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In re Cablevision Consumer Litigation

United States District Court, E.D. New York

March 31, 2014

In re CABLEVISION CONSUMER LITIGATION

Lee S. Shalov, Esq., Ralph M. Stone, Esq., Shalov Stone Bonner & Rocco LLP, New York, NY, Todd J. Krouner, Esq., Scott Jaller Koplik, Esq., Law Offices of Todd J. Krouner, Chappaqua, NY, Gregory E. Keller, Esq., Chitwood Harley Harnes LLP, New York, NY, for Plaintiffs.

Thomas H. Golden, Esq., Wilkie Farr & Gallagher, New York, NY, for Defendants.

MEMORANDUM & ORDER

JOANNA SEYBERT, District Judge.

This consumer class action arises out of defendants Cablevision Systems Corp. and CSC Holdings, LLC's (collectively, "Cablevision") failure to provide certain television programming to its subscribers during a two-week period in 2010. Presently before the Court are: (1) a motion for class certification made by all of the named plaintiffs (collectively, "Plaintiffs") (Docket Entry 65); and (2) a motion for partial summary judgment made by plaintiffs Eric Bohm, John Brett, Arthur Finkel, Theodore Pearlman, Vincent Pezzuti, and Stanley Somer (Docket Entry 80). For the following reasons, the motion for class certification is GRANTED and the motion for partial summary judgment is DENIED WITHOUT PREJUDICE and with leave to renew after the putative class members have been provided notice and an opportunity to opt out of the suit.

BACKGROUND

I. Factual Background

A. The Parties

Cablevision provides, among other things, cable television services. During the time period at issue, Cablevision had approximately three million cable television subscribers in New York, New Jersey, Connecticut, and Pennsylvania. (Cablevision's Opp. Br., Docket Entry 90, at 2.) Plaintiffs, who are residents of New York, New Jersey, and Connecticut, were Cablevision customers. (Second Consolidated Am. Compl. ("SCAC"), Docket Entry 54, ¶¶ 10-13.) Plaintiffs commenced this action on behalf of themselves and a putative class of the three million Cablevision customers, seeking contractual damages for Cablevision's failure to provide certain programming and networks owned by Fox Cable Network Services ("Fox") during a two-week period from October 16, 2010 to October 30, 2010. (See generally SCAC.)

B. The Fox Channels Interruption

Prior to October 16, 2010, Plaintiffs received, along with dozens of other programming offerings provided in bundled packages of cable channels, some or all of the following Fox cable channels: WNYN ("Fox 5"), WWOR ("My9 Channel"), WTXF ("Fox 29"), Fox Business Network, National Geographic Wild, and Fox Deportes (collectively, the "Fox Channels"). (SCAC ¶¶ 3, 17; Cablevision's Opp. Br. at 4-5.) Fox 5, Fox 29, and My9 (the "Broadcast Basic Channels") were provided to subscribers as part of Cablevision's "Broadcast Basic" package, Cablevision's smallest package consisting of roughly thirty-five channels. (Cablevision's Opp. Br. at 4-5.) Fox Deportes, National Geographic Wild, and Fox Business were not included in the Broadcast Basic package. Those channels were provided to subscribers as part of Cablevision's "iO" packages, which included the Broadcast Basic Channels and hundreds of other cable channels. (Cablevision's Opp. Br. at 5.)

On October 16, 2010, Cablevision's retransmission agreement with News Corp., Fox's parent company, expired. (Cablevision's Opp. Br. at 6; SCAC ¶ 18.) As a result, Cablevision lost its rights to broadcast the Fox Channels. The channels were unavailable for distribution on Cablevision's cable systems for two-weeks until October 30, 2010, at which point Cablevision and News Corp. reached a new retransmission agreement, allowing Cablevision to once again broadcast the Fox Channels. (Cablevision's Opp. Br. at 8; SCAC ¶ 26.)

