Verizon Can’t Force Arbitration in Late Fee Class Action, Court Rules

Earlier this week, a California state appeals court rejected a bid by Verizon California Inc. to force arbitration on a plaintiff in a class action lawsuit challenging late fees she was charged by Verizon.

The three-judge panel ruled in favor of Verizon customer Heather Bryden, finding that Verizon’s terms of use relate to internet use only, and Bryden’s Verizon class action lawsuit is challenging only the late fees related to voice service. Therefore, she is not bound by the arbitration clause in the terms of use.

Bryden’s class action lawsuit, initially filed in 2011, alleges that late fees charged by Verizon were actually “unlawful penalties” under California law.

The Verizon class action lawsuit also asserts violations of California’s Unfair Competition Law and Consumer Legal Remedies Act.

According to the Verizon class action lawsuit, Bryden used long-distance telephone and internet services provided by Verizon entities from 2005 until at least 2013. The services were bundled so she received one monthly bill from Verizon.

Verizon petitioned a lower court to compel arbitration based on two agreements that include arbitration clauses: a “Product Guide” that governs long-distance telephone service and the Terms of Use governing high-speed internet service. The arbitration provision was added to the internet terms of use in 2011, several years after Bryden had set up her internet account.

The lower court denied Verizon’s bid to compel arbitration, finding that Bryden never accepted the arbitration agreement in the Product Guide and that the arbitration provision in the internet terms of use was added after the Verizon late fee class action lawsuit was filed and could not be applied retroactively.

Verizon did not take issue with the lower court’s ruling regarding the Product Guide, but the company appealed the decision regarding the internet terms of service, arguing that they should apply to Bryden’s class action lawsuit. The appeals court disagreed and issued an opinion Tuesday that states the internet terms do not provide a basis to compel arbitration for the case.

“That Verizon chose to send Bryden a single bill for both telephone and internet services does not change the fact they were separate services, governed by separate agreements,” the appellate panel writes.

“In short, Verizon’s unilateral practice of charging a single late fee for bundled services governed by different contracts cannot force Bryden to arbitrate claims over fees for one service, telephone, because another service, internet, has terms arguably requiring arbitration,” the panel continues.

Bryden is represented by Alan Roth Plutzik and Jennifer S. Rosenberg of Bramson Plutzik Mahler & Birkhaeuser LLP, Mark Gene Rich of Reich Radcliffe LLP and Lawrence Timothy Fisher of Bursor & Fisher PA.

The Verizon Late Fee Class Action Lawsuit is Heather Bryden, et al. v. Verizon California Inc., Case No. A143506, in the Court of Appeal of the State of California’s First Appellate District.