Opposition Brief — Fox v. Fox

Supreme Court brief1999

Ask Donna

What actually matters in this document.

Text

N°. 98-947

In The ~—

Supreme Court of The United States

October Term 1998

AT&T WIRELESS SERVICES and

McCAW CELLULAR COMMUNICATIONS, INC..,

Petitioners,

CORYELL TENORE, CHARLES F. PETERSON

and KAREN M. COLE, on behalf of themselves

and all others similarly situated,

Respondents.

Petition For A Writ Of Certiorari

To The Washington Supreme Court

BRIEF OF RESPONDENT IN OPPOSITION

STEVE W. BERMAN*

Erin K. Flory

Sean R. Matt

Hagens Berman, P.S.

1301 Fifth Avenue

Suite 2900

Seattle, WA 98101

(206) 623-7292

Attorneys for Respondents

*Counsel of Record

APPELLATE ADVANTAGE

POST OFFICE BOX 7506@KANSAS CITY, MO 64116816-453-2424

QUESTIONS PRESENTED

¥ Whether 47 U.S.C. § 332(c)(3)(A), which

prohibits regulation by the States of “the entry of or the rates

charged” by cellular telephone service providers, preempts

state law claims for injunctive relief and damages based on

deceptive business practices, when Congress specifically

provided that § 332 “shall not prohibit a State from regulating

the other terms and conditions of commercial mobile

services.”

2. Whether, in light of the language of 47 U.S.C.

§ 414 which preserves all “remedies now existing at common

law,” 47 U.S.C. § 332(a)(3)(A) gives AT&T immunity to

deceive consumers and abrogate its contractual promises in

violation of state laws.

RULE 29.6 STATEMENT

Pursuant to Sup. Ct. Rule 29.6, respondents hereby

state that they are individuals and thus have no corporate

parents or subsidiaries.

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED ...........---0--ee eee: i

ATES ES EE PRE EERE ns cis dcccssvoevesvensere il

TABLE OF AUTHORITIES . 2.0... cc ccc ccc cscevens Vv

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED . 2. ee ccc eee nerses l

STATEMENT OF THE CASE ....... cece csccenes |

A. AT 8 Pere tO DISCIOOS ... 5 a eee cease |

B. Proceedings Below .........0.-cecceeeeeeees 3

REASON FOR DENYING THE PETITION .......... 6

I. THERE IS NO CONFLICT AMONG

THE HIGHEST COURTS OF THE

STATES OR BETWEEN A HIGH STATE

COURT AND A COURT OF APPEALS

THAT WARRANTS REVIEW .............. 8

A. There is No Conflict Among the State

High Courts that Deception Claims Are

Not Preemipted ........2 sce eeeeeee 9

B. AT&T’s Review of Intermediate Court

Decisions Do Not Present a Conflict of

Sufficient Magnitude to Warrant Review 11

ill

be If a Conflict Exists it is at Such a

Nascent Stage that Review is Premature . 15

II. THE WASHINGTON SUPREME COURT

OPINION IS HARMONIOUS WITH PRIOR

OPINIONS OF THIS COURT, AND

OTHERS, THAT AN AWARD OF

DAMAGES DOES NOT EQUAL

IMPERMISSIBLE RATE REGULATION ....17

A. The Washington Supreme Court

Decision Is Harmonious With

Supreme Court Precedent ............ 17

B. The Washington Supreme Court

Holding Is In Accord With Numerous

Other Holdings that Damages Are Not

fe Pp ey rey 23

. The Washington Supreme Court

Opinion Follows The Proper Standards

Governing Preemption ............:.:; 24

CATING AE bev aes tank aes VEN seo ae wes ee 28

TABLE OF AUTHORITIES

CASES

AT&T Co. v. Central Office Tel. Inc.,

5G Oe re oo a ie She 14, 19

American Airlines v. Wolens,

SE Ae OP ies bin 98 a eRe ers 26

American Inmate Phone Sys.., Inc. v. U.S.

Sprint Comms. Co., 787 F. Supp. 852

TSR SO) es Ciai ee eevea tanks = c0 ee

Arkansas Louisiana Gas Co. v. Hall,

BESTS CST CAPO) eke en tk seen ees 14

Ball v. GTE Mobilnet of California, Ltd.,

No. 98AS03811 (Cal. Super. Ct.

(Sacramento Cty.) Nov. 17,1998) ........... 12

Bennett v. Alltel Mobile Comm. Of Alabama, Inc.,

Civil Action No. 96-D-232-N, slip op.

(M.D. Ala. May 14, 1996) ........... 10, 21, 22

Carroll v. Cellco Partnership,

Docket Nos. AM-001316-96T3 and

AM-001303-96T3 (N.J. Super. Ct., App.

Ey. Dae 25. Pere a dos wie eas we eos 13

Cipollone vy. Liggett Group,

ETT RTE sos chalk Nene eee 25

In re Comcast Cellular Telecomms.,

— ——<—_

949 F. Supp. 1193 (E.D. Pa. 1996) ........... 12

DeCastro v. AWACS, Inc.,

935 F. Supp. 541 (D.N.J. 1996) .......... 10, 21

Freightliner Corp. v. Myrick,

Die RAs DOEE 5 seed kins a Caco ed Vn en 25

Hardy v. Claircom Communications Group, Inc.

(d/b/a AT&T Wireless Services),

937 P.2d 1128 (Wash. Ct. App. 1997) ......... 4

Jefferson v. City of Tarrant,

Fe ROR Bee PS RS eS rere or ar 17

Kellerman v. MCI Telecomms. Corp.,

493 N.E.2d 1045 (Ill.), cert. denied.,

S70 US. POs Ce 5 Da ak ca bae 9,10, 11, 21

In re Long Distance Telecomms. Litig.,

S31 FD Ce a vu bo eine nts cd's 10

Marcus v. AT&T Corp.,

938 F. Supp. 1158 (S.D.N.Y. 1996),

aff'd, 138 F.3d 46 (2nd Cir. 1998) ............ 8

Matter of Richman Bros. Records Inc. v. U.S. Sprint

Comms. Co., Release No. DA 95-2438,

10 F.C.C. Red 13639, 1995 FCC LEXIS 7985 ...5

Moulton v. Alltel Mobile Comm. of Alabama, Inc..,

CA No. 96-D-89-N, slip op.

CEES, a a, 1G TS 8 iia 10, 21

Nader v. Allegheny Airlines,

Be Eke 2 ERE a hbk oS coedtwen 5, 20, 21

New York State Conf. of Blue Cross & Blue

Shield Plans v. Travelers Ins. Co..,

iE EEo LE.) ie rey ~

Nova Cellular West, Inc. v. Air Touch

Cellular of San Diego,

Case No. 98-02-036 (CPUC Sept. 3, 1998) . 14, 15

Powers v. AirTouch Cellular,

No. N71816 (Cal. Super. Ct.

(San Diego County) Oct. 6,1997) ......-. 14, 22

Rice v Sioux City Memorial Park Cemetery, Inc.,

SATS FOLIOS). cxck etn ctaarsbeodsevere 16

Rogers v. Westel-Indianapolis Co..,

No. 49D03-9602-CP-0295

(Marion Super. Ct. (Ind.) July 1, 1996) ....... 13

San Diego Bldg. Trades Council y. Garmon,

MOTE BOR CIOION. Soca kek tac ccs csestrdivdd

Sanderson, Thompson, Ratledge & Zimny v.

AWACS. Inc., 958 F. Supp. 947 (D. Del. 1997) .9

Silkwood v. Kerr-McGee Corp.,

464 U.S. Z3B C1GBS) . ww wc ccc cee eeess 23, 24

Simons v. GTE Mobilnet, Inc.,

No. H-95-5169

(S.D. Tex. Apr. 11, 1996) ........---. 1s oe

Tenore v. AT&T Wireless Servs.,

962 P.2d 104 (Wash. 1998) ........---0 eee 5

Wegoland, Ltd. v. NYNEX Corp.,

27 F.3d 17 (2nd Cir. 1994) ..........--e eee 4

Vil

Westside Cellular, Inc. v. GTE Mobilnet, Inc.,

1995 Ohio PUC LEXIS 240 (Mar. 23, 1995) ...15

STATUTES

BY EEA Oe. eR So FOR aS Rae 19

47 U.S.C. § 332 (c)(3)(A) (the Federal

ee et. ea ree re 39

CYBER 8 ey TS GOS tree weer re reid epee ix, 3, 26

Airline Deregulation Act, 49 U.S.C. § 41713 ......... 26

H.R. REP. No. 103-111, 103RD CONGRESS IST SESS. 211

reprinted in 1993 U.S.C.A.A.N 378 ...7........ 5

Vill

Cm at Ae li

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

In addition to those provisions identified by petitioner,

another statutory provision involved is 47 U.S.C. § 414. This

provision states, in pertinent part:

Nothing in this chapter . . . shall in any way

abridge or alter the remedies now existing at

common law or by statute, but the provisions

of this chapter are in addition to such

remedies.

STATEMENT OF THE CASE

A. AT&T’s Failure to Disclose

AT&T is the nation’s leading seller of cellular

telephone services. Respondents alleged that AT&T engaged

in a deceptive, fraudulent and/or misleading practice that

generates millions of dollars of “airtime” charges for airtime

that consumers never receive. Pet. App. 2a-5a.

AT&T offers consumers a range of billing plans for its

cellular phone services. These plans offer various fixed

charges per month for a specified period of time, e.g. 30, 60

and 90 minutes. Pet. App. 4a. AT&T’s advertisements

likewise often represent that subscribers will receive certain

guaranteed blocks of airtime for their monthly fee. For any

airtime beyond the fixed-charge time allotted under each plan,

the subscriber is charged at various rates “per minute,”

depending on the plan and whether the call is made during

peak or off-peak hours. Airtime charges for time beyond that

allocated in a customer’s pian are substantially higher than

airtime charges within a plan.

AT&T’s contracts and advertisements also purport to

describe how AT&T calculates such airtime. According to

many of AT&T’s customer service agreements, that it

requires every subscriber to sign, AT&T charges from the

first second of any call to the end of the call. This is

pale). DP ERIE eS

ipa ONS 2 ile nad a a a ti

ee A em TR RE ote ud 2 SS MeN aE

Sebi RR AE calcd oe ie TAS AE POR eit a PE OE “ tomes

ve ae ere

prominently described in the literature as “SEND TO END”

billing. Pet. App. 3a.

In reality this is not how AT&T bills. Rather, while

billing increments start when the send call button is pressed,

billing ends not when the end button is pushed, but at the next

full minute after the end button. So for example, a call lasting

one minute and six seconds as measured from Send to End is

billed as a full two minutes. Pet. App. 3a\ This practice is

called “rounding.”

