On May 13, 2010, the US District Court for the Southern District of California granted in part and denied in part Verizon Wireless’s motion to dismiss a consumer’s complaint challenging its practice of charging sales tax on the full retail price of telephones, rather than the actual price paid by the consumer. Verizon allegedly based the practice on false representations that California law required Verizon Wireless to collect the tax based on the full retail price. The plaintiff has asserted claims for fraud, unfair competition, and violations of California’s Consumer Legal Remedies Act and Section 201(b) of the Federal Communications Act (Act); she sought restitution and to enjoin the disputed practice. Carney v. Verizon Wireless Telecom, Inc., S.D. Cal. Case No. 09-cv-1854 DMS (AJB).
The federal court dismissed the claims to the extent they rely on the Customer Information Overview document that she received upon purchasing the phone, which the court found not to include language that regards the initial telephone purchase, but rather related to subsequent bills. The court also dismissed plaintiff’s federal claim alleging a violation of Section 201(b) of the Act. Relying on the Ninth Circuit’s recent holding in North County Communications v. Catalog & Technology, 594 F.3d 1149 (9th Cir. 2010), the court held that, to state a 201(b) claim in federal court, the plaintiff must proffer an FCC finding confirming that the “particular practice” at issue in the case violates 201(b) and confers a private right of action. The court distinguished the FCC’s March 18, 2005 Order on the National Association of State Utility Consumer Advocates’ Petition for Declaratory Ruling, in which the FCC held that, “[c]onsistent with the Commission’s prior findings, we reiterate that it is a misleading practice for carriers to state or imply that a charge is required by the government when it is the carriers’ business decision as to whether and how much of such costs they choose to recover directly from consumers through a separate line item charge.” The court found that the FCC ruling is not directly on point to the facts alleged by the plaintiff, and therefore dismissed the 201(b) claim.