Apparently, a huge class action against the wireless network has been certified by an arbitrator. How huge? Well, the RCR News article says that Verizon may be forced to pay nearly a billion bucks in refunds for the early termination fees they have charged over the years.
This article caught my interest because Verizon wireless as well as other mobile phone carriers have class action policies stated in their wireless contracts or terms and conditions. Here's the statement from the wireless contract or terms and conditions of Verizon:
THIS AGREEMENT DOESN'T PERMIT CLASS ARBITRATIONS EVEN IF THOSE PROCEDURES OR RULES WOULD. IN EXCHANGE FOR YOUR AGREEMENT TO ARBITRATE ON AN INDIVIDUAL BASIS, WE'RE PROVIDING YOU A FREE INTERNAL MEDIATION PROGRAM. MEDIATION IS A PROCESS FOR MUTUALLY RESOLVING DISPUTES. A MEDIATOR CAN HELP PARTIES REACH AGREEMENT, BUT DOESN'T DECIDE THEIR ISSUES. IN OUR MEDIATION PROGRAM, WE'LL ASSIGN SOMEONE (WHO MAY BE FROM OUR COMPANY) NOT DIRECTLY INVOLVED IN THE DISPUTE TO MEDIATE. THAT PERSON WILL HAVE ALL THE RIGHTS AND PROTECTIONS OF A MEDIATOR. NOTHING SAID IN THE MEDIATION CAN BE USED IN A LATER ARBITRATION OR LAWSUIT.Well, I'm not really an expert in law but it seems that the fact that this arbitration has been certified is not favorable to the beleaguered wireless network.
The arbitrator who made the decision is Eugene I. Farber, a former federal judge and senior arbitrator-mediator for the American Arbitration Association in White Plains, N.Y. He explained his decision in this statement,
“I find the claimants have complied with the criteria for class certification. My decision is also motivated by my conclusion that as a matter of equity and fairness, millions of class members are entitled to adjudication of the central common questions of fact or law in this arbitration related to whether the $175 early termination fee imposed by respondents Cellco Partnership d/b/a Verizon Wireless … is based upon an unenforceable liquidated damage clause.”Farber's decision to certify the class action has historical significance as well as financial implications. Financial because the refunds that Verizon make hand out is estimated to be worth nearly a billion bucks. Historical because with approximately 70 million members of the subscriber class it is the largest class ever certified in arbitration. This class action suit is also the largest class ever certified on a contested motion in any type of forum, litigation or arbitration.
The implementation of early termination fees have always been a controversial issue. Consumer groups and customers have complained that it is an unfair practice and they have succeeded in forcing some carriers to make their ETFs pro-rated. In fact, Verizon Wireless was the first carrier to announce that their ETF will be prorated.
If this class action suit succeeds then Verizon Wireless consumers will gain a great advantage. They will be able to seek a refund worth nearly a billion dollars. And maybe this ruling will also trigger similar suits in other wireless networks because they too have been imposing early termination fees on their consumers. It may also change some of the statements in the wireless contracts and terms and conditions that will be signed by subscribers.
I'll continue to monitor the progress of this development. I'll also make sure that I post any updates of this class action suit as well as other related incidents in this blog.