Voluntary payment doctrine is not a viable defense to deceptive telecommunications billing

By Joe Forward, Legal Writer, State Bar of Wisconsin

Feb. 24, 2012 – Voluntarily paying a bill will not bar claims of “cramming,” the practice of slipping small but unauthorized charges into customers’ bills, under the state’s telecommunications statute, the Wisconsin Supreme Court ruled today.

More specifically, the “voluntary payment doctrine” cannot be used as a viable defense when sued under Wis. Stat. section 100.207, which regulates telecommunication services.

Plaintiff Thomas Schmitt and his accounting firm sued Wisconsin Bell Inc. and other telecommunication companies, claiming the defendants violated state laws, including section 100.207, when they billed for small, unauthorized charges ranging from $2 to $40 per month.

Schmitt said he paid the disputed telephone bills without noticing the charges. Under the common law voluntary payment doctrine, a party can’t sue to recover payments made knowingly and voluntarily, absent fraud or duress.

The circuit court dismissed, concluding that Wisconsin Bell could use the voluntary payment doctrine as a defense even if it were proved that Wisconsin Bell violated section 100.27 by including charges on the bill that were not authorized. The appeals court affirmed.

Supreme court reverses

In MBS-Certified Public Accountants LLC v. Wisconsin Bell Inc., 2008AP1830 (Feb. 24, 2012), the supreme court unanimously reversed (6-0, Abrahamson, C.J., did not participate). A majority (Justices Bradley, Crooks, Roggensack, and Ziegler) ruled that the voluntary payment doctrine is never applicable to claims under section 100.207.

“Application of the common law voluntary payment doctrine would undermine the manifest purposes of Wis. Stat. § 100.207,” wrote Justice Ann Walsh Bradley for the majority. 

Allowing the doctrine to apply, the majority explained, would give customers a remedy only if they protested before paying, or proved the elements of common law fraud.

“The statute is meant to deter the practice of cramming by holding crammers responsible for the illegal practice in court,” Justice Bradley wrote.

Allowing the common law defense, the majority explained, might encourage telecommunications companies “to produce more unauthorized charges, knowing that customers who do not initially notice deceptive charges will face high hurdles to recovering those payments in a court action.” The majority also rejected the argument that the voluntary payment doctrine applies to all legislatively created causes of action unless expressly barred.

In a concurring opinion, Justice David Prosser (joined by Gableman, J.) agreed that the voluntary payment doctrine did not require dismissal in this “billing” case, but suggested that it could still apply under other provisions of the statute, like advertising and sales.

Other statutes

The supreme court remanded the case to determine if the voluntary payment doctrine applies to claims under Wis. Stat. section 100.18(1), which generally prohibits fraudulent representations, and the Wisconsin Organized Crime Control Act.

The plaintiffs had also sued under those provisions. But the supreme court deferred, noting that those alternative arguments were not yet properly before the supreme court.

“[N]othing set forth in this opinion should be construed to restrict the court of appeals from taking up these arguments on remand,” Justice Bradley wrote.

Dissenting on this point, Justice Prosser (joined by Gableman, J.) argued that the voluntary payment doctrine already applies to claims under section 100.18 under prior case law.

“The majority opinion casts a cloud of uncertainty over commercial transactions in this state,” Justice Prosser wrote. “[The majority’s] assurance that ‘the voluntary payment doctrine remains alive and well in Wisconsin’ will prove hollow if its discussion of the doctrine in relation to Wis. Stat § 100.18 is maintained.”

Attorneys

Douglas Dehler of O’Neil, Cannon, Hollman, DeJong & Laing S.C., Milwaukee, represented the plaintiffs Thomas Schmitt and MBS-Certified Public Accountants LLC. Paul Linn and Ted Wisnefski of Michael, Best & Friedrich LLP, Milwaukee, represented Wisconsin Bell. The State of Wisconsin filed an amicus curiae brief.