Kushner v. AT&T

Filed 6/28/06 Kushner v. AT&T CA4/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

APPEAL from a judgment of the Superior Court of San Diego County, Ronald S. Prager, Judge. Affirmed.

In this action alleging violations of California's unfair competition law (Bus. & Prof. Code, § 17200 et seq., hereafter the UCL)^[1], plaintiffs and appellants Irina Kushner et al., individually and on behalf of a class similarly situated (Plaintiffs), sought an

injunction, compensatory and punitive damages, and an order for disgorgement of funds against defendant AT&T Corporation (AT&T or Defendant). (Code Civ. Proc., § 382.) Plaintiffs' theory is that Defendant committed unlawful, unfair and/or fraudulent business practices through its policy of imposing on customers a monthly charge known as the "Bill Statement Fee" (BSF), which represents an additional monthly fee for the purpose of allowing AT&T long distance subscribers to receive their AT&T long distance service charges together with their monthly local telephone bill, from a separate provider. Plaintiffs contend this fee has been imposed without proper disclosures or notification to customers.

The trial court granted Defendant's motion for summary adjudication on the UCL causes of action, which also effectively disposed of a separately alleged cause of action, based on the same facts, brought under the Consumer Legal Remedies Act (Civ. Code, § 1750 et seq.) (CLRA). Plaintiffs appeal, contending the trial court erroneously granted judgment after the motion for summary adjudication because: (1) A reasonable trier of fact could find for Plaintiffs if the evidence is correctly interpreted, but the trial court's rulings on evidentiary objections were in error; (2) contrary to the trial court's conclusion, the filed rate doctrine arising from federal telecommunications law should not be available as a defense in this case; and (3) the trial court should not have concluded Plaintiffs lacked standing to bring this action in light of the passage of Proposition 64, after the filing of the action. (Prop. 64 was approved by California voters in November 2004.)

None of Plaintiffs' contentions has merit and we affirm the judgment.

FACTUAL AND PROCEDURAL BACKGROUND

A

Complaint; Class Certification Order

Plaintiffs are subscribers to AT&T's land-based residential long distance phone service. The original complaint was filed in August 2002 and the operative complaint is the first amended complaint. Pursuant to motion under Code of Civil Procedure section 382, Plaintiffs obtained an order certifying a class in October 2003, defining the class as follows, "All AT&T landline fixed rate long-distance calling plan subscribers who, while a California resident, were charged a monthly [BSF] prior to being provided with adequate notice that such fee would be imposed . . . . [subject to certain exclusions for persons who had already received setoffs resolving their claims about the BSF]." (Italics added.)^[2] The trial court retained jurisdiction to modify or decertify the class, according to the evidence to be presented.

Plaintiffs assert a number of alleged violations of the fraudulent, unfair, and unlawful prongs of the UCL statute, beginning when AT&T initiated procedures to impose the BSF around April 2001. (§§ 17200, 17500.) This took place during a period of intense governmental and commercial activity to deregulate the telecommunications

field pursuant to 1996 federal legislation, with various relevant regulatory deadlines set in the summer of 2001, as will be set out more fully later in this opinion.^[3] Generally, it should be noted that the detariffing process was ongoing in 2001, when this lawsuit was generated, and that process required communications companies to change from a regulatory tariff-based billing system to a consumer service agreement or contract-based system. (See, e.g., Gallivan v. AT&T Corp. (2004) 124 Cal.App.4th 1377 (Gallivan).)

Specifically, Plaintiffs allege that from 2001 and forward, AT&T has pursued misleading and deceptive marketing initiatives and corresponding advertising campaigns and mass market solicitations relating to the actual costs of its various landline, long distance calling plans that provide a fixed rate for monthly or per minute service. Plaintiffs allege Defendant "inadequately disclosed and improperly imposed a monthly $1.50 charge on customers who received their long distance charges with their monthly local phone service bill." This monthly charge, the BSF, applies to customers who receive their AT&T long distance service charges with their monthly local telephone bill from another service provider, such as a local exchange carrier.^[4]

In particular, Plaintiffs complain that AT&T did not properly or adequately disclose the existence of the BSF in its advertising, promotional, or marketing materials or in any consumer services contracts. Instead, Plaintiffs claim that this charge is disclosed, if at all, only after the consumer has subscribed and initiated long distance phone service through AT&T, and Plaintiffs argue the format of the notification of the change, separate from the customer's phone bill, was inadequate.

It is not disputed that AT&T implemented the BSF in two phases in 2001. Its competitors were also implementing such fees during the same time frame. First, AT&T gave notice to its existing customers in April 2001, to assess the BSF only against those residential long distance customers (with LEC billing) who had optional calling/savings plans. It did this by sending its subscribers separate notices by letter or postcard, marked "Important information regarding your AT&T Long Distance Bill."

