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Ramzy Ayyad v. Sprint Spectrum

October 29, 2012

RAMZY AYYAD, PLAINTIFFS AND RESPONDENTS,
v.
SPRINT SPECTRUM, L.P., DEFENDANT AND APPELLANT.



Trial court: Alameda County Superior Court Trial judge: Hon. Winifred Y. Smith (Alameda County Super. Ct. No. JCCP 4332)

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

CERTIFIED FOR PUBLICATION

In Cellphone Termination Fee Cases (2011) 193 Cal.App.4th 298 we affirmed a December 2008 judgment in favor of the plaintiffs*fn1 in this long-running class action against Sprint Spectrum, L.P. (Sprint). We also affirmed the trial court's order granting Plaintiffs a partial new trial on the issue of Sprint's actual damages and the calculation of a setoff to which Sprint might be entitled. (Id. at pp. 303, 330.) In our disposition, we remanded for further proceedings limited to those issues. (Id. at p. 330.)

When the matter returned to the trial court, Sprint moved to compel arbitration of all of the named plaintiffs' claims, the very same claims that had been resolved by our affirmance of the December 2008 judgment. The trial court refused to entertain Sprint's motion. It ruled that its jurisdiction on remand was restricted to the issues specified in the dispositional language of our earlier opinion.

Sprint now appeals from the denial of its motion to compel arbitration. We conclude that the trial court properly refused to hear Sprint's motion, because doing so would have exceeded its jurisdiction on remand. Accordingly, we affirm the trial court's order denying the motion to compel arbitration.

FACTUAL AND PROCEDURAL BACKGROUND

Our opinion in Cellphone Termination Fee Cases, supra, 193 Cal.App.4th 298 contains a detailed description of the history of this litigation. We refer the reader to that opinion for a full statement of the facts. (See id. at pp. 303-309.) We summarize here only the events relevant to the issues presented by the current appeal.

Initial Litigation in the Trial Court

Plaintiffs filed their initial complaint in this action in Alameda County Superior Court in July 2003. They alleged that Sprint's flat early termination fees (ETF's) violated California's Consumers Legal Remedies Act (CLRA), Civil Code section 1750 et seq., and Unfair Competition Law (UCL), Business and Professions Code section 17200 et seq. and that the ETF's were unauthorized penalties under Civil Code section 1671. (Cellphone Termination Fee Cases, supra, 193 Cal.App.4th at pp. 303-304.) In June 2005, Plaintiffs filed a third consolidated amended complaint including additional causes of action for unjust enrichment and money had and received. (Id. at p. 304 & fn. 8.) In its answer to that complaint, Sprint asserted a number of affirmative defenses, including setoff and arbitrability.

In June 2006, the trial court certified Plaintiffs' claims as a class action on behalf of an "ETF Payer Class." The court defined the class as " '[a]ll persons who (1) had a wireless telephone personal account with [Sprint] with a California area code and a California billing address[] who (2) cancelled the account at any time from July 23, 1999, through [March 18, 2007], and (3) were charged an early termination fee in connection with that cancellation.'" (Cellphone Termination Fee Cases, supra, 193 Cal.App.4th at p. 304.) "The class certification was 'expressly predicated' on an 'aggregate approach to monetary relief and the related setoff and cross-claim issues.' Thus, if the ETF's were found to be illegal and unenforceable [Sprint] would still potentially be entitled to offset against any class recovery for [its] actual damages in the form of lost profits." (Ibid., fn. omitted.)

Sprint was permitted to file a cross-complaint for breach of contract seeking monetary damages and equitable relief against the named Plaintiffs and putative class members in the event the ETF's were found to be unenforceable penalties. (Cellphone Termination Fee Cases, supra, 193 Cal.App.4th at pp. 304-305.) The trial court declined to certify a cross-defendant class, because it determined that if Sprint prevailed on its cross-complaint, it would be entitled only to setoff and not to affirmative relief. (Id. at p. 305.)

The court below decided there should be a single trial before the court and jury, with the judge and jury each deciding different issues. (Cellphone Termination Fee Cases, supra, 193 Cal.App.4th at p. 305.) On the issue of damages, Plaintiffs would present aggregate damages calculations for their class claims to the jury, which would then determine the aggregate amount owed to Plaintiffs. (Id. at p. 304, fn. 7.) Similarly, Sprint would present to the jury its aggregate damage calculations for its cross-claims against Plaintiffs as a class, and the jury would state the amount members of the class might owe Sprint. (Ibid.) The trial court would then set off the two numbers. (Ibid.) If the net amount was " 'a positive for Plaintiffs,'" the court would enter judgment in that amount. If the net amount was " 'zero or a negative for the Plaintiffs,'" the court would enter a judgment of zero in favor of Plaintiffs. (Ibid.) Sprint would not " 'be permitted to recover money from the Plaintiff/Cross-Defendant class.'" (Ibid.)

The Verdict, Statement of Decision, and Judgment

After a month-long trial, plaintiffs prevailed on all of their legal claims. (Cellphone Termination Fee Cases, supra, 193 Cal.App.4th at p. 308.) The trial court concluded that Sprint's flat ETF's were unenforceable contractual penalties under Civil Code section 1671, subdivision (d). (Ibid.) On the basis of that conclusion, it found plaintiffs had also prevailed on their claims for violation of the CLRA and UCL, as well as on their claims for unjust enrichment and money had and received. (Ibid.) The jury determined the total amount of ETF's that Plaintiffs had paid to Sprint was $73,775,975, and the trial court ruled Plaintiffs were entitled to restitution in that amount. (Id. at pp. 307, 308.) The jury also found that Plaintiffs had breached their contracts with Sprint and that the early termination of those contracts had caused Sprint damages of $225,697,433. (Id. at p. 307.)

Although it determined that plaintiffs were entitled to restitution of the collected ETF's, the trial court also ruled that this amount was subject to a setoff for Sprint's cross-claims. (Cellphone Termination Fee Cases, supra, 193 Cal.App.4th at p. 308.) After setting off Plaintiffs' recovery against Sprint's damages on its cross-claims, Sprint's resulting net recovery was $151,921,458. In accordance with its earlier order, the court reduced Sprint's recovery to zero. (Ibid.) The court's grant of injunctive relief was unaffected. (Ibid.)

On December 24, 2008, the trial court entered a judgment reflecting these determinations. (Cellphone Termination Fee Cases, supra, 193 Cal.App.4th at p. 308.) The court later granted in part Plaintiffs' motion for a new trial, ordering a new trial on the amount of Sprint's actual damages under its ...


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