On January 26, 2023, Judge Walcott-Henderson of the New Jersey Superior Court, Mercer County, granted final approval to a $11.5 million class action settlement in Grillo et al v. RCN Telecom Services, LLC, et al., Docket No. MER-L-1319-22, in a case alleging that an internet service provider charged customers an alleged undisclosed monthly Network Access Maintenance Fee (“NAM” fee). The class complaint alleged that various RCN companies’ advertising and sign-up practices for internet services constituted a deceptive “bait and switch” scheme, in that RCN promised customers a specific flat monthly subscription rate for internet service, but then charged them a previously-undisclosed, monthly “NAM Fee” in addition to the advertised rate. Plaintiffs’ complaint specifically alleges that the NAM Fee was not included in RCN’s advertised monthly subscription rates or in its customer contracts, and that the NAM Fee was not disclosed to RCN customers until after they signed up for and had subscribed to RCN’s internet service. Plaintiffs’ complaint further alleges that, upon disclosing the NAM Fee to its customers, RCN mischaracterized the Fee as a “tax,” but in reality the Fee was simply a deceptive means for RCN to charge more for its internet service than its advertised rates, thereby increasing its profit. RCN began imposing a $1.97 monthly NAM in January of 2018 and unilaterally increased the fee $1.20 per year every year.
Plaintiffs allege that this scheme violated the New Jersey Consumer Fraud Act, N.J.S.A. § 56:8-1, et seq.; the New Jersey Truth in Consumer Contract, Warranty and Notice Act, N.J.S.A. § 56:12-14, et seq.; and the New Jersey Uniform Declaratory Judgment Act, N.J.S.A. § 2A:16-51, et seq. RCN, headquartered in Princeton, New Jersey provides broadband internet services to approximately 835,000 customers in six metropolitan areas in the United States: New York, New York; Chicago, Illinois; Boston, Massachusetts; Washington, D.C.; Philadelphia, Pennsylvania; and Allentown, Pennsylvania. Under the now approved class action settlement, RCN customers who were charged a NAM fee during the class period will be eligible to obtain a refund of up to $159 which is the equivalent of 80% of the alleged overcharges. The court also approved an award of counsel fees and costs of $3.83 million to class counsel: DeNittis Osefchen Prince, P.C. of Marlton, New Jersey and Hattis & Lukacs of Washington State.
Speaking as to the final approval of the settlement, class co-counsel Stephen P. DeNittis stated:
“This is an outstanding class action settlement and a great victory for consumers. Some of these class members were subject to a mandatory arbitration clause which could have knocked their cases out of court entirely. Instead, they and the other class members are getting substantial refunds under a multi-million settlement that gives the class member the choice of either receiving a cash refund or a bill credit.”
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