AT&T Caught Charging Customers for Services They Didn’t Want- $47 Million Paid in Settlement
What began as a telephone call to complain to AT&T Wireless for billing overcharges turned into a nationwide legal slugfest fought on behalf of hundreds of thousands of miffed AT&T customers— ultimately resulting in a hefty $47 million dollar settlement. Represented by a small Santa Barbara law firm, Austin, Texas resident German Godoy, took his fight to AT&T on behalf of himself and all others who he believed were similarly wronged by AT&T.
The case started when Mr. Godoy decided to cancel his wireless service with AT&T partway through his billing cycle. Upon receiving his bill, he discovered that he was charged for the entire billing cycle, even though he had only used his telephone for a portion of the month in which he cancelled. Understandably upset for paying for service he did not want or use, Mr. Godoy contacted Santa Barbara based class action attorneys Foley, Bezek, Behle & Curtis, LLP. Attorneys at Foley, Bezek, Behle & Curtis, LLP together with the Santa Barbara law firm of Arias Ozzello & Gignac, LLP and the Washington State law firm of Tousley Brain and Stephens, PLLC filed a nationwide class action lawsuit against AT&T the United States District Court for the Western District of Washington (AT&T’s principal place of business) for unfair and deceptive billing practices.
The class action alleged that prior to May of 2003, when a customer of AT&T cancelled wireless service, AT&T’s uniform practice was always to “pro rate” the monthly service charge -- charging the customer only for the portion of the billing cycle during which the wireless service actually was used (i.e., through the date of cancellation of service). AT&T, however, saw an opportunity to generate additional revenue from its fleeing customers by implemented a uniform company policy of not pro rating but instead charging its customers for a full billing cycle for the month in which the cancellation took place in direct violation of its existing terms and conditions. This unfair and deceptive practice was intended to quickly generate income from lost customers in the telecom industry equivalent of saying, “Don’t let the door hit you on the way out!” The class action complaint sought damages for Violation of the Federal Communications Act, Breach of Contract, Unjust Enrichment and Declaratory Relief. Several months after Mr. Godoy filed his complaint, the firm of Lieff, Cabraser, Heimann & Bernstien filed a similar complaint and the two actions were consolidated by stipulation.
In the midst of the grueling class action battle with AT&T, Plaintiffs learned of a situation on the east coast that could have potentially wiped-out Mr. Godoy’s entire case. Unbeknownst to the Plaintiffs, AT&T had recently entered into settlement negotiations with another group of law firms who had filed a similar action in the Superior Court of New Jersey rather than the face the tough prosecution of the action by the Plaintiffs’ team of lawyers. When Plaintiffs learned of the settlement, which offered just over $2 million in recovery to the class, Plaintiffs were shocked.
Undeterred by the fact that a New Jersey judge had preliminarily approved the settlement, Plaintiffs’ attorneys decided to take the fight to the New Jersey Courts. Plaintiffs alleged, amongst other things, that the proposed settlement was inadequate and let AT&T off the hook at the consumers’ expense. Although the New Jersey Judge initially denied Plaintiffs’ motion to intervene into the case, the Plaintiffs’ attorneys ultimately persuaded the Court that the settlement reached in the New Jersey action did not adequately compensate the class. In a well-reasoned, 11-page decision, the Honorable Judge Bernstein of the Essex County, New Jersey Superior Court concluded that “the settlement was unfair.” Shortly after the decision, AT&T approached Plaintiffs’ counsel in an attempt to reach a global settlement of both the Washington and New Jersey actions. In a remarkable turnaround and as a result of the Plaintiffs’ attorneys’ efforts including objecting to the initial settlement and leading the negotiations of the revised settlement, the New Jersey court ultimately approved a revised settlement valued at over $40,000,000 to be distributed to the class of former-AT&T customers
The extreme tenacity of Foley, Bezek, Behle, & Curtis, LLP took what was otherwise a miniscule claim and turned it into a nationwide case that successfully compensated hundreds of thousands of consumers across America and taught AT&T that if they wrong their customers, they will have to pay the price. This was a true victory for consumers across America.