Next, AT&T implemented a second phase of the BSF notifications between June 1, 2001 and June 7, 2001, by sending out similarly worded postcards which stated that the BSF charge would be assessed beginning July 1, 2001. Both phases of these notices told the customer that they had three different billing choices: (1) receiving a separate long distance bill directly from AT&T without being charged a BSF; (2) online billing, also without a BSF; or (3) continuing to receive local company (LEC) billing which included both local and long distance charges, and paying a BSF of $1.50 per statement. These notices and the monthly bills included a toll-free telephone number to call for more details about the BSF and the three billing options.

Further, Plaintiffs object that the manner in which the BSF is described in a new customer "fulfillment package," and on the company website, when the customer enters into a new CSA, is misleading. Plaintiffs rely on Defendant's own internal marketing studies and focus groups to show a lack of clarity in the BSF notifications given. Specifically, Defendant's research in 2001 and 2004 has shown that many such notices reading "Important Information" and the like are considered by consumers to be "junk mail" which the consumer is inclined to discard, rather than to carefully review its contents.

Accordingly, Plaintiffs contend in their complaint that the BSF is merely a subterfuge by AT&T to recover administrative overhead and ancillary costs associated with its phone service, without alerting consumers to this fact. When the imposition of the BSF is considered together with the structure of AT&T's service plans, which advertise a per minute rate, Plaintiffs argue that the BSF imposition creates an effect on the Defendant's advertising and marketing materials about its calling plans that is false, misleading, deceptive and serves to materially increase the effective per minute rate paid by the consumer/subscriber. For the same reasons, Plaintiffs allege that the BSF allows AT&T to gain an unfair advantage over competitors also offering long distance service: "The actions taken by AT&T are intended to likely deceive and mislead plaintiffs and other Class members to gain a marketing advantage by disguising the true costs of defendant's long distance services to prospective subscribers."

B

Motion/Opposition

In June 2004 Defendant filed its motion for summary adjudication of the UCL unfair business practices and false/misleading advertising claims. It argued: (1) its notices to customers regarding the BSF provided reasonable notice of the fee and were adequate as a matter of law; (2) AT & T had voluntarily filed consumer telecommunications service tariffs with federal regulatory agencies which provided constructive notice of the rates to be charged, such as the BSF, at all relevant time periods.

In support of its motion, Defendant submitted a separate statement of undisputed facts, referring to numerous lodged documents and declarations by executives in charge of the BSF program. Sample notices were provided of the various phases of notification of the BSF, to show that they were not in fine print or otherwise incomprehensible in format. There were over 5.2 million California customers who were then being billed through their LEC's and who were sent such notices. AT&T decided to impose the BSF because it was itself being charged fees by the various LEC's to issue a combined billing statement that included AT&T long distance charges. Also, its competitors were doing so.

In addition to sending out the two phases of notices to customers, in February 2001, AT&T filed tariffs with federal agencies, on a voluntary basis, to include the BSF for its customers who retained LEC billing. The FCC declined to regulate telecommunications providers through tariffs effective July 31, 2001, and AT&T no longer filed tariffs for domestic service after that date.

AT&T records showed that after the BSF notices were sent, over 414,000 California customers converted to a new method of billing, as of August 2001, apparently to avoid the BSF. Also, as of that time period, over 320,000 California customers left AT&T service for another long-distance carrier.

The parties agreed that discovery material from a federal district court case, Ting v. AT&T (N.D. Cal. 2002) 182 Fed.Supp.2d 902^[5] regarding the BSF notice program, could be considered for purposes of resolving the motion.

After a stipulated continuance, Plaintiffs filed opposition to Defendant's motion, arguing their claims were not subject to summary adjudication, because there were triable issues of material fact on whether AT&T's materials giving notice of the BSF were adequate. Plaintiffs contended those materials, taken as a whole, did not adequately disclose the existence and terms of the BSF, as it affected the actual cost of telephone service, and amounted to violations of the fraudulent, unfair, and unlawful prongs of the UCL statute, as well as false advertising. (§§ 17200, 17500.) Plaintiffs also argued the trial court should not consider the filed rate doctrine in connection with the motion, because AT&T had not expressly pled it as an affirmative defense, and because deregulation had already been accomplished by the time of completion of the BSF notice program (around August 1, 2001), so that a regulatory doctrine should no longer apply, particularly to customers who signed up later.^[6]

Plaintiffs' evidence included declarations by their attorneys, setting forth regulatory reports and also computer disk evidence about 29 advertisements that AT&T had run about its various offerings, which did not expressly mention the BSF. Plaintiffs' attorneys also set forth deposition excerpts from various named plaintiffs about how they did not remember receiving notices from Defendant about imposing the BSF on their accounts, and/or that they thought the notices that stated, "Important information regarding your AT&T Long Distance Bill" appeared to be junk mail. Also, Plaintiffs provided evidence that the BSF had generated $173 million revenue during the relevant time period. Plaintiffs also submitted studies prepared by Defendant (e.g., 2001 and 2004 yield loss studies) about the numbers of customers who had left AT&T or changed their billing methods around the time of the BSF notices. At that time, AT&T had the capacity to directly bill only around 17 percent of its millions of customers, and it received orders to do so in about that amount; it was not clear that it could have accommodated more direct billing customers at that time.

