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Thursday, March 09, 2017

Ind. Decisions - 7th Circuit denies class action status to law firm in self-renewing contract case

CAFFERTY, CLOBES, MERIWETHER & SPRENGEL, LLP, on behalf of itself and all others similarly situated, Plaintiff-Appellant, v. XO COMMUNICATIONS SERVICES, LLC, an interesting to read, 5-page opinion yesterday from Judge Posner on a case out of Illinois. A few quotes:

The plaintiff, a law firm, seeks both individual and class relief against XO Communications, a large provider of telecommunications services to business customers, such as the plaintiff, and wholesalers. The plaintiff’s contract with XO provided that the contract would be automatically renewed at the end of the customer’s current service term “for a similar term and at the same rates” set forth in the contract. A customer who didn’t want to renew was required to so notify XO at least 30 days prior to the expiration date in the contract; if it failed to do so, the contract would renew automatically. The contract also provided that XO would notify the customer of the automatic-renewal feature of the contract (which it did from time to time), thus reminding the customer that if it decided not to renew the contract it would have to so notify XO at least 30 days before expiration. The contract further stated that if the customer terminated the contract after the deadline it would have to pay XO a termination fee based on the revenue that XO would have received from the customer over the remaining months of the contract had it not been terminated prematurely and thus in violation of the contract. XO’s monthly invoices contain a prominent reminder of the automaticrenewal feature of the contract. * * *

It’s not as if the plaintiff were some hapless consumer bamboozled by a huge company. According to the plaintiff’s website (www.caffertyclobes.com/home, visited March 3, 2017), “Cafferty Clobes Meriwether & Sprengel LLP, which has offices in Chicago, Philadelphia, and Ann Arbor, combines the diverse talents of attorneys with a wide range of litigation experience. Since its founding in 1992, the firm has focused on representing plaintiffs, such as investors, employees, consumers and companies, in complex civil litigation throughout the country. The firm and its attorneys have helped recover billions of dollars for the benefit of represented plaintiffs and classes, and in some cases, have secured the reform of corporate practices alleged to be unlawful or abusive. The skill and experience of our attorneys has been recognized on repeated occasions by courts that have appointed these attorneys to leadership positions in complex multidistrict or consolidated litigation.” Had this substantial enterprise kept track of the date of its contract with XO (more precisely the date of its latest renewal of the contract), it would not have incurred the modest termination fee that it seeks to recover by this suit.

Of course its real aim, doubtless, was, in the words of its website, to “recover billions of dollars for the benefit of represented plaintiffs and classes.” It can’t have brought this suit just to recover a $9,000 termination fee (less, actually, because it hadn’t paid the entire fee); it must have hoped that a class would be certified, although a different law firm—Lite DePalma Greenberg, LLC—would be representing the class in the litigation.

Posted by Marcia Oddi on March 9, 2017 08:52 AM
Posted to Ind. (7th Cir.) Decisions