Hesse, et al. v. Sprint PCS
In the summer of 2014, Stritmatter Kessler Whelan secured a $20 million class action settlement on behalf of hundreds of thousands of mobile phone service customers of Sprint PCS.
In 2006, Sprint customers Christopher Hesse and Nathaniel Olsen alleged in a consumer class action lawsuit filed in King County Superior Court and later removed to federal court that Sprint PCS engaged in misleading and illegal billing practices by charging all Sprint PCS customers in the State of Washington a tax that state law prohibited businesses from charging. Instead of acknowledging its illegal conduct and repaying the collected taxes to its customers, Sprint PCS started an 8-year legal battle that reached as high as the doorsteps of the United States Supreme Court.
The vast majority of cell phone companies doing business in this state did not pass on the B&O tax to its customers. Cingular and Sprint were the only exceptions. Thus, Cingular and Sprint had an unfair competitive advantage over other companies in that they made their customers pay some overhead as a line item (i.e., and their competitors had to figure out a way to include that tax in its cost of service).
Sprint PCS spared no expense in defending its conduct and raised every legal loophole Sprint could conjure. Sprint first argued that it did not have to abide by state law and could go right on charging the illegal tax (and it did just that). Sprint also argued that the case against it had already settled in a Kansas state court even though Kansas residents cannot settle a consumer case that alleges Washington law in a Kansas court. After years on appeal, Sprint finally argued that the courthouse doors were closed to its Washington customers and the case should be decided on an individual basis through a secret tribunal chosen by Sprint PCS from which there was no right to appeal.
The settlement will fully reimburse every Sprint PCS customer who paid the illegal tax plus interest from 2002 to the present.
Note: Federal law requires that attorneys’ fee not exceed 20% of the settlement.