In its reply papers, Defendant filed extensive evidentiary objections to Plaintiffs' showing. First, they objected that the computer advertisement material was not probative of whether notice had otherwise been given of the BSF to customers. Of the 34 items of Plaintiffs' evidence to which Defendant was objecting, numbers 1-10 mainly dealt with the income generated by the BSF, the purposes for imposing it, and the numbers of customers who left AT&T service around that time. Defendant objected that neither this evidence of revenue generated by the BSF, nor the purposes for imposing it, were relevant to whether the notice given to customers at their addresses of record was sufficient.^[7]

The second portion of the 34 items of Plaintiffs' evidence to which Defendant was objecting, Nos. 11-34, included objections to portions of Plaintiffs' class members' declarations about what they remembered or did not remember about the BSF notification process, which Defendant argued did not objectively show inadequacy of such notice. Further, Defendant objected that Plaintiffs were taking the consumer surveys/studies and employee e-mails out of context, and citing them selectively and misleadingly, regarding billing methodology, the design of the notices, and the purposes for imposing the BSF.

Specifically, Defendant objected to Plaintiffs' reliance, as argumentative and mischaracterizing the testimony, on the deposition testimony of AT&T employees who were members of the BSF team, about the reasons why the company imposed the BSF (to cover expenses from the LEC billings to AT&T, because competitors were doing so, to offset its costs in order to compete and make money as a business, to attempt to retain customers through direct billing, etc.). Also, Defendant was objecting to Plaintiffs' use of surveys of customers conducted by Defendant about their awareness of the BSF, in connection with the company raising that fee in March 2004. Defendant argued that the later surveys did not show that the notice originally given was inadequate.

Further, Defendant objected, for lack of foundation or relevance, to material provided by Plaintiffs about the detariffing process, in which communications companies were required to change from a filed tariff-based billing system to a consumer service agreement contract-based system, effective August 1, 2001.

In their reply points and authorities, AT&T argued that its BSF notice scheme was legally sufficient and not deceptive, and Plaintiffs had failed to show otherwise. AT&T also argued that the recent passage of Proposition 64 had deprived Plaintiffs of standing. The court continued the matter for supplemental briefing on the effect of Proposition 64 on the action.

Plaintiffs replied, defending their ongoing standing to sue in a representative capacity, even after Proposition 64. Plaintiffs submitted evidentiary objections to declarations provided by AT&T, mainly on grounds of hearsay and lack of foundation, regarding the opinions rendered regarding the substance of and the adequacy of the mailed BSF notices and the fulfillment packages for new customers, as well as whether the filed tariffs were adequate to give notice.

C

Ruling

After considering the supplemental briefing regarding the effect of the passage of Proposition 64 in November 2004, the trial court issued its tentative ruling. No oral argument was requested or held before the trial court, which then confirmed its ruling. First, with regard to whether AT&T had provided adequate notice and disclosure to customers of its BSF, the court analyzed the evidence provided in the respective separate statements and explained its conclusions as follows. The notices given to customers in the two phases of BSF disclosures, as well as the disclosures provided through the fulfillment package, monthly billing statements, toll-free telephone number, and website, adequately disclosed the BSF to AT&T 's customers. Plaintiffs' evidence was deemed inadequate to show that the disclosures were ineffective (such as the evidence of the class representatives' lack of recollection of receiving a BSF letter or postcard). Moreover, the court concluded that: "[T]he other facts Plaintiffs rely on are not supported by the evidence they cite to. The Court sustains AT&T's evidentiary objections to the items set forth as nos. 11-34 on the ground that the Plaintiffs mischaracterized, misstated, and/or took the statements cited out of context." The trial court accordingly ruled in favor of AT&T to summarily adjudicate the adequacy of notice issue.

The ruling further addressed the availability of a defense to AT&T under the federal "filed rate doctrine," for the period between April and August 2001: "AT&T argues that the filed rate doctrine bars Plaintiffs' claims up to and including August 1, 2001. On the other hand, Plaintiffs contend that AT&T may not assert this defense since it was not included in its Answer and that it completed its detariffing process in March 2001." The trial court determined that the defense was adequately pled and was available to AT&T for the period before August 1, 2001, based on the reasoning of the court in Gallivan v. AT&T Corp., supra, 124 Cal.App.4th 1377 (holding that the filed rate doctrine applies to a voluntarily filed tariff). The court explained, "In this case, AT&T amended its Federal FCC tariffs to include the BSF, effective April 1, 2001, for customers who elected to receive Local Co. Billing on February 28, 2001. [Citation.] Therefore, the claims of Plaintiffs who were AT&T customers prior to August 1, 2001 are barred."^[8]

Finally, the trial court's ruling discussed the impact of Proposition 64 on this lawsuit, concluding that Plaintiffs lacked standing to bring this action in light of the passage of Proposition 64. The court reasoned that the amendments made by Proposition 64, effective November 2004, restricted standing requirements, and Plaintiffs could not meet them. First, they could not "allege (and ultimately prove) that the purported wrongful conduct or practices of the named defendants actually injured them in some tangible way, i.e., caused loss of money or property." Second, these Plaintiffs sought to represent the general public, but had not sufficiently alleged and showed actual injury to themselves, or to a certifiable class of California residents which suffered comparable injury or loss. Instead, Plaintiffs were merely arguing that they were at all relevant times AT&T long distance customers who were assessed and paid the BSF charge, and that it could be inferred that they suffered injury in fact and lost money as a result. The court rejected this inference, stating, "However, this assumes that any customer who paid the BSF did not want to use the Local Co. Billing option. Also, Plaintiffs failed to provide admissible evidence to show that AT&T's disclosures were inadequate. Therefore, the Court concludes that Plaintiffs lack standing to bring this action."

