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Clearwire Sued Over Early Termination Fees

Lawsuit by Clearwire Subscribers Alleges Misleading Advertising and Unlawful Early Termination Fees

A lawsuit was filed today against Clearwire US, LLC (“Clearwire”) seeking certification of a class action on behalf of Clearwire subscribers. As alleged in the lawsuit, Clearwire entices consumers into long-term contracts for internet and phone service by advertising its service as a fast, reliable “always-on” alternative to cable or DSL internet access, and as a superior alternative to traditional land-line telephone service. But, according to the complaint, when those consumers seek to cancel their Clearwire service because they discover that, in fact, Clearwire service is slow and unreliable (or for any other reason), the consumers learn that their long-term contracts contain an Early Termination Fee provision pursuant to which Clearwire charges a fee of up to $220 for canceling.

The lawsuit alleges that Clearwire’s advertising is deceptive and that its Early Termination Fees are unlawful.

Clearwire is a Washington-based company with its headquarters in Kirkland, Washington. Clearwire has claimed in its filings with the Securities and Exchange Commission that it has hundreds of thousands of U.S. subscribers to its internet service, which it offers in sixteen states.

The complaint alleges that Clearwire engages in unfair business practices in the imposition and collection of Early Termination Fees. The complaint alleges that the majority of Clearwire’s subscribers are required to enter into one or two-year agreements. Should a subscriber decide to cancel Clearwire service for any reason, including lack of internet service or moving to a location in which Clearwire service is not offered, Clearwire charges the subscriber an Early Termination Fee. The complaint alleges that the Early Termination Fee constitutes an unlawful penalty, stymies competition, and is otherwise void and unenforceable.

The complaint also alleges that Clearwire engages in false advertising of its internet and telephone services. Although Clearwire advertises its internet service offering as a reliable, comparable, and “always-on” alternative to cable internet or DSL, the complaint alleges that Clearwire’s internet service is actually far inferior to cable internet and DSL, as consumers frequently experienced service disruptions, including dial-up speeds and lack of service entirely. With respect to Clearwire’s telephone service, although Clearwire advertises its telephone service as a superior alternative to traditional land-line telephone service, the complaint alleges that Clearwire’s telephone service is far inferior to traditional land-line service, as subscribers experience frequent service disruptions.

The plaintiffs who have brought the lawsuit are from various states in which Clearwire offers service, including Washington, Hawaii, Minnesota, and North Carolina. They seek recovery of any Early Termination Fees paid by Clearwire subscribers, as well as an injunction prohibiting Clearwire from enforcing the Early Termination Fees and from further false advertising.

The lawsuit is captioned Minnick et al. v. Clearwire US, LLC, and was filed in King County, Washington. Plaintiffs are represented by the Washington, D.C. law firm of Tycko & Zavareei LLP and the Seattle, Washington law firm of Peterson Young Putra. A copy of the complaint can be downloaded from the Tycko & Zavareei LLP website: http://www.tzlegal.com/files/clearwirecomplaint.pdf

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