Calif. Late-Fee Challenges Linger

California operators thought they’d put an end to late-fee challenges in 1997, when they got a state law passed that specified that companies could charge tardy payers $4.75.

But attorneys for consumers are just completing a round of class-action lawsuits against cable companies for late-fee billing practices dating back to 1997. The lawsuits contended that the companies violated state law by linking franchise-fee payments to late-fee revenue.

“We were surprised when someone found a loophole in the law,” said Larry Goldberg, an outside attorney for Charter Communications Inc.

A single suit, seeking class-action status, was filed against the state’s major operators, fostered by the Utility Consumers Action Network, a consumer watchdog group. It later broke into separate class actions that have led to settlements as large as $461,000, paid by Comcast Corp., according to plaintiff’s attorney Jonathan Weiss.

The suits aren’t about generating a lot of money for consumers. In the case against Charter, a tentative settlement currently pending in Los Angeles County Superior Court would refund to California consumers as little as 24 cents apiece.

“It’s about taking the profit out of violating the law,” Weiss said.

In the Charter action, one of two class actions still unresolved, UCAN claimed that the company violated state laws against unfair and deceptive trade practices by collecting a 5% franchise fee, or 24 cents, on the $4.75 late fee.

The lawsuits sought consumer recovery back to March 1996, but the court limited the period to between January 1997 and now.

The tentative settlement amount for Charter is $187,318.38, which is 82.5% of the amount the plaintiffs could have received at trial.

Larry Christopher, Charter’s vice president and senior counsel for litigation, stressed that the company has admitted no wrongdoing. He said Charter was happy with the settlement to end the litigation. “To the extent customers believe they’ve been hurt, we want to make them whole,” he added.

The settlement does not require operators to cull records for late-fee payers. Instead, 80% of the settlement will be rebated, prorated, to all customers, while 20%, representing payment for consumers who have dropped cable service from Charter, will be given to charity. An additional $87,790 could go to pay Weiss’ legal fees.

Time Warner Cable and Cox Communications Inc. have settled cases using similar formulations, Weiss said. The suit against bankrupt Adelphia Communications Corp. was not pursued.

Comcast settled regarding its video customers, but the MSO is still before the courts fighting over the treatment of customers who buy high-speed Internet service only.

Weiss contended that the letter of the state law argues that high-speed-data late fees are subject to individual negotiations between consumers and the provider.

Charter has agreed to abide by the court ruling in the Comcast dispute on how high-speed-data late fees will be handled in the future.

A fairness hearing on the proposed settlement in the Charter case is scheduled next month.