The lawsuit filed against United Cable Television of Baltimore over $5 late fees has resulted in a more than $7 million windfall for the Mayor's Office of Cable and Communications and a newly established cable education fund.
The funds stem from Circuit Judge Gary I. Strausberg's 1997 ruling, which ordered United Cable, then owned by Tele-Communications Inc. and now owned by AT&T Corp., to charge late fees of no more than 50 cents.
The judge ordered the company to return the difference to the 35,000 to 40,000 customers who paid the $5 fees. Factoring in litigation costs, the refund amounted to about $3.60 per fee. Strausberg ruled that the mayor's cable office and a new nonprofit, the Children's Education Trust Fund, would split any late fees unclaimed by June 5.
United Cable filed its initial report with Baltimore Circuit Court late Monday. It stated that 11,426 current and former cable customers filed claims for refunds of a little more than $1 million, leaving nearly $7.17 million for the mayor's cable office and the Children's Education Trust Fund to split.
The late fee pot has already grown from $7.59 million at the time of Strausberg's ruling to $8.17 million as of yesterday's filing, in part because United Cable continued to charge customers the $5 late fees while its appeal was pending. The Court of Appeals upheld the ruling in July 1999.
United Cable doesn't have to file its final report until Sept. 5, and it expects the amounts will fluctuate a bit due to interest income and straggler claims that were either late reaching United Cable or took longer to process.
"It's within 1 percent of the final number," said David Nevins, a spokesman for United Cable. Both Nevins and United Cable's attorney, Brian Eberle, said they did not try to predict how many people would submit requests for refunds.
"The overwhelming majority of people either paid no late fees, or maybe were late once or twice," Nevins said. "Obviously, there were a significant number of people who felt the amount was relatively inconsequential and not worth the time it would take to fill out the forms."
Marilyn Harris-Davis, the director of the mayor's cable office, said she was unaware United Cable's interim report had been filed. But her office already is planning for the windfall, which it expects to receive after the final report deadline in September.
Harris-Davis said half a dozen cable companies have contacted her office about providing fiber-optic networks that will run through city property.
The mayor's office needs to upgrade the city's existing networks before the companies can come in, she said. She also plans to increase her agency's staff to monitor the new companies' activities "and make sure folks are being charged fairly," she said.
Harris-Davis will also sit on the three-member Children's Education Trust Fund board, which will use its cable late fee money to buy television equipment for city schools.
Louis Burch and Phillip Vincent, the case's two named plaintiffs, each received $5,000 as part of the settlement, said Philip Friedman, the attorney representing cable subscribers.
Friedman's six other late-fee cases in Maryland are on hold, thanks to the state legislature. In April, it passed a measure authorizing a variety of businesses to charge monthly late fees of up to $5, or 10 percent of the overdue payment.