WACO – Every couple of years or so a new litigation wave hits the Lone Star State, with Texas attorneys scrambling to sign up local governments for the purpose of filing lawsuits.
A few years ago opioid litigation was the craze, as dozens of Texas counties and cities filed suit against pharmaceutical manufactures and distributors. Before that, storm-chasing attorneys went all out following every hailstorm and hurricane, signing up thousands of clients after every storm.
Following each new wave, the Texas Legislature has stepped in to turn the tide, passing bills meant to stem the suspected lawsuit abuse.
Now, it seems a new litigation trend may be emerging – Texas cities seeking to sue Netflix, Hulu, Disney and other video service providers (VSPs) in order to recover franchise fees.
As more and more Americans are cutting the cable cord, more and more cities are arguing that video streaming providers are also required to pay 5 percent of their gross revenues under the Texas Public Utility Regulatory Act.
Back in February, Dallas City Council green lighted a franchise fee suit. And as previously reported, on July 12 the city of Plano sent a contingent fee to the Office of the Attorney General (OAG) for approval for a franchise fee suit.
Plano’s agreement is between the city and the law firms of Ashcroft Sutton Reyes, McKool Smith, and Korein Tillery.
The three law firms representing Plano are the same law firms also representing the city of Waco in its pending franchise fee lawsuit, according to documents obtained by The Record.
Waco’s request to the OAG for approval to sue Netflix, Hulu, Disney and other streamers came only two days after Plano submitted its request, records show.
Until two years ago, Texas trial lawyers routinely solicited local governments for litigious purposes and then sent contingency fee contracts to the Comptroller’s Office for approval.
That changed on Sept. 1, 2019 – the date House Bill 2826 went into effect, a law designed to bring transparency to how local governments go about hiring law firms and place contract approval in the hands of the attorney general.
HB 2826 requires local governmental entities to provide notice and negotiate with well-qualified attorneys, instead of just hiring those who solicit them.
The aim of HB 2826 was to end attorney solicitation and backroom deals between trial lawyers and local governments, while empowering the OAG to stop litigation waves before they can start so the state can file one master lawsuit.