Postpichal v. Cricket Wireless, LLC

Background

This putative class action concerns allegations that Cricket sold 4G phones and wireless plans at premium prices in areas where Cricket did not provide 4G coverage. Plaintiffs alleged that Cricket used a company-wide strategy called “4G in non-4G markets,” directing its stores and authorized dealers to promote 4G phones and service in non-4G markets. The alleged advertising appeared through television, radio, internet, mail, and in-store materials.

Plaintiffs alleged that Cricket knew its 4G network did not reach most customers and continued marketing 4G products despite complaints from customers and employees. They claimed that customers paid more for 4G phones and plans but received slower 3G service. The named plaintiffs asserted a RICO claim based on alleged mail and wire fraud. A prior order had dismissed the plaintiffs’ California Consumers Legal Remedies Act claim for failure to show that required notice had been given; this order addressed Cricket’s motion to dismiss the RICO claim.

Legal standard

Under Federal Rule of Civil Procedure 12(b)(6), a complaint survives a motion to dismiss if its factual allegations, accepted as true at this stage, plausibly show a right to relief. Because the alleged RICO predicate acts were mail and wire fraud, the plaintiffs also had to satisfy Rule 9(b), which requires fraud to be described with particularity, including the time, place, and content of the alleged misrepresentations and the identities of the parties involved.

Court’s analysis

The court held that plaintiffs plausibly alleged the details required by Rules 12(b)(6) and 9(b). For example, Jamie Postpichal alleged that she visited a Cricket store in Kansas City, Missouri, on November 30, 2013, saw 4G advertising, bought two premium-priced 4G phones, and paid $60 per month for what she believed was 4G service. Plaintiffs alleged that Cricket’s 4G network did not reach Kansas City. Another named plaintiff, Freitas, alleged that she bought a 4G phone and plan at a Cricket store in Vancouver, Washington, on October 22, 2013, but did not receive 4G coverage because Vancouver was a non-4G market.

The court also found sufficient allegations that Cricket participated in operating the alleged enterprise. Plaintiffs relied on internal communications and marketing presentations that allegedly showed Cricket executives and managers directing the campaign and supplying advertising materials. The alleged enterprise consisted of Cricket and its dealers, which plaintiffs said acted together under a common marketing plan from 2012 through 2014.

The court found that plaintiffs adequately alleged a pattern of racketeering activity through repeated uses of mail, the internet, television, and radio to market 4G products. It also concluded that the alleged scheme could support mail- and wire-fraud predicates. The court stated that a RICO claim based on mail or wire fraud does not require plaintiffs to prove that they relied on a specific misrepresentation before purchasing. Instead, the alleged scheme must be a factual cause and a legally direct cause of the injury.

Finally, the court found that plaintiffs plausibly alleged injury to their property through overcharging. Their theory was that the difference between the prices of 3G and 4G phones and plans represented money they paid for 4G characteristics and service they did not receive.

Disposition

The court denied Cricket’s motion to dismiss plaintiffs’ RICO claim. The ruling did not determine whether plaintiffs would ultimately prevail, and the opinion did not decide class certification.