Cellphone Termination Fee Cases

In Cellphone Termination Fee Cases (2011) 193 Cal.App.4th 298, a class of consumers challenged Sprint's early termination fees. The trial court found that Sprint's early termination fee was an unlawful liquidated damages clause and not an alternative means of performance. (Id. at p. 321.) On appeal, the court found substantial evidence to support the trial court's findings. (Cellphone, supra, at p. 329.) The court relied on evidence that 80 percent of the customers who were charged an early termination fee were terminated by Sprint after it declared the contract had been breached. Accordingly, the predominant effect of the early termination fee was not to provide consumers with a choice of whether to keep the contract or terminate it. Instead, consumers were forced to pay the fee after Sprint unilaterally decided to terminate the contract. (Ibid.)