In a closely watched case, a Baltimore County circuit judge ruled yesterday that a state law that protects cable companies from paying back millions in late fees is constitutional because the fees are part of a customer's contract.
Judge J. Norris Byrnes ruled that Comcast Cablevision, the county's cable provider, does not have to refund late fees to customers and that there is nothing wrong with a law that allows businesses to assess late fees of up to $5 a month.
"None of the parties to these cases dispute the right of the legislature to enact such a measure. Late fees themselves are not a pariah," Byrnes wrote in an eight-page ruling.
Byrnes' ruling disappointed lawyers for cable subscribers but was greeted enthusiastically by business groups, who said the case reaches far beyond Comcast.
"This case is a really big deal," said Paul Tiburzi, a lawyer for the Maryland Chamber of Commerce, who filed written arguments in support of Comcast.
At stake, experts say, is the constitutionality of a state law enacted this year that allows many businesses to collect millions of dollars in late fees each year.
About 20 suits have been filed throughout the state seeking refunds from a wide range of businesses, including Bell Atlantic, wireless communications companies and companies that rent self-storage sheds, experts say.
Ronald Rubin, the lawyer for the plaintiffs, said he will file an appeal asking the Court of Appeals to by-pass the intermediate appellate court and consider reversing Byrnes' ruling.
Legal experts say the 20 other cases will likely be put on hold while Rubin's appeal is pending.
"I would expect the courts to await some direction and guidance from the state's highest court on this," Rubin said.
The Court of Appeals opened the door to many of the suits in June 1999 when it ruled that the $5 late fee charged by United Cable Television of Baltimore to city subscribers violated state constitutional protections against excessive penalties.
The appeals court affirmed a city judge's order that United Cable refund $6.7 million in late fees paid over the past five years by about 40,000 city subscribers.
The appeals court ruled that the cable companies - and other businesses that collect late fees - should charge no more than 50 cents a month, an amount set by the state Constitution to protect consumers.
City cable customers were expected to receive about $3.60 per late fee collected after litigation costs. But after extensive lobbying this year, the General Assembly enacted a measure that allows late fees of up to 18 percent a year or $5 a month. The law exempted the $6.7 million awarded to United Cable subscribers.
The law was made retroactive to 1995, so that late-fee penalties could not be