Wireless providers say class actions threaten companies' rate structure

During a smoke break outside of 1 Metropolitan Centre in downtown St. Louis, Jessica Hall of Granite City fumed about having to pay a $150 contract cancellation fee to her wireless phone provider. Little did she know at the time that her private conversation was being overheard by plaintiff attorney Matt Armstrong.

“Me and my boyfriend were talking about it and he was by us and he overheard,” said Hall in a recent deposition. She is now the lead plaintiff in a class action lawsuit that was filed against Sprint in January 2004 in Madison County.

Attorney Jeffrey Millar of the Lakin Law Firm of Wood River wrote the complaint. Attorney Phillip Bock of the Chicago firm of Diab and Bock, represented Hall in the deposition. Armstrong, who has worked for Carr Korein Tillery of St. Louis, was the referring attorney.

The case which was certified last month by Circuit Judge Nicholas Byron--and others like it in California and South Carolina--could threaten rate structures of all wireless phone companies, according to an industry group.

CTIA the Wireless Association, which formerly stood for Cellular Telecommunications and Internet Association, has asked the Federal Communications Commission to block class action lawsuits in Madison County and other venues over the fees they charge when customers cancel contracts.

In a March 15 petition, CTIA warned the FCC that pending class action suits threaten a rate structure that has produced “the ubiquitous deployment, innovative services, affordable prices and soaring subscribership that has characterized the wireless industry.”

It asks the FCC to confirm that early termination fees fall within the definition of “rates charged” under the Communications Act, and says application of state law would constitute a prohibited rate regulation.

CTIA says that early termination fees allow lower initial and monthly payments.

“Without the availability of the early termination fee to mitigate losses from early service terminations, such plans would cease to exist in their present form,” the petition states.

Defense attorney John Gilbert of Belleville asked Hall if she complained to the state commerce commission or the attorney general.

“No, I didn’t know there was anything like that,” Hall responded in deposition.

When asked why she thought the fee was unfair, Hall responded, “I don’t feel people should have to pay money to cancel their phones.”

Gilbert asked if she thought that others who paid the fee had the same gripe.

"Yes," Hall said.

“Why do you think that?” Gilbert asked.

“I don’t know why,” she answered.

At a Feb. 18 hearing, Byron certified Hall as class representative. He based his ruling on Missouri law and told attorneys to prepare an order defining the class.

Hall’s attorneys moved March 18 for leave to amend the complaint, which Byron granted.

On March 23 her attorneys filed a complaint that relied on Kansas law.

Gilbert immediately moved Byron to reconsider his class certification order, writing that the order put Sprint’s entire rate and service structure in jeopardy. He said that Hall abandoned her reliance on Missouri law and argued solely on Kansas law.

“Sprint was sandbagged at the hearing,” Gilbert wrote.

Hall’s “moving target approach” caused the court to overlook crucial issues, Gilbert said.

Gilbert moved to stay the case pending FCC action.

On April 5, Byron denied Sprint’s motions to reconsider and stay.

Hall’s attorneys moved to set aside and stay a protective order that Byron had granted at Sprint‘s request to keep rate setting information confidential on April 15.

Byron set a hearing on Hall’s motion May 20.

Meanwhile, attorneys have failed to agree on a definition of the class that Byron orally certified on Feb. 18. As a result, Byron still has not signed a class certification order.

In its FCC petition, CTIA asked for expedited consideration because of the uncertainty that class action suits have created on every long term wireless contract in the country.

FCC spokeswoman Lauren Patrich said the commission might put the CTIA petition out for public comment.