W.A. Call Mfg. Co., Inc. v. WiLine Networks Inc.

Background

The plaintiffs—W.A. Call Mfg. Co., Inc., Lisa Diaz doing business as Legacy Dance Academy, and Alilang LLC—filed a putative class action on behalf of California persons and businesses that incurred WiLine termination fees or service-rate increases. They alleged that WiLine violated its customer-service agreements and online terms by increasing rates more than once per year, without thirty days’ notice, and by amounts exceeding Consumer Price Index adjustments. They also alleged that WiLine obscured automatic-renewal terms and used early termination fees to extract additional funds or deter cancellations.

The amended complaint asserted four claims: breach of contract; violation of Section 201(b) of the Federal Communications Act; violation of California’s Unfair Competition Law; and false promise, brought by the individual plaintiffs only. WiLine moved under Federal Rule of Civil Procedure 12(b)(6) to dismiss the second through fourth claims. It also moved under Rule 12(f) to strike the class allegations and Paragraph 193 of the unfair-competition claim, which referenced California Penal Code § 484.

Federal Communications Act claim

The court dismissed the Section 201(b) claim with prejudice. Section 201(b) prohibits common carriers from engaging in unjust or unreasonable charges or practices, but the court held that a private lawsuit requires an Federal Communications Commission determination that the challenged conduct violates that section. The plaintiffs did not identify an agency determination concerning the rate increases, notice practices, or automatic renewals alleged here. The court found that the agency decisions cited by the plaintiffs involved different conduct, such as unauthorized carrier changes, unauthorized charges, or blocked calls.

Unfair-competition claim and Paragraph 193

The court dismissed the Unfair Competition Law claim without prejudice and with leave to amend. The court explained that the statute provides equitable relief only when the plaintiff lacks an adequate legal remedy, and the plaintiffs had not alleged that damages were inadequate to address their harm. Because the unfair-competition claim was dismissed, the court struck Paragraph 193 as irrelevant, without prejudice. The court noted that, absent that conclusion, the paragraph would not have been stricken merely because of its reference to the previously dismissed conversion claim.

False-promise claim

The court denied WiLine’s motion to dismiss the false-promise claim. The plaintiffs adequately alleged that WiLine promised annual, Consumer Price Index-linked increases with thirty days’ notice and that WiLine did not intend to perform those promises when it made them. The court therefore found the claim sufficiently pleaded, including under the rule requiring fraud allegations to be stated with particularity.

Class allegations

The court denied the motion to strike the class allegations. After dismissal of the Federal Communications Act and unfair-competition claims, the class allegations applied only to the surviving contract claim. The court found that whether WiLine raised rates more than annually, without notice, and beyond the Consumer Price Index presented common questions. It held that challenges about whether individual issues predominate are better addressed in a later motion for class certification after discovery, rather than at the pleading stage.

Disposition

The court stated that the motion to strike and dismiss was granted in part and denied in part. The motion to strike the class allegations was denied as to the contract claim. The Section 201(b) claim was dismissed with prejudice. The Unfair Competition Law claim was dismissed without prejudice and with leave to amend. The motion to dismiss the false-promise claim was denied. The plaintiffs were ordered to file an amended complaint within twenty-one days and attach a blackline comparison with the existing complaint.