstention doctrine—ﬁrst
recognized more than a century ago—on a ﬁrm foundation in
Levin. By clarifying that Hibbs v. Wynn “has a more modest
reach,” the Court reaﬃrmed that federal courts should exer-
cise substantial caution before adjudicating disputes with
meaningful impacts on matters of state taxation and revenue
collection. Levin, 560 U.S. at 424; see also Fair Assessment,
454 U.S. at 111; Boise Artesian Hot & Cold Water Co., 213 U.S. at
282.
    The Supreme Court is sure to say more about the limits of
comity abstention in years to come. Today, though, informed
in part by substantial issues of waiver, we are satisﬁed that
the district court did not abuse its discretion by granting the
cities’ motion to remand to Indiana state court.
     We therefore AFFIRM.