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October 22, 2013 / Soheil Bahari

California Appellate Court Revived Skype’s Class Action on False Advertisement

A California appellate court revived a former putative class action against Skype which had initially been dismissed by the trial court without leave to amend due to the finding that Skype had adequately and conspicuously stated the terms of its service.

Melissa Chapman claimed that Skype has falsely named one of its services as “Unlimited” when the service is far from unlimited as it limits the minutes and the number of calls per day. A footnote designator appears immediately after the word “unlimited” in the title “Unlimited U.S. and Canada” which leads users to a hyperlink called “fair usage policy” which then led users to another page covering the usage policies. Ms. Chapman filed a lawsuit on behalf of Skype customers alleging unjust enrichment, negligent and intentional misrepresentations, violation of laws prohibiting unfair competition and false advertising.

Skype initially succeeded in persuading the trial court to dismiss the case by showing that the hyperlink provided in their footnote laid out the usage policy which limited the call time and that it was conspicuous and clear enough for the users to notice and follow. The trial court based its decision on the basis that the Plaintiff had failed to state any valid claims. However the Second District California Court of Appeals reversed the decision and revived the suit ruling that the plaintiff has made valid claims of false advertising and violation of California’s unfair competition laws and allowed her to amend her claims for negligent and intentional misrepresentation.

The opinion written by Justice H. Walter Croskey explained that “The trier of fact reasonably could conclude based on the facts alleged in the complaint and those judicially noticed that consumers are likely to believe that Skype’s Unlimited US & Canada calling plan offers unlimited calling within the United States and Canada for a fixed monthly fee, and that they will fail to notice the disclosure to the contrary in the fair usage policy.”

The judgment was reversed with directions to trial court to vacate its previous order.

If you or someone you know has purchased a product or service based upon false or misleading advertisement, you may be entitled to relief. Please call Khorrami Boucher Sumner Sanguinetti, LLP for a confidential consultation.

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