Supreme Court hears telco anti-trust arguments

November 28, 2006

Remember Bell Atlantic? They were subsumed into Verizon in 2000, when Bell Atlantic bought GTE and the new company was renamed Verizon.

But even though that was six years ago,that doesn't mean they have vanished from the legal landscape.

Yesterday, the U.S. Supreme Court heard oral arguments in the case of Bell Atlantic Corporation v. Twombly. The class-action lawsuit alleges that ISPs and phone companies violated Sherman Act antitrust statutes after the breakup of "the old" AT&T in the early 1980s. The complaint specifies that these transgressions occurred when service providers blocked local competitors from their service areas- and by doing so- created the illusion of non-competition.

The US District Court for the Southern District of New York dismissed the complaint for failure to state a claim, but the US Court of Appeals for the Second Circuit vacated the judgment and remanded, finding Twombly's pleading sufficient.

The core issue is whether a complaint of Sherman Act antitrust violations must be accmpanied by specific facts that indicate conspiratorial conduct, or whether a conspiracy may be inferred by similar but perhaps unrelated conduct by one or more parties.

Yesterday, Twombly's lawyers maintained that the standard of specifics would doom any anti-trust cases not boosted by specific discuvery. The defendants argued that a lower standard would encourage frivolous lawsuits.

A possible indicator of the Supreme Court's skepticism toward the Twombly argument came from a Justice often thought to represent the Court's "liberal" wing.

Justice Stephen Breyer said that a lower standard would allow plaintiffs to "sue half the firms in the economy."