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Rex Elder v. Pacific Bell Telephone Company et al

April 30, 2012


Trial Court: Marin County, Superior Court Trial Judge: Hon. James Ritchie, Judge (Marin County Super. Ct. No. CIV 095162)

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


Plaintiff Rex Elder, individually and on behalf of a class of similarly situated individuals, filed this lawsuit seeking relief against defendants Pacific Bell Telephone Company (hereafter Pacific Bell) and ACI Billing Services, Inc., doing business as OAN (hereafter OAN)*fn1 for the inclusion of allegedly unauthorized charges on a subscriber's telephone bill, a practice known as "cramming," in violation of Public Utilities Code section 2890, subdivision (a). We agree with plaintiff that the superior court erred in sustaining defendants' demurrers without leave to amend. Accordingly, the judgment of dismissal is reversed and the matter is remanded for further proceedings.


A. Law Relating to Cramming

In 1998, the Legislature added sections 2889.9 and 2890 to the Public Utilities Code*fn2 to address "cramming," which is the practice of including unauthorized charges on a subscriber's telephone bill. (See Stats. 1998, ch. 1036, § 2; Stats. 1998, ch. 1041, § 3, amended by Stats. 1999, ch. 1005, § 65.7, and by Stats. 2000, ch. 931, § 4.) In pertinent part, section 2889.9 reads: "(a) No person or corporation shall misrepresent its association or affiliation with a telephone carrier when soliciting, inducing, or otherwise implementing the subscriber's agreement to purchase the products or services of the person or corporation, and have the charge for the product or service appear on the subscriber's telephone bill." In pertinent part, section 2890 reads: "(a) A telephone bill may only contain charges for products or services, the purchase of which the subscriber has authorized." The statutes also contain provisions addressing billing and dispute procedures regarding cramming. (§§ 2889.9, 2890.) By these statutory enactments, the Legislature intended "to do all of the following: [¶] (a) Reduce the inclusion of unauthorized charges on a telephone subscriber's bill, a practice known as 'cramming.' [¶] (b) Clarify the rights and remedies available to California consumers with regard to telephone billing disputes. [¶] (c) Provide California consumers with a consistent, effective, and easily accessible means of resolving disputes over unauthorized, inadvertent, misleading, or fraudulent charges that appear on their telephone bills. [¶] (d) Encourage the verification of telephone charges." (Stats. 1998, ch. 1041, § 1.)

B. Current Lawsuit*fn3

In October 2009, plaintiff, on behalf of himself and others similarly situated, sued defendants Pacific Bell and OAN seeking relief for cramming.*fn4 By the first amended complaint, plaintiff sought relief for a class defined as: "[A]ll landline telephone subscribers in the state of California who suffered losses or damages as a result of . . . Pacific Bell billing for OAN products or services not authorized by the subscriber; provided, however, that the following are excluded from this Class: (i) the Defendants, and (ii) any employee of Defendants." The pleading set forth causes of action for breach of contract (against Pacific Bell only), tortious interference with a contract and restitution/unjust enrichment (against OAN only), unfair business practices in violation of California's Unfair Competition Law (Bus. & Prof. Code, § 17200, et. seq.) (hereafter UCL)*fn5 (against both defendants), and unauthorized telephone charges in violation of section 2890 (against both defendants).*fn6 In the prayer for relief, plaintiff sought certification of a class and appointment of counsel, declaratory and injunctive relief, actual damages, including prejudgment interest, exemplary damages, costs, and attorney fees.

Defendants generally demurred to the entire complaint based on the ground that the Public Utilities Commission (hereafter PUC) had exclusive or primary jurisdiction to resolve the lawsuit (Code Civ. Proc., § 430.10, subd. (a)), and generally demurred to each count based on the failure to allege facts sufficient to state a cause of action (Code Civ. Proc., § 430.10, subd. (e)). OAN specifically demurred on the ground that each cause of action against it was uncertain. (Code Civ. Proc., § 430.10, subd. (f).) Plaintiff opposed the demurrers.

The superior court granted defendants' general demurrers without leave to amend on the ground that the PUC had exclusive jurisdiction over this lawsuit. Because of its ruling that it lacked jurisdiction, the court did not address defendants' alternate argument that this lawsuit should be stayed under the doctrine of primary jurisdiction and the PUC should be given the opportunity to rule on plaintiff's claims in the first instance. The court also found that a cause of action for tortious interference with a contract against OAN failed because the complaint did not allege facts to support a necessary inference that OAN knew the third-party charges were unauthorized but nonetheless it forwarded them to Pacific Bell for inclusion in a subscriber's telephone bill. Having sustained the demurrers without leave to amend, the court issued a judgment dismissing the lawsuit in its entirety. Plaintiff timely appeals.


I. Standard of Review

In reviewing the ruling on defendants' demurrers, "we do not review the validity of [the superior court's] reasoning but only the propriety of the ruling itself. [Citation.]" (Wilner v. Sunset Life Ins. Co. (2000) 78 Cal.App.4th 952, 958.) *fn7 "We independently evaluate the complaint, construing it liberally, giving it a reasonable interpretation, reading it as a whole, and viewing its parts in context. [Citation.] Treating as true all material facts properly pleaded, we determine de novo whether the factual allegations of the complaint are adequate to state a cause of action under any legal theory, regardless of the title under which the factual basis for relief is stated. [Citation.]" (Burns v. Neiman Marcus Group, Inc. (2009) 173 Cal.App.4th 479, 486-487.) "Each element must be pleaded with particularity so as to apprise the defendant of the specific grounds for the charge and enable the court to determine whether there is any ...

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