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Vendors tweak suit to block AG on voided broadband contract

Two internet companies are asking a federal judge to block Attorney General Lawrence Wasden (pictured) from forcing them to return millions of dollars paid under a voided state broadband contract. (Betsy Russell / The Spokesman-Review)
By Kimberlee Kruesi Associated Press

BOISE – Two internet companies are asking a federal judge to block the state’s attorney general from forcing them to return millions of dollars paid under a cancelled state broadband contract.

Education Networks of America Inc. and CenturyLink Communications LLC first filed their lawsuits in federal court in August, where they argued that the state owed them more than $37 million in back payments and damages.

Shortly after the announcement of the federal lawsuits, Attorney General Lawrence Wasden filed a separate lawsuit in state court demanding that actually the vendors needed to return tax dollars paid to them under the illegal deal. Those two companies have since amended their federal complaints to request that Wasden be prohibited from interfering with their payment recovery.

“This action seeks to enjoin the state of Idaho from attempting to collect from the plaintiff sums paid to the plaintiff for services that the state admits that it owed, which payments were approved by the state,” wrote Phillip Oberrecht, a Boise attorney representing ENA, in the lawsuit filed Oct. 17.

In November, CenturyLink filed a similar amended complaint.

So far, Wasden’s office has only responded in court filings to ENA’s new lawsuit. A spokesman for Wasden declined to comment Wednesday because of the pending litigation.

“Idaho courts should decide whether Idaho law requires ENA to return state funds it received, and whether it permits ENA to collect any additional money from the state,” wrote Scott Zanzig, a deputy attorney general, in a Dec. 12 response. “This court should not enjoin that process based on ENA’s speculative fear that it might result in a judgment adverse to ENA.”

U.S. District Court Judge B. Lynn Winmill is scheduled to consider ENA’s request in early January.

The companies argue they deserve repayment for unpaid work because the contract was deemed void because of the state’s action and through no fault of their own. However, Wasden has maintained that the Idaho Supreme Court ruled that the state is required to recover tax dollars paid to the companies under the illegal deal.

If the companies win, Idaho could face an even bigger price tag for the failed statewide broadband plan. Taxpayers have already paid out more than $29 million for the project.

Lawmakers had previously hoped to settle the claims for $8 million, but those efforts were scuttled when the state Supreme Court agreed that the contract with the companies was void.

The $60 million broadband program was created in 2008 in hopes of bringing a single high-speed internet system to all schools across the state. It has since been dismantled, leaving individual school districts to secure their own high-speed internet.