Verizon stock takes hit on $50 billion lawsuit

Lawsuit asks Verizon and government to end phone snooping and seeks $1,000 for each of phone company's 50 million customers.

May 15, 2006: 12:01 PM EDT
NEW YORK (CNN) - A lawsuit is asking a federal court to order President Bush, the National Security Agency and Verizon to end a secret snooping program, and Verizon's stock took a hit on the news Monday.

Verizon (down $0.36 to $31.43, Research) stock fell more than 1 percent on the New York Stock Exchange early Monday.

The suit, filed Friday by two New Jersey lawyers on behalf of all Verizon subscribers, contends the phone records collection - first reported by USA Today on Thursday - violates the Constitutional right to privacy and federal law.

As a part of the snooping program, the government reportedly collects information every time a call is made on a Verizon phone line.

"The Telecommunications Act of 1934 is as clear as clear can be," plaintiff Carl Mayer said. "You can't turn over the records of your customers and if you do so it's $1,000 per violation. The Constitution is very clear. The Supreme Court has consistently held that the Fourth Amendment prevents unlawful searches and seizures which we believe this to be."

At $1,000 for each of Verizon's 50 million customers, the company and government could be made to pay $50 billion dollars in a class action suit, Mayer said. Verizon Communications said Friday that it could not confirm or deny whether it has provided phone records to the National Security Agency, but the company insisted it protects customer privacy and would never participate in a government "fishing expedition."

Thursday, USA Today reported that Verizon, AT&T (Research) and BellSouth (Research) have provided the NSA with records of billions of domestic phone calls since shortly after the Sept. 11, 2001, terrorist attacks.

According to newspaper, the NSA doesn't record or listen in on the conversations, but uses data about the calls - numbers, times and locations - to look for patterns that might suggest terrorist activity. Mayer said the phone records database could easily be cross-checked with other databases to give the government an inside look at a citizen's private life.

"Who amongst us wants the government snooping into who we call, whether it's a psychiatrist, your lawyer, your doctor, your clergy person, Alcoholics Anonymous, whatever," Mayer said.

"Americans do not want this vast intrusion, this unprecedented government intrusion into their private lives."

Mayer said the information, only collected from landline subscribers, would not provide the government any information to help national security. "The terrorists are on the pay phones or using the prepaid phones," he said. "They are not on landlines so this entire exercise is another one of the administration arguments that we have to protect national security by doing something which doesn't have any protection for national security."

The lawyers will attempt to get information about the secret program through subpoenas, Mayer's said. "We want answers to these questions and we intend to get them, because, frankly, neither party has been aggressive enough," he said. "The Democrats are not being aggressive enough in standing up to this unprecedented intrusion into the private lives of Americans."

The lawsuit said that another phone company, Qwest (Research), refused the government's request for access to the phone call data unless the NSA provided warrants issued under the Foreign Intelligence Surveillance Act or a written opinion by the Attorney General that the program was lawful.

"If the CEO of Qwest Communications understands that this whole thing is illegal why don't the CEO's of AT&T, Verizon, and the other phone companies understand that it's illegal to be giving over private records to the government, to the National Security Agency," Mayer said.

AT&T also released a statement saying that while it has an "obligation" to assist government agencies "responsible for protecting the public welfare," it does so "strictly within the law and under the most stringent conditions" in order to protect customer privacy.

"Beyond that, we don't comment on matters of national security," AT&T said in a statement.

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BellSouth says gave NSA no records