Court Opinion

ID: 9946439
Source: CourtListenerOpinion
Date Created: 2024-02-29 19:00:36.496944+00
Date Added: 2024-06-11T14:25:26.152400
License: Public Domain

PRECEDENTIAL

      UNITED STATES COURT OF APPEALS
           FOR THE THIRD CIRCUIT
              ________________

                    No. 22-2139
                 ________________

         BOROUGH OF LONGPORT;
  TOWNSHIP OF IRVINGTON, individually and on
      behalf of all others similarly situated,

                                     Appellants

                          v.

            NETFLIX, INC.; HULU, LLC
               ________________

     Appeal from the United States District Court
              for the District of New Jersey
                (D.C. No. 2-21-cv-15303)
     District Judge: Honorable Stanley R. Chesler
                   ________________

     Submitted under Third Circuit L.A.R. 34.1(a)
                  on May 18, 2023

Before: SHWARTZ, ROTH and FISHER, Circuit Judges

          (Opinion filed: February 29, 2024)
                   ________________

               OPINION OF THE COURT
                  ________________

James E. Cecchi
Kevin G. Cooper
Carella, Byrne Cecchi Olstein Brody & Agnello
5 Becker Farm Road
Roseland, NJ 07068

Tyler Graden
Joseph H. Meltzer
Melissa L. Yeates
Kessler Topaz Meltzer & Check
280 King of Prussia Road
Radnor, PA 19087

             Counsel for Appellants

Mary Rose Alexander
Robert C. Collins, III
Latham & Watkins
330 N Wabash Avenue
Suite 2800
Chicago, IL 60611

Peter E. Davis
Jean Pawlow
Latham & Watkins
555 11th Street NW
Suite 1000
Washington, DC 20004

                            2
Dylan Byrd
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
Victor Jih
Wilson Sonsini Goodrich & Rosati
1900 Avenue of the Stars
Suite 288
Los Angeles, CA 90067

Arnold B. Calmann
Jakob B. Halpern
Saiber
18 Columbia Turnpike
Suite 200
Florham Park, NJ 07932

                Counsel for Appellees

ROTH, Circuit Judge

        The Borough of Longport and the Township of
Irvington, two New Jersey municipalities, sued the popular
video streaming companies Netflix, Inc. and Hulu, LLC. The
municipalities seek to enforce a provision of the New Jersey
Cable Television Act (CTA or Act), which requires cable
television entities to pay franchise fees to municipalities.1 The
CTA does not, however, provide an express right of action for
municipalities to enforce its provisions. We must, therefore,
determine whether the CTA implies such a right. For the

1
    N.J. Stat. Ann. § 48:5A-1, et seq.

                                 3
reasons stated below, we hold it does not, and thus we will
affirm the judgment of the District Court.

                 I.      Statutory Background

            The New Jersey Cable Television Act

       In 1972 the New Jersey Legislature enacted the CTA to
regulate cable television companies.2 The Legislature sought,
among other things, “to secure a desirable degree of uniformity
in the practices and operations of cable television companies
in” New Jersey municipalities and to protect the interests of
those municipalities.3 To “promote [these] objectives,” the

2
  Id. § 48:5A-2(b).
3
 Id. § 48:5A-2(c). The Legislature noted six objectives for this
regulation. Id. The five other objectives include:

                               4
Legislature vested the Board of Public Utilities (BPU) with the
“authority to regulate cable television companies generally,
and the[] rates, services and operations, in the manner and in
accordance with the policies” of the Act.4

       Under the CTA, a cable television company can seek
two kinds of authorization from the BPU. It can seek a
“franchise” for authorization to operate within a particular
municipality.5 To do so, it must first secure the municipality’s
consent.6 Alternatively, a “system-wide franchise” permits a
cable company to “operate a cable television system in any

