Dallas turns to AG over records sought in litigation seeking to sue Netflix, other streamers

AUSTIN – The same three law firms are representing a growing list of Texas cities seeking to sue Netflix, Hulu, Disney and other streams over franchise fees – and whether the conversations leading up to the hiring of those same firms is a matter of public record may be a matter decided by the state’s chief lawyer.

Since the start of 2021, more than a half dozen Texas cities have sought approval from the Office of the Attorney General (OAG) to press forward with their franchise fee suits against the streaming video service providers (VSPs).

As more and more Americans cut the cable cord, more and more cities are arguing that streaming VSPs are also required to pay 5 percent of their gross revenues under the Texas Public Utility Regulatory Act.

The Texas cities seeking to sue Netflix and the other streamers include Dallas, Plano, Waco, Abilene, Carrollton, Frisco and Garland – all of which are represented by the law firms of Ashcroft Sutton Reyes, McKool Smith, and Korein Tillery.

Last month, The Record filed an open records request with Dallas, seeking all communications, including email and phone transcripts, between the city and the law firms over the past two years.

Records show that on Nov. 1 Dallas reached out the open records division of the OAG, believing that “some or all” of the requested information is exempt under Chapter 552 of the Texas Government Code, which deals with public information.

The city is asking the OAG to determine whether the information is exempt from disclosure.

Ashcroft Sutton Reyes, one of the three firms representing Dallas and the other cities, did not return a request for comment.

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.