Plaintiffs timely filed their notice of appeal.^[9]

DISCUSSION

The gist of the complaint is that AT&T has failed since April 2001 to provide adequate, clear, plain and conspicuous notice of the BSF to the class of its existing subscribers or to new subscribers, in its advertisements, billing, or customer service agreements. Plaintiffs contend the reasonable consumer cannot determine from these AT&T materials how the BSF actually affects the cost of service, and that the evidence of revenue generated by the BSF, and its purposes for charging it, should lead to a conclusion that it misled consumers. To address these arguments, we first set out

standards of review for judgments after summary adjudication, and then outline the standards for resolving UCL cases. We will then address the filed rate doctrine and Proposition 64 standards as necessary.

I

SUMMARY ADJUDICATION STANDARDS OF REVIEW; EVIDENTIARY ISSUES

On review of a judgment after a grant of summary adjudication, the legal sufficiency of the underlying order is examined de novo. (Smith v. Wells Fargo Bank (2005) 135 Cal.App.4th 1463, 1471-1472 (Smith).) The same standards apply as for review of a trial court's order granting a motion for summary judgment. (Ibid., citing Code Civ. Proc., § 437c, subds. (c) & (f).) " '[A] party may move for summary adjudication as to one or more causes of action within an action . . . if that party contends that the cause of action has no merit . . . . A motion for summary adjudication shall be granted only if it completely disposes of a cause of action . . . .' [Citation.]" (Smith, supra, at p. 1472; Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843, 857.)^[10]

On appeal of such a judgment, " 'we review the record de novo, considering all the evidence set forth in the moving and opposition papers except that to which objections have been made and sustained. [Citations.]' " (Smith, supra, 135 Cal.App.4th at p. 1472, citing Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 334.) In Carnes v. Superior Court (2005) 126 Cal.App.4th 688, 694, the appellate court noted that even though

ordinarily, an appellate court reviews a summary judgment motion "de novo," a different analysis will apply for review of a trial court's rulings on evidentiary objections. Thus, "an appellate court reviews a court's final rulings on evidentiary objections by applying an abuse of discretion standard. [Citations.]" (Ibid.) Even where an appellant disagrees with the rulings made, reversal is not required if they are not shown to be incorrect. " 'Anyone who seeks on appeal to predicate a reversal of [a judgment] on error must show that it was prejudicial. [Citation.]' [Citation.]" (Ibid.)

Plaintiffs seek to bring this case within the scope of our holding in Sambrano v. City of San Diego (2001) 94 Cal.App.4th 225, 235, regarding a trial court duty to rule upon evidentiary objections, and resulting error from a failure to do so in the summary judgment context. The problem in that case was summarized, "When that duty is not performed, appellate courts are left with the nebulous task of determining whether the ruling that was purportedly made was within the authority and discretion of the trial court and was correct." (Ibid.) Plaintiffs argue here that this record contains persuasive evidence to which AT&T failed to object, and/or that the trial court failed to address certain other evidentiary objections made by Defendant. Plaintiffs accordingly seek to show that all those materials are deemed to be included in the record, so that on the current record, the trial court erroneously concluded there were no triable issues of material fact regarding the UCL and false/misleading advertising causes of action. (Ann M., supra, 6 Cal.4th 666, 670, fn. 1.)

In particular, Plaintiffs emphasize that the trial court did not rule upon the first 10 of the 34 defense objections to Plaintiffs' evidence. Thus, Plaintiffs argue the record contains admissible evidence about the income generated by the BSF, and the relatively small numbers of customers who left AT&T service or switched billing methods after the BSF notices were sent. Plaintiffs thus argue the evidence of the 2001 and 2004 billing options and yield loss research studies remain in the record, showing the above.

Also, Plaintiffs argue the trial court did not exclude its evidence about the 29 advertisements that did not expressly mention the BSF, when discussing the costs of various AT&T plans. Therefore, Plaintiffs argue AT&T, or the LEC's who performed the billing, did not adequately disclose the BSF. In Plaintiffs' view, even after the trial court's ruling to exclude other evidence, they have sufficiently raised triable issues to show the BSF was inadequately disclosed to customers and prospective customers.

Before examining Plaintiffs' arguments regarding the adequacy of their evidentiary showing to defeat the defense summary adjudication motion, we first set forth principles for evaluating the UCL causes of action alleged.

