Advertisers get notice of suit – Southwestern
Bell late fees disputed
12/12/03
By DAN MARGOLIES
The Kansas City Star
Notices are set to be mailed to 175,000 Southwestern
Bell Advertising customers in five states who were allegedly overcharged
more than $20 million in so-called collection activity fees.
A judge in February found that the fees were "inherently deceptive," but
procedural maneuvers delayed the mailing of the notices until now.
Southwestern Bell disputes the ruling. It cannot appeal yet, however, because
damages have not been ascertained — meaning the ruling is not a final
judgment for appeal purposes.
A trial to determine damages has not been scheduled but may occur early
next year.
"We believe our contract contained wording that enabled us to charge
the collection activity fee, and we disagree with the judgment," said
Southwestern Bell spokesman Bob Mueller.
Mueller said the company was contemplating an appeal but keeping its options
open.
"Obviously there are a lot of things still to happen in this case,
but we'll leave that decision open until the time is right," he said.
The lawsuit was filed in late 2001 by Liberty Cellular Inc. and Blast Inc.
and alleged that Southwestern Bell wrongly charged a $25 "collection
activity fee" for late invoice payments.
Jackson County Circuit Judge Thomas Clark certified the case as a class
action in August 2002. That allowed Liberty and Blast to bring their breach-of-contract
claims on behalf of thousands of Southwestern Bell Yellow Pages customers
in Missouri, Kansas, Arkansas, Oklahoma and Texas.
Liberty Cellular, based in Liberty, sells wireless and cellular phone services.
Blast, based in Kansas City, is a cold storage facility and provider of
refrigerated transportation services.
The two plaintiffs contended that Southwestern Bell falsely claimed that
the collection activity fee represented the company's collection costs.
Instead, they said, the fees were unauthorized late payment penalties not
specified in customers' contracts.
"The language of the contract was very specific as to what it allowed,
and that was interest," said one of the attorneys for the plaintiffs,
Theodore Beckett III.
Southwestern Bell has since changed the wording of the contract and continues
to charge and collect late payment fees. Internal company records indicate
the company has collected more than $20 million since it instituted the
practice in July 2001.
In February, Clark found in the plaintiffs' favor, ruling that customers
paid the $25 flat fee "without full knowledge of the facts" and
that Southwestern Bell's use of the term "collection activity fee" to
represent collection costs "was inherently deceptive."
In addition to the mailings to class members, notices of the class action
will be published in 15 newspapers in the five-state area, including The
Kansas City Star, on Sunday and Dec. 21. The notices will provide information
about the lawsuit and the options available to class members.
Businesses are considered members of the class if they were customers of
Southwestern Bell Yellow Pages Inc., Southwestern Bell Yellow Pages Resources
Inc. or Southwestern Bell Advertising; they resided in Missouri, Kansas,
Arkansas, Oklahoma or Texas when they advertised in the Yellow Pages; and
they paid the $25 fee because they were late in making their payments.
Class members are not required to take any action to be deemed members
and will be notified of the lawsuit's outcome. Members who want to be excluded
from the class must send written notice no later than Jan. 31 to Beckett's
law firm, Beckett & Hensley, P.O. Box 13185, Kansas City, MO 64199.
Members who seek to be excluded will not be bound by any judgment or entitled
to any damages awarded in the lawsuit.
The plaintiffs' attorneys are to get one-third of any recovery.
To reach Dan Margolies, legal affairs and banking reporter, call (816)
234-7740 or send e-mail to dmargolies@kcstar.com.
Copyright 2003 Kansas City Star. All rights reserved.
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