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Federal Judge Dismisses Ex-AT&T Subs' Suit in Ill.

9/14/2003 8:00 PM Eastern

A federal court judge in Illinois has quashed a suit by former Chicagoland consumers who alleged their then-cable operator, AT&T Broadband, violated federal debt collection laws by using the wrong corporate identification when it tried to collect past-due bills.

Judge Ann St. Eve of the U.S. District Court for the Northern District of Illinois issued a summary judgment in the case on behalf of the operators.

The intended target of the attempted class action was AT&T Broadband LLC and Communications and Cable of Chicago, Inc., the local business units of the former AT&T Broadband, which has since been acquired by Comcast Corp.

A summary judgment means the court found no genuine issue of material fact to the case brought by the plaintiffs.

But the dispute is not over — the plaintiffs will challenge the lower court ruling in the U.S. Court of Appeal for the Seventh Circuit, vows attorney Lance Raphael of the Consumer Advocacy Center in Chicago. The federal case is only an offshoot of the main challenge by consumers, which is pending in state court, he added.

That suit also seeks class-action status for former AT&T customers in the state.

The state suit, in filed Cook County Circuit Court, challenges a marketing program conducted in the Chicago area in 2000, said Raphael. Consumers, including plaintiffs Andrew Everst, Frances Gutierrez and Joseph Rydel, were offered a free month of Home Box Office, but if they tried to cancel the service after that month, they were charged $9.95.

The plaintiffs were allegedly disconnected, with balances owed, as they challenged the downgrade charge. The Consumer Advocacy Center filed suit that year over the alleged deceptive marketing tactics, but Raphael said the lawsuit's progress has been stymied while the plaintiffs try to determine the exact legal entity responsible for the alleged violations.

At the time of the campaign, the local company did business as either AT&T Cable Services or AT&T Broadband. But the legally incorporated name is AT&T Broadband LLC and Communications and Cable of Chicago Inc.

Raphael said when the plaintiffs sued AT&T Cable Services, lawyers for the defendants argued that it wasn't the responsible business unit.

So the recently concluded federal court action was filed on the theory that if AT&T Cable Services isn't the local cable provider, it must be a debt-collection service and therefore subject to federal fair-collection laws, Raphael explained.

Federal law forbids businesses from designing a letter to debtors that could be used to "create the false belief in a consumer that a person other than the creditor … is participating in the collection of … a debt (ellipsis added by the court)."

But attorneys for AT&T Broadband successfully argued that the cable company did not even draft the demand letter; Credit Protection Associates LP wrote it for the operator. AT&T Broadband lawyers only reviewed the letter, according to court documents.

The plaintiffs' attorneys also argued the cable company broke the law by identifying itself in demand letters as "AT&T Cable Services" and "AT&T Broadband." But the judge Sept. 1 ruled a company does not have to solely use its incorporated name in its business dealings.

Faith Gay, one of the attorneys representing the cable operator, said the federal ruling demonstrates that consumers disgruntled with their local operator can't use the courts, and the federal Credit Protection Act, as a big sword to fend off legitimate debt collectors.

Raphael countered: "This is hardly a victory on the merits of the law. This is just a demonstration of their ability to hide the truth."

A good cartoon demonstrating this case, he added, would depict a giant gorilla hiding behind a tiny shell. AT&T Broadband hid behind shell corporations, Raphael said.

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