T-Mobile’s Interlocutory Appeal Would Fend Off ‘Costly Discovery,’ Says Chamber

The U.S. Chamber of Commerce supports T-Mobile’s Nov. 28 motion to certify the court’s Nov. 2 denial of T-Mobile’s motion to dismiss the T-Mobile/Sprint antitrust class action for interlocutory appeal to the 7th Circuit U.S. Court of Appeals (see 2311290042), said the Chamber’s amicus brief Wednesday (docket 1:22-cv-03189) in U.S. District Court for Northern Illinois in Chicago.

The Chamber believes that fair and equitable enforcement of the Sherman Act and the Clayton Act “is good for business” because it promotes fair competition, which is “at the heart of a market economy,” the brief said. But in the Chamber’s experience, those goals “are undermined by permitting antitrust claims based on attenuated and speculative allegations to proceed,” it added.

Discovery in such lawsuits “is typically burdensome and enormously expensive, and rarely yields any actual evidence of an antitrust violation,” said the brief. “Worse, the cost of such discovery frequently drives defendants to settle meritless cases,” it said.

The case involves seven consumer plaintiffs who seek to vacate T-Mobile’s 2020 Sprint buy on antitrust grounds. All AT&T or Verizon customers, the plaintiffs allege the T-Mobile/Sprint transaction's anticompetitive nature caused their wireless rates to soar.

In denying the T-Mobile motion to dismiss, U.S. District Judge Thomas Durkin found that T-Mobile/Sprint likely “exacerbated the risk of price coordination” in the wireless market space, thereby reducing competition among all the carriers. But T-Mobile said Durkin’s denial raises the question whether AT&T and Verizon customers have antitrust standing to challenge T-Mobile/Sprint. That’s a “pure and potentially case-dispositive question of law,” it said. If the 7th Circuit agrees with T-Mobile, “that would end the case, eliminating the need for discovery and trial,” it said.

Lawsuits like this can “stifle” rather than promote competition “by forcing companies to spend money on litigation costs that would otherwise be put to productive use,” said the Chamber’s brief. The Chamber and its members “have a strong interest in this case,” it said, as members “are frequently named as defendants in civil suits, including antitrust suits,” said the brief. Its members have an interest in ensuring that federal courts “adhere to the plausibility standard” established in the U.S. Supreme Court’s 2007 decision in Bell Atlantic v. Twombly, it said. That standard protects businesses by ensuring that they won’t face “costly discovery unless plaintiffs can plead facts plausibly demonstrating their entitlement to relief and by deterring forum-shopping,” it said.

The plausibility standard also protects the U.S. court system “by preventing its resources from being overwhelmed by frivolous litigation,” the brief added. Adherence to Twombly is particularly important in antitrust cases like this one, “in which denial of a motion to dismiss based on flimsy allegations could open the door to extraordinarily broad discovery,” it said.

Durkin should grant T-Mobile’s motion to certify because his denial of T-Mobile’s motion to dismiss “involves a controlling and debatable question of law,” said the brief. That question involves how district courts should apply Twombly to standing in antitrust cases brought by a competitor’s consumers, it said. 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,” said the brief. Whether the plaintiffs’ allegations of harm based on a competitor’s increased prices meet this standard is debatable, especially in light of Twombly’s dismissal of allegations with an obvious alternative explanation, it said. This case should be over if the plaintiffs’ allegations aren’t enough, it said.

“The question is important too,” said the brief. As Twombly noted, the unusually high cost of discovery in antitrust cases demands rigorous enforcement of pleading standards, it said. Once a claim has survived a motion to dismiss, these litigation costs might force a defendant to settle even anemic cases, it added.

The pressure to settle “is made worse in cases like this one by the prospect of treble damages on behalf of a nationwide class,” said the brief. These pressures “should be especially concerning when antitrust standing is at issue,” it said. 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,” said the brief. The Chamber suggests that granting the motion to certify would be “beneficial and appropriate” not only to the court’s resolution of this case but also “to other courts’ resolution of similar suits filed in the future."