First Amended Complaint against AT&T for Service Quality Problems

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Lenza H. McElrath III (SBN 245721)3637 18th St. #2San Francisco, CA 94110Telephone: 216.920.1997Fax: 510.550.7820Email: [email protected] for Plaintiffs

UNITED STATES DISTRICT COURT

Northern District of California

Fredrick M. Blau,Jacob R. Stern,Anthony P. Tran,andLenza H. McElrath III,

individually, and on behalf of all others similarly situated,

Plaintiffs,

vs.

AT&T Mobility,a Delaware corporation,1025 Lenox Park Blvd.Atlanta, Georgia 30319-5309,

and

AT&T, Inc., a Delaware Corporation208 S. Akard StreetDallas, Texas 75202,

Defendants.

Case No. C 11-00541 CRB

First Amended Complaint for Breach of Contract, Breach of the Implied Warranty of Merchantability, Unfair Business Practices under Civil Code § 17500, Unfair and Deceptive Acts under the Consumer Legal Remedies Act, Fraud by Intentional Misrepresentation, and Fraud by Concealment, Violations of the Federal Communications Act, Violations of the Magnuson-Moss Warranty Act, and Violations of the Racketeer Corrupt Organizations Act.

CLASS ACTION

DEMAND FOR JURY TRIAL

Plaintiffs Fredrick M. Blau, Anthony P. Tran, Jacob Stern, and Lenza H. McElrath III

(collectively “Plaintiffs”), by and through their counsel, Lenza H. McElrath III, individually, and on

behalf of all others similarly situated, allege causes of action for Breach of Contract, Breach of Implied

Warranty of Merchantability, Unfair Business Practices under Civil Code § 17500, Unfair and Deceptive

Acts under the Consumer Legal Remedies Act, Fraud by Intentional Misrepresentation, and Fraud by

Concealment, Violations of the Federal Communications Act, Violations of the Magnuson-Moss

Warranty Act, and Violations of the Racketeer Corrupt Organizations Act. against AT&T Mobility, and

AT&T, Inc. (collectively “Defendants” or “AT&T”), demand a trial by jury, and allege as follows:

Case No.: C 11-00541 CRB - 1 - Blau et al., v. AT&TFirst Amended Complaint

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COMPLAINT

With over 95 million customers Defendants are America's largest provider of wireless

telecommunication services. They promote themselves as having superior service. Over the years

nationwide advertising campaigns have stated that they have the “fewest dropped calls,” “more bars in

more places,” and the “fastest mobile broadband network.” Despite these claims, AT&T is notorious for

having horrendous service. In two major surveys conducted late last year (2010), they were rated last for

both service quality and reliability. These low ratings coincide with unprecedented demands being

placed upon AT&T's network infrastructure due to record subscriber growth. The avalanche of users was

triggered by Defendants decision to place profits ahead of service quality. AT&T aggressively marketed

their service to users of smartphones and other data hungry devices, and offered users of these devices

unlimited internet connectivity. They did this knowing their network infrastructure could not possibly

accommodate the demands the increased usage would cause. The CEO of AT&T Mobility, Ralph de la

Vega, admits that their network is “performing at levels below [AT&T's] standards” and promised that

these problems are “going to get fixed.”

While the problems with AT&T's service were being fixed, Plaintiffs were experiencing

persistent service quality and reliability issues. These issues included slow or non-functional internet

connectivity, innumerable dropped calls, and the inability to place or receive calls. In other words,

AT&T's service was not fit for the purpose for which wireless phone service is generally used. Plaintiffs

stuck with AT&T in reliance upon their public and private assurances that overall service quality was

superb, and that any problems Plaintiffs experienced were isolated and being diligently addressed.

Plaintiffs were also held hostage by the costs associated with changing providers. Among these costs was

an “Early Termination Fee” that Defendants insisted on assessing if Plaintiffs sought refuge with another

wireless service provider.

AT&T has been unwilling to address the significant problems with their service and continue to

promote their service as superior, even as the problems get worse and customer satisfaction levels

decline. Instead of correcting their service issues, AT&T has instead instituted policies that penalize


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customers for seeking service elsewhere, and do not allow fee adjustments when AT&T is unable to

provide service of reasonable quality. Under these policies Defendants refused to provide any

compensation to Plaintiffs for the poor services they provided and continue to provide. In fact, they have

aggressively pursued collection efforts over unpaid fees. Plaintiffs have been forced to come to this court

to obtain compensation for AT&T's failure to live up to their obligations as a wireless service provider.

