Verizon to pay $21 million settlement

July 9, 2008 7:08:13 PM PDT
Verizon Wireless has agreed to pay $21 million to settle a lawsuit filed by California customers upset with the company's early termination fees, a lawyer on the case said Wednesday.

Many details of the settlement still need to be worked out and authorized by an Alameda County Superior Court judge, said Alan Plutzik, an attorney for the customers.

"We are recovering cash" that would "be available" to Verizon mobile phone customers who paid fees to end their contracts early, Plutzik said.

Plutzik said its unclear how many Verizon customers will be eligible to share in the settlement, a decision that will ultimately be up to the judge. A spokesman for Verizon Communications Inc. could not be reached for comment late Wednesday.

Telecommunications companies charge early termination fees that can range from $150 to $225 when customers cancel their service contracts before they expire.

Wireless companies have said they must charge the fees to recover the cost of cell phones, which they subsidize when they sign up customers for new long-term service contracts.

Customers of six companies sued the carriers in 2006 in Alameda County Superior Court alleging that the fees violate California law.

Sprint Nextel Corp. faced trial first in Alameda County Superior Court last month. Judge Bonnie Sabraw has not yet issued her decision on the legality of the fees in California in that case.

Jury selection began last month in Verizon's trial, which will be halted now that an agreement has been reached. AT&T Inc. is next up for trial, Plutznik said.

Federal Communications Commission chairman Kevin Martin last month laid out a plan to regulate the fees, saying he was skeptical that the lawsuits would adequately resolve all pending issues about the unpopular fees. The industry supports Martin's proposal to prorate the fees in exchange for immunity from state lawsuits.


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