WASHINGTON-Richard Blumenthal, the high-profile Connecticut attorney general who played key roles in successful lawsuits against Microsoft Corp. and the tobacco industry, has joined his counterparts in California and Wisconsin in urging the Federal Communications Commission to declare that state laws banning unfair deceptive practices by wireless carriers are not federally pre-empted.
“The attorneys general urge the commission to make clear that wireless carriers may not use federal pre-emption as a pretext to immunize providers that use unfair and deceptive practices to exploit the public,” stated Blumenthal, California Attorney General Bill Lockyer and Wisconsin Attorney General James Doyle in a recent filing with the FCC.
The December filing comes as the FCC inches closer to ruling on a petition filed last July by the Wireless Consumers Alliance.
WCA asked the FCC to declare that a 1993 law-which removed state oversight of entry and rates of commercial wireless carriers but retained state jurisdiction over terms and conditions of service-does not pre-empt states from awarding monetary damages against wireless carriers for violating state contract and fraud laws.
The FCC is expected to rule by spring on WCA’s petition, which has been challenged by mobile-phone carriers.
In pending litigation in California and other states involving the practice of rounding calls up to the next minute, alleged deceptive marketing and other carrier practices, mobile-phone companies have argued with some success that the 1993 law shields them from liability.
Carriers assert that any monetary damage assessed by a state court would have to be passed on to subscribers and therefore would constitute a forbidden intrusion into rate-making under the 1993 law.
In recent years, the liability issue has gained major visibility. First, there was the highly publicized case of Marcia Spielholz. Spielholz sued after a December 1994 carjacking in Los Angeles that resulted in her being shot in the face after her mobile phone failed to process repeated 911 calls. AT&T Corp. and Spielholz reached an out-of-court settlement last year.
Liability also was a hot-button issue last year in legislation passed by Congress that gives wireless firms and others limited liability protection from lawsuits related to glitches in emergency and some non-emergency calls.
In addition to the 1993 law, wireless carriers have relied on the “filed rate doctrine” as a defense against consumer fraud lawsuits. The doctrine generally prevents private causes of action related to tariffed rate setting by common carriers.
But Blumenthal and the other two attorneys general say strict adherence to the filed rate doctrine is no longer viable in view of recent FCC rulings, court decisions and the competitive marketplace.
“Pro-competitive public policy is not served by pre-empting state consumer protection laws. This is particularly the case when considering the status of tariffs and filed rate doctrine-issues the petition brings into focus. The attorneys general have supported commission efforts to eliminate tariffs as an ineffective and inefficient vestige of the past regulatory era,” stated Blumenthal, Lockyer and Doyle.
Indeed, last November the FCC ruled wireless carriers are not exempt from all state contractual and consumer fraud laws.
But Michael Altschul, vice president and general counsel of the Cellular Telecommunications Industry Association, said case law and FCC rulings support the industry’s position. He said last November’s FCC decision backed the Supreme Court proposition in a ruling last year that telecom rates do not exist in isolation.
Altschul said CTIA never stated that 1993 wireless deregulation legislation pre-empts all state and consumer laws.
But he added, “An award that affects rates is rate-making.”
Altschul said even though states are limited in taking action against wireless carriers, consumers are not unprotected because state attorneys general and the Federal Trade Commission can punish carriers with fines.
