WASHINGTON-The Wireless Consumers Alliance Inc. this week plans to ask the Federal Communications Commission to rule that state courts are not pre-empted by federal law from awarding monetary damages against wireless carriers for misleading advertising, a liability issue with far-reaching implications beyond the litigation itself.
The request stems from a class-action lawsuit against Los Angeles Cellular Telephone Co. for alleged false and deceptive advertising of its “seamless calling area” throughout Southern California.
A California superior court in March rejected the Alliance’s request for monetary damages in the case, siding with L.A. Cellular that to do so would force it to regulate rates in violation of a 1993 law pre-empting entry and rate regulation of commercial mobile radio service providers.
The Alliance took its case to a California appeals court. On June 15, the appeals courts stayed proceedings pending a ruling by the FCC on whether the Communications Act prevents state courts from awarding monetary relief as a remedy for fraud and false advertising claims.
The Alliance said the fallout of deceptive claims about wireless coverage is exacerbated because many people buy phones for safety. One L.A. Cellular subscriber, Marcia Spielholz, was attacked in her car and shot in the face while trying unsuccessfully to make a 911 cellular call in an unserved service area in December 1994.
Spielholz and AT&T Wireless Services Inc., managing partner of L.A. Cellular, have since negotiated what is believed to be a multimillion dollar out-of-court settlement.
In the class-action lawsuit, the Alliance says the issue of liability goes far beyond false and deceptive advertising.
Carl Hilliard, a former law professor who heads the Alliance, said wireless carriers potentially could be shielded from all lawsuits seeking monetary damages if the California trial court’s ruling is upheld.
As a result of a strong lobbying campaign by the wireless industry, Congress appears well on its way to passing legislation this year giving mobile phone operators limited liability protection on par with state-regulated landline telephone companies.
“Wireless carriers successfully pressed Congress and the commission to replace regulation with marketplace competition. It is a paradox for these same carriers to now argue that they are `regulated’ and thus immune from state consumer protection, contract and tort laws, which are an essential part of the marketplace,” said Hilliard.
L.A. Cellular disagrees.
“Congress … has clearly and unequivocally pre-empted any state regulation of the rates that cellular service providers charge their subscribers.
“This federal prohibition, which applies to judicial as well as to legislative and administrative action, precludes any monetary relief plaintiffs seek in this case because calculating the relief would necessarily enmesh the Superior Court in precisely the type of state rate regulation that Congress has expressly proscribed,” stated L.A. Cellular in a brief filed with the appeals court on May 12.
