Eighth Circuit Overturns Minnesota Statute on Wireless Service Contracts:
In 2004, Minnesota enacted statutory provisions (Minn. Stat., § 325F.695) which in part required wireless carriers to notify customers in writing 60 days in advance of any proposed “substantive change" in the contract.
A “substantive change” included any modification that would result in an increased charge or extend the term of the contract. If the subscriber did not affirmatively accept the change (orally or in writing), the original terms of the contract would remain in force.
The major wireless carriers filed suit in federal district court in Minneapolis challenging the new rules (Case No. 04-2981, D. Minn.). The District Court denied the carriers’ request for a preliminary injunction, rejecting the carriers’ argument that the provisions constitute impermissible rate regulation.
The carriers appealed the District Court’s ruling to the United States Court of Appeals for the Eighth Circuit (Dkt. No. 04-3198). On Dec. 9, 2005, the Court of Appeals ruled in favor of the carriers and permanently enjoined enforcement of the statute. The Court reasoned that the provision requiring consumer consent to substantive contract changes prevented providers from raising rates for at least some period of time, either during the notification period for a consumer that accepts the change or during the remainder of the contract for one who rejects it. Thus, the Court ruled that the statute constituted impermissible rate regulation.
