December 29, 2004 in Business

Verdict against AT&T trimmed

Associated Press

ATLANTA – A federal appeals court upheld a jury’s finding that AT&T Corp. committed fraud by billing telephone gambling charges as long-distance fees, but reduced a damage award against the company from $1 million to $250,000.

AT&T appealed after a federal district judge declined to throw out the jury’s verdict and the award to Felix Kemp of Augusta, whose grandson ran up a $115 bill in 1992 playing a 900-number game called “Let’s Make a Deal.”

A three-judge panel of the 11th U.S. Circuit Court of Appeals ruled Monday that the lower court judge was correct to affirm the jury’s verdict but that the award for punitive damages was too severe.

Aaron Bedy, a regional spokesman for AT&T, said appropriate company officials could not be reached to comment Tuesday night.

The “Let’s Make a Deal” game was created by Teleline Inc., based on a television game show of the same name, and ran from early 1990 until December 1992, the appeals court said. When participants called the 900-number line, at $3.88 a minute, they were asked to pick a number on their telephone that corresponded to a figurative “door” that concealed a prize.

Bedminster, N.J.-based AT&T listed the charges among other long-distance fees on its bills. Kemp sued after paying the bill.

The jury awarded Kemp the $115 in actual damages, tripled under racketeering provisions, and added the $1 million in punitive damages.

The appeals panel agreed that the game constituted an illegal lottery under Georgia law, making the charges an attempt to collect an unlawful debt.

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