Amended Fraud Complaint Should Be Dismissed With Prejudice, Says AT&T

Plaintiff Jerome Edmondson, CEO of EDN Global, attempted to avoid written contracts with AT&T when he tried to “plead around” them “by omitting a breach claim and instead asserting a host of tort claims,” said AT&T Tuesday in its memorandum in support (docket 3:23-cv-00355) of its motion to dismiss Edmondson and EDN's amended complaint for failure to state a claim.

Because Edmondson and EDN entered the agreement but now assert tort claims seeking economic damages, “the economic loss rule bars their claims,” AT&T said. And because plaintiffs claim AT&T stole their trade secrets, trade secret preemption bars their separate tort claims predicated on the same alleged theft, said the memorandum.

After over a year of litigation, plaintiffs “finally admitted that the parties’ written agreements govern their dispute and asserted a breach claim,” it said. Because the written agreements confirm Edmonson’s claims “all fail as a matter of law,” the court should dismiss the amended complaint with prejudice, it said.

The action is Edmondson’s second against AT&T, the defendant said, citing a March 2021 action in Georgia state court in which plaintiffs asserted breach of contract and misappropriation of trade secret claims for allegedly stealing their leads. AT&T removed the case to federal court, and Edmonson’s motion for remand was denied. An amended complaint added AT&T employees Steve Driscoll and Doug Clark as defendants. Plaintiffs voluntarily dismissed that action on the deadline for filing a response to AT&T’s motion challenging the joinder of the Georgia citizens, the memorandum said. Plaintiffs filed the second action in Georgia state court in June 2022.

The second action, which AT&T removed to district court, asserts claims based on the same set of facts but plaintiffs “avoid addressing any terms of the parties’ written Agreements that are applicable to those claims,” said the complaint. The court said “no court would find [AT&T] Mobility liable” for EDN’s allegations because plaintiffs didn’t plausibly allege a joint venture, and “a party cannot recover on an implied contract when an express contract exists.” The court said Driscoll wasn’t liable for wrongful acts because his actions were taken for the benefit of AT&T, not himself, the response said.

Edmondson’s complaint alleges that when AT&T realized Edmondson’s financial power and the potential of his revenue sources, the company targeted him "with the purpose and intent to take his leads and destroy his business,” said the memorandum. The carrier “surreptitiously, systematically, and with racist animus, appropriated money due to Edmondson,” it said, and it “usurped his contacts and value and converted them to the sole property of AT&T."

Edmondson alleges he was required to put his customer leads and referral lists into AT&T’s customer relationship management platform, Salesforce, making them visible to AT&T and other AT&T Solution Providers, who “contacted Plaintiffs’ customer leads” to “appropriate” them for their own benefit, said the response. “Even though Edmondson was aware his customer leads could be taken by others if placed in the Salesforce system, “plaintiffs did so,” said AT&T.

Plaintiffs' admission they uploaded the information to Salesforce “show as a matter of law they did not engage in reasonable efforts to maintain the secrecy of that information,” said the memorandum. “Because plaintiffs made no effort to keep their customer lists confidential, they cannot assert claims based on Defendants’ alleged theft of these ‘trade secrets,’” it said.

After it “pilfered Edmondson’s trade secrets,” AT&T inserted “an all-white AT&T sales team to replace a qualified all black African American sales team and destroy the sales organization that Edmondson built,” said the amended complaint. Edmondson cited “intentional and reckless conduct” causing him “severe humiliation, mental anguish, and emotional and physical distress.”

The claim fails as a matter of law, said AT&T, because plaintiffs “fail to allege conduct that is extreme and outrageous.” Even if Edmondson adequately alleged racist comments by Driscoll or Clark, which they “vigorously deny,” Texas law “is clear that this type of conduct does not support recovery for intentional infliction of emotional distress,” the memorandum said. Other allegations about performance and termination of the agreements “do not involve outrageous conduct” so the intentional infliction of emotional distress claim “fails as a matter of law.”

Plaintiffs alleged Driscoll and Clark “conspired with” the other defendants to prevent EDN from receiving compensation for services and devices EDN was entitled to be compensated for, and they claim AT&T didn’t provide EDN with the same tools as non-minority providers. Those claims fail for three reasons, said the memorandum: 1) the agreements between EDN and AT&T govern the parties’ relationships and preclude plaintiffs’ claims; 2) the economic loss rule and trade secret preemption bar all of EDN’s tort claims; and 3) plaintiffs’ trade secret and intentional infliction of emotional distress claims independently fail as a matter of law, it said.