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McCutchen, Doyle, Brown & Enersen lawyers scored a landmark victory Monday when the American Arbitration Association handed down a judgment granting the firm’s client, Covad Communications Group Inc., $27.2 million in damages in a battle with San Antonio-based SBC Communications Inc., parent company of Pacific Bell. The case is the first under the Telecommunications Act of 1996 to result in a damage award, McCutchen lawyers said. “We are very pleased with the award,” said lead McCutchen partner Alfred Pfeiffer Jr., who was assisted by partners Nora Cregan and Holly House. “It was a very interesting, challenging case.” “Usually you litigate cases that are pretty close,” said Dhruv Khanna, executive vice president, general counsel and secretary of Covad. “But this was not a close case. It was more like an open-and-shut one.” Khanna called the award “a little on the low side,” yet added that “it is obviously not a trivial amount” and said his team is pleased. Partner Robert Mittelstaedt of Pillsbury Madison & Sutro, who represented Pacific Bell, declined to comment on the case. The arbitrators also awarded attorneys fees and costs to the Santa Clara-based company, a leading provider of digital subscriber lines (DSLs) used to access the Internet. In addition, roughly $730,000 was awarded in damages and attorneys fees as a partial final award issued by the panel in January 1999. Khanna tapped McCutchen in 1998 after the AAA determined that SBC had acted in “fundamental and pervasive” bad faith, violating its contract with Covad as well as the Telecommunications Act by delaying delivery of the space and equipment required to provide DSL service. “They were not just contractual but statutory violations,” Khanna said. Immediately after the ruling, Pacific Bell raised a challenge to disqualify the panel and vacate the award. The challenge is still pending in the California state court of appeal. Khanna said he anticipates that the May 16 award will also be challenged by Pacific Bell and wrapped up in the same appeal. “Pacific Bell’s claims,” he said, “are egregious.”

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