Case 2:18-cv-02660-JAM-DB Document 27 Filed 09/16/20 Page 1 of 62 1 XAVIER BECERRA Attorney General of California 2 PAUL STEIN Supervising Deputy Attorney General 3 SARAH E. KURTZ Deputy Attorney General 4 JONATHAN M. EISENBERG Deputy Attorney General 5 JOHN D. ECHEVERRIA Deputy Attorney General 6 P. PATTY LI, State Bar No. 266937 Deputy Attorney General 7 455 Golden Gate Avenue, Suite 11000 San Francisco, CA 94102-7004 8 Telephone: (415) 510-3817 Fax: (415) 703-1234 9 E-mail: [email protected] Attorneys for Defendants the State of California, 10 Governor Gavin C. Newsom, and Attorney General Xavier Becerra 11 12 IN THE UNITED STATES DISTRICT COURT 13 FOR THE EASTERN DISTRICT OF CALIFORNIA 14 15 THE UNITED STATES OF AMERICA, 2:18-cv-02660-JAM-DB 16 2:18-cv-02684-JAM-DB Plaintiff, 17 DEFENDANTS’ OPPOSITION TO v. PRELIMINARY INJUNCTION MOTIONS 18 Judge: The Hon. John A. Mendez 19 THE STATE OF CALIFORNIA, et al., Actions Filed: Oct. 1, 2018; Oct. 3, 2018 20 Defendants. 21 AMERICAN CABLE ASSOCIATION, 22 CTIA – THE WIRELESS ASSOCIATION, et al., 23 Plaintiffs, 24 v. 25 XAVIER BECERRA, in his official capacity 26 as Attorney General of California, 27 Defendant. 28 Opposition to Preliminary Injunction Motions (2:18-cv-02660-JAM-DB) (2:18-cv-02684-JAM-DB) Case 2:18-cv-02660-JAM-DB Document 27 Filed 09/16/20 Page 2 of 62 1 TABLE OF CONTENTS 2 Page 3 Introduction..................................................................................................................................... 1 Factual and Legal Background........................................................................................................ 2 4 I. The Architecture of the Internet and the Major Players.......................................... 2 5 II. The Crucial Importance of, and the Threat to, Net Neutrality................................ 3 6 A. BIAS Providers Have Engaged in Unequal Treatment of Internet Traffic.......................................................................................................... 3 7 B. Open Access to the Internet is Essential ..................................................... 5 8 III. The Development—and Abrupt Termination—of Federal Net Neutrality Protections............................................................................................................... 6 9 A. The FCC Moves to Regulate Broadband After Finding Numerous Abuses......................................................................................................... 6 10 B. The FCC Reclassifies BIAS as an “Information Service,” Repeals 11 Its Net Neutrality Rules, and Tries—But Fails—to Preempt the States From Adopting Their Own Rules..................................................... 8 12 IV. California Protections for Its Internet Users ........................................................... 9 13 A. California Protects Its Internet Users Through Numerous Laws................ 9 B. California’s Net Neutrality Law................................................................ 10 14 V. Proceedings to Date............................................................................................... 11 15 Legal Standard .............................................................................................................................. 11 16 Argument ...................................................................................................................................... 12 I. Plaintiffs Are Not Likely to Succeed on the Merits of Their Preemption 17 Claims ................................................................................................................... 12 18 A. Because SB 822 Is an Exercise of California’s Historic Police Powers, the Presumption Against Preemption Applies Here.................... 13 19 B. No Conflict Preemption Results from the 2018 Order ............................. 14 20 1. Conflict Preemption Can Only Result from Agency Action Authorized by Statute.................................................................... 15 21 2. No Conflict Preemption Results from the 2018 Order, Which Is Based on the FCC’s Lack of Authority to Impose 22 Net Neutrality Rules...................................................................... 16 23 a. Reclassification Left the FCC with Only Ancillary Authority Over BIAS, Which Cannot Support 24 Preemption ........................................................................ 16 b. The Repeal of Federal Net Neutrality Protections 25 Results from a Lack of Authority, Which Cannot Constitute a Federal Deregulatory Policy With 26 Preemptive Effect.............................................................. 21 27 c. No Conflict Preemption Results from the Transparency Rule ............................................................ 