published Thursday, August 28th, 2014

Attorneys spar over Hamilton County 911, nine other 911 districts in Tennessee

BellSouth may have failed to give local governments as much money as the law requires for 911 fees, a lawyer for the company says. But that doesn't matter.

Attorney Scott Angstreich on Wednesday asked U.S. District Judge Curtis Collier to rule against Hamilton County 911 and nine other 911 districts in Tennessee. The districts claim in a lawsuit that BellSouth didn't turn over 911 fees it owed them, intentionally lying to the emergency services providers to help its bottom line.

But Angstreich argued those claims aren't true and asked Collier to dismiss the suit. Even if BellSouth didn't pay the 911 districts as much money as the law required, Angstreich told Collier, the districts can't prove the phone company did it on purpose.

"Nobody said BellSouth's billing is perfect," Angstreich said. "This is not about whether BellSouth's billing was perfect."

But attorneys for the local 911 districts say BellSouth knew it was paying less money than it was supposed to, and they want Collier to bring the case to trial. If he does, they plan to ask the jury to make BellSouth pay three times as much as it owes the districts as a lesson for cheating the government.

"Your Honor," attorney Tom Greenholtz said, "they should be stopped."

The 911 fees at the center of the argument are included on customer phone bills. Citizens help fund local 911 centers by paying a $1.50 surcharge per month for residential phone lines and $3 per month for business lines.

Phone companies are supposed to collect the fee and give the money to the local 911 districts.

But in November 2011, Hamilton County 911 sued BellSouth, claiming the company wasn't charging and collecting all the money it was supposed to. Within seven months, nine more Tennessee 911 districts jumped into the lawsuit, including those in Bradley and Coffee counties.

These weren't the first districts to file such a lawsuit against BellSouth. In 2009, the Madison County, Ala., 911 district settled with BellSouth for an undisclosed amount. In 2011, the Davidson County 911 district settled for $1 million, and the Lincoln County 911 district settled for $13,000.

Attorneys for Hamilton County estimate BellSouth failed to collect somewhere between $4.5 million and $9 million over a decade.

In court filings, the county alleges that BellSouth stopped charging 911 fees around 1996, when the federal Telecommunications Act forced them to compete with other phone companies in the area. Not charging the fee gave BellSouth a competitive edge because it could charge lower prices, according to the county's attorneys.

On Wednesday, attorneys for both sides argued over two elements of the districts' lawsuits: Breach of fiduciary duty and a violation of the Tennessee False Claims Act. These two claims are important because they affect how much money BellSouth would owe the districts if the phone company lost the lawsuit.

The fiduciary duty claim deals with the relationship between BellSouth and the 911 districts. The 911 districts' attorneys say this relationship is founded on trust and that BellSouth holds power over the districts because the districts can't get the fees unless the phone company collects them and turns them over.

But attorneys for BellSouth argue the relationship is strictly business. The district is like a customer walking into a Walmart and picking one company's product instead of another. They say the districts are free to walk away at any time.

If a court finds that BellSouth committed a breach of fiduciary duty, the company could owe the districts the actual amount of money it failed to pay, plus punitive damages.

The other argument deals with whether BellSouth kept money that it knew it was supposed to give to the districts. If so, the company could be liable for triple damages.

Attorneys for BellSouth say this doesn't apply because the company isn't accused of keeping money it owes the government. The districts simply claim BellSouth failed to collect the money it was supposed to.

"There is literally no evidence that BellSouth withheld money," Angstreich said Wednesday.

The districts, meanwhile, say the False Claims Act applies because of the "competitive advantage" BellSouth gained by not charging customers the 911 fees.

There is no timetable for Collier's decision.

Contact staff writer Tyler Jett at tjett@timesfreepress.com or at 423-757-6476.

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