Metropolitan News-Enterprise


Friday, September 13, 2002


Page 3


Court of Appeal Reinstates Class Action Over Verizon Telephone Charges


By a MetNews Staff Writer


A putative class action accusing Verizon California of charging customers for obsolete or nonexistent telephones without their knowledge was reinstated yesterday by the Court of Appeal for this district.

Los Angeles Superior Court Judge Wendell Mortimer Jr. erred in ruling that the dispute was within the exclusive jurisdiction of the Public Utilities Commission, Justice Walter Croskey wrote for Div. Three.

The plaintiffs, represented by Dan Stormer of Pasadena and Marc Coleman of Long Beach, claim that Verizon and its predecessor, GTE, continued to rent telephones after deregulation in 1984.

Hiding the charges as “equipment rental” on bills, the company has collected hundreds of dollars each from customers for the use of older phones, mostly rotaries, that cost it less than $20 apiece and often are no longer even in use, the plaintiffs alleged. The total damages suffered by the class exceeds $10 million, the complaint asserts.

Croskey concluded yesterday that the trial court has jurisdiction under Public Utilities Code Sec. 2106, which permits an action for damages against a utility “which does, causes to be done, or permits any act, matter, or thing prohibited or declared unlawful, or which omits to do any act, matter, or thing required to be done, either by the Constitution, any law of this State, or any order or decision of the commission.” 

The justice rejected Verizon’s reliance on Sec. 1759, which says a trial court may not “review, reverse, correct, or annul any order or decision of the commission or to suspend or delay the execution or operation thereof, or to enjoin, restrain, or interfere with the commission in the performance of its official duties.”

Croskey rejected the argument that the suit was a challenge to the commission’s authority to set rates and to allow phone companies to rent phones to their customers. 

“Rather, plaintiffs are challenging the +manner+ in which defendants billed them for rental of telephones, specifically, the alleged lack of information given to plaintiffs about the rental charge made each month by defendants,” the justice wrote. “The gist of this suit is the alleged deception, intentional or negligent, resulting in plaintiffs unknowingly paying rent month after month, year after year for telephones they do not use, or for telephones whose value is less than the cumulative rent plaintiffs paid to defendants for them.  The gist of the suit is that if plaintiffs had been adequately informed about the nature of the equipment rental charge that they repeatedly paid, they would have chosen to not pay it.”

Nor, Croskey went on to say, is the suit barred by the primary jurisdiction doctrine.

That doctrine, the justice explained, provides that when a court and an administrative agency have concurrent jurisdiction over a dispute, the court should defer when necessary to promote uniformity of regulation and out of respect for the agency’s specialized expertise.

Deference under the doctrine was an abuse of discretion, Croskey said, because the outcome will not affect any matter requiring uniformity, such as rates, nor does the PUC have any particular expertise that would enable it to decide the crux of the issue—whether the billing practices are deceptive.

Verizon was represented on appeal by, Henry Weissmann, Richard Drooyan and A. Tali Zer-Ilan of Munger, Tolles & Olson.

The case is Cundiff v. Bell Atlantic Corporation, B151296.


Copyright 2002, Metropolitan News Company