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Sprint Text Messaging Tax Suit Dropped

Alleged improper taxes for users of network cards

By Jon Hood
ConsumerAffairs.com

June 30, 2009

• How to Avoid Early Termination Fees • Site Offers Cell Phone Contract Swapping --- News • Verizon Wireless To Increase Termination Fees to $350 • Verizon Wireless Revamps "Exclusive" Handset Deals • Sprint Text Messaging Tax Suit Dropped • Senate Committee Investigates Cell Phone Contracts • Senate Committee To Investigate Cell Phone Contracts • Judge Rules Sprint Termination Fees are Illegal • Verizon Pays $21 Million to Settle Termination Fee Lawsuit • Washington Power Grab May Be Price of Lower Cell Phone Termination Fees • U.S. Cellular Settles 'Free' Phone Complaint • Cell Phone Industry Losing Its Treasured Arbitration Clauses • Wireless Firms Face Pressure On Termination Fees • Verizon, FCC Cook Up Termination-Fee Plan • FCC Not Ready to Pry Open Wireless Networks • Sprint Removes Three Fees, Adds Two New Ones • Sprint, T-Mobile Prorate Termination Fees • AT&T Changes Contract Policy • California Supreme Court OKs T-Mobile Class Action • Verizon Wireless Changes Contract Policy • FCC, Congress May Limit Cable, Cell Phone Termination Fees • Cell Phone Consumers Win Court Victory • Text Messaging Charges Surprise Cell Phone Users • Cell Phone Customers Held Captive by Termination Fees • Poll Finds Cell Phone Users Want Stronger Consumer Protection • Michigan Challenges One-Sided Cell Phone Contracts • New York Considers Tough Cell Phone Consumer Protection Law • California to Try Again With Telecommunications Bill of Rights • California Suspends Wireless Bill of Rights • California Adopts Wireless Consumer Bill of Rights

Sprint scored a victory last week when a federal judge dismissed a nationwide class-action complaint alleging that the company charged extraneous fees for text messages and voicemails sent to customers using network cards.

The suit was filed by the Utility Consumers' Action Network (UCAN), a non-profit consumer advocacy group. According to the suit, Sprint began charging taxes and surcharges for text messages to network card users in September 2006. This practice is improper because the cards have no keypad or screen and thus can't alert customers when they've received a message. The suit further alleged that Sprint refused to issue refunds when prompted by consumers.

U.S. District Judge Robert Bryan decided that the plaintiffs failed to show that a nationwide class action would "outweigh the complexity of such a proceeding." Bryan concluded that "a nationwide class in this situation would not be a superior method of adjudicating" the issue.

UCAN, based in California, was founded in 1983 and boasts over 30,000 members. The organization's website says that UCAN "was formed to protect consumers from utility and corporate abuse" and that the group's "not-for-profit legal team has saved San Diego consumers billions of dollars in unfair utility rate hikes." The organization is especially involved in consumer issues surrounding energy, gas and water, and communications.

Bryan took over the case in 2008, after colleagues recused themselves.

The instant action is only one in a number of recent class actions involving text messages. Two weeks ago, a federal court ruled that publisher Simon & Schuster violated telemarketing laws when it sent out unsolicited e-mails hawking a new Stephen King book. That decision will likely have wide-ranging implications for electronic marketing in the 21st century.

A suit last year accused wireless providers of overcharging customers for text messages, which use very little bandwidth and cost next to nothing to process. That action brought counts in unjust enrichment, unauthorized charges, and wrongful collections, and named as defendants seven wireless providers, including Sprint, Verizon, and AT&T. A similar suit was also lodged against T-Mobile.

Bryan's decision, while barring a nationwide suit, leaves the door open for a class action made up entirely of California residents. Plaintifffs' attorneys often file suits on behalf of statewide classes when nationwide suits fail or are impracticable.

And while the ruling is a welcome development for Sprint — spokesman John Taylor said the company is "pleased with the judge's decision" — the company also has other lawsuits to contend with. In March, leading class action firm Coughlin Stoia Geller Rudman & Robbins filed a securities suit in Kansas accusing the company of misrepresenting its own health and stability, thereby driving up stock prices.

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