A York appeals court recently rejected a preemption argument in a lawsuit initiated by the New York Attorney General alleging that Time Warner Cable, subsequently purchased by Charter, and Spectrum management defrauded New York consumers by misrepresenting facts about access to online services.
According to the NY OAG, the defendants made various unqualified guarantees about Internet speeds and that consumers were charged more for faster service. The OAG alleges the failure to provide the promised level of service, and that it leased outdated and inadequate modems to subscribers.
The appeals court considered defendants argument that Federal Communication Commission regulations preempted the NY OAG’s action, in part, because the FCC’s Transparency Rule obligates providers to disclose “expected and actual access speed and latency.” According to the appeals court, the lower court got it right.
In ruling that federal broadband disclosure speed standards do not preempt state laws governing false advertising, the appeals court held that “[t]he court correctly rejected defendants’ argument that the claims based on allegations of false promises about broadband speeds involve an irreconcilable conflict between federal and state law that requires a finding of preemption.”
“The complaint alleges that defendants’ use of their official disclosures in consumer advertisements is misleading, because other statements in the advertisements give consumers the false impression that the disclosed speeds represent speeds that consumers can expect to experience on their devices, including wireless devices, consistently,” it stated. “The Transparency Rule does not preempt state laws that prevent fraud, deception and false advertising.”
The court also held that some of the service-related claims presented issues of fact.
Contact a New York Attorney General and Department of Consumer Affairs (DCA) defense lawyer if your company is the target of a state or local regulatory investigation or enforcement action.
Richard B. Newman is an advertising law attorney at Hinch Newman LLP.
Informational purposes only. Not legal advice. Prior results do not guarantee similar future result. Hinch Newman LLP | 40 Wall St., 35th Floor, New York, NY 10005 | (212) 756-8777.