Suit Names Big Cellular Phone Firms, Electronics Stores

A group of small companies that market cellular phones and service has filed a lawsuit accusing large cellular phone carriers and major electronics stores of price fixing, breach of contract and fraud.

The suit alleges that the region’s largest cellular phone services, including Airtouch Communications Inc. and Pacific Telesis, conspired with major retail outlets such as Wal-Mart and the Good Guys to drive smaller cell phone services out of business.

“The carriers themselves engaged in various illegal schemes, such as selling below cost, to divert trade from the unfavored,” the suit alleges. “With the competitive playing field so greatly unbalanced, many [plaintiffs] went out of business or are on the verge of same.”

Neither plaintiffs’ nor defendants’ attorneys could be reached for comment.

The suit was filed Monday in Orange County Superior Court in Santa Ana by a number of small regional cellular operators such as West L.A. Cellular and Just Phones of Irvine.

In the suit, these companies claim that they entered the business as sales agents for major cellular carriers such as Airtouch at a time when the carriers “realized that many salespeople were needed to promote cellular.”

But in recent years, the suit alleges, the major carriers sought to eliminate certain agents in an effort to cut sales costs that had risen sharply because of a “buildup of residual [sales] commissions.”

“The longer an agent or subagent was active, the greater the cost,” the suit claims. “Accordingly, the carriers had planned to substantially reduce the number of agents and subagents they employed once the market was penetrated.”

The plaintiffs in the case claim they were victims of that reduction program, and that they were excluded from promotional deals and higher commissions that went to so-called “favored” retail outlets and services.

Such commissions enabled “special agents and subagents to advertise and sell cellular telephone equipment for considerably under the cost of said equipment, and far less than the price at which the plaintiffs could sell said telephone cellular equipment,” the suit says.

The suit also accuses the carriers of conspiring to fix prices in Los Angeles and Orange counties.

Other plaintiffs in the suit include Just Phones of Long Beach and Jerry Kaufmann of Just Phones of Fullerton.