AT&T’s advertising disclosures and _ service

agreements do not inform customers that AT&T secretly bills

them for additional time after “the time [they] press end.””

Similarly, no mention of rounding is made in the Customer

Service agreement. As a result, customers who purchase

plans allowing specified minutes of airtime per month

certainly do not expect, and are not told, that AT&T will short

them of their allotted time by virtue of the practice of

rounding. When a customer exceeds the fixed time on the

; AT&T claims that rounding is a long-standing industry

practice. It may be that certain carriers rounded, but generally

such rounding did not count toward the fixed time a consumer

received under a rate plan, beyond which higher charges would be

imposed.

. Although AT&T claims this is a standard practice, it cites

no support in the record for this proposition. Indeed, one

prominent television campaign, run by Nextel, features the fact

that Nextel does not round up, but charges for the actual time used.

Se ly

plan, he or she is then billed at an even higher rate for airtime.

Thus, AT&T’s practice deprives customers of the airtime they

have purchased under a given plan. In the end, AT&T

charges consumers tens of millions of dollars that neither its

advertising nor its contracts disclose. Pet. App. 4a.

B. Proceedings Below

In light of the above, respondents filed a class action

complaint seeking injunctive and monetary relief arising from

AT&T’s deceptive and unlawful conduct. Consistent with

332(c)(3)(A) 1994, the complaint attacked solely the “terms

and conditions of’ the services, and invoked, consistent with

47 U.S.C. § 414, the traditional state common law remedies

based on deceptive conduct and breach of promise. At no

time did respondents seek to change, diminish, or modify the

rates being charged by AT&T. Respondents did not seek any

relief that would disturb the uniformity of rates charged by

AT&T. Rather, respondents sought to enforce the terms of

AT&T’s promises, that they would charge consumers from

“Send to End” and would deliver the amount of airtime

promised in the consumers’ service plan.

AT&T moved to dismiss the complaint on the grounds

that a lawsuit alleging that AT&T engaged in deceptive acts

and practices in violation of state law, was preempted by (1)

47 U.S.C. § 332 (c)(3)(A) (the Federal Communications Act)

and (ii) ‘he doctrine of primary jurisdiction. During the

pendency of the briefing of AT&T's dismissal motion, the

Washington Court of Appeals (Division I) issued its ruling in

a somewhat related case, Hardy v. Claircom Communications

Group, Inc. (d/b/a AT&T Wireless Services), 937 P.2d 1128

(Wash. Ct. App. 1997). According to AT&T, Hardy is a

Court of Appeal panel’s determination that the FCA preempts

all state law claims challenging AT&T’s deceptive and

unlawful conduct. Erroneously believing it was bound by

Hardy, the superior court dismissed plaintiffs’ claims.

+ Sse Lbbin eer keh

Respondents immediately appealed to the Washington

Supreme Court. Not surprisingly, the Washington Supreme

Court reversed the superior court finding, and held that

_respondents’ traditional state law claims of misrepresentation,

+ Rater ae

fraud and consumer protection violation were not preempted

by Section 332. Pet. App. 31a-32a. The Washington

Supreme Court’s reasoning was sound. To begin, the

Washington Supreme Court found that the Hardy ruling, on

which the superior court relied, was unpersuasive. Hardy

involved the filed rate doctrine. This doctrine “is a court

created rule to bar suits against regulated utilities involving

SAI Ga ok

allegations concerning the reasonableness of the filed rates.”

Pet. App. 8a-9a (emphasis supplied).’ As the court correctly

noted, and as AT&T conceded, AT&T “is specifically

i ; In support of this statement the court cited Wegoland, Ltd.

vy. NYNEX Corp., 27 F.3d 17, 18 (2™ Cir. 1994). During the

proceedings below AT&T conceded that no filed rates were at

‘ issue. Pet. App. 13a.

exempted from tariff filing requirements . . . [as a result]

those cases are not materially significant.” Tenore v. AT&T

Wireless Servs., 962 P.2d 104 (Wash. 1998); Pet. App. 31a.

Furthermore, the Washington court found that the express

language of Section 332 makes clear that not all claims are

preempted. This is because the last clause of Section 332

states that “this paragraph shall not prohibit a State from

regulating the other terms and conditions of commercial

mobile services.” 47 U.S.C. § 332 (c)(3)(A) (emphasis

supplied). The court found that this “terms and conditions”

clause limits the preemptive reach of Section 332.

Additionally, the court found that the savings clause is

indicative of Congressional intent “to preserve state law

claims for billing or advertising which do not attack market

entry or rates charged” by providers such as AT&T. Pet, App,

3la. Finally, the Supreme Court decision in Nader v.

Allegheny Airlines, 426 U.S. 290 (1976), makes clear that a

court may award damages without regulating rates. This is

especially true where, as here, there is no requirement that a

. See H.R. Rep. No. 103-111, 103" Congress 1* Sess. 211

reprinted in 1993 U.S.C.A.A.N. 378, 588 (The phrase “terms and

conditions” includes “customer billing information and practices

and billing disputes and other consumer protection matters.’’).

Through the “terms and conditions” language, the FCC has

specifically noted that the FCA “preserves the nghts of parties to

pursue legal remedies against interstate carriers that they may

pursue against other corporations such as liability for .

misleading advertising. ...” Jn Matter of Richman Bros. Records

Inc. v. U.S. Sprint Comms. Co., Release No. DA 95-2438, 10 FCC

Red 13639, 13641-42, 1995 FCC Lexis 7985, at *16-17 (Dec. 13,

1995)(decided against consumer on other grounds).

5 ae

Lome ° Ee =F. s ll

tariff be filed, and any impact on rates is “merely incidental.”

Id.°

Hence, the court ruled against preemption because

plaintiffs, through this lawsuit, are not attempting to alter the

rates AT&T chooses to charge. All respondents seek is for

AT&T to be held to the terms of its promise to bill “Send to

End,” as opposed to deceptively informing customers that

they would be billed “Send to End” and then billing them

“Send” to the next highest minute after which “End” is

pressed. As AT&T concedes, it was not until after this

lawsuit was filed that AT&T began selectively informing

customers that it has been lying about the manner in which it

charges for airtime. Pet. 8,n.7. In light of this concession, it

is clear that AT&T is asking this Court to do something the

Washington Supreme Court refused — turn a blind eye to its

admittedly deceptive practice under the guise of federal

preemption.

REASON FOR DENYING THE PETITION

Review of the Washington Supreme Court decision is

neither “urgent” or warranted as AT&T suggests. Congress

, Additionally, the court found that a “challenge to a

practice that is not governed by a tariff filing does not implicate

the ‘conflict’ inherent in contesting a practice or rate expressly

regulated by an agency. ...” Pet. App. 31a.

made a clear statement in Section 332 that it was not

prohibiting states from regulating terms and conditions of

cellular services and further provided that § 332 would not

“abridge existing remedies.” Requiring truthful advertising

is not rate regulation. Requiring AT&T to bill customers as

promised and awarding damages wien AT&T has not done

so is not “rate regulation.” Indeed, the Washington Supreme

Court decision simply requires AT&T to charge the rate it

promised. Rather than giving “carte blanche” to regulate

rates, the decision simply requires AT&T to conduct its

business truthfully, a requirement imposed on all of corporate

America. There is nothing novel or urgent arising from the

imposition of honesty.

To further bolster its claim for review, AT&T warns

that plaintiffs are asking courts to “regulate rates” for the

entire wireless industry. Pet. at 9. As noted, however, this

d similar lawsuits simply seek to enforce laws that require

all businesses to tell the truth about billing and/or keep

contractual promises. One carrier, U.S. West, has settled such

claims and paid a rebate to its customers. Res. App. C-19.

Such a settlement did not implicate U.S. West’s rates or

unravel the cellular industry as AT&T suggests will be the

result. Thus, contrary to the central theme of AT&T’s

petition, the cellular industry and its ability to set rates is not

being jeopardized by this type of litigation.

ae Pag. pet Pe ete:

5a. CNL is BARE eid Hi OX en

wiley

Finally, as explained below, there is no conflict among

courts of appeals or high state courts that is ripe for review by

this Court.

THERE IS NO CONFLICT AMONG

THE HIGHEST COURTS OF THE

STATES OR BETWEEN A HIGH STATE COURT

AND A COURT OF APPEALS THAT

WARRANTS REVIEW

AT&T’s claim of a conflict among the courts is a

manufactured one pursued in a vain attempt to obtain review.

There is no split in authority among the circuit courts of

appeal or among the highest courts of the states. There is no

confusion and controversy among courts — the decisions are

uniform.

First, it is important to recognize the distinction

between this case and the cases upon which AT&T relies.

Cases which arise under the “filed tariff’ doctrine, where a

company is required to file a tariff by the FCC, uniformly find

that state law damage claims are preempted. See e.g., Marcus

v. AT&T Corp., 938 F. Supp. 1158 (S.D.N.Y. 1996), aff'd,

138 F.3d 46 (2™ Cir. 1998). Cases which address traditional

state law claims such as deceptive advertising or failure to

disclose, uniformly rule against preemption. Kellerman vy.

MCI Telecomms. Corp., 493 N.E.2d 1045 (Ill.), cert. denied,

479 U.S. 949 (1986). This case did not involve the “filed

tanff’ doctrine nor the services offered by AT&T, but rather

arises from issues of deceptive advertising and a failure to

disclose and a breach of contract. Hence, the conflict and

confusion claimed by AT&T simply does not exist.

The Washington Supreme Court found that the

majority of cases relied on by AT&T were predicated upon

the “filed rate” doctrine. However, as the court found, this

doctrine is wholly inapplicable here — AT&T conceded that

it had no tariff on file with the FCC because it is exempt from

the filing requirement. Pet. 16; Pet. App. 12a -13a. Hence,

the purposes behind the “filed rate” doctrine and the

authorities discussing it “are thus not applicable.” Pet. App.

13a. As aresult, AT&T is off-base in its assertion that “state

and federal decisions involving Section 332 preemption are

all over the map.” Pet. 15.

A. There is No Conflict Among the State

High Courts that Deception Claims Are

Not Preempted

State courts, and for that matter lower federal courts,

are uniform in holding that claims relating to advertising and

failures to disclose are not preempted. See, e.g., Sanderson,

tie

Thompson, Ratledge & Zimny v. AWACS, Inc., 958 F. Supp.

947, 955 (D. Del. 1997); Kellerman v. MCI Telecomms.

Corp., 493 N.E.2d 1045, 1051-52 (Ill.), cert. denied, 479 U.S.

