Verizon Sued for Mismanagement Over FCC Fine on Charges

Verizon Communications Inc. (VZ), the second-largest U.S. phone company, was sued by an investor who claimed some officers and directors violated management duties, leading to fines for $360 million in wireless overcharges.

The New York-based company from 2007 to 2010 tacked on $1.99 in bogus small-data exchange fees to wireless bills, then said it was a mistake when the Federal Communications Commission began investigating.

“Verizon repeatedly denied the overcharging” and in 2010 “characterized the fees as accidental,” according to a complaint filed yesterday by Arthur Belendiuk in Delaware Chancery Court.

The FCC in October 2010 announced that Verizon would pay a record $25 million to end the investigation and “refund a minimum of $52.8 million to approximately 15 million customers” for the “mystery fees,” according to an FCC statement at the time.

Belendiuk’s case, known as a derivative lawsuit, was filed on behalf of Verizon and seeks unspecified damages from directors and officers at the time of the overcharges, to be paid to the company.

Plaintiffs’ lawyers also asked the court to force Verizon to improve its corporate governance procedures to prevent a recurrence of such events.

Robin Nicol, a Verizon Wireless spokeswoman, said in an e-mailed statement that the company had no comment on the suit.

The case is Belendiuk v. Barish, CA9026, Delaware Chancery Court (Wilmington).

To contact the reporter on this story: Phil Milford in Wilmington, Delaware at pmilford@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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