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Thursday, April 25, 2024 | Back issues
Courthouse News Service Courthouse News Service

Cingular Bill Suit Punted to Wash. Supreme Court

(CN) - The 9th Circuit asked the state Supreme Court in Washington to rule on whether cellular phone dealers can recoup state business and occupation taxes through a surcharge on gross receipts, as long as they disclose the fee.

The question, filed Monday, relates to a proposed class action against AT&T's Cingular Wireless, in which Washington residents Jared Peck and James Bowden claim that the company's billing practices violate state law.

Cingular mentions in its one-page Wireless Service Agreement that it charges various fees meant to recover state and federal telecom regulation taxes, "a gross receipts surcharge, and state and federal universal service charges," according to the order. The company also admits among other terms on its website that it collects "applicable taxes and governmental fees, whether assessed directly upon you or upon Cingular." Cingular's plan price does not include Washington's business and occupation tax, however, which showed up on the plaintiffs' bills as a "State B & O Surcharge" ranging from 5 cents to 44 cents per month.

Peck sued the company in Washington state court, and Cingular removed the case to federal court. Peck appealed, and the case was sent back to state court on federal preemption grounds.

There, Bowden joined the suit and sought class certification before Cingular removed the case again to federal court. The district court then granted Cingular summary judgment, finding that, based on a similar case that is also pending before the 9th Circuit, Cingular's practices did not violate state law.

But on Monday the three-judge appeals panel found that the two cases were not similar enough to decide the present issue.

"Considering the substantial factual differences between the present case and Washington case law, it is not clear how the Washington Supreme Court would rule on this issue," Judge Pamela Ann Rymer wrote for the panel.

The panel sent the following certified question to the court for review:

"Under Revised Code of Washington section 82.04.500, may a seller recoup its business and occupation taxes where, prior to the sale of a monthly service contract, the seller discloses that in addition to the monthly service fee, it collects a surcharge to cover gross receipts taxes?"

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