Cable fee dispute spawns lawsuits

  • Article by: GRAISON HENSLEY CHAPMAN , Special to the Star Tribune
  • Updated: December 7, 2013 - 2:00 AM

Lakeville and Charter are feuding over $470,000.

The city of Lakeville will sue Charter Communications, the City Council decided Monday night, in an attempt to force the cable provider to pay at least $470,000 in back fees the city says it has failed to pay the past 14 years.

At issue are educational and governmental access fees, amounting to pennies on each bill, that the company’s franchise agreement says the firm must collect from customers and pay to the city. Last year, city staff wrote Charter asking for the money after reviewing documents to prepare for a new cable agreement with the company.

Charter, which filed its own federal suit Nov. 13 to block the payment, said the city released the company from its obligation to pay the fees at a City Council work session in 1999, and until last year has never requested any payment or even budgeted for the fees.

“In fact,” Charter’s lawsuit states, “the resolution shows that the budget the city adopted had included [educational and governmental] access fees, but it was subsequently adjusted to reflect that the city would not collect such fees.”

“It made perfect sense at the time for the city to waive the implementation of that provision,” said Charter spokeswoman Kim Haas, “since doing so would minimize the impact on their customers.”

City Administrator Steve Mielke admits that city employees failed to make sure Charter collected the fee, but said it happened by accident, not by an official decision. “There was a changeover in staff,” he said. “We never scoured through the franchise agreement.”

Besides, Mielke said, the City Council never voted to defer payment, but merely discussed it in a work session.

Regardless of the city’s oversight, said John Baker, Lakeville’s defense attorney in the suit, the issue over payment begins and ends with the formal franchise agreement. “[Charter] made a binding promise,” he said, “they didn’t do it, and the city is within its rights to require them to pay.”

“Whatever errors were made beyond that,” he said, “doesn’t cause the language of the contract to change. The text remained unchanged throughout all of this.”

Baker expects pretrial scheduling to start by early next year.

In exchange for the right to provide services in the area, cable companies typically pay a share of overall revenues to a city and collect educational and governmental access fees. The individual fees don’t amount to much, but if Charter is forced to pay back the six years of fees allowed by state law — plus whatever the judge allows for interest and damages — it will add up. And spokeswoman Haas said Charter is required by the agreement to pass that cost on to customers.

Baker, the defense attorney, says Charter could pay the fees out of its own pocket. “I haven’t yet seen anything that says Charter is required to pass the requirement onto its customers,” he said.

Charter and the city have been unable to resolve the dispute with negotiations out of court. Today, they still seem only to agree on two things: When the current cable agreement expires in June, both would like to renew it. And neither Charter nor Lakeville want customers to foot the bill for the back fees.

Mielke has more than professional interest in the outcome. He is a Charter customer himself. “And I hope to continue to be,” he said.

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