The Ninth Circuit Court of Appeals recently gave business some more breathing room on the enforceability of aggressively-applied termination fees in Hutchinson v. Yahoo, where a couple challenged AT&T’s $200 early termination fee on their telephone and high speed internet account, when they tried to stop their plan two weeks before it was up so they could move. They argued the fee should be banned under the California statute that voids liquidated damages clauses in consumer contracts as unreasonable penalties, unless the amount of damages on breach would be too difficult to calculate. But the court decided that whether or not the fee is enforceable turned on whether the fee provides the consumers a “true option or alternative” at the time they enter into the plan. From the vantage point of the outset of the plan, these consumers chose a certain defined length plan with lower payments than they would otherwise pay but could end the plan early by paying the fee, so it was a true “alternative” provision. However, a dissent argued that if the court considered the particular circumstances relevant at the time the plan was terminated – the consumers were moving from the home near the end of the plan period and needed to cancel service to allow a new purchaser to move in – the fee functioned as a penalty not a choice.