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Fischer v. Time Warner Cable Inc.

California Court of Appeals, Second District, Eighth Division

February 23, 2015

SHERRY FISCHER et al., Plaintiffs and Appellants,
v.
TIME WARNER CABLE INC. et al., Defendants and Respondents.

APPEAL from a judgment of the Superior Court of Los Angeles County No. BC512259. Lee Smalley Edmon, Judge; Amy D. Hogue, Judge.

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COUNSEL

Blecher Collins Pepperman & Joye, Maxwell M. Blecher and Courtney A. Palko, for Plaintiffs and Appellants.

Gibson, Dunn & Crutcher, Daniel G. Swanson, Jay P. Srinivasan and Brandon J. Stoker for Defendant and Respondent Time Warner Cable, Inc.

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White & Case, Bryan A. Merryman, Rachel J. Feldman and Lauren M. Mutch for Defendant and Respondent The Los Angeles Lakers, Inc.

Winston & Strawn, David B. Enzminger, Dan K. Webb, Derek J. Sarafa and William C. O’Neil for Defendants and Respondents Los Angeles Dodgers Holding Company and America Media Productions.

OPINION

RUBIN, ACTING P. J.

Four subscribers to Time Warner Cable Inc. appeal from the order sustaining without leave to amend the demurrers of Time Warner, the Los Angeles Lakers and the Los Angeles Dodgers to the subscribers’ class action unfair competition complaint based on rate hikes for carrying channels that broadcast Dodgers and Lakers games. We affirm because federal regulations implementing federal communications statutes have expressly preempted this action.

FACTS AND PROCEDURAL HISTORY[1]

Time Warner Cable is a significant, if not the primary, provider of cable television throughout several Southern California counties. Typically, Time Warner buys content from programmers (think Fox, Disney, Viacom, and HBO), who require Time Warner to offer each programmer’s channels in a single bundle as part of Time Warner’s enhanced basic cable programming tier.

In 2011, Time Warner paid the Lakers $3 billion for the licensing rights to televise Lakers games for 20 years over two channels: TWC SportsNet and TWC Deportes. Time Warner’s subscription rates rose by $5 a month as a result of bundling those channels into the enhanced basic cable tier. In 2013, Time Warner paid the Dodgers $8 billion for the licensing rights to televise Dodgers games for 25 years. The new SportsNet LA channel was also added to the enhanced basic cable tier, raising subscribers’ monthly rates by another $4. The rate hikes will cost Time Warner subscribers at least $11 billion over the life of the contracts.

Sherry Fischer, Stewart R. Graham, Todd Crow, and Gavin McKiernan filed a class action lawsuit against Time Warner, the Dodgers, and the Lakers, alleging that this new arrangement violated the state’s unfair competition law

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(UCL) (Bus. & Prof. Code, § 17200, et seq.) because: (1) Time Warner’s acquisition of the licensing rights to Dodgers and Lakers games made it both programmer and distributor; (2) surveys showed that more than 60 percent of the population does not follow sports and would not pay separately to watch Dodgers or Lakers games; (3) there were no valid reasons for bundling these sports stations into the enhanced basic cable tier instead of offering them separately as part of a sports channel package;[2] (4) although a majority of Time Warner subscribers would opt out of those channels if they could, they had no such option and were instead forced to pay an extra $9 per month for unwanted programming; (5) Time Warner expanded the reach of this scheme by selling its rights to Lakers and Dodgers games to other cable and satellite television providers, requiring those providers to also ...


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