Court revives voluntary payment doctrine.

Byline: David Ziemer

The voluntary payment doctrine bars cable customers from recovering monetary damages for past payments of allegedly unlawful fees paid without objection or protest, the Wisconsin Supreme Court held on July 16.

The doctrine provides that a person cannot recover money that he has voluntarily paid with full knowledge of all of the facts, absent fraud, duress, or extortion in some form, and that no action will lie to recover the voluntary payment.

However, the court did permit the customers to sue for declaratory relief prohibiting the company from charging unlawful liquidated damages in the future.

High Late Fees

Time Warner Cable of Southeastern Wisconsin, Ltd., provides cable television service in Southeastern Wisconsin, and has a government licensed monopoly on those services. When a customer fails to timely pay his monthly bill, Time Warner imposes a $5 late payment fee.

Several customers who have had the late fee imposed on them in the past brought suit against Time Warner, on behalf of themselves and all similarly situated customers. The suit alleged that the late payment fee constituted excessive and unlawful liquidated damages, and sought monetary damages for that portion of the fee which is not reasonably related to Time Warner's actual costs incurred as a result of late payments.

The suit further sought declaratory relief preventing Time Warner form imposing such fees in the future.

More specifically, the suit alleged that Time Warner is a monopoly, its cable contract is an adhesion contract, and the actual cost of a late payment is between 38 cents and 48 cents. The suit further alleged that any late fee is a double recovery because Time Warner has already incorporated non-payment collection costs into its rates, which are approved by the Federal Communications Commission.

Finally, the suit alleged that the payments were made, "under duress and the real and imminent threat that Time Warner, a monopolist for cable television programming ..., would disconnect the cable television services of a late paying customer."

Time Warner moved to dismiss, arguing the voluntary payment doctrine precluded the claim for money damages, and that the claim for declaratory relief was not ripe for resolution. Milwaukee County Circuit Court Judge Lee E. Wells granted both motions, and the plaintiffs appealed.

The court of appeals affirmed both conclusions in a published decision, Putnam v. Time Warner Cable of SE Wis., 2001 WI App 196, 247 Wis.2d 41, 633 N.W.2d 254.

The Supreme Court granted the plaintiffs' petition for review, and affirmed dismissal of the monetary damages claim, but reversed the dismissal of the claim for declaratory relief, in a decision by Justice David T. Prosser.

Justice William A. Bablitch wrote...