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From Antitrust Law Daily, May 20, 2014

Conspiracy claims against wireless carriers over text message pricing fail

By Jeffrey May, J.D.

Four of the nation's largest wireless carriers would not have conspired to fix the price of pay-per-use (PPU) text messages based on evidence raised by complaining customers, the federal district court in Chicago has ruled. Defendants T-Mobile, Sprint, AT&T, Verizon, and the wireless trade association CTIA, were entitled to summary judgment on the consumers’ antitrust claims (In re: Text Messaging Antitrust Litigation, May 19, 2014, Kennelly, M.).

Direct evidence. There was no direct evidence of a price fixing conspiracy, the court ruled. An e-mail exchange between T-Mobile employees, in which one employee referred to a price increase as “collusive,” was not the “smoking gun” that the plaintiffs suggested it was. The record did not reflect that the employee who sent the e-mail had knowledge or involvement in pricing decisions such that his statement constituted an admission, the court explained.

Circumstantial evidence. The plaintiffs' circumstantial evidence also did not reasonably tend to rule out the possibility that the defendants raised their PPU text message prices for independent reasons, the court ruled. According to the plaintiffs, high-level officers of the carriers devised the price increases in concert, using CTIA meetings as a venue for their discussions, and concocted sham internal analyses to justify the pricing moves.

Although the plaintiffs’ allegations of parallel price increases with CTIA as a go-between made their complaint sufficiently plausible to proceed past a motion to dismiss, the evidence collected in discovery was inadequate to sustain a dispute of material fact for trial, the court ruled. The U.S. Court of Appeals in Chicago had held in a December 2010 opinion (2010-2 Trade Cases ¶77,281) that the complaint alleged a conspiracy based on parallel behavior with sufficient plausibility to satisfy the pleading standard of Bell Atlantic Corp. v. Twombly.

“Plaintiffs' theory . . . requires the inference of a vast, multifaceted, highly coordinated conspiracy dedicated to creating a Potemkin village of seemingly independent analyses to lend paper support to each collusive pricing move,” according to the court. “This inference is unreasonable and unsupported, and no reasonable jury could find in favor of plaintiffs on the basis of the evidence.”

The court considered each of the plaintiffs' categories of evidence, such as opportunity to conspire, alleged “lockstep” pricing decisions, and other “plus factors,” in isolation, and in the aggregate. According to the court, the evidence merely showed that several wireless carriers increased their PPU text messaging prices at varying times, following internal studies and debates about each increase, while occasionally interacting with competitors at trade association meetings or elsewhere. Even adding the “smoking-gun” e-mail to the mix did not change anything, in the court's view, given the sender's lack of knowledge of, or participation in, any potential conspiracy. Because the evidence did not give rise to a genuine dispute about whether the defendants conspired to fix prices, the court granted summary judgment in favor of the defendants.

Spoliation. Before granting summary judgment to the defendants, the court rejected the plaintiffs’ argument that T-Mobile and CTIA destroyed material and relevant evidence, warranting a jury instruction that the missing evidence would have been unfavorable to these defendants. The court declined to impose spoliation sanctions against T-Mobile for the deletion of the email “that precede[d] a direct admission” or the eleventh hour reappearance of some, but not all, of an employee's notebooks. The court also refused to impose sanctions on CTIA, based on the association's alleged “wholesale spoliation of documents connected to the CTIA executive who facilitated the price-fixing conspiracy” and its failure to preserve the minutes of meetings and phone calls between the carrier defendants. The plaintiffs did not establish bad faith or that evidence was intentionally destroyed for the purpose of concealing negative information.

The case is No. 08 C 7082 (MDL No. 1997).

Attorneys: Fred T Isquith (Wolf Haldenstein Adler Freeman & Herz LLP) and Joe R. Whatley, Jr. (Whatley Kallas, LLP) for plaintiffs. Dan K. Webb (Winston & Strawn LLP) for Verizon Wireless. Christopher B. Hockett (Davis Polk & Wardwell) for T-Mobile USA, Inc. Dane H. Butswinkas (Williams & Connolly LLP) for Sprint Nextel Corp. Brian A McAleenan (Sidley Austin LLP) for AT&T Mobility LLC. Julia D. Riedel Emfinger (Greenberg Traurig, LLP) for CTIA-The Wireless Assn.

Companies: Verizon Wireless; T-Mobile USA, Inc.; Sprint Nextel Corp.; AT&T Mobility LLC; CTIA-The Wireless Assn.

MainStory: TopStory Antitrust IllinoisNews

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