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Update on New York Net Neutrality Lawsuit

July 26, 2017

I promised I would write something about this lawsuit two months ago on Reddit (sorry guys!), but hey, better late than never.  Besides, there have been some developments in this lawsuit that I now get to discuss as a result of my procrastination. 

 

So what is Net Neutrality and why should I care? 

 

Instead of reinventing the wheel, I'll just link to this fantastic piece from the American Civil Liberties Union, and this (more humorous) video from John Oliver.  Basically put, the fight for Net Neutrality is to force internet providers to treat every website and data stream as equal, rather than a "pay to play" system where the rich can obtain a better internet connection to their services. 

 

The lawsuit in question today is The People of the State of New York v. Charter Communications, Inc. and Spectrum Management Holding Company, LLC.  This lawsuit was filed by Eric Scheiderman, the Attorney General of New York, on behalf of the State of New York.  If you are legally versed here is a copy of the complaint.  Otherwise, I'll briefly explain the gist of the lawsuit and its current status.

 

OVERVIEW

 

At its essence, New York alleges that Charter and Spectrum acting as Spectrum-TWC, a major internet provider in the United States, conducted a "systematic scheme" to defraud its subscribers by promising a quality of internet connection that they knew they couldn't provide, and failed to provide reliable access to internet content that it promised to provide.

 

The esports angle is this: Spectrum promised its subscribers that they would be able to reliably access content such as League of Legends.  As of 2013, customers complained that they were unable to mantain a sufficient connection to League of Legends to enjoy the game.  The players suffered from high latency and disconnection issues.  Riot Games, who runs League of Legends, attempted to work with Spectrum-TCW to provide a better experience to Spectrum's customers, as it was in Riot's best interest to have a good relationship and connection with one of America's major internet providers.  

 

Two years passed with little progress, until, and this is the important part, Riot Games paid Spectrum-TWC for "access to its subscribers" and suddenly the latency and connection problems evaporated. This is a classic pay to play transaction, and is precisely the problem that Net Neutrality advocates are attempting to avoid.  New York, in its complaint alleged in the most telling paragraph that:

 

Spectrum-TWC deliberately took advantage over port capacity where its network connected to online content providers to extract more revenue for the company.  To do so, Spectrum-TCW used its leverage over access to subscribers to extract fees from online content providers in exchange for granting such access.  Spectrum-TCW lined its pockets by intentionally creating bottlenecks in its connections which online content providers, despite knowing that these negotiating tactics would create problems for its subscribers in accessing online content.  

 

 

 

Spectrum-TWC's Defense

 

The case is still in its early stages.  Defendants (Spectrum-TWC) have filed a Motion to Dismiss.  This motion is still pending.  The legal theories are moderately complicated: Spectrum argues that New York is attempting to supplant the authority of the Federal Communications Commission, and that New York does not have the authority to upend the FCC's structure for regulating these types of transactions.

 

If that explanation left you behind, here's a short video on the basics of Federalism.  Spectrum is essentially saying that since the Federal Government regulates internet providers and that the Supremacy Clause of the Constitution requires that the State Court dismiss the lawsuit.  Since the Feds have ruled in this area of law, the State is not allowed to enact and enforce a contradictory law.  

As an alternative argument, Spectrum asks that the FCC be allowed to weigh in on the allegations made by New York before judgment is rendered under the "primary jurisdiction doctrine," should the State Court decide that the Feds intended to allow State Courts to make laws on the subject.

 

 

 New York's Response

 

New York filed a responsive brief in opposition of Spectrum's motion to dismiss.  Their argument is much easier to grasp: New York argues that Spectrum-TWC is defrauding its citizens, and that New York has the power to protect its citizens against an abusive and fraudulent company.  

 

New York also argues that the Federal Communications Act, which the FCC is tasked with enforcing, explicitly gives New York and other states the power to prevent internet service providers from engaging in deceptive and fraudulent trade practices within the border of their respective states.  In addition, New York claims Spectrum is just attempting to retread on an argument they made in Federal Court before the case was moved back to State Court (a facinating topic in and of itself, but spectacularly outside the scope of this article).  

 

New York argues that the case against Spectrum should go forward on the merits, and that the Court should not allow any delay for Spectrum to go and lobby "the FCC to support Spectrum-TWC's legal arguments."  

 

This argument goes to a disappointing reality; the Federal Government would likely side with Spectrum-TWC under the current administration.  New York knows that should it have to prosecute Spectrum under Federal jurisdiction it will lose.

 

 

I hope that this short post was informative.  Now that I'm on top of the case, and have email updates for subsequent filings,  I plan on providing updates after major milestones.  Expect to see another post on the topic after the court rules on Spectrum's Motion to Dismiss.  

 

My analysis is that the Courts will not dismiss the case at this early stage.  Spectrum-TWC made these federalism arguments in Federal Court, and they were not persuaded.  As a result, I believe the State Courts will allow the case to continue to develop and enter into the discovery phase.  

 

 

 

 

 

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