WASHINGTON-Nextel Communications Inc. late last month quietly settled a lawsuit with Charles Dascal, an ex-Miami dispatch operator who claimed Nextel Vice Chairman Morgan O’Brien stole his idea for a nationwide wireless system when O’Brien represented him as a communications lawyer in the 1970s and 1980s.
The case was settled on Oct. 25, the day the case was scheduled to go to trial in a Miami federal court.
Terms of the settlement were not disclosed.
Dascal’s September 1994 lawsuit against O’Brien originally sought between $30 million and $400 million in damages for breach of fiduciary duty, misappropriation of trade secrets, negligent misrepresentation, fraud, conversion, civil theft, breach of good faith and dealing, and unjust enrichment.
With the Dascal lawsuit behind it, Nextel now faces another big legal challenge. Next year, a class-action lawsuit against Nextel is expected to go to trial in a New Jersey federal court. The lawsuit accuses Nextel executives of insider trading and making false and misleading statements about Nextel’s digital technology in the early 1990s in order to artificially inflate the price of the stock.
Nextel declined to comment, saying the settlement with Dascal was reported in its quarterly filing with the Securities and Exchange Commission two weeks ago. In that filing, Nextel said it did not expect the Dascal settlement to impact its operations or financial health.
Neither Dascal nor his lead attorney, Pedro Martinez-Fraga, could be reached for comment.
The 1994 complaint alleged that before launching Nextel, O’Brien advised Dascal-then doing business as Telair Network Inc.-against pursuing a nationwide wireless network of clustered dispatch frequencies run by Motorola Inc., MCI Communications Inc. and local specialized mobile radio operators.
Today, Nextel is a highly leveraged nationwide wireless firm, a hit on Wall Street that bundles dispatch, messaging and mobile telephony services.
The Reston, Va., firm, which has an estimated $33 billion capitalized value as well as $5 billion to $7 billion in debt, aggressively is seeking more spectrum to provide broadband Internet services, but to date has been unsuccessful in that attempt.
Martinez-Fraga told RCR in 1997 that during discovery it was revealed that O’Brien-who allegedly rejected Dascal’s nationwide wireless plan-himself had a business plan for a nationwide SMR system at the time he represented Dascal.
Martinez-Fraga charged that O’Brien continued to represent Dascal through the October-November 1986 time frame, when Telair’s 26 dispatch radio licenses were sold for $1.9 million to American Mobile Systems Inc. A few years later, Nextel bought the licensees from AMS.
Nextel early on tried to settle the case, but Dascal refused. Nextel countersued, but was unsuccessful.
Why Dascal waited until 1994-some seven years after Nextel was founded-to sue O’Brien is unclear.
In 1997, Martinez-Fraga told RCR that Dascal was not aware until then that O’Brien had expanded the nationwide SMR concept as the basis for Nextel.
