Galaxy Cablevision has bucked the trend of settlements or courtroom losses
over consumer late fees, winning a challenge to its $5 overdue-bill charge.
The decision was rendered in the U.S District Court for the Northern District
of Mississippi in Aberdeen in a class action on behalf of the Sikeston,
Mo.-based operator's 120,000 subscribers.
'We were very pleased,' president and chief operating officer Jim Gleason
said, adding that the MSO's executives always believed they were on solid legal
The suit was filed in January 1999. In a previous ruling, the court honored
Galaxy's request for summary judgment on all issues raised by the plaintiffs
except the allegation that the late fee violated the legal concept of 'duty of
good faith and fair dealing.'
The decision, issued April 16, indicated Judge Glen H. Davidson's opinion
that a $5 late fee, as a concept, is fair and reasonable. The fee met the
fair-dealing test because consumers who testified indicated that they knew they
would be subjected to a penalty if their cable payment missed the due date.
The operator's case was further strengthened by the fact that Mississippi
state law specifically allows for $5 late fees, although that statute does not
explicitly include the cable industry. Further, another state where Galaxy
operates, Kansas, has a law codifying cable's $5 late fee. That law was passed
as the challenge to Galaxy's fee was pending.
Gleason attributed the victory, however, to a persuasive report submitted to
the court by Galaxy's expert witness, Overland Consulting of Kansas City,
That firm -- regulatory consultants to the telecommunications, cable,
electric and gas industries -- analyzed the cost of late payers. The court cited
that study as 'more thorough and influential' than the operator's testimony.
If Galaxy had lost the case, it could have been assessed the $11 million
judgment sought on behalf of its customers.
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