BellSouth lawsuit in hands of judge

BellSouth lawsuit in hands of judge

June 21st, 2012 by Todd South in News

Tom Greenholtz addresses the other attorneys present during Friday morning's hearing. Attorneys representing Mayor Ron Littlefield and petitioners met in Judge Jeff Hollingsworth's courtroom on Friday for a preliminary hearing about the petition to recall Mayor Littlefield.

Tom Greenholtz addresses the other attorneys present during...

Photo by Jake Daniels /Times Free Press.

A local federal judge will decide in the next month whether a multimillion-dollar lawsuit by 10 Tennessee 911 districts against telecommunications company BellSouth will move forward or be dismissed.

Chief U.S. District Judge Curtis Collier told attorneys for both sides Wednesday after hearing arguments in the case that he would return a written decision in the next 30 days.

Since the first lawsuit was filed on behalf of Hamilton County in November, lawyers for the 911 districts have claimed that BellSouth failed to collect state-mandated 911 fees to the tune of tens of thousands of dollars a month for as long as a decade.

BellSouth attorneys have asked Collier to dismiss the case, saying the complaints do not fall under the False Claims Act and the company has abided by state law on remitting 911 fees.

The Hamilton County suit alone seeks between $4.5 million to $9 million in uncollected fees. Lawyers have asked for punitive "treble damages," which would triple the amount to between $13.5 million and $27 million.

Lawyers for the 911 districts allege that by not collecting the fee, BellSouth sought a "competitive advantage" when bidding for county government and business phone contracts.

"They are trying to underbid with the public's money, the district's money, our money, to get a competitive advantage," said Frederick Hitchcock, attorney for the 911 districts.

Henry Walker, lead attorney for BellSouth, argued that the 911 districts' claims don't hold up when looking at the bills provided in the lawsuit.

Attorneys Hitchcock and Tom Greenholtz pointed to December 2010 monthly bills in all the counties. They show BellSouth reported collecting fees on 245,876 lines. Other reports show 322,000 connected lines, a 31 percent difference.

"That same pattern is true in lots of other districts," Hitchcock said.

After Hamilton County filed suit, Blount, Bedford, Bradley, Coffee, Cheatham, Giles, Roane, Franklin and and Knox followed. Hitchcock and Greenholtz are representing all the counties and Collier recently consolidated the cases.

In May 2011, Lincoln and Davidson counties filed lawsuits accusing BellSouth of similar practices, mostly related to the billing of PRI or multiplex circuits. The circuits allow for one line to carry as many as 23 channels.

Previously, the law required monthly charges of $1.50 per residential line and $3 per business to support county 911 districts. The multiplex circuit complaint started the current cases, but amended complaints alleged there were other lines with uncollected fees, according to court documents.

Davidson County settled with BellSouth for $1 million in October. Lincoln County settled for $13,361, according to documents obtained by the Times Free Press.

Shelby and Madison counties' 911 districts settled out of court for undisclosed amounts, according to 911 officials.

Walker told Collier that BellSouth at first used a Federal Communications Commission guideline to charge for five lines for each multiplex circuit but after an agreement with Tennessee in March 2011, began charging for each line.

Greenholtz argued that, for some 911 districts, the fees collected from phone bills comprise half of their annual budgets. Many are classified as "financially distressed districts."

Hamilton County alone faced 911 district budget shortfalls of $138,194 in 2009, $2.3 million in 2010 and $811,828 in 2011, according to court records.

But Walker countered that argument with another figure.

"Despite the cries of poverty here, Hamilton County [911] has $12 million in cash in the bank," Walker said.

After the hearing, Greenholtz clarified that the $12 million figure is money allocated for future system upgrades and is not budgeted for regular operations.