THE PARTIES

1. Plaintiff Fredrick M. Blau (“Blau”) is a resident of the state of New York.

2. Plaintiff Jacob Stern (“Stern”) is a resident of the state of California.

3. Plaintiff Anthony P. Tran (“Tran”) is a resident of the state of California.

4. Plaintiff Lenza H. McElrath (“McElrath”) is a resident of the state of California

5. Defendant AT&T Mobility is a Delaware corporation with its headquarters in Atlanta,

Georgia. AT&T Mobility has at all times relevant to this complaint conducted business in the

Northern District of California.

6. Defendant AT&T, Inc. is a Delaware corporation with its headquarters in Dallas, Texas.

AT&T Inc. has at all times relevant to this complaint conducted business in the Northern District of

California.

JURISDICTION AND VENUE

7. Jurisdiction is proper in this Court under 28 U.S.C. § 1332 (diversity jurisdiction). Venue is

proper in this Court user 28 U.S.C. § 1391 because the events that give rise to Plaintiffs claims took

place within the Northern District of California.

8. At all relevant times, AT&T Mobility acted as an agent for AT&T, Inc. The services

provided by AT&T Mobility are sufficiently important to AT&T, Inc. that without AT&T Mobility, or

another representative, AT&T, Inc. would perform the services of AT&T Mobility itself.


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9. At all relevant times AT&T Mobility, AT&T, Inc., or their agents, conducted business

throughout the Northern District of California. Defendants maintain offices, direct sales, and conduct

operations in the Northern District. At all relevant times, Defendants marketed and sold services to

purchasers in the Northern District of California.

10. Plaintiffs entered into agreements with AT&T in the Northern District of California for

services that were provided in the Northern District.

GENERAL ALLEGATIONS

The Wireless Service Agreement

11. Defendants provide wireless voice and data services (“AT&T Wireless Services”) to over 95

million subscribers across America. This makes them the largest wireless telecommunication provider

in the United States.

12. Defendants require all customers to enter into standard written contracts of adhesion. This

written agreement is prepared entirely by AT&T. AT&T's customers, including Plaintiffs, are not able

to negotiate any terms of the written agreement.

13. AT&T claims that a standard term of their written agreement is agreement to arbitration and

claims related to the agreement. This term is contrary to California public policy, unconscionable

under California law, and a violation of federal law.

14. AT&T claims that their written agreement explicitly disclaims any level of service quality or

reliability.

15. On information and belief, at all times relevant to this complaint it was not possible to obtain

AT&T Wireless Services without agreeing to a contract with a term of a least one year.

16. One provision of AT&T's written agreement states that they will assess an “early termination

fee” (“Early Termination Fee,” or “ETF”) if the customer would like to cancel a line of service before

the end of the contract term.


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17. On information and belief, official AT&T policy does not allow the ETF to be waived. This

is true even when AT&T is not able to provide service of reasonable quality to a customer.

18. On or about July 30, 2008, Blau entered into a contract with Defendants in the Northern

District of California under which AT&T Wireless Services were provided to Blau. Blau terminated

his contract with AT&T in Febuary 2010.

19. On or about August 2, 2008, Stern entered into a contract with Defendants in the Northern

District of California under which AT&T Wireless Services were provided to Stern. Stern canceled

his personal line of service with AT&T in March 2010.

20. On or about December, 28, 2009, Tran entered into a contract with Defendants in the

Northern District of California under which AT&T Wireless Services were provided to Tran. Tran

still receives AT&T Wireless Services from AT&T under this contract.

21. On or about July 17, 2008 McElrath entered into a contract with Defendants in the Northern

District of California under which AT&T Wireless Services were provided to McElrath. McElrath

ended his contract with AT&T in June 2010.

22. Each Plaintiff used AT&T Wireless Services in the San Francisco Bay Area (“Bay Area”).

At the time Plaintiffs entered into their contracts for service, AT&T knew or should have known that

Plaintiffs intended to use service in the Bay Area.

