A 2-1 panel of he Tenth Circuit today affirmed a $16.5 million award to a subclass of AT&T's California residential landline customers for overcharges on the carrier's contributions to the Universal Service Fund.  Cummings v. AT&T Corp., No. 09-3059 (10th Cir. Sept. 20, 2010) (applying New York law).

A Kansas City jury found in November 2008 that AT&T breached its Consumer Service Agreement by charging customers more than it paid into the Universal Service Fund.  The CSA described AT&T's Universal Connectivity Charge as "a monthly charge . . . to recover amounts AT&T must pay" into the Fund.  The jury rejected price-fixing claims.

USF payments by AT&T and other carriers help hospitals, schools, and other institutions afford communications services, including Internet access.

The panel also ruled 3-0 that AT&T did not breach its contract with business customers and 2-1 that sections 201 and 202 of the federal Communications Act preempt a substantive unconscionability challenge to the arbitration clause in the CSA under New York law.

Circuit Judge Murphy wrote the main opinion.  Circuit Judge Holmes dissented on the award to the California subclass;  District Judge Pollak (E.D. Pa.) dissented on preemption.

Blawgletter served as lead trial counsel for the plaintiffs in the case and argued the breach of contract issues in January.  Paul Bland presented arguments on preemption and unconscionability.