Three Texas cellular customers have brought a class-action lawsuit against GTE Mobilnet, maintaining the company’s $200 cancellation fee is an unfair penalty for discontinuing service, said the plaintiffs’ attorneys Richard Norman and Timothy Crowley of Crowley, Marks & Douglas L.L.P.The case originated in Brazos County, Texas, and has been removed to the U.S. District Court for the Southern District of Texas, Houston division. In the plaintiffs’ petition, S heila Fay of Bryan, Texas, Jamil Elias of Austin and Patrick Simons of Bay City, Texas, allege the $200 fee required of consumers who breach GTE’s 12-month contract is a penalty, and “not a reasonable estimate of damages sustained [by GTE Mobilnet] as a result of the breach.”GTE’s lawyer would not comment. .The contracts require 30 days notice of intent to cancel service to avoid a cancellation fee, according to Fay, Elias and Simons. After 11 months on a contract, any notice to cancel is too late, meaning a breach of contract. Unless a subscriber cancels service the contract rolls over automatically, renewing a subscriber’s contract for a successive 12-month period, according to th e plaintiffs. Fay, Elias and Simons assert that the fee is assessed when a customer terminates service at the contract’s beginning, end or anytime in between.Relative damages is the issue, contended Norman. “The plaintiffs are say ing that GTE Mobilnet is entitled to collect their damages but nothing more,” said Norman. “Often $200 is in excess of damages.”However, $200 is common cancellation fee in the industry. Norman said GTE’s $200 fee is the same for a customer of a few months and a customer of 10 years. The amount of damages incurred by GTE by two such different customers also would vary, Norman said. Fay, Elias and Simons maintain GTE is capable of calculating accurate damag es when a specific customer breaches contract. They charge that the $200 is a device to coerce customers into continuing service.”Under the common law, a liquidated damages provision is invalid when such provision is punitive in n ature,” said Norman.Fay and Elias are current GTE cellular customers who have not paid the $200 fee, said Norman. Simons has paid the fee and no longer is a customer.In their petition to the court, the three seek an order certifyi ng their action will be maintained as a class action; a judgment against GTE and “for plaintiffs declaring the contracts’ early termination clause void as being a penalty;” and the award of damages to plaintiff members who have p aid the cancellation fee under the terms of the contract.GTE spokeswoman Susan Asher told RCR the lawsuit is not a class-action case. The company said it will not comment further while the case is in litigation.
FORMER GTE CELLULAR CUSTOMERS CONTESTING CANCELLATION CLAUSE
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