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1

 The class is defined as all current and former Washington State wireless service customers of

Sprint, who have been charged and paid to Sprint a Washington B&O tax surcharge. (Order May 18,

2007 (Dkt. No. 117 at 11).)

ORDER – 1

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF WASHINGTON

AT SEATTLE

NATHANIEL OLSON and

CHRISTOPHER W. HESSE,

Plaintiffs,

v.

SPRINT SPECTRUM L.P. d/b/a SPRINT PCS,

Defendant.

CASE NO. C06-0592-JCC

ORDER

This matter comes before the Court on Plaintiffs’ Motion for Partial Summary Judgment (Dkt.

No. 175), and Defendant’s Motion for Summary Judgment (Dkt. No. 176), together with responses and

replies to each motion, and supporting affidavits and exhibits. Having carefully considered the papers

filed, and determined that oral argument is unnecessary, the Court hereby GRANTS Defendant’s Motion

(Dkt. No. 176) and DENIES Plaintiffs’ Motion (Dkt. No. 175), as follows.

I. BACKGROUND

In this action, Plaintiffs Christopher Hesse and Nathaniel Olson, individually and on behalf of a

similarly situated class,1

 assert common law claims of breach of contract and unjust enrichment and

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2

 Sprint PCS provides wireless and commercial mobile radio services in Washington State. It is a

limited partnership organized under the laws of Delaware, with its principal place of business in Kansas.

(See Dkt. No. 186 at 2.) 

3

 Washington imposes a Business and Occupation (“B&O”) tax “for the act or privilege of

engaging in business activities” in the state. WASH. REV. CODE 82.04.220. The B&O tax is an excise tax.

1B KELLY KUNSCH ET AL., WASHINGTON PRACTICE: METHODS OF PRACTICE § 72.7 (1997).

4

 “‘Effective Date’ . . . means the termination of the Actions after . . . [t]his Class Action

Settlement Agreement is approved in all respects by the Court; and . . . [a] Final Order, entering

judgment of dismissal with prejudice against all Class Plaintiffs and Settlement Class members who do not

properly opt out . . . has been filed, and the time for the filing of any appeals has expired, or if there are

appeals, approval of the settlement and judgment has been affirmed in all respects by the appellate court

of last resort to which such appeals have been taken and such affirmances are no longer subject to further

appeal or review.” (Agreement 9 (Dkt. No. 178-3 at 10).)

ORDER – 2

further allege that Defendant Sprint2

 violated the Washington Consumer Protection Act, WASH. REV.

CODE 19.86.010 et seq. (Dkt. No. 118 at 9–10.) Plaintiffs’ allegations all relate to a Washington B&O tax

surcharge,3

 which they contend Sprint impermissibly billed to its Washington customers. 

Plaintiffs originally brought two separate class actions, filed in state court in March and July 2006.

Sprint removed both actions to federal court, where they were subsequently consolidated. The Court

certified the class on May 18, 2007; Plaintiffs’ Consolidated Complaint was filed soon thereafter on June

8; and Sprint’s Answer followed on June 22. (Dkt. Nos. 117, 118, 121.) Sprint’s Answer asserted several

affirmative defenses, including res judicata (Dkt. No. 121 at 14), and more specifically, “application of

the doctrine of settlement.” (Id. at 15.)

Meanwhile, in February 2006, Sprint entered into a Settlement Agreement in a different class

action that had been pending, in one form or another, in the Missouri and Kansas state courts, since 2002.

(Dkt. No. 178-3 at 2–3.) That Agreement created two distinct settlement classes; relevant here is the

Benney Settlement Class, which the Agreement defined as: 

all current and former Sprint wireless customers in the United States who were customers for any

time during the period December 1, 2000 to the Effective Date,[4] and who were charged

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 “‘Regulatory Fees’ means: (i) the ‘USA Regulatory Obligations & Fees’ fee or surcharge on

subscriber invoices that Sprint charged subscribers for the cost of implementing federally mandated

programs for Enhanced 911 (‘E911’) emergency calling Phase II and federal Universal Service Fund

contributions (‘USF’); (ii) ‘Federal Telephone Number Pooling’ fee or surcharge on subscriber invoices

that Sprint charged subscribers to recover costs of implementing the federally mandated program for

wireless number portability; (iii) ‘Federal USF,’ ‘Federal E911’ and ‘Federal Wireless Number Pooling

and Portablility’ fees or surcharges on subscriber invoices that Sprint charged wireless subscribers to

recover costs of implementing federally mandated programs for wireless number pooling and portability,

federal Universal Service Fund contributions, and Enhanced 911 emergency calling Phase II.”

