KANSAS CITY, Mo. -Class-action lawsuits alleging that AT&T engaged in a price-fixing conspiracy with other long-distance carriers will go forward after a federal judge refused to throw out the plaintiffs’ antitrust claims.

After denying AT&T’s motion to grant it summary judgment last month, U.S. District Judge John Lungstrum on Thursday rejected AT&T’s request to reconsider his order.

The long-running case comprises dozens of class-action lawsuits that were filed nationwide and eventually consolidated before Lungstrum in federal court in Kansas City, Kan.

The lawsuits allege that Sprint Nextel Corp. and AT&T conspired with each other and their one-time chief competitor, MCI, to overcharge customers when they passed on federal assessments, known as the Universal Service Fund fee, to business and residential users.

AT&T officials could not be reached for comment Friday. But the company has maintained that the evidence cited by the plaintiffs does not prove the carriers did not act independently of one another.

MCI, which filed for bankruptcy in 2002 and was later acquired by Verizon Communications, was not a party to the lawsuit.

Sprint is no longer involved in the litigation. It agreed to settle the case last September for $30 million.

The Universal Service Fund was set up to help cover the cost of getting service to high-cost rural areas, low-income customers, schools, libraries and rural medical facilities.

Carriers that provide interstate or international service are required to contribute to the fund. The “contribution factor” – a percentage of gross revenue from interstate or international calls – is set by the Federal Communications Commission.

Although carriers are not required to pass the assessment along to customers, most do. Sprint described the surcharge on bills as a “Federal Universal Service Fee” or “Carrier Universal Service Charge.” AT&T described it as a “Universal Connectivity Charge.”

Experts for the plaintiffs estimate the economic damages attributable to the carriers’ alleged price-fixing behavior adds up to $890.8 million.

In his 82-page order last month, Lungstrum ruled that the evidence, when viewed in the light most favorable to the plaintiffs – the legal standard in a summary judgment motion filed by the defendants – “contains evidence that tends to exclude the possibility that AT&T, Sprint and MCI acted independently.”

Lungstrum cited evidence of parallel pricing – both AT&T and Sprint, for example, charged residential customers a 9.9 percent universal fund rate in the second half of 2003 – and evidence that the carriers’ universal fund rates exceeded their contribution factors.

“This plausibility of noncompetitive behavior combined with the opinions of plaintiffs’ experts is sufficient for plaintiffs to withstand summary judgment,” he concluded.

The antitrust claims cover the period between Aug. 1, 2001, and March 31, 2003. After March 31, 2003, the Federal Communications Commission barred carriers from charging Universal Service Fund recovery rates in excess of the federally mandated contribution factor.

AT&T won a partial victory last month when Lungstrum threw out the plaintiffs’ antitrust claims for the period following March 31, 2003. He also threw out breach-of-contract claims asserted by AT&T’s business customers.



(c) 2008, The Kansas City Star.

Visit The Star Web edition on the World Wide Web at http://www.kansascity.com.

Distributed by McClatchy-Tribune Information Services.

AP-NY-07-18-08 1902EDT


Only subscribers are eligible to post comments. Please subscribe or to participate in the conversation. Here’s why.

Use the form below to reset your password. When you've submitted your account email, we will send an email with a reset code.