Arbitrator shaves $4M from finding against MassTech

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Citing a math error, the arbitrator who decided a dispute over the money-losing "middle mile" broadband network has reduced his judgment against the state, while finding blame elsewhere for the error.

Rather than owe $12.2 million to two companies involved in running its fiber-optic network, the Massachusetts Technology Corp. is now ordered to pay $8.4 million in damages and costs.

The change followed MassTech's claim that arbitrator Philip D. O'Neill's initial award Oct. 2 counted one big sum twice.

Meantime, MassTech and its legal adversaries continue to fight in U.S. District Court over aspects of O'Neill's decision, prompting a second trip in two years to the First Circuit Court of Appeals in Boston.

Continued court action since the arbitrator's decision two months ago suggests that there will be no let-up in litigation over the 1,200-mile network, which provides high-speed internet connections to public agencies across Western and Central Massachusetts, as well as to some private operators.

MassTech has not yet paid the arbitrator's revised sum to Axia NetMedia Corp. or to the related company that operates the network, KCST USA Inc.

In his final award filed Nov. 20, O'Neill appears to fault parties to the arbitration for allowing the computational error to occur by not rooting out a "latent duplication issue lurking in supporting evidentiary minutia."

"The miscalculation of damages through some duplication ... was a function of an award reflecting what was specifically requested by each of the prevailing parties," O'Neill wrote.

The arbitrator reaffirms aspects of his initial finding, which held MassTech primarily responsible for problems with the middle mile operating contract that resulted in millions of dollars of losses by the operator.

O'Neill wrote that his decision seeks to make Axia and KCST whole after MassTech's missteps.

"At bottom, as all Parties well recognize, Massachusetts law of damages seeks to place Axia/KCST in the position they should have been but for MTC's wrongful commercial behavior," he wrote.

In his final award, O'Neill bolstered Axia's claim that it should no longer be required to guarantee the functioning of the Mass Broadband 123, as the $90 million middle mile network is officially known. He faulted MassTech's request for "clarification" over whether that guarantee remained in effect.

"MTC cited no record support for the requested ruling because there was none," O'Neill wrote. "The record was simply devoid of specific persuasive evidence in this regard."

In U.S. District Court in Worcester, MassTech has this fall successfully opposed a move by Axia to obtain proceeds from a $4 million performance bond that the state agency secured. That bond was required after MassTech prevailed last year in obtaining a preliminary injunction compelling Axia to continue to perform under the disputed network operating agreement.

Larry Parnass can be reached at lparnass@berkshireeagle.com, at @larryparnass on Twitter and 413-496-6214.


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