Metropolitan News-Enterprise


Thursday, October 5, 2006


Page 1


C.A. Declines to Reinstate Suit Against Cellphone Providers




The First District Court of Appeal yesterday declined to revive a suit against the state’s cellphone providers, in which the plaintiffs sought to amend the complaint in order to add a qualifying plaintiff under Proposition 64.

The Foundation for Taxpayer and Consumer Rights had adequate opportunity to amend its complaint before judgment was entered, Presiding Justice Barbara J.R. Jones concluded in an unpublished opinion for Div. Five.

The foundation sued three of the state’s seven major cellphone companies three years ago, charging that they violated the Unfair Competition Law by “locking” the handsets, so that a customer who shifts from one provider to another must buy a new phone. One of the defendants, AT&T Wireless, successfully moved to coordinate the suit with other pending actions against all seven providers.

The plaintiffs in the earlier suits claimed, among other things, that the fees charged customers who terminated their contracts early were illegal penalties and violated the UCL by unfairly tethering consumers to longterm contracts and preventing them from changing providers.

The coordinated cases were still pending in November 2004, when voters approved Proposition 64, which amended the UCL to eliminate representative actions by private plaintiffs who did not themselves suffer injury as a result of the allegedly unfair, illegal, or fraudulent practices pled in their complaints. The initiative preserved the authority of the attorney general and local prosecutors to sue on behalf of the general public.

A defendant in the coordinated actions, T-Mobile, then moved for judgment on the pleadings in three cases, claiming that the plaintiffs lacked standing under Proposition 64.

The Alameda Superior Court judge overseeing the coordinated cases then issued an order allowing plaintiffs in all of the cases to file stipulations or motions to amend their complaints—subject to a March 4, 2005 deadline, later extended to March 25—to allege actual injury, thus assuring standing under Proposition 64. The order explicitly authorized the plaintiffs to allege “new legal theories of recovery that are based on the same the,” as well as to add new plaintiffs.

In April of last year, T-Mobile demurred to the foundation’s complaint, saying the foundation lacked standing. In doing so, the company noted that the complaint in one of the other cases—which is still pending in the trial court—had been amended to add a challenge to the handset locking practice on behalf of new plaintiffs who were allegedly injured consumers.

 The judge sustained the demurrer without leave to amend, saying the foundation lacked standing and did not comply with the court’s order setting a cut-off date for the amendment of complaints in order to meet the Proposition 64 standing requirements.

In its appeal, the foundation initially argued that Proposition 64 was not retroactive. After the California Supreme Court ruled otherwise, but held in a companion case that trial courts have discretion to permit plaintiffs to amend complaints to add new allegations or new plaintiffs in order to establish standing, the foundation asked the First District panel to remand the case to the trial court so that it could seek leave to amend.

T-Mobile objected to the remand, and the Court of Appeal, after hearing oral argument, determined that no remand was required.

Jones said in yesterday’s opinion that the foundation “manifestly knew that it had been given the opportunity to file an amended complaint that would satisfy the Proposition 64 requirements by substituting in new parties who could allege they had suffered injury in fact from this practice” but failed to make a timely showing that “there was a reasonable possibility it could cure the Proposition 64 standing defects in its complaint” or “that it was unable to make this requisite showing by the agreed-upon filing schedule.”

The case is Foundation for Taxpayer and Consumer Rights v. T-Mobile, U.S.A., Inc., A111618.


Copyright 2006, Metropolitan News Company