Judge Won't Let FCC's Net Neutrality Repeal Stop Lawsuit Alleging Charter Throttled Netflix

Charter CEO Tom Rutledge - H 2014
AP Photo/Richard Drew

Charter CEO Tom Rutledge - H 2014

In December, the Federal Communications Commission voted to repeal landmark net neutrality rules. The agency's "Restoring Internet Freedom Order" went beyond rolling back prohibitions on ISPs from blocking and throttling content. The FCC also attempted to preempt any states wishing to enact their own policies. But in the first significant decision referring to the repeal since FCC chairman Ajit Pai got his way, a New York judge on Friday ruled that the rescinding of net neutrality rules wasn't relevant to an ongoing lawsuit against Charter Communications.

New York Attorney General Eric Schneiderman filed the lawsuit almost exactly a year ago today. It's alleged that Charter's Spectrum-TWC service promised internet speeds it knew it couldn't deliver and that Spectrum-TWC also misled subscribers by promising reliable access to Netflix, online content and online games. According to the complaint, the ISP intentionally failed to deliver reliable service in a bid to extract fees from backbone and content providers. When Netflix wouldn't pay, this "resulted in subscribers getting poorer quality streams during the very hours when they were most likely to access Netflix," and after Netflix agreed to pay demands, service "improved dramatically."

This arguably is the kind of thing that net neutrality was supposed to prevent. And Charter itself pointed to the net neutrality repeal in a bid to block Schneiderman's claims that Charter had engaged in false advertising and deceptive business practices.

New York Supreme Court Justice O. Peter Sherwood isn't sold.

He writes in an opinion that the FCC's order "which promulgates a new deregulatory policy effectively undoing network neutrality, includes no language purporting to create, extend or modify the preemptive reach of the Transparency Rule," referring to how ISPs have to disclose "actual network performance."

And although Charter attempted to argue that the FCC clarified its intent to stop state and local governments from imposing disclosure obligations on broadband providers that were inconsistent with FCC's rules, Sherwood notes other language from the "Restoring Internet Freedom Order" how states will "continue to play their vital role in protecting consumers from fraud, enforcing fair business practices... and generally responding to consumer inquiries and complaints."

The judge further rejects Charter's motion to dismiss where it argued that federal law preempts Schneiderman's lawsuit. The internet provider argued that the lawsuit conflicted with regulatory safe harbors by treating speed characterizations sanctioned by the FCC as deceptive and interfered with the FCC's policy of giving flexibility in the measurement of actual speeds. Sherwood sees no conflict.

And the judge sees no preemption either, writing "Spectrum-TWC fails to identify any provision of the [Federal Communications Act] that preempts state anti-fraud or consumer-protection claims, or reflects any intention by Congress to make federal law the exclusive source of law protecting consumers from broadband providers' deceptive conduct."

And then in a point of emphasis that could come into play down the road as states look to make their own end-run around the net neutrality repeal, Sherwood adds, "Here, the FCC lacks the authority to preempt state law because the FCA does not clearly  authorize it to do so. Indeed, the FCC, itself, has repeatedly recognized that federal regulation of telecommunication carriers co-exists with, rather than displaces, state laws protecting the rights of consumers."

Here's the full ruling.