(Agreement 7–8 (Dkt. No. 178-3 at 8–9).) 

ORDER – 3

Regulatory Fees (as defined in paragraph 1.3(a)).[5]

(Id. at 15.) The Settlement Agreement was ultimately approved in an order issued by Judge Duncan of

the District Court of Wyandotte County, Kansas, on November 8, 2006. (Dkt. No. 178-2 at 2.) That

order defined the Benney Settlement Class as:

all current and former Sprint-branded (“Sprint” or “Sprint PCS”) wireless telephone customers in

the United States who were customers for any time during the period December 1, 2000 to the

Effective Date as defined in the Settlement Agreement, and who were charged Regulatory Fees

(as defined in the Settlement Agreement). 

(Id. at 6.) In approving the Settlement Agreement, the court found that Sprint had provided notice “far

exceed[ing] the minimum standard necessary” to potential settlement class members. (Id. at 13.)

Approximately 425,000 current or former Sprint customers submitted claim forms, and approximately

103 persons or entities objected to the Settlement Agreement. Roughly twenty current or former Sprint

subscribers elected to opt out of the Settlement Class. (Id. at 10.) The settlement became effective on

March 8, 2007, when the final appeal by an objector was dismissed. (Dkt. No. 178-5 at 2.)

Sprint moves for summary judgment arguing, inter alia, that Plaintiffs’ claims are barred by the

terms of the Benney Settlement Agreement and the court order approving that Agreement. Plaintiffs

make several arguments in opposition, each of which the Court addresses, below.

//

//

//

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II. LEGAL STANDARD

The question before the Court is whether Plaintiffs’ claims are precluded by the Settlement

Agreement approved by a Kansas state court in a separate class action against Sprint. Summary judgment

should be granted “if the pleadings, the discovery and disclosure materials on file, and any affidavits show

that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a

matter of law.” FED. R. CIV. P. 56(c). Substantive law determines which facts are material, T.W. Elec.

Serv., Inc. v. Pac. Elec. Contractors Ass’n, 809 F.2d 626, 631–32 (9th Cir. 1987), and “[o]nly disputes

over facts that might affect the outcome of the suit under the governing law will properly preclude the

entry of summary judgment.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

Once the moving party has met its burden, the burden shifts to the nonmoving party to “set out

specific facts showing a genuine issue for trial.” FED. R. CIV. P. 56(e); see also T.W. Elec. Serv., 809

F.2d at 630. To discharge this burden, the nonmoving party cannot rely merely on allegations or denials

in its pleadings, but instead must have evidence showing that there is a genuine issue for trial. Id.

Under the Full Faith and Credit Act, the “judicial proceedings of any court of any . . . State . . .

shall have the same full faith and credit in every court within the United States . . . as they have by law or

usage in the courts of such State . . . from which they are taken.” 28 U.S.C. § 1738. “This statute has

long been understood to encompass the doctrine[] of res judicata, or ‘claim preclusion’ . . . .” San Remo

Hotel, L.P. v. City and County of San Francisco, Cal., 545 U.S. 323, 336 (2005) (internal quotation

marks omitted). Judgments of state courts in class action proceedings fall squarely within this mandate

and, as such, must be given the same preclusive effect in federal court that they would be accorded in the

courts of the rendering state. Matsushita Elec. Indus. Co., Ltd., v. Epstein, 516 U.S. 367, 373–74

(1996). Whether the doctrine of claim preclusion applies is a question of law, properly resolved on

summary judgment. See Stanfield v. Osborne Indus., Inc., 949 P.2d 602, 608 (Kan. 1997).

//

//

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26 ORDER – 5

III. ANALYSIS

A. Hesse and Olson Are Members of the Benney Settlement Class

The Benney Settlement Class is comprised of all Sprint wireless customers in the United States

who: (1) were customers for any time during the period December 1, 2000 to March 8, 2007; and (2)

were charged “regulatory fees.” Regulatory fees are defined in the Settlement Agreement as fees or

surcharges on subscriber invoices, specifically including “USA Regulatory Obligations & Fees,” “Federal

E911” and “Federal Wireless Number Pooling and Portablility” fees or surcharges. (Dkt. No. 178-3 at

8–9.) 

