Two Cablevision customers in Nassau and Suffolk counties are the lead complainants in a $250 million class action lawsuit filed Tuesday in New York State Supreme Court alleging the cable operator is illegitimately charging customers for service knocked out by Hurricane Sandy.

The suit claims that unlike other cable and phone companies in New York and New Jersey extending automatic service outage credits to impacted customers, Cablevision is only giving credits to customers who self-report outages within 30 days.

Cablevision was the hardest hit cable operator in the region, with its coastal service areas on Long Island, Connecticut, and New Jersey receiving the brunt of storm surges and wind-related damage. At least half of the company’s three million customers were without service after the storm hit Oct. 29. Nearly 80,000 customers are still without power and utilities are signaling some may wait until after Christmas before lights are back on. Some of the most devastated areas are not scheduled for restoration at all because those properties will have to be abandoned or rebuilt.

The plaintiffs claim Cablevision, “only agreed to rebate some of its most favored customers on a discretionary basis and in varying amounts, and only after the customers’ contacted Cablevision for the rebate.” The suit also alleges customers threatening to cancel service are getting the most generous rebates.

The suit suggests Cablevision should have known not to bill or accept money from customers that remain without service. Many Cablevision customers are on the company’s electronic billing and autopay programs, which will continue to deduct money from bank accounts for services customers cannot actually receive.

“The lawsuit misstates the facts and is without merit,” Cablevision said in a statement. “But lawsuits aside, we have an extremely broad and customer friendly credit policy following Sandy. Blanket or arbitrary credits for cable outages could shortchange customers because each case is different and our policy covers the entire period of time when Cablevision service was out, including when the service interruption was caused by the loss of electrical power.”

Cablevision says the amount of damage to its facilities is so extensive, it could impact the next quarter’s financial results. Company officials also admit some of their customers will not be coming back because their homes and businesses no longer exist.

Time Warner’s maze of explanations and excuses still don’t add up.

Instead of waiting for the outcome of a class action case against Time Warner Cable’s new $3.95 monthly modem fee, readers might do better taking their case direct to the company. Longtime Stop the Cap! reader “PreventCAPS” rattled the cages of Time Warner’s social media customer service representatives, which resulted in credits worth six months of modem rental fees.

Our reader tells us he brought pointed questions about the modem fee, complaints about the inconsistent reasons for imposing them, and irritation about the lack of notification.

Some Q&A:

Q. Why is Time Warner Cable now charging a modem fee? Earlier reports that the fee would cover the cost of equipment do not make sense because the company is not automatically supplying customers with new cable modems and already assesses $24-150 penalty fees to “cover costs” of damaged or unreturned cable modems. 

A. Time Warner Cable now says the fee is to cover the costs of increasing broadband speeds. A representative explained that the company wants to make sure everyone can be assured of getting the speeds advertised, and there are still customers with DOCSIS 1x equipment that can only support broadband speeds up to 9Mbps, which already conflicts with the company’s advertised 10Mbps Standard Service speed (soon to be 15Mbps).

Our Take: DOCSIS 1x equipment was recalled from western New York customers years ago. It was first introduced locally in 1998 and is long past its expiry date. It is a safe bet only a very tiny percentage of Time Warner customers still have first generation equipment. The overwhelming majority of current broadband customers have DOCSIS 2 modems, many installed years earlier. Those customers will keep that equipment for years to come unless they choose to upgrade to 30/5Mbps speeds or higher because a DOCSIS 3 modem is required for faster speeds. Our reader pointedly asked if the new modem fee guarantees every customer will receive the newest equipment and increased service. The answer in response was “no.”

These phony explanations and justifications tapdance around the reality this modem fee is being introduced as a revenue enhancer — nothing more, nothing less.

Customers are not buying this!