949 (1986); Bennett v. Alltel Mobile Comm. Of Alabama,

Inc., Civil Action No. 96-D-232-N, slip op. at 9 (M.D. Ala.

May 14, 1996) (Res. App. A-1), adopted in full by Moulton v.

Alltel Mobile Comm. of Alabama, Inc., CA No. 96-D-89-N,

slip op. (M.D. Ala. Aug. 16, 1996) (Res. App. B-18); Jn re

Long Distance Telecomms. Litig., 831 F.2d 627, 633-34 (6"

Cir. 1987); DeCastro v. AWACS, Inc., 935 F. Supp. 541, 550

(D.N.J. 1996). 2

Kellerman illustrates that holdings from the highest

state courts are in accord with the Washington Supreme

Court. In Kellerman, MCI, much like AT&T here, contended

that plaintiffs were not really challenging deceptive

advertising but rather were seeking to regulate rates.

Kellerman, 493 N.E.2d at 1051. Like the Washington

Supreme Court, however, the Illinois Supreme Court rejected

the argument. As the court noted, “[t]he subject matter of

plaintiffs’ complaints involves neither the quality of

defendant’s service nor the reasonableness and lawfulness of

its rates.” Jd. Hence, just like the Washington Supreme

Court, the Illinois Supreme Court found that the issue was

deceptive advertising and not “rate regulation”:

[Plaintiffs seek to hold defendant to the same

standards as they would any other business

which advertises on a nationwide basis and

which, in the course of its business, is subject

to regulation from a number of Federal and

State agencies.... The prosecution of these

claims will in no way interfere with the

delivery of long-distance telephone service to

defendant’s customers .... Finally, no

Federal statute or regulation has been brought

to our attention which would expressly

prohibit these actions.

Id. at 1051-52. No amount of sophistry can change the fact

that the case law does not support defendants conflict

argument. Kellerman, and the other cases cited above, are

in accord with the Washington Supreme Court opinion.

B. AT&T’s Review of Intermediate Court

Decisions Do Not Present a Conflict of

Sufficient Magnitude to Warrant Review

In light of consistent state and federal authority,

AT&T was forced to rely on one or two page slip opinions to

illustrate its alleged “conflict.” However, these cases, with

little to no analysis, are not high court or circuit court of

appeals opinions and do not support the assertions made

throughout AT&T’s brief. No amount of verbal acrobatics

can change that fact.

Typical is AT&T’s citation to Simons v. GTE

Mobilnet, Inc., No. H-95-5169 (S.D. Tex. Apr. 11, 1996), Pet.

15. Simons had nothing to do with fraud or deception because

such a claim was not asserted. Rather, the plaintiffs claimed

that one of GTE’s service charges, a termination fee, though

plainly disclosed in GTE’s service contract, was itself illegal.

Pet. 58a-59a. Hence, the Simons plaintiff's claim attacked the

legality of a rate, and the Court found that such claims are

preempted by the FCA. Unlike Simons, this case concerns

deceptive advertising, and not “rate regulation.”

AT&T’s reliance on Ball v. GTE Mobilnet of

California, Ltd., No. 98AS03811 (Cal. Super. Ct.

(Sacramento Cty.) Nov. 17, 1998), is similarly flawed. Pet

App. 63a-64a. The court in Ball analogized the case before

it to that of Jn re Comcast Cellular Telecomms. Litig., 949 F.

Supp. 1193, 1205-06 (E.D. Pa. 1996). Plaintiffs in both cases

“attacked the fairness of charges for non communication

time.” Not surprisingly, “[t]he court considered this to be

more than just a challenge to billing practices (not necessarily

preempted) and noted that plaintiffs were attacking the

‘reasonableness of the method by which Comcast calculates

length and consequently the cost ofa . .. call.’” Pet. App.

64a. Hence, “plaintiff [sic] claims present a direct challenge

to the calculation of rates....’” Jd. Here, unlike Bail, there

is no challenge to the calculation of the rate but rather, to the

failure to disclose the calculation and to the failure to live up

to AT&T’s promises as set forth in advertising and by the

terms of its contract.

AT&T’s citations to the trial court decision in Rogers

v. Westel-Indianapolis Co., No. 49D93-9602-CP-0295

(Marion Super. Ct. (Ind.) July 1, 1996) (Pet. App. 65a-66a)

and Powers v. AirTouch Cellular, No. N71816 (Cal. Super.

Ct. (San Diego County) Oct. 6, 1997) (Pet. App. 68a-69a) are

equally misplaced. Indeed, Rogers, is little more than a

minute order which identifies nothing about the grounds for

its rulings. In Powers, after examining plaintiffs allegations,

the court merely concluded that the complaint did “not focus

on defendant’s alleged failure to disclose . . . but on the

legality or reasonableness of such charges.” Pet. App. 69a.

Finally, AT&T cites to Carroll v. Cellco Partnership,

Docket Nos. AM-001316-96T3 and AM-001303-96T3 (N.J.

Super. Ct., App. Div., June 25, 1997) (Pet. App. 70a-71a) to

support its “confusion” argument. However, Carroll is in

accord with the plethora of cases cited above. Indeed, the

Carroll court stated it was “satisfied that plaintiffs’ action is

primarily grounded on allegations of fraud and consumer

protection and not rate setting.” Pet. App. 70a-71a. It then

ruled that “rates will not be directly impacted” because the

respective tnal judges would “recognize the limits of

jurisdiction as reserved to the States under the ‘savings

clause’ ....” Jd. In other words, the court ruled that the

claims were preserved to the extent they assert state-law

deceptive-advertising and contract claims — a finding

completely in accord with the cases cited above. Hence, as

the Court can see, AT&T’s cries of conflict are illusory at

best.°

Finally, determined to manufacture confusion, AT&T

also asserts that regulatory agencies are in disagreement as to

the scope of Section 332. In support, it cites to Nova Cellular

West, Inc. v. Air Touch Cellular of San Diego, Case No. 98-

02-036 (CPUC Sept. 3, 1998)(Pet. App. 72a-80a). However,

Nova did not involve a violation of state consumer protection

laws but rather whether AirTouch was required to provide

Nova with promotional access and airtime plans available to

them at lower rates. Pet. App. 73a. As the Commission

noted, “{iJn this case, mandating that AirTouch provide

particular services at given rates is functionally identical to

requiring AirTouch to provide its given services at particular

rates.” Jd. at 78a. Hence, Nova is a case about the lawfulness

of rates. The Commission was never confronted with, and

; AT&T attempts to point the finger at the “filed tariff”

doctrine for the source of “the confusion among the lower courts.”

Pet. 16. However, the “filed tariff” rule is clear: it “forbids a

regulated entity to charge rates for its services other than those

properly filed with the appropriate federal regulatory agency.”

Arkansas Louisiana Gas on v. Hall, 453 U.S. 571, 377 (1981).

Unlike preemption analysis, the filed tariff doctrine does not

determine which law governs the plaintiffs claim for fraud against

telephone service providers. Rather, as AT&T acknowledges, it

can prohibit altogether defrauded consumers from bringing any

such claims pers when the provider has been required to file

its rates with a regulating agency. This is because “[e]ven if a

carrier intentionally misrepresents its rate and a customer relies on

the misrepresentation, the carrier cannot be held to the promised

rate if it conflicts with the published tariff.” AT&T v. Central

Office Tel., Inc., 118 S. Ct. 1956, *3 (1998).

therefore never addressed, the issue of state consumer

protection laws, such as those forbidding deceptive

advertising. In light of this, the finding in Nova is not adverse

to that in Westside Cellular, Inc. vy. GTE Mobilnet, Inc., 1995

Ohio PUC LEXIS 240 (Mar. 23, 1995). Pet. 17. Indeed, as

Westside points out, “the legislature intended for the states to

retain significant authority over cellular telephone to ensure

a competitive marketplace and to safeguard the public

interest.” Jd. at *9.

‘. If a Conflict Exists it is at Such a Nascent

Stage that Review is Premature

Supreme Court Rule 10 sets forth that review on writ

of certiorari “is not a matter of nght, but of judicial

discretion.” As stated in the rule, a petition will only be

granted for “compelling reasons.” Jd. While not an

exhaustive list, Rule 10 does set forth three reasons it deems

compelling. One such reason is that “a state court of last

resort has decided an important federal question in a way that

conflicts with the decision of another state court of last resort

or of a United States court of appeals.” Rule 10(b). It would

appear that it is this compelling reason on which AT&T bases

its request for review.’ Yet, AT&T itself concedes that it is

Rule 10(b) appears to be implicated for AT&T states that

“(t]he Washington Supreme Court’s decision starkly illustrates the

confusion in state and federal courts. Pet. 18. In addition, to

Rule 10(b) it appears AT&T also seeks review pursuant to Rule

10(c) which sets for that review is appropriate where “a state court

“the lower courts and federal and state regulatory agencies

that are divided,” Pet. 18 (emphasis supplied), and not state

courts of last resort as set forth in the rule. In light of

AT&T’s concession, its petition presents no “compelling

reason” for Supreme Court review.

It would simply be premature for the Supreme Court

to rule in this area when, as AT&T itself admits, it is only

lower courts that are grappling with the issue. There are few

if any circuit court rulings on these issues and only two high

state court decisions, one of which forms the basis of this

appeal and the other of which is completely in accord.

Moreover, time may further illuminate how other high state

courts and/or circuit courts will address the issue. See

generally, Rice v Sioux City Memorial Park Cemetery, Inc.,

349 U.S. 70 (1955). Hence, this case does not present the type

of “compelling reason” contemplated by Supreme Court Rule

10 and the holdings of the Supreme Court.

... has decided an important question of federal law that has not

been, but should be, settled by this Court, or has decided an

important federal question in a way that conflicts with relevant

decisions of this Court.” Rule 10(c). However, this compelling

reason, like the one discussed above, is also not substantiated by

case law. See discussion Section I], infra.

Il.

THE WASHINGTON SUPREME COURT OPINION

IS HARMONIOUS WITH PRIOR OPINIONS OF

THIS COURT, AND OTHERS, THAT AN AWARD

OF DAMAGES DOES NOT EQUAL

IMPERMISSIBLE RATE REGULATION®

A. The Washington Supreme Court Decision

Is Harmonious With Supreme Court

Precedent

As a further basis for review, AT&T claims that the

decision below conflicts with this Court’s holdings. Analysis

demonstrates that this is incorrect.

