Black-Owned Equity Firm Can’t Save Its Civil Rights Act Case From Dismissal, Says AT&T

The Aug. 7 opposition of Legacy Equity Advisors to AT&T’s July 17 motion to dismiss (see 2308080037) can’t save its complaint from dismissal, said AT&T’s reply Monday (docket 3:23-cv-00979) in U.S. District Court for Northern Texas in Dallas. The private equity firm alleges AT&T violated Section 1981 of the Civil Rights Act when it blocked the firm from bidding on assets AT&T was divesting, including DirecTV, Cricket Wireless, AT&T’s Puerto Rican wireless operations and a tranche of 88 retail stores, due to the firm’s African American ownership and management.

Legacy’s opposition “makes no meaningful attempt,” nor could it, to explain “how an unsolicited bid for Cricket Wireless can survive when Cricket Wireless was never for sale and is still owned by AT&T today,” said AT&T’s reply. Legacy also tries to turn the law “upside down” by suggesting a “generic statement of interest” by a would-be minority buyer to buy any assets for sale creates “an affirmative duty on a seller to solicit bids from the buyer,” it said.

Beyond its “mischaracterization” of the law, Legacy’s opposition also fails because it can’t overcome the complaint’s “structural defects,” said AT&T’s reply. Missing from the complaint are allegations that Legacy told AT&T it wished to buy specific assets, or that Legacy actually formulated bids for those assets, including the terms, it said.

Legacy’s complaint also fails to allege it had the necessary qualifications and industry experience necessary to buy those assets, including AT&T operations in Spanish- and Portuguese-speaking countries, said AT&T’s reply. The complaint also fails to allege how AT&T’s conduct “was a but-for cause of any injuries,” it said.

Legacy’s remaining “core allegation” and “lynchpin” claim over the 88 retail stores “fares no better,” said AT&T’s reply. If AT&T didn’t want to contract with minority-owned businesses, Legacy can’t explain why AT&T, when it rejected the unsolicited offer to buy Cricket Wireless, allegedly for racist reasons, then immediately invited Legacy to bid on other assets, and spent months “negotiating and conducting due diligence on these assets,” it said. Legacy also can’t explain why AT&T ultimately accepted Legacy’s $31 million bid for those assets if it were guilty of Section 1981 violations, it said: “Legacy’s allegations make no sense.”

Legacy’s other attempts at "resuscitating" its complaint “are equally unpersuasive,” said AT&T’s reply. The alleged statement of AT&T executive Chris Cass, telling Legacy’s leaders he had no confidence that African American equity firms could raise the financing necessary to participate in big-money deals, “is not direct evidence of discrimination,” it said.

Direct evidence “is a high bar, requiring a showing that a statement of the decision-maker reflects a discriminatory motive on its face, without inference or presumption,” said AT&T’s reply. Legacy’s own complaint admits it didn’t initially view Cass’ alleged remarks as discriminatory when made, “negating any suggestion the remarks were discriminatory on their face,” it said.

Legacy’s complaint fails to plead discriminatory intent by any decision-maker, a “defect” that can’t be cured by “newly pleaded facts” in its opposition, said AT&T’s reply. The complaint also fails to allege any intentional discrimination “was a but-for cause of injury, as required by the U.S. Supreme Court,” it said.

Legacy is wrong in suggesting the 5th Circuit’s 2019 decision in Cicalese v. University of Texas Medical Division or any other case “has created a new, reduced pleading standard for discrimination cases,” said AT&T's reply. Cicalese said an employer’s stray remarks about an Italian employee’s “stupidity” were enough for a demoted plaintiff to plead a Title VII discrimination claim that could withstand a motion to dismiss.

Legacy’s opposition to AT&T’s statute of limitations defenses “also lack merit,” said AT&T’s reply. Legacy tethers its claims to a March 2022 date, it said. That despite pleading that its bid for Cricket Wireless was rejected years earlier in 2019 and the “undisputed publicly available sale date” for the Puerto Rico wireless division was December 2019, it said: “These claims are time-barred.”