II

UCL

Section 17200 establishes three varieties of unfair competition, i.e., acts or practices which are unlawful, unfair, or fraudulent. The general inquiry in a UCL action brought under section 17200 is whether the allegations demonstrate that the public is likely to be deceived by the challenged practices. (Committee on Children's Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 211.) Plaintiffs appear to be making arguments about each of these prongs of the statute. (Ibid.)

In determining whether members of the public are likely to be deceived by a particular business practice regarding a charge or cost, courts will apply the standard of the hypothetical "ordinary consumer acting reasonably under the circumstances. Where the advertising or practice is targeted to a particular group or type of consumers, either more sophisticated or less sophisticated than the ordinary consumer, the question whether it is misleading to the public will be viewed from the vantage point of members of the targeted group, not others to whom it is not primarily directed. [Citation.]" (Lavie v. Procter & Gamble Co. (2003) 105 Cal.App.4th 496, 512 (Lavie).) As long as a business provides reasonable and advance notice of a charge or cost for a product or service, "there is no requirement that reasonable notice has to be the best possible notice." (Plotkin v. Sajahtera, Inc. (2003) 106 Cal.App.4th 953, 966 (Plotkin).)

Plaintiffs cannot point to any requirement in the UCL that a consumer be notified of the ultimate use of the money that a business charges a customer. In Searle v. Wyndham International, Inc. (2002) 102 Cal.App.4th 1327, 1334 (Searle), this court observed that the defendant business, a hotel, had a number of means of generating revenue from its guests, including room service charges, but that the guests who were charged such fees did not have any legitimate interest in learning what the hotel did with the service charges, in terms of being notified of the recipient of the money: "What a hotel does with the revenue it earns-from either the minibar, in-room movies or its room service charges-is of no direct concern to hotel guests." (Ibid.) This court rejected arguments that this practice amounted to violations of the Labor Code, pertaining to gratuities, and found it important in that case that the patrons had been given clear notice that a particular service was being offered at a premium price, but they had the freedom to decline the service. We concluded that charging such a premium price for room service was not per se unlawful or unfair under those circumstances. (Id. at pp. 1334-1335.)

In light of all these considerations, we now turn to the record to examine Plaintiffs' claims that these UCL issues were not properly subject to summary adjudication, based on the respective showings made.

A

Analysis: Disclosures of BSF

Although Plaintiffs make general arguments that the trial court's evidentiary rulings represent an abuse of discretion, their true focus on appeal seems to be that regardless of the result of those affirmative rulings on the defense objections, there remains enough unchallenged evidence in the record to raise triable issues about the adequacy of the BSF disclosures. (Ann M., supra, 6 Cal.4th 666, 670, fn. 1 [record may be deemed to include those materials for which objections were not expressly ruled upon].) Thus, we should examine both the evidence presented by the defense, and the evidence argued by Plaintiffs to be remaining even after the court concluded that: "[T]he other facts Plaintiffs rely on are not supported by the evidence they cite to. The Court sustains AT&T's evidentiary objections to the items set forth as nos. 11-34 on the ground that the Plaintiffs mischaracterized, misstated, and/or took the statements cited out of context."

With regard to the defense objections sustained by the trial court, Nos. 11-34, these disputed the manner in which Plaintiffs' witnesses and arguments were interpreting the Defendant's consumer surveys/studies and employee e-mails, by reading them out of context and/or citing them selectively and misleadingly. Those materials covered the topics of billing methodology between AT&T and the LEC's, various class representatives' responses to the changing design of the notices over time, and AT&T's reasons for imposing the BSF (to recover expenses from the LEC billings, to follow the lead of Defendant's competitors, and to offset its costs in order to compete and make money as a business, etc.).

In deciding whether Defendant was properly granted summary adjudication, we follow the analytical approach set out in Smith, supra, 135 Cal.App.4th at page 1489. We " 'must . . . determine what any evidence [submitted by Plaintiffs] or inference [therefrom] could show or imply to a reasonable trier of fact.' [Citation.] Therefore, if any evidence or reasonable inference therefrom shows or implies the existence of the required element(s) of a cause of action, the trial court was required to deny [Defendant's] motion for summary adjudication because a reasonable trier of fact could find for [Plaintiffs]. [Citation.]" Conversely, where a plaintiff has only shown that the existence of a required element of a cause of action is only as likely as its nonexistence or even less likely, the court must then grant a defendant's motion for summary adjudication, even apart from any consideration of defendant's evidence, because a reasonable trier of fact could not find for that plaintiff. (Id. at pp. 1474, 1489.)

Applying that standard, we conclude a reasonable trier of fact could not infer from the established facts regarding Defendant's disclosures that the existence of all of the elements of Plaintiffs' causes of action is more likely than their nonexistence. (Aguilar v. Atlantic Richfield Co., supra, 25 Cal.4th at p. 857.) A trier of fact could reasonably infer it is more likely that the disclosures regarding the BSF imposition adequately placed the reasonable consumer on notice of the change in the cost of service provided, without any unfair business practices taking place. (Code Civ. Proc., § 437c, subd. (o).) First, Defendant demonstrated that the notices it provided through direct mailings to customers and in the fulfillment packages, as well as the toll-free billing inquiry phone number, included sufficient detail to place a reasonable consumer on notice that the billing methods were changing, and an additional charge was being imposed for the convenience of a single bill from the LEC. The notices defined the term BSF, set forth its amount, and gave the consumer choices among bill payment methods. This amounted to a sufficient showing that Defendant's business practices regarding the BSF were not likely to deceive the hypothetical "ordinary consumer acting reasonably under the circumstances." (Lavie, supra, 105 Cal.App.4th at p. 512.)

