The battle will continue over $300 million Sprint Nextel charged customers who prematurely canceled their calling contracts.
A California judge issued a new ruling this week ordering a new trial in the class-action case. The former Sprint customers were challenging the company's ability to charge so-called early-termination fees of as much as $200 each if they scrapped service before the expiration of their calling contract. Sprint is challenging the new ruling.
Sprint and the attorneys representing the company's former customers have disagreed in courtroom skirmishes as well as in the later analysis of what the resulting rulings mean.
The issue of early termination fees has been a point of contention for far more than just Sprint and its customers. Other carriers, including Verizon Wireless, have confronted similar complaints.
Cell phone companies said they resorted to such fees to protect their ability to recover subsidies allowing consumers to receive free or reduced-price phones. If the customers agree to stay with the cell phone company for at least two years, then the companies figured they could make their money back in calling fees.
Yet consumers are frustrated. Sometimes they say the quality of service degrades and they want other options. Or they would like to sign up for a better offer with another company. Their complaints have become fierce and loud.
The major carriers have responded with new policies that will pro-rate the fees a customer faces depending whether his or her calling contract is to expire in a couple of months or in a couple of years. Some carriers also have agreed to various settlements.
"Consumer outcry over ETFs — which can run $175 to $200 — have prompted a flood of class-action lawsuits around the country and heated policy debates in the nation’s capital," RCR Wireless noted in a report last month.
Consumer activists regularly offer advice on how mobile phone customers might find a way to wriggle out of paying these fees.
In the Sprint case, Judge Bonnie Sabraw of the Superior Court of California in Alameda County issued the latest ruling this week. Judge Sabraw questioned the decisions reached previously by a jury and granted a request for a new trial.
The upcoming court action is to determine the extent of the Sprint's damages.
“This is another tremendous victory for the class plaintiffs, and another devastating loss for Sprint,” Scott A. Bursor, the lead trial counsel for the former customers bringing the lawsuit, stated in a release. “We had already won on the key issue in the case by proving that Sprint’s termination fees are illegal. But this latest ruling eliminates any reduction or setoff against our claim and restores every penny of our $299 million victory.”
Sprint representatives, however, had a different view.
The initial ruling determined that the customers did breach their contracts with Sprint by failing to complete the terms of their contracts.
The new ruling indicates that Sprint charged more than $299 million in fees and collected nearly $74 million.
Judge Sabraw questioned how the jury determined Sprint's total economic damages in the matter.
The judge noted that, according to the jury's finding, "Sprint’s actual damages from the early termination of the class’s contracts ($225,697,433) were exactly equal to the amount of the charged but unpaid ETFs ($225,697,433)."
This meant that Sprint did not have to pay any damages as a result of the initial trial, said Matthew Sullivan, a Sprint spokesman.
“We’re baffled as to why a new trial was granted when the jury did exactly as it was asked to do," Sullivan said. "There was no accusation or evidence of jury misconduct, and fairness and due process principles do not entitle unsuccessful plaintiffs’ attorneys to a “do over." This order gives the plaintiffs’ attorneys a second bite of the apple to attempt an award of damages that they did not accomplish with the evidence presented during the first trial.”
While a new trial will reconsider the issue of economic damages, it will not revisit the jury's finding that "subscribers breached their contracts with Sprint when they terminated early," Sullivan said.

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