Time Warner Escapes Dodgers, Lakers Bundling Class Action

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On Monday, a proposed class action lawsuit alleging that Time Warner Cable Inc. violated the law by bundling various sports channels and making over $11 billion from subscribers was dismissed by a California Court of Appeals.

In their class action lawsuit filed in June of 2013, lead plaintiffs alleged that two agreements made by Time Warner Cable to broadcast Lakers and Dodgers games over cable were unfair because the costs of these agreements would be paid by consumers in Southern California. These consumers, “if given the option to do so, would opt out of such telecasts,” said the plaintiffs in their Time Warner class action lawsuit. The plaintiffs claimed that the Time Warner deals were unlawful and unfair business practices under the California Business and Professions Code and sought an injunction against the company.

The California appeals court dismissed the class action lawsuit, finding that federal law preempted the case and did not bar Time Warner from bundling the channels. The court explained that even though federal regulations ban companies from negative option billing, a practice that charges customers for services they haven’t requested, there are exceptions that allow cable providers to add specific programs or channels.

“With apologies to Bruce Springsteen, we appreciate the lament of cable television subscribers who feel that although they now receive 10 times 57 channels or more, mostly nothing’s on that they wish to view,” wrote the court of appeals in their decision. “We simply hold that federal preemption principles bar application of state consumer protection laws in this case.”

In their Time Warner class action lawsuit, the plaintiffs had argued that in this case was unique because Time Warner owns the sports channels they are including in their enhanced cable packages and the negative billing exception did not apply. The plaintiff’s argued that Time Warner’s addition of the sports channels was a fundamental change in the nature of the basic cable package and therefore California’s unfair competition law applies.

The California court of appeals disagreed, explaining that adding three channels and adjusting rates accordingly was not a severe change. The court of appeals pointed out that the Federal Communications Commission order had said those types of changes were minor, even if coupled with a price adjustment, according to the ruling. “By contrast, deleting all existing channels from a particular tier and replacing them with an entirely new set of channels would constitute a fundamental change to a tier of channels,” wrote the court of appeals. “In that hypothetical setting, negative option billing would be implicated and state laws that addressed such changes would not be preempted.”

The plaintiffs are represented by Maxwell Blecher and Courtney Palko of Blecher, Collins, Pepperman & Joye.

The Time Warner Cable Bundling Class Action Lawsuit case is Sherry Fischer, et al. v. Time Warner Cable Inc., et al., Case No. BC521159, in the Superior Court of the State of California, County of Los Angeles.