Mountain States Tel. and Tel. Co. v. District Court, City and County of Denver
| Decision Date | 24 July 1989 |
| Docket Number | No. 88SA439,88SA439 |
| Parties | , 1989-2 Trade Cases P 68,679 MOUNTAIN STATES TELEPHONE AND TELEGRAPH CO., d/b/a Mountain Bell, a Colorado Corporation, Petitioner, v. DISTRICT COURT, CITY AND COUNTY OF DENVER, State of Colorado, and The Honorable William G. Meyer, One of the Judges Thereof, Respondents. |
| Court | Colorado Supreme Court |
Davis, Graham & Stubbs, Dale R. Harris, Carole K. Jeffery and Lisa S. Kahn, Denver, and Peter D. Willis, Englewood, for petitioner.
Stutz, Dyer, Miller & Delap, Robert J. Dyer, III, Denver, George Gary Duncan, Santa Fe, N.M., Wolf & Slatkin, James A. Shpall, Denver, and Lawrence G. Walner, Chicago, Ill., for respondents.
In this original proceeding filed by Mountain States Telephone & Telegraph Company, now known as U.S. West Communications (hereinafter referred to as Mountain Bell), we are asked to determine the validity of an order of the Denver District Court directing Mountain Bell to provide space in its monthly billing envelopes for notices of a pending class action brought against Mountain Bell by some of its customers. We issued a rule to show cause, and we now discharge the rule.
Five individual customers and one corporate customer of Mountain Bell filed a class action complaint against Mountain Bell in the Denver District Court. The suit was brought on behalf of all Colorado Mountain Bell customers, numbering approximately 1.2 million residential and 235,000 business customers, who have been charged for inside wire maintenance service since 1982. 1 Inside wire maintenance involves repairs to telephone wiring within the customer's home or place of business.
After stating that the representative plaintiffs satisfied prerequisites for a class action mandated by C.R.C.P. 23(a) and (b)(3), the complaint alleged the following pertinent facts. Prior to 1982, inside wire maintenance service was routinely provided by Mountain Bell, but in 1982 the Federal Communications Commission (FCC) issued an order requiring separate billing for component services that traditionally had been covered by a single service charge. The FCC's order was calculated to permit customers to choose among various services offered by their local utility. Following the FCC order, Mountain Bell notified its customers that it would assume each customer wished to continue inside wire maintenance unless Mountain Bell was notified that the service should be discontinued. Silence on the part of the customer, in other words, was deemed by Mountain Bell to be an acceptance of continued inside wire maintenance service.
The complaint stated that Mountain Bell, in utilizing this form of "negative option" contract, engaged in an illegal restraint of trade in violation of the Colorado antitrust statute, §§ 6-4-101 to 6-4-109, 2 C.R.S. (1973 and 1988 Supp.); that Mountain Bell made false or misleading statements of fact concerning the nature, quality, and cost of the inside wire maintenance service in violation of the Colorado Consumer Protection Act, §§ 6-1-101 to 6-1-115, 2 C.R.S. (1973 and 1988 Supp.); that Mountain Bell's "negative option" contract was invalid and its customers were entitled to restitution of all amounts paid for inside wire maintenance service; that Mountain Bell breached the duty of good faith and fair dealing to its customers by failing to fully and adequately explain the inside wire maintenance service contract; and that Mountain Bell defrauded its customers by concealing or negligently misrepresenting material facts concerning the contract. The plaintiffs requested relief in the form of actual and punitive damages, interest, attorney fees, and an injunction prohibiting Mountain Bell from charging for inside wire maintenance service unless and until the company fully disclosed the service plan to the customer and the customer actually assented to the plan.
Mountain Bell answered the complaint by denying all allegations of liability and raising several affirmative defenses, including the statute of limitations and laches, accord and satisfaction, settlement and release, res judicata and collateral estoppel, the Noerr-Pennington doctrine, 2 several jurisdictional defenses, and setoff. Mountain Bell also counterclaimed for the reasonable value of inside wire maintenance service provided to customers pursuant to the service contract. The class plaintiffs denied the allegations of the counterclaim.