23. At the time of entering into the agreement important terms of the agreement were not

reasonably discoverable. Plaintiffs were not made aware that they were entering an agreement to

arbitrate any claims between themselves and AT&T.

24. As discussed below, Plaintiffs contracts for AT&T Wireless Service (collectively, the

“Wireless Service Agreements”) have been modified by both public statements made by AT&T, and

by statements made to individual Plaintiffs.

25. The Wireless Service Agreements, and the most fundamental principles of contract law,

require that AT&T Wireless Services meet a minimum standard for quality and reliability, and that

AT&T keep Plaintiffs reasonably informed of significant quality and reliability issues.


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26. Plaintiffs have attempted to obtain complete copies of the written portions of their Wireless

Service Agreements from AT&T, but they have been unwilling or unable to produce these documents.

AT&T has also been unwilling to provide customer service records for the named plaintiffs.

27. An example of AT&T's written agreement (obtained from the web) is attached hereto as

Exhibit A (“Plan Terms”). On information and belief, the written portion of the Wireless Service

Agreements are substantially similar to those of Exhibit A.

AT&T's Inadequate Service

28. AT&T has the worst rated service of any major carrier in the United States. Their service

quality and reliability were rated dead last in recent surveys by both PC World and Consumer Reports.

See, Exhibit B (“Consumer Reports Says AT&T 'Worst-Rated' U.S. Carrier”), Exhibit C (“Consumer

Reports AT&T Slam Points Squarly Toward Verizon iPhone”), Exhibit D (“Consumer Reports ranks

AT&T as worst U.S. Carrier”), and Exhibit E (“PC Worlds 2010 Reliability and Service Survey”).

AT&T has or should have knowledge of the deficiencies in their network and service quality.

29. Defendants have directly experienced severe service quality issues using AT&T's wireless

network. This is largely due to AT&T's inability to meet the demands placed on their network

because of oversubscription. See, Exhibit F (“Bad Connection: Inside the iPhone Network

Meltdown”)

30. On information and belief, the statements of facts contained in Exhibit A-F are true, and are

hereby incorporated by reference.

31. The wireless technologies used by AT&T to provide wireless services can only provide a

limited amount of bandwidth that is shared by all users of the wireless network in a particular area. If

there is too much demand in a given area, service quality and reliability can be severely degraded.

32. In the past four years AT&T has experienced tremendous growth in both number of

subscribers and average network traffic per user. Overall wireless network traffic has grown more


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than 5,000 percent over this time. AT&T has not made the necessary infrastructure improvements

required to meet this demand.

33. In the summer of 2007 AT&T became the exclusive carrier for Apple's “iPhone” and began

offering unlimited data bandwidth to customers. Defendants offered unlimited internet connectivity as

a way to entice even more individuals to enter into agreements for AT&T Wireless Services.

Defendants knew or should have known that offering this service would have a large negative impact

on the level of service they were able to provide.

34. By the end of 2007 AT&T knew that it was experiencing service quality and reliability issues

due to the increased demands on their network. This was due in part to the iPhone using even more

bandwidth than AT&T had projected. See, Exhibit F.

35. The problems with Defendants' network became so severe that Apple investigated ending

their exclusive arrangement with AT&T. Apple CEO Steve Jobs made public comments regarding the

problems with AT&T's infrastructure.

36. On information and belief, AT&T requested that Apple take measures to limit networks

usage of their devices to minimize network congestion problems. Apple did not take these measures.

37. In an attempt to relieve pressure on its network, in June 2010 AT&T stopped offering their

unlimited data plan.

38. AT&T knew or should have known that their infrastructure lacked the capacity to service the

massive numbers of new subscribers that were obtained as the result of their aggressive marketing,

and exclusive phone arrangements.

39. Despite having full knowledge of the deficiencies in their network infrastructure, AT&T

continued (and continues) to aggressively market their service to new subscribers, further exacerbating

the existing service problems. Last year alone AT&T saw a net increase of almost 9 million

subscribers, their largest yearly increase ever.

40. Plaintiffs directly experienced significant and continuous problems with AT&T Wireless

Services. These problems include: slow or non-functional data service, innumerable dropped calls,


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and periods where they were unable to make or receive calls. Service quality deteriorated since the

inceptions of the Wireless Service Agreements.