       (1) to promote adequate, economical and
       efficient cable television service to the citizens
       and residents of [New Jersey], (2) to encourage
       the optimum development of the educational and
       community-service potentials of the cable
       television medium, (3) to provide just and
       reasonable rates and charges for cable television
       system services without unjust discrimination,
       undue preferences or advantages, or unfair or
       destructive competitive practices, (4) to promote
       and encourage harmony between cable television
       companies and their subscribers and customers, .
       . . and ([5]) to cooperate with other states and
       with the Federal Government in promoting and
       coordinating efforts to regulate cable television
       companies effectively in the public interest.
Id.
4
  Id. § 48:5A-2(d).
5
  Id. § 48:5A-3(q), 48:5A-15.
6
  Id. § 48:5A-22.

                                5
location within” New Jersey.7          It need not have a
municipality’s consent to obtain a “system-wide franchise.”8

       Along with vesting the BPU with regulation and
franchising authority, the Legislature empowered the BPU to
“have [the] full right, power, authority[,] and jurisdiction” to
enforce the CTA.9 Through this enforcement authority, the
BPU may

       a. Receive or initiate complaints of the alleged
       violation of any of the provisions of [the CTA] .
       . . or of the terms and conditions of any municipal
       consent or franchise granted . . .

       b. Supervise and regulate every [cable television
       entity] operating within [New Jersey] . . . so far
       as may be necessary to carry out the purposes of
       [the CTA] . . .

       c. Institute all proceedings and investigations,
       hear all complaints, issue all process and orders,
       and render all decisions necessary to enforce the
       provisions of [the Act]. . . or of any municipal
       consents issued . . .

       d. Institute, or intervene as a party in, any action
       in any court of competent jurisdiction seeking
       mandamus, injunctive or other relief to compel
       compliance with any provision [of the CTA], of

7
  Id. § 48:5A-3(r).
8
  Id. § 48:5A-16.
9
  Id. § 48:5A-9.

                                6
       any rule, regulation or order adopted thereunder
       or of any municipal consent or franchise issued
       thereunder, or to restrain or otherwise prevent or
       prohibit any illegal or unauthorized conduct in
       connection therewith.10

If a cable company (or, indeed, anyone else) “has violated,
intends to violate, or will violate any provisions of [the CTA],”
the BPU “may institute a civil action in the Superior Court for
. . . relief.”11

       The provision of the CTA at issue here is Section
48:5A-30, which requires cable companies “to make annual
franchise payments in each municipality in which they own or
operate cable systems and provide cable services in the amount
of two percent of the . . . gross revenues received from the
provision of cable services in that municipality.”12 The
municipalities here seek to enforce this franchise payment
provision on their own.

                   II.     Procedural History

       Netflix and Hulu are two of the world’s most popular
video streaming services. The municipalities sued them on
behalf of a putative class of all New Jersey municipalities.
They alleged that Netflix and Hulu failed to pay them the
franchise fees required under the CTA. Netflix and Hulu both
moved to dismiss for failure to state a claim under Rule
12(b)(6) of the Federal Rules of Civil Procedure. The District

10
   Id. § 48:5A-9.
11
   Id. § 48:5A-51(c).
12
   JA6 (citing N.J.S.A. § 48:5A-30(a)–(d)).

                               7
Court granted the motions, concluding that the municipalities
have no private right of action under the CTA. The
municipalities appeal.

          III.   Jurisdiction and Standard of Review

      The District Court had jurisdiction pursuant to 28
U.S.C. § 1332(d)(2). We have jurisdiction under 28 U.S.C. §
1291.

