PT&T; Minority Holders Lose in Buy-Out Suit

SAN FRANCISCO — A federal appeals court ruled Monday that American Telephone & Telegraph has no obligation to pay a $58-million damage claim by minority stockholders of the old Pacific Telephone in a stock buy-out controversy.

The U.S. 9th Circuit Court of Appeals rejected the claims of former Pacific Telephone & Telegraph stockholder Alexander Eagle and several thousand shareholders that stock value was depressed $3 a share by AT&T; in its decisions affecting PT&T.;

AT&T;, which owned 90% of the common stock in PT&T; in 1980, was accused by the 10% minority shareholders of decisions that led to a $381-million rate-refund order and $1.5 billion in tax liabilities. The shareholders argued that those decisions depressed the value of PT&T; stock at the time AT&T; imposed a buy-out of the 10% PT&T; minority stock shares.

Eagle, a Sonoma County resident who owned 1,400 shares of PT&T;, claimed that stock was depressed $3 a share by AT&T;’s failure to take accelerated depreciation on taxes and investment tax credits. Eagle and the shareholders sought $38 million in damages and $20 million in punitive penalties against AT&T.;

Forgave Some Taxes

PT&T; was merged with AT&T; in the buy-out in 1981, and Congress forgave the bulk of the $1.5-billion tax bill after the merger, reducing it to several hundred million dollars.

The appeals court ruled that there was no injury to Eagle and the other stockholders.

AT&T;, which divested itself of the old PT&T; a scant three years later, argued that there was no impact on stockholders from the $381-million rate refund since the money would not have been collected in the first place if the firm had done what Eagle expected.

In a tangle of legal decisions stretching over several years, AT&T; voted not to take advantage of depreciation on PT&T; equipment because the tax reductions had to be passed through to ratepayers in the early 1980s.