A bill to legalize late-fee amounts for Maryland businesses
has passed a major hurdle, gaining the approval of the state Senate.
The measure will need approval from the state's House
of Representatives before it has a chance to become law.
Cable and other service industries backed the bill, which
was written after an appeals court ruled in support of a successful fee challenge in
Baltimore.
The appeals panel said late fees must adhere to the 6
percent annual interest cap outlined in common law. This means the maximum late fee on a
$50 bill would be 25 cents. Further, the panel said, all late fees should have to pass a
reasonableness test.
Industry leaders grew fearful that the opinion could spark
a spate of lawsuits against other industries.
Senators approved a bill version that capped late fees at
$10, or 10 percent of the unpaid bill, whichever is larger. The Maryland State Bar
Association opposed the bill, especially since it will provide protection to industries
backdated to 1995.
The suit would have no effect against the judgment in
Baltimore, against then-United Cable of Baltimore L.P., but it could affect suits pending
in Montgomery, Prince George's, Baltimore and Harford counties, according to lawyers.
The lawyers' lobby has its attention divided. Not only
is it concerned about the late-fee bill, but it is battling two other pending pieces of
litigation that also "turn back the clock."
As legislation clarifying late-fee legality proceeds in
Maryland, a lawsuit challenging their application has been given class status in Texas.
A suit filed by a single plaintiff in Harris County
challenged the $5 late fee assessed by Time Warner Cable in Houston. Judge Scott Brister
certified the class last month.
As a class action, the suit will represent late-fee payers
among the Houston system's 650,000 customers.
The action initially targeted Tele-Communications Inc. and
OpTel Inc., a wireless cable provider. However, TCI (now AT&T Broadband & Internet
Services) already faces a class action in Dallas, which will cover all of its consumers in
the state. OpTel, which filed for bankruptcy-law protection from creditors last year, is
on questionable financial footing, according to plaintiff's attorneys.
The suit alleged that Houston operators' late fees
violate state usury laws. Also, since consumers are unable to negotiate with the company
for a late fee lower than $5, the subscriber contract disallows good-faith bargaining,
which is required under contract law.
