U.S. Supreme Court Hands Victory to Telecom Companies

By a 7-2 vote, the Supreme Court handed the nation's biggest local phone carriers a victory over consumers who filed an anti-competitive business practices lawsuit.

The court ruled in favor of the phone companies because it was found this consumer lawsuit lacked any factual support showing these local phone companies secretly conspired to stay out of the others territory when it came to supplying local phone and high-speed Internet service.

Justice David Souter wrote in the majority opinion that it was not enough to claim a conspiracy exists without having actual facts and evidence to back up such a claim.

Souter said the complaint alleging restraint of trade "comes up short." The consumers "have not nudged their claims across the line from conceivable to plausible," Souter wrote.

In dissent, Justice John Paul Stevens objected to a federal judge's dismissal of the case. Stevens said federal rules, previous rulings and "sound practice mandate that the district court at least require some sort of response" before throwing out the case.

Justice Ruth Bader Ginsberg joined Justice Stevens as the only two justices to vote in favor of the consumers.

The 2nd U.S. Court of Appeals voted in favor of the consumers by ruling this lawsuit did show "a plausible claim of conspiracy."

This lawsuit shows the Supreme Court Justices are focusing their efforts on anti-trust laws. Two other cases to be heard by this court involve a suit against Wall Street Investment banks, and a case challenging a 96 year-old ruling which bans agreements between manufacturers and retailers who agree to preset pricing on certain products.

Attorney Joseph Simons, a former chief antitrust enforcer at the Federal Trade Commission, said it appears the Supreme Court wants to make over the anti-trust landscape by cleaning up areas this courts feels a clean-up is necessary.

The Chamber of Commerce and eight other business groups and companies filed papers supporting the phone companies.

The decision is "a triumph of the voices for America's wealthiest corporations," said attorney J. Douglas Richards, who argued the case for the plaintiffs in the Supreme Court.

Attorney Richards said it was deplorable the Supreme Court won't allow cases to progress so disclosure of any evidence the phone companies may have showing they did collude with each other in fixing the price of certain services.

This case came to fruition because of changes made to the 1996 telecommunications act which said local phone companies had to open up their monopoly of local phone service to other competitors. By agreeing to this, local phone companies were given the right to offer both local and long-distance service. At the time of this change, four local phone companies supplied roughly 90 percent of the local phone service to consumers.

This case, Bell Atlantic v. Twombly, 05-1126, named Bell Atlantic Corp., BellSouth Corp., Qwest Communications International Inc., and SBC Communications Inc.

Bell Atlantic has since changed their name to Verizon, and SBC bought AT&T and changed their name to AT&T. Bellsouth has just recently agreed to a merger with AT&T and Cingular.

A prominent firm of plaintiffs' attorneys represented the consumers by suing these companies when it was discovered these companies retained their own territory without competing with one another.

In his writing for the majority, Justice Souter wrote there was a natural explanation for these companies not competing with each other by saying these companies were sitting tight while waiting for each other to make the first move.

The consumers complaint also alleged the big 4 local companies conspired to keep smaller companies from competing in the larger companies market.

Justice Souter also wrote nothing in the consumers complaint suggest the defendants were resisting competition efforts by other companies, but instead the reaction of the defendants was quite natural because they were acting alone.

Attorney Edward Schwartz said this court decision should discourage anyone from filing an anti-trust lawsuit based solely on nothing more than parallel conduct with the hopes that some type of evidence against a defendant will pop-up in discovery.

The defense attorneys said it should be totally understandable these companies would decide on a individual basis whether is was worth the risk of entering into a new market.

The Bush administration also agreed with this Supreme Court ruling because the consumers case did not show concrete evidence of any wrong doing by the phone companies.

The Justice Department's solicitor general went on to say the burden of proof lies with the plaintiff's ability to show clear evidence these companies met with the intended goal of conspiring with one another to fix prices.

It is not sure whether a new lawsuