Appellate Court Ends Text Message Price-Fixing Class Action MDL

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A text message price-fixing class action lawsuit multidistrict litigation (MDL) filed against T-Mobile USA Inc., Sprint Corp., AT&T Mobility LLC and Verizon Wireless LLC will not be revived by the Seventh Circuit Court of Appeals.

The three judge panel in the appellate court said that the revelation of emails, which allegedly show the price fixing scheme was not sufficient evidence.

The judges say that “what is missing . . . is the smoking gun in a price-fixing case: direct evidence, which would usually take the form of an admission by an employee of one of the conspirators, that officials of the defendants had met and agreed explicitly on the terms of a conspiracy to raise price.”

The plaintiffs claim the “smoking gun” is emails between T-Mobile executives Adrian Hurditch and Lisa Roddy.

“It is apparent from the emails that Hurditch disagreed with his firm’s policy of raising the price of its text messaging service,” the panel wrote about the price-fixing class action lawsuit.

The three judge panel agreed with the lower court that the emails did not amount to a conspiracy between the various carriers.

According to court documents, text messaging prices increased from 10 cents to 20 cents for the four carriers accused of price-fixing over three years.

Hurditch had called the text messaging price increases “‘nothing more than a price gouge on consumers . . . . It’s not like we’ve had an increase in the cost to carry message to justify this . . . . I know the other guys are doing it but that doesn’t mean we have to follow,'” according to an email he sent in May 2008.

In an email from September 2008, after a congressional investigation began into “alleged price gouging,” Hurditch wrote “that ‘at the end of the day we know there is no higher cost associated with messaging. The move [the latest price increase by T-Mobile] was colusive [sic] and opportunistic.”

The judges explain that “the misspelled ‘collusive’ is the heart of the plaintiffs’ case,” in which they claim that “‘Hurditch’s statement that the price increases were collusive is thus dispositive. Hurditch’s statement is a party admission and co-conspirator statement.'”

However, the panel disagrees with the conclusion the plaintiffs reached regarding the emails.

“The plaintiffs’ counsel demonstrate a failure to understand the fundamental distinction between express and tacit collusion,” the appellate court judges explain. “Express collusion violates antitrust law; tacit collusion does not. There is nothing to suggest that Hurditch was referring to (or accusing his company of) express collusion.

“In fact the first email rather clearly refers to tacit collusion; for if Hurditch had thought that his company had agreed with its competitors to raise prices he wouldn’t have said ‘I know the other guys are doing it but that doesn’t mean we have to follow,'” the panel explains.

If there was a conspiracy, “they would have had to follow, or at least they would be under great pressure to follow, if they had agreed to follow.”

The appellate court concludes that “nothing in any of Hurditch’s emails suggest that he believed there was a conspiracy among the carriers.”

The court also said that while the plaintiffs said that the fact that Hurditch asked Roddy to delete emails amounted to some sort of admission of guilt, but it’s really more “consistent with his not wanted to be detected by his superiors criticizing their management of the company.”

“It’s a mystery to us that the plaintiffs have placed such weight on those emails, thereby wasting space in their briefs that might have been better used. The plaintiffs greatly exaggerate the significance of the emails, but apart from the emails the circumstantial evidence that they cite provides insufficient support for the charge of express collusion,” the panel wrote about the text-messaging price-fixing class action lawsuit MDL.

“We hope this opinion will help lawyers understand the risks of invoking ‘collusion’ without being precise about what they mean,” they add.

The ruling was made by U.S. Circuit Judges Diane Pamela Wood, Richard Posner and John Daniel Tinder. The decision was written by Posner.

Plaintiffs are represented by Patrick J. Coughlin, David W. Mitchell, Steven F. Hubachek, Randi D. Bandman, Steven M. Jodlowski, Vincent M. Serra and Lonnie A. Browne ofRobbins Geller Rudman & Dowd LLP, Marvin A. Miller and Lori A. Fanning of Miller Law LLC, Mary Jane Fait of Law Offices of Mary Jane Fait and Fred Isquith and Thomas H. Burt ofWolf Haldenstein Adler Freeman & Herz LLP.

AT&T is represented by David W. Carpenter, John W. Treece, Linton J. Childs and Brian A. McAleenan of Sidley Austin LLP. Verizon is represented by Aaron M. Panner of Kellogg Huber Hansen Todd Evans & Figel PLLC, and Dan Webb and Tom Frederick of Winston & Strawn LLP. T-Mobile is represented by Charles H.R. Peters of Schiff Hardin LLP, and Christopher B. Hockett, Sandra West Neukom and Micah Block of Davis Polk & Wardwell LLP. Sprint is represented by John E. Schmidtlein of Williams & Connolly LLP, and Frederic R. Klein of Goldberg Kohn Ltd. CTIA – The Wireless Association is represented by Ruth A. Bahe-Jachna of Greenberg Traurig LLP.

The Text Message Price-Fixing Class Action Lawsuit MDL is In Re: Text Messaging Antitrust Litigation, Aircraft Check Services Co. et al. v. Verizon Wireless et al., Case No. 14-2301, in the U.S. Court of Appeals for the Seventh Circuit.