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.
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