Court to Rule on Pay-Phones Case

The two telecom giants have asked the Supreme Court to throw out a lawsuit filed by several companies, known as "aggregators," on behalf of approximately 1,400 small pay-phone operators. Lawyers for Sprint and AT&T argue that the aggregators don't have the right to sue because they don't have a sufficient interest in the outcome of the lawsuit.

The case turns on a narrow legal issue, but if the justices allow the suit to proceed, the aggregators will be able to seek more than $100 million from the telecom companies.

The Federal Communications Commission in 1996 required long-distance carriers to compensate pay-phone operators for so-called "dial-around" or coinless phone calls that customers can make by dialing codes such as 10-10-220. Those rules have spurred extensive litigation over how much compensation should be paid.

The Supreme Court ruled last year in a case involving telecommunications company Global Crossing Ltd. that pay-phone operators had the right under federal rules to sue for greater compensation.

But lawyers for Sprint and AT&T argued in court filings that the right doesn't extend to the aggregators, who have contracted with the pay phone operators to collect compensation from the long-distance carriers. The aggregators are litigating the case for a fee and won't share in any proceeds from the suit, the companies said.

The aggregators "are entitled to absolutely nothing under the FCC's regulations, and in litigation they would have nothing to gain," Thomas Goldstein, lead counsel for Sprint and AT&T, said in court filings.

Roy Englert, an attorney for the aggregators, said there is ample legal precedent for collection companies to sue to recover money owed to others.

A federal district court and the U.S. Court of Appeals for the District of Columbia Circuit sided against the telecom companies. The appeals court ruled that the aggregators have a "personal stake" in the dispute.

Approximately 1,400 pay-phone companies authorized the aggregators to sue on their behalf. The aggregators include APCC Services Inc., based in Virginia, and Davel Communications Corp., based in Illinois.