’ In as much as AT&T challenges the assessment of

damages as opposed to the viability of the claim — its request for

certification is premature. Defendants contention is that refunding

damages equals retroactive rate regulation. Pet. 22. In Je fferson

v. City of Tarrant, 522 U.S. 75 ( pits the Court was faced with a

petition for review on the issue of whether a state statute regardin

punitive damages governed the potential recovery on federa

claims. The ‘Court denied review determining that it had no

authority to hear the appeal. Among the reasons set forth was that

the outcome of the further proceedings on remand may render the

question moot. Indeed, if the state law claims were ultimately lost

on the merits, the issue of damages would be rendered moot. If

not, the issues of damages would be addressed at that time. In

light of those facts, the Court determined that the Alabama

Supreme Court decision was not a “final” judgment worthy of

certification. Jefferson is strikingly similar to the case before this

Court. AT&T’s contention that refund damages are retroactive

rate setting need not be addressed at this time and could be

rendered moot should respondents lose on other issues on remand.

In light of this fact, and the holding in Jefferson, it is not at all

clear that this case is even a final judgment worthy of review.

The Washington Supreme Court found that a request

for money damages does not require a court to retroactively

establish new rates. Pet. App. 31a. This finding was based in

large part on the fact that respondents do not contend that they

were injured by AT&T’s act of charging for a full minute

when the party merely spoke for seconds. Rather,

respondents claim damage from AT&T’s failure to disclose

the practice and its breach of promise to bill “SEND TO

END,” and not from the practice itself. As the Washington

Supreme Court so eloquently stated, this case does not

challenge rates and an award of damages based on rates does

not equal state regulation of rates:

There is sufficient reliable authonty for this

Court to conclude that the state law claims

brought by Appellants and the damages they

seek do not implicate rate regulation

prohibited by Section 332 of the FCA. The

award of damages is not per se rate regulation,

and as the United States Supreme Court has

observed, does not require a court to

“substitute its judgement for the agency’s on

the reasonableness of a rate.” Any court is

competent to determine an award of damages.

(Pet. App. 25a-26a].

Despite this supported finding, AT&T claims that the

Washington Supreme Court decision conflicts with the

findings of this Court in AT&T Co. v. Central Office Tel. Inc.,

118 S.Ct. 1956 (1998). Pet. 20-21. AT&T is wrong. In

Central Office the Court held that “the century-old ‘filed-rate

doctrine’ associated with the ICA tariff provisions applies to

the Communications Act as well.” /d. at *15. In Central

Office, unlike the present situation, the carner was required to

file its rates and tanffs with the FCC. Jd. Indeed, the

Communication Act requires that the “filed tanff [must] show

not only the ‘charges’ but also ‘the classifications, practices

and regulations affecting such charges,’ 47 U.S.C. § 203(a) .

...” Id. at *18. Under the “filed tariff” doctrine, the Court

found that the “Communications Act’s filed-tanff

requirements pre-empt respondent’s state law claims.” /d. at

*3. However, as stated throughout this opposition, filed tanff

cases are wholly distinguishable. Moreover, here, unlike in

Central Office, there is no challenge to the practice of billing

increments as a practice, only to the failure to disclose those

increments.’ Because Central Office never discusses Section

332 or its explicit allowance of state law claims, it 1s wholly

inapposite.

The lack of conflict with Supreme Court authority is

In Central Office, the state law claims before the Court

were breach of contract and tortious interference with contractual

relations. Ja. at *il. As the concurmng opinion noted,

“Respondent contends that petitioner promised to provide it with

services on terms different from those listed in the tariff. As the

above cases make clear, the filed rate doctrine bars such a claim.”

Id. at *28 (Rehnquist, C.J., concurring).

evidenced by Nader v. Allegheny Airlines, Inc., 426 U.S. 290

(1976). The Court in Nader allowed state law claims to

proceed because, like here, the court was “not called upon to

substitute its judgment for the agency’s on the reasonableness

of a rate.” Pet. App. 24a-25a.'° In the end, this Court in

Nader determined that “the action ‘does not turn on a

determination of the reasonableness of a challenged practice,’

but only on the issue of disclosure of that practice, ‘the

standards to be applied in an action for fraudulent

misrepresentation are within the conventional competence of

the courts.’” App. Pet. 25a.'’ Not only does AT&T fail to

distinguish the harmonious ruling in Nader in the analytical

portion of its petition — it does not even mention it at all. The

In Nader, an airline passenger was denied his reserved and

confirmed seat on an airplane because the airline had overbooked

the flight. Rather than accept the “denied boarding compensation”

the passenger brought a common law action for fraudulent

musrepresentation based on the airline’s failure to disclose its

boarding practices. Pet. App. 23a. Like the respondents here, the

passengers were not challenging the practice only the airlines

failure to disclose said practice. /d. e district court found for

plaintiffs but the United States court of appeals reversed holding

that the Civil Aeronautics Board was the body charged with

determining the reasonableness of the booking practices. Jd. The

Supreme Court reversed. Pet. App. 24a. While focusing mainly

on primary junsdiction grounds, the Court did note that, unlike the

case relied on by the Court of Appeals, here “there was no tariff

provision requirement that airlines engage in or disclose the

practice of overbooking.” Pet. App. 25a. Hence, any impact on

rates, “would be merely incidental.” Jd.

re As the Washington Supreme Court noted, “AT&T [did]

not dispute that billing and advertising practices are not governed

exclusively by the FCA, if at all.” Pet. App. 25a (emphasis

supplied).

omission is clearly purposeful. Nader specifically held that

“any impact on rates that may result from the imposition of

tort liability or from practices adopted by a carrier to avoid

such liability would be merely incidental.” Jd. 300. The

Washington Supreme Court opinion is consistent with Nader.

Similar authorities abound whose holdings are in

unison with Supreme Court authority and the Washington

Supreme Court decision. In DeCastro v. AWACS, Inc., 935

F. Supp. 541, 550 (D.N.J. 1996), for example, the court found

that plaintiffs’ claims for nondisclosure of rounding did not

requi. > a court to assess the reasonableness of the defendant’s

underlying billing practice. /d. Likewise, in Kellerman v.

MCI Telecomms. Corp., 493 N.E.2d 1045, 1051-52 (Ill.), cert.

denied, 479 U.S. 949 (1986), the court ruled that an award of

damages would not interfere with MCI’s rates nor any other

aspect of the FCA’s regulatory scheme. /d. at 1051. Hence,

the court rejected the premise that awarding damages was an

act of rate regulation. The courts in Bennett v. Alltel Mobile

Comm. Of Alabama, Inc., Civil Action No. 96-D-232-N, slip

op. at 9 (M.D. Ala. May 14, 1996) (Res. App. A-1) and

Moultan y. Alltel Mobile Comm. Of Alabama, Inc., CA No.

96-D-89-N, slip op. (M.D. Ala. Aug. 16, 1996) (Res. App. B-

18) also rejected AT&T’s argument and ruled that plaintiffs’

claims for damages were immaterial to the issue of

preemption: “The court finds that the relief sought in the

form of a refund in the difference between the amounts

charged and the amount consumers allegedly though they

were being charged . . . does not relate to the rates charged or

services provided ....” Bennett, slip op at 6, Res. App. A-7.

Finally, in American Inmate Phone Sys., Inc. v. U.S. Sprint

Comms. Co., 787 F. Supp. 852 (N.D. Ill. 1992), the court

concluded that the request for breach of contract damages

“neither conflicts with the provisions of the Communications

Act nor interfere with the regulatory scheme of the Act.” Jd.

at 856.

In short, AT&T’s predicate is false: Legal damages

are not rates, and courts can award damages without

regulating rates or otherwise interfering with a federal

regulatory regime. An award of damages against AT&T for

deceiving customers will leave AT&T’s rates untouched, i.e.,

it will not impose obligations on AT&T that are inconsistent

with any prior decisions of this Court.’

AT&T asserts that the Washington Supreme Court holding

“conflicts with decisions by other courts, which have concluded

that similar claims for damages constitute state rate regulation”

and cites to Simons and Powers to support this proposition. Pet.

22. However, this proposition is simply false. Not only did

Simons and Powers not even address the issue of damages but

Powers suggests that had the allegations in the complaint focused

on “[djefendant’s alleged failure to disclose the ‘teardown time’

charge, [rather than] the legality or reasonableness of such

charges” the claims would have been allowed to proceed. Pet.

App. 69a.

B. The Washington Supreme Court Holding

Is In Accord With Numerous Other

Holdings that Damages Are Not Per Se

Regulation

To further support its claim of conflict, AT&T cites to

San Diego Bldg. Trades Council v. Garmon, 359 U.S. 236

(1959), in conjunction with Black’s Law Dictionary, to press

upon this Court that “damage awards unquestionably can

constitute a form of state rate regulation.” Pet. 21 (emphasis

original). Based on this, AT&T contends that the Washington

Supreme Court opinion is in conflict with Supreme Court

authority. Pet. 22. However, as set forth below, the

Washington Supreme Court holding on this issue is not

adverse to Supreme Court authority.

The Garmon Court stated that “[rjegardless of the

mode adopted, to allow the States to control conduct which is

the subject of national regulation would create potential

frustration of national purpose.” /d. at 244. However, here,

respondents are attempting to punish AT&T for engaging in

a deceptive practice — something which is not the subject of

national regulation. Hence, there is no fear of “frustration of

the national purpose,” because Section 322 explicitly allows

States to enforce consumer protection laws. Hence, Garmon

is distinguishable from the case before this Court. In fact,

dispositive on this issue, and in accord with the Washington

Supreme Court’s finding, 1s Silkwood v. Kerr-McGee Corp.,

fe,

464 U.S. 238 (1984). Like AT&T, the petitioners in Silkwood

were unable to point to any legislative history or anything in

the regulation that indicates that damages for violation of state

laws are prohibited. See id. at 255. And, although allowance

of damages may cause tension, the Supreme Court noted that

such tension does not equate to a wholesale bar of damage

awards:

It may be that the award of damages based on

the state law of negligence or strict liability is

regulatory in the sense that a nuclear plant will

be threatened with damages liability if it so

does not conform to state standards, but that

regulatory consequence was something that

Congress was quite willing to accept.

Id. at 256. By including the “terms and conditions” clause in

Section 332 and by not delineating how states were to deal

with violations of laws in areas which Congress has preserved

their nght to regulate, Congress made clear that an award of

damages here resulting from a violation of consumer

protection laws does not equal impermissible rate regulation.

As a result, there is no conflict and no “compelling reason” to

grant review.

_ The Washington Supreme Court Opinion

Follows The Proper Standards Governing

Preemption

There is a strong presumption against preemption in

areas of traditional state regulation. See New York State Conf.

of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514

U.S. 645, 655 (1995);"° see also Cipollone v. Liggett Group,

505 U.S. 504, 516 (1992).'"* The area of consumer protection

is that traditionally regulated by the State. It is for this reason

that consumer protection laws are often listed as part of the

“terms and conditions” that are exempt from Section 332. In

light of the strong state interest in protecting the welfare of its

citizens and in enforcing its state consumer protection laws,

it is hard to believe that AT&T would question the standards

applied by the Washington Supreme Court.

