Ninth Circuit Gives T-Mobile Two Wins
Loyal reader Fred Burnside at Davis Wright Tremaine has sent along news of two wins his firm received for T-Mobile from the Ninth Circuit. Both cases involve class action challenges to the defendant passing along charges to customers, specifically charges for the Universal Service Fund and the Regulatory Programs Fee.
In Lowden v. T-Mobile USA Inc., No. 09-35201, Slip op. (9th Cir. May 10, 2010), the court explained that the USF subsidizes telecommunications service for low-income and rural consumers. The FCC expressly permits companies to recover their mandatory contributions from consumers as line-item charges.
The RPF is charged to carriers to cover government mandates like wireless number pooling, local number portability, and enhanced 911.
In Lowden, plaintiffs argued that passing along these charges to consumers on the bill was a breach of contract and a violation of the State of Washington's Consumer Protection Act. The district court had held that plaintiffs lacked standing to bring these claims. The Ninth Circuit declined to address the standing issue, instead holding that plaintiffs had failed to state a claim under Rule 12(b)(6). It reasoned that the carrier's contracts "adequately disclosed that it would pass along regulatory fees such as the USF fee and the RPF to its customers. Moreover, until 2005 the FCC expressly excluded wireless providers from the requirement that 'charges contained on telephone bills must be accompanied by a brief, clear, non-misleading, plain language description of the service or services rendered.'" Slip op. at 4.
In Janda v. T-Mobile USA, Inc., No. 09-15770, Slip op. (9th Cir. May 10, 2010), two California residents brought the same claim, asserting violations of California's Unfair Competition Law, False Advertising Law, and Consumer Legal Remedies Act, as well as breach of contract. The Ninth Circuit was not buying plaintiffs' claim here, either.
The court held that the complaint failed to allege above a speculative level that any advertising was likely to deceive members of the public. Moreover, the service agreements and terms and conditions of sale were clear: regulatory charges could be recovered. The court considered each of the three prongs of the UCL, ultimately concluding that no UCL violation was adequately alleged. The court also noted that plaintiffs failed to give proper pre-suit notice under the CLRA, and held that plaintiffs had not alleged a representation "likely to deceive a reasonable consumer." Slip op. at 7.
The Ninth Circuit also dismissed the breach of contract for failing to meet the one-year statute of limitations contained in the agreement. The court explained that "[e]ven if a contract is one of adhesion, a provision shortening the applicable statute of limitations is enforceable so long as the limitations period is substantively reasonable." Slip op. at 8.
Congrats, Fred, on two opinions that use the clarity of contractual disclosures to dismiss putative consumer fraud class actions.