Q. Why is the list of supported DOCSIS 3.0 modems so thin and limited?

A. The representative speculated the reason Time Warner Cable so heavily favored Motorola equipment came from contractual support agreements and guarantee obligations with that company. But the representative claimed Time Warner Cable “will activate and support any modem model they currently lease to customers.”

Our Take: This claim represents a new development, but one unlikely to prove consistent across the country. Time Warner Cable’s national call centers have employees currently trained to activate and support only those modems on the approved list. However, local technical support and “Tier 3” agents inside of local offices seem to have a more flexible attitude about accepting other equipment. This is a classic case of “your results may vary.”

Q. Why are there modem fees for Internet service but no modem fee if I use the exact same equipment for my Time Warner Cable phone service.

A. The representative claimed it has to do with Federal Communications Commission rules governing phone equipment.

Our Take: We are not certain what rules would apply in this case, but it is possible the company’s lawyers found some “exposure” if Time Warner began charging the fee for phone service equipment. Again, we suspect the fee applies to broadband primarily because it is the service customers are least-likely to cancel over a price hike. Phone service is more tenuous. Increase the price and disconnect requests are likely to rise.

Q. Why are these fees being instituted to “cover costs” when records show capital expenses for Internet service (and cable modem equipment) have dropped for the past three years in a row?

A. The representative claimed that capital costs don’t cover cable modems.

Our Take: That answer is completely inaccurate. Nice try. Stop the Cap! earlier reported that capital expenditures for customer premise equipment dropped for the last three years in a row. For the benefit of readers (and Time Warner Cable), here is the company’s own definition of that equipment¹:

“Such equipment includes digital (including high-definition) set-top boxes, remote controls, high-speed data modems (including wireless), telephone modems and the costs of installing such new equipment.”

 ¹- Time Warner Cable 2011 Annual Report, “TWC’s capital expenditures,” p.60

Two class-action lawsuits were filed Tuesday on behalf of Time Warner Cable customers in 29 states to force the company to refund ill-gotten modem rental fees in violation of consumer fraud laws.

“It’s a massive hi-tech consumer fraud accomplished by low-tech methods,” said attorney Steven L. Wittels. “Send customers confusing notice of the fee in a junk mail postcard they’ll throw in the garbage, sock them with a $500 million dollar a year rate hike, then announce on your website that customer satisfaction is your #1 priority. That’s some way to deliver satisfaction.”

The context for the class action suit is that Time Warner Cable began imposing the fee Nov. 1 without giving customers appropriate notification. New York City residents had little more than two weeks notice in the form of a poorly printed postcard. Some residents in western New York and other cities have still not received notification from the cable company, either on bills or in the mail.

The two lawsuits were brought on behalf of Manhattan resident Kathleen McNally and Fort Lee, N.J. resident Natalie Lenett, but the suit asks the court to order refunds for all Time Warner Cable customers charged modem fees across their national service area.

The Consumerist thought the company’s failure to meet the timely notification requirement about the forthcoming modem rental fee might have the cable company dead to rights:

Pricing and Service Changes

Unless otherwise provided by applicable law, Time Warner Cable will notify you 30 days in advance of any price or service change. Notice of these changes may be provided on your monthly bill, as a bill insert, as a separate mailing, in the Legal Notice section of the newspaper, on the cable system channel(s) or through other written means.

But on closer examination, that provision only applies to pricing and service changes for Time Warner Cable’s television service, not broadband or home phone service.

In fact, Time Warner Cable’s new Subscriber Agreement has reserved the right to change just about anything it likes, just by updating the terms and conditions on its website:

We May Change our Customer Agreements

(a) We may change our Customer Agreements by amending the on-line version of the relevant document.  Unless you have entered into an Addendum that ensures a fixed price for a period of time (for instance, a Price Lock Guarantee Addendum), we may also change the prices for our services or the manner in which we charge for them.

(b) If you continue to use the Services following any change in our Customer Agreements, prices or other policies, you will have accepted the changes (in other words, made them legally binding).  If you do not agree to the changes, you will need to contact your local TWC office to cancel your Services.

