To Tell the Truth

Long after prime-time television hours, speaking by phone from a Marriott hotel room in a suburb of Chicago, Doug Hamilton is sounding anything but happy. His wife and three school-age children are back at the family's home in Rockwall, just east of Dallas.

But Hamilton had to accept the only work he has been able to find since he was fired by Southwestern Bell. The new job means reporting every week to an office outside Chicago and flying home for the weekends. He hopes to finish the project he is now working on in time to get home for Christmas.

"It's 100 percent travel, and it gets really lonely. It's hard," Hamilton says, and he knows that he is not the only one suffering. "It's hard on my wife too," he says. "She is kind, having to shoulder everything at home."

There has been little for Hamilton and his family to cheer about since he was fired by Southwestern Bell in February 1995. The 43-year-old former manager is suing the company, claiming that Southwestern Bell wrongfully terminated him.

Along with economic hardships, Hamilton has suffered stress, his wife says, from the intense scrutiny he has been subjected to as company lawyers scour his employment history looking for fault.

But, despite the uncomfortable inquisitions and the financial setbacks, several specific steps taken by Southwestern Bell since Hamilton filed his suit have convinced him that he will be doing the right thing when he heads into a federal courtroom as scheduled next month to press his case against the company.

Although the outcome of his case remains uncertain, Hamilton's litigation has already shown a side of Southwestern Bell that consumers rarely see. As the Dallas Observer reported in its February 15, 1996 cover story,"Project X," Hamilton contends that he was fired--in part--for refusing to go along with a Southwestern Bell policy which he and other employees say targeted low-income, primarily minority neighborhoods for stricter billing practices.

The phone company, Hamilton and others say, called its strict scrutiny of low-income customers "Project X." They claim the policies meant that poor customers were more likely to have their phone service cut off, or be forced to post large deposits with the phone company.

When the Observer first reported on the allegations, Southwestern Bell spokesman Chino Chapa declined to comment on the existence of Project X. Chapa did say that the company denied "any and all allegations of discrimination" and has "a commitment to equal opportunities for all citizens."

Southwestern Bell director of regulatory affairs Kirt Hapfinger says that the company does "absolutely not" use geographic factors as a way to differentiate among customers for billing purposes.

But as a trial date nears for Hamilton's lawsuit against the company, the fired manager and his attorney believe that the evidence of Project X's existence is getting stronger. Documents and evidence unearthed since Hamilton filed his suit, they say, lend credence to his claims that Southwestern Bell effectively discriminates against poor and minority customers.

Doug Hamilton assumed that he would be a lifer at the phone company. Before he was fired, he had put in 20 years at Southwestern Bell and had no reason to think he'd ever leave.

Indeed, his wife's medical condition--she was diagnosed in 1986 with multiple sclerosis, an incurable disease of the brain and spinal cord--made the insurance package he received from his employer an absolute necessity. Because she had a serious, pre-existing medical condition, any new employer might refuse to provide her medical coverage.

In 1992, Hamilton was transferred into a supervisor's job in the revenue management office in Dallas, then a newly created division. It was that office, according to Hamilton and five other current and former Southwestern Bell employees interviewed last year by the Observer, which enforced policies that unfairly targeted poor and predominantly minority neighborhoods.

Employees in the revenue management office focused their energies entirely on maximizing Southwestern Bell's collection of cash: screening potential customers' billing and credit information to avoid starting service for those with a high risk of failing to pay, and deciding when to pull the plug on those who had fallen behind in their bills.

Hamilton and other Southwestern Bell employees told the Observer that they were instructed to scrutinize customers in low-income, high-minority-population areas more closely than those in neighborhoods that were more affluent and heavily Anglo. On busy days, for example, the workers say they were told to validate 100 percent of the social security numbers and previous addresses on service applications from prospective customers in Oak Cliff--while not checking a single one of the new customers in more affluent Addison.