AT&T's Bay Area Problems

41. On information and belief, the issues with AT&T Wireless Service are particularly acute in

the Bay Area. In a December 2010 Consumer Reports survey Defendants performed the worst in San

Francisco, their score of 51 was a full 23 points worse than the second worst wireless carrier. See,

Exhibit D.

42. Independent testing by PC World gave AT&T a reliability rating of only 55% in San

Francisco, the lowest of any carrier in any city. See, Exhibit G (“Smartphone Tests: Performance

Results for 13 U.S. Cities”).

43. AT&T is aware that they suffer significant infrastructure issues in the Bay Area. In June

2008, a manager at an AT&T store in downtown San Francisco stated that he was aware that AT&T

was experiencing significant service issues, “especially in San Francisco.”

44. On information and belief, AT&T's service quality in the Bay Area falls below even their

own standards. In a call with investors, Defendants showed a slide entitled “Closing the Gap”

(Exhibit H) that indicated their wireless network was performing below their “performance objective.”

45. Ralph de la Vega, CEO of AT&T Mobility, said that the company's San Francisco and New

York service was “performing at levels below our standards” and promised the problems were “going

to get fixed” See, Exhibit I (“AT&T to New York and San Francisco: We're Working on It”).

46. On June 28, 2010, AT&T announced that they completed corrective improvements to their

wireless infrastructure in New York city. No such announcement was made for San Francisco.

AT&T's Misrepresentations

47. Defendants represent in printed promotional material, in person, and elsewhere, that their

wireless service area includes the vast majority of the United States.


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48. Defendants have similarly represented that their service area includes all of the Bay Area.

49. Street level coverage maps, generated by AT&T, describe coverage as “Good” or “Best” in

the areas where Plaintiffs used AT&T Wireless Services. See, e.g., Exhibit J.

50. On information and belief, Defendants train their sales personnel to highlight the supposed

quality of AT&T network, and to deny or suppress information about the infrastructure issues that

AT&T has faced.

51. Defendants have never provided notifications to Plaintiffs that AT&T Wireless Service

suffers from quality or reliability problems in any major region of their claimed service area.

52. Defendants' statements and omissions regarding their coverage are understood to mean, and

were intended to lead the public to believe, that AT&T has high service quality and reliability in the

areas where Plaintiffs used AT&T Wireless Service.

53. AT&T has run a local and national marketing campaigns (“Marketing Campaigns”) stating

that AT&T has the “fewest dropped calls,” “more bars in more places,” and that their network is “the

nations fastest.” Examples of these advertisements are attached as Exhibit K.

54. The Marketing Campaigns have been and continue to be disseminated nationwide via

billboards, television, radio, and other media. They are often specifically targeted at the areas where

Plaintiffs used AT&T Wireless Service.

55. The Marketing Campaigns are reasonably understood to mean that AT&T has high service

quality and reliability throughout their claimed service-area, including in the areas where Plaintiffs

used AT&T Wireless Service.

56. The Marketing Campaigns are also understood to mean that AT&T's service quality and

reliability is better than that of its competitors throughout their claimed service-area, including in the

areas where Plaintiffs used their service with AT&T.

57. In fact, AT&T Wireless Services were of low quality and reliability, and below accepted

market standards, both nationally and in the areas where Plaintiffs used their services.


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58. Plaintiffs spoke individually with AT&T regarding the service issues they encountered.

During these conversations AT&T alternatively asserted: (1) overall service coverage and quality in

the areas Plaintiffs used service was high, (2) temporary network issues were at fault for service

problems, (3) problems with Plaintiffs' wireless equipment were to blame for service quality issues,

and (4) purchasing additional equipment from AT&T such as a “MicroCell” would improve service

quality.

59. In fact Defendants knew or should have known that long term infrastructure problems were

to blame for the problems Plaintiffs experienced with AT&T Wireless Services.

60. As Defendants intended, Plaintiffs personally saw and/or heard Defendants

misrepresentations regarding the quality and reliability of AT&T Wireless Services. In reasonable and

justifiable reliance on these statements Plaintiffs decided to enter into the Wireless Service

Agreements.

61. In reasonable and justifiable reliance on Defendants' continued misrepresentations and

omissions Plaintiffs made decisions to maintain their AT&T Wireless Services.