(c) Any changes to our Customer Agreements are intended to be prospective only.  In other words, the amended version of the relevant document only becomes binding on you as of the date that we make the change.

One significant change Time Warner inserted in its Subscriber Agreement (the one printed in tiny print on tissue-thin paper, occasionally mailed with your bill) was deemed so important, it appears highlighted and in bold language:

Time Warner Cable now requires customers to submit disputes individually to binding arbitration, denying the right to bring or participate in any class action case. However, customers can opt-out of this provision simply by notifying the company through an online form. (You will need your Time Warner Cable account number.)

In practice, this would require McNally, Lenett, and millions of other customers to individually submit to a time-consuming arbitration proceeding — all to fight a $3.95 monthly fee. Few would bother. Wittels told The Consumerist the lawsuit still has merits because of other language Time Warner Cable maintains in its agreement which he believes holds the door open to a class action challenge.

Although customers are invited to purchase their own cable modem equipment to avoid the fee, the lawyers involved say the options are limited and expensive.

A surprise announcement from the U.S. Supreme Court that it will hear an appeal brought by Comcast Corporation in a class action lawsuit brought on behalf of Philadelphia consumers, despite a pending settlement, may mean the Supreme Court is on the verge of issuing another business-friendly ruling that will make class action cases more difficult to file.

Comcast had reached a tentative settlement in June with lawyers who brought a $875 million class-action lawsuit on behalf of Philadelphia area cable subscribers. The antitrust case, originally filed in 2003, accused Comcast of strategically swapping or acquiring cable systems owned by Marcus Cable, Greater Philadelphia Cablevision, Inc., Lenfest Communications, Inc., AT&T, Adelphia Communications Corp., Time Warner, and Patriot Media in and around Philadelphia for the purpose of creating a super-sized Comcast cable system that could deter competitors from entering the market and allow Comcast to charge higher prices for service.

RCN Telecom Services originally intended to compete for cable customers in the Philadelphia region, but found it could not break into the market because Comcast allegedly hired as many available technicians it could find and tied them down with exclusive contracts. RCN also claimed Comcast targeted potential customers with special, allegedly below-cost deals to retain their business. RCN later filed for bankruptcy.

“Stated bluntly, Comcast and other large cable operators have demonstrated both the inclination and the wherewithal to use their market power to crush broadband competition in their local markets whenever it has the audacity to appear,” RCN alleged.

In 2002, RCN went public with a series of allegations:

Comcast intimidates independent construction and installation contractors. Comcast prevented or tried to prevent about 15 Philadelphia-area contractors from doing business with RCN through “non-compete” clauses, RCN alleged. The company provided specific names of contractors and Comcast personnel in sealed documents.

Those practices dated at least to the late 1990s, when Comcast acquired Suburban Cable, RCN said. Both Suburban and Comcast went “to extraordinary lengths to document ‘violations’ and intimidate contractors who were thought to be in contact with, or working for, RCN,” RCN said.

RCN cited instances of Suburban Cable employees, many of whom later worked for Comcast, allegedly following contractors in their trucks and taking photographs to document contractors seen at an RCN office or work site. These photographs then became “evidence,” RCN said, to support contractors’ termination.

As for predatory pricing, RCN claimed that before its entry into Folcroft in 2000, Comcast allegedly established a sales “swat team” instructed to sign up customers for 18-month contracts in exchange for cheaper cable services.

The plaintiffs’ attorneys want subscribers to receive refunds representing the savings they would have enjoyed had a competitor successfully forced prices down.

Comcast and the plaintiffs’ counsel reached a tentative settlement in June after both sides learned the lawsuit would proceed to trial this September. But in a surprise announcement, the U.S. Supreme Court suddenly decided to step in and hear an appeal filed by Comcast. Comcast immediately declared the settlement incomplete and has now declined to proceed with it, believing it has a more favorable outcome waiting at the Supreme Court.

