- Associated Press - Wednesday, March 5, 2014

FRESNO, Calif. (AP) - A California Yellow Pages company filed a lawsuit against AT&T; and its corporate partners Wednesday in a dispute over phone book advertising.

The lawsuit filed by Fresno-based Valley Yellow Pages says a rival phone book run by AT&T; and Cerberus Capital Management LP are offering illegal, secret discounts to advertisers. The lawsuit seeks an end to the alleged practice and unspecified damages.

Ralph Alldredge, an attorney for Valley Yellow Pages, said the illegal advertising incentive goes back to 2012, when AT&T; Inc. partnered with Cerberus to publish the phone directory. The laws Alldredge accuses AT&T; and its partners of breaking stem from the 1930s and were written to keep large national companies from anticompetitive and fraudulent behavior used to crush smaller businesses.

“They’ve kind of been forgotten,” he said of the old laws. “But their time has come again because of the economic conditions.”

AT&T; and Cerberus formed the joint venture called YP Holdings LLC to operate the phone book directory service both in print and online. In a written statement, YP spokeswoman Kristen Morquecho said the lawsuit is “without merit” and the company intends to “vigorously defend itself.” The lawsuit says Cerberus is the majority shareholder.

Valley Yellow Pages distributes phone books throughout much of California and competes directly with AT&T;’s directory. Launched in 1985 by three former Pacific Bell executives, Valley Yellow Pages is the largest independent publisher of Yellow Pages directories in Central and Northern California, circulating from Bakersfield north to the Oregon border.

The lawsuit filed in the Fresno County Superior Court accuses AT&T; and its affiliates of offering select advertisers prices below those listed on its rate cards and asking those customers to keep quiet. The Dallas-based phone giant is also accused in court papers of luring customers away from the smaller competitor by marking a substantial portion of advertising space below cost.

Alldredge has had success before making similar arguments, winning a $20 million judgment in a 2008 jury trial on behalf of a chain of alternative newspapers.

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