United States: Court Rules For Wireless Carriers In Text Message Price Fixing Case

An Illinois federal judge has granted summary judgment to the defendant wireless carriers in the controversial text message price fixing case. The court found that, notwithstanding inflammatory employee emails, available opportunities to collude, parallel price increases, and expert testimony, the evidence did not meet the requirement of tending to show collusion rather than independent action. The court held that plaintiffs' strategy of offering many arguments (but little evidence) regarding opportunities to collude and parallel action were insufficient to prove conspiracy.  This strategy is frequently pursued by plaintiffs in antitrust conspiracy cases, so the district court's rejection is noteworthy.

Background

Until 2005, prices charged by wireless carriers for pay-per-use text messaging varied considerably. Between 2005 and 2008, prices coalesced: initially at ten cents, then fifteen cents, and finally twenty cents.

Alleging a conspiracy to fix these prices, the plaintiffs offered an email, which they characterized as the "smoking gun," by an officer of one carrier stating that the carriers' move to twenty cents per text message "was collusive and opportunistic."  Plaintiffs also presented circumstantial evidence that the industry's trade group meetings presented an opportunity to collude, that the timing of the various price increases suggested "lockstep" behavior, and that expert economic analyses demonstrated that collusion was "the most likely cause" of the carriers' pricing behavior.

Applying  Monsanto to Inflammatory Direct & Circumstantial Evidence

In its decision, the district court relied heavily on the Supreme Court's 1984 decision in Monsanto Co. v. Spray-Rite Serv. Corp., which held that in conspiracy cases, courts must consider whether the plaintiffs' evidence reasonably tends to rule out the possibility of independent action. Applying this standard, the district court found that the email, meetings, price timeline, and expert opinions were equally compatible with independent action and collusion, rather than "tending to show" collusion. The evidence was therefore insufficient to survive a summary judgment motion.

The district court first found that the "smoking gun" email was not direct evidence of the conspiracy because, even though authored by a "well informed" employee, the email did not show any knowledge of or involvement by the company in the conspiracy. In addition, the court found that the opportunity for the wireless carriers to collude via trade group meetings could not be circumstantial evidence of collusion without a showing that the meetings were actually used in this manner. And while the plaintiffs argued that the defendants had implemented "lockstep" price increases, the evidence showed that these pricing actions had occurred over spans as long as a year and thus, the court held, did not qualify even as parallel action, much less as collusive behavior. Finally, because the plaintiffs' economic experts relied primarily on documentary evidence – the email, evidence of trade group meetings, and internal company analyses preceding the price changes – to conclude that collusion was the "most likely" cause of the pricing patterns, their reports could not "tend to exclude" the possibility of independent action any more than the underlying (and insufficient) documentary record.

Implications

Plaintiffs frequently attempt to prove antitrust conspiracies with evidence only of opportunities to collude, rather than evidence of actual collusion; parallel but not concerted pricing actions; and a few emails with provocative "sound bites."  In rejecting such evidence as insufficient in this case, the district court adhered to the Monsanto standard and provided an opinion that will assist other defendants facing the same plaintiff strategy in antitrust conspiracy cases.

The District Court's May 19 decision can be found here:  In re Text Messaging Antitrust Litigation.

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