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Ricardo Soto v. Superior Telecommunications

April 29, 2011

RICARDO SOTO,
PLAINTIFF,
v.
SUPERIOR TELECOMMUNICATIONS, INC., A CALIFORNIA CORPORATION; C GLOBAL DISTRIBUTORS, INC., A CALIFORNIA
CORPORATION; CCI COMMUNICATIONS, LLC, A DELAWARE LIMITED LIABILITY COMPANY; NETWORKIP, LLC, A TEXAS LIMITED LIABILITY CORPORATION, INTERACTIVE COMMUNICATIONS INTERNATIONAL, INC., A NEVADA CORPORATION; 7-ELEVEN, INC., A TEXAS CORPORATION, ON BEHALF OF ITSELF AND ALL OTHERS SIMILARLY SITUATED; DHAMI CORPORATION, A CALIFORNIA CORPORATION, ON BEHALF OF ITSELF AND ALL OTHERS SIMILARLY SITUATED AND DOES 5 -1000, DEFENDANTS.



The opinion of the court was delivered by: Irma E. Gonzalez, Chief Judge United States District Court

ORDER GRANTING IN PART AND DENYING IN PART DISTRIBUTORS, INC.'S DEFENDANT C GLOBAL MOTION TO DISMISS

[Doc. No. 78]

In this putative class action, Plaintiff Ricardo Soto asserts eight causes of actions stemming from Defendants' alleged failure to disclose hidden fees in connection with the sale of prepaid calling cards. Presently before the Court is a motion to dismiss brought by Defendant C Global Distributors, Inc. Having reviewed the parties' arguments, and for the reasons stated below, the Court GRANTS IN PART AND DENIES IN PART the motion to dismiss.

BACKGROUND

I. Parties

Defendants Superior Telecommunications, Inc. ("STI"), C Global Distributors, Inc. ("C Global"), CCI Communications, Inc. ("CCI"), NetworkIP, LLC ("NetworkIP"), and Interactive Communications International, Inc. ("InComm") (collectively, "Distributor Defendants") provide prepaid calling card services and prepaid calling cards with the brand name "Bonita Senorita" to consumers in California. (SAC ¶ 14.) STI designs, advertises, prints, and provides customer support for the Bonita Senorita cards. Through a contract with STI, NetworkIP and CCI operate the electronic systems that impose the rates, fees, and charges on the cards and provide the telecommunications services for the cards. (Id. ¶ 15.) NetworkIP and CCI negotiate with STI to establish the rates, fees, and charges imposed on the cards, which are memorialized in "rate decks." NetworkIP and CCI also provide customer support for the Bonita Senorita cards. (Id. ¶ 16.)

STI sells "live" Bonita Senorita cards to C Global, who resells the cards to 7-Eleven stores in California. "Live" cards may be used by the consumers without activation at the point of sale. (Id. ¶ 16.) InComm sells Bonita Senorita "swipe" cards to 7-Eleven and its franchisees through a Master Distribution and Service Agreement. A "swipe" card is one that needs to be activated at the point of sale by 7-Eleven or its franchisee stores. In addition to selling the swipe cards to 7-Eleven, InComm provides its FastCard technology to 7-Eleven which allows 7-Eleven to activate the cards at its register. (Id. ¶ 18.)

Plaintiff Ricardo Soto ("Soto") hails from Bolivia, but currently resides in San Diego, California. (Id. ¶ 4.)

II. Allegations

Soto purchased Bonita Senorita prepaid telephone service calling cards offered, sold, and serviced by the Distributor Defendants. (SAC ¶¶ 14, 21.) He uses the cards to call friends and family in Bolivia. (Id. ¶ 21.) Having reviewed posters at convenience stores, Soto believed he would receive 50 minutes for calls to La Paz, Bolivia for the purchase of a $5.00 card (10 cents per minute). (Id. ¶ 22.) The voice prompt at the beginning of his calls to Bolivia stated that he would receive 50 minutes. (Id. ¶ 22.) However, Soto did not receive 50 minutes as promised. (Id. ¶ 24.)

According to Soto, the Distributor Defendants fail to disclose numerous ancillary fees and charges ("hidden fees") on the Bonita Senorita cards. (Id. ¶ 22.) The hidden fees, which are not disclosed on the cards themselves, in their packaging, or in any advertisements, reduce the number of minutes available to the consumer. (Id. ¶¶ 22-23.) In addition to their failure to disclose hidden fees to consumers, the Distributor Defendants fail to provide retail vendors with current information about fees and charges, thereby preventing retail vendors from displaying required information at the point of sale. (See id. ¶ 23.) Had Soto known the true charges, he would not have purchased the calling cards. (Id. ¶ 24.)

III. Procedural History

Soto originally filed this action on behalf of himself and a putative class of similarly situated others in the Superior Court of California in San Diego. (Doc. No. 1.) Defendants 7-Eleven, Inc. and DHAMI Corporation (both terminated from the case February 14, 2011) removed the action to this Court based on the Class Action Fairness Act. (Id.) Soto has amended his complaint twice, and he filed his second amended complaint ("SAC") on November 24, 2010. (Doc. No. 40.) Defendant C Global filed the present motion to dismiss on March 11, 2011. (Doc. No. 78.) Soto filed a response in opposition. (Doc. No. 80.) C Global did not ...


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