       We exercise de novo review over a district court’s grant
of a motion to dismiss.13 We must “accept[] all well-pleaded
allegations in the complaint as true and view[] them in the light
most favorable to the plaintiff.”14

                         IV.    Discussion

        A plaintiff must have a private right of action to bring a
claim to enforce a statute.15 If a legislature fails to provide a
private right of action expressly, courts may determine whether
it did so implicitly.16 The municipalities do not dispute that the
CTA confers no express right of action, so this appeal turns on

13
   Fenico v. City of Phila., 70 F.4th 151, 161 (3d Cir. 2023)
(citing Morrow v. Balaski, 719 F.3d 160, 165 (3d Cir. 2013)
(en banc)).
14
    Id. (quotations omitted) (quoting Warren Gen. Hosp. v.
Amgen Inc., 643 F.3d 77, 84 (3d Cir. 2011)).
15
   See In re State Comm’n of Investigation, 527 A.2d 851, 853–
54 (N.J. 1987).
16
   Jarrell v. Kaul, 123 A.3d 1022, 1029 (N.J. 2015) (citing Cort
v. Ash, 422 U.S. 55, 78 (1975)).

                                8
whether it implies such a right.17 We hold the CTA does not
imply a right of action for municipalities to enforce the fee
provision.18
       To determine whether an implied right of action exists,
New Jersey courts use the three factors established by the U.S.
Supreme Court in Cort v. Ash.19 Courts must ask

      (1) whether the plaintiff is “one of the class for
      whose []special benefit the statute was enacted”;
      (2) whether there is any evidence that the
      Legislature intended to create a private cause of
      action under the statute; and (3) whether
      implication of a private cause of action in this
      case would be “consistent with the underlying
      purposes of the legislative scheme.”20

17
   See Appellant Br. at 8–10. The municipalities request that,
if we decline to reverse the District Court, we instead certify
this question to the New Jersey Supreme Court. We decline to
do so because the question before us is not unclear. See United
States v. Defreitas, 29 F.4th 135, 141 (3d Cir. 2022). New
Jersey uses the federal test to decide whether an implied right
of action exists; we are familiar with its application.
18
   While our analysis signals that the CTA contains no right of
action for municipalities to enforce any of its provisions, the
parties contest only the fee provision.
19
   Jarrell, 123 A.3d at 1029 (citing In re State Comm’n of
Investigation, 527 A.2d at 854). See also Cort, 422 U.S. at 78.
20
   Jarrell, 123 A.3d at 1029–30.

                              9
       To satisfy this test the courts must decipher “the
underlying legislative intent.”21 If “the Legislature has
expressly created specific remedies,” the New Jersey Supreme
Court requires that courts “hesitate to recognize another
unmentioned remedy.”22 In other words, “[i]n the absence of
strong indicia of a contrary [legislative] intent, we are
compelled to conclude that [the Legislature] provided precisely
the remedies it considered appropriate.”23

       Here, the second and third Cort factors weigh heavily
against implying a private right of action for the

21
   Id. at 1030 (citing Jalowiecki v. Leuc, 440 A.2d 21, 26 (N.J.
Super. Ct. App. Div. 1981)).
22
   Id.
23
    Id. (quotations omitted) (alterations in original) (quoting
Middlesex Cnty. Sewerage Auth. v. Nat’l Sea Clammers Ass’n,
453 U.S. 1, 15 (1981)). See, e.g., R.J. Gaydos Ins. Agency, Inc.
v. Nat’l Cons. Ins. Co., 773 A.2d 1132, 1148 (N.J. 2001)
(“[W]e are not persuaded that the Legislature intended to
confer a private right of action on an insurance agent . . . . On
the contrary, [the relevant] statutory scheme vests enforcement
powers exclusively in the Commissioner.”); Med. Soc’y of New
Jersey v. AmeriHealth HMO, Inc., 868 A.2d 1162, 1168–69
(N.J. Super. Ct. App. Div. 2005) (finding no implied private
right of action for private parties because the relevant statute
explicitly vested enforcement authority in the agency
commissioner).

                               10
municipalities.24 Regarding the second factor, there is no
evidence that the Legislature intended to create a private right
of action for municipalities. Instead, the Legislature expressly
vested “all” enforcement authority in the BPU.25 This explicit
vesting cuts against the municipalities’ argument for at least
two reasons.

