ACD Wins $8 Million Jury Verdict Against AT&T Michigan

Last week the Ingham County Circuit Court entered a judgment ordering AT&T Michigan to pay ACD Telecom $7,994,590 in damages for breach of contract.

The judgment was the result of a three week jury trial.

ACD Telecom is a Lansing-based competitive local phone company. ACD Telecom is affiliated with ACD.net, headquartered in Lansing.

The verdict resolves a six-year long dispute between the companies. ACD filed the suit in 2004, claiming that AT&T had breached a 2003 contract.

 AT&T entered into an identical agreement with 14 other competitive local phone companies in Michigan in addition to ACD. Two other companies, TDS Metrocom and Telnet Worldwide, brought similar claims that had been resolved earlier.

“It has taken a long time and a lot of effort to achieve victory, but in the end, with enough persistence and perseverance, it proves that our legal system works," said ACD president Kevin Schoen. "This has been a long and aggravating process for us but we are pleased that AT&T will finally be required to honor their contract.”

ACD has not received payment from AT&T. Schoen is now waiting to see if AT&T appeals, which could take two to three years. ACD plans to invest any proceeds that are eventually received from the lawsuit to expand its operations in Michigan.

It sounds like ACD will have to continue waiting: AT&T spokesman Joe Steele said Sunday night that "AT&T Michigan stands by its position that it did not breach the contract at issue, does not owe ACD Telecom any money and will be filing an appeal."

Under the contract, ACD and AT&T had mutually agreed to let their customers under long-term contracts switch their services to the other company without having to pay the early termination fees in their contracts. Most commercial telecommunication services are purchased on term contracts with substantial termination penalties, much like a consumer cell phone contract. This makes it difficult and expensive to switch phone companies when new technology, lower prices or better services become available.

ACD says AT&T refused to honor the agreement and charged two of the customers that switched from AT&T to ACD early termination penalties in excess of $40,000 each.

AT&T then sued these two companies to collect early termination penalties. One of the two companies, Lansing-based ARQ Internet, went out of business in the face of the termination charges AT&T assessed in breach of the contract.

ACD said the lawsuit took a number of twists and turns to get to a jury trial including an appeal with the Michigan Court of Appeals. That court re-instated the case after a previous dismissal and remanded it to a jury trial. The jury trial took place from late September to mid-October this year before Hon. Joyce A. Draganchuk. In rendering its verdict, the jury found that AT&T Michigan had breached the contract and that ACD should be awarded the profits that it lost as a result of AT&T’s breach.

ACD was represented in the lawsuit by Field Law Group, a Lansing law firm specializing in telecommunications. Norman C. Witte, of-counsel  to Field Law Group, handled the trial for the firm.

A Michigan-based company, ACD Telecom in conjunction with ACD.net owns and maintains hundreds of route-miles of fiber in communities throughout the state. The metro fiber connects their statewide network to give businesses, institutions and other telecommunication carriers access to ACD.net’s high bandwidth and redundant backbone networks, ACD.net's MPLS network, and ACD.net's telephone services.

ACD.net provides digital telephone service and broadband via DSL, fiber, T1s, T3s and now Wi-Fi.