That Plaintiffs are members of the Benney Settlement Class is evident. Plaintiffs attach to their

motion for partial summary judgment a Sprint PCS wireless invoice addressed to Hesse for the billing

period ending January 14, 2002, which includes an assessment for “USA Regulatory Obligations & Fees.”

(Dkt. No. 175-2 at 50.) Similarly, Sprint submits a wireless invoice addressed to Olson dated September

23, 2006, which includes charges for “Federal Wireless Number Pooling and Portability,” and “Federal

E911.” (Dkt. No. 72 at 10.) That the current action challenges the imposition of a “surcharge” rather than

a “regulatory fee” is irrelevant to class membership—Plaintiffs cannot and do not deny that at some point

during the period December 1, 2000 to March 8, 2007 they were charged regulatory fees as defined in

the Settlement Agreement.

B. Hesse and Olson Had Notice of the Benney Settlement and Did Not Opt Out of the

Class

Plaintiffs received notice of the proposed Settlement Agreement and failed to opt out of the

settlement class. Hesse was sent notice of the proposed settlement in an insert enclosed with his May 15,

2006 invoice, for which Sprint received payment on or around June 11, 2006. (Nevels Decl. ¶¶ 9, 10

(Dkt. No. 178).) That notice defined the Benney Settlement Class as “all current and former Sprint

wireless telephone customers in the United States who were customers for any time during the period

December 1, 2000 to the Effective Date, and who were charged Regulatory Fees.” (Dkt. No. 178-6 at 8.)

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26 ORDER – 6

It included an explanation of the “Legal Effect of the Settlement (Release of Claims)”:

Upon the Court’s approval of the settlement . . . the class members who do not properly opt out

of the proposed Settlement Classes, regardless of whether or not a claim for benefits is filed, will

release and forever discharge Sprint . . . from any and all claims, demands, debts, liabilities,

actions, causes of action of every kind and nature, obligations, damages, losses, and costs,

whether known or unknown, actual or potential, suspected or unsuspected, direct or indirect,

contingent or fixed, that have been, could have been, or in the future might be asserted in the

Benney Lawsuit . . . or in any other court or proceeding which relate in any way to the allegations

that defendants failed to disclose or otherwise improperly charged for surcharges, regulatory fees

or excise taxes . . . .

(Id.) Similarly, Olson, who received electronic invoices, was sent an e-mail containing an internet link to

the notice of proposed settlement on or around July 21, 2006. (Riley Decl. ¶ 8 (Dkt. No. 179).) On July

24, 2006, the recipient of that email clicked on the link to the notice (id. at ¶ 12), which defined the

Benney Settlement Class and explained the Legal Effect of the Settlement precisely as the paper notice

quoted above. (Dkt. No. 178-6 at 12, 19.)

In approving the Settlement Agreement, Judge Duncan found that Sprint had provided notice “far

exceed[ing] the minimum standard necessary” to potential settlement class members. (Dkt. No. 178-2 at

13.) Nevertheless, Plaintiffs argue that “notice was defective to the extent it purports to cover the B&O

tax charge” because “nothing in the notice sent to Plaintiffs specified that the Washington B&O tax

surcharge . . . was being settled in the Kansas court.” (Pls.’ Reply 3 n.3 (Dkt. No. 183).) Plaintiffs cite no

authority to support their assertion that, in order to effectively release Sprint from liability for the claims

brought in the instant action, the Notice of Proposed Settlement had to have specifically listed each and

every surcharge, regulatory fee, or excise tax potentially covered by the settlement. Moreover, such a

requirement would be impractical and would certainly discourage settlement, which would run contrary

to the long standing policy of encouraging settlement—a policy Judge Duncan emphasized in approving

the Settlement Agreement. (See Dkt. No. 178-2 at 12.) Plaintiffs’ argument that notice was defective is

without merit. 

//

//

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26 ORDER – 7

C. Sprint Did Not Waive the Defense of Preclusion

Plaintiffs argue that Sprint waived any defense based on the Benney Settlement by not raising it

prior to moving for summary judgment, and as such, should be estopped from raising it now. As evidence

of waiver, Plaintiffs cite several documents filed, and appearances made, by Sprint, none of which

mention the Benney Settlement. Plaintiffs argue that these documents and court appearances evidence

Sprint’s intention to waive any defense it may have had based on the Benney Settlement. (Pls.’ Resp. 10

(Dkt. No. 185).) Moreover, Plaintiffs argue that “[t]here is no reason why Sprint could not have asserted

this defense earlier,” and Sprint’s failure to invoke the defense until now “has wasted this Court’s time

and prejudiced the Plaintiffs and an entire class of Washington consumers.” (Id.) 

