UPDATE 1-NY judge rules Charter Communications must face lawsuit over slow internet

By Jonathan Stempel

NEW YORK, Feb 16 (Reuters) - Charter Communications Inc (CHTR.O) must face a lawsuit by New York's attorney general accusing the cable company of providing customers slower-than-advertised internet speeds, a New York state judge ruled.

Justice O. Peter Sherwood of the state Supreme Court in Manhattan rejected Charter's claim that Attorney General Eric Schneiderman failed to plausibly allege the company had short-changed and misled customers.

He also rejected Charter's claim that federal law pre-empted the lawsuit. The Feb. 13 decision was made public on Friday.

Schneiderman accused Charter's Spectrum unit, previously known as Time Warner Cable, of having systematically defrauded customers since 2012, including by creating an impression they would consistently get fast internet speeds.

The attorney general said at least 640,000 subscribers signed up for high-speed plans but got slower speeds, and many subscribers could not access promised content such as Facebook (FB.O) , Netflix (NFLX.O) , Google's (GOOGL.O) YouTube and gaming platforms.

He also accused Time Warner Cable of leasing older-generation modems to 900,000 subscribers, knowing they could not generate faster internet speeds.

In a statement, Spectrum spokesman John Bonomo said the company "delivers its advertised internet speeds," and will continue to vigorously contest Schneiderman's claims about practices at Time Warner Cable, which Charter bought in 2016.

Sherwood rejected Charter's claims that its advertising was not misleading because the company had promised to provide speeds only "up to" particular levels, and reasonable consumers would understand that could mean slower speeds were possible.

The judge said the state's highest court, the Court of Appeals, had rejected this argument in another case where, as Schneiderman alleged, the advertised speeds were "functionally unattainable as a result of the defendants' knowing conduct."

Sherwood said while there may have been "literal truth" to Charter's advertising claims, this was not a defense "where, as here, the claims create a false 'net impression.'"

Schneiderman called the decision a "major victory" for consumers. He said the lawsuit, which seeks restitution and civil fines, will proceed toward a possible trial.

"The allegations in our lawsuit confirm what millions of New Yorkers have long suspected - Charter-Spectrum has been ripping you off," the attorney general said in a statement.

The case is New York v Charter Communications Inc et al, New York State Supreme Court, New York County, No. 450318/2017.