Supreme Court Dismisses Twombly Suit

Citing a lack of specifics, the Supreme Court has dismissed what stood to be the most important antitrust case in 20 years.

Judges on Monday voted 7-2 to reject the Bell Atlantic (Verizon Communications Inc., Qwest Communications International Inc., SBC Communications Inc. and BellSouth Corp.) v. Twombly suit.

In a memo to clients, lawyers for Morrison & Foerster a firm with a telecommunications practice said the decision is important because it significantly limits plaintiffs’ ability to bring speculative antitrust claims. Indeed, experts previously had agreed that the likelihood of the justices siding with Twombly was slim because of what that would mean for all antitrust lawsuits in the United States a free-for-all evocative of the tobacco lawsuits of the late 1990s.

By dismissing the case, the court raised the pleading standards for plaintiffs alleging conspiracies among companies, Morrison & Foerster lawyers noted.

Independent analyst Victor Schnee, founder of Probe Associates Financial Inc., agreed.

I wasnt real optimistic that they were going to prevail, he said.

That was because the plaintiffs had to prove that the Bells had agreed not to compete in one anothers territories, a difficult task in a market dominated by a few large suppliers.

In 2003, William Twombly, a U.S. citizen, filed his suit with the help of Milberg Weiss Bershad & Schulman LLP, a law firm notorious for bringing securities class-action lawsuits against corporations. Milberg Weiss also has been indicted for fraud and bribery, and its motivations for filing cases often are questioned.

Twombly alleged the Bell companies (reduced from seven to three since the case hit the dockets) illegally conspired to prevent competitors from entering their territories after Congress passed the 1996 Telecom Act. Twombly who filed on behalf of everyone in the continental United States who bought Internet access and local telephone service from February 1996 to the present also accused the Bells of agreeing not to compete in each others markets.

The case has been through several courts after different judges disagreed on the nitty-gritty details. In essence, the Supreme Court had to decide whether there was enough evidence of intentional agreement not to compete to allow the case to proceed, which would mean returning it to a district court for trial or settlement.

Morrison & Foerster said the Supreme Courts decision now plainly instructs the lower courts stringently to apply the standards articulated in Twombly in future antitrust cases.

Plaintiffs could compile a new lawsuit but its unclear whether lawyers working for contingency fees would be willing to take on such a case again.

Verizon Communications Inc. was the sole Bell company to issue a statement regarding the justices dismissal of the suit. The carrier said the outcome only benefits consumers.

Morrison & Foerster www.mofo.com
Probe Financial Associates Inc. www.probefin.com
Qwest Communications International Inc. www.qwest.com
SBC Communications Inc. www.att.com
Verizon Communications Inc. www.verizon.com