Verizon Wins Bid to Keep Lawsuit in Federal Court

(CN) - A class action accusing Verizon of charging customers for phone services they never ordered belongs in Federal Court, the 9th Circuit ruled, as Verizon "has borne its burden to show the amount in controversy exceeds $5 million."

The federal appeals court in San Francisco vacated a federal judge's order remanding the action to California state court.

Lead plaintiff Delores Lewis sued Verizon in 2009, claiming the company charged her for "premium content," such as weather and traffic reports, that she never ordered. Verizon allegedly billed her landline for the services through the independent telephone service provider Enhanced Services Billing Inc. (ESBI).

She did not specify a demand for damages in her complaint.

Verizon, arguing that the potential damages would exceed the $5 million threshold established by the Class Action Fairness Act, sought to remove the case to Federal Court.

The company cited the research of consultant Paul E. Glover, who said "records show that these subscribers were billed more than $5 million, exclusive of fees and interest, from March 1, 2006 until the present for ESBI charges."

Lewis called Glover's research "incompetent," claiming her complaint challenged only "unauthorized" charges, not "Verizon's gross billings to consumers for ESBI content."

The district court agreed with Lewis and remanded the class action, but the 9th Circuit sided with Verizon.

Calling the lower court's decision "a semantic misunderstanding," Judge Mary Schroeder found "no evidence to support the premise that some portion of the charges alleged in the complaint were 'authorized.'"

"Indeed ... the defendant has conceded that where proposed class members have been billed for services they did not order, they are entitled to a refund," Schroeder wrote. "Hence, on this record, the entire amount of the billings is 'in controversy.' The amount in controversy is simply an estimate of the total amount in dispute, not a prospective assessment of defendant's liability."

To establish jurisdiction, the judge said, "Verizon need not concede liability for the entire amount, which is what the district court was in essence demanding by effectively asking Verizon to admit that at least $5 million of the billings were 'unauthorized' within the meaning of the complaint."

The appellate panel vacated the lower court's order and sent the case back to the federal judge.

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