62. Similarly, had Defendants disclose the extent of their infastructure problems, Plaintiffs

would not have entered into the Wireless Service Agreements, or would have ended the agreements

sooner.

AT&T's Refusal to Correct

63. On information and belief, AT&T has not been sufficiently diligent about upgrading their

network infrastructure, given the severity of their problems. The Consumer Reports Survey stated that

“AT&T was the only carrier with scores that dropped significantly in our satisfaction survey [they are]

now positioned in last place overall and in almost every market we rate."

64. AT&T has not met their obligation to inform Plaintiffs of significant quality and reliability

problems they experience with their network. To the contrary, they attempted to mislead Plaintiffs to


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believe that issues Plaintiffs experienced were isolated, due to equipment issues, or could be solved by

purchasing additional equipment such as a “MircoCell.”

65. AT&T has not taken adequate steps to relieve congestion on their wireless network. In fact,

Defendants have exacerbated the problems with their network with aggressive marketing that attempts

to add even more users of data hungry devices. For example, on January 27, 2010, AT&T announced

it was partnering with Apple to provide 3G wireless data service for the iPad.

66. Plaintiffs have contacted AT&T to complain about poor service quality. AT&T has falsely

provided assurances that their network quality would improve. Plaintiffs have not experienced any

tangible improvements.

67. On information and belief, some time in 2010 Defendants changed their policy with respect

to waiving Early Termination Fees. Defendants now take the position that no matter how poor AT&T

Wireless Services perform, customers are bound to pay all service fees contemplated by the Wireless

Service Agreement, including any ETF.

68. AT&T has assessed and/or collected fees from Plaintiffs under the Wireless Service

Agreements, including Early Termination Fees. AT&T has refused to refund or waive these fees due

to the low quality and reliability of their service. AT&T has aggressively pursued collection efforts

over unpaid fees.

69. There are many costs involved with switching wireless service providers, including but not

limited to, time to coordinate a change of provider, the costs of new wireless phone equipment, and

activation fees with the new provider.

70. Due to the low quality of AT&T Wireless Services, some Plaintiffs chose to mitigate

damages by changing wireless service providers. AT&T has not agreed to pay any costs associated

with Plaintiffs changing providers.

71. On July 25, 2010, counsel for Plaintiffs sent a letter addressed to AT&T Mobility General

Counsel demanding compensation for AT&T's poor service quality and reliability. This letter is

attached hereto as Exhibit L. AT&T did not respond to this letter.


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72. On information and belief, after receiving this letter AT&T performed an internal review of

one or more of Plaintiffs' accounts. The results of this review were forwarded to both AT&T's general

counsel and the office of the president. AT&T formally decided not to provide any compensation to

Plaintiffs for the the poor service their received. AT&T did not notify Plaintiffs of the reason for their

decision, the findings of the review, or even that the review had taken place.

Damages

73. Plaintiffs paid for or have been assessed fees under the Wireless Service Agreements for

services which were inadequate. Plaintiffs have also been charged and/or paid Early Termination

Fees.

74. Plaintiffs purchased devices to compensate for AT&T's poor network, including “MicroCell”

devices.

75. Plaintiffs purchased wireless devices for use with AT&T Wireless Services that were

designed to be functional only on Defendants' network. The value of these devices was diminished due

to the low quality and reliability of AT&T Wireless Service.

76. Plaintiffs paid for wireless phone equipment and activation fees in order to obtain service

with an alternate provider.

77. Plaintiffs have suffered other reasonably foreseeable damages due to the low quality and

reliability of AT&T's network.

FIRST COUNT

Breach of Contract – Express Warranty

78. Plaintiffs incorporate by reference each and every preceding paragraph as though fully set

forth herein.

79. Plaintiffs entered into Wireless Service Agreements with AT&T.


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80. The statements and advertisements made by AT&T constitute a warranty that their service

would meet a minimum standard of quality and reliability during the term of the Wireless Service

Agreement.

81. AT&T beached the Wireless Service Agreements by not providing service of sufficient

quality or reliability.

82. Plaintiffs have performed all obligations to Defendants except those obligations Plaintiffs

were prevented or excused from performing.

83. Plaintiffs suffered damages legally (proximately) caused by Defendant's breach of the

agreement and are entitled to damages.

SECOND COUNT

Breach of Contract – Implied Warranty of Merchantability


forth herein.

