Tuesday, March 8, 2011

White Collar: ATT Charged in Civil RICO Complaint

A customer of AT&T (ATT) has filed a class action suit in federal district court in San Francisco alleging a bank, wire and mail fraud based racketeering claim. The suit names AT&T and three of its subsidiaries as defendants. The complaint alleges that the defendants engaged in a practice known as "cramming," which is the unlawful practice of charging customers for third party products that the customers had neither requested nor authorized.

The complaint accuses the defendants of falsely representing in their bills that the amounts charged were authorized and owed by customers. The plaintiffs alleged two specific bills and the invoice dates to meet the requirement of a pattern of racketeering activity.

The complaint alleges that the racketeering enterprise consisted of AT&T, the three subsidiaries, billing aggregators, and third party providers billing through AT&T. The plaintiffs successfully argued that the entities forming the RICO enterprise all had a common purpose, thus meeting the burden necessary to establish an enterprise rather than an ad hoc group or conspiracy. The common purpose was the exploiting of AT&T's unlawful third party billing and collecting system.

The case has made it through the first hurdle of a motion to dismiss. Discovery will now begin before the next major obstacle for the plaintiffs, which is the certification of the class under Federal Rule of Civil Procedure 23.

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