It does not appear that Plaintiffs actually contend the sample notices were not duly sent or received, nor that their text was set out in misleadingly fine print, nor that they were otherwise incomprehensible in format. Rather, Plaintiffs argue they were misconstrued by consumers or mistakenly ignored. In any case, Plaintiffs have not shown that the notices were misleadingly worded or printed, in the manner criticized in Schnall v. Hertz Corporation (2000) 78 Cal.App.4th 1144, 1163-1164 (a disclosure practice for certain charges, using a separate document, could be deceptive in the manner in which price formulas were displayed and printed). Rather, the BSF notification scheme, using individualized separate notices sent to addresses of record, should be examined from the viewpoint of the hypothetical ordinary reasonable consumer. It is not dispositive that many customers apparently did not read the notices or recognize them as affecting their bills. Defendant made many different and appropriate efforts to provide such notice, separate from the billing, and the reasonable consumer had the opportunity to take action upon it. Also, references were made on customer bills to the toll-free telephone number and the company website, designed to answer questions about billings.

We are aware that Plaintiffs are contending that the decision in Ting v. AT&T, supra, 319 F.3d 1126 should have a collateral estoppel effect to determine that a particular feature of the BSF notification methods used was inadequate (i.e., that placing the marketing phrase, "important information" on an envelope or postcard is commonly associated with the mailing of junk mail or solicitations). However, even assuming that Plaintiffs are entitled to the benefit of this conclusion, we do not consider that portion of the marketing studies performed by AT&T to be dispositive here.

Rather, on the entire record, Plaintiffs failed to show not only that the notice given was insufficient, but also that any further types of notice would have been more desirable or required in some manner. For example, Plaintiffs argue that Defendant could have issued a press release to announce the BSF imposition. Plaintiffs also argue that Defendant could have more fully disclosed to customers the expenses that the billing process represented to it, and the increased income it gained from imposing the BSF. We agree with Defendant that Plaintiffs have not shown in the trial court or this court that there were any duties to take such further types of action, as now suggested. Reasonable notice of a charge is not necessarily the best possible notice. (Plotkin, supra, 106 Cal.App.4th 953, 966.) Defendant's choices to provide individualized notices regarding the new fees, as was done here along with the other efforts, do not constitute unfair, unlawful, or deceptive business practices, under all the relevant circumstances.

Moreover, Plaintiffs cannot successfully rely on the remaining undisputed evidence about Defendant's internal surveys and studies about low customer awareness of the BSF (2001 and 2004 billing options and yield/loss research studies). Even though those surveys and studies show that more consumers responded to the 2004 set of notification efforts, as opposed to 2001, this does not necessarily show that the 2001 efforts were inadequate. The 2004 BSF amounted to $2.49, not the 2001 figure of $1.50, and this increase could possibly have made a significant difference in consumers' decisionmaking, as opposed to the manner of notification itself.

These surveys and studies also showed a relatively small proportion of customers left AT&T service or switched billing methods after the BSF notices were sent in 2001. Even if we accept, as did the trial court, the evidence that several class representatives did not remember receiving such notices, this material does not require the denial of the motion for summary adjudication, in light of the entire record viewed objectively.

Plaintiffs' efforts to infer from the evidence of the income generated by the BSF that it amounted to a misleading business practice are also unsuccessful. The evidence of income does not support an inference of deception on the part of Defendant to increase the costs of service to consumers, over the advertised plan costs. Those facts about the revenue received are not inconsistent with the conclusion that consumers were otherwise placed on adequate notice of the total amount to be charged, and for what purpose. Plaintiffs cannot show they have a right to know the disposition of the various forms of income that a business receives, within the business itself. (See Searle, supra, 102 Cal.App.4th 1327, 1334.)

We further conclude the trial court did not err or abuse its discretion in analyzing the evidentiary showings, with respect to granting the defense objections numbers 11-34. " 'Anyone who seeks on appeal to predicate a reversal of [a judgment] on error must show that it was prejudicial. [Citation.]' [Citation.]" (Carnes, supra, 126 Cal.App.4th at p. 694.) In light of the record as a whole, Plaintiffs cannot show any prejudice from the ruling. The trial court correctly granted Defendant's motion for summary adjudication and judgment.

B

Analysis: Effect of Filed Rate Doctrine

Although the trial court primarily treated this case as requiring resolution of questions of law upon the facts presented regarding notice (after following the evidentiary objection procedure), it also fully addressed in its ruling the issue of whether the filed rate doctrine is applicable to this case, as a defense to the allegations of inadequate disclosure of the BSF to present and future customers of AT&T. This doctrine provides constructive notice of rates for services, as specified in duly filed tariffs. (See Marcus v. AT&T Corp. (2d Cir. 1998) 138 F.3d 46, 63.)

