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Michael Willard et al v. At&T Communications of California

March 6, 2012

MICHAEL WILLARD ET AL., PLAINTIFFS AND APPELLANTS,
v.
AT&T COMMUNICATIONS OF CALIFORNIA, INC., ET AL., DEFENDANTS AND RESPONDENTS.



APPEAL from a judgment of the Superior Court of Los Angeles County, Anthony J. Mohr, Judge. (Los Angeles County Super. Ct. No. BC437043)

The opinion of the court was delivered by: Kriegler, J.

CERTIFIED FOR PUBLICATION

Affirmed.

Plaintiffs and appellants Michael Willard and Jessica Sher subscribed to a wireline*fn1 telephone service and to a service offered by the telephone company that suppressed their names, addresses, and telephone numbers from the White Pages telephone directory and 411 directory assistance ("nonpublished service"). The voice communications services industry in California is under the jurisdiction of the California Public Utilities Commission (CPUC). (Pub. Util. Code, § 701.)*fn2 All rates for services must be "just and reasonable." (Pub. Util. Code, § 451.) In 2006, the CPUC determined that competitive market conditions supported pricing freedom for, among other things, nonpublished service, with the caveat that the matter would be reopened if there was evidence of market abuses. (CPUC Decision 06-08-030, issued Aug. 24, 2006, p. 156.) Thereafter, the telephone company raised its fee for nonpublished service. Believing the fee was too high, plaintiffs brought this putative class action for declaratory, restitutionary, and injunctive relief.

The trial court entered a judgment of dismissal of the complaint after sustaining a demurrer of defendants and respondents AT&T Communications of California, Inc., and Pacific Bell Telephone Company (collectively AT&T)*fn3 to the complaint without leave to amend.*fn4 Plaintiffs contend the complaint sufficiently alleges causes of action for unconscionability and violations of Business and Professions Code section 17200 et seq. (section 17200).*fn5 We affirm.

PROCEDURAL BACKGROUND

I. Allegations of Complaint (Filed May 3, 2010)*fn6

AT&T violated its wireline subscribers' right to privacy under California Constitution, article 1, section 1, by grossly overcharging its customers for nonpublished service and for not listing their names, addresses, and telephone numbers in the White Pages only ("unlisted service"). Subscribers have a constitutional right to exclude this information from the White Pages and directory assistance. Willard and Sher were subscribers to AT&T's nonpublished service. AT&T charged $1.25 per month for nonpublished service and $1.00 per month for unlisted service. These fees generated revenues of $40 million for services that cost AT&T almost nothing to provide. Competing wireline carriers in California also engaged in this practice and form an oligopoly in the wireline market.

A. First Cause of Action

In the first cause of action, for declaratory relief to deem the contract to be unconscionable, plaintiffs alleged the contractual fees for subscribing to nonpublished service and unlisted service were unconscionable, because of the true cost of providing the services, unequal bargaining power, and the customer's right to privacy. AT&T had discretion to set the level of the fees.

B. Third Cause of Action*fn7

In the third cause of action, for violation of section 17200, plaintiffs alleged that, since at least June 2007, AT&T charged its customers unconscionable and oppressive fees for nonpublished service and unlisted service. This practice violated the implied covenant of good faith and fair dealing, as it breached the customer's right to privacy, enforced unconscionable and oppressive contractual fee provisions, and was unfair; and plaintiffs were entitled to an award of restitution damages and injunctive relief.

II. Pleadings on AT&T's Demurrerto Complaint

In a demurrer to the complaint, AT&T contended, in relevant part, that the complaint failed to state facts sufficient to constitute a cause of action and the trial court should abstain, under the doctrine of judicial abstention, from adjudicating the complaint because the issues involve complex economic policy best suited to the Legislature or an administrative agency. AT&T contended there is no right to privacy in a telephone listing, and the Legislature has recognized telephone companies may charge for nonpublished service and unlisted service.

In opposition, plaintiffs contended they enjoy a right to privacy with respect to their telephone numbers and addresses, the causes of action state a claim for relief, ...


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