Smilow v. Southwestern Bell Mobile Systems, Inc.

A group of cell-phone users (customers) (plaintiffs) sued their service provider, Southwestern Bell Mobile Systems, Inc., doing business as Cellular One (Cellular One) (defendant). The customers alleged that they had been charged for incoming calls in breach of a contract that purportedly provided free incoming calls and that Cellular One had engaged in deceptive practices. Each customer had signed an identical standard-form contract, each had been charged for incoming calls, and each had received an identical user guide. The customers paid for services at different rates, but each was invoiced monthly. The lawsuit was initially certified as a class action in federal district court, and a class representative was approved. Later, the customers moved to substitute a new class representative. As part of its motion opposing the substitution, Cellular One argued that the class should be decertified because common issues of fact did not predominate. The district court denied the motion to substitute and decertified the class. The court reasoned that the breach-of-contract claim could not be sustained because even if Cellular One committed a breach of contract, it had nonetheless rendered services in exchange for the incoming-call charges and was thus based on the theory of quantum meruit. It reasoned that the deceptive-practices claim was also barred because Cellular One had rendered services in return for the incoming-call charges and that any damages would be calculated based on individual customers’ phone bills, meaning that individual issues predominated over issues common to the class. The customers appealed the decertification.