Dear Legal Line,

My company got sued over a prepaid card we had on the market. The gist of the lawsuit is that the amounts billed by our underlying carrier, and my company, were vastly different from the rates we disclosed to distributors and everyone else. I’m in charge of our company’s switch and setting LCRs and pretty much all things related to our switch. The truth is that there were some rates and charges that I knew about, others that I really did not, and some that my company actually charged. Now I have been subpoenaed for deposition and I am worried about what to say. I have talked to the company’s attorney and he is apparently not worried. My superiors however want me to make something up that benefits the company. I am afraid of committing perjury and ending up in jail. I really feel like I am in the “cross-hairs” right now between my employer and this deposition. Any suggestions?

Signed,
Tech-on-a-Wire

Dear Tech,

I think the best course of action is to consult a local attorney prior to this deposition. I believe that you, individually, may need counsel at the deposition and let me explain why. At this point of the litigation, you are a non-party witness. This means that you are being called to give testimony as to what you knew and experienced during the relevant time of this problem. You are not directly involved. However, as the person in your company that had a considerable amount of knowledge and control as to what was occurring at the time —particularly regarding LCRs, rates and programmed charges on the cards —you may find yourself actually involved in this lawsuit. Should your employer eventually try to shift the blame of this whole problem into your hands, the testimony you give or don’t give may be critical to your own defense. Likewise, the presence of the company’s attorney in this deposition may not be of any real benefit to you. The company’s attorney represents the company, and not necessarily you. Although you may have had conversations with the attorney on this case and communications to or from them and yourself related to what you knew or didn’t, these protect only the company by virtue of privileged information or attorney work product. This can leave you personally wide open — particularly in that gray fuzzy area of “some” of the charges, rates, and etc that you knew about and possibly programmed into the switch. Likewise, this whole idea of “making something up” leads me to smell a Rat more than a legit civil conflict. Please consult a local attorney regarding these issues immediately. It may be worth the cost of retaining counsel to go with you and evoke whatever protections you are entitled to at the deposition. Depositions are delicate in that if a privileged communication is not protected, or is inadvertently disclosed at deposition without reserving the legal right to exclude it, then it can — and usually will — be used at trial. This means potential liability for you. Quite honestly, I do not believe that you are a Tech-on-a-Wire, rather, I think you may be a Tech on his way to being hung-out- to-dry.

Let’s be careful out there…OK?

Dear Legal Line,

I had invested equipment and substantial money in a foreign route that was eventually shut down by the local government about six months after it lit up. My foreign partner and I have a contract under US law and it has a Force Majeure clause. Will this prevent my recovery in the courts here in the US ?

Signed,
Int’l. Daddy Warbucks

Dear Mr. Warbucks,

My question to you is, why was the route actually shut down? If it was because it was illegal, you may not like the answer I’ll give you. Your recovery will likely be diminished, if not barred, because of illegality of contract. There is a long-standing legal principal that the courts do not enforce contracts to perpetrate illegal activity. If this position is advanced by your foreign partner’s attorney, you may never even get to address the force majure clause. Most force majure clauses are drafted to agree on recovery should a civil disturbance, political unrest, or act of God, frustrate or destroy a business enterprise contracted by the parties. During the late 1990’s, it was quite fashionable to extend governmental or regulatory actions by foreign governments to force majure clauses to “hedge” gray or illegal routes in Latin America and Asia. These clauses however never have really stood the legal test of time for telecom — particularly in a foreign route termination. This is because of the nature of telephony: two sides (or jurisdictions) are necessary to complete and deliver the international service to US customers.

The illegality of the service on one end of the circuit is telling of how the matter is generally addressed here in the US under contract theories. If you are investing in Telecom in another country, your evaluation of risk is paramount and I would venture to believe you know that Mr. Warbucks. I am also willing to bet that you knew the route was illegal otherwise your question would have focused on fraud as opposed to contract remedies. If so, this may be a good case of chalking one up to the experience of “you got what you paid for”. Recovery of equipment in a foreign jurisdiction can also be a headache. I’ve had to civilly recover equipment forfeited in foreign jurisdictions before and It’s a long, time consuming, and quite frankly, costly process. So recovery of the equipment may not be an option, depending on its value. In sum, the answer to your original question is “yes,” force majure clauses can prevent recovery — provided that the entire contract is not first challenged by illegality of contract. You should definitely bring up all these issue with your attorney prior to actually enforcing anything related to this contract in court.

Good Luck and Success in the Industry!

•• Ed Maldonado is a principal of Maldonado & Glenn, a telecom legal firm. He can be reached at info@4counsel.net.

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