      First, expressly conferring “all” enforcement authority
makes clear that the Legislature did not intend the
municipalities to share enforcement power with the BPU.26
The Legislature used the word “all” four times in its
enforcement provision: “The [BPU] . . . shall have full right,
power, authority, and jurisdiction to . . . [i]nstitute all
proceedings and investigations, hear all complaints, issue all

24
   Because the municipalities cannot establish the second and
third Cort factors, we need not analyze the first factor—
whether municipalities are indeed members of a class that the
Legislature intended to benefit. See 422 U.S. at 78 (quoting
Texas & Pac. R. Co. v. Rigsby, 241 U.S. 33, 39 (1916)).
25
   N.J. Stat. Ann. § 48:5A-9(c) (providing that the BPU is
vested with the authority to “[i]nstitute all proceedings and
investigations, hear all complaints, issue all process and
orders, and render all decisions necessary to enforce the
provisions of [the Act] . . . or of any municipal consents issued”
(emphasis added)). Moreover, the Act explicitly vests
regulation authority in the BPU, calling the agency “the local
franchising authority in [New Jersey].” Id. § 48:5A-2(d),
48:5A-9.
26
   See City of Reno v. Netflix, Inc., 52 F.4th 874, 878 (9th Cir.
2022) (“In vesting enforcement of the [act] in state agencies,
the [l]egislature seems to have deprived local governments of
enforcement powers intentionally.”).

                               11
process and orders, and render all decisions necessary to
enforce the provisions of [the CTA.]”27 According to
Merriam-Webster Dictionary, “all” means “the whole amount,
quantity, or extent of.”28 The Legislature provided no
exceptions in the CTA for anything that could fall outside the
BPU’s enforcement authority. Accordingly, we must interpret
“all” to mean the entire extent of enforcement proceedings.
We find no basis for the municipalities’ argument that the
Legislature essentially leaves room for the municipalities to
enforce the CTA’s provisions because “the CTA d[id] not
explicitly delegate the BPU with the sole and exclusive
authority to bring actions.”29 By vesting all enforcement
authority in the BPU, the Legislature necessarily delegated to
the BPU the sole and exclusive authority to bring actions. If
the municipalities shared the authority of the BPU to enforce
the CTA’s provisions by instituting proceedings, then the BPU
would no longer hold “all” enforcement authority. It would
hold some, or even most—but not all.30

       Second, because the Legislature included an express
right of action for the BPU, we must hesitate to recognize a
remedy not expressly included. We must look to see if there

27
   N.J. Stat. Ann. § 48:5A-9(c) (emphasis added).
28
   All, MERRIAM-WEBSTER DICTIONARY (2023). See United
States v. Poulson, 871 F.3d 261, 269 n.7 (3d Cir. 2017) (“When
a statutory term is undefined, we give it its ordinary meaning.
We may refer to legal and general dictionaries to ascertain the
ordinary meaning of a term.” (citations omitted)).
29
   Appellant Br. at 17 (emphasis in original).
30
   “All” does not constitute “some” or “most.” All, MERRIAM-
WEBSTER DICTIONARY (2023).

                              12
are strong indicia that the Legislature intended to include a
private right of action for municipalities.

       The municipalities contend that, “taken as a whole, the
CTA demonstrates legislative intent that municipalities have
power to enforce their rights to collect mandatory fees.”31 Not
so. As discussed above, the CTA expressly states that the BPU
has the authority to enforce all provisions of the CTA, which
would of course include the collection of mandatory fees.

