Crestwood’s reserves grew by roughly $223,000 thanks to a Christmas Eve check from AT&T — part of a larger, $65 million lawsuit settlement with a group of Missouri cities.
But some aldermen voted last week to ask the St. Louis County Municipal League to oppose the manner in which the phone company is recouping legal costs from that suit.
The board voted 4-3 Jan. 26 to recommend the municipal league support plaintiffs in a new legal battle against AT&T who claim the company is wrongfully taxing its customers to offset the $65 million settlement.
Ward 3 Alderman Jerry Miguel’s proposal was supported by fellow Ward 3 Alderman Paul Duchild, Ward 1 Alderman Darryl Wallach and Ward 4 Alderman John Foote. Ward 1 Alderman Mimi Duncan, Ward 2 Alderman Jeff Schlink and Ward 4 Alderman Deborah Beezley were opposed. Ward 2 Alderman Chris Pickel abstained; he is a director of external affairs for AT&T.
In November, a St. Louis Circuit Court judge settled a five-year dispute between AT&T and hundreds of Missouri cities and St. Louis County regarding unpaid landline telephone gross receipt taxes. By excluding certain items, AT&T underpaid municipalities and the county on that tax, the suit alleged.
Crestwood received $226,052.95 from AT&T. Aldermen voted to place the settlement in general fund reserves and to allocate $3,000 — roughly 1 percent — of that amount to the municipal league, which asked county cities to appropriate up to 5 percent of their settlement checks to the organization for its efforts in the legal dispute.
But while Crestwood and other municipalities awaited their respective windfalls, AT&T customers began seeing a special “gross receipts surcharge” on their bills.
“This component is designed to cover costs incurred and payments made by AT&T Mobility to settle claims related to past gross receipts taxes claimed by certain municipalities applicable to Missouri customers who are also billed a Municipal Gross Receipts Surcharge,” according to the company’s Web site.
But two Kansas City businesses and a Boonville resident since have taken AT&T to court in a class-action lawsuit seeking to stop the company’s “unauthorized billing.”
Representing AT&T residential and business customers, two Minsky’s Pizza restaurants and Harry Mark Wooldridge allege AT&T “boldly passed their liability on to their customers in the form of monthly charges disguised on telephone bills … This practice is wrongful, deceptive and extremely lucrative for defendants, who proceed as though they are immune from the consequences of their wrongdoing.
“Indeed, they need not worry about the costs of their illicit practices settled in other matters; their customers will simply pay the bill,” their petition states.
The plaintiffs want all funds paid to AT&T under the special charge refunded to its customers. The suit was filed last month in Jackson County Circuit Court.
Miguel said last week that AT&T customers shouldn’t have to foot the company’s legal bills because they already paid the taxes over which the cities originally sued.
He proposed the municipal league become “at least a friend of the court on behalf of the residents” in the new lawsuit.
“I’m a bit disappointed that they are not holding the flag here and going forward to fight the ability of AT&T to go back to the residents and in effect recover the cost of the lawsuit,” said Miguel, who acknowledged he previously motioned for the city to pay the municipal league $3,000 for its work in the original lawsuit. “It seems to me that the company and the shareholders should be the ones that are bearing this cost.”
But while Miguel’s motion garnered sufficient votes last week, not all aldermen were on board with his proposal.
Schlink said he, too, felt “tricked” by AT&T’s controversial billing practice but added he wasn’t planning on joining the fight against the company.
“I’m not just going to vote to join something just because there’s one particular issue that might be irritating me,” Schlink said. “There could be other things that a particular group or lawsuit would go after that I would not agree with. And not knowing all that information, I will not be able to support those things going forward.”
Mayor Roy Robinson said he agreed with Miguel but told aldermen there was little the municipal league could do because the initial agreement with AT&T provided for its billing customers to offset legal costs.
Robinson said if residents don’t approve of the charge, they should “drop AT&T and pick up somebody else. And that way, they don’t get the money.”
“If you’re dissatisfied that much, change. If not, pay the $1.99,” he said. “The municipal league can’t do anything to change that because it was actually part of the agreement with AT&T at the time.
“So that’s what bothers me about sending something to the league and telling them we want that. It makes us look like we’re out of contact with reality.”