Willard v. AT&T Commc'ns of California, Inc., B231137.

CourtCalifornia Court of Appeals
Citation138 Cal.Rptr.3d 636,12 Cal. Daily Op. Serv. 2766,204 Cal.App.4th 53
Decision Date06 March 2012
Docket NumberNo. B231137.,B231137.
PartiesMichael WILLARD et al., Plaintiffs and Appellants, v. AT & T COMMUNICATIONS OF CALIFORNIA, INC., et al., Defendants and Respondents.


Blecher & Collins, Los Angeles, Maxwell M. Blecher, Donald R. Pepperman, Maryann R. Marzano, William C. Hsu and Majed Dakak for Plaintiffs and Appellants.

Tucker Ellis & West, Los Angeles, Matthew I. Kaplan, Nathan T. Newman, Irene C. Keyse–Walker, Patrick J. Pascarella; and Gleam O. Davis for Defendants and Respondents.


Plaintiffs and appellants Michael Willard and Jessica Sher subscribed to a wireline 1 telephone service and to a service offered by the telephone company that suppressed their names, addresses, and telephone numbers from the White Pages telephone directory and 411 directory assistance (“nonpublished service”). The voice communications services industry in California is under the jurisdiction of the California Public Utilities Commission (CPUC). ( Pub.Util.Code, § 701.) 2 All rates for services must be “just and reasonable.” ( Pub.Util.Code, § 451.) In 2006, the CPUC determined that competitive market conditions supported pricing freedom for, among other things, nonpublished service, with the caveat that the matter would be reopened if there was evidence of market abuses. (CPUC Decision 06–08–030, issued Aug. 24, 2006, p. 156.) Thereafter, the telephone company raised its fee for nonpublished service. Believing the fee was too high, plaintiffs brought this putative class action for declaratory, restitutionary, and injunctive relief.

The trial court entered a judgment of dismissal of the complaint after sustaining a demurrer of defendants and respondents AT & T Communications of California, Inc., and Pacific Bell Telephone Company (collectively AT & T) 3 to the complaint without leave to amend.4 Plaintiffs contend the complaint sufficiently alleges causes of action for unconscionability and violations of Business and Professions Code section 17200 et seq. ( section 17200).5 We affirm.

I. Allegations of Complaint (Filed May 3, 2010)6

AT & T violated its wireline subscribers' right to privacy under California Constitution, article 1, section 1, by grossly overcharging its customers for nonpublished service and for not listing their names, addresses, and telephone numbers in the White Pages only (“unlisted service”). Subscribers have a constitutional right to exclude this information from the White Pages and directory assistance. Willard and Sher were subscribers to AT & T's nonpublished service. AT & T charged $1.25 per month for nonpublished service and $1.00 per month for unlisted service. These fees generated revenues of $40 million for services that cost AT & T almost nothing to provide. Competing wireline carriers in California also engaged in this practice and form an oligopoly in the wireline market.

A. First Cause of Action

In the first cause of action, for declaratory relief to deem the contract to be unconscionable, plaintiffs alleged the contractual fees for subscribing to nonpublished service and unlisted service were unconscionable, because of the true cost of providing the services, unequal bargaining power, and the customer's right to privacy. AT & T had discretion to set the level of the fees.

B. Third Cause of Action7

In the third cause of action, for violation of section 17200, plaintiffs alleged that, since at least June 2007, AT & T charged its customers unconscionable and oppressive fees for nonpublished service and unlisted service. This practice violated the implied covenant of good faith and fair dealing, as it breached the customer's right to privacy, enforced unconscionable and oppressive contractual fee provisions, and was unfair; and plaintiffs were entitled to an award of restitution damages and injunctive relief.

II. Pleadings on AT & Ts Demurrer to Complaint

In a demurrer to the complaint, AT & T contended, in relevant part, that the complaint failed to state facts sufficient to constitute a cause of action and the trial court should abstain, under the doctrine of judicial abstention, from adjudicating the complaint because the issues involve complex economic policy best suited to the Legislature or an administrative agency. AT & T contended there is no right to privacy in a telephone listing, and the Legislature has recognized telephone companies may charge for nonpublished service and unlisted service.

In opposition, plaintiffs contended they enjoy a right to privacy with respect to their telephone numbers and addresses, the causes of action state a claim for relief, and judicial abstention is not appropriate.

III. Judicial Notice

The trial court took judicial notice of CPUC Decision 06–08–030 and CPUC Decision 94–09–065, issued September 15, 1994.