Realizing that it and Fox might not reach a new agreement in time, Cablevision sent an e-mail to its subscribers on October 12, 2010 warning them of the possibility that it might lose its rights to broadcast the Fox Channels. (Cablevision's 56.1 Counterstmt., Docket Entry 93-1, ¶ 44, Ex. 32.) On the day the retransmission agreement expired, Cablevision e-mailed its subscribers to notify them that the Fox Channels were no longer available but that Cablevision would continue to negotiate a new retransmission agreement. (Pls.' 56.1 Stmt., Docket Entry 80-2, ¶ 6; Shahmoon Decl., Docket Entry 80-3, Ex. F; Cablevision's 56.1 Counterstmt. ¶ 47.) Cablevision also began broadcasting a similar message on the Fox Channels. (Cablevision's 56.1 Counterstmt. ¶ 47; SCAC ¶¶ 7, 23.)

Cablevision did not provide a credit to any of its subscribers for the two-week period that they were without the Fox Channels, nor did Cablevision provide alternative programming to replace the Fox Channels. In interrogatory responses served in the action, Cablevision stated:

Cablevision is not aware of any customers who communicated complaints to it relating to a disruption in the provision of programming content on the Fox Channels between October 16, 2010 through October 30, 2010, and who thereafter received a reduced charge for cable television service on their monthly invoice because of such disruption.
...
Cablevision did not provide alternative programming specific to the Fox Channels during the period beginning October 16, 2010 through October 30, 2010.

(See Golden Decl., Docket Entry 90-1, Ex. F at 8-9.)

C. Cablevision's Services and the Terms of Service

With the exception of certain premium channels, Cablevision subscribers cannot order individual cable channels. (Feldman Decl., Docket Entry 90-6, ¶ 3.) Rather, Cablevision offers its bundled packages of channels in exchange for a flat monthly fee; it does not charge its subscribers specifically for any particular channel. (Feldman Decl. ¶ 3.) Accordingly, Cablevision did not charge Plaintiffs specifically for any of the Fox Channels, and Plaintiffs could not order any of them individually. (Cablevision's 56.1 Counterstmt. ¶ 39.)

Cablevision's Terms of Service, a standard form agreement drafted by Cablevision, governed the contractual relationship between Cablevision and its subscribers before and during the two-week period that the Fox Channels were unavailable. (Golden Decl. Ex. A.) Pursuant to the Terms of Service, Cablevision billed its subscribers "monthly in advance for services to be received." (Golden Decl. Ex. A ¶ 1.) However, the precise days of each subscriber's monthly billing period vary from subscriber to subscriber. (Cablevision's 56.1 Counterstmt ¶ 23.) In addition, subscribers of the same service package, even in the same service area, may pay different rates for the same package because of the various promotions and discounts Cablevision offers to certain subscribers. (Cablevision's 56.1 Counterstmt. ¶ 26; Pls.' Resp. 56.1 Stmt., Docket Entry 100-1, ¶ 26.)

As discussed more fully below, Paragraphs 4 and 17 of the Terms of Services are the focus of this litigation. Paragraph 4 of the Terms of Service governs the rights of the parties in the event of a "program or service interruption." (Golden Decl. Ex. A ¶ 4.) Paragraph 4 provides:

Disruption of Service: In no event shall Cablevision be liable for any failure or interruption of program transmissions or service resulting in part or entirely from circumstances beyond Cablevision's reasonable control. Subject to applicable law, credit will be given for qualifying outages. In any event, if there is a known program or service interruption in excess of 24 consecutive hours (or in excess of such lesser time period pursuant to state law), Cablevision, upon prompt notification of such failure or interruption from Subscriber, will either provide Subscriber with a pro-rata credit relating to such failure or interruption or, at its discretion, in lieu of the credit provide alternative programming during any program interruption. Cablevision shall not be liable for any incidental or consequential damages.

(Golden Decl. Ex. A ¶ 4.) Paragraph 17 of the Terms of Service applies to programming "changes" and states: "Programming: All programming, program services, program packages, number of channels, channel allocations, broadcast channels, interactive services, e-mail, data offerings and other Services are subject to change in accordance with applicable law." (Golden Decl. Ex. A ¶ 17.)

