A U.S. Appeals Court on Friday reversed a lower court decision and allowed a class-action lawsuit against Cingular Wireless to go ahead.

The ruling relates to a case filed in February 2006 by cell phone user Kennith Shroyer, who complained about how Cingular, now part of AT&T Inc, dealt with customers after it bought AT&T Wireless in 2004.

When AT&T Wireless customers complained about problems related to their service Cingular told them it would give them a chip to improve service if they signed a contract with Cingular, according to an Appeals Court document.

But in doing this, Cingular told the class action members that they would not be able to keep the same rates they had from AT&T Wireless, according to the document.

After Shroyer's complaint, Judge Manuel Real ruled at the U.S. District Court for the Central District of California in favor of Cingular's argument that the case was outside that court's jurisdiction and should instead go to arbitration, due to a clause in Cingular customer contracts that barred customers from pursuing legal claims against it in Court.

But the Appeals Court reversed the ruling in a document published on Friday saying that the district court should consider the case because the clause was unenforceable.

AT&T said it was still reviewing the opinion but noted that the case was based on an old arbitration clause and that it has since changed its terms to make them more customer friendly.

(Reporting by Sinead Carew)

California AT&T