Plaintiff Cafferty Clobes Meriwether & Sprengel LLP, a plaintiffs firm that typically represents investors, employees, consumers and companies in complex civil litigation, filed its lawsuit in the U.S. District Court for the Northern District of Illinois Feb. 17.
In its 16-page complaint, Cafferty Clobes alleges defendant XO Communications Services Inc. -- formerly known as Nextlink Communications, Concentric Network Corporation and Allegiance Telecom Inc. -- charged it and similarly situated customers unlawful early termination fees in violation of the Illinois Automatic Contract Renewal Act, or ACRA, and the state Consumer Fraud and Deceptive Business Practices Act, or ICFA.
XO, according to its website, owns and operates one of the largest Ethernet and IP networks in the United States.
“XO failed to disclose the renewal terms clearly and conspicuously in either the contracts or its monthly invoices, failed to notify its customers in writing of the automatic renewal, and charged unlawful and excessive termination fees designed to act as a penalty,” the law firm alleges.
In June 2005, Cafferty Clobes -- at the time known as Miller Faucher & Cafferty LLP -- contracted with XO for local and long distance telephone service.
The contract was signed, on behalf of the firm, by then-office manager, Anne Jewell. Jewell left the firm in 2006.
Under the contract, the start of service date was July 7, 2005 for a three-year term.
The contract included a provision stating that XO would inform its customer, in writing, prior to the expiration of the initial term or applicable renewal terms, that if no action is taken by the customer prior to the expiration of the term, the agreement will automatically renew.
Accordingly, the contract renewed pursuant to its terms on July 7, 2008; July 7, 2011; and July 7, 2014.
But at no point did XO provide any notice, written or otherwise, to the firm that the contract had actually renewed on these dates, Cafferty Clobes alleges in its complaint.
“Nor did XO provide adequate notice, in accordance with the Contract terms, that the Contract would renew prior to these dates,” the lawsuit states.
The firm also alleges that nowhere do its monthly invoices identify the date upon which the customer’s current service term will expire -- only “boilerplate” language.
Cafferty Clobes contends the lack of specifics leave the burden on the customer to both identify the date and determine whether cancellation is required, if it elects to do so.
The law firm moved its offices in downtown Chicago last year. XO was unable to provide telephone services at the firm’s new address, prompting the firm to terminate its contract and making a “termination charge” payment of $1,000 to the company.
Shortly thereafter -- and notwithstanding Cafferty Clobes’ payment of the termination charge -- XO allegedly demanded the firm pay an additional $9,000 in liquidated damages due to its early termination of the contract.
“To date, Plaintiff has refused to pay this unlawful and excessive penalty,” the firm’s lawsuit states. “As a result, Plaintiff continues to be harassed by debt collectors hired by XO.”
Cafferty Clobes is seeking to represent a nationwide class of all current and former XO customers who entered into contracts with XO containing an automatic renewal clause and were charged early termination fees.
The Chicago office of Lite DePalma Greenberg LLC is representing the plaintiff.
From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.