The company would move to cut off service to customers in West Dallas if they were late paying bills as small as $50, Hamilton and other Bell employees said. But customers in North Dallas could fall behind as much as $200 without even getting a call from the phone company asking about the late payments.

If relatively new customers in West Dallas began making more than $100 a month in long distance calls, they would be asked to put up a hefty deposit--as much as $1,500, workers said. Customers in Richardson or Addison with similar long-distance charges were not asked for an additional deposit.

It is a prudent--and legal--business practice for a company to make sure it is being paid for its services. But Hamilton and others say Southwestern Bell's practices went beyond prudence. Hamilton recalls his supervisors repeatedly telling him, "If we cut off the right accounts, they won't complain."

The Public Utility Commission of Texas, which regulates telephone companies, requires that customers be given 10 days' notice before their phone service is cut off. But Hamilton argues in court filings that as part of Project X his supervisor, Dennis Dorsey, insisted that customers in poor neighborhoods be cut off without the 10 days' notice.

This would happen most often, Hamilton says, in cases where Bell employees turned on phone service for a customer before the customer's credit application had been fully checked out. If it later turned out that a customer in one of the areas targeted by Project X had provided a faulty previous address or social security number, Hamilton contends, his supervisor wanted the customer's phone cut off without 10 days' notice.

PUC rules give the telephone company freedom to handle customers disparately. As long as the company is filling 95 percent of service requests within seven days and giving 10 days' notice before terminating service for delinquent payment, it is operating within the PUC guidelines.

But Hamilton believed that the revenue management office's practices violated PUC rules. He says that he went to a supervisor in another department--the department responsible for initiating dial tones--to try to develop a procedure that lowered the company debt levels while staying within the PUC guidelines.

In early January 1995, Hamilton alleges, he met with his supervisor and stated that he would no longer carry out orders that he believed violated PUC guidelines. Nor would Hamilton allow his subordinates to do so.

"I told Mr. Dorsey that I was not going to do it anymore," Hamilton testified during a deposition for his civil case, referring to the practice of terminating customers without 10 days' notice.

"OK. And what did Mr. Dorsey say?" asked Southwestern Bell in-house lawyer Martin Hotchkiss.

"That that was part of my job," Hamilton replied. (Southwestern Bell declined to make Dorsey available to talk to the Observer.)

Later in the deposition, the Southwestern Bell lawyer asked Hamilton if--by warning Dorsey about terminating customers without proper notice--Hamilton was trying to protect the company against liabilities.

"Primarily, I was trying to protect myself," Hamilton, who concedes that he never intended to sacrifice his job to fight discriminatory practices at Southwestern Bell, told the company lawyer.

But his refusal to participate in Project X, Hamilton contends, played a big part in his firing--an event that has left the former telephone company manager and his family feeling unprotected and vulnerable.

When interviewed for the Observer story earlier this year, one of Doug Hamilton's supervisors laughed at the mention of Project X. Another said, "I'm not sure what we're talking about here."

But five other Southwestern Bell employees--two of whom had already left the company--confirmed details of Project X in interviews with the Observer.

Hamilton's lawsuit against Southwestern Bell would seem to provide a perfect opportunity for the company to dispel any notions about Project X's existence. If there is no Project X, Hamilton could not possibly have been fired in part, as he claims, for refusing to go along with the policy.

But, significantly, in its court filings relating to Hamilton's lawsuit, Southwestern Bell has yet to deny that Project X existed. Southwestern Bell spokesman Chino Chapa dismisses the significance of the lack of a denial in the company's pleadings. "There is no reason to deny something that does not exist," he says.

Instead the company's lawyers have adopted a more complicated defense. Even if Hamilton's supervisors forced him to participate in Project X, the Bell attorneys have argued, that may have been a violation of Public Utility Commission codes, but not criminal behavior.

Hamilton was therefore not protected, the Southwestern Bell lawyers contend, under the state statutes that forbid employers from firing employees for refusing to engage in illegal behavior.

