Knoxville, Tennessee, represented by Schneider Wallace and co-counsel, is suing Netflix and Hulu for unpaid municipal franchise fees. The complaint alleges that Netflix and Hulu operate “at least in part in public rights-of-law” and seeks damages up to $5 million. 

Netflix, Hulu and State Taxes 

The city alleges that Netflix and Hulu have not complied with Tennessee’s Competitive Cable and Video Service Act. The act charges a fee of 5% of gross revenue to video service providers, and certifies each complying company. Both Netflix and Hulu are alleged to have not applied for the state certificate, nor paid the fee. The complaint reads: 

“By failing to obtain the required authorization for providing video service in the city of Knoxville and in other Tennessee municipalities and counties, defendants have avoided their obligation to pay the franchise fee” 

This is not the first municipal or local government to sue Netflix and Hulu for allegedly failing to pay local taxes or follow local laws.  Multiple municipalities in Georgia, including Gwinnett County, have previously sued Netflix and Hulu regarding cable fees based on Georgia laws.  The Georgian municipalities are seeking more than $5 million in total unpaid fees. The Georgia complaint alleges Netflix and Hulu have violated the Georgia Consumer Choice for Television Act, which similar to the Knoxville complaint requires franchise fees to be paid to help cover the cost of public broadband facilities. 

Cable Company Franchise Fees 

Cable companies such as Cox, Comcast, and other follow the law and pay franchise fees per local rules. Netflix and Hulu have claimed previously these laws should not apply to them, and they are not video service providers. Plaintiffs in this case argue these companies are “generally considered comparable to programming provided by a television broadcast station.”. 

Fee Recovery Lawyers 

The attorneys at Schneider Wallace have extensive experience representing both private companies and the public in recovering funds. If you wish to schedule a time to speak with our attorneys, call or contact us today.