Many Verizon customers to receive $7 credits

May 24, 2006|By HANAH CHO | HANAH CHO,SUN REPORTER

More than 2 million Verizon customers in Maryland will receive an average credit of $7 on their local telephone bills in the next several weeks, under a settlement stemming from a seven-year lawsuit over late fees.

The $16.8 million in consumer compensation ends the class action lawsuit against Bell Atlantic-Maryland, now Verizon Maryland.

The complaint, filed in 1999, alleged that the phone company charged late fees exceeding the state's legal limit of 6 percent a year. (The law was changed in 2000 to raise the late-fee limit.)

The lawsuit covered former and current customers who paid late fees between 1996 and 2000.

Under the settlement, however, all current customers of Verizon - of up to 2.5 million - will receive a credit on their bills because the phone company could not provide a break-down of customers who paid late fees during the time period covered by the lawsuit, said Kieron F. Quinn, a Baltimore attorney, who was involved in the settlement.

Former customers who submitted a claim also will receive a payment.

The settlement, completed last month, took three years to be approved due to opposition by a group of plaintiffs.

In 2003, a Prince George's Circuit Court judge rejected an initial proposal that would have given attorneys in the case $13 million in legal fees, while affected customers would receive an average $6 refund if they filed a claim.

But several plaintiffs opposed the settlement. Acting in their behalf, Trial Lawyers for Public Justice, a public-interest law firm, and three Maryland law firms challenged the size of the attorney fees and argued that the amount was not disclosed to customers.

Michael J. Quirk, a staff attorney for the public-interest law firm, said yesterday that only 18,000 customers of more than 2 million eligible customers filed a claim, for a total payout of about $156,000.

Although Verizon had put aside $51.9 million, the proposed settlement called for the company to keep any money not claimed by customers.

"Customers were fundamentally getting zip," said Quinn, who represented 10 plaintiffs opposed to the settlement.

In 2004, the Prince George's County Circuit Court approved a second settlement of $26 million with the class action attorneys receiving about half. The dissenting group appealed to the Maryland Court of Appeals, which remanded the case back to the Circuit Court.

The final settlement approved by the Circuit Court in March awards $26 million to the plaintiffs.

Of that amount, the class action attorneys will receive $6.1 million while lawyers for the dissenting class action group will receive $3.1 million, according to court documents.

Besides customers who have already submitted claims, "the final settlement pays relief to all current [Verizon] customers" , Quirk said.

The settlement became final last month when no appeals were received within 30 days of the court's approval.

Verizon denied that its late fees were illegal in a statement yesterday. Spokeswoman Sandra Arnette said the fees, implemented in 1996, were approved by the Maryland Public Service Commission.

The Maryland Court of Appeals ruled in 1999 that any late fee exceeding 6 percent a year required statutory authority. The following year, the General Assembly approved legislation allowing businesses to charge higher late fees.

hanah.cho@baltsun.com

Settlement details

$26 million total

$16.8 million in compensation to more than 2 million former and current local service customers. Customers will receive an average of about $7.

$6.1 million in legal fees to class action attorneys

$3.1 million in legal fees to lawyers representing dissenting group of class action plaintiffs

[Source: Court documents]

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