Company Charging $55 for One-Minute Calls Escapes Legally
The San Diego Better Business Bureau is swamped with complaints about San Diego-based BBG Communications. People complain about outrageous charges for credit card phone calls made from this company's overseas pay phones — $55 for one minute, for example. The BBB gives the company a rating of F. But on Jan. 10, federal judge Anthony J. Battaglia threw out a class action suit against BBG, refused to let aggrieved plaintiffs amend their complaint, and granted BBG's motion to file the documents under seal. BBG's longtime law firm, Sheppard Mullin, argued that the plaintiffs should have sued Switzerland-based BBG Global AG, not San Diego's BBG Communications. The American company is 95% owned by Gregorio and Rafael Galicot, who are Americans. The managing director of the Swiss firm admitted that Gregorio Galicot is on its board (the Swiss Money House publication says he is president), and among numerous things, administrative duties are outsourced to the American company. BBG Communications each day receives phone-billing information from BBG Global. Plaintiffs argued that for these and many other reasons, the American and Swiss companies were alter egos. Sheppard Mullin insisted that the two companies are separate entities, despite all the evidence presented.
Battaglia cited technical reasons why the two firms did not meet all the alter ego tests. The suit was originally heard by Judge Marilyn Huff, who said it should go forward, because, among a number of things, some of the conduct took place in California and those practices were unlawful under California's unfair competition laws. But the case was taken from Huff and given to Battaglia, who sided with BBG Communications.
Says John Mattes, one of two lawyers representing the plaintiffs, "The American justice system reveals it is unable to protect thousands and thousands of hard-working consumers from getting ripped off by a company hiding [behind Swiss protection]." I wrote about this case in my Aug. 10, 2011 column.