Kenneth A. Jacobson, a professor at Temple University’s law school, told the Philadelphia Inquirer the Supreme Court does not typically decide to hear a case “during the settlement negotiation and approval process.”

Other Supreme Court watchers suspect the Court’s sudden involvement in the case means it is likely to issue a precedent-setting decision, more likely than not in Comcast’s favor, that will be talked about in law journals for the next decade.

Comcast Center in downtown Philadelphia

The specific point of Comcast’s appeal that interests the Supreme Court has to do with how a class action case certifies damages to the court hearing the case. The Supreme Court agreed to hear the case based on, “whether a district court may certify a class action without resolving whether the plaintiff class has introduced admissible evidence, including expert testimony, to show that the case is susceptible to awarding damages on a class-wide basis.

Currently, courts insist that the burden of proof for damages lies with the plaintiff, but they are not necessarily required to demonstrate the actual individual damages suffered by each member of a proposed class action. Many judges accept the concept of fixed group damages based on a composite of an average proposed class member. That amount gets multiplied by the number of members in the certified class action to arrive at the total requested damages. Typically, both sides negotiate a final settlement, deduct attorney fees and costs, and then class members typically get a change in a company’s policies, coupons good for a future purchase or an actual refund in the mail.

The Supreme Court may find that concept inadequate, and insist on a detailed analysis of actual harm done to each proposed class member — a high and potentially expensive hurdle to cross for many class action cases. Legal analysts suggest the intended effect of such a decision would be to further deter class action lawsuits against companies, because the costs and complexities involved would increasingly not be justified.

In the Comcast case, the cable company wanted the court to dismiss the case, and for some very novel reasons:

1. Since Comcast effectively kept competing “overbuilding” cable systems out of Philadelphia, there is no evidence of any theoretical competition benefits such as reduced prices;
2. Since no competitor actually got their service up and running in Philadelphia, Comcast argues there was no competition to eliminate;
3. RCN, in Comcast’s view, was never actually going to start service in Philadelphia because of their own financial woes;
4. Without actual competition in Philadelphia, there is no basis for any expert witness hired by the plaintiff to credibly estimate damages;
5. Even if Comcast was engaged in anti-competitive behavior in Delaware County, that cannot be used by plaintiffs to serve as evidence of class-wide impact for the entire multi-county Philadelphia Comcast cluster.

Over the past few years, the Court has ruled in favor of corporations trying to compel less-costly legal avenues — like mandatory arbitration — for consumers who feel harmed by a company’s actions.

If you were or remain a customer of Verizon Wireless under either their America’s Choice I or America’s Choice II plans (unavailable to new customers), a class action settlement benefit should be arriving in your mailbox this week.

In July 2005, a lawsuit was brought against Verizon Wireless alleging the company improperly assessed roaming charges on customers. Cowit et al. v. Cellco Partnership d/b/a Verizon Wireless was filed in Hamilton County, Ohio. In eventually became a nationwide class action case.

The two sides reached a settlement for all America’s Choice customers, one that considerably benefits the plaintiff’s lawyers. They will receive attorney’s fees, costs and incentive awards not to exceed $6 million dollars. The original complainant, Barry Koblenz, will receive a check in the mail from Verizon Wireless for the princely sum of $50. Koblenz can also apply for an “incentive award” not to exceed $10,000. Other Class Representatives can apply for their own awards not to exceed $20,000 each.

What do customers get? Not much:

• Customers who did not submit a valid claim to participate in the action by the fall of 2011 will receive 25 additional calling minutes good on any Verizon Wireless plan when you exceed your current calling allowance. The minutes expire in one year.
• Customers who submitted a valid claim will receive a transferable long distance calling “card” worth up to 40 minutes of domestic long distance calling (or around 13 minutes of international calling) valid for 24 months.
• All affected customers enrolled in an unlimited calling plan will receive the long distance calling “card” as described above.