By Ross Todd, From The Recorder

SAN FRANCISCO—A federal judge said he’s ready to bless an unusual $40 million deal that TracFone Wireless Inc. reached to settle lawsuits brought by private plaintiffs and the Federal Trade Commission.

On Thursday U.S. District Judge Edward Chen of the Northern District of California said he plans to give preliminary approval to the settlement, which resolves claims the nation’s largest prepaid cellphone service provider reduced data speeds for some customers with unlimited plans. Chen scheduled a fairness hearing on the class action settlement for June 23.

TracFone, which does business under the brands Straight Talk, Net10, Simple Mobile and Telcel America, has offered unlimited talk, text and data plans since 2009 for about $45 per month. According to a complaint filed in January by the FTC, TracFone slowed the speeds of customers who exceeded certain data limits or suspended their service altogether, without clearly disclosing its data use limits.

Chen noted Thursday that the three-way deal involving TracFone, plaintiffs lawyers and the government was “not a typical settlement,” but Chen said it was fair considering the difficulties plaintiffs faced in certifying a class and fending off the arbitration clause in TracFone user agreements. He indicated he would sign off on preliminary approval of the class settlement by Friday after minor changes.

Class members will be entitled to collect a little more than $2 for those who’ve had service throttled since TracFone changed its disclosures, or as much as $65 for those who had service terminated. The FTC will rely on the claims administration procedure set up as part of the class action settlement to pay out those funds. As part of the class action settlement, TracFone also has agreed to change its future advertising to “prominently disclose” restrictions on the amount and speed of mobile data in unlimited plans.

Class counsel led by Michael Sobol of Lieff Cabraser Heimann & Bernstein are asking Judge Chen to approve $5 million in fees and $100,000 in costs. The company has been represented in the FTC matter by counsel at Carlton Fields Jorden Burt and Wiley Rein. It’s also represented by Carlton Fields and Sidley Austin in the class actions.

Spencer Elg from the FTC’s Southeast Regional office in Atlanta appeared at Thursday’s hearing on behalf of the FTC.

Lawyers from the FTC’s San Francisco office are representing the agency in a similar case against AT&T Mobility LLC filed in October in the Northern District of California. Unlike TracFone, AT&T has so far fought the FTC’s charges, insisting it’s shielded from FTC enforcement by its status as a common carrier.

IMAGE: U.S. District Judge Edward Chen, Northern District of California

Hillary Jones-Mixon / The Recorder

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