A lawsuit which is part of four coordinated class action lawsuits against cell phone providers, involving early termination fees, has begun arguments in a California court today. At issue is a California law covering liquidated damages. California Civil Code ยง1671(d), governing how to collect liquidated damages when someone breaks a contract, requires cell phone companies to prove that the fee reasonably reflects the money they lost by losing the customer. If the FCC decides to regulate early termination fees, it is possible that the fees would become part of the cell phone companies’ rate structure, which federal law pre-empts from state regulation.The first case, against Sprint, resulted in a pro-Sprint verdict. Sprint’s vice president of marketing testified that the company set its early termination fees by comparing the rates competitors used to keep more customers from leaving. The current case being heard is against Verizon.
Source: http://www.law.com/jsp/article.jsp?id=1202422467192&pos=ataglance