The representative plaintiffs requested the court to certify the case as a class action and the court granted the plaintiffs' application, finding as follows: that the plaintiffs had adequately demonstrated that the class is sufficiently large to render joinder impracticable; that there are questions of law and fact common to all members of the class; that the plaintiffs' claims are typical of the claims of the other class members; that the plaintiffs have selected qualified counsel to prosecute the claims; that the factual and legal issues common to the members of the class predominate over any question affecting any individual member of the class; and that, inasmuch as the average claim is between $35 and $50 and the largest is $150, a class action is superior to any other form of litigation for resolving the controversy.
After certifying the case as a class action, the court conducted a hearing on the question of notice to class members. At the hearing the representative plaintiffs advised the court that the cost of individual notice by first-class mail would be in excess of $500,000, and urged the court to direct that notice to class members be accomplished by permitting the plaintiffs to enclose notices of the pending litigation in Mountain Bell's monthly billing envelopes. The plaintiffs acknowledged that they would be responsible for the cost of copying the notice, the cost of enclosing the notices in the envelopes, which was estimated to be between $25 and $42 per thousand envelopes, and any incidental mailing expenses over and above the postage associated with the monthly billing statements. The plaintiffs estimated that, based on the assumption that class notices would be mailed to all of Mountain Bell's residential and business customers, their proposal for providing notice would result in a cost saving to them of approximately $200,000. Over Mountain Bell's objection, the court ordered Mountain Bell to provide space in its monthly billing envelopes for the mailing of notices to class members, with the incremental costs associated with the copying of the notice, the enclosing of the notice in the billing envelopes, and any additional postage charges to be paid by the representative plaintiffs.
The notice which the court directed to be mailed to Mountain Bell customers informs the customer that the court has certified the pending litigation as a class action and describes the class as follows:
All persons and entities who have been telephone customers of Mountain Bell in Colorado any time since the Federal Communications Commission unbundled inside wire maintenance service in 1982 and who have been charged fees pursuant to Mountain Bell's optional inside wire maintenance service program at any time between the date that optional service took effect and August 25, 1988.
The notice contained the following description of the lawsuit and the effect of the court's ruling on class certification:
The Case
Plaintiffs sued Mountain Bell, now doing business as U.S. West Communications ("U.S. West"), alleging that U.S. West acquired and maintains a monopoly over the market for inside wire maintenance and repair services contrary to Colorado antitrust law. Plaintiffs also allege that the inside wire maintenance contracts are void or voidable because of fraud practiced by U.S. West and under principals [sic] of contract law and Colorado deceptive practices law. Plaintiffs have asked for damages and injunctive relief against U.S. West. U.S. West has denied all these claims and charges.
U.S. West has filed a counterclaim against certain members of the class, asserting that if it is required to refund charges paid by subscribers to the inside wire maintenance programs, then it is entitled to recover the value of service calls made to customers who have had their inside wire, including their telephone jacks, serviced or repaired by U.S. West at any time from the date that optional inside wire maintenance service first took effect through August 25, 1988. U.S. West claims that, for certain class members, recovery on its counterclaim may exceed Plaintiffs' recovery against it. Plaintiffs have denied U.S. West's counterclaim or that recovery by U.S. West on its counterclaim might exceed Plaintiffs' recovery against U.S. West.
Without expressing its views concerning the merits of Plaintiffs' claims or U.S. West's counterclaim, the Court has ruled that this lawsuit may proceed as a claim for damages and punitive damages, injunctive relief, attorneys' fees and costs, not only by the Plaintiffs but also on behalf of the class as defined above. The Court also has ruled that the Plaintiffs named in the caption above may act as representatives of the class and their attorneys, Robert J. Dyer, III, George Gary Duncan, James A. Shpall and Lawrence Walner, may act as counsel for the class.
Establishment by the Court of this class does not mean that any money or injunctive relief will be obtained for U.S. West's inside wire maintenance and repair service customers, for these are contested issues which have not been decided. Rather, the ruling means that the ultimate outcome of this lawsuit--whether favorable to the Plaintiffs or to U.S. West--will apply in like manner to the class members; that is, all U.S. West inside wire maintenance and repair service customers described above who do not timely elect to be excluded from the class.
The notice also informed customers that they could...
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