Court rules AT&T foulup hurt Vegas company

Friday, Aug. 11, 2000 | 10:58 a.m.

CARSON CITY -- The Nevada Supreme Court on Thursday ruled AT&T was liable for damages for fouling up the telephone bills of a Las Vegas business that suffered a loss of profits as a result.

The court, however, sent the case back to District Judge Jack Lehman to determine how much money Las Vegas Reservations Systems Inc. (LVRS) should be able to collect from AT&T.

AT&T provided 800 service to LVRS, which booked hotel reservations in Las Vegas for tourists using the toll-free number. For a period of about four months, AT&T merged the reservation system's bill with its competitor Central Reservation Systems.

LVRS declined to pay its bill and AT&T cut off service and sued to collect the back bill. The reservation systems company countersued, claiming the merging of its bills resulted in the release of confidential propriety information to its competitor. And it said the failure of AT&T to provide monthly billing statements deprived the company of vital marketing information.

LVRS claimed it lost business as a result of the mix-up in the telephone bills. A district court jury awarded AT&T $94,785 for the non-payment of bills. LVRS received $626,000 from the jury.

AT&T appealed, saying federal law pre-empted the issue from being handled in state court. It said it files its rates and business practices with the Federal Communications Commission and this case should not have been handled in the state court system.

The Supreme Court agreed with part of AT&T's argument that LVRS cannot collect damages for termination of its service and for technical problems with the telephones. It said the state court did not have authority to consider these issues.

But it upheld the claim by the reservation service that the mix-up in billing hurt its business profits and AT&T should be liable.

AT&T also said there was no evidence to show LVRS lost business to its competitor during the period the bills were merged.

There was conflicting evidence at trial about the loss of business. The court said, "Due to the nature of LVRS's business and its reliance on phone records, statistical evidence was relevant to prove damages." And it added, there "was sufficient evidence to support the issue of causation as to the damages sustained by LVRS."

Since the $626,000 was awarded in a lump sum, the court told Judge Lehman to sort out how much LVRS was entitled to for its loss of business but not to give it any money for technical problems with the phones or the termination of service.

LVRS did not appeal the $94,785 judgment in back bills it owed AT&T.