85. Plaintiffs entered into Wireless Service Agreements with AT&T as retail buyers.

86. Due to the service quality and reliability issues described herein, AT&T's Wireless Service

could not pass without objection in the trade under the contract description, and are not fit for the

ordinary purpose for which such service is generally used.

87. Plaintiffs suffered damages legally (proximately) caused by Defendant's breach of the

agreement and are entitled to damages along with attorney fees under civil penalties under California

Civil Code § 1794.

THIRD COUNT

False Advertising – Bus. and Prof. Code § 17500


forth herein.


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89. Defendants disseminated or caused to be disseminated statements concerning the quality of

their Wireless Services which were untrue or misleading.

90. AT&T knew or should have known that the statements were untrue or misleading.

91. Defendants intent in disseminating these statements was to induce Plaintiffs and the general

public to enter into an agreement to pay for AT&T Wireless Services.

92. Plaintiffs have suffered damages legally (proximately) caused by Defendant's unfair business

practices.

FOURTH COUNT

Unfair and Deceptive Acts(In Violation of the Consumer Legal Remedies Act)


forth herein.

94. Plaintiffs are “consumers” as that term is defined by California Civil Code section 1760(d)

because they bought AT&T Wireless Services for personal, family, or household purposes.

95. Plaintiffs and Defendants have engaged in “transactions” as that term is defined by

California Civil Code § 1761(e).

96. The conduct alleged in this Complaint constitutes unfair methods of competition and unfair

and deceptive acts and practices for the purposes of the Consumer Legal Remedies Act (the “CLRA”),

and was undertaken by Defendants in transactions intended to result in, and which resulted in, the sale

of services to consumers.

97. As alleged more fully above, Defendants violated the CLRA by falsely (a) representing to

Plaintiffs that AT&T Wireless Services were of high quality; (b) advertising services with the intent to

sell them in a diminished quality in the future; and (c) inserting unconscionable provisions in the

Wireless Service Agreements, including the imposition of Early Termination Fees.


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98. Plaintiffs have notified Defendants in writing of their violations of the CLRA and have

demanded that they correct or otherwise rectify the problem created by the misrepresentations and

other deceptive and unfair business practices.

99. Defendants have failed to take appropriate actions to correct, or otherwise rectify the

problems with the wireless services they have provided and continue to provide.

100. Plaintiffs have suffered damages as a result of Defendants' violations of the CLRA.

101. The willful, deliberate, and deceptive nature of the conduct described herein entitles

Plaintiffs to an award of punitive damages pursuant to Civil Code § 1780(a)(4)

FIFTH COUNT

Fraud by Intentional or Negligent Misrepresentation


forth herein.

103. Defendants made representations of material fact regarding the quality of their wireless

phone services including but not limited to the fact that users would experience the “fewest dropped

calls,” and the “fastest wireless broadband network,” and that the Bay Area did not have widespread

service quality issues.

104. Their representations were in fact false. The truth was AT&T Wireless Services were of

significantly lower quality and reliability than their competitors, and even lower quality and reliability

than what one would reasonably expect.

105. When Defendants made the representations, Defendants knew or should have known that

they were false.

106. Defendants made the representations with the intent to defraud and induce Plaintiffs to

purchase wireless telecommunication equipment, and enter into and then continue to receive AT&T

Wireless Services under the Wireless Service Agreements.


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107. At the time Plaintiffs acted, Plaintiffs did not know the representations were false and

believed they were true.

108. Plaintiffs acted in justifiable reliance upon the truth of the representations

109. Plaintiffs would not have entered into the Wireless Service Agreements, or would have

terminated the agreements sooner, if they had known the true facts.

SIXTH COUNT

Fraud by Concealment


forth herein.

111. Defendants concealed material facts regarding the quality of AT&T Wireless Services that

they had a duty to disclose, such as the degree to which their network was overloaded, and material

changes to the level of service quality that Defendants provided.

112. Defendants suppressed material facts they were bound to disclose by telling Plaintiffs other

facts designed to mislead Plaintiffs and prevent Plaintiffs from discovering the concealed or

suppressed facts. For example, they stressed that they have “more bars in more places” when they

knew that service quality in the areas where Plaintiffs used service was actually poor.

