U.S. Cellular sued by shareholder over fees to parent

U.S. Cellular Corp., the nation's fifth-largest wireless carrier, was sued by an investor alleging its board failed to provide proper oversight of more than $900 million in fees paid to parent Telephone & Data Systems Inc.

The Monroe County, Michigan, Employees' Retirement System contends the service payments, made since 1993, are unfair and asks a judge to rule that Telephone & Data was unjustly enriched and award unspecified damages to U.S. Cellular.

"The directors of U.S. Cellular have never reviewed the terms on which these payments are made" and no one "has exercised a business judgment as to whether such payments were necessary," lawyers for the pension fund said in Delaware Chancery Court papers made public today in Wilmington.

U.S. Cellular, with $4.24 billion in sales last year, is 81 percent owned by Telephone & Data, which is run by the Carlson family. Leroy T. Carlson Jr. is chairman of Chicago- based U.S. Cellular and chief executive officer of Telephone & Data.

The fees include payments for accounting, human resources and other administrative expenses "on terms unilaterally set by Telephone & Data," according to the complaint.

Mark Steinkrauss, a spokesman for Chicago-based Telephone & Data, didn't immediately return phone and e-mail messages seeking comment on the lawsuit.

Telephone & Data, with $5.09 billion in sales last year, rose 66 cents, or 2.2 percent, to $30.47 in New York Stock Exchange composite trading at 2:12 p.m. U.S. Cellular rose 77 cents, or 1.9 percent, to $40.97.

The case is Monroe County Employees' Retirement System v. Leroy T. Carlson, CA4587, Delaware Chancery Court (Wilmington).