AT&T contends that “nowhere in its decision below

does the court mention . . . the critical role played by the

statutory language.” Pet. 23. This statement is wholly false.

| The Court in Travelers stated: “[W]e have never assumed

lightly that Congress has derogated state regulation, but instead

have addressed claims of pre-emption with the starting

presumption that Congress does not intend to supplant state law.

Indeed, in cases like this one, where federal law is said to bar

state action in fields of traditional state regulation . . . we have

worked on the ‘assumption that the historic police powers of the

States were not to be superseded by the Federal Act unless that was

the clear and manifest purpose of Congress.’” Jd. at 654-55

(citations omitted)

" The Cipollone Court held that the federal law regulating

cigarette warnings and labeling would not preempt state law claims

based upon express warranty, intentional fraud and

misrepresentation, or conspiracy. Jd. at 530-31. The Court

determined that whether federal law is preemptive depends upon

Congress’ intent. /d. at 516. Accord, Freightliner Corp. v.

Myrick, 514 U.S. 280 (1995) (Federal Motor Vehicle Safety

standards did not preempt state-law product-liability cases alleging

wi ral design for failure to require anti-lock brakes on tractor-

trailers).

a A ea Ee ia DIS OO ae TD

The court below focused on the critical role of the “terms and

conditions” language which preserves state law causes of

action for deceptive advertising.’ Based on this statutory

language, the court determined that Congress did not intend

to remove states entirely from the wireless telephone industry.

Had Congress intended to completely preempt state law

causes of action, it most assuredly would not have included a

clause which explicitly provides for state regulation.

Additionally, if the intent was to preempt all state law

causes of action, Congress would not have included a savings

clause.'® Indeed, the Supreme Court has consistently found

that savings clauses are further support against preemption.

See e.g., American Airlines v. Wolens, 513 U.S. 219, 232

(1995). In Wolens, the Court was presented with a claim for

violation of the consumer protection act as well as a claim for

breach of contract. American Airlines contended that the

claims were preempted by the Airline Deregulation Act, 49

U.S.C. § 41713, which prohibits state regulation of a price,

route, or service offered by an air carrier. As stated by the

Court, it was not “plausible that Congress meant to channel

into federal courts the business of resolving, pursuant to

See supra, n.2.

- See 47 U.S.C. § 414 (1994) (“Nothing in this chapter . . .

shall in any way abridge or alter the remedies now existing at

common law or by statute, but the provisions of this chapter are in

addition to such remedies.”’).

————

judicially fashioned federal common law, the range of

contract claims relating to airline rates, routes, or service.” /d.

In addition, “the conclusion that the ADA permits state-law-

based court adjudication of routine breach-of-contract claims

also makes sense of Congress’ retention of the FAA’s savings

clause.” Jd. Hence, the ADA’s preemption clause “read

together with the FAA savings clause, stops States from

imposing their own substantive standards with respect to

rates, routes, or services, but not from affording relief to a

party who claims and proves” that an airline has acted

negligently with respect to other areas. See generally id.

As the Washington Supreme Court found, the same

holds true here. The FCA’s preemption provision read

together with the savings clause, stops states from imposing

standards on “the entry of or rates charged by any commercial

mobile service” but does not prohibit regulation of the “other

terms and conditions of commercial mobile services” such as

deceptive advertising. See generally Pet. App. 3la. This

reasoning of the Washington Supreme Court is harmonious

with Supreme Court precedent and numerous other courts

which have addressed this issue. There is no conflict and,

therefore, no reason to grant review.

CONCLUSION

For the reasons set forth above, the petition for a writ

of certiorari should be denied.

Respectfully submitted,

Steve W. Berman*

Erin K. Flory

Sean R. Matt

HAGENS BERMAN

1301 Fifth Avenue

Suite 2900

Seattle, WA 98101

(206) 623-7292

Attorneys for Respondent

* Counsel of Record

APPENDIX A

JNITED STATES DISTRICT COURT FOR THE

MIDDLE DISTRICT OF ALABAMA

NORTHERN DISTRICT

PEE LIAS > PU AA BIOL Ce N R ee Tos 0S rr en ra Re Aan tee nae ~ < are a s ES - Ree Xb yates

Zt. tel Pin doe -

IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF ALABAMA

NORTHERN DISTRICT

FILED

MAY 14 1996

CLERK

U.S. DISTRICT COURT

MIDDLE DIST. OF ALA.

ROBBYN VAN BENNETT, etc., _)

Plaintiff, )

v. } CIVIL ACTION NO.

ALLTELL MOBILE ) 96-D-232-N

COMMUNICATIONS OF )

ALABAMA, INC.,

Defendant. )

)

MEMORANDUM OPINION AND ORDER

Before the court is the plaintiffs motion, filed

February 28, 1996, to remand this action to the Circuit of

Lowndes County, Alabama, whence it was removed. The

defendant responded in opposition on March 19, 1996.

In the three-count complaint, the plaintiff avers that in

connection with the billing for cellular phone service,

defendant Alltel, through its agents and employees,

misrepresented and failed to disclose its practice of charging

for a full minute of cellular phone air time even if a subscriber

Apdx A - 1

is connected for only a few seconds. The plaintiff also

contends that Alltel has breached its contract with the plaintiff

because Alltel's contract fails to notify the user of the phone

service of its practice of rounding up the amount of air time

used to the next full minute. Subsequently, the defendant

removed this action, asserting federal-question jurisdiction

pursuant. to 28 U.S.C. §§ 1331 and 1441.' The defendant

contends that the plaintiffs claim for relief involves the

application of the communications Act, 47 U.S.C. §§ 151 et

seq., and the Omnibus Budget Reconciliation Act of 1993

(“OBRA”), which amended the Communications Act to

expressly preempt any action by a state to regulate the rates

charged by cellular service providers. In essence, the

defendant contends that while the plaintiff has not pleaded a

violation of the Communications Act or the OBRA, these

Acts still control in this action. The plaintiff asserts,

however, that he is seeking relief only under state law, thus,

precluding removal based upon federal-question jurisdiction.

Because removal jurisdiction raises significant

‘Section 1441 states in part that“... any civil action

brought in a State court of which district courts of the United

States have original jurisdiction, may be removed by the defendant

or the defendants, to the district court of the United States for the

district and division embracing the place where such action is

pending. . .” 28 U.S.C. § 1441(a). Pursuant to 28 U.S.C. § 1331,

a district court has original jurisdiction over all cases “arising

under the Constitution, laws or treaties of the United States.”

Apdx A - 2

federalism concerns, the removal statutes must be strictly

construed. Shamrock Oil & Gas Corp. v. Sheets, 313 U.S.

100 (1941). All doubts must be resolved in favor of a remand

to state court. Stone v. Williams, 792 F. Supp. 749 (M.D.

Ala. 1992); Lambert v. Mail Handlers Benefit Plan, 886 F.

Supp. 830, 833 (M.D. Ala. 1995) (Albritton, J.) (remand of a

removed case is favored where federal jurisdiction is not

absolutely clear) (citing Burns v, Windsor Ins. 31 F.3d 1092,

1095 (11th Cir. 1994)); see also Horn v. Rural Community

Insurance Servs., 903 F. Supp. 1502, 1504 (M.D. Ala. 1995)

(Albritton, J.); Shamrock Oil & Gas Corp. v. Sheets, 313 U.S.

100 (1941). Moreover, “the existence of a federal question

cannot be left to mere speculation.” Bryant v. Blue Cross &

Blue Shield of Alabama, 751 F. Supp. 968, 969 (N.D. Ala.

1990) (citations omitted). As such, the defendant, as the party

removing this action to federal court, has the burden of

establishing federal jurisdiction. Sullivan v. First Affiliated

Secs., 813 F.2d 1368 (9th Cir.), cert. denied, 484 U.S. 850

(1987).

The foregoing is consistent with the basic principle

that federal courts are courts of limited jurisdiction and have

the power to hear only those cases which congress or the

Constitution authorizes them to hear. Lambert, 886 F. Supp.

at 832 (citations omitted); Horn, 903 F. Supp. at 1504 (citing

Gulf Offshore, 453 U.S. at 477-78). Accordingly, “a

presumption (exists) that state courts have concurrent

jurisdiction over claims that involve federal law.” Id.

Apdx A - 3

Whether the complaint states a federal question must

be determined by examining the face of the complaint.

Franchise Tax Bd. v. Construction Laborers Vacation Trust,

463 U.S. 1, 9-11 (1983). As stated by the Supreme Court of

the United States:

[o}|nly state-court actions that orginally could

have been filed in federal court may be

removed to federal court by the defendant.

Absent diversity of citizenship, federal-

question jurisdiction is required. The

presence or absence of federal-question

jurisdiction is governed by the “well-pleaded

complaint rule,” which provides that federal

jurisdiction exists only when a federal

question is presented on the face of the

plaintiff's properly pleaded complaint. See

Gully v. First National Bank, 299 U.S. 109,

112-13 . . . (1936). The rule makes the

plaintiff the master of the claim; he or she

may avoid federal jurisdiction by exclusive

reliance on state law.

Caterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987)

(internal footnotes omitted); Great Northern R.R. Co. v.

Alexander 246 U.S. 276, 282 (1918) (“[T]he plaintiff may by

the allegations of his [or her] complaint determine the status

with respect to the removability of a case.”); The Fair v.

Kohler Die & Specialty Co. 228 U.S. 22, 25 (1913) (The

Apdx A -4

plaintiff is “master to decide what law he [or she] will rely

upon.”); Burke v. Humana Ins.. Co., No. 95-T-299-N, No. 95-

T-300-N, slip op. at 4 (M.D. Ala. May 11, 1995) (A plaintiff

“has the prerogative to rely on state law alone although both

state and federal law may give him (or her] a cause of

action.”). In other words, “lower federal courts [have]

jurisdiction to hear, originally or by removal from a state

court, only those cases in which a well-pleaded complaint

establishes either that federal law creates the cause of action

or that the plaintiff's nght to relief necessarily depends on

resolution of a substantial question of federal law.”’ Franchise

Tax Bd., 463 U.S. at 27-28. The Supreme Court has narrowly

construed the test to restrict removal by holding that simply

because a claim implicates a federal issue, or involves

construction of federal law does not necessarily give rise to a

federal question and confer removal jurisdiction on a federal

court. Mernll Dow Pharmaceuticals, Inc. v. Thompson, 478

U.S. 804 (1986).

