The U.S. District Court in Minnesota considered whether a Minnesota statute that regulates customer notification of and agreement to changes to wireless telecommunication service contracts violates 47 U.S.C. Sec. 332(c)(3)(A), a Federal statute that prohibits states from regulating wireless rates. According to the Minnesota statute, if a wireless company would like to make a substantive change to the customer’s contract for wireless services, it must notify the customer 60 days before the modification is to take effect and obtain permission from the customer. If the customer is not notified or does not agree with the changes, the original contract terms will apply. Increases in taxes and government fees that are passed along to consumers are not considered “substantive” changes. A group of wireless companies sought an injunction against the Minnesota statute, arguing that it is a form of state rate regulation prohibited by 47 U.S.C. Sec. 332(c)(3)(A). The court first considered whether the injunction would succeed on the merits. Dataphase Sys., Inc. v. C L Sys., Inc., 640 F. 2d 109, 113 (1981).
The court refused to grant the broad injunction against enforcement of the statute that had been sought by plaintiffs, holding that the Minnesota statute was designed to protect traditional contract principles and was not designed to regulate rates.
The statute is, in the court’s view, a consumer protection measure, rather than a
regulation of wireless telecommunication rates. The court rejected plaintiffs’ assertions that the statute was void for vagueness.
The court then performed a balancing test where the harm to the plaintiffs was balanced against harm to consumers. 640 F. 2d at 113. The plaintiffs alleged that increased recordkeeping burdens would be onerous. The state argued that customers were being harmed by unauthorized changes to their contracts and by the burdens involved in contesting these changes. The court held that the balance of harms militated against an injunction. The court did, however, grant a limited injunction directing that plaintiffs be permitted to pass along to consumers required fees and taxes assessed by the Federal government without the notice and permission required by the statute.