A Jan. 9 scheduling hearing in Saline County Circuit Court is set for an 8-year old class-action lawsuit over early termination fees charged to Alltel cellphone customers.
The 2006 lawsuit seeks repayment for Arkansas customers who dropped their Alltel service before their contracts expired and were charged a $200 “early termination fee,” also called the “early disconnect penalty,” said plaintiff attorney Scott Poynter of Little Rock. At least 65,000 Alltel accounts were assessed the fee, said Poynter, who is co-counsel with Todd Turner of Arkadelphia.
The alleged purpose of the fee was to recompense Alltel for the money it spent subsidizing the costs of cellphones so it could sell them to customers at discounted rates, he said.
But the plaintiffs contend the fee had no real connection to Alltel’s expenses, but was primarily intended to discourage customers from leaving for better deals and superior service, Poynter said. The lawsuit claims the fee violated the Arkansas Deceptive Trade Practices Act.
“The early termination fees were a marketing ploy,” he said. “We think it was fraud. The fee only served to keep customers hostage.”
The statute of limitations restricts the plaintiff pool to customers between February 2001 - five years before the suit was filed - and September 2009, when Verizon Communications Inc. purchased the company, Poynter said. Verizon inherited the lawsuit with the purchase.
Representatives for Verizon did not return a request for comment Friday made through their attorneys at the Quattlebaum, Grooms, Tull & Burrows firm.
Verizon has endured similar litigation before. In 2008, the company paid $21 million to settle complaints about its termination feer aised in a California lawsuit. T-Mobile paid an $11.5 million settlement in 2009.
The phone industry abandoned the practice of assessing flat-rate termination fees after the Federal Trade Commission imposed rules requiring pro-rated fees based on the length of time the customer had subscribed to the service.
The litigation’s progress has been delayed with a plaintiffs’ appeal to the Arkansas Supreme Court after the presiding judge, Grisham Phillips, declined to certify the suit as a class-action complaint. The high court overturned that decision in January 2010.
The proceedings are heading for another turn before the Supreme Court over a dispute about a defense demand for arbitration, but the judge has set a tentative trial date for August, Poynter said.
The Jan. 9 hearing is for the judge to schedule pretrial preparation and review the plaintiffs’ plan to inform plaintiffs about the litigation and give them the opportunity to withdraw from the suit and mount their own case against Verizon. The plaintiffs have a website, www.allteletfclassaction.com.
The lead plaintiff is Peter Rosenow of Benton, who subscribed to Alltel in 1997 but quit eight years later out of dissatisfaction with the quality of service. The company charged him the $200 fee, but Rosenow disputed he owed the money, demanding that Alltel show him a copy of a contract that required him to pay.
Alltel refused, saying it didn’t have to provide a copy. Disputing that he had ever signed a contract requiring him to pay the fee, Rosenow continued to refuse to pay. But he eventually capitulated in October 2005, fearing what Alltel could do to his credit rating, after Alltel continued to add additional late fees and taxes to the bill. He paid $230 under protest and filed the lawsuit six months later.
Arkansas, Pages 11 on 12/28/2013