Consumer Law

Form Contract Puts Sprint in Class Action

Sprint-Nextel Corp. essentially scored an own goal, an Illinois appeals court says, by including in its adhesionary form contract a choice-of-law provision that allows customers to bring a national class action.

Upholding a Madison County trial judge’s class certification, the 5th District Appellate Court decided the case over the cell phone service provider’s early-termination fee was appropriately brought as a 48-state class action. That’s because the choice-of-law provision in Sprint’s cell phone contracts applies the same Kansas consumer protection law to customers throughout the country, allowing them to challenge en masse the company’s approximately $200 fee for switching to another cell phone carrier before the Sprint cell phone contract term expires, reports the Madison Record.

“The only issue in this case is the validity of the early-termination fee,” Justice Bruce D. Stewart wrote in the court’s June 27 opinion, “and by the parties’ own choice, that issue is governed by Kansas law. The fact that Kansas law might not otherwise apply is irrelevant, because the parties chose to apply Kansas law.”

Meanwhile, in an unrelated Sprint matter, a New York regulator says such fees should be a “two-way street,” and is calling for the cell company itself to pay the equivalent of early termination fees to some 1,100 customers it recently dropped for calling customer service too frequently, reports the Los Angeles Times.

Sprint, however, says it has already been generous to these customers, not only waiving the $175 early-termination fee it would ordinarily charge them but waiving their final month’s bill, the Times article continues. A company spokesman says an unspecified contract provision permits early terminations by Sprint.

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