Here, the orginal complaint neither mentions the

Communications Act, as amended, nor invokes any other

federal statute. Moreover, it does not mention a constitutional

provision or a treaty. Hence, the complaint does not refer to

any matter which allows access to a federal court under §

1331.

In making this determination, the court rejects the

defendant's argument that the plaintiff's complaint necessarily

implicates the filed rate doctrine which raises a federal

Apdx A - 5

question. See Def.’s Opp. to Remand at 18-20. Specifically

, the court finds that the defendant's reliance on T&G Express,

Inc. v. Webster Indus., 93-D-1127-N, slip op. at 3 (Jan. 12,

1994) (DeMent, J.) (attach. as Ex. G), is misplaced. In T&G

Express, this court did state that “[w]hen the tariff of a

common carrier is challenged or recovery is predicated on the

existence of a valid tariff, the case involves a federal question

under 28 U.S.C. § 1331, which may be removed to federal

court from a state court upon a filing of a notice of removal

pursuant to § 1446 by the defendant.” T&G Express, slip op.

at 3. However, T&G Express is distinguishable from the

instant case because the T&G Express plaintiff asserted a

tariff claim, in addition to contract claims, which was the

basis for removal. Thus, in T&G Express, the face of the

complaint set forth a federal claim. The court interprets T&G

Express as merely holding that when recovery is specifically

predicated on the existence of a valid tariff as a specific count

in the plaintiff's complaint, then the issue is one of federal

law. In this case, on the other hand, the plaintiff predicates

recovery solely on common law contract grounds. The tariff

issue is raised as a defense by the defendant. Consequently,

because the plaintiff is the master of his or her complaint, the

court finds that T&G Express does not support the existence

of removal jurisdiction in the instant case.

In addition, the court does not believe that the

plaintiff's nght to relief necessarily depends on a resolution of

a substantial question of federal law, in that federal law is a

Apdx A - 6

necessary element of one of the well-pleaded claims. The

court finds that the relief sought in the form of a refund in the

difference between the amounts charged and amount

consumers allegedly thought they were being charged does

not confer the court with federal-question jurisdiction in that

it does not relate to the rates charged or services provided,

particularly when a commonsense reading of the complaint

reflects the pleading of state law claims. The causes of action

are, supported by alternative theories of state law, and the

Communications Act, as amended, is not essential to any of

those theories. The alternative theories of state law include

breach of contract, fraud, misrepresentation, suppression of

material facts, and engaging in deceptive practices. These are

state law claims the determination of which must be left to the

state court system. Moreover, retaining jurisdiction over this

action would interfere with a state court's right to decide and

interpret its own law as applied to the federal acts of this case.

Accordingly, the court finds that the causes of action do not

arise under federal law.’

The court recognizes that the preemptive force of

some federal statutes can provide a legal basis for removal of

a case from state to federal court even if a plaintiff has framed

the complaint to allege violations of only state law.

*The court notes that it is not persuaded by the defendant's

“artful pleading” argument. Here, the plaintiff has not merely

failed to plead federal questions, but rather, the substance of the

plaintiff's complaint involves state law.

Apdx A - 7

Metropolitan Life Ins.. Co. v. Taylor, 481 U.S. 58, 65 (1987).

For example, the Supreme Court of the United States has

determined that issues involving the Labor Management

Relations Act, 29 U.S.C. § 1001, et seg., and the Employment

Retirement Income Security Act, 29 U.S.C. § 185, et seq.,

transform state-law claims into ones arising under federal law

for purposes of the well-pleaded complaint rule. Caterpillar,

Inc., 482 U.S. at 393-94.

In determining whether complete preemption exists,

the court focuses on congressional intent. Lambert, 886 F.

Supp. at 836. The court is highly persuaded by Justice

Brennan's concurrence in Metropolitan Life, wherein he

stated: “In future cases involving other statutes, the prudent

course for a federal court that does not find a clear

congressional intent to create removal jurisdiction will be to

remand the case to state court.” Metropolitan Life, 481 U.S.

at 68 (Brennan, J., concurring) (quoted in Lambert, 886 F.

Supp. at 837). Thus, as stated in Horn v. Rural Community

Ins.. Servs., 903 F. Supp. 1502 (M.D. Ala. 1995) (Albritton,

J.), “[a]bsent a finding of clear Congressional intent to

preempt the state courts from hearing the actions, the court

must presume that complete preemption does not apply. Id. at

1504.

The defendant first relies on 47 U.S.C. § 332(c)(3)

(A), as amended by OBRA, to support a finding of complete

preemption under the Communications Act, as amended.

Section 332 (c) (3) (A) _ states in pertinent part:

Apdx A-8

“Notwithstanding sections 152(b) and 221(b) of this title, no

State or local government shall have any authority to regulate

the entry of or the rate charged by any commercial mobile

service. ... 47 U.S.C. § 332(c)(3)(A). In comparison with

the language of ERISA, the court finds that § 332(c)(3)(A) is

not as broad in scope. See Lambert, 886 F. Supp. at 836

(similar finding involving the Federal Employees Health

Benefits Act). As set forth above, the Communications Act,

as amended, expressly provides for preemption only where

state law regulates “the entry of or the rates charged by... .

commercial mobile service” providers, such as Alltel. 47

U.S.C. § 332(c) (3) (A). On the other hand, “ERISA's

preemption clause states that the law ‘shall supersede any and

all state laws insofar as they may now or hereafter relate to an

employee benefit plan.’ Lambert, 886 F. Supp. at 836

(discussing ERISA's jurisdictional and preemption clause)

(emphasis added).

Clearly, Congress could have completely preempted

state law by stating that § 332 (c) (3) (A) would preempt any

state law that related to the rates charged by commercial

mobile service providers, if it so desired. However, Congress

chose to only prohibit the regulation of those rates by the

states. In fact, § 332 (c) (3) (A) does not seek to vindicate the

same interests upon which the plaintiff's state cause of action

seeks relief. See Bryant, 751 F. Supp. at 972 (citing Allstate

Ins.. v. 65 Security Plan, 879 F.2d 90, 93 (3d Cir. 1989))

(stating requirement for complete preemption includes

Apdx A -9

vindication of same interests). Here, the plaintiff is not

contesting the rate charged, but rather is challenging Alltel's

failure to disclose in its contract with consumers its practice

of “rounding up” charges for air time. Hence, this action will

not affect the rates charged; instead, it may, depending on the

outcome, affect the disclosure of the rates charged. In other

words, there is not a federal remedy directed to the matter of

disclosing the basis behind the rate charged. Given that

jurisdiction is not directly conferred by a cause of action

concerning cellular services, the court finds that the

preemptive force in § 332 (c) (3) (A) is not so powerful as to

displace entirely any state cause of action within the ambit of

the federal cause of action.

The defendant also points the court to §§ 47 U.S.C.

201(b) and 207 to suggest that the complete preemption

doctrine applies to the Communications Act, as amended,

thereby rendering any claim federal in nature.* Section 201(b)

provides that any “charge, practice, classification or

regulation that 1s unjust or unreasonable is declared to be

unlawful. . . .” 47 U.S.C. § 201(b). Section 207 vests

exclusive jurisdiction over claims arising under § 201(b) in

either the federal courts or the Federal Communications

Commission:

Any person claiming to be damaged by any

common carrier subject to the provisions of

-OBRA did not amend either § 201(b) or § 207.

Apdx A - 10

this chapter may either make complaint to the

Commission . . . or may bring suit for the

recovery of the damages in any district court

of the United States. . . .

47 U.S.C. § 207.

In In_re Long Distance _Telecommunications

Litigation, 831 F.2d 627 (6th Cir. 1987), the Sixth Circuit

remanded a case similar to the instant case. Therein. the

plaintiffs' fraud claims were based on the defendants' failure

to disclose their practice of charging long distance customers

for unconpleted calls, ring time and holding time. The Sixth

Circuit held that the plaintiffs’ state law claims for fraud and

deceit, based on the defendants' alleged failure to notify

customers of the practice of charging for uncompleted calls,

were not preempted:

We believe the district court erred in holding

that the state law claims for fraud and deceit,

based on the defendants’ failure to notify

customers of the practice of charging for

uncompleted calls, were pre-empted by the

Communications Act. These claims, unlike

those based on Section 201 of the Act, do not

require agency expertise for their treatment

and are “within the conventional experience of

judges.”

831 F.2d at 633-34 (citing Far East Conference v. United

States, 342 U.S. 570, 574 (1952)) (emphasis added).

Apdx A - 11

In In re Long Distance Telecommunication ions

Litigation, the court also distinguished Ivy Broadcasting Co.

v. American Telephone & Telegraph Co., 391 F.2d 486 (2d

Cir. 1968), relied on by the defendant in this case. The Sixth

Circuit distinguished Ivy

Broadcasting as follows:

[In Ivy Broadcasting,]. . . the complaint

charged negligence and breach of contract in

the rendition of interstate telephone service.

The Ivy court held that the claims were

preempted by federal common law even

though they did not charge violations of

specific provisions of the Communications

Act. However, the alleged torts involved the

level of service provided by the defendants,

not a failure to notify customers of a practice

[as in this case].

Id, at 634. The court finds, contrary to the defendant's

assertion and consistent with the court's discussion of §

332(c) (3) (A), that § 332 (c) (3) (A) does not alter the

analysis or holding in Ivy Broadcasting. Moreover, as

discussed supra, the court finds, similar to the Ivy

Broadcasting court, that a commonsense reading of the

complaint in this case suggests that the state law claims relate

to the failure to disclose rather than rates or service.

More importantly, though, §§ 201(b) and 207 must be

read in conjunction with the savings clause in § 414, which

Apdx A - 12

States in pertinent part:

[nJothing in this chapter contained shall in any

way abridge or alter the remedies now

existing at common law or by statute, but the

provisions of this chapter are in addition to

such remedies.

47 U.S.C. § 414 (emphasis added). The court finds that it

logically follows from this savings clause that the

Communications Act, as amended, did not preempt the entire

field of commercial mobile services. See Hudson Ins..

Company v. American Electric Corp., 748 F. Supp. 837, 844

(M.D. Fla. 1990) (similar finding concerning the

comprehensive Environmental Response Compensation and

Liability Act of 1980), affd, 957 F.2d 826, cert. denied, 506

U.S. 955 (1992). In other words, the court finds that the

savings Clause indicates a lack of intent by Congress to extend

the Communications Act, as amended, to all matters

somehow related to those known to be preempted. Based on

the foregoing, the court concludes that nothing in the

Communications Act, as amended, gives the explicit

suggestion necessary to infer that Congress intended to rely

on a body of federal common law to interpret all actions

involving commercial mobile services.* Cf. Hudson Ins.. Co.