"Hamilton claimed another manager told him that the PUC of Texas interpreted its regulation requiring 10 days' notice in certain situations in a manner Hamilton felt was inconsistent with SWBT's operations. This belief allegedly led him to conclude that he was being asked to perform an 'unlawful act,'" the Southwestern Bell lawyers wrote in their pleadings. But "Hamilton did not know, and still does not know, if he would be subject to criminal action if he continued to perform the activity, [and] he admits that he did not seek any legal opinion or PUC advice on the subject." The PUC violation, the Southwestern Bell lawyers state, wasn't subject to criminal liability, and therefore Hamilton's firing does not constitute wrongful termination.

In responding to Doug Hamilton's lawsuit, Southwestern Bell speaks to Project X through its silence. But a related development adds further credence to Hamilton's claims, his lawyer believes. Just a few months after Hamilton filed his lawsuit, Southwestern Bell approached the PUC and asked for formal permission to engage in a practice quite similar to the ones Hamilton complained about.

In April 1996, four months after Hamilton filed suit and two months after the Observer published its initial story, Southwestern Bell applied for permission from the PUC to implement new revenue procedures. Specifically, Southwestern Bell applied on April 3, 1996 for a change in its tariff which would have allowed "an internal monitoring process for toll activity on 'at-risk' customer accounts." The company wanted to put a predetermined limit on the long-distance calls made by certain customers, those who Southwestern Bell deemed were unlikely to pay their bills.

"An 'at-risk' customer's toll usage will be accumulated, and when a predefined limit is exceeded, all further toll calling will be restricted until full or partial payment is received," Southwestern Bell's managing director of regulatory matters, Jon R. Loehman, wrote in a letter to Paul Mueller, the secretary to the PUC. If the PUC had approved the proposed tariff change, Southwestern Bell planned to put the program into effect as early as June 1996 in some cities in West Texas, and in Dallas in March 1997.

But the PUC never had the opportunity to approve or disapprove of the proposal. That's because the Office of Public Utility Counsel, the watchdog agency for consumer groups, raised questions in late May 1996 about the proposed tariff change. When the public counsel's office wanted to know how Southwestern Bell intended to define an "unsatisfactory credit risk," the telephone company swiftly--within a matter of days--withdrew its formal request for a change.

"We started asking questions and they just said forget it," recalls Suzi Ray McClellan, the public counsel at the Office of Public Utility Counsel.

From the get-go, the watchdog agency held a skeptical view of Southwestern Bell's policies. Rick Guzman, an assistant to the public counsel in the Office of Public Utility Counsel, had said when he initially heard about Hamilton's allegations regarding Project X: "Sounds like high-tech redlining to me."

Hamilton's lawyer, Larry Boyd, contends that the Southwestern Bell application for the tariff change was tantamount to an acknowledgment that the company wanted to discriminate among customers. Boyd and Hamilton consider the Southwestern Bell request to the PUC as fodder for their case against the company.

Southwestern Bell regulatory affairs director Kirt Hapfinger says the company withdrew the filing because several other proposed amendments to its tariffs--including one to allow customers to select on a voluntary basis to have their toll calls limited--seemed sufficient.

Even if the existence of Project X is ultimately proven, Doug Hamilton still faces a stiff challenge to win his lawsuit against Southwestern Bell. His firing was fraught with questions raised by a complicated series of events including his heroic rescue of a flood victim, his dramatic altercation with a co-worker, and his claim to suffer from Post-Traumatic Stress.

It's been a month and two years since Hamilton took a fateful detour, two blocks from his home on the Highway 80 service road near Town East Boulevard. Hamilton had wanted his wife and children to see the way the overflow rainwater created a dramatic whirlpool when the city failed to close the floodgates, as it did on that stormy night in October 1994.

"You know how it is," Hamilton said, recalling the night for the Observer last year. "Cheap thrills for little kids."

Rather than just showing his kids some waterworks, however, Hamilton ended up saving Elisa Moore, a special education teacher, who had driven her blue 1990 Mustang down the highway ramp and straight into the flood. Moore was stuck in the car when she saw Hamilton, chest-high in the waters, at her window. He somehow pried open the door and let Moore out.

