AT&T to Court: Dismiss EDN's Amended Complaint for Failure to State a Claim

The amended breach of contract complaint from EDN Global and CEO Jerome Edmondson against AT&T and three of its employees fails for three reasons, said AT&T’s reply Tuesday (docket 3:23-cv-00355) in support of its motion to dismiss the complaint with prejudice for failure to state a claim.

Edmondson, who became AT&T’s first authorized minority dealer for the Commerce Department’s FirstNet public safety broadband network (see [Ref:2307130013), alleges he lost more than $100 million in damages after AT&T pilfered his trade secrets, inserted an all-white AT&T sales team to replace a qualified all-African American sales team, and destroyed the sales organization he built.

In the reply, AT&T said agreements between EDN and AT&T Global govern the parties’ relationships and preclude plaintiffs’ claims. The Alliance Program agreement has a two-year limitations provision that isn't tolled, defendants aren't "strangers” capable of tortious interference and plaintiffs failed to assert their breach of contract claim against the proper party, it said.

Plaintiffs argued they continued to perform after termination but didn’t address the agreement’s prohibitions on post-termination services, said the reply. Their “improper affidavit” from a former AT&T employee “provides no facts” showing AT&T’s waiver of the contractual prohibition, it said. Plaintiffs “vaguely allege” AT&T offered new agreements until March 2021, though the first complaint “expressly alleged these purported offers occurred in July, August and October 2019,” it said. The breach of contract claim should be dismissed as “untimely” under the agreement’s two-year limitations period, AT&T said.

EDN and Edmondson argued defendants were “strangers” capable of tortious interference, citing paragraphs discussing their relationships with AT&T vendors under the agreements. But the amended complaint confirms AT&T had a direct interest in the plaintiffs’ dealings with the third parties, meaning the defendants “did not constitute ‘strangers’ to these relationships," the reply said. In response to claims AT&T hired plaintiffs’ consultants to help close deals initiated by EDN and Edmondson, the defendants said they weren't strangers to EDN’s consultants “who were directly involved in selling and marketing” AT&T products to actual and potential AT&T customers under the agreements.

The economic loss rule and trade secret preemption bar plaintiffs’ tort claims, said AT&T's reply. When a contract spells out parties’ rights about a subject, the contract, “not common law tort theories, governs any dispute about the subject matter,” it said, citing Exxon Mobil v. Kinder Morgan Operating. Counts one and two of the amended complaint, which allege interference with plaintiffs’ business relations, concern parties involved in EDN’s marketing and selling of AT&T products "under the agreements," the reply said. Counts three and four allege AT&T's misrepresentations that plaintiffs’ sales leads would remain confidential after being uploaded to AT&T’s Salesforce system, but agreements provide “AT&T, not EDN, owns all customer relationships,” it said.

Edmondson’s claim of intentional infliction of emotional distress fails because he fails to allege conduct that's “extreme and dangerous,” said the reply. The intentional infliction claim is “time-barred” under the two-year contractual limitations provision and the general two-year statute of limitations, it said. On plaintiffs’ trade secret claim, that they didn’t agree to provide AT&T with their customer list and leads “for ‘free’ without compensation, AT&T said the agreement addresses compensation only for plaintiffs’ sales of services, not for their customer lists.