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3rd Circuit vacates $17.5M settlement in Sprint class action

3rd Circuit vacates $17.5M settlement in Sprint class action

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A $17.5 million class settlement did not adequately protect the rights of all cell phone customers who had claims against Sprint for allegedly unlawful early termination fees, the 3rd Circuit has ruled in reversing judgment.

Until 2008, Sprint charged a flat $200 fee to customers who terminated their cell phone contracts before the end date stated in their service agreements. The plaintiffs filed class actions against Sprint and other cellular service providers, challenging the lawfulness of those fees.

After five months of mediation, the Sprint plaintiffs settled their class action for $17.5 million. The district court approved the settlement over the objections of certain Sprint customers who claimed that the telephone company failed to produce an adequate class member list for use in providing individual notice to class members. According to the objectors, Sprint failed to provide notice to 9.2 million identifiable class members.

The 3rd Circuit agreed that the settlement failed to adequately protect the rights of absent class members, noting evidence that a more comprehensive search of the company’s billing records would identify millions more customers charged the disputed fees.

“Given Sprint’s concession that a billing records search could result in identifying millions of class members who were charged a flat-rate [early termination fee] – individuals who are in the sweet spot of the proposed class – we are not sure how it can be said that it is unreasonable for Sprint to search any of its billing records, but we leave that determination to the District Court,” the court said.

In addition to remanding the case for a reevaluation of Sprint’s efforts to provide notice to class members, the 3rd Circuit suggested that the district court reconsider whether the class representatives could adequately represent all class members.

U.S. Court of Appeals, 3rd Circuit. Larson v. AT&T Mobility, No. 10-1285. June 29, 2012.

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