A whistleblower lawsuit against AT&T, Verizon, Sprint and T-Mobile alleging the carriers overcharged California government customers millions of dollars will move forward unimpeded, a California Superior Court judge ruled.
Filed in December 2015, the lawsuit alleges the four tier-1 carriers ignored two cost-saving requirements included the master contracts used by California’s state and local governments and ended up overcharging government customers by more than $100 million.
The carriers jointly filed three demurrers – similar to motions to dismiss – but were shot down by Sacramento County Superior Court Judge Judy Holzer Hersher in her decision last week.
The carriers argued the case should be dropped because the government customers’ allegations had previously been publicly disclosed; because language in the contracts prevented the lawsuit; and because the government plaintiffs failed to provide sufficient evidence to necessitate a cause of action. Hersher, however, dismissed all three demurrers based on the conclusions that no public disclosure had occurred; the government’s interpretation of the contract was reasonable; and the plaintiff’s complaint contained sufficient support for its claims.
The case will now move into the evidence-gathering phase, known as “discovery.”
According to the lawsuit, which was filed by whistleblower OnTheGo Wireless and supported by more than 40 California government entities, Verizon, AT&T, Sprint and T-Mobile did not abide by rate plan optimization clauses in the master contracts with California government parties. The clauses require carriers to tell government customers which rate plans would result in the lowest cost and provide wireless services at the “lowest available cost.”
The lawsuit said rate plan optimization generally reduces costs between 20 percent and 30 percent over the term of the contract.
“The carriers promised optimization in order to win these government contracts, which are worth billions of dollars,” Constantine Cannon Partner and Attorney Anne Hayes Hartman said in a statement when the case was filed. “But while they were happy to take the government’s money, the carriers simply ignored their commitments to bill using the lowest cost rate plans. The carriers profited and taxpayers paid the price.”
Intervening entities in the case include the Regents of the Univeristy of California, Los Angeles County, Orange County, the City of San Bernardino, the City of Sacramento, and the San Diego Unified School District, among others.
The Plaintiffs are seeking three times the amount of damaged sustained, restitution, civil monetary penalties for each claim and attorney’s fees.