The trial court observed in its ruling that, as relevant to this long distance carrier, the original detariffing deadline has been extended numerous times, until July 31, 2001. The filed rate doctrine was found to bar Plaintiffs' claims up to and including August 1, 2001, as this defense was deemed to be sufficiently pled in the general defense of preemption.

The trial court then accepted the AT&T argument that constructive notice of the BSF had been sufficiently provided in the voluntarily filed tariffs that AT&T filed before the FCC went out of the regulation business in this context (relying on Gallivan, supra, 124 Cal.App.4th 1377). On February 28, 2001, AT&T had amended its FCC tariffs to include the BSF, effective April 1, 2001, for customers who had elected to receive LEC billing. Therefore, the claims of Plaintiffs who were AT&T customers prior to August 1, 2001 were ruled to be barred.

As explained in Gallivan, supra, 124 Cal.App.4th at page 1382, "The filed rate doctrine has two primary purposes: '(1) preventing carriers from engaging in price discrimination as between ratepayers (the "nondiscrimination strand") and (2) preserving the exclusive role of federal agencies in approving rates for telecommunications services that are "reasonable" by keeping courts out of the rate-making process (the "nonjusticiability strand"), a function that the federal regulatory agencies are more competent to perform.' [Citation.] . . . 'There is no question that the doctrine has been used repeatedly to bar myriad claims seeking monetary recovery.' [Citation.]" However, where a business entity is no longer subject to regulation and requirements to file its rates with the FCC for approval by that agency, the justification for the rule disappears. (Id. at p. 1385.)

Plaintiffs vigorously argue that the principles set forth in Gallivan, supra, 124 Cal.App.4th 1377, regarding voluntary filings, do not apply here, because that was a case involving local exchange carriers, while AT&T in this case represents a long distance carrier that was subject to mandatory detariffing. Plaintiffs contend that triable issues of fact remain about when the detariffing process was completed (March or August 2001?), and that this process was separate from the changes to Defendant's bill rendering services. Therefore, Plaintiffs contend Defendant could not properly assert a defense that its voluntarily filed tariffs had adequately put consumers on constructive notice of the BSF charges. Moreover, Plaintiffs argue that Defendant's failure to file a cross-appeal of the judgment means that it cannot challenge the trial court's limitation of the applicability of the filed rate doctrine to the pre-August 2001 time period.

Whatever the legal correctness of the trial court's conclusions in these respects, they need not be addressed in detail here. Arguably, the constructive notice provided by the voluntarily filed tariffs during the April-August 2001 period to existing customers may have supplied those Plaintiffs and the class they represent with additional notice of the BSF enactment and imposition. However, even if we accept that interpretation of the doctrine, such constructive notice was essentially superfluous to the showing of actual notice given to Defendant's customers during the time period before the tariffs were no longer required. Instead, the key portions of the record lead to a conclusion that the notices provided through direct mailings to customers and in the fulfillment packages, as well as the toll-free billing inquiry phone number and websites, were adequate to place a reasonable consumer on notice that the billing methods were changing and an additional charge was being imposed for the convenience of a single bill from the LEC. The availability of the filed rate doctrine defense is not dispositive of the correctness of the ruling.

C

Effect of Proposition 64

The trial court fully addressed in its ruling the additional issue of whether the passage of Proposition 64 deprived these Plaintiffs of standing to sue.^[11] The court noted in its ruling that under those standards, Plaintiffs had to allege (and ultimately prove) that the purported wrongful conduct or practices of Defendant actually injured them in some tangible way, i.e., caused loss of money or property. Also, UCL plaintiffs who wish to represent the general public were now required to allege and show actual injury to themselves, and also to demonstrate that a certifiable class of California residents suffered comparable injury or loss. The trial court then found these plaintiffs lacked standing to proceed with the action, and it also ruled that Plaintiffs had failed to present enough admissible evidence to show that the disclosures made by Defendant were inadequate.

Here, Plaintiffs essentially argue that since they had already obtained class certification, before the enactment of Proposition 64, there can be no valid challenge to their standing to maintain this UCL action. (See Lockheed Martin v. Superior Court (2003) 29 Cal.4th 1096, 1103-1104 [outlining the community of interest requirement for class certification as including three factors: (1) predominant common questions of law or fact; (2) class representatives with claims or defenses typical of the class; and (3) class representatives who can adequately represent the class].) However, it should be noted that the trial court's grant of class certification was subject to retained jurisdiction to modify or decertify the class, according to the evidence to be presented.

In Huntingdon Life Sciences, Inc. v. Stop Huntingdon Animal Cruelty USA, Inc. (2005) 129 Cal.App.4th 1228, 1262, this court reached the conclusion that Proposition 64 would apply to cases pending as of its effective date of November 3, 2004. This court observed that the unfair competition law provides statutory remedies, not common law remedies, and statutory remedies are subject to repeal by the legislative body. (Ibid.) The Legislature may therefore impose different standing requirements on pending cases, such as requiring a showing of competitive injury, or increasing standing requirements for representative actions. (Ibid.)

