AT&T false advertising case continues in California

Morgan v. AT & T Wireless Services, Inc., -- Cal.Rptr.3d ----, 2009 WL 3019780 (Cal. App. 2 Dist.)

The plaintiff filed a putative class action based on AT&T’s marketing for premium cell phones that used a wireless network that AT&T allegedly changed to make the phones essentially useless. The court of appeals held that the plaintiffs alleged sufficient facts to sustain UCL, CLRA, and fraud claims, though they lacked standing under the FAL. Of note, the court rejected AT&T’s argument that the representations on which the UCL claim were based were nonactionable puffery—opinion, or predictions of future events. The court reasoned that the alleged reliance was not based on specific false representations, but on the overall effect of the sale of an expensive cell phone with multi-year agreements for the service necessary to operate the phone, combined with AT&T’s ad campaign touting an improving and expanding network. The court accepted that this could lead reasonable consumers to believe that AT&T would continue to provide the necessary service for a reasonable period of time, which could be the reasonable life of the phone.

Moreover, plaintiffs weren’t required to identify specific ads or representations on which they relied; they alleged that they conducted extensive research before buying, and the ad campaign was alleged to have taken place over many months in several different media with consistent claims by AT&T that its network was reliable, improving, and expanding. A presumption, or at least an inference, of reliance arises upon a showing of a material misrepresentation; this was sufficient to allege standing at this stage.

However, the plaintiffs didn’t have standing to bring a FAL claim about AT&T’s attempt to replace their expensive phones with $20 models that could use the new network (but lacked premium features) because none of the named plaintiffs took the deal.