“In making this determination, the court rejects the

defendant's argument that Sprint Corp. v. Evans, 818 F. Supp. 1447

(M.D. Ala. 1993) (Albritton, J.) lends support to the proposition

that the Communications Act completely preempts the entire field

Apdx A - 13

v. American Electric Corp., 748 F. Supp. 837, 843 n.5 (M.D.

Fla. 1990) (reaching same conclusion regarding the

Comprehensive Environmental Response Compensation and

Liability Act of 1980); National Audubon Soc. v. Department

of Water, 869 F.2d 11964 1201-03 (9th Cir. 1988) (reaching

same conclusion regarding Clean Water Act).

If the court were to find otherwise, it would be

allowing federal common law to implement precisely that

which Congress determined was not necessary. Moreover,

this case does not involve unique federal interests; rather,

allowing a state court to hear this contract and fraud dispute

between private parties will not frustrate federal policy. In

fact, given that Congress enacted the savings clause, it

obviously thought state courts could adequately handle

matters in this area. As such, the court emphasizes that it

“will not broaden the language of [any federal] statute without

some clear indication from Congress that this was [its]

intent.” Horn, 903 F. Supp. at 1505 (citing Hyzer v. Cigna

Property & Cas. Ins., Co., 884 F. Supp. 1146, 1151 (E.D.

Mich. 1995)).

of mobile commercial services. The court'reads Sprint as

completely preempting the field of interstate message

transmissions. Here, though, the plaintiff is not attempting to

regulate interstate message transmissions; rather, he is merely

questioning a mobile service provider's disclosure policy to

consumers. While the causes of action in this case may very well

be preempted by a federal statute, the whole field is not preempted

to constitute complete preemption.

Apdx A - 14

The court finds that absent “complete preemption” of

State causes of action, the defendant cannot establish that a

federal court has original jurisdiction by arguing preemption

as a defense:

Ordinarily, federal pre-emption is raised as a

defense to the allegations in a plaintiff's

complaint. Before 1887, a federal defense

such as pre-emption could provide a basis for

removal, but, in that year, Congress amended

the removal statute. We interpret that

amendment to authorize removal only where

original federal jurisdiction exists. Thus, it is

now settled law that a case may not be

removed to federal court on the basis, of a

federal defense, including the defense of pre-

emption, even if the de. se is anticipated in

the plaintiffs complaint, and even if both

parties concede that the federal defense is the

only question truly at issue.

Caterpillar Inc., 482 U.S. at 393-94 (internal citations

omitted) (emphasis in original). The court notes that its

ruling on “complete preemption has no preclusive effect on

the state court's consideration of the substantive preemption

defense.” Bryant, 751 F. Supp. at 973 (quoting Whiteman v.

Raley's, Inc. 886 F.2d 1177, 1180-81 (9th Cir. 1989))

(internal quotations omitted). In fact, the court has no

jurisdiction to rule on the substantive preemption defense

Apdx A - 15

because complete preemption is lacking. Id. “Th{e] court has

no doubt that the Alabama state courts are perfectly capable

of correctly applying the preemption defense. . . . Horn, 903

F. Supp. at 1506.

CONCLUSION

Because the plaintiff's complaint only involves state

law claims and does not involve a substantial question of

federal law, because the complete preemption doctrine does

not convert the plaintiffs’ state claims into claims under the

Communications Act, as amended, and because a defendant

may not remove a case based upon a federal preemption

defense, the court finds that the defendants have failed to

establish that at the complaint pleads a federal question.

Thus, the court does not have original jurisdiction over this

action.

Accordingly, it is CONSIDERED and ORDERED

that the plaintiff's motion to remand be and the same is hereby

GRANTED and this cause be and the same is hereby

REMANDED to the Circuit Court of Lowndes County,

Alabama. The clerk is DIRECTED to take all steps necessary

to effect said remand.

DONE this /s/ ]4th day of May, 1996.

/s/ Jan DeMent

UNITED STATES DISTRICT JUDGE

Apdx A - 16

APPENDIX B

UNITED STATES DISTRICT COURT FOR THE

MIDDLE DISTRICT OF ALABAMA

NORTHERN DISTRICT

BS A 8 Nel ee ar Le ON

SS ae Me SR PR Ee a,

IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF ALABAMA

NORTHERN DIVISION

FILED

AUG 16 1996

CLERK

U.S. DISTRICT COURT

MIDDLE DIST OF ALABAMA

ROBERT MOULTON, III __ )

on behalf himself and all )

others similarly situated )

Plaintiff, )

V. ) CIVIL ACTION NO.

ALLTELL MOBILE ) 96-D-89-N

COMMUNICATIONS OF __)

ALABAMA, INC., )

Defendant. )

ORDER

Before the court is defendant's request for a ruling on

the plaintiffs motion to remand filed August 12, 1996, which

the court construes as to include a motion to reconsider the

decision of the clerk to close this case based on the plaintiff's

notice of dismissal filed on June 20, 1996. For good cause

shown, it is CONSIDERED and ORDERED:

(1) That the defendant's motion for reconsideration be

and the same is hereby GRANTED because pursuant to Rule

Apdx B - 17

23 (e) of the Federal Rules of Civil Procedure a plaintiff must

obtain the court's approval of a dismissal of any potential

class action as well as provide notice to all class members of

such a dismissal.

(2) That this action be and the same is hereby

REINSTATED.

(3) That pursuant to the authority of_Robbyn Van

Bennett, et al. v. Alltel Mobile Communications of Alabama,

Inc., Civil Action No. 96-D-232-N (M.D. Ala. May 14, 1996)

(DeMent, J.) (A copy of the order is attached hereto.) and 28

U.S.C. §1447(c), the plaintiff's motion to remand be and the

same is hereby GRANTED and that this cause be and the

same is hereby REMANDED to the Circuit Court of

Montgomery County, Alabama. The clerk 1s DIRECTED to

take all steps necessary to effectuate paid remand.

DONE this /s/ / 6th day of August, 1996.

/s/ Jan DeMent

UNITED STATES DISTRICT JUDGE

APPENDIX C

SUPERIOR COURT

OF THE

STATE OF WASHINGTON

FOR KING COUNTY

SUPERIOR COURT OF THE STATE OF WASHINGTON

FOR KING COUNTY

MICHAEL LAIR and DAVE

MANWEILER,

individually and on behalf of

NO. 95-2-26309-7-SEA

all others similarly situated,

Plaintiffs,

VS.

U.S. WEST NEW VECTOR

GROUP d/b/a U. S. WEST

CELLULAR

Defendant.

This Notice May Affect Your Rights.

Please Read It Carefully. :

TO: ALL SUBSCRIBERS OF U. S. WEST

NEWVECTOR WHO PARTICIPATED ON A

PAYING BASIS IN A FULL-MINUTE CELLULAR

CALLING PLAN AT ANY TIME DURING THE

PERIOD JULY 1, 1994 THROUGH MAY 1, 1996,

EXCEPT FOR (A) SUBSCRIBERS WITH

TALKALONGS™ CALLING PLANS OR CALLING

PLANS OFFERED TO CALIFORNIA

SUBSCRIBERS, OR (B) SUBSCRIBERS WHOSE

BR eh i ear ta te ee

Apdx C - 19

ACCOUNTS WERE TERMINATED BY

NEWVECTOR FOR NON-PAYMENT

INTRODUCTION

l. lhis Notice is given pursuant to an order of the

Superior Court of Washington for King County. The purpose

of this Notice is to inform you of the pendency of a class

action and the proposed settlement of a class action that is

pending on your behalf against U.S. WEST NewVector

Group d/b/a U.S. West Cellular (““NewVector’’), and to inform

you how this lawsuit and the settlement may affect your nghts

and what steps you may take in relation to it. This Notice is

not an expression of any opinion by the Court as to the merits

of the claims or defenses by any of the parties to this class

action.

DESCRIPTION OF THE CASE

es Michael Lair and Dave Manweiler are the

persons bringing this lawsuit (the “Plaintiffs”). Plaintiffs’

claim relates to NewVector’s method of billing cellular air

time. For certain subscribers, NewVector rounds air time for

billing purposes, to the next highest minute. This is also

called “rounding up” or full-minute billing. For example, a

call that lasts one minute and five seconds is rounded up to

two minutes for billing and air time calculation purposes.

This case is about whether this method of billing was

adequately disclosed and was otherwise appropriate.

Apdx C -20

PLAINTIFFS' CONTENTIONS

3. The complaint alleges that NewVector offers

customers a range of billing plans in each of its service areas.

These plans offer a fixed-charge per month for a specified

period of air time, (e.g., thirty, sixty, seventy-five or two

hundred minutes). For any air time beyond the fixed-charge

time allotted under each plan, the subscriber is charged at

various rates “per minute,” depending on the plan and

whether the call is made during peak or off-peak hours.

4. Plaintiffs allege that the plain import of the

language describing these plans is that a customer receives a

set amount of air time.

5. Once a customer has selected the billing plan,

lewVector requires that each customer sign a Service

rreement which identifies the plan selected. Plaintifis

contend that these Service Agreements contain all of the

terms and conditions of the customers' agreement with

NewVector. Plaintiffs contend that missing from the billing

terms is the fact that NewVector rounds up air time to the

next highest full minute.

“rounding” practice is not fully disclosed or referenced in

NewVector's point of sale documents, /.e., brochures and rate

plans.

7. Plaintiffs contend that rounding up air time

damages Settlement Class Members by preventing customers

from receiving the specified fixed-charge air time under their

plans. For example, if a plan provides thirty minutes of air

time, a customer may actually be on the air for less than thirty

minutes but might begin paying on a per-minute basis due to

rounding up.

8. In their complaint Plaintiffs allege that

NewVector's method of billing constitutes a violation of the

Washington State Consumer Protection Act (and/or other

consumer protection statutes in other states), negligent

misrepresentation, common law fraud and a breach of

contract. Plaintiffs seek monetary damages for the injury

caused to class members, treble damages under the

Washington Consumer Protection Act, and costs of the suit

including attorneys’ fees.

DEFENDANT'S CONTENTIONS

9. NewVector denies all allegations of

wrongdoing and liability. As explained more fully herein,

NewVector contends that full-minute billing was fully

disclosed in NewVector's advertising brochures, bills, service

agreements and by information available to consumers in the

marketplace and was legally permissible and appropmiate.

NewVector also contends that its advertising and sale of

cellular service were not the cause of damages to consumers,

since NewVector changed its billing plans in response to

consumer feedback and lowered rates to provide additional

savings to subscribers. Further, even if subscribers were

Apdx C - 22

unaware of NewVector's advertising brochures and the

standard industry method of full-minute billing, the method

of billing would have been fully disclosed by the first bill,

representing one of numerous ways in which potential

damages would be limited.

