Diacakis brought a putative class action against Comcast for allegedly fraudulently marketing and selling service plans without disclosing associated equipment fees. He contacted Comcast in August 2011 in response to ads for service bundles, and spoke to a CSR who told him about various plans, all of which he rejected as too expensive. She then offered a “Triple Play” package for $99/month, and indicated that there were additional charges for DVR service, HBO and for the Speed channel. He didn’t order services at that time, but called later and asked about the Triple Play bundle, and received the same information about the additional charges for HBO and Speed. He asked if there were any additional charges, and the representative responded that the rate was an introductory rate. When pressed further (and it’s sad that people reasonably feel the need to do this, given how misleading cable offers generally can be), the representative said there was a $25 installation charge. The CSR didn’t mention an additional modem charge. Diacakis ultimately ordered the Triple Play package, which came with a previously undisclosed monthly modem fee of $10 and a modem lease charge of $5.
Diacakis, unlike most of the rest of us, sued, alleging claims under the usual California statutes and for fraud. Comcast moved to dismiss.
The court found that the complaint satisfied Rule 9(b). It specifically alleged the dates Diacakis contacted Comcast, the names given by the CSRs with whom he spoke, and a specification of what was false or misleading about what they said/didn’t say. Though Comcast argued that Diacakis didn’t specifically identify the ads he saw for the bundles, his claims weren’t dependent on the ads, and his allegations about the CSRs were sufficient at this stage.
Comcast renewed its argument that its service agreement disclosed the equipment fees. That’s not fatal where the consumer was subjected to collateral misrepresentations (since consumer protection statutes generally don’t follow the common law/contractual view that the contract language can override misrepresentations outside the contract). Comcast downplayed its CSRs’ behavior, saying that only a “few” didn’t mention the equipment charges, but Diacakis specifically asked them about additional charges and was told there were none.
Comcast then argued that Diacakis must have known about the extra charges because he was an existing/prior customer whose past service agreement disclosed equipment charges. No. Even if this hadn't been outside the pleadings, “Comcast fails to pinpoint specifically where in the 38–page agreement, which is single-spaced and in a small font, this alleged disclosure is set forth. Nor has Comcast demonstrated how disclosures supposedly made in 2008 have any bearing on whether Comcast misrepresented the terms of its bundled promotion offered in 2011.”
Comcast also contended that no reasonable consumer would have been misled, since bundled services are distinct from equipment. No again. Diacakis alleged that he asked whether there were any other associated charges, and the CSR said no. “A reasonable consumer could interpret such response to mean that the quoted fees were all inclusive.” This certainly wasn’t something that could be resolved on a motion to dismiss.