1st Circuit Decision Opens Doors to Other States Prorating Cable

New York Assembly members may vote as soon as next week on cable prorating AB-5428, said Assemblyman Ken Zebrowski in a Wednesday interview. The Democrat was encouraged by the 1st Circuit decision, which affirmed his belief that states have authority to protect consumers from unfair business practices, he said. AB-5428 had enough support to pass the Assembly last year, and the ruling will help get Senate passage and the governor’s signature, he said. Zebrowski will “certainly be watching” the 3rd Circuit case, but it’s not going to “slow down our process,” he said. “We’re going to push this through, one way or the other.” Consumers shouldn’t “be forced to pay for a product that they’re not using,” he said.

The 1st Circuit decision runs contrary to "every other tribunal to have addressed that question," including decisions that preempted the New Jersey law, and it also conflicts with Supreme Court and First Circuit decisions about the role of legislative history in statutory interpretation," plaintiff/appellee Charter Communications said in a docket 20-2142 rehearing petition Tuesday. It said the 1st Circuit panel decision that Maine wasn't regulating cable rates with its prorating law came from a faulty reading of Cable Act legislative history. "Legislative history is not to be treated as a dog that did not bark," Charter said. "When Congress enacts broad statutory text, that text cannot be curtailed simply because Congress did not mention a particular application in the legislative history."

“I strongly encourage other states to enact these common sense consumer protections!” the Maine law’s author, Rep. Seth Berry (D), emailed last week before Charter appealed. Berry didn't comment now.

Consumers Reports Senior Policy Analyst Jonathan Schwantes said it seems unlikely a full appellate panel might come to a different result. Lerman Senter's Rebecca Goldman said state legislatures might wait and see about such a possible appeal. Other than New York companion bills AB-5438 and SB-7457, the National Conference of State Legislatures hasn’t seen active cable prorating bills in other states, said Heather Morton, NCSL senior fellow-fiscal affairs.

Cable prorating “is an important consumer protection that states can implement to protect [their] cable customers,” emailed National Association of State Utility Consumer Advocates Telecom Committee Chair Regina Costa: NASUCA hopes the 3rd Circuit and New Jersey Supreme Court will agree. “We hope that these precedents will allow other states to enact similar consumer protections,” she said. Prohibiting companies from “charging consumers for a service that is no longer being received has nothing to do with rate regulation,” she said.

Other Courts

Some other U.S. district courts have followed District Court in Portland, but the ruling should give state legislatures some comfort that a pro rata refund statute will pass legal challenge and not be preempted, said Potomac Law's Doug Bonner. He said the Maine law "is simply making sure consumers aren't paying for a service they're not receiving," he said. Whether other states take up similar rules depends on cable company refund practices there, Bonner said. "If the legislative phones aren't burning hot with consumer complaints," there mightn't be much political impetus, he said.

The 1st Circuit decision is relevant to the Altice litigation at the 3rd Circuit and New Jersey Supreme Court, said New Jersey Rate Counsel Director Brian Lipman. The state attorney general informed the 3rd Circuit about the Maine ruling earlier this month, before a Jan. 27 hearing in Philadelphia (see 2201050034). The state and federal courts that found the Cable Act preempts New Jersey prorating rules “relied on the Maine District Court case to make their decision, and that case has been overturned,” Lipman said. “Circuits like to hear what other circuits are doing,” and the 1st, 2nd and 9th circuits “tend to agree with each other.”

Lipman wouldn’t be surprised if several other states made prorating rules, especially if the 3rd Circuit agrees with the 1st Circuit, he said. “If it’s found to be permissible, it’s a very strong consumer protection.” Several East and West Coast states probably “would immediately do it,” he said. The New Jersey Supreme Court might wait to see what the 3rd Circuit does, since it’s a federal preemption issue, Lipman said. The state’s high court hasn’t decided whether to hear the case in response to a petition by the state AG office supported by state Rate Counsel office and opposed by Altice, he said.

Federal appeals courts “view decisions from other circuits as ‘persuasive authority’ but not binding,” emailed NARUC General Counsel Brad Ramsay. Circuits often don’t agree, which leads to a split and an appeal to the Supreme Court, he said. The 3rd Circuit judges probably know this and want to avoid a Supreme Court decision saying “they were wrong and another Circuit was right,” so “they will carefully read the 1st Circuit decision.”

U.S. District Court in Portland finding the Cable Act preempts the Maine law was a big part of the rationale behind U.S. District Court in Trenton finding similar about the New Jersey prorating requirement, said Free State Foundation Senior Fellow Andrew Long. The subsequent 1st Circuit reversal could mean similar regulations returning in New Jersey, where the Trenton court "bought into the [Portland court's] logic and that logic has been thrown out the window," he said. He said states in the 1st Circuit have a green light to adopt similar rules as Maine. But "it seems crazy that in 2022, we're talking about cable-specific rules in the video context," given cord cutting and cable no longer having the unique bottleneck position on the video market it once did, he said. "It's not like 1984."