Contrary to Plaintiffs’ assertion, Sprint’s Answer to the Consolidated Complaint did assert a

defense based upon a prior settlement of claims. Among the several affirmative defenses set forth in

Sprint’s answer were the defenses of res judicata (Dkt. No. 121 at 14), and more specifically,

“application of the doctrine of settlement.” (Id. at 15.) Moreover, even if Sprint had failed to include a

preclusion defense in its Answer, in the Ninth Circuit a defendant may raise an affirmative defense for the

first time—whether or not that defense was specifically pled in the Answer—in a motion for summary

judgment, “at least where no prejudice results to the plaintiff.” Healy Tibbitts Const. Co. v. Ins. Co. of N.

Am., 679 F.2d 803, 804 (9th Cir. 1982). Here, Plaintiffs received notice of the proposed settlement (as

detailed above) in May and July of 2006, and were further put on notice when Sprint included the

defenses of res judicata and settlement in its Answer. Any costs thereafter incurred were at Plaintiffs’

peril.

Nor do the other documents filed and court appearances made by Sprint, which Plaintiffs list in

their Opposition, suffice to waive this affirmative defense. Because Sprint was well within its rights to

assert the defense for the first time upon motion for summary judgment, its failure to, for example, raise it

in an earlier motion to dismiss, or mention it at a status conference, or highlight it in its opposition to

class certification, simply cannot be interpreted as definitive evidence of Sprint’s “voluntary or intentional

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26 ORDER – 8

relinquishment” of its right to assert the defense. See, e.g., Royal Air Props., Inc. v. Smith, 333 F.2d 568,

571 (9th Cir. 1964). 

D. The Benney Settlement Bars Plaintiffs’ Claims

Plaintiffs make several arguments that the release in the order approving settlement is not

applicable to the claims at bar; none are persuasive. The November 8, 2006 Settlement Order released

and discharged Sprint:

from any liability to each and every Benney Class Plaintiff and Settlement Class members, with the

sole exception of those Settlement Class members who timely excluded themselves from the class

by filing a request for exclusion by the deadline set by the Court, arising from or relating to any

and all claims that were or could have been alleged in the Benney matter, including but not

limited to claims which relate in any way to allegations that, on or before the Effective Date as

defined in the Settlement Agreement, Sprint failed properly to disclose or otherwise improperly

charged for surcharges, regulatory fees or excise taxes, including but not limited to the

Regulatory Fees, as set forth in Paragraph 22(a)(1) of the Settlement Agreement.

(Dkt. No. 178-2 at 18) (emphasis added). This release became effective on March 8, 2007, when the final

appeal by an objector was dismissed. (Dkt. No. 178-5 at 2.) 

First, Plaintiffs contend that the Kansas court that approved the Settlement Agreement “lacked

subject matter jurisdiction over a claim that Washington consumers were improperly charged a

Washington B&O tax surcharge, which renders its judgment [approving the Settlement Agreement]

void.” (Pls.’ Reply 3 n.3 (Dkt. No. 183).) Plaintiffs make this argument in a single, unsupported footnote,

and it is without legal basis. Even if the Kansas state court could not have properly adjudicated Plaintiffs’

claims—if, for example, the claims at issue were within the exclusive jurisdiction of the federal

courts—the court nevertheless could have effectively approved a settlement that released claims that the

court itself did not have jurisdiction to decide. Matsushita, 516 U.S. at 369. In fact, the U.S. Supreme

Court flatly rejected Plaintiff’s argument when it disapproved of a test applied by the Ninth Circuit “under

which the preclusive force of a state-court settlement judgment is limited to those claims that ‘could . . .

have been extinguished by the issue preclusive effect of an adjudication of the state claims.’” Id. at 372.

The rule is clear: “Absent a partial repeal of the Full Faith and Credit Act, by another federal statute, a

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6

 Although this argument is not before the Court, it is worth noting that the language in the order

approving the Benney Settlement is not identical to the language in the release at issue in Matsushita, and

the Benney language could be read to imply some limitation on the release. Specifically, the order releases

Sprint from claims “that were or could have been alleged in the Benney matter.” (Dkt. No. 178-2 at 18.)

