Lawyer: Appeals Court Upholds $21M Verizon Wireless Settlement

30th Jun 2010 16:35

By Roger Cheng Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--A federal appeals court in California upheld a $21 million refund that Verizon Wireless will have to pay to some of its customers as a result of a settlement of a class-action lawsuit over its early termination fees, according to the lawyer representing the plaintiffs. Each person in the class-action claim is estimated to receive $87.50 after challenging the carrier's practice of charging a $175 fee for breaking a wireless-service contract early. "Yesterday's ruling by the Court of Appeal confirms that this is a terrific settlement for Verizon Wireless customers, and now more than 175,000 of those customers will get a substantial refund," said Scott Bursor, lead attorney for the plaintiffs. A spokesman for Verizon Wireless wasn't immediately available for comment. Early termination fees have been a hot-button issue for consumers and regulators, leading to increased scrutiny and legal action over the practice. The carriers argue the fees are necessary because they offset the costs incurred when subsidizing cellphones for subscribers. A basic Apple Inc. (AAPL) iPhone 4, for instance, would cost $200 with a two-year contract, but $600 if purchased without a service plan. The settlement was agreed upon in 2008, but two appeals were filed. An appeals court based in Alameda, Calif., rejected the appeals on Tuesday, noting the awards were justified. The funds have been kept in an escrow account. The funds can't be distributed until all appeals are used up, Bursor said, adding he expects the process to be completed within the next 60 days. Verizon Wireless raised eyebrows when it increased its early-termination fee on smartphones late last year. The carrier, however, said the fee would go down after each month of the contract. Earlier this month, AT&T Inc. (T) also raised its early-termination fee on smartphones. Verizon Wireless is jointly owned by Verizon Communications Inc. (VZ) and Vodafone Group PLC (VOD, VOD.LN). -By Roger Cheng, Dow Jones Newswires; 212-416-2153; [email protected] (END) Dow Jones Newswires June 30, 2010 11:35 ET (15:35 GMT)