Windstream Holdings Inc. (fka WINMQ)

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HUGE WINMQ NEWS-Judge Drain Finds CHTR Liable-Big Money At Trial For WINMQ-Probably Out-Of-Court Settlement-100s of Millions???


Rival Liable For Deceiving Public About Windstream's Ch. 11

Law360 (December 18, 2019, 9:30 PM EST) -- A New York bankruptcy judge on Wednesday found that a competitor of Windstream Holdings tried to poach the telecom company's customers with a deceptive mailer about Windstream's Chapter 11 case.

Judge Robert Drain issued a partial summary judgment finding telecom company Charter Communications was liable for violations of the federal Lanham Act and state laws for using false advertising to try to convince Windstream’s customers that the company’s Chapter 11 filing meant the customers were in danger of losing their services and should switch to Charter.

“Charter set out to intentionally deceive the public,” Judge Drain said.

Windstream, which filed for bankruptcy in February after losing a $310 million courtroom battle to a hedge fund creditor, told the court in April that Charter tricked customers into thinking Windstream would be shutting down its service with an advertising campaign that included sending 800,000 mailers urging customers to switch to Charter's Spectrum brand for telecommunication services.

Both sides filed motions for summary judgment of the case, with Windstream arguing to the court that the mailer — sent in an envelope of the same color that Windstream used in its mailings and saying Windstream’s Chapter 11 meant there was a risk the customer could lose services — was intended to confuse customers and convince them Windstream was going out of business when Charter was aware Windstream intended to restructure and was in a good position to do so.

“In context, you come away with the impression they’re going out of business,” Windstream counsel Terence Ross said.

The mailer had a noticeable effect, he said, saying a Windstream call center took about 3,700 calls from customers concerned the company was going under and that the company both lost customers and had to engage in an advertising campaign to counteract the false claims.

Charter argued the mailer was not deceptive, however, saying the use of a nontrademarked envelope color was not false advertising and that Windstream had talked about the risk of going into a Chapter 7 liquidation in its own financial filings and statements.

“Is it disputed that bankruptcy involves risks and uncertainties?” Charter counsel Michael Nepple said.

Charter also argued a significant number of respondents to a survey conducted by an expert it retained had said the mailer could be interpreted in more than one way and that large numbers of Windstream customers did not respond to the mailer at all, indicating they did not interpret it to mean Windstream was going out of business.

“If the advertisement was literally false the reaction would have been crazy,” Nepple said.

But Judge Drain said the cited Windstream risk warnings were mostly from “boilerplate” disclaimers in reports intended for investors and that a majority of the respondents in the survey had interpreted the mailer to mean Windstream was in danger of going out of business.

The judge additionally found Charter had breached an agreement with Windstream to provide services to some Windstream customers. The company claimed following the bankruptcy Charter terminated the services of hundreds of Windstream’s customers without the 30-day notice required under the contract.

But Charter said the accounts were unintentionally terminated by a computer program intended to shut down accounts with unpaid bills, and that the contract only requires Charter make its “best effort” to deliver services.

The judge agreed with Windstream that the “best effort” clause was intended to cover outages with external causes, like weather, and not ones caused by Charter, such as making a decision to automate its shutdown process.

Judge Drain’s finding was on liability only, leaving damages questions for trial.

Windstream is represented by Terence P. Ross, Michael R. Justus and Shaya Rochester of Katten Muchin Rosenman LLP.

Charter is represented by John Kingston, Michael Nepple and Brian Hockett of Thompson Coburn LLP.

The adversary action is Windstream Holdings Inc. et al. v. Charter Communications Inc. et al., case number 19-08246, in the U.S. Bankruptcy Court for the Southern District of New York.

--Editing by Amy Rowe.


Read more at: https://www.law360.com/articles/1229717?copied=1