In contrast, the Matsushita settlement released “all claims arising out of the Matsushita-MCA

acquisition,” the plain language thereby not limiting release to only those claims that could have been

brought in the jurisdiction where the settlement agreement was approved. See Matsushita, 516 U.S. at

371. However, the difference in language is of no moment here. Defendant Sprint PCS has its principal

place of business in Kansas; therefore, the Court is aware of no reason why a Kansas state court would

not have had jurisdiction over Plaintiffs’ claims, had Plaintiffs chosen to bring them there. See, e.g.,

Montgomery v. Sprint Spectrum, L.P., No. 07-2227, 2007 WL 3274833, at *1 (D. Kan. Nov. 6, 2007)

(Texas resident plaintiff filed a class action petition in Kansas state court alleging that Sprint “has been

and is deceptively and improperly charging her as a Sprint wireless telephone customer a ‘Texas Margin

Fee Reimbursement’ since January 2007.”). Thus, Plaintiffs’ claims are such that they could have been

alleged in the action which gave rise to the settlement, and are encompassed by the language of the

release.

ORDER – 9

federal court must give the judgment the same effect that it would have in the courts of the State in which

it was rendered.” Id. at 369 (internal citations omitted).6

Perhaps Plaintiffs meant to argue that the Kansas court lacked personal jurisdiction over them;

however, the Kansas Supreme Court has held that, in determining whether a state court has jurisdiction

over nonresident plaintiffs in a class action, “[w]hat is important is that the nonresident plaintiffs be given

notice and an opportunity to be heard and that their rights be justly protected by adequate

representation.” Shutts v. Phillips Petroleum Co., 567 P.2d 1292, 1305 (Kan. 1977). The “minimum

contacts” standard applicable when determining whether a court has personal jurisdiction over a

nonresident defendant, simply does not apply. Id. As discussed in depth above, Plaintiffs were given

effective notice of the proposed settlement agreement. Plaintiffs make no argument that they were not

offered an opportunity to be heard, and the fact that approximately 103 persons or entities objected to the

Settlement Agreement and roughly twenty Sprint subscribers elected to opt out of the Settlement Class

belies such a position. (Dkt. No. 178-2 at 10.) Finally, Plaintiffs do not argue that their rights were not

justly protected by adequate representation and there is no evidence before the Court that would permit it

to make such a finding. The Kansas Supreme Court has pointed out the close relationship between notice

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and the concept of “adequate representation:” “Notice to absent members of the class . . . is the greatest

single safeguard against inadequate representation.” Shutts, 567 P.2d at 1314. Simply put, if Plaintiffs did

not believe the proposed settlement appropriately addressed their interests, they should have either

objected to it, or opted out.

Next, Plaintiffs urge the Court to read the Settlement Agreement and its implementing order to

encompass only claims related to a “regulatory fees” surcharge, not implicating an excise tax surcharge

such as for Washington’s B&O tax. The reading Plaintiffs press contradicts the plain language of the

Agreement and the order approving the settlement. The latter releases Sprint from liability for “any and

all claims that were or could have been alleged in the Benney matter, including but not limited to claims

which relate in any way to allegations that . . . Sprint failed properly to disclose or otherwise improperly

charged for surcharges, regulatory fees or excise taxes . . . .” (Dkt. No. 178-2 at 18) (emphasis added).

Finally, Plaintiffs argue that “the claims in the Kansas case relate solely to collections prior to the

‘effective date’ of the settlement, which is alleged to be in March 2007. Sprint continued to collected

[sic] B&O tax surcharges after that date.” (Pls.’ Reply 3 n.3 (Dkt. No. 183).) Plaintiffs cite no evidentiary

or legal support for this conclusory statement and it is simply insufficient to rebut the case Sprint makes

for summary judgment. Moreover, the Court reads the plain language of the order approving the Benney

Settlement to make a distinction between claims that arise after the effective date and damages that

accrue thereafter, but flow from claims that arose prior to the effective date. The order releases Sprint

from liability for “claims which relate in any way to allegations that, on or before the Effective Date . . . ,

Sprint failed properly to disclose or otherwise improperly charged for surcharges . . . .” (Dkt. No. 178-2

at 18) (emphasis added). 

IV. CONCLUSION

For the foregoing reasons, the Court finds that Plaintiffs’ claims are barred by the Benney

Settlement Agreement and GRANTS Sprint’s Motion for Summary Judgment. (Dkt. No. 176.) Plaintiffs’

claims are DISMISSED in their entirety and Plaintiffs’ Motion for Partial Summary Judgment is

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accordingly DENIED as MOOT. (Dkt. No. 175.) 

SO ORDERED this 20th day of February, 2008.

A 

John C. Coughenour

United States District Judge

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