By Samuel Lopez, Legal News Contributor for USA Herald
In an ongoing legal battle, the state of Delaware is determined to hold AT&T accountable and obtain millions of documents related to unclaimed property. The conflict revolves around the state’s revised subpoena, which demands that AT&T turn over approximately 57 million documents for auditing purposes. Samuel Lopez, a legal news contributor for the USA Herald, states, “This case highlights the significance of corporate transparency and accountability, as well as the determination of states like Delaware to protect their interests and revenue sources.”
Delaware’s Department of Finance has been persistent in its pursuit of these records, despite AT&T’s attempts to stonewall the discovery process and delay the proceedings. The state’s attorney, Martin S. Lessner of Young Conaway Stargatt & Taylor LLP, asserted that AT&T’s claim of the production being “too burdensome” is unfounded. He argued, “The documents and the data are available. They just refuse to turn them over.”
In December 2019, Delaware sued AT&T in Chancery Court to enforce its rights under the state’s escheats law, which allows the government to audit state-chartered businesses and recover unclaimed property. Delaware’s escheat collection rights are a vital revenue source for the state and apply to assets both within and outside its borders.
Initially, Vice Chancellor J. Travis Laster rejected the state’s subpoena as too expansive, prompting the Delaware Supreme Court to provide guidance on revising the request. In response, the state issued a new subpoena based on the court’s recommendations. However, AT&T continued to resist, urging the court to quash or modify the subpoena.
Despite AT&T’s objections, the state argues that it has met all the requirements outlined in the U.S. Supreme Court’s 1964 ruling in United States v. Powell. The ruling asserts that subpoenas are enforceable if they make relevant inquiries for a legitimate purpose, secure information not already in hand, and follow required administrative steps.
Lessner contends that the state has a legitimate purpose in requesting all the documents and needs the complete data set to identify potential errors or discrepancies in AT&T’s claims. He explains, “Delaware itself will do an examination and make a determination about whether the checks are escheatable or not.”
AT&T’s attorney, Sara A. Lima of Reed Smith LLP, argued that Delaware’s demands were “pretextual” and made “in bad faith.” She claimed that the state’s objective is to support a multi-state audit by Kelmar Associates LLC, the vendor contracted for the audit.
However, Lessner refuted this accusation, emphasizing that the state would not provide information to other states without AT&T’s consent. He accused AT&T of raising confidentiality issues at the last minute to “put sand in the gears” and “weigh the state down” in its examinations.
As the case continues, it is crucial to remember the importance of corporate transparency and the responsibility of states like Delaware to protect their interests. This legal battle serves as a reminder that the pursuit of justice and accountability is a never-ending process, and states like Delaware will not back down in their efforts to ensure that corporations like AT&T comply with the law.