Whether these Plaintiffs should be deemed to have any vested rights to continue this pending litigation on statutory claims, even after the passage of this ballot initiative, is not dispositive here. Rather, even Plaintiffs admit that despite "all of the hullaballoo, it does not appear that Prop. 64 actually has any impact on these proceedings at this juncture." Instead, the trial court correctly focused on the lack of admissible evidence submitted by Plaintiffs to prove that the BSF notices were legally inadequate. In light of that finding, applicable to the representative portion of the action, we need not enter the debate, now pending before the California Supreme Court, about the issue of Proposition 64's retroactivity. (See fn. 11, ante.)

DISPOSITION

The judgment is affirmed. Plaintiffs are to pay the ordinary costs on appeal.

HUFFMAN, Acting P. J.

WE CONCUR:

McINTYRE, J.

AARON, J.

Publication courtesy of California pro bono legal advice.

Analysis and review provided by La Mesa Real Estate Attorney.

^[1] All statutory references are to the Business and Professions Code unless otherwise specified. Sections 17200 through 17209 are commonly referred to as the unfair competition law or "UCL." (Stop Youth Addiction, Inc. v. Lucky Stores, Inc. (1998) 17 Cal.4th 553, 558, fn. 2.)

^[2] Some of the five named plaintiffs were already AT&T subscribers in the spring of 2001 when the BSF was implemented, and some became subscribers in 2002, as new customers, after the BSF was already in effect. These distinctions among class representatives are not emphasized in the briefing, except as to the filed rate doctrine defense, and do not appear to materially affect the relevant legal issues dealt with in the summary adjudication motion.

^[3] The trial court ruling set forth the evolution of the filed rate doctrine as follows: "The Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 ('1996 Act'), fundamentally altered the [federal] Communications Act's regulatory scheme by giving the FCC the power to decline to regulate via tariff under certain circumstances. [See Federal Communications Act of 1934; as amended, 47 U.S.C. § 160(a).] As a result, AT&T was required to detariff its domestic service."

^[4] LEC stands for "Local Exchange Carrier," which is the customer's local telephone service provider. An LEC will provide its own bill for local services, and in order to also include AT&T's long-distance service charges to a customer in that LEC bill, the LEC will charge AT&T for this service. The record shows the LEC charges to AT&T for doing so were originally around $0.73, and the original BSF imposed by AT&T was $1.50 (since raised to $2.49 and higher).

^[5] The district court opinion, Ting v. AT&T, supra, 182 Fed.Supp.2d 902, was reversed in part by Ting v. AT&T (9th Cir. 2003) 319 F.3d 1126, 1141 (the purpose of this 1996 legislation is explained as Congress's intention to replace the old regulatory scheme with one based on market competition in which consumers would be protected in part by state law).

^[6] Plaintiffs originally contended that the BSF represented a "negative option" sales scheme under which consumers were sold a new product unless they objected; however, it does not appear that Plaintiffs continue to pursue that theory on appeal. (See Wojcieszek v. New England Tel. and Tel. Co. (D. Mass. 1997) 977 F.Supp. 527, 532 [" 'A true "negative option" occurs where a consumer is told he or she will begin automatically receiving services, and being billed for them, unless he or she affirmatively declines to accept the services.' "].)

^[7] It should be noted that the trial court ruling does not expressly decide the first 10 of Defendant's 34 objections, and Plaintiffs argue that those materials survived the ruling and are deemed included in the record. (Ann M. v. Pacific Plaza Shopping Center (1993) 6 Cal 4th 666, 670, fn. 1 (Ann M.).) The trial court sustained Defendant's objections numbers 11 through 34, as will next be discussed.

^[8] Plaintiffs contend on appeal that if Defendant seeks to have a broader applicability of the filed rate doctrine as a defense than the trial court allowed, it should have cross-appealed this judgment, but it failed to do so. For example, two of the named class representatives (Kushner and Fillet) did not subscribe to AT&T until 2002, so the doctrine was no longer applicable at that time. As we will discuss in part IIB, post, we need not rely on the applicability of the filed rate doctrine to consider the dispositive evidentiary issues, but will otherwise uphold this judgment.

^[9] Plaintiffs pled a separate cause of action under the CRLA, but the parties essentially consider the CLRA cause of action to be based on substantially the same allegations as the UCL cause of action. The same reasoning applies and the parties stipulated that the ruling on summary adjudication regarding the UCL claims would also be dispositive regarding the CRLA theory. Judgment was entered accordingly, and there is no contention that it is not sufficiently final for purposes of this review.

^[10] As already noted, pursuant to the stipulation of the parties, the ruling on the UCL issues was deemed to apply to the CLRA claim.

^[11] The Supreme Court has granted review on this issue in Branick v. Downey Savings & Loan Assn. (2005) 126 Cal.App.4th 828, review granted April 27, 2005, S132433; Californians for Disability Rights v. Mervyn's (2005) 126 Cal.App.4th 386, review granted April 27, 2005, S131798; and many more.