True Wireless Sues HTH Communications For Breach of Management Service Contract

Telecommunications carrier True Wireless filed a complaint against HTH Communications, whose business includes handset distribution, device fulfillment and refurbishing, on Wednesday in the Southern District of Texas for breach of contract, claiming that HTH Communications did not pay True Wireless’s suppliers and vendors as required in the agreement.

True Wireless predominately provides subsidized wireless services to qualifying consumers through the Federal Communications Commission’s (FCC) Lifeline program, which is operated by the Universal Service Administrative Company (USAC). USAC reimburses providers like True Wireless through a monthly fund, which serves as the subsidies for Lifeline customers. True Wireless stated that it “uses federal funds received from USAC to pay its suppliers and vendors for goods provided and services performed in connection with the Lifeline program.” True Wireless and HTH Communications entered a management services agreement on June 26, which “required HTH to pay invoices from True Wireless’s suppliers and other creditors.” Three days after entering the agreement, True Wireless transferred $237,331 in federal funds that True Wireless had received to HTH, so HTH could pay True Wireless’s invoices. However, True Wireless alleged that “[i]nstead of paying the invoices as agreed…HTH diverted the funds for other uses without True Wireless’s permission. HTH also improperly rejected and failed to pay several other business-related invoices, causing True Wireless to go into debt to its vendors.”

HTH used these funds to pay itself and another entity controlled by the members of HTH; these USAC funds were not used to pay True Wireless’s other suppliers or vendors. Furthermore, True Wireless also requested for HTH to transfer True Wireless’s domain name and social media accounts back to True Wireless, but HTH has allegedly refused to do so and is still controlling these items. After discovering HTH’s conduct, True Wireless notified HTH of its breach of contract and True Wireless terminated the agreement after less than two weeks.

True Wireless has sought compensatory damages, declaratory judgment, an order for HTH to provide a full accounting, pre- and post-judgment interest, an award for attorney’s fees and costs, and other relief.

True Wireless is represented by The Jackson Law Firm with Vedder Price P.C. of counsel.