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Md. Court to Review Late-Fee Law

The Maryland Court of Appeals will hear arguments next January about a controversial new state late-fee law with retroactive provisions.

The state's highest court will decide whether a lower-court judge was correct when he sided with lawmakers earlier this and stated that it was constitutional for a bill to be applied retroactively.

Judge J. Norris Byrnes of Baltimore Circuit Court also threw out a request to make the challenge a class-action suit during his decision in July.

The late-fee law had been the target of criticism ever since it passed the Legislature.

The law to codify late-fee policies was prompted by state industries that were frightened by language in a ruling by the state Court of Appeals in 1999. That appeal addressed a suit against high late-fee charges by then United Cable of Baltimore LLC, now an AT & T Broadband property.

The court agreed that United's late fee, which was equal to 6 percent of a consumer's bill, was excessive. But the part of the ruling that struck fear in the heart of corporate attorneys was the court's suggestion that late fees meet an undefined "reasonableness" test and that 10 cents might be a reasonable fee.

Cable and other businesses that use late fees to punish specific consumers who don't pay their bills argued to legislators that the ruling could open the floodgates for late-fee litigation.

In response, the state Legislature passed a bill that set the late fee at $5, or 10 percent of the past-due bill, whichever is smaller.

The bill also protects industry and company late fee policies dating back to 1995. That had a negative impact on incomplete late-fee suits against cable operators in Montgomery, Prince Georges, Baltimore and Harford counties, as well as challenges to other businesses.

The bill's challengers skipped a judicial step, bypassing the Court of Special Appeals, and moved directly to the high court for adjudication.