No Fee Recovery After Telecoms Duck Lawsuit

SAN JOSE, Calif. (CN) - AT&T, Verizon and other telecoms cannot recover attorneys' fees after ducking claims that they overcharged for electronic surveillance, a federal judge ruled.

Former New York Deputy Attorney General John Prather had filed the lawsuit on behalf of the U.S. government, claiming that AT&T, Verizon, Qwest Communications International and Sprint Nextel overcharged federal, state and city governments for services under the Communications Assistance to Law Enforcement Agencies Act (CALEA), which requires the companies to provide the government with electronic surveillance of their customers in exchange for reasonable expenses.

Prather claimed to have "observed eavesdropping charges increase tenfold after CALEA despite changes in technology that should have made it easier for Telecoms to provide wiretaps, and believed that the Telecoms were overcharging for wiretaps."

U.S. District Judge Charles Brewer dismissed the suit on Nov. 5, 2013, finding that Prather failed to prove that he was the original source of the information or that he had firsthand knowledge of the alleged fraud.

Prather's observation of "increased pricing over a twenty-year period does not equate to knowledge of fraud," and that his allegations were "little more than conjecture," Breyer noted.

Although the telecommunication companies were successful in getting the complaint thrown out, their lawyers are not entitled to attorney fees because Prather's complaint was not "clearly frivolous," Brewer ruled on Feb. 10.

The parties litigated the issue of subject-matter jurisdiction for several months and Brewer's ultimate decision that Prather did not constitute an original source was not clear or unequivocal.

Furthermore, the phone companies "fail to show that Relator's action was 'clearly vexatious' or 'brought primarily for purposes of harassment' as there is no evidence that relator pursued this litigation merely to annoy or embarrass defendants," the ruling states. "Conversely, Relator asserts that he brought this action 'in an attempt to bring to light the fraud of the telecommunications carriers, and to help insure that the Law Enforcement Agencies would not be hindered in their investigation of crime.'"

The companies also failed to show that Prather brought his claims in bad faith.

"Moreover, this court has noted that public policy would be 'entirely undermined if a plaintiff in [this] situation were forced to pay attorney[s'] fees to the defense upon a finding that a good faith and not unreasonable claim lacked merit,'" Brewer wrote.

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit