Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—SDCal: Class Certification Refused in Unfair Competition Action Against Cox Communications over Alleged Failure to Disclose Fees, (May 23, 2013)

By Tobias J. Gillett, J.D., LL.M.

The federal district court in San Diego has declined to grant class certification in an action against cable television provider Cox Communications, Inc. asserting a claim under California’s Unfair Competition Law (UCL) that Cox violated the federal Cable Television Consumer Protection and Competition Act (Cable Act) by not disclosing certain monthly rental fees for set-top boxes or obtaining consent before charging them (Cottle-Banks v. Cox Communications, Inc., May 21, 2013, Curiel, G.). The court also declined to grant a motion for spoliation sanctions regarding Cox’s alleged failure to preserve recordings of its customer service representatives (CSRs).

Brittni Cottle-Banks alleged that she ordered cable television services from Cox and elected to install the set-top converter box herself. She received a self-installation kit containing two converter boxes, and assumed the second one was free. She allegedly later discovered that Cox had charged her a rental fee for the second box on each monthly bill.

Cottle-Banks filed a class action lawsuit against Cox, alleging that Cox violated the Cable Act by failing to disclose and obtain customers’ consent to be charged for monthly rental fees associated with their set-top boxes. Cottle-Banks sought relief for this violation through the UCL, which prohibits unlawful, unfair, or fraudulent business practices, and incorporates violations of other laws through the “unlawful” prong. In the present motion, the court addressed Cottle-Banks’ motion for class certification, and her motion for spoliation sanctions based on Cox’s alleged failure to properly retain customer service telephone calls.

Class Certification

The court explained that a court deciding whether to certify a class must determine whether the proposed class satisfies the numerosity, commonality, typicality, and adequacy requirements of Federal Rule of Civil Procedure 23(a), and then whether it satisfies at least one of the requirements of FRCP 23(b).

Commonality. To satisfy the commonality requirement, a plaintiff must show that “there are questions of law or fact common to the class,” the court observed. The common question in the present case was “whether [Cox] had a common practice of charging customers for converter boxes and/or remotes without first disclosing to them the equipment offered and the prices to be charged and without first obtaining the customer’s affirmative acceptance of the equipment and prices.”

The court concluded that Cottle-Banks failed to provide sufficient “supportive or persuasive” evidence of Cox’s alleged “common practice” to satisfy the commonality requirement. The court found a declaration from a former Cox CSR to be “not supportive evidence” because she was mostly employed at Cox outside of the class period, and she was subject to discipline during the time when she was employed during the class period.

Moreover, although Cottle-Banks referred to Cox scripts for its CSRs that allegedly did not require them to inform customers about the monthly equipment charges, Cottle-Banks did not show “that the CSRs are required or regularly use these scripts,” and conversations between CSRs and customers varied. Further, although Cottle-Banks asserted that only less than ten of 200 recordings produced by Cox in discovery were relevant, and in two of those calls the CSRs did not mention the equipment charges, the court noted that Cox identified seven calls out of those same recordings where the CSRs did notify customers about the charges.

Therefore, the court determined that Cottle-Banks had not demonstrated that Cox had a uniform policy. Without a uniform policy, the court would have to determine whether each customer had received notice of the monthly charges and had accepted them. Cottle-Banks had thus “failed to show a common core of facts or a shared legal issue that affects all class members.”

Ascertainability. The court also concluded that Cottle-Banks did not demonstrate that her proposed class would be sufficiently “precise, objective, and presently ascertainable.” The court observed that customers could order service from Cox through a telephone call, a retail store, or Cox’s website. The court noted that “customers who order online through Cox’s website are informed about equipment and monthly fees and customers must affirmatively accept these charges in order to complete the ordering process,” and that “[n]either party addresse[d] purchases made at Cox’s retail stores.” Therefore, by including online and retail store customers, Cottle-Banks’ class was “overbroad and imprecise,” and thus “not ascertainable.”

Since the court concluded that Cottle-Banks did not satisfy the commonality requirement, it did not address whether Cottle-Banks had satisfied the numerosity, typicality, and adequacy requirements, or the requirements of FRCP 23(b).

Spoliation Sanctions

Cottle-Banks’s motion for spoliation sanction with respect to Cox’s failure to preserve recordings of its customer service telephone calls requested 1) “an adverse inference operative in all proceedings in this case, that all CSR call recording destroyed by [Cox] after service of the original complaint in this case would have evinced a common practice by [Cox]” of violating the Cable Act, and 2) that Cox “shall be precluded from introducing evidence that its CSRs complied with [the Cable Act] before June of 2011.”

Adverse inference. The court initially concluded that Cox had an obligation to preserve the recordings that arose when Cottle-Banks filed her complaint in September 2010. “While [Cox] may have objected to the legal grounds for Plaintiff’s assertion in the original complaint that customers had to affirmatively request each equipment, Cox should have known that telephone recordings would have reasonably been requested during discovery as the ordering by the telephone appears to be the predominant way that customers request cable service,” the court stated, and Cox “should have reasonably known that the telephone recordings could have also eventually become relevant through an amended complaint.”

The court also found that Cox acted with a “culpable state of mind.” The court noted that where a defendant’s “culpable state of mind” with respect to alleged spoliation is bad faith, “that fact alone is sufficient to demonstrate relevance,” but when the state of mind is negligence, “relevance must be proven by the party seeking the sanctions.” Although the court concluded that Cottle-Banks did not show that Cox acted in bad faith, the court found that, since Cox had an obligation to preserve the recordings, Cox “was negligent in failing to preserve” them.

However, the court concluded that Cottle-Banks had not shown that the recordings would be relevant to substantiating her claims. The court noted that only two of the recordings already produced by Cox supported her claims. Although Cottle-Banks contended that those calls were from a recent period, and would not reflect the content of earlier calls, Cox had demonstrated that its training practices had not changed since 2008. Therefore, the court found “that the deleted call recordings would not have been supportive of Cottle-Banks’s claim,” and declined to grant an adverse inference.

Preclusion. The court also declined to grant Cottle-Banks’s request that Cox be precluded from introducing evidence that its CSRs complied with the Cable Act. Since Cottle-Banks did not show that the calls would have been relevant and supportive of her claim, she also did not show that she was prejudiced by Cox’s deletion of the recordings.

Timeliness. Finally, although not an issue raised by either party, the court found that Cottle-Banks’s sanctions motion was untimely. Cottle-Banks knew by May 24, 2011 that Cox was still deleting its call recordings, but did not file a motion for spoliation sanctions until February 2012. An “unreasonable delay” could “render a spoliation motion untimely,” and the court’s local rules required discovery disputes to be filed “within thirty (30) days of the date upon which the event giving rise to the dispute occurred.”

The case is No. 10cv2133-GPC(WVG).

Attorneys: Jeff S. Westerman (Westerman Law Corp.) for Brittni Cottle-Banks. Allison L. Ehlert (Coblentz Patch Duffy & Bass LLP) for Cox Communications, Inc.

Companies: Cox Communications, Inc.

Cases: StateUnfairTradePractices CaliforniaNews