District Judge’s Dismissal of Antitrust Complaint Was ‘Particularly Egregious,’ Says Smart

The Nov. 1 decision of the U.S. District Court for Middle Pennsylvania in Harrisburg dismissing Smart Communications’ Sherman Act antitrust claims against Global TelLink (GTL) and York County Prison in Pennsylvania came about because the court “consistently misread” Smart’s complaint, said Smart’s attorney, Phillip Closius of Silverman Thompson, in oral argument Thursday before the 3rd U.S. Circuit Court of Appeals.

Plaintiff-appellant Smart alleges that GTL and the prison colluded to deny Smart the contract the prison told the company it would be awarded to provide inmate calling services on much better terms than GTL was offering (see 2212070047). Smart’s appeal seeks the 3rd Circuit’s reversal of the district court's dismissal of the complaint, and to remand the case for further proceedings.

U.S. District Judge Jennifer Wilson’s order wrongly “characterizes specific allegations as general and conclusory,” and it also adopts “a factual scenario that’s not supported by the facts,” said Closius. “This is particularly egregious in the context of a motion to dismiss, when all benefits of the doubt should be going to the complaint and the plaintiffs,” he said.

Smart “engaged in good-faith negotiations” with York County and was told “repeatedly that we had the contract,” said Closius. Smart then “suddenly found out” that the county executed a deal with GTL, and that “we were out of it,” he said. “We did not voluntarily walk away,” he said. “We were excluded.”

If GTL and York County Prison had executed a new agreement for two years at will, “like the prior 16 years of agreements” between them, instead of the seven-year term they agreed on,“we would not be in this court, and there would not be an antitrust violation,” said Closius. “The antitrust laws are pretty clear that how you do something matters,” he said. “They excluded other competitors for seven years in this agreement,” he said. “Under the 16-year prior practice, you would get your shot at going in to bid every two years.”

The 3rd Circuit should affirm Wilson’s dismissal of Smart’s Sherman Act claims “for two separate reasons,” countered GTL attorney Brian Feeney of Greenberg Traurig. Smart “has not alleged that it suffered an antitrust injury, and thus it lacks antitrust standing,” he said. Smart also didn’t plead “a cognizable relevant market” in its complaint, he said.

There’s “no antitrust injury here,” said Feeney. “Smart’s response to that is that others are injured,” he said. It argues that the inmates and their families were injured by having to pay higher per-minute call rates under the GTL contract than they would have under a Smart agreement, he said. “There’s no allegation of an antitrust injury that Smart incurred,” he said.

Smart’s “only injury really is that it engaged in a contract negotiation, and at the end of the day, it did not secure the contract,” said Feeney. “The law is clear that if you get in there and compete and you don’t win the exclusive contract, you don’t incur antitrust injury,” he said. On Closius’ argument that there’s “a distinction to be drawn” between walking away from a contract and being denied that contract, that really isn’t “an important or relevant distinction,” said Feeney.