Kaplan v. Cablevision of PA, Inc.
29 U.C.C. Rep. Serv. 2d (West) 425, 448 Pa. Super. 306, 671 A.2d 716 (1996)
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Rule of Law:
A cable television provider's failure to automatically issue credits for service interruptions is not an unfair trade practice, breach of good faith, or breach of an implied warranty when the subscription agreement does not expressly promise continuous service or automatic rebates. The provision of cable television programming is a service, not a 'transaction in goods,' and is therefore not subject to the implied warranty of merchantability under the Uniform Commercial Code (UCC).
Facts:
- Kenneth Kaplan subscribed to cable television services provided by Cablevision of PA, Inc. and its successor, Suburban Cable TV Co., Inc. ('Cable Companies').
- Kaplan and other subscribers paid in advance for their cable service under the terms of a Subscription Agreement.
- The Subscription Agreement did not contain an express promise of continuous, uninterrupted service.
- The agreement also did not specify that the Cable Companies would provide automatic credits or refunds for service interruptions.
- The Subscription Agreement included a 'force majeure' clause, which excused the Cable Companies from liability for service interruptions caused by specific events beyond their control, such as storms or strikes.
- Kaplan and other subscribers experienced periods of cable service interruption.
- The Cable Companies' unwritten policy was to provide pro-rata credits for service outages, but only if a customer specifically requested one.
Procedural Posture:
- Kenneth Kaplan filed a class action complaint against Cablevision of PA, Inc. and Suburban Cable TV Co., Inc. in a Pennsylvania trial court.
- The Cable Companies filed preliminary objections to the complaint.
- Kaplan filed an amended complaint alleging violations of the UTPCPL, breach of the duty of good faith and fair dealing, and breach of the implied warranty of merchantability.
- The Cable Companies filed preliminary objections in the nature of a demurrer to the amended complaint, arguing it failed to state a claim upon which relief could be granted.
- The trial court granted the Cable Companies' preliminary objections and dismissed Kaplan's amended complaint with prejudice.
- Kaplan (appellant) appealed the trial court's dismissal to the Superior Court of Pennsylvania.
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Issue:
Does a cable company's failure to automatically issue credits for service interruptions constitute an unfair trade practice, a breach of the duty of good faith, or a breach of the implied warranty of merchantability, when the subscription agreement does not expressly promise continuous service or automatic rebates?
Opinions:
Majority - Hudock, J.
No. A cable company's failure to automatically issue credits for service interruptions does not violate the UTPCPL, the duty of good faith, or the implied warranty of merchantability under these circumstances. The court reasoned that since the Subscription Agreement contained no express promise of continuous service or automatic credits, it could not imply such a term using the doctrine of 'necessary implication,' as it was not clear the parties intended to be bound by it. Regarding the duty of good faith and fair dealing, the court held that since there was no underlying contractual duty to provide automatic rebates, the failure to do so could not constitute bad faith; in fact, providing credits upon request evidences good faith. Most significantly, the court determined that the provision of cable television is predominantly a service, not a 'transaction in goods,' and therefore the UCC's implied warranty of merchantability does not apply. The court analogized it to telephone service rather than the sale of measurable commodities like gas, electricity, or water.
Dissenting - Hester, J.
Yes. The complaint stated sufficient facts for an unfair trade practice claim. The dissent argued that by expressly disclaiming liability for interruptions beyond its control in the 'force majeure' clause, the cable company, by 'necessary implication,' accepted liability for interruptions that were within its control. This creates an implied contractual duty to provide damages (i.e., refunds) for such outages. The company's failure to comply with this implied term, coupled with its failure to inform subscribers of their right to a credit upon request, constitutes an unfair and deceptive trade practice under the UTPCPL.
Analysis:
This decision solidifies the distinction between service contracts and transactions in goods, significantly limiting the application of the UCC's implied warranties to modern service-based industries like telecommunications. By refusing to imply a duty of continuous service or automatic refunds, the court reinforced the principle that the express terms of a contract govern the parties' obligations, particularly in consumer service agreements. The ruling places the onus on subscribers to negotiate for or on legislatures to mandate such protections, as courts will not create them through interpretation where the contract is silent. This precedent makes it more difficult for consumers to bring successful claims against service providers for service interruptions unless a specific promise has been breached.
