AT&T is firing back at some law firms that are seeking to block its $39 billion acquisition of T-Mobile USA through arbitration involving 1,000 or more customers.
In lawsuits filed this month in federal district courts across the United States, AT&T Mobility LLC has asked judges to find that the disputes fall outside the scope of AT&T’s arbitration agreements and may not proceed.
“AT&T’s arbitration agreement with our customers – recently upheld by the Supreme Court – allows individual relief for individual claims," an AT&T spokesman said. The law firm of “Bursor & Fisher is seeking class-wide relief wrapped in the guise of individual arbitration proceedings, which is specifically prohibited by AT&T’s arbitration agreement. Accordingly, the claims are completely without merit."
Earlier this month, New York-based Bursor & Fisher revealed the American Arbitration Association has begun administering the cases despite AT&T’s objection that arbitrators lack authority to block the merger. Bursor & Fisher also has retained the firm of Faruqi & Faruqi, LLP, according to an AT&T lawsuit.
AT&T has asserted the courts must decide whether an issue can be arbitrated.
In a lawsuit filed against one of its customers in the U.S. District Court for the District of Massachusetts, AT&T lawyers declared that the demand for class-wide injunctive relief against the merger “would directly affect more than 120 million wireless customers and millions of other individuals and businesses, as well as federal, state, and local governments which are not represented in these arbitration proceedings."
Scott Bursor of Bursor & Fisher told Reuters in an email that AT&T’s lawsuits appear “to be an act of desperation, since AT&T now realizes it faces substantial likelihood that one or more of these arbitrations will stop the takeover from happening."
Bursor & Fisher, which has launched a website dedicated to fighting the merger, has provided a link to AT&T’s wireless customer agreement. The agreement requires that a customer resolve a dispute through binding arbitration or small claims court rather than through courts of general jurisdiction. The contract clause precludes class actions and class arbitration. Arbitration is less formal than a lawsuit in court, using a neutral arbitrator to decide a case rather than a judge or jury and is subject to very limited court review, AT&T explains in its customer agreement.
AT&T’s contracts require the telecom provider to pay all costs of arbitration, and provide for a guaranteed minimum recovery of $10,000 if an arbitrator finds in favor of the customer, Bursor & Fisher said. But AT&T claims the opposing law firms are hoping for a windfall.
“Although the claim is meritless, the Bursor and Faruqi firms are hoping that thousands of ‘bites at the same apple’ will turn up just one arbitrator willing to entertain it – and that ATTM [AT&T Mobility] will hedge against that risk by entering into an extortionate settlement."
AT&T has filed suits with federal courts in the Northern District of California, Southern District of New York, Eastern District of New York, District of New Jersey, District of Massachusetts, Southern District of Florida, Eastern District of Pennsylvania and District of Maryland.
