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IN RE ADELPHIA COMMUNICATIONS CORP.

August 30, 2005.

In re ADELPHIA COMMUNICATIONS CORP. et al., Debtors. GERALD DIBBERN, individually and on behalf of all others similarly situated, Plaintiff-Appellant,
v.
ADELPHIA COMMUNICATIONS CORP., JOHN DOES 1-20 and XYZ COMPANY Nos. 1-50, Defendants-Appellees.



The opinion of the court was delivered by: DENNY CHIN, District Judge

MEMORANDUM DECISION

This is an appeal from a decision and order of the United States Bankruptcy Court for the Southern District of New York (Gerber, B.J.), dated May 3, 2005 (the "Order"), granting the motion of defendant-appellee Adelphia Communications Corporation ("Adelphia") to dismiss the amended complaint pursuant to Fed.R.Civ.P. 12(b)(6). For the reasons that follow, the Order is affirmed in part and reversed in part.

  STATEMENT OF THE CASE

  A. The Facts

  As alleged in the amended complaint, the facts are as follows:

  Plaintiff-appellant Gerald Dibbern is a resident of Massachusetts. (Am. Compl. ¶ 9). In approximately 1996,*fn1 he contacted Harron Communications Corp. ("Harron") to obtain cable television service for his home. (Id. ¶ 79). He signed up for the "basic service tier" ("BST"), which consisted of basic service only, without any premium channels. He began renting two cable converter boxes, which were necessary to view even basic programming. (Id. ¶¶ 9, 79). To the extent Dibbern received any contract documents or installation materials or other documents at the time, he no longer has them. (Id. ¶ 80). Dibbern has been paying a rental fee for the converter boxes of between $1.60 and $3.25 per month per box. (Id. ¶ 16).

  In April 1999, Adelphia announced that it was acquiring Harron. The transaction closed in October 1999. (Id. ¶ 21). The Harron acquisition added subscribers in Pennsylvania, Michigan, Massachusetts, and New Hampshire to Adelphia's customer base. (Id. ¶ 24).

  At some point after the acquisition, as it had been doing with respect to its acquisitions of other cable systems, Adelphia upgraded the system it acquired from Harron. (Id. ¶¶ 20, 25, 28, 30). Previously, Harron's BST customers, including Dibbern, had to rent converter boxes to be able to view basic programming. (Id. ¶ 26). After the upgrade, however, BST customers no longer needed converter boxes to view basic programming, if they had a cable-ready television or VCR (as most people do) and did not want to subscribe to premium channels or use pay-per-view services. (Id. ¶¶ 2, 28, 43).

  Adelphia did not advise Dibbern or its other BST customers that the converter boxes were no longer required to view basic programming. Instead, Adelphia continued to charge monthly rental fees for the boxes, even though they were no longer necessary for BST customers who were not interested in viewing premium channels or pay-per-view programs. (Id. ¶¶ 3, 32, 35).

  In May 2001, Adelphia finally advised its customers that they no longer needed to rent converter boxes for BST-only service. (Id. ¶ 36). The notice appeared on the May bill as follows:
EFFECTIVE IMMEDIATELY
CUSTOMERS WHO DO NOT SUBSCRIBE TO ANALOG PREMIUM CHANNELS (HBO, CINEMAX, SHOWTIME OR NESN), OR ENJOY ORDERING PAY-PER-VIEW, NO LONGER NEED A CONVERTER BOX, PROVIDED THAT THEIR TELEVISION IS CABLE-READY. CONVERTERS MAY BE RETURNED TO YOUR LOCAL ADELPHIA OFFICE.
(Order at 3-4 n. 4). A majority of the BST subscribers returned their cable boxes, and thus they were no longer subject to the cable box rental fee. (Am Compl. ¶ 37). A follow-up notice was included in the September 2001 bill, reminding BST customers that the converter boxes were no longer necessary. (Id. ¶ 41; Order at 3-4 n. 4).

  Adelphia is and was at all relevant times a Delaware corporation with its principal place of business in Pennsylvania. (Am. Compl. ¶ 10). The amended complaint does not allege where Harron was incorporated or where its principal place of business was located.

  B. Prior Proceedings

  On April 14, 2002, Dibbern filed an action in state court in Pennsylvania against Adelphia, raising the claims asserted herein. On June 25, 2002, for unrelated reasons, Adelphia and many of its subsidiaries filed for Chapter 11 protection. On July 8, 2002, Dibbern filed a "class" proof of claim in the Bankruptcy Court on behalf of a nationwide class of similarly situated subscribers, alleging that Adelphia had improperly billed him for the rental of the two converter boxes. Thereafter, Dibbern filed this adversary proceeding, as a nationwide class action.

  The amended complaint asserts claims for: (1) violations of the Pennsylvania Unfair Trade Practices and Consumer Protection Law, 73 P.S. § 201-1 et seq. (the "UTPCPL"); (2) breach of contract; (3) fraud; (4) unjust enrichment; (5) an ...


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