Canada court lets C$19 billion cell phone suit proceed

Reuters News
Posted: Jun 28, 2012 9:58 AM
Canada court lets C$19 billion cell phone suit proceed

By Randall Palmer

OTTAWA (Reuters) - The Supreme Court of Canada agreed on Thursday to let a C$19 billion ($18.4 billion) class action suit proceed against Canadian cell phone companies over the "system access fees" they have charged.

The high court declined to hear an appeal by the phone companies of lower court decisions that let the suit proceed. Among the companies named are units of BCE Inc, Rogers Communications Inc, Telus Corp and Bell Aliant Inc.

The suit claims that the phone companies engaged in "unjust enrichment" in charging "system access fees" or "license administration fees" on top of regular monthly fees. For example, a subscriber might be charged C$30 a month and then another C$6.95 a month for system access.

These extra fees have been mostly phased out, but the suit seeks damages for about 20 years during which they were in place. Tony Merchant, the lawyer behind the class action, said the claim was for C$19 billion.

A Saskatchewan court had certified the class action in 2007 and the Saskatchewan Court of Appeal dismissed an appeal by the phone companies last November. The phone companies then turned to the Supreme Court, but it said it would not hear an appeal from them.

The suit can now be heard on its merits in the lower court. Any class action awards that Canadian courts do make tend to be worth substantially less than the claims that were made.

"We are confident the case is without merit and baseless, at least as it relates to Telus," Telus spokesman Shawn Hall said.

Merchant said phone companies have made huge profits on mobile phones. Canada has some of the higher cell phone charges among major developed economies.

"Cellular services, in which they don't have meaningful investment, are extremely profitable, while land line services, in which they have huge investment, are marginally profitable," said Merchant.

"These are the gold and silver veins," he said, adding that that was why the emphasis in advertising is on mobile phones.

($1=$1.03 Canadian)

(Editing by Jeffrey Hodgson)