D. Plaintiffs' Breach of Contract Claim

Plaintiffs contend that the two-week absence of the Fox Channels was a "program or service interruption" within the meaning of Paragraph 4 of the Terms of Service. (SCAC ¶¶ 20-21.) Thus, they allege that Cablevision breached Paragraph 4 when it failed to give its subscribers a pro rata credit on their monthly subscriber fees or alternative programming for the two-week period that the Fox Channels were unavailable. (SCAC ¶¶ 45-46.) In defense, Cablevision primarily relies on Paragraph 17. According to Cablevision, it is not liable for breach of contract because Paragraph 17 relieves it of the obligation to provide any particular programming and Paragraph 4 only applies to interruptions caused by a mechanical or technical problem. (Cablevision's Opp. Br. at 14; Cablevision's Opp. Br. to Summ. J., Docket Entry 93, at 7-17.)

II. Procedural Background

Plaintiffs Theodore Pearlman and Marc Tell commenced this purported class action on October 29, 2010. On February 1, 2011, this Court consolidated the Pearlman complaint with four other actions brought by Cablevision subscribers alleging virtually identical causes of action. Pearlman v. Cablevision Sys. Corp., No. 10-CV-4992, 2011 WL 477815 (E.D.N.Y. Feb. 1, 2011). On February 22, 2011, Plaintiffs filed a Consolidated Amended Complaint, asserting claims for (1) breach of contract; (2) breach of the covenant of good faith and fair dealing; (3) unjust enrichment; (4) consumer fraud under New York law; (5) consumer fraud under New Jersey law; and (6) consumer fraud under Connecticut law. (Docket Entry 27.)

On March 18, 2011, Cablevision moved to dismiss the Consolidated Amended Complaint. (Docket Entry 34.) On March 28, 2012, the Court dismissed all claims in the Consolidated Amended Complaint except for Plaintiffs' breach of contract claim. See In re Cablevision Consumer Litig., 864 F.Supp.2d 258 (E.D.N.Y. 2012). Cablevision made three arguments as to why the Fox Channels interruption did not trigger a pro rata credit under Paragraph 4. Only the first two are relevant to the pending class certification motion. As noted above, Cablevision argued that Paragraph 17 relieved Cablevision of providing any particular content and therefore Cablevision could not be liable for a pro rata credit related to a programming change. The Court disagreed that Paragraph 17 foreclosed Plaintiffs' claim that Paragraph 4 entitled them to a pro rata credit. The Court explained:

Paragraph 17 does not foreclose Plaintiffs' claim because it can be fairly read as relieving Cablevision of providing particular content only in the event of a change in applicable law-not, as Cablevision would have it, any time for any reason. If Cablevision's reading of the Terms of Service is correct, then it has not really promised to provide anything and the contract is arguably illusory. More to the point, Cablevision's reading of Paragraph 17 would arguably render Paragraph 4 meaningless. Taken to its logical conclusion, Cablevision's position that it was not required to provide particular channels would mean that it was not obligated to provide any channels and would render useless its promise to refund customers for service outages.

In re Cablevision Consumer Litig., 864 F.Supp.2d at 263 (internal citations omitted).

Cablevision's second argument, related to the first, was that Paragraph 4 could not be interpreted to obligate Cablevision to compensate customers for the suspension of a particular channel because such an interpretation would render Paragraph 17 meaningless. The Court rejected this argument as well, explaining that "the converse is equally true: reading Paragraph 17 in the way Cablevision urges would render Paragraph 4 meaningless. And the two provisions may be reconciled by the reading of Paragraph 17 that the Court suggested above." Id. at 264. The Court did note that Paragraphs 4 and 17 could be reconciled in the way Cablevision suggested: The Terms of Service did not require Cablevision to provide any particular channels but did require it to refund customers for "outages" as defined in state cable television regulations. Id. at 264 n.3. However, the Court found that Plaintiffs had stated a plausible entitlement for relief and that it would be inappropriate to resolve the ambiguity at the motion to dismiss stage. Id.

On April 16, 2012, Plaintiffs filed a Second Consolidated Amended Complaint consistent with the Court's March 28, 2012 Order. (Docket Entry 54.) On October 10, 2012, Plaintiffs filed a motion for class certification. (Docket Entry 65.) On December 3, 2012, plaintiffs Eric Bohm, John Brett, Arthur Finkel, Theodore Pearlman, Vincent Pezzuti, and Stanley Somer filed a motion for partial summary judgment. (Docket Entry 80.) These motions are currently pending before the Court.

DISCUSSION

The Court will first address Plaintiffs' motion for class certification and then turn to the motion ...


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