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Courtroom Case

Cingular-AT&T Merger (Coneff v. AT&T Corp., et al)

Case Status:
On Appeal

Fighting to Redress Overcharged Consumers After Merger of Wireless Giants
(Coneff v. AT&T Corp.)

U.S. District Court for the Western District of Washington, No. 2:06-cv-00944-RSM
U.S. Court of Appeals for the 9th Circuit, No. 09-35563

Following the 2004 acquisition of AT&T Wireless Services, Inc. by Cingular Wireless LLC, Consumer Watchdog began receiving complaints from AT&T customers experiencing poor wireless service who, in order to obtain usable cell phone service, were faced with the option of either paying to upgrade to Cingular’s network or paying to terminate their existing contracts.

On October 6, 2006, lawyers for Consumer Watchdog, joined by Public Justice, Strittmatter Kessler Whelan Coluccio, Pearson, Simon, Warshaw & Penny, LLP and other private law firms, filed a national class action lawsuit in the U.S. District Court for the Western District of Washington against AT&T on behalf of MaryGrace Coneff and all other affected AT&T customers alleging fraud, breach of contract, and violation of state consumer protection statutes arising from the 2004 AT&T/Cingular merger.

The joint complaint alleges that after the merger, Cingular failed to maintain and dismantled the AT&T Wireless network so as to degrade the service provided to AT&T customers, which would induce AT&T customers to transfer Cingular plans; this required AT&T customers to pay upgrade fees of $18, buy new phones and agree to new and more expensive rate plans. AT&T customers who did not agree to new plans were left with the choice of fulfilling their contract term with AT&T Wireless despite degraded or non-existent service, or paying early termination fees of anywhere between $175 and $400 to cancel service before the expiration of the contract term.

AT&T sought to compel arbitration on an individual basis, arguing that AT&T customers agreed to waive their right to seek refunds from AT&T in court based on a provision in its customer agreement that required arbitration of all disputes and barred customers from joining together in an arbitration.

However, on May 22, 2009, the U.S. District Court for the Western District of Washington invalidated this provision, holding that AT&T’s arbitration clause was unconscionable because most AT&T customers would never obtain redress without the ability to bring a class action.

The case is presently before the 9th Circuit.  AT&T is appealing on the grounds that the
U.S. Supreme Court’s recent decision in AT&T Mobility v. Concepcion 563 U.S. __ (2011) should be interpreted to apply to the arbitration clause struck down by the court in Coneff in 2009. Consumer Watchdog and co-counsel contend that Concepcion does not apply because in Coneff, unlike Concepcion, there is an extensive factual record which demonstrates that enforcing the arbitration provision would prevent the consumers from vindicating their statutory rights.

Download the complaint here: http://www.consumerwatchdog.org/sites/default/files/resources/coneffvat-t_complaint_10-06-06.pdf

Read the brief in opposition to AT&T's motion to compel arbitration here: http://www.consumerwatchdog.org/sites/default/files/resources/ATT_Oppo_Arb_Motion.pdf

Download the 2009 order of the federal district court here: http://www.consumerwatchdog.org/sites/default/files/resources/ConeffvATT_OrderDenyArb_5-22-09.pdf

See the Cingular-AT&T Merger Fact Sheet here.