Disney Platform Distribution, Inc. et al. v. City of Santa Barbara

Summary

The California Court of Appeal affirmed the denial of petitions by Disney Platform Distribution, BAMTech, and Hulu challenging Santa Barbara's assessment of video users' taxes on video streaming services. The court held that the city's ordinance applies to internet video streaming despite the appellants' argument that streaming services do not provide or sell a technical transmission channel. The opinion also addresses challenges under the Internet Tax Freedom Act, the First Amendment, the California Constitution, and Public Utilities Code section 799.

Holdings

1. The ordinance applies to Internet video streaming because its ordinary-language provisions encompass video programming and related services using one or more channels regardless of the technology used, and the term "channel" was not used in the technical transmission-path sense urged by appellants.
2. Applying the video users' tax to Internet streaming does not violate the Internet Tax Freedom Act because streaming services and the sale or rental of DVDs are not similar services, goods, property, or information for purposes of the Act, and DVD transactions are separately subject to sales or use tax.
3. The ordinance's taxation of Internet video streaming is not a content-based regulation of speech and does not violate the First Amendment.
4. The City's enforcement of Ordinance 5471 against streaming providers did not increase the tax or revise its methodology, enlarge the tax base, or require a new vote under article XIII C of the California Constitution.
5. The City was not required to provide notice under Public Utilities Code section 799 before enforcing the existing video users' tax against appellants because it neither enacted a change to the tax nor adopted a new tax.

Questions Presented

1. Whether Ordinance 5471's video users' tax applies to Internet video streaming services.
2. Whether applying the ordinance to video streaming violates the anti-discrimination provisions of the federal Internet Tax Freedom Act.
3. Whether the ordinance's taxation of Internet streaming violates the First Amendment.
4. Whether the City's enforcement of the existing tax against streaming providers constituted a tax increase requiring voter approval under article XIII C of the California Constitution.
5. Whether the City violated Public Utilities Code section 799 by failing to provide advance notice before enforcing the existing tax against streaming providers.

Disposition

affirmed