Ruling allows class action against Sprint to continue

Rachel Weinhaus Jul. 12, 2007, 7:00am

Circuit Judge Nicholas Byron

A decision granting a 48-state class action lawsuit against Sprint has been upheld.

On June 27, the Fifth District Appellate Court upheld the decision by Madison County Circuit Judge Nicolas Byron, granted February 18, 2005, certifying the punitive class action against Sprint.

On appeal, Justice Bruce D. Stewart, writing the opinion, concluded that Byron granted class certification because of the application of Kansas law based upon the choice of law provision contained in Sprint's form contract.

Sprint argued that if the class certification was predicated upon the Kansas Consumer Protection Act then the order must be reversed because 1) the Act cannot be applied extraterritorially and 2) the Act does not apply to all class members because the choice of law provision does not govern non-contractual claims such as statutory fraud. The court disagreed stating that Sprint availed itself to Kansas law by voluntarily including a broadly worded choice of law provision in their adhesion contract, which covers the early termination fee.

"The only issue in this case is the validity of the early termination fee," Justice Stewart writes, "and by the parties' own choice, that issue is governed by Kansas law. The fact that Kansas law might not otherwise apply is irrelevant, because the parties chose to apply Kansas law."

The court found no reason not to apply the Kansas law since both Kansas and Missouri have a substantial relationship to the parties of the suit -- Sprint's component parts are based both in Kansas and Missouri -- and there is no satisfactory public policy argument against another state's consumer protection laws because Illinois does not have a greater interest in this case than Kansas or Missouri.

The court also disagreed with Sprint's argument that the Kansas law does not extend extraterritorially because Kansas law defines a "consumer transaction" to one within the state.

Sprint then argued that the plaintiff, Jessica Hall, filed "non-contractual" claims and therefore, the choice-of-law provision should not apply to them. However, the court concluded that since Hall's claims stemmed from the idea that the early termination fee was an unlawful penalty, the claims were fundamentally a creature of contract law.

Next Sprint argued that applying the Kansas Consumer Protection Act to non-Kansas class members violated their due process rights under Phillips Petroleum Co. v. Shutts, in which the U.S. Supreme Court stated that regarding choice-of-law provisions Kansas must have a significant impact on each class member in order to create a legitimate state interest so that the laws are applied fairly. Here the court noted that considering expectations of the parties is an important factor and since Sprint included an express choice-of-law containing Kansas law, then they should anticipate that Kansas law would govern their consumer fraud claim.

Finally, Sprint argued that the court abused its discretion when granted class certification. Again, the court disagreed finding that all of the four prerequisites for class certification, including numerosity, commonality, adequacy of representation, and appropriateness were satisfied.

Earlier this month Judge Byron threw out a protective order that guarded the wireless company's trade secrets-including revenue data, pricing models, internal policies and unique computer systems-after CTIA, the Wireless Association, petitioned the FCC to block the suit, arguing that the fee fell within the definition of rates, which states may not regulate.

Initially, Hall and Sprint agreed to keep some documents confidential. They stipulated a protective order, and Byron signed it. Hall then withdrew her consent to the protective order, telling Byron she did not know that CTIA would petition the FCC when she agreed to it.

The plaintiff is represented by Paul M. Weiss of Freed & Weiss.

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