113. Defendants concealed or suppressed these facts with the intent to defraud and induce

Plaintiffs to purchase wireless telecommunication equipment, and enter into and then continue to

receive AT&T Wireless Services under the Wireless Service Agreements.

114. At the time Plaintiffs acted, Plaintiffs were unaware of the concealed or suppressed facts.

115. Plaintiffs would not have entered into the Wireless Service Agreements, or would have

terminated the agreements sooner, if they had known the facts.


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SEVENTH COUNT

Violations of the Federal Communications Act


forth herein.

117. Defendants' practice of including an agreement to arbitrate claims in their Wireless Service

Agreement, and not taking measures to reasonably inform customers of that provision, is unjust and

unreasonable in violation of 47 U.S.C. § 201(b).

118. Defendants' false and misleading claims regarding the quality and reliability of AT&T

Wireless Services is unjust and unreasonable in violation of 47 U.S.C. § 201(b).

119. Defendants' practice of imposing early terminations fees no matter the level of service

quality is unjust and unreasonable in violation of 47 U.S.C. § 201(b).

120. Defendants' practice of refusing to provide customer's their service records including what

agreements AT&T purports they entered into, the quality of the service they received, or the substance

of prior communications with account representatives is in violation of 47 U.S.C. § 201(b).

121. Defendants' practice of advertising AT&T Wireless Services as being a product of “AT&T”

while claiming AT&T, Inc. is not a provider of those services is unjust and unreasonable in violation

of 47 U.S.C. § 201(b).

122. As described herein, Plaintiffs incurred damages as a proximate result of AT&T's violations

of 47 U.S.C. § 201.


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EIGHTH COUNT

Violations of the Magnuson-Moss Warranty Act(15 U.S.C. §§ 2301, et. Seq.)


forth herein.

124. Plaintiffs bought wireless equipment and services from Defendants for personal use and are

“consumers” within the meaning of the Magnuson-Moss act.

125. Defendants are “suppliers” and “warrantors” within the meaning of the Magnuson-Moss Act.

126. Defendants' written statements of fact, promises, and descriptions as alleged herein are a

“written warranty” that their equipment and services would meet a minimum standard of quality and

reliability during the term of the Wireless Service Agreement. In addition, there exists an implied

warranty for the sale of such services within the meaning of the Magnuson-Moss Act.

127. As described herein, Defendants breached these express and implied warranties. AT&T's

wireless equipment and/or service was defective as that term is used in 15 U.S.C. § 2304.

128. AT&T has failed to make the terms of their contracts for wireless service clear and

conspicuous, in violation of 15 U.S.C. § 2306.

129. AT&T has attempted to has attempted to disclaim or modify the implied warranty in

violation of 15 U.S.C. § 2301(a).

130. Plaintiffs have suffered damages and other losses as a result of Defendants' violations of the

Magnuson-Moss Act


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NINTH COUNT

Violations of the Racketeer Influenced Corrupt Organizations Act (“RICO”)(47 U.S.C. § 201(b))


forth herein.

The Enterprise

132. At all times relevant hereto, the Plaintiffs were "persons" within the meaning of 18 U.S.C. §

1961(3).

133. At all times relevant hereto, Defendants AT&T, Inc., AT&T Mobility, individually and

collectively, were corporate “persons” within the meaning of 18 U.S.C. § 1961(4), with a definable

corporate structure and a hierarchy of corporate direction.

134. The RICO enterprise (“Enterprise”) consists of (1) AT&T, Inc., (2) AT&T Mobility, (3) their

officers and directors, (4) other individuals, companies, subsidiaries, agents, and affiliated entities

(under the AT&T corporate umbrella, or otherwise) responsible for marketing, maintaining, and

providing AT&T Wireless Services. The contractual relationships between and among members of the

Enterprise constitute an enterprise in fact.

135. Upon information and belief, each member of the Enterprise participated with a common

purpose, as alleged herein, to acquire and retain customers through fraud, misrepresentations, and

nondisclosures. The purpose of this scheme was to drive and maintain subscriptions for AT&T

Wireless Services, thereby increasing revenue for AT&T.

136. As part of their scheme, Defendants attempt secure agreements from their subscribers to a set

of dispute resolution policies that effectively exculpated them from liability for their illegal and

fraudulent activity. This agreement purports to require customer to arbitration disputes only on an

individual basis, waive any right to participate in a class action.

