New York State Supreme Court rules that T-Mobile will face some fraud charges

You might recall that back in January we told you about a class action suit brought against T-Mobile by individually-owned T-Mobile stores. The owners of these stores accused T-Mobile of lying to Congress when it told lawmakers that if it were allowed to complete its acquisition of Sprint, hundreds of independent T-Mobile stores would be opened. Instead, the wireless provider ended up purchasing minority-owned locations paying little to no compensation for those stores.

The suit alleges that T-Mobile conspired with the third-largest operator of T-Mobile stores, Arch Telecom, to close the minority-owned locations. The original filing submitted to the court said, "Arch Telecom attempts to close the Plaintiffs' stores for absolutely zero compensation, depriving them of their livelihood and disgorging them of their investments." 

The documents add, "The Plaintiffs are essentially community-based T-Mobile stores, and they are what T-Mobile and Arch Telecom prefer to call 'Sub-Dealers.' T-Mobile and Arch Telecom hold the latter out to be a 'Master Dealer.' Using its operating standards, T-Mobile controls substantially every aspect of the Plaintiffs' business." The filing mentioned how the Plaintiffs allege that when an Arch director who acted on behalf of T-Mobile approached a minority store owner, he told the latter that he had "the option of either giving the store to Arch Telecom or simply being forced to close." 

T-Mobile, Arch Telecom, and a third defendant called The Portables Choice Group each filed motions to have the case dismissed with prejudice meaning that the suit could not be returned to court. Overall, among the three defendants, there were 17 counts that they were seeking to have dismissed.

Part of the court filings dealt with comments made by then T-Mobile CEO John Legere who said when T-Mobile announced its acquisition of Sprint, "We’ll build hundreds of stores." The court did agree that Legere's comments were promissory, related to potential future actions, and cannot be used to claim that fraud was committed. However, the allegations of fraud against T-Mobile also come from the carrier allegedly requiring the Plaintiffs to renovate their stores and renew leases without telling the Plaintiffs that the sub-dealer program they were part of was going to be terminated.

In addition, the date of such terminations, which were released to the Plaintiffs by Arch with T-Mobile's knowledge, was earlier than the termination dates set by T-Mobile. As a result, the Plaintiffs were worried that their stores were in imminent danger of getting shut down so they agreed to sell them to Arch at terms that gave the defendant a big discount.

The bottom line is that the court did dismiss some causes of action against T-Mobile, Arch, and The Portables Choice Group. But it did deny some of the charges which means that we will be hearing more about this class action suit in the future!

Thanks to John Hermina for the tip!