$13 Million Only Tip of Iceberg: AT&T Damages Could Total Billions
July 1, 1994. An Oregon jury ordered AT&T to pay $13 million for "willful misconduct" toward a long distance reseller in the nation's first such trial Monday. With nearly forty other resellers standing in line to sue the telecommunications giant, damages against AT&T could shoot into the billions of dollars.
The federal court jury found AT&T "intentionally interfered" with customers of Central Office Telephone of Milwaukie, Ore., breaching contracts and causing the company to lose profits. The jury heard testimony from former AT&T executive Spencer Perry, who said top brass at AT&T's reseller division planned a "roadblock" to remove resellers from the telecommunications market.
"Resellers are one for one, so we're off to a good start," said Richard Yeskoo, a New York attorney representing nine similar pending lawsuits. "AT&T was not able to persuade the Oregon jury that it had acted legally."
Many resellers were driven out of business as a result of AT&T's tactics, which included delays up to a year long in connecting and billing reseller customers, spreading false information about reseller companies and breaking Federal Communication Commission laws. Resellers are heartened by the Oregon victory, the first case of a long distance reseller against AT&T.
"This shot a major torpedo into the bow of the AT&T defense," said Fred Gratzon, chairman of Telegroup, Inc., which filed suit in June. "We just saw the tip of the iceberg--and AT&T knows it."
Though AT&T has been trumpeting a recent Texas court decision as a victory over resellers, the complainant in that case, Teledesign, is not a typical reseller. Teledesign had only one large client, Siemens electronics firm, which was not handled by AT&T's reseller division. True resellers have thousands of clients who buy long distance service from the resellers at discounted "group" rates.
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