US Chamber Urges 7th Circuit to Grant T-Mobile’s Petition for Interlocutory Review

The 7th U.S. Circuit Court of Appeals should grant T-Mobile’s petition for interlocutory review of the district court’s denial of its motion to dismiss the antitrust claims of seven AT&T and Verizon customers who allege their own wireless rates soared as a result of T-Mobile’s 2020 Sprint buy (see 2404090059), said the U.S. Chamber of Commerce in an amicus brief Wednesday (docket 24-8013).

The chamber and its members have a strong interest in this case because its members are frequently named as defendants in antitrust suits, said the brief. Those members have an interest in ensuring that federal courts “adhere to the plausibility standard” in the U.S. Supreme Court’s 2007 decision in Bell Atlantic v. Twombly, it said.

It wasn’t the first time in the case that the chamber came to T-Mobile’s defense. The chamber’s Dec. 6 amicus brief supported T-Mobile’s motion to certify for interlocutory appeal of the court’s denial of the motion to dismiss in which it warned against “permitting antitrust claims based on attenuated and speculative allegations to proceed” (see 2312070029). U.S. District Judge Thomas Durkin for Northern Illinois in Chicago granted T-Mobile’s motion to certify in his March 27 order (see 2403280027).

As the district court itself recognized, its decision involves a “controlling and debatable question of law” -- how district courts should apply Twombly to standing in antitrust cases brought by a competitor’s consumers, said the brief. Twombly requires a plaintiff to allege facts that raise a right to relief above the speculative level, it said. For antitrust claims, a plaintiff can’t show a right to relief “without making plausible allegations of a direct harm proximately caused by the alleged antitrust violation,” it said.

Whether the AT&T and Verizon plaintiffs’ allegations of harm based on a competitor’s increased prices meet this standard, especially in light of Twombly’s dismissal of allegations with an obvious alternative explanation, “is at least a debatable question,” said the brief. This case "should be over" if the plaintiffs’ allegations aren’t enough, it said.

The unusually high cost of discovery in antitrust cases “demands rigorous enforcement of pleading standards,” said the brief. Once a claim has survived a motion to dismiss, these litigation costs might force a defendant to settle even "anemic" cases, it said. The pressure to settle “is made worse in cases like this one by the prospect of treble damages on behalf of a nationwide class,” it said.

These pressures should be “especially concerning” when antitrust standing is at issue, said the brief. Too lax an approach would allow plaintiffs “to create pressure for a substantial settlement without even plausibly alleging a statutorily cognizable harm,” it said. Since antitrust plaintiffs can rely on “unusually generous venue provisions,” they will often be able to sue in a district “that makes surviving a motion to dismiss -- and creating pressure to settle -- easiest,” it said.

For antitrust cases like this one, the plaintiffs must ultimately show that T-Mobile engaged in anticompetitive conduct that caused them “direct harm,” said the brief. At the pleading stage, Twombly requires the plaintiffs “to plausibly allege both unlawful conduct and direct harm proximately caused by the alleged antitrust violation,” it said.

The plaintiffs attempt to meet this burden by alleging that reduced competition caused by T-Mobile’s Sprint buy allowed AT&T and Verizon to raise their prices, even though two federal judges, DOJ and the FCC already concluded that the combination didn’t “run afoul of the law,” said the brief. The plaintiffs’ “bare allegations of harm” are undermined by each of those final judgments, it said.

The plaintiffs’ reliance on competitors’ increased prices, and alleged harm to competitors’ customers, “raises an important and contestable question,” said the brief. Twombly instructs that a plaintiff can’t “push his claim across the line from possible to plausible” when there’s an obvious alternative explanation for the alleged conduct, it said.

Here, there are “alternative explanations” for AT&T’s and Verizon’s price increases “that have nothing to do with the merger,” said the brief. “They could have raised their prices due to supply-chain disruptions during the COVID-19 pandemic, changes in demand, inflation, product development costs, or myriad other reasons,” it said.

Yet the district court “rejected these possibilities based on allegations that AT&T and Verizon were not as responsive to prices after the deal was announced and then increased their respective prices in 2022,” said the brief. No decision from the 7th Circuit “answers whether an antitrust plaintiff can establish standing based on a competitor’s increased price,” it said.

It’s “debatable” whether the plaintiffs’ allegations “plausibly show that the merger itself proximately caused the third parties to raise their prices, as opposed to independent third-party business and pricing decisions after the merger was concluded,” said the brief. The 7th Circuit should grant review, “and clarify how the Twombly standard applies in these circumstances,” it said.