In re Text Messaging Antitrust Litigation

The plaintiffs filed a class action suit, alleging that AT&T, Verizon, Sprint, and T-Mobile (carriers) and a trade association to which they belonged (collectively defendants) conspired to fix text messaging prices in violation of the Sherman Act. The carriers supplied 90 percent of the text messaging service in the country and exchanged pricing information at their trade association meetings. The plaintiffs presented evidence that the carriers uniformly changed pricing structures to encourage volume-based discounts. The plaintiffs also presented evidence that the carriers increased their prices for price per use (PPU) text messages despite the fact that the cost of providing text messaging services had decreased. Although the plaintiffs’ complaint did not contain direct evidence of price fixing, the district court denied the carriers’ motion to dismiss for failure to state a claim. The carriers appealed. The United States Court of Appeals for the Seventh Circuit affirmed, finding that circumstantial evidence of the conspiracy was sufficient to support the plaintiffs’ claim. To withstand a motion to dismiss, an antitrust complaint need only state a plausible claim of price fixing. Any actual price fixing could be revealed during discovery. After discovery, the plaintiffs produced an email from one T-Mobile executive to another stating that the company’s text messaging price increase “was colusive [sic] and opportunistic,” which they claimed was evidence of deliberate collusion. The carriers argued that they engaged in merely tacit collusion. The district court granted the carriers’ motion for summary judgment. The plaintiffs appealed.