"By the way," Hamilton asked when they made it safely out of the flood waters, "what's your name?" The stunned Moore told him her first name and climbed into the cruiser of the police who had, at that point, arrived at the scene.

The incident made Hamilton--for a short while--a hero. In the weeks following the rescue, Hamilton was nominated for the Vail Prize, Southwestern Bell's highest honor, which carries with it a $5,000 prize. Southwestern Bell even assigned a public relations specialist to drum up news coverage about the rescue. The Dallas Morning News featured a story about the rescue on the front page of its Mesquite edition. "He is a hero in every sense of the word," the Dallas-Fort Worth vice president and general manager of Southwestern Bell told the newspaper.

But two months after that Morning News story ran, Southwestern Bell fired Hamilton from his $47,000-a-year job. He was told he was being dismissed for conduct unbecoming a manager.

In between those events, both sides in the litigation agree, Hamilton blew up at a co-worker.

On November 30, 1994, Hamilton had shouldered the office's workload while a fellow line supervisor took her staff for a Christmas shopping outing. The women had the approval to leave the office for a short while, but Hamilton, who says he was already suffering the effects of trauma and had begun seeing a counselor, grew angry. The women's absence had left Hamilton and his staff overburdened. When the other line supervisor returned, Hamilton let her have it. According to both her and his account, they argued, she pointed her finger in his direction, and he pushed it away.

"Immediately after the altercation, I shut my office door, sat down, and began to weep," the other line supervisor wrote in her affidavit for the company's lawyers. "I was shaking, my face was covered with the beads of saliva from the mouth of Hamilton."

Hamilton conceded even moments after the argument took place that he had been out of line. He went back to the woman's office and said as much. But in his complaint, he alleges that the incident occurred because he was suffering from Post-Traumatic Stress Disorder resulting from the flood rescue. Hamilton, who says he was waking up with flashbacks and nightmares, had already asked to see an employee counselor by the time of the fight with his co-worker. He has a doctor who diagnosed him with the condition.

But the company's lawyers have argued that Hamilton's medical condition did not impair him substantially or qualify him as disabled under federal laws protecting workers with disabilities. They also have a doctor who supports their claim.

The office altercation--and Hamilton's claims of stress related to his heroic rescue--make his lawsuit against Southwestern Bell a sticky one, in which claims about the existence of Project X play only one part. Even if Hamilton's lawyer is able to prove the existence of Project X--or if Southwestern Bell continues to remain silent on its possible existence--Hamilton still may not win his case.

Doug Hamilton is the son of an auto mechanic, the first in his family to graduate from college, and a born-again Christian. He can share moments of extreme optimism. But much of the time, he expresses deep-rooted concerns for his and his family's future.

His wife, Janet, has had good and bad years since discovering in 1986 that she suffers from multiple sclerosis. Recently she has been feeling pretty good, Hamilton says.

In August 1996, the medical insurance coverage he had received as an extension of his policy when he was at Southwestern Bell expired. (Federal law required the company to continue offering coverage to Hamilton for a period after his dismissal.) In its place, Hamilton has bought a patchwork of coverage which costs him a whopping $2,600 a month.

The work Hamilton has found in Chicago is helping cover those enormous bills. But as a consultant, Hamilton is paid only for the hours he works. When he takes time off to attend his trial scheduled for next month, for instance, he will not be paid.

Hamilton is debating these days about whether to take off when the judge has promised his case will be on the docket or to wait until the last minute, when his date is absolutely certain. He is also stewing about the events that have led to his predicament. He and his lawyer, he says, decided after the judge-ordered mediation led to no agreement that either they or the Southwestern Bell lawyers have terribly misjudged the case. "Someone has got something figured wrong," he says.

Hamilton has already been an accidental hero once. It was not his intention to become one again, he says, when he began protesting against Project


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