After Sprint's home run, Verizon is at bat in cell phone cancellation fee class action

On June 12, 2008, Sprint avoided liability when a California jury ruled in its favor in a trial involving the contentious issue of early termination fees (ETFs) in wireless service contracts.  Now, in an Alameda County Superior Court, attorney will present opening arguments as Verizon goes on trial in the second of four coordinated class actions against cell phone companies.  (Evan Hill, Cell Phone Fee Case Set for Trial (June 23, 2008) www.law.com.)

In light of the verdict in the Sprint class action, attorneys for the class will shift their trial strategy:

“At the heart of the class actions is California Civil Code §1671(d), which lays out how to collect liquidated damages when someone breaks a contract. For the early termination fees to be legal under the statute, the cell phone companies need to prove that the fee reasonably reflects the money they lost when the customers left.

[Jeffrey] Lawrence [of Coughlin Stoia Gellar Rudman & Robbins] said the burden was on Sprint to prove it had made a reasonable estimate in establishing the fees. In their closing trial brief, the plaintiffs argued that Sprint never presented any evidence that it based its fees on how much it would lose from customers breaching their contracts. They pointed to testimony by Sprint's vice president of marketing, who said the company set its early termination fees after seeing how competitors used theirs to keep more customers from leaving.

(Ibid.) However, all of this maneuvering may be moot, if the FCC takes action.  The week after the Sprint verdict was issued, FCC Chairman Kevin Martin stated that he was "skeptical" that class actions can solve customer concerns about ETFs.  Martin wants the FCC to make an "initial decision" in July or August about how to regulate ETFs.