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Comcast Looks to Block Sports Fans Suing Over High Cable TV Costs

Why the hardly-ever-read fine print of a subscriber agreement could matter more than ever.

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Cable television customers upset at the rising cost of service, lackluster Internet programming or even the absence of a major TV network could find themselves without much recourse. Thanks to a ruling by the Supreme Court two months ago and the fine print of cable service agreements, the ability to file a class action lawsuit against a big cable company could be endangered.

Evidence of this comes from a court filing made on Monday by Comcast, which is defending itself from charges of making anti-competitive agreements with the National Hockey League that have allegedly had the effect of forcing sports fans to pay overpriced fees to watch their favorite teams.

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The case (Laumann et al v. National Hockey League et al) has been consolidated with another proposed class action over similar agreements made between Major League Baseball and its broadcast partners. Last December, these legal actions, alleging an antitrust "conspiracy" in how TV rights are carved up, got a huge boost when a New York federal judge denied the leagues' motion to dismiss.

But in the wake of American Express Co. v. Italian Colors Restaurant, a Supreme Court ruling on June 20, Comcast is looking to carve itself out of the dispute by forcing the aggrieved plaintiffs to individually file arbitration claims.

Other cable companies could follow suit. For example, that class action lawsuit filed last week by Time Warner Cable customers over having to pay for service without CBS? Yes, TWC also has an arbitration rider inside its service agreement.

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The plaintiffs suing Comcast (and DirecTV) allege that cable and satellite TV companies are working in tandem with sports leagues to ensure high prices. League owners are said to collusively make territorial arrangements, ensuring that in-market games are subject to blackouts via the Internet and out-of-market games are only sold through league-sponsored packages.

While this might seem like an established practice that customers can do nothing about except choose to not subscribe, recent court decisions have paved the way for an attempt to challenge the status quo. One such ruling was American Needle vs. NFL, where the U.S. Supreme Court determined that a sports league can be seen as separate teams and not a single entity when it comes to holding certain licensing activities to antitrust scrutiny.

The cable and satellite TV customers are suing to force open distribution agreements and inhibit various restrictions, but on Monday, they potentially hit a new roadblock when Comcast directed the court's attention to American Express.

In that case, a suing restaurant alleged that “American Express used its monopoly power in the market for charge cards to force merchants to accept credit cards at rates approximately 30% higher than the fees for competing credit cards.”

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American Express sought to enforce the arbitration clause in its merchant agreements.

Writing for a 5-3 majority, Justice Antonin Scalia wrote, “Courts must 'rigorously enforce' arbitration agreements according to their terms. … That holds true for claims that allege a violation of a federal statute, unless the FAA’s mandate has been 'overridden by a contrary congressional command.'"

Now, in its motion, Comcast is pointing to its own subscriber agreement, which, besides providing a class action waiver, states that if "you [subscriber] have a Dispute with Comcast that cannot be resolved ... you or Comcast may elect to arbitrate that Dispute in accordance with the terms of this Arbitration Provision rather than litigate the Dispute in court."

Comcast says that customers who sign up for service agree to this, and that the Federal Arbitration Act requires enforcement. Additionally, the cable TV company notes, "prior to the Supreme Court’s decision in American Express Co. v. Italian Colors Restaurant, the enforceability of the Subscribers’ arbitration agreements was in doubt because each contains a class action waiver. Italian Colors erased that doubt. And yet the Subscribers continue to pursue class relief on claims directly related to the television services (including out-of-market television packages) they purchased from Comcast or DIRECTV, or to Internet services they purchased from Comcast."

If the judge accepts this argument, it will be a big blow to the plaintiffs' attempts. Class action lawyers are usually only interested in bringing group claims with the potential for a lot of monetary damages and broad relief. And unlike the Time Warner Cable subscriber agreement, Comcast's arbitration provision appears to make no exception for claims for injunctive relief.

We've reached out to the lead attorney for the plaintiffs and will update if he comments.

E-mail: Eriq.Gardner@THR.com
Twitter: @eriqgardner