In Decision 06–08–030, [based on] our statutory and market analysis, [the CPUC] grant[ed] carriers broad pricing freedoms concerning almost all telecommunications services, new telecommunications products, bundles of services, promotion, and contracts.” (Decision 06–08–030, p. 2.) The CPUC felt “compelled to discard price controls [for basic residential service] in the face of both state and federal policies favoring competition in the voice communications market.” ( Id. at p. 152.) In addition to incumbent local exchange carriers such as AT & T, the voice communications marketplace included wireless carriers, competitive local exchange carriers, cable television with Voice-over Internet Protocol (VoIP), and pure VoIP providers. ( Id. at pp. 3–4.) [M]arket conditions support pricing freedoms for basic residential rates.” ( Id. at p. 153.) [A]s our discussion of statutes and market conditions makes clear, neither statutes nor market conditions make it necessary to continue price regulation for any of the services ‘associated’ with basic service. In particular, we see no reason to continue prices regulation of ... non-published and unlisted telephone numbers [and] [W]hite [P]ages listings.” ( Id. at p. 156.) “Finally, we will remain vigilant in monitoring the voice communications marketplace. We will ensure that basic residential service remains affordable and does not trend above the current highest basic residential rate in the state, no matter the technology employed to offer such service. Should we see evidence of market power abuses, we retain the authority and firm resolve to reopen this proceeding to investigate such developments promptly.” ( Id. at pp. 156–157.)

In Decision 94–09–065, the CPUC granted GTE California, Inc.'s request to increase its charge for nonpublished service from $.60 per month to $1.50 per month and to establish an unlisted service for $1.00 per month.

IV. Trial Court's Rulings

The trial court sustained the demurrer to the complaint without leave to amend. As to both causes of action, the court concluded judicial abstention was appropriate because the case “delves into complex economic policy and regulation that is better left to the Legislature.” “The CPUC has already decided to deregulate [fees for nonpublished service and unlisted service] and let the free market control the prices. The CPUC chose to stop regulating those services while they retained the ‘authority and firm resolve to reopen’ review of those services. [Citation.] Neither this court nor the appellate courts are required to determine the wisdom of economic policy. That function rests with the Legislature. Cel–Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 184 [83 Cal.Rptr.2d 548, 973 P.2d 527] ( Cel–Tech Communications ). The court elects to avoid the fray and therefore abstains.”

Moreover, plaintiffs had “no inherent right to privacy in a telephone listing.” Citing People v. Chapman (1984) 36 Cal.3d 98, 201 Cal.Rptr. 628, 679 P.2d 62 ( Chapman ), the trial court stated: ‘context’ determine[s] whether listing information constitute[s] a potentially protectable privacy interest.” Further, plaintiffs had no reasonable expectation of privacy in their contact information. “When they bought AT & T's telephone service, plaintiffs knew their contact information would surface in the white pages directory unless they also purchased non-publication or non-listing services.” 8

The trial court dismissed the complaint with prejudice and entered judgment in favor of defendants.


I. Standard of Review

The trial court having sustained the demurrer without leave to amend, we give the complaint a reasonable interpretation and treat the demurrer as admitting all material facts properly pled. [Citation.] Because the trial court dismissed this case on the basis of the doctrine of judicial abstention, however, our standard of review is abuse of discretion.” ( Alvarado v. Selma Convalescent Hospital (2007) 153 Cal.App.4th 1292, 1297, 64 Cal.Rptr.3d 250 ( Alvarado ); see Arce v. Kaiser Foundation Health Plan, Inc. (2010) 181 Cal.App.4th 471, 482, 104 Cal.Rptr.3d 545.)

II. Trial Court's Decision to Abstain Was Not an Abuse of DiscretionA. Abstention

Plaintiffs contend the trial court abused its discretion by abstaining from adjudicating the dispute, because complex economic policy questions were not involved.

Because the remedies of declaratory judgment, injunction, and restitution “are equitable in nature, courts have discretion to abstain from employing them.” ( Desert Healthcare Dist. v. PacifiCare, FHP, Inc. (2001) 94 Cal.App.4th 781, 795, 114 Cal.Rptr.2d 623 ( Desert Healthcare ); see Babb v. Superior Court (1971) 3 Cal.3d 841, 850, 92 Cal.Rptr. 179, 479 P.2d 379.)

“It is well established that a court of equity will abstain from employing the remedies available under the unfair competition law in appropriate cases.... ‘Where [an unfair competition law] action would drag a court of equity into an area of complex economic [or similar] policy, equitable...

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