probably wish they could forget all about their involvement in the defunct high-speed Internet service
Well, they can't. Not just yet.
In a ruling issued in New York last week -- but not publicized until now -- a federal judge refused to dismiss a class-action suit alleging securities fraud by those companies and other owners, directors and executives of At Home, which operated as Excite@Home until its effective demise in 2001.
The judge's decision not only gives the green light to a pretrial discovery process but also leaves an A-list of companies and Excite@Home-involved executives liable for damages. These include onetime major shareholders Comcast, AT&T, the venture capital firm Kleiner Perkins Caufield & Byers, and cable operator
( COX), and a host of former Excite@Home directors: Comcast President Brian Roberts, Comcast Chairman C. Michael Armstrong,
Chairman John Malone and Kleiner Perkins general partner William R. Hearst III.
At issue in the case is the technology developed by At Home to deliver high-speed Internet to households via cable systems -- technology which AT&T unfairly expropriated, according to the suit. "The case alleges AT&T took intellectual property from At Home," says Chris Lovell, lead counsel for the former At Home shareholders who brought the suit, "and that this was not disclosed, and it rendered At Home useless to AT&T."
The liability of At Home's directors, alleges Lovell, mostly stems from inaccurate
Securities and Exchange Commission
filings and statements made by At Home. "When you're director of a company," says Lovell, "you have a duty to make sure that the documents are correct." And, he says, various SEC filings were false "because they didn't disclose the fact that AT&T was taking At Home's intellectual property."
While the amended complaint alleges that AT&T committed the intellectual property theft, Comcast -- which acquired AT&T's former cable systems last year -- could end up sharing the cost of any adverse outcome for Ma Bell. Under the terms of Comcast's acquisition of AT&T's former cable systems last year, Comcast is on the hook for half of any liabilities of AT&T relating to At Home, "including any pending or threatened litigation," according to Comcast's annual report for 2002.
On Monday, Comcast's shares fell 72 cents to $30.48, while AT&T's shares rose 41 cents to $22.91. A Comcast spokesman declined comment, and an AT&T spokesman said the company had no immediate comment.
Frank J. Thomas, one of the lead plaintiffs in the case, says the shareholders have already started submitting requests for documents and emails as part of the discovery process. The case could be ready for trial in about a year, says Lovell.