T-Mobile Seeks Interlocutory Appeal of Denial of Its Motion to Dismiss T-Mobile/Sprint Case

Interlocutory review is designed to address “consequential, unsettled questions of law that can meaningfully change the trajectory of important, resource-intensive cases,” said T-Mobile’s memorandum of law Tuesday (docket 1:22-cv-03189) in U.S. District Court for Northern Illinois in Chicago in support of its motion to certify the court’s Nov. 2 denial of T-Mobile’s motion to dismiss for interlocutory appeal to the 7th U.S. Circuit Court of Appeals.

The case involves seven consumer plaintiffs who seek to vacate T-Mobile’s 2020 Sprint buy on antitrust grounds (see 2212060052). The plaintiffs, all AT&T or Verizon customers, allege the anticompetitive nature of the T-Mobile/Sprint transaction caused their own wireless rates to soar. In denying the T-Mobile-SoftBank 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 (see 2311030011).

Durkin’s order raises the question of whether AT&T and Verizon customers have “antitrust standing” to challenge T-Mobile/Sprint, said T-Mobile’s memorandum. 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.

Discovery and trial both are “certain to be burdensome” for the court and parties alike in a case where the plaintiffs are seeking billions of dollars in damages on behalf of all Verizon and AT&T wireless subscribers, "who account for the majority of the country’s adult population,” said the memorandum. The plaintiffs oppose the motion to certify Durkin’s order for interlocutory appeal, said T-Mobile.

Whether the plaintiffs have standing to challenge T-Mobile/Sprint “is also a question on which courts could reasonably disagree,” said the memorandum. It’s also a question on which the 7th Circuit, unlike other courts of appeals, “has yet to provide clear guidance under the more stringent pleading standards” of the U.S. Supreme Court’s 2007 decision in Bell Atlantic Corp. v. Twombly, it said.

The plaintiffs’ “expansive conception” of antitrust standing is “unprecedented,” said the memorandum. “No court has ever ruled that plaintiffs may challenge a defendant’s merger as anticompetitive based on alleged injuries attributable to the decisions of the defendant’s competitors to increase their own prices after the merger,” it said.

Such an “attenuated theory” of antitrust standing “runs headlong” into SCOTUS decisions holding that tenuous and speculative connections between the alleged antitrust violation and the plaintiff’s alleged injury “are insufficient to satisfy the proximate-cause requirement of antitrust standing,” said the memorandum. The plaintiffs must instead show that their injuries resulted directly from the alleged anticompetitive conduct, it said.

The plaintiffs’ “multi-step theory” of antitrust standing “is also impossible to reconcile” with SCOTUS case law requiring plaintiffs to allege plausible, not merely possible, claims to survive a motion to dismiss, said the memorandum. The plaintiffs allege that they should be permitted to recover from T-Mobile because AT&T and Verizon have charged higher prices for nationwide wireless plans as a result of T-Mobile/Sprint, it said.

But the merger was approved after extensive scrutiny by federal and state regulators and a federal district court in New York, said the memorandum. The transaction also is subject to “multiple years of ongoing court-appointed monitoring,” it said.

There are many other possible explanations for the wireless price increases, including inflation and “massive investment in network improvements,” said the memorandum. The plaintiffs’ theory “calls for a return to the bygone era of notice pleading, when speculative allegations of a supposed causal link between the defendant’s conduct and the plaintiff’s claimed harm may have been enough to state a claim,” it said.

Worse still, that theory “would permit challenges to any completed merger on the basis of competitors’ postmerger price increases,” said the memorandum. The antitrust laws shouldn’t be interpreted “in a way that encourages price hikes by companies seeking to foment challenges to a competitor’s merger,” it said.

The 7th Circuit has yet to “squarely address such a boundless theory of antitrust standing,” said the memorandum. Since Twombly was decided in 2007, the 7th Circuit also has had no chance “to apply the proximate-causation requirement to assess the sufficiency of standing allegations by plaintiffs who do no business with a defendant,” it said. This case presents the 7th Circuit with “an ideal opportunity for it to do so,” it said.

Without certifying the Nov. 2 order for interlocutory appeal, T-Mobile and third parties will be compelled to incur the potentially enormous expense of discovery common to other major antitrust class actions, said the memorandum. The court “will doubtless be asked to resolve time-consuming discovery disputes that an interlocutory appeal may render unnecessary,” it said.