Class Action Dilemmas: Pursuing Public Goals for Private Gain

By Deborah R. Hensler; Nicholas M. Pace et al. | Go to book overview

Chapter Eight
CABLE TV LATE FEE LITIGATION: 1
SELNICK v. SACRAMENTO CABLE 2

PROLOGUE

Sacramento Cable Television is the sole cable television operator for Sacramento, California, a metropolitan area of about 1.5 million residents. It services the cities of Sacramento, Folsom, and Galt as well as the County of Sacramento. Through 1996, Sacramento Cable Television operated as a partnership of Scripps-Howard Cable Company of Sacramento, which was owned by the large Scripps-Howard Broadcasting Corporation, and River City Cablevision, Inc. 3 Although the subscriber base has varied as households add and drop cable services, the company serviced, on average, approximately 209,000 subscribers per month between 1992 and 1994 for charges ranging from $10 to $23. 4

On March 23, 1993, Sacramento Cable instituted a policy of charging a $5.00 late fee for tardy payments of monthly subscriber bills. 5 The company's practice was to mail bills on the first day of the service period and impose a payment due date 20 days later. If Sacramento Cable did not receive payment within four days of the due date, the company charged the subscriber the $5.00 late fee. 6 After imposing late fees, Sacramento Cable engaged in a series of efforts ranging from notices to disconnecting the cable to obtain payment of the subscriber's account balance. Table 8.1 describes the steps by which Sacramento Cable sought payment. The company's statistics indicate that, on average, from 1992 through 1994 approximately 35,000 7 customers were charged late fees each month, amounting to about $175,000 per month paid to the company.

Sacramento Cable's customers responded to the new late fee policy with numerous complaints to the local cable regulatory commission, the Sacramento Metropolitan Cable Television Commission. In fact, late fees were the numberone complaint received by the commission. 8 Based on these complaints, in 1994 the commission opened an investigation into Sacramento Cable's pricing policies with particular focus on its late fees. In May 1994, the company commissioned a study by Price Waterhouse, which it expected to support its poli

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