Touch-tone charge puts Verizon on trial
By Timothy Hurley
Advertiser Maui County Bureau
WAILUKU, Maui — A Maui judge yesterday refused to block a class-action lawsuit that says Verizon Hawai'i Inc. charges its customers for a telephone service they should get for free.
The complaint, filed by Wailuku attorney James Krueger on behalf of Maui residents Brendan Balthazar and Michael R. Savona, seeks 14 years worth of refunds for nearly all of the company's 700,000-plus Hawai'i customers, an amount estimated at $138 million.
At issue is the billing fee for touch-tone dialing, a service first offered to customers in 1968 when Verizon's predecessor, Hawaiian Telephone Co., used mainly rotary dial phones and had to bring in special equipment to provide the digital service.
By 1998, however, touch-tone dialing was the standard and no new equipment was needed, according to the suit. But Verizon continued to charge for the service in a misrepresentation that constitutes an unfair or deceptive business practice, the complaint charges.
For years, residential customers have been paying an extra touch-tone charge of $1.65 a month, while businesses have been charged $2.15.
Joseph W. Cotchett, a California attorney working with Krueger on the case, estimated that Hawai'i's main telephone company reaped an extra $17 million a year for offering essentially a nonexistent innovation for at least 14 years.
Verizon spokesperson Ann Nishida declined to discuss the case yesterday.
M. Evan Corcoran, a Washington, D.C., attorney hired by Verizon, argued in court that the company has permission from the state Public Utilities Commission to levy the touch-tone charges and, therefore, the complaint should be dismissed.
Second Circuit Court Judge Joseph Cardoza disagreed, and now the case heads to a formal discovery phase before more hearings are held to determine if there is sufficient evidence.
Krueger said the idea for the lawsuit grew out of a discussion with his friends, Balthazar and Savona, who agreed to be the plaintiffs.
The attorney noted that several other cases of this nature have been tried in California and other states where the courts have held that utilities can be liable for misrepresentations or unlawful business practices outside of public utility commission regulations.
Cotchett achieved national fame for winning a $3.3 billion jury verdict in the Lincoln Savings & Loan scandal of the early 1990s. That jury award was later reduced to $1.75 billion.
He also represented former U.S. Rep. Gary Condit of California, whose political career crashed after the disappearance of Washington intern Chandra Levy.