137. The Enterprise is an ongoing organization that engages in, and whose activities affect,

interstate commerce. Defendants control and operate the Enterprise through a variety of means,


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including agreements to market AT&T Wireless Service in a manner designed to mislead prospective

and actual users of AT&T Wireless Services.

Predicate Acts

138. AT&T has knowingly, intentionally, and/or recklessly engaged in an ongoing, open-ended

scheme, artifice and pattern of racketeering by committing the predicate acts of mail fraud within the

meaning of 18 U.S.C. § 1341, wire fraud within the meaning of 18 U.S.C. § 1343, and bank fraud

within the meaning of 18 U.S.C. § 1344(2).

139. For the purpose of executing their scheme to defraud, Defendants violated 18 U.S.C. § 1341

(mail fraud) by causing matter and things to be sent or delivered by the Postal Service or commercial

interstate carriers.

140. For the purpose of executing their scheme to defraud, Defendants violated 18 U.S.C. § 1343

(wire fraud) by transmitting by means of wire, radio, and television communication in interstate

commerce, writing, signs, signals, pictures, and sounds.

141. On information and belief, items that were sent or delivered or transmitted included at least

(1) marketing materials, (2) contracts and agreements, (3) wireless communication devices, (4) bills

for wireless services and devices, (5) other communications in furtherance of of necessary to

effectuate their scheme to defraud.

142. For the purpose of executing their scheme to defraud, Defendants violated 18 U.S.C.

§ 1344(2) (bank fraud) by obtaining moneys, funds, credits, or other property under the control of a

financial institution as payment for AT&T Wireless Services by means of false or fraudulent

pretenses.

Pattern of Racketeering Activity

143. As described herein, AT&T's scheme to defraud has been conducted thousands of times over

the course of at least the past four years, and continues to this day. The racketeering activity was

made possible by AT&T's regular and repeated use of the facilities and services of the Enterprise. The

acts of racketeering were not isolated, but rather had the same or similar purpose, participates, method


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of commission, and victims, including Plaintiffs. The multiple acts of racketeering activity which

Defendants committed were related to each other and pose a threat of continued racketeering activity,

and therefore constitute a “pattern of racketeering activity” as defined in 18 U.S.C. § 1361(5).

Violations and Damages

144. Defendants violated 18 U.S.C. § 1362(c) by conducting, or participating in the conduct of,

the affairs of the Enterprise through a pattern of racketeering activity, including acts indictable under

18 U.S.C. §§ 1341, 1342, and 1344.

145. In violation of 18 U.S.C. § 1362(d), defendants conspired to violate 18 U.S.C. § 1362(c).

Each of the Defendants knowingly, willfully, and unlawfully agreed to conduct or participate in the

conduct and affairs of the Enterprise through a pattern of racketeering activity. Defendants committed

numerous overt acts of racketeering activity or other wrongful activity in furtherance of such

conspiracy.

146. As a result of AT&T's scheme to defraud, AT&T has obtained money and property

belonging to Plaintiffs.

PRAYER FOR RELIEF

Plaintiffs request that the court:

1. Enter a judgment against Defendants, and each of them jointly and severally, in the amount of

economic damages, statutory damage, compensatory damages, and liquid damages outlined in the claims

above, plus interest, costs, and attorney's fees,

2. Enter a declaratory judgment that Defendants' dispute resolution procedures, including any

purported agreements to arbitrate claims, are unlawful,

3. Enter a declaratory judgment that Defendants are not entitled to any fees assessed under the

Wireless Service Agreements, and enjoin Defendants from making further attempts to collect these fees,

4. Enjoin the Defendants from disseminating further misleading statements and advertising, or

concealing material facts regarding the quality of their wireless services,


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5. Disgorge Defendants of any profits unjustly earned through their knowing and reckless acts, and

6. Award Plaintiffs any such other relief as may be just and proper, including punitive damages, that

this Court finds Plaintiffs are entitled.

Dated:

Respectfully Submitted,

/ s/ Lenza H. McElrath III Lenza H. McElrath III3637 18th St. #2San Francisco, CA 94110Tel: 216.920.1997Fax: 510.550.7820

Attorney for Plaintiffs


Documents

First Amended Complaint against AT&T for Service Quality Problems