CLASS CERTIFICATION

10. For the purposes of Settlement, NewVector

has stipulated to a Settlement Class. A “class” is a legal

mechanism whereby one or more individuals can represent all

those who are similarly situated with respect to defendant's

alleged conduct.

11. The Settlement Class consists of the following

members: All subscribers of U. S. WEST NewVector who

participated on a paying basis in a full-minute cellular calling

plan at any time during the period July 1, 1994 through May

1, 1996 (the “Settlement Class Period”), except for (a)

subscribers with TalkAlong™ calling plans or calling plans

offered to California subscribers, or (b) subscribers whose

accounts were terminated by NewVector for non-payment (an

“involuntary deactivation’).

Your receipt of this notice, therefore, does not

necessarily mean that you are a class member. You are a

class member only if you fit within the class definition set out

above.

LRN GIA IRE ALG LE TOE EE IO NLP GOI LOE LEGS SALI TS

TE CN AOR

SATIRE RA

ISTE ALERTS RT RID GM TNE LON is

TERMS OF THE SETTLEMENT

12. Class Counsel have thoroughly investigated

the facts and applicable law regarding the claims of the

persons on whose behalf they are acting and potential

defenses thereto. Based on this, Plaintiffs and Class Counsel

believe that the proposed settlement set forth below is fair,

reasonable and adequate, and in the best interests of the

Settlement Class. Class Counsel also conducted extensive

negotiations with counsel for NewVector prior to arriving at

this settlement, taking into account the relevant facts and law.

The following description of the proposed settlement is only

a summary, and reference is made to the text of the

Stipulation of Settlement, on file with the Court, for a full

statement of its provisions:

(a) NewVector will fully and _ fairly

disclose “rounding up” or full-minute billing in contracts,

service agreements and all point-of-sale collateral documents,

when it is occurring.

(b) NewVector acknowledges that in

response to this litigation, it has already changed some or all

of its disclosures regarding full-minute billing.

of the Settlement Class according to 1) a member's average

monthly cellular usage during the Settlement Class Period

(measured in terms of minutes of usage or “MOUs’”) and ii)

whether the member is an active NewVector subscriber. or

Apdx C - 24

whether the member's cellular service was terminated

voluntarily by the member, or involuntarily by New Vector:

SETTLEMENT AWARDS

Customer Usage Groupings

Highest ‘250 MOU/Month

High 150-250 MOU/Month

Medium 60-150 MOU/Month

Low <60 MOU/Month

Settlement Awards -- ACTIVE SUBSCRIBERS (z2.e.,

current customers)

Bill Credit (Highest Usage) $26

Bill Credit (High Usage) $18

Bill Credit (Medium Usage) $ 9

Bill Credit (Low Usage)

Settlement Awards -- VOLUNTARY DEACTIVATION

(meaning you elected to terminate your services, i.e., you are

a former customer).

Bill Credit or cash (Highest Usage) $26

Bill Credit or cash (High Usage) $18

Bill Credit or cash (Medium Usage) oe

Bill Credit or cash (Low Usage) $ 3

(d) Former subscribers whose cellular

Apdx C - 25

service was terminated by NewVector for nonpayment (1.e.,

involuntary deactivations) are not included within the

Settlement Class.

(e) Each Settlement Class Member 1s

entitled only to one settlement award. The average monthly

‘llular usage and resulting settlement award for Settlement

Class Members with more than one qualifying cellular line of

service will be calculated using an average of the applicable

MOvws for all qualifying lines of service. Active Settlement

Class Members who also have one or more separate

voluntarily deactivated lines of service will receive their

settlement award as an Active Subscriber. Settlement Class

Members with more than one voluntarily deactivated line of

service, and no active line of service, will be eligible to

reactivate one cellular line of service.

(f) The value of the consideration set forth

above is estimated to be approximately $8.4 million.

NewVector's total obligation may vary with the final

accounting, but the value for each class member remains the

same.

(g) NewVector will pay all notice and

administration costs, including but not limited to the costs of

printed and published notice, publication of summary notice,

identification of class members, and calculation and payment

of claims.

(h) [f a Settlement Class Member within

the voluntary deactivation category reactivates with

Apdx C - 26

NewVector and elects the bill credit option, that class member

i) has the right to waiver of the activation fee, and 11) can opt

for a month-to-month contract if reactivation is with his or her

own phone. If NewVector supplies the cellular phone, then

a standard twelve-month service agreement is required.

(1) In exchange, if the Settlement is

approved, the Court will enter a final judgment dismissing

this action with prejudice, and dismissing with prejudice all

claims, demands, and causes of action against NewVector, its

subsidiaries, affiliates, agents, predecessors, successors and

assigns, as their respective representatives, that were or could

have been asserted by Plaintiffs and the Settlement Class

Members who do not elect to exclude themselves from the

class and its benefits arising out of the facts and

circumstances alleged in this action. If the proposed

settlement is approved, all members of the Settlement Class

who do not elect to exclude themselves from the class and its

benefits will be personally barred and enjoined from

instituting or prosecuting, indirectly or directly any and all

actions or proceedings that they had or have, known or

unknown, arising out of or based upon the facts set forth in

the Complaint. All members of the Settlement Class who do

not elect to exclude themselves from the class, whether or not

they file a claim form, will be bound by the terms of the

settlement and releases of claims and any order of the Court

dismissing the litigation

16. Plaintiffs took into account all of the foregoing

bead

Apdx C-2

factors in agreeing to the proposed settlement. Although

Plaintiffs believe they would have overcome these defenses,

there 1s no certainty that this, in fact, would occur.

HOW CLAIMS WILL BE PROCESSED

1? Accompanying this Notice 1s a Proof of Claim

and Release (“Proot of Claim”) which must be filled out in

order to take part in the settlement. Settlement Class

Members must indicate a) whether they are active or former

subscribers as of the date they mail the Proof of Claim, and b)

if they are former subscribers, whether they elect to reactivate

or receive a cash award. The Proof of Claim must be mailed

on or before October 20, 1997 to: NewVector Claims

Administration, P.O. Box 4068; Portland, OR 97208-4068.

All claims will be administered within 120 days of the final

approval of the Settlement by the Court.

ELECTION BY CLASS MEMBERS

Ls If you are a member of the class, you have a

right to elect whether or not to exercise your nght to exclude

yourself from the class. Your choice will have certain

consequences that you should understand before making this

decision.

[IF YOU WISH TO REMAIN IN THE CLASS, YOU

NEED NOT RESPOND TO THIS NOTICE IN ORDER TO

DO SO BUT YOU SHOULD FILL OUT A CLAIM FORM.

IF YOU DO NOT WISH TO REMAIN IN THE

CLASS, 4 OU MUST RESPOND TO THIS NOTICE.

CONSEQUENCES OF EXCLUSION FROM THE

CLASS

19. If you do not wish to remain a member of the

class, you must request to be excluded. If you request

exclusion, you will not be entitled to share 1n the settlement.

However, if excluded, you may present any claims you have

against NewVector by filing your own lawsuit.

20. If you do not wish to remain a member of the

class, you must mail a written request for exclusion,

postmarked no later than August 18, 1997, to: Steve W.

Berman, Hagens & Berman, 1301 Fifth Avenue, Suite 2929,

Seattle, WA 98101 and Barry Kaplan, Perkins Coie, 1201

Third Avenue, 40th Floor, Seattle, WA 98101.

21. Requests for exclusion must refer to Lair v.

U.S. West NewVector, No. 95-2-26309-7 SEA and must

provide your name and address. For the sake of convenience,

please also provide your current or former NewVector cellular

account numbers. All requests for exclusion must be signed

Apdx C - 29

and expressly state that you wish exclusion from the class.

THE HEARING

22. A hearing (the “Settlement Hearing’’) will be

held before the Honorable R. Joseph Wesley at 8:30 a.m. on

August 25, 1997, in Room W905 of the Superior Court of the

State of Washington for King County, at 516 Third Avenue,

Seattle, WA, for the purpose of determining whether the

proposed Settlement is fair, reasonable and adequate and

whether it should be approved by the Court; whether

judgment should be entered dismissing the actions on the

merits and with prejudice as against Defendant. The

Settlement Hearing may be continued or adjourned from time

to time by the Court at the Settlement Hearing or any

continued or adjourned session thereof without further notice.

Bo. Settlement Class Counsel will apply to the

Court at the conclusion of the Settlement Hearing for an

award of attomeys' fees and costs of $1,686,000, which

represents approximately 20% of the monetary value of the

iF)

ettlement. This amount will be paid by NewVector in

addition to the previously described amounts being offered to

the Settlement Class. Plaintiffs will also seek approval of

payments to the two plaintiffs of $10,000 each, as payment

for the time and expense in prosecuting this case on behalf of

the Settlement Class.

Apdx C - 30

24. Any member of the Settlement Class who has

not requested exclusion may appear at the Settlement Hearing

to show cause why the proposed Settlement should not be

approved, the Class Action should not be dismissed on the

merits with prejudice as against the Defendant, and to present

any opposition to the application of Settlement Class Counsel

for attorneys’ fees, costs and expenses, or to the application

for an award to the plaintiffs, provided, however, that no such

person shall be heard, unless his or her objection or

opposition is made in writing and is filed, together with

copies of all other papers and briefs to be submitted by him or

her to the Court at the Settlement Hearing, with the Court no

later than ten days prior to the hearing, and showing due proof

of service on:

Settlement Class Counsel:

Steve W. Berman

Hagens & Berman

1301 Fifth Avenue, Suite 2929

Seattle, WA 98101

and Counsel for Defendant:

Barry Kaplan

Perkins Coie

1201 Third Avenue, 40th Floor

Seattle, WA 98101-3099

Unless otherwise ordered by the Court, any member of the

Settlement Class who does not make his or her objection or

Apdx C - 31

opposition in the manner provided shall be deemed to have

waived all objections and opposition to the fairness,

reasonableness and adequacy of the proposed settlement, or

to the request of Settlement Class Counsel for attorneys’ fees,

costs and expenses,

ADDITIONAL INFORMATION

25. This notice is not all-inclusive. Any questions

you have concerning the matters contained in this notice (and

any corrections or changes of name or address) should not be

made to the Court but should be directed in wniting to

Settlement Class Counsel at the address listed below.

26. If you wish to communicate with Settlement

Class Counsel as your attorney in this litigation, you may do

so by writing to Steve W. Berman at the firm of Hagens &

Berman, P.S., 1301 Fifth Avenue., Suite 2929, Seattle, WA

98101.

Please do not contact the court for further information

at this time.

DATED: July 8,1997.

Apdx C - 32

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.