SBC Global claims ESL school district failed to pay for $686K in services

By Kelly Holleran | Sep 19, 2011


An Internet service provider has filed suit against the East St. Louis School District, alleging the district did not pay for installation services provided.

SBC Global Services doing business as AT&T Global Services and AT&T Datacomm claim they sent Internet and wireless equipment to the East St. Louis School District on Feb. 20, 2007, after entering into an agreement with the school district. However, the school failed to pay for the services provided.

Under the terms of the agreement, East St. Louis promised to pay 10 percent of the costs for the equipment while Universal Service Administrative Company said it would pick up the remaining 90 percent of the cost.

USAC is the agency in charge of the E-Rate program, which helps schools in high poverty districts pay for updated technology, according to the complaint filed Aug. 26 in St. Clair County Circuit Court.

In early 2006, the East St. Louis School District decided to apply for funding to upgrade its Internet and wireless systems through E-Rate. Under the program, it was eligible to receive the 90-percent discount, the suit states.

The East St. Louis School District developed a technology plan in accordance with the E-rate program, which was approved. It later submitted the plan to the plaintiffs, who agreed to install the equipment, according to the complaint.

Realizing the potential for USAC to fail to fund all promised money, the plaintiffs included a number of contingencies. Among the contingencies was an agreement that if USAC withdrew funding from the East St. Louis School District before the equipment was delivered, the school district could back out of the deal. If, however, USAC withdrew funding after the delivery of equipment, the East St. Louis School District would be required to pick up the tab, the suit states.

USAC originally agreed to pay the East St. Louis School District $1,414,332.70.

"After receiving this funding commitment and prior to the delivery of the original equipment requested from AT&T, ESL decided to change some of the equipment ordered, and also some of the locations at which this equipment would be installed and used," the suit states.

Due to the alteration, USAC reduced its amount to only 28 percent of the cost of the equipment, the complaint says.

In turn, the plaintiffs claim they billed the East St. Louis School District for the remaining funds.

"ESL did not pay any amounts invoiced to it," the suit states. "The unjust benefit to ESL and detriment to AT&T is estimated to be approximately $686,707.20, plus interest."

In their complaint, the plaintiffs allege breach of contract and unjust enrichment.

Michael J. Gill and Ranjit Hakim of Mayer Brown in Chicago and Mimi B. MacDonald of AT&T Services in St. Louis will be representing them.

St. Clair County Circuit Court case number: 11-L-482.

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