24 28 i Opposition to Preliminary Injunction Motions (2:18-cv-02660-JAM-DB) (2:18-cv-02684-JAM-DB) Case 2:18-cv-02660-JAM-DB Document 27 Filed 09/16/20 Page 3 of 62 1 TABLE OF CONTENTS (continued) 2 Page 3 d. No Conflict Preemption Results from Purported “Factual Findings” in the 2018 Order ............................... 26 4 C. No Conflict Preemption Results from the Communications Act.............. 28 5 D. No Field Preemption Results from the Act’s General References to FCC Regulation of “Interstate Communications”..................................... 31 6 1. General References to FCC Regulation of “Interstate” Communications Do Not Result in Field Preemption .................. 32 7 2. Numerous Provisions of the Act Assume or Recognize State 8 Regulation ..................................................................................... 34 3. The Field Preemption Claim Is Incompatible with the Case 9 Law................................................................................................ 35 10 4. Under Plaintiffs’ Sweeping Theory of Field Preemption, All State Regulation of Information Services Would Be 11 Preempted, but That Is Not the Law ............................................. 36 E. The Communications Act Does Not Expressly Preempt SB 822’s 12 Regulation of Mobile BIAS ...................................................................... 37 13 1. SB 822’s Mobile Broadband Provisions Do Not Regulate the Entry of Any Mobile Service .................................................. 38 14 2. SB 822’s Zero-Rating Provisions Do Not Regulate the Rates Charged by Any Mobile Service................................................... 39 15 II. Plaintiffs Have Failed to Demonstrate Irreparable Harm ..................................... 40 16 A. A Presumption of Irreparable Harm Is Not Appropriate .......................... 40 17 B. ISP Plaintiffs Have Failed to Establish Irreparable Harm ........................ 41 1. The Alleged Harms Relating to Interconnection, the General 18 Conduct Rule, and the Prohibitions on Blocking and Throttling Are Entirely Speculative.............................................. 41 19 2. The Harms Alleged from the Zero-Rating Provisions Are 20 Also Entirely Speculative.............................................................. 45 C. The Irreparable Harm Alleged by the United States Is Legally 21 Irrelevant and Has Not Been Established.................................................. 46 22 III. The Balance of Equities Weighs Strongly Against an Injunction......................... 47 Conclusion .................................................................................................................................... 50 23 24 25 26 27 28 ii Opposition to Preliminary Injunction Motions (2:18-cv-02660-JAM-DB) (2:18-cv-02684-JAM-DB) Case 2:18-cv-02660-JAM-DB Document 27 Filed 09/16/20 Page 4 of 62 1 TABLE OF AUTHORITIES 2 Page 3 CASES 4 ACA Connects – Am. Comm’cns Ass’n v. Frey 5 2020 WL 3799767 (D. Me. July 7, 2020)...........................................................................13, 18 6 Air Conditioning & Refrigeration Inst. v. Energy Res. Conservation & Dev 7 Comm’n 410 F.3d 492 (9th Cir. 2005).....................................................................................................37 8 Alliance Shippers v. Southern Pacific Transport Company 9 858 F.2d 567 (9th Cir. 1988).....................................................................................................30 10 American Library Ass’n v. FCC 406 F.3d 689 (D.C. Cir. 2005) ............................................................................................17, 23 11 12 American Trucking Ass’n, Inc. v. City of Los Angeles 559 F.3d 1046 (9th Cir. 2009)...................................................................................................40 13 Arizona v. United States 14 567 U.S. 387 (2012)......................................................................................................25, 32, 33 15 Arkansas Elec. Co-op. Corp. v. Arkansas Pub. Serv. Comm’n 461 U.S. 375 (1983)..................................................................................................................22 16 Armstrong v. Exceptional Child Ctr., Inc. 17 575 U.S. 320 (2015)..................................................................................................................40 18 Associated Gen. Contractors of Cal., Inc. v. Coalition for Economic Equity 19 950 F.2d 1401 (9th Cir. 1991)...................................................................................................40 20 AT&T Comm’cns of Ill. v. Ill. Bell Tel. Co. 349 F.3d 402 (7th Cir. 2003).....................................................................................................28