        Without providing any support, the municipalities also
claim that, since the enforcement provision does not explicitly
state that the BPU has “sole and exclusive [enforcement]
authority,” we must infer that the “Legislature intended to
preserve municipalities’ implied rights to collect those fees.”32
As explained above, however, we conclude that the CTA
provided the BPU with sole and exclusive enforcement
authority. Moreover, the Legislature expressly noted that it
vested the BPU with this supervisory authority “to carry out
the purposes of [the CTA].”33 Because one of the purposes of
the CTA is to ensure uniformity throughout the municipalities,
it would be inconsistent with that purpose to permit individual
municipalities to enforce the CTA’s provisions. This could
create an inconsistent enforcement scheme. We conclude that
there are not only no strong indicia of a contrary legislative
intent, but there exist only indicia that the Legislature sought
to provide the BPU, and no other entities, with enforcement
authority. For these reasons, the municipalities fail to show

31
   Reply Br. at 20.
32
   Reply Br. at 18–19.
33
   N.J. Stat. Ann. § 48:5A-9(b).

                               13
that the Legislature intended to create a private right of action
under the CTA.

        Even if the municipalities could establish the second
Cort factor, they cannot establish the third: whether it is
consistent with the purposes of the CTA to infer the existence
of a private right of action for municipalities. As mentioned
above, if every municipality had an implied right to sue
entities, there would exist an enforcement scheme with
nonuniform decisions concerning which providers to sue,
when to sue them, and what damages to seek.34 We agree with
Netflix that this would effectively give municipalities
“regulatory jurisdiction over who must obtain a franchise and
pay franchise fees, and thereby make municipalities local
franchising authorities.”35 The municipalities thus cannot
establish the third Cort factor.

       We also reject the municipalities’ constitutional
argument. They contend that, because the New Jersey
Constitution recognizes that municipalities have powers of
“necessary or fair implication,” we should read an implied
right of action into the CTA.36 True, Paragraph 11 of Article
IV, §7 of the New Jersey Constitution describes the power of
municipalities to “include not only those granted in express
terms but also those of necessary or fair implication, or incident

34
   See City of Ashdown v. Netflix, Inc., 52 F.4th 1025, 1028 (8th
Cir. 2022) (“The [act]’s clear intent to create uniformity across
the state would be undermined if individual municipalities
possessed authority to bring enforcement suits independently
of the state body charged with enforcement.”).
35
   Netflix Br. at 21.
36
   Appellant Br. at 11–14.

                               14
to the powers expressly conferred, or essential thereto, and not
inconsistent with or prohibited by th[e] Constitution or by
law.”37 That said, the New Jersey Supreme Court has
explained that Paragraph 11 does not change the plain meaning
of statutes.38 Paragraph 11, the court has explained, “was
intended to obviate earlier judicial decisions which had taken
the position that grants of power by the Legislature to its
political subdivisions should be construed narrowly and that
doubt as to the existence of any asserted power should lead to
its denial.”39 Given that “municipal action cannot run contrary
to statutory . . . law,” Paragraph 11 cannot be interpreted to
provide municipalities with statutory enforcement authority
that would directly conflict with the statute.40

       Here, the CTA plainly vests all enforcement authority
in the BPU. To find a right of action for the municipalities
would mean the BPU would no longer hold all enforcement
authority. Because this would change the plain meaning of the
CTA, we find no constitutional basis for finding a private right
of action for municipalities. To find otherwise would conflict
with the CTA. We thus reject the municipalities’ constitutional
argument.
                       V.      Conclusion

37
   N.J. Const. art. IV, § 7, ¶ 11.
38
   Wagner v. Mayor & Mun. Council of City of Newark, 132
A.2d 794, 800 (N.J. 1957).
39
   Fraternal Ord. of Police, Newark Lodge No. 12 v. City of
Newark, 236 A.3d 965, 975 (N.J. 2020) (quoting Union Cty.
Bd. of Chosen Freeholders v. Union Cty. Park Comm’n, 196
A.2d 781, 784 (N.J. 1964)).
40
   Id.

                              15
       Because we find the municipalities have no private right
of action, we will affirm the judgment of the District Court.41

41
  Because we hold the municipalities have no private right of
action, we need not reach Hulu’s argument on the merits. Hulu
Br. at 10–15.

                              16