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Galaxy Wins One on Late-Fee Issue

4/29/2001 8:00 PM Eastern

Galaxy Cablevision has won a challenge to its $5 overdue-bill charge, bucking the trend of settlements or courtroom losses in late-fee cases.

U.S. District Court Judge Glen H. Davidson — ruling on a class-action lawsuit filed on behalf of the operator's 120,000 subscribers — indicated that the Sikeston, Mo.-based MSO's $5 late fee, as a concept, is fair and reasonable. The ruling was handed down April 16 in U.S. District Court in Aberdeen, Miss.

"We were very pleased," said Jim Gleason, Galaxy's president and COO, who added that executives always believed the company was on solid legal footing.

The suit against the MSO was first filed in January of 1999. The court had earlier honored Galaxy's request for summary judgment on all issues raised by the plaintiffs except an allegation that the late charge violated the legal concept of "duty of good faith and fair dealing."

But Davidson ruled that the fee met the fair-dealing test, because consumers who testified said they knew they were subject to a penalty if they missed their cable payment due date.

Gleason attributed the victory to a persuasive report submitted to the court by Galaxy's expert witness, Overland Consulting of Kansas City, Mo. That firm — regulatory consultants to the telecommunications, cable, electric and gas industries — analyzed the cost of late payment.

The court cited that study as "more thorough and influential" than the operator's testimony.

Had Galaxy lost the case, it could have been assessed the $11 million judgment sought on behalf of its customers.

The small MSO achieved a court victory in a fight that's resulted in losses or expensive settlements for larger MSOs elsewhere. Last December, Charter Communications Inc. agreed to resolve a similar class-action lawsuit on behalf of its customers, except those in California, Connecticut, Maryland, Oklahoma, Vermont and Washington.

To end the litigation, Charter agreed to provide affected customers a rebate in the form of $9.95 worth of free service. It also agreed to drop its late fee to $2.95, a rate that may escalate moderately according to an Illinois court-approved schedule.

September