Lawyers’ ‘Inexcusable Neglect’ Costs AT&T $40M

The 18 attorneys from two firms representing AT&T in a patent infringement lawsuit brought by Two-Way Media LLC didn't realize the clock was ticking on an appeal until after the 30-day time limit expired.

AT&T argued that the oversight was "excusable neglect" because it received incomplete notice of electronic filings that were not reissued when the court corrected the docket entries.

In a February 2014 order, a San Antonio federal judge rejected that argument and refused to extend or reopen the appeal period.

Thursday's 2-1 opinion from a Federal Circuit panel affirmed the decision.

"The trial court examined the circumstances surrounding the admitted neglect by AT&T's counsel and concluded it should not be forgiven," Circuit Judge Kathleen O'Malley wrote in a 16-page order. "The trial court found that it was not excusable for AT&T's attorneys to rely on the email notifications and neglect to read the orders in light of the circumstances surrounding the November 22, 2013 notices of electronic filing."

The Dallas-based AT&T sought a new trial following a 2013 jury verdict awarding damages to Two-Way Media. By November of that year, District Judge Orlando L. Garcia rejected its four post-trial motions and the court sent notice of electronic filings, or NEFs, to the involved parties.

"The district court noted, moreover, that the orders and NEFs had been sent to 18 different counsel and legal assistants representing AT&T and that at least some of those recipients downloaded the full text of the orders," the ruling continued. "Given these circumstances, the district court concluded that it was inexcusable for AT&T's multiple counsel to fail to read all of the underlying orders they received, or - at minimum - to monitor the docket for any corrections or additional rulings."

In a dissent, Circuit Judge Timothy Dyk said that the court staff's incorrect filings meant the judgment was not officially filed until they fixed the errors - which gave AT&T's lawyers extra time on the appeal clock and the federal judge authority to reopen the case.

Marty Richter, a spokesperson for AT&T, said the company had no comment on the ruling. Sidley Austin LLP, one of the firms representing AT&T, did not respond to a request for comment Friday.

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