Time Warner Cable Must Face Modem Lease Fee Class Action Lawsuit

Following a judge’s order, Time Warner Cable will continue to face class action allegations that it charged cable customers an improper fee.

U.S. District Judge Allyne R. Ross issued an order last week denying defendant Time Warner Cable Inc.’s motion for dismissal in its entirety.

The judge determined that the named plaintiffs are not precluded from continuing to bring claims for equitable relief just because their monetary relief claims were handled via private arbitration.

Back in July 2013, Judge Ross sent the plaintiffs’ individual claims for money damages to private arbitration, pursuant to the arbitration clause in Time Warner’s residential services subscriber agreement.

Time Warner won those arbitrations on all claims – except for the breach of contract claims brought by plaintiffs Louis McLaughlin and Diana Manwaring, who each won modest damage amounts. The plaintiffs then came back to court with an amended complaint seeking only equitable relief.

In Time Warner’s motion for dismissal, the company argued for dismissal of every claim now that arbitration has been completed. Because these claims were already wrapped up in arbitration, the plaintiffs are barred from relitigating them just to seek equitable relief, the company argued.

Time Warner also argued the allegations in the new modem fee class action lawsuit are not adequate to support the plaintiffs’ claims for equitable remedies.

Judge Ross disagreed on all points. She found no legal authority – and Time Warner apparently didn’t cite any – supporting the argument that a decision in arbitration precludes relitigating the same or similar issues in court.

A related concept exists in the doctrine of res judicata, which prohibits a party to a lawsuit from reviving an issue that has already been litigated in court. But res judicata does not apply to arbitral decisions, the judge said.

In the alternative, Time Warner argued the claims on which it had prevailed in arbitration were barred by collateral estoppel, a doctrine similar to res judicata. However, Judge Ross found the company failed to show “with clarity and certainty” that the issues plaintiffs raise now are the same ones decided in arbitration.

Nine plaintiffs initiated this Time Warner class action lawsuit in February 2013. They allege that in October 2012, Time Warner started charging its residential cable customers a “modem lease fee” of $3.95 per month, mere days after sending them a “vague and misleading” postcard notifying them of the new charge.

The plaintiffs are continuing to assert a putative Class consisting of all Time Warner customers who were charged the modem lease fee. They also propose various state-by-state subclasses consisting of Class Members who were charged the fee in violation of particular states’ consumer protection laws.

Following arbitration, they are now seeking only declarative and injunctive relief on all claims and restitution for their unjust enrichment and consumer protection claims.

The plaintiffs are represented by Steven L. Wittels and J. Burkett McInturf III of the Law Offices of Steven L. Wittels PC and by Richard Roth of The Roth Law Firm PLLC.

The Time Warner Modem Fee Class Action Lawsuit is Lorraine Damato, et al. v. Time Warner Cable Inc., Case No. 1:13-cv-00994, in the U.S. District Court for the Eastern District of New York.

UPDATE: The Time Warner Modem Fee Class Action Lawsuit was dismissed on September 26, 2017.  Top Class Actions will let our viewers know if a new case is filed.