Coloradans who spent weeks, sometimes months, sometimes even years waiting for US West to install new telephone lines will soon be eligible for credits on their telephone bills, thanks to a class-action lawsuit filed back in 1997. The frustrated US West customers will share a pot of $36 million; the lawyers who filed the suit on their behalf will take home $7.2 million.
While that might seem like quite a haul (unless you're former US West CEO Sol Trujillo, with a bank account buoyed by a golden parachute), the attorneys involved say it's a reasonable amount of compensation for their efforts.
"The fee is 20 percent of the settlement fund," says Tobin Kern, an attorney with the Denver firm of Hoffman Reilly Pozner & Williamson. "That's at the low end of fees typically accepted by the courts in class actions."
The court case created a sensation in the fall of 1999, when documents released to the plaintiffs revealed that US West had told its customer-service reps to lie to customers who wanted to know when their telephones would be installed. "If you don't see a facility in place to install service, give the customer an artificial due date and hope we make it," the company advised its employees in a memo. "DO NOT advise the customers of a possible held order situation or that there may be a delay in providing service to them."
This practice even had a name within the company: the "Customer Not Educated" policy, or CNE for short.
Even more shocking was the revelation that US West had ranked every neighborhood in Colorado by income level, designating each area as "gold," "platinum" or "bronze," then instructed its employees to give service priority to the gold neighborhoods ("Liars on the Line," November 11, 1999).
The lawsuit estimated that more than 200,000 Coloradans had been adversely affected by US West's failure to get new telephone lines up and running. Company documents released during discovery indicated that in 1995 it took US West an average of 61 days to clear a "held order," meaning that many people moving into new homes were waiting months for service. Internal corporate memos also showed that although US West consultants repeatedly warned that the company was not spending enough money on Colorado's telephone network, those warnings were ignored.
During that same period, in fact, US West executives routinely told the news media they were making great progress in meeting the demand for telephone services, even as waits for new lines sometimes lasted as long as six months. One consultant told the company in 1994 that its conduct was "an extraordinarily clear example of the ways of evasion of the truth."
By cutting back on investments in its basic telephone network, US West was able to shift funds into a panoply of new high-tech services that made the company an inviting buyout target. The strategy paid off last year, when it was acquired by Qwest for $46 billion. US West executives, including Trujillo, took home multimillion-dollar bonuses as a result of that deal.
Qwest has claimed it wants to dramatically improve telephone service in Colorado, and the company says it decided to settle the class-action suit that came along with its purchase of US West so that it could start fresh with customers. "We wanted to get this behind us and concentrate on improving service," says Matt Barkett, spokesman for Qwest.
The proposed settlement is expected to be approved in March by the Larimer County District Court, where the case was first filed. It will cover anyone in Colorado who ordered a basic telephone line between January 1, 1993, and October 17, 2000, and was forced to wait for installation beyond the scheduled hookup date; most of the credits will be for under $60. Within a few months, Qwest will begin notifying customers about the refund program, and the company may also advertise the settlement fund in local newspapers. (The company will not accept applications for refunds until the court gives final approval to the agreement. More information about the settlement is available at Qwest.com/about/media/index.html.)
While the attorneys' $7.2 million fee has raised eyebrows, Kern says the lawyers who pursued the case spent more than $1 million gathering documents, taking depositions, hiring telecommunications experts and laying the groundwork for a complex lawsuit. He insists the firm took a big financial gamble by going up against the telephone company.
"We took the case on a contingency basis," he says. "If we had lost, we wouldn't get anything."
But when Qwest decided to settle, they won, and won big.
Now the firm is looking into possible class-action suits against other companies. "We're definitely interested in the consumer field, where consumers have been promised more than the provider can deliver, especially in technology," Kern says.
At the moment, Qwest appears to be doing somewhat better at serving consumers than US West did. At least, complaints about the phone company to the Office of Consumer Counsel and the Colorado Public Utilities Commission have declined in recent months.
"It's too early to tell if things are getting better, but they're saying the right things," says Ken Reif, director of the Colorado Office of Consumer Counsel. "They've acknowledged there's a problem and said they're going to fix it."
And Qwest's decision to settle the lawsuit may bode well for the future. "I take Qwest settling the case as a good sign," Reif says. "They could have contested this for a long time."
