Texas Judge Grants EDN Leave to File FAC in Breach of Contract Case vs. AT&T
U.S. District Court Judge Brantley Starr granted EDN Global’s motion for consideration to file a first amended complaint (FAC) in its breach of contract lawsuit (docket 3:23-cv-00355) against AT&T, said his Tuesday order in U.S. District Court for Northern Texas in Dallas. Plaintiffs articulated a non-conclusory reason it’s necessary -- “to base the complaint on Texas law” -- Starr’s order said. In a separate order, he found "moot" AT&T’s motion to dismiss for failure to state a claim.
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Plaintiff Jerome Edmonson, CEO of EDN Global, became AT&T’s first authorized minority dealer for the Commerce Department’s FirstNet public safety broadband network after the wireless company, the only bidder, won the contract, said plaintiff’s first amended complaint, filed Monday. Under the January 2018 contract, “all parties were expected to use their labor and economic resources,” said the FAC.
AT&T intended to access Edmondson’s first responder clients, including the National Organization of Black Law Enforcement Executives (NOBLE) and sell them cellular service, but the provider “did not anticipate that Edmondson, a successful Black American, would flourish,” said the FAC. AT&T had no prior knowledge of NOBLE, that its 9,000 members controlled over 50% of first responder purchasing budgets in the U.S. and that Edmonson “could potentially earn hundreds of millions of dollars” by selling AT&T’s product to Edmonson’s proprietary leads list, it said.
When AT&T realized Edmondson’s financial power and the potential of his revenue sources, the company “targeted Edmondson with the purpose and intent to take his leads and destroy his business,” said the FAC. 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." The company “pilfered Edmondson’s trade secrets, and 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,” it said.
Edmondson suffered over $100 million in damages as a result, the FAC said. It cited FirstNet authorized dealer contracts Edmondson said he closed from 2018 to 2019. By April 2019, EDN’s AT&T FirstNet business clients averaged 393 new activations per client with an average contract value of $450,000. Edmondson contracted with the city of Dallas police, fire and emergency services departments for 7,000 lines of wireless service plus “strategic services” worth over $2.3 million, he said.
In February 2019, EDN contracted with the Georgia Department of Juvenile Justice under FirstNet. Due to the “intentional and deliberate tortious conduct" of AT&T employees Steve Driscoll and Doug Clark, Edmondson lost 1,100 devices for that deal after “Driscoll and Clark realized the financial magnitude of Edmondson’s customer lead list, contacts and marketing plan.”
Driscoll and Clark, “for their own personal gain, started a scheme to disrupt Edmondson’ business relationships, take their business opportunities, misappropriate Edmonson’s revenue and not pay Edmondson,” said the FAC. Driscoll and Clark changed Edmondson’s “rules of engagement and the Named Solution Provider (NSP) process arbitrarily,” the FAC said, while other non-minority FirstNet authorized dealers “were not subjected to these changes.”
Driscoll and Clark required Edmondson to put his customer leads and referral lists into the Salesforce customer relationship management platform used by AT&T’s marketing, sales, commerce, service and IT teams so Edmondson’s customer leads “could be taken by others,” the FAC said. The defendants “sabotaged EDN’s contract and business relationships,” it said. No other AT&T FirstNet authorized dealers were required to place their customer leads and referral lists into Salesforce and provide them to AT&T, it said.
By April 2019, EDN had 44 clients in AT&T’s Salesforce system, equating to about $25 million in value and over 17,000 new lines of service that Edmondson never received, the FAC said. Driscoll and Clark “appropriated" Edmondson’s proprietary lists "for their own benefit,” leading to the “destruction" of Edmondson’s present and future business relationships and the "demise" of Edmondson's business, it said.
After “sabotaging and destroying” Edmondson’s current and future business relationships and reducing Edmondson's business to “shambles,” defendants hired some of Edmondson’s consultants to work for AT&T, said the FAC. The consultants hired by AT&T from EDN were expected to provide their proprietary contacts and customer leads that Edmondson had initiated and developed, it said.
The breach of contract lawsuit also claims tortious interference with contract and with business relations, fraud, trade secret theft, conversion, trespass and intentional infliction of emotional distress. EDN Global seeks punitive damages, statutory damages and treble damages for each applicable count.
"The claims in this lawsuit are false," emailed an AT&T spokesperson Thursday. "We do not tolerate discrimination or retaliation of any kind and work ethically with all of our suppliers." EDN and Edmondson filed a "nearly identical lawsuit in 2021, which they dismissed after we challenged them in court," the spokesperson said: "We are confident this second bite at the apple is equally meritless and will be dismissed as well." Last year, AT&T spent $16.3 billion with certified diverse businesses, over a quarter of its procurement spend, he said. The company made a two-year commitment in 2019 to spend at least $3 billion with Black-owned suppliers and "exceeded it."