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AT&T customers are being sought by the New York law firm of Bursor & Fisher to help fight the merger with T-Mobile. The basis for the fight is loss of competition, possible higher prices and a return to the Ma Bell monopoly.
To accomplish this, the law firm is using the arbitration clause in AT&T customers’ contracts to open a huge series of arbitration cases against the company. According to the version of the contract Burton and Fisher is using on its new Fight the Merger Website, the arbitration agreement promises each user a payment of $10,000 if they are unable to reach an arbitrated agreement with AT&T.
The idea is to bring AT&T to the arbitration table by each customer demanding that the merger be stopped, and that the demand be put to arbitration. Since it’s unlikely that AT&T would accept the arbitration decision, the company would then have to pay the money. AT&T, as you might expect, is blowing the whole thing off. It says that the arbitration clause can’t be used in that way.
But Bursor & Fisher has a pretty good track record in fighting wireless providers in unconventional actions. One of those was a series of actions in California in which Sprint and Verizon were taken to court in class actions regarding early termination fees. The company has won judgments in actions againstSprint 4G phones and T-Mobile early termination fees, as well as in a suit against Facebook for misusing private data and against CitiBank for illegally foreclosing on property owned by deployed troops.
In other words, this is an aggressive law firm that seems to have a habit of winning. It’s notable that in most of these cases the companies that ended up on the losing side took virtually the same stand that AT&T has, which is that the cases can’t be won.
What’s also notable is that Bursor & Fisher isn’t charging any attorney’s fees to the AT&T customers it’s recruiting. Instead, it plans to take those from any settlement, a factor that’s clearly spelled out on the Website (unlike the somewhat murky language in most cell phone contracts). Basically, it boils down to this: You’ll get the part of any settlement that’s left over after the firm collects expenses and its portion of the settlement. This is a pretty normal approach for law firms in class action suits. Whether it’s one you like depends on you, but Bursor & Fisher is making no secret of how it’s broken out.
Law Firm Tries to Kill Merger With 1,000 Small Cases
Will Bursor & Fisher block the merger? Probably not right away. After all, AT&T has spent millions of dollars in the second quarter alone lobbying Congress and the FCC to make sure it goes forward. This is on top of the millions of dollars it has paid to induce various organizations to write the FCC in support of the merger. Surely, AT&T isn’t going to give up the fight just because some feisty law firm tries something new. It’s going to fight tenaciously in court, and the Bursor & Fisher gambit could fail.
The problem for AT&T is that the company has faced Bursor & Fisher before. It lost. In fact, AT&T has a history of losing when it comes up against these folks, so you have to wonder if they’re on to something. Perhaps AT&T has sown the seeds of its own undoing in the way it structured its user agreements? Or perhaps not. As I’ve mentioned in this space before, I’m not a lawyer. But the people representing AT&T are lawyers, and they’ve been wrong before.
The way this plan would work is that each customer (represented by the law firm) would demand that AT&T cease and desist. When AT&T doesn’t (which is basically a sure thing), then the customer would request arbitration with the American Arbitration Association, along with providing evidence to support it. Once that’s done, Bursor & Fisher may demand that AT&T fork over the ten grand. They could also seek a larger settlement on your behalf.
It’s an open question whether this will actually work. Getting arbitrators to see things your way can certainly seem like a roll of the dice at times. But if Bursor & Fisher starts getting cases brought before arbiters, and payments of $10,000 start to be ordered, it’s likely that AT&T will start to take notice. While ten grand is chump change to AT&T, after a while they start to build up to millions of dollars if enough cases are won. After awhile this could be enough to pay for all of those cell sites that AT&T claims it can’t build as a reason it must buy T-Mobile. Now that’s serious money.
But will it stop the merger? Maybe not. AT&T has a lot of lawyers and a lot of money. It also has its heart set on getting back to that good ol’ monopoly it enjoyed back before the Justice Department went and ruined everything. Life is good in a monopoly, at least if you’re the monopolist. And I suppose AT&T wants that good life back again.