Windstream Lawsuit Says Charter Engaged In ‘Scare-Tactic Campaign’

Windstream Holdings is accusing telecommunications rival Charter Communications of launching an all-out “scare-tactic campaign” and using "bait and switch" efforts to attract Windstream’s customers to Charter’s Spectrum brand, according to a federal lawsuit filed Friday.

Windstream filed its lawsuit against Charter, the third-largest cable provider in the country, with the U.S. Bankruptcy Court in the Southern District of New York.

“Charter through its brand Spectrum, commenced a scare-tactic campaign to mislead, deceive, and confuse consumers regarding the reason, status, and consequences of Windstream’s Chapter 11 cases,” the complaint states. “Charter disseminated false advertisements, directly targeting Windstream’s strongest customer bases in Alabama, Georgia, Kentucky, Ohio, Nebraska, and North Carolina. With a clear intent to deceive, Charter’s advertisements were sent to Windstream’s customers in a manner designed to make customers believe that the communication was from Windstream.”

Little Rock, Ark.-based Windstream said in its complaint that a recent direct mailing from Charter/Spectrum told consumers that they could be at "risk' of losing their TV and internet services in the wake of Windstream's Chapter 11 bankruptcy filing in February. Charter also allegedly used Windstream's trademark and "same distinct color pattern" from Windstream's own current advertising campaign, the company said, calling it a "bait and switch" tactic to encourage Windstream customers to open the advertisement.

"Windstream did not arrive in Chapter 11 due to operational failures, and does not expect or plan to liquidate," the lawsuit reads. "Despite these facts, one of Windstream's direct competitors, Charter, through its brand Spectrum, commenced a scare-tactic campaign to mislead, deceive, and confuse customers regarding the reason, status, and consequences of Windstream's Chapter 11 cases."

[Related: Shrinking Windstream Sells Off EarthLink's Consumer Internet Assets]

Stamford, Conn.-based Charter Communications did not return CRN's request for comment before publication time. A Windstream spokesperson said that the company did not have any additional comment outside of the filings.

Windstream in a cease and desist letter sent to Spectrum in March said that Spectrum's advertising campaign contained "incorrect" statements about its pricing and contracts to consumers in states including Alabama, North Carolina, and Nebraska.

"Customers are calling in or coming to our local stores unhappy, upset, and concerned about these scare tactics," said Carol Keith, deputy general counsel for Windstream, in the letter. "Also, some of these customers are also Windstream employees, who, understandably, reacted to this assault with distress and alarm."

The letter went on to say that customers who called Spectrum were told that it has a contract with Windstream to buy out its customers, which Windstream called "an outright lie."

"This misconduct is unacceptable and will not be tolerated. This goes beyond a mere marketing decision made in bad taste and is clearly an illegal targeting of Windstream services and/or business," the letter said.

Windstream said in the complaint that it is looking for both “injunctive relief and monetary damages” as a remedy to “Charter’s false and misleading statements.”

Windstream in February filed for Chapter 11 bankruptcy protection to "voluntary reorganize" after the communications company lost its court battle with U.S. hedge fund Aurelius Capital Management, a Windstream bond holder. The filing came after a federal court in New York that month ruled Windstream defaulted on its bonds in 2015 when it spun off some of its telecom assets into a company called Uniti Group.

Charter stock was up 1.65 percent to $351.44 on Friday afternoon.