Favorable 7th Circuit Decision Would ‘Stave Off’ Burdensome Trial, Discovery, Says T-Mobile

The federal antitrust laws strictly limit who may bring damages claims to only those injured directly by anticompetitive behavior, said T-Mobile’s petition for interlocutory review Monday (docket 24-8013) in the 7th U.S. Circuit Court of Appeals.

T-Mobile is seeking to reverse U.S. District Judge Thomas Durkin’s Nov. 2 denial of its motion to dismiss the claims of seven AT&T and Verizon customers who allege that T-Mobile’s 2020 Sprint buy caused their own wireless rates to soar (see 2311030011). Durkin’s March 27 order granted T-Mobile’s motion to certify for interlocutory appeal his Nov. 2 denial to the 7th Circuit (see 2403280027). Durkin said in his certification order that he believes his interpretation of the relevant standards was the most "reasonable," but there's "plenty of room for debate."

Courts have long relied on the “proximate-cause limitation” to establish antitrust standing “to prevent infinitely elastic theories of antitrust liability from unleashing costly and unwarranted discovery,” said T-Mobile’s petition. Durkin’s Nov. 2 denial “broke with that precedent,” it said.

Durkin decided in his denial that the plaintiffs “had plausibly alleged in their complaint that T-Mobile's merger proximately caused AT&T's and Verizon's claimed price increases and had therefore established antitrust standing,” said T-Mobile’s petition. Until that decision, “no court had ever held that a merger can be challenged by customers of the merged defendant’s competitors, much less that allegations of the competitors’ post-merger pricing decisions are enough to plead standing,” it said.

The antitrust-standing question “is a pure and controlling question of law,” said T-Mobile’s petition. If the 7th Circuit agrees with T-Mobile, “that would end the case, eliminating the need for discovery and trial,” it said. The litigation is “certain to be burdensome for the parties, dozens of nonparties, and the judiciary,” it said. The plaintiffs are seeking to “unwind the combined network and business assets of a long-ago consummated merger and recover billions of dollars in treble damages on behalf of nonparties AT&T’s and Verizon’s wireless subscribers,” it said.

As Durkin’s March 27 certification order recognized, the 7th Circuit “has yet to squarely address antitrust standing in this setting,” said T-Mobile’s petition. This case presents an “ideal opportunity” for the 7th Circuit to do so, it said.

The absence of support for the plaintiffs’ standing theory is “unsurprising,” said T-Mobile’s petition. The U.S. Supreme Court has consistently held that tenuous and speculative connections between the alleged antitrust violation and the plaintiff’s alleged injury are insufficient to establish antitrust standing, it said. Plaintiffs must instead show that their injuries resulted directly from the alleged anticompetitive conduct, it said.

Applying that proximate-cause standard, lower courts have consistently rejected attempts to establish antitrust standing “based on injuries flowing from third parties’ conduct,” said T-Mobile’s petition. The plaintiffs’ theory of antitrust standing is also impossible to reconcile with Supreme Court case law requiring plaintiffs to allege plausible, not merely possible, claims to survive a motion to dismiss, it said.

The plaintiffs’ theory is “entirely speculative,” said T-Mobile’s petition. Durkin’s ruling permitting those “tenuous” allegations to survive a motion to dismiss “opens the door to challenges” in the 7th Circuit to any completed combination “based on competitors’ causally unconnected post-merger price increases," which, in an inflationary environment such as this, “are likely to be common across a range of industries,” it said.

Section 1292(b) was designed to ensure the availability of appellate review “in just this type of case,” said T-Mobile’s petition. The case presents an important legal question that, if decided in the defendant’s favor, “would end the litigation and stave off enormous discovery burdens,” it said. The 7th Circuit should grant the petition, it said.