Class Action

AT&T Class Action Defense Cases–Morgan v. AT&T: California Appellate Court Reinstates Class Action Against AT&T Holding Class Action Complaint Sufficiently Alleged UCL, CLRA and Fraud To Survive Demurrer

By Michael J. Hassen

Class Action Complaint Alleging AT&T Violated State Consumer Protection Laws Concerning Advertising of Premium Cell Phone Properly Dismissed as to False Advertising and Declaratory Relief Claims but UCL, CLRA and Fraud Claims Improperly Dismissed California Appellate Court Holds

Plaintiffs filed a putative class action against AT&T Wireless alleging violations of various state consumer protection laws; specifically, the class action complaint was “based upon AT&T‟s marketing and sale of premium cell phones that operated on a wireless network that AT&T allegedly modified in a manner that rendered those premium cell phones essentially useless.” Morgan v. AT&T Wireless Services, Inc., ___ Cal.App.4th ___ (Cal.App. September 23, 2009) [Slip Opn., at 1-2]. According to the allegations underlying the class action, AT&T sold the Sony Ericsson T68i as a premium cell phone that “could make and receive calls around the world and had other advanced technologies”; at the time, however, AT&T knew that “it had no intention to continue to support and service the T68i” and modified its wireless system so as to render the phone “worthless.” Id., at 3. AT&T also allegedly sought to “surreptitiously ‘phase out’ these worthless premium phones without paying any compensation to the purchasers, or providing them with a new phone of equal capabilities and compatible with the changes made to their system,” id. The original class action complaint was 13 pages long and alleged violations of California’s Unfair Competition Law (UCL), False Advertising Law, Consumers Legal Remedies Act (CLRA), fraud and declaratory relief; the third amended class action complaint contained the same claims for relief but had “morphed” into a 47-page long pleading “after the trial court sustained AT&T‟s successive demurrers on the ground that the complaint lacked the requisite specificity.” Id., at 2. The trial court again sustained AT&T’s demurrer to the class action complaint because “plaintiffs’ theory of recovery [was] obscured by extraneous allegations in the third amended complaint” and because “plaintiffs still failed to identify with particularity any actionable misrepresentations made by AT&T.” Id. The Court of Appeals affirmed in part and reversed in part, sending the class action back for further proceedings.

We do not here summarize the allegations in each variation of the class action complaint. See Morgan, at 3-13. Nor do we summarize the theories underlying the class action’s claims for relief. See id., at 13-17. In ruling on AT&T’s demurrer, the trial court observed that the class action complaint “included so much extraneous matter that it was difficult to determine what plaintiffs’ theory was, and which allegations supported that theory.” Id., at 18. The trial court concluded, “In sum, no CLRA damages claim is stated because no CLRA notice was given. Plaintiffs‟ argument that pre-suit notice provided to [AT&T] as required by the CLRA may be provided 2 years into the case, with the filing of an amended complaint, is rejected. No fraud claim is stated because plaintiffs do not allege what specific misrepresentation was made to them that they relied on and were injured by. At most, a UCL or FAL claim might be found amongst the foliage, but plaintiffs have not identified where.” Id., at 19. Because plaintiffs had “failed to identify with particularity any actionable misrepresentation by AT&T” after four attempts to do so, and because plaintiffs had not identified how the class action complaint may be amended to rectify this deficiency, the trial court sustained the demurrer without leave to amend. Id.

Full post as published by Class Action Defense Blog on September 28, 2009 (boomark / email).