Lawyers for AT&T Corp. rang in the new year with a class-action lawsuit brought against it and AT&T Wireless Services Inc. by New York City area customers, and a federal magistrate’s ruling that a dispute with wireless operator Cellular One Group over the use of the “Digital One” name must go to trial.
The class-action lawsuit, filed in the Supreme Court of the State of New York County, New York, claims that AT&T violated New York’s General Business Law prohibiting deceptive acts or practices in the conduct of any business. The suit alleges that AT&T violated that law by representing to the public that its wireless service was reliable and dependable while knowing that it lacked the capability to provide such service. The suit also claims that AT&T Wireless failed to either rectify the problem or provide rebates when put on notice of the problem despite assurances to the contrary.
“Defendant AT&T breached express and implied warranties by selling wireless phone service which it inaccurately described as `reliable’ or `dependable,’ despite the fact that its wireless phone service was unreliable and undependable, and which, as a result, was not fit for its intended purpose,” the suit alleges.
The suit notes that AT&T’s move to its Digital One Rate service in 1998, eliminating separate roaming and long-distance charges, caused an overwhelming response of customers who overloaded the system by 1999 in major markets.
While continuing to advertise that its service was “reliable” and “dependable,” the suit claims AT&T acknowledged in media reports that its system in New York City was overloaded and not capable of handling the customer load. The suit cites a variety of media outlets where executives at AT&T acknowledged it was having trouble at times meeting the demand for services in the New York market.
The suit claims that one of the lead plaintiffs in the case, Julie Pope, entered into a one-year contract for AT&T wireless service in July of 1998, intending to use the phone for personal business. Pope claims she had such little success using her cell phone in New York City, that she stopped attempting to make calls even though she was trapped in her one-year contract.
When Pope wanted to cancel her contract, she realized she would be charged a $200 cancellation fee for termination after the first 30 days of service.
“Under such an arrangement, AT&T Wireless was essentially able to use its subscribers’ money to try to upgrade its unreliable system without fear that its subscribers would bolt and leave AT&T for a better service provided by an AT&T competitor,” the suit claims.
Another plaintiff named in the case, New York resident Alexander Abrams, claims his wireless service did not allow up to 80 percent of incoming calls through, and estimated that at least 50 percent of his outbound calls did not go through.
AT&T would not comment on the suit.
AT&T, through its partnership with Alaska Native Wireless, was leading after 23 rounds in bidding for a license in the New York market in the Federal Communications Commission’s re-auction of personal communications services spectrum.
The Cellular One case, filed in the U.S. District Court, Northern District of Texas, Dallas Division, involves AT&T’s use of the “Digital One” name, which Cellular One claims infringes on its registered DigitalOne trademark and service mark.
Dick Lyons, president of Cellular One Group, said that AT&T infringed upon its trademarked Digital One name when it introduced its Digital One Rate service in 1998. At that time, Lyons said Cellular One sent a letter to AT&T asking them to stop using the name, but was ignored. AT&T was a partner in Cellular One Group until 1999.
“That infringement is willful,” said Dick Lyons, president of Cellular One Group. “They knew about it and still went ahead and did it. They claimed in court that they use the name only as part of a phrase, but they did not try to trademark that phrase.”
Lyons said that Cellular One Group applied for a trademark for the Digital One name in 1994 and was granted its request in 1999. Lyons also noted that Cellular One’s revenue stream is predicated on licensing its names to fellow members and that AT&T’s use of that name causes confusion in the marketplace.
“AT&T tried to have the case dismissed, but the magistrate ruled that it would not because AT&T willfully used the name,” Lyons said. “The judge also ruled that the use of the name by AT&T did cause confusion on the marketplace. We can’t roll out additional services into the marketplace because of that confusion.”
AT&T would not comment on the case, and its lawyers did not return phone calls prior to RCR Wireless News press time.
Cellular One, a partnership of subsidiaries of Western Wireless Corp. and SBC Wireless L.L.C., and was formed to own, manage and promote the Cellular One brand nationwide, is seeking unspecified damages and injunctive relief preventing AT&T from using Digital One. The case is scheduled to go to trial in September.
