Although taking away her cell phone is making her miserable I don’t think it was the wrong choice.  She can promise you that she will not contribute to the tormenting but if she even receives a message from others that are cyber-bullying she automatically gets involved.  It may be time to get to the root of the problem.  Why are the girls behaving this way and what are the other parents thoughts on this.  You want to make sure you do not go on the offensive or begin accusing other parents of allowing this to happen.  They probably have NO IDEA this is going on and it may be helpful to inform them.  I have seen groups of parents work together to deal with this type of behavior but it works best when parents do not feel they are being attacked.  It has to come from a place of being informative and not blame.

With your daughter you really need to explain why you don’t want her involved.  As a bystander she could be found culpable depending on the severity of the bullying and the school’s policy.  California law gives schools the right to discipline students for cyber-bullying when it creates a hostile environment at the school for the student being bullied.  I have seen some schools make examples of everyone involved.  If you can work things out with the other parents and talk to your daughter about your expectations when it comes to how she treats others both face to face and online, I think you will be able to find a compromise with the phone.