Fred Hiatt's concern over "costly litigation" for AT&T and Verizon

The Washington Post Editorial Board continues to reveal core Beltway corruption in its ongoing call for telecom amnesty.

Published October 27, 2007 1:46PM (EDT)

(updated below)

Of all the dumb and dishonest arguments in favor of telecom amnesty -- and there are many -- the dumbest and most dishonest is that it is unfair to subject telecoms to the "high costs" of defending against these lawsuits. It should come as no surprise, then, that this is the principal argument The Washington Post's Fred Hiatt advances today in his latest call for telecom amnesty:

As we have said, we do not believe that these companies should be held hostage to costly litigation in what is essentially a complaint about administration activities.

In 2005, the total revenue of Verizon -- from telephone services alone -- was $75 billion. ATT's total 2006 revenue was $63 billion. Whatever the "costs" of defending these lawsuits are, it is a minscule -- really undetectable -- amount to these companies. Whatever the telecoms' motives are in wanting amnesty for their lawbreaking, being relieved from "costly litigation" has nothing to do with it.

Trite pseudo-populist rhetoric about the "high costs" of litigation might work when it comes to lawsuits against small businesses or individuals. There, attorneys fees and other expenses really do make lawsuits expensive to defend. But they still have to go to court to prove they did nothing wrong. That is what it means to live under "the rule of law."

And telecom lawsuits could be "costly" if telecoms are found -- without any good faith basis -- to have broken the law and/or violated the constitutional rights of their customers. But to claim that telecoms like AT&T or Verizon -- whose revenues are measured in the tens of billions of dollars -- care in the slightest about "litigation costs" from a single set of lawsuits is just preposterous, really just a stupid thing to say.

These telecoms have been participating in this "costly litigation" for the last two years and they seem to be managing:

SAN ANTONIO, Oct. 23, 2007 -- AT&T Inc. (NYSE:T) today posted strong third-quarter results and delivered its tenth consecutive quarter of double-digit growth in adjusted earnings per share. Results included an increase in wireless subscribers of 2.0 million, further advances in enterprise business trends and accelerated expansion of AT&T's next-generation TV service.

"We delivered an excellent third quarter," said Randall Stephenson, AT&T chairman and chief executive officer. "Revenue growth continues to ramp, merger integration is on track, adjusted earnings and free cash flow are both strong." . . . .

AT&T reported third-quarter revenues of $30.1 billion, up from $15.6 billion in the year-earlier quarter, prior to its Dec. 29, 2006 acquisition of BellSouth Corporation and the accompanying consolidation of wireless results.

Believing that the costs of litigation are relevant in the slightest to corporations like AT&T and Verizon -- as Hiatt obviously does, or at least pretends to -- is to display exactly the lack of Seriousness and Sophistication which The Washington Post Editorial Page believes itself to embody. That is additionally demonstrated by the fact that the lead counsel pursuing the case against these telecoms is a small non-profit organization with a tiny budget staffed by under-paid lawyers devoted to privacy rights and the rule of law.

And all of that is to say nothing about the snide characterization from Hiatt that these lawsuits are nothing more than "a complaint about administration activities." The lawsuits allege that telecoms violated multiple federal laws directed at telecoms that were enacted as a result of the discoveries by the Church Commission of massive invasions of the privacy rights of American citizens and decades-long abuses of surveillance powers by the Government. At least theoretically, there is still a distinction in the U.S. between the Government and corporations. Corporations do not have license to break the law because the President tells them to. Isn't it unbelievable that this even needs to be pointed out at all?

As the lead counsel in the AT&T case, Cindy Cohn, explained in the interview I conducted with her two weeks ago:

We brought the case only against AT&T because AT&T has an independent duty to you, its customers, to protect your privacy. This is a very old duty, and if you know the history of the FISA law, you'll know that it was adopted as a result of some very deep work done by the Church Committee in Congress, that revealed that Western Union and the telegraph companies were making a copy of all telegraphs going into and outside the U.S. and delivering them to the Government.

So this was one of the big outrages uncovered by the Church Committee -- in addition to the rampant surveillance of people like Martin Luther King.

As a result of this, Congress very wisely decided that it wasn't sufficient to simply prevent the Government from listening in on your calls - they had to create an independent duty for the telecom carries not to participate in illegal surveillance.

So they are strictly forbidden from handing over your communications and communications records to the Government without proper legal process.

In a civilized society that lives under "the rule of law," there is no such thing as a defense of: "I broke the law because I was told to." That has sort of been a basic tenet of justice in the Western World for quite some time now. In the United States, the President does not have the power to direct private actors to break the law. Think about how rancid and venal our political and media elite are that these basic principles even need to be stated, let alone defended from a full-scale assault.

* * * * *

A general update on the campaign to stop telecom amnesty is here.

* * * * *

UPDATE: Several commenters have suggested that net income is a more meaningful barometer than gross revenues for determining the impact of litigation costs. Fair enough. AT&T's pre-tax net income in 2006 was $10.8 billion, and after-tax income was $7.3 billion. After law school, I was a litigator at the highest-charging corporate law firm in the country, and the absolute most I ever saw a single set of cases generate in fees was $1 million per month -- during the months when the litigation was fully active (which is rare). And even in the most intensely fought cases among the largest corporations, the fees were almost always substantially less than that.

In the NSA cases, AT&T is being represented by Sidley & Austin (.pdf), a large, fairly standard corporate law firm. Because there are multiple telecoms as defendants in these suits, the litigation costs, in some respects, end up being shared. Even assuming that these cases are generating unusually high fees, and even using net income as the standard, the "litigation costs" to telecoms is completely negligible. It does not even show up on the financial radar. If the non-profit EFF can manage to prosecute these lawsuits, AT&T and Verizon can obviously easily defend them (and indeed, it is almost certainly the case that the litigation costs borne by these litigious corporations from the lawsuits they commence against others vastly outweigh the costs they are incurring from defending the illegal surveillance suits).

The real point, of course, is that corporations -- just as is true for ordinary citizens and small companies -- can dramatically reduce their chances of being subjected to long, protracted litigation by obeying the law. Hiatt's rationale -- it's so unfair to make these poor corporations endure the costs of litigation -- would "justify" granting general amnesty to corporations for all illegal behavior, i.e., it would eviscerate the rule of law. We want there to be a price to pay when private actors violate the law. But the "price" which AT&T, Verizon and others are paying from "litigation costs" is so miniscule that to cite it as a reason to give amnesty is either incredibly ignorant or purposefully dishonest.

By Glenn Greenwald

Follow Glenn Greenwald on Twitter: @ggreenwald.

MORE FROM Glenn Greenwald

Related Topics ------------------------------------------