AT&T's Facts 'Inaccurate,' Says EDN, Opposing Motion to Dismiss Fraud Case

AT&T Global Services’ facts are “inaccurate” regarding breach of contract, said plaintiff EDN Global in a Thursday brief (docket 3:23-cv-00355) in opposition to defendant’s motion to dismiss in U.S. District Court for Northern Texas in Dallas.

In May, AT&T said EDN Global and its CEO, Jerome Edmondson, are seeking a “do-over” and trying to “plead around” a January 2018 AT&T Alliance Program agreement, authorizing EDN to promote and market certain AT&T products and services (see 2305160027). The complaint alleges AT&T terminated the agreement and addendum “for convenience” in 2019 and then hired some of plaintiff’s consultants.

AT&T argued in its motion to dismiss that plaintiffs have not been allowed to plead in their complaint, making their factual allegations inaccurate, said plaintiffs’ brief. It cited a limitation of liability clause in the alliance agreement between the companies that says any action against either party may be commenced more than two years after cause of the action accrues. EDN filed the action June 16, 2022.

Edmondson wasn’t aware any breaches had accrued under the agreement until March 2021, when the plaintiffs realized the defendants “misled them and that the Defendants never intended to pay the Plaintiffs for the services rendered,” said the brief. Claims were filed within the two-year statute of limitations period, it said.

Global EDN entered into the agreement with AT&T and affiliates to access and encourage plaintiffs’ first responder clients to buy FirstNet cellular services, not anticipating that plaintiffs would “potentially outsell AT&T’s other sales force,” said the brief. Defendants didn’t realize that plaintiffs could earn potentially “hundreds of millions of dollars” from the agreement by selling cellular services to their proprietary leads list, it said.

When it realized “the financial power and potential revenue” of plaintiffs’ network and Edmondson’s “almost exclusive access to it,” AT&T targeted plaintiffs with the intent to take their leads “and destroy Plaintiffs’ business,” said the brief. AT&T “usurped Plaintiffs' contacts and value and converted them to the sole property of AT&T, poached Plaintiffs’ trade secrets, and inserted AT&T sales teams to replace Plaintiffs and to destroy the sales organization that Plaintiff Edmondson had built,” it said.

A July 2018 addendum to the agreement allowed EDN to promote and submit orders for certain AT&T FirstNet Authority services, said the memorandum. The complaint alleges AT&T terminated the agreement and addendum “for convenience” in 2019 and then hired some of plaintiff’s consultants.

EDN alleges two AT&T employees – defendants Steve Driscoll and Doug Clark -- required them to put their customer leads and referral lists into AT&T’s Salesforce customer relationship management platform, making their customer leads open and visible to them and other AT&T Solution providers. EDN alleges Driscoll and Clark contacted their customer leads and “conspired" with the other defendants to “appropriate Plaintiffs’ business relationships” and to prevent EDN from being compensated for the “opportunities stolen" by the defendants.

Defendants’ arguments that the EDN Global’s claims accrued when the channel agreement was terminated for convenience in May 2019 and the FirstNet addendum was terminated in December 2019 “are inaccurate,” said EDN, saying its claims don’t arise from defendants’ conduct that occurred before or at the same time as the terminations, said the brief. Plaintiffs communicated with defendants up to March 2021 regarding payment of deals they completed and initiated under the agreement and addendum, it said. “Defendants continuously refuse to pay the Plaintiffs royalty compensation on services they have completed, which continues to accrue to this day,” it said.

EDN’s claims fail for three reasons, said AT&T's May memorandum: (1) the agreement between EDN and AT&T Global (now AT&T Corp.) governs the parties’ relationships and precludes plaintiffs’ claims, (2) the economic loss rule and trade secret preemption bar EDN’s tort claims and (3) EDN’s trade secret and intentional infliction of emotional distress claims “independently fail as a matter of law,” it said.

EDN said tort claims are recognized under Georgia common and statutory law as independent claims separate from the alleged contract with defendants, said the brief. Its claims are barred by the economic loss rule because tort claims are independent of the contract, it said. Assuming the economic law rule applies, the misrepresentation exception bars the application of the rule in this case, it said.

On AT&T’s assertion EDN didn’t sufficiently claim for misappropriation of trade secrets, EDN said defendants disclosed and used its customer leads list without consent and used “fraud” to acquire knowledge of the lists. Defendants argue that under the agreement EDN was required to provide its customer list, leads and business network and that AT&T owned them. “Therefore, Defendants incorrectly argue” that EDN can’t allege theft of trade secrets “predicated on information they contractually agreed to provide.” EDN didn’t contractually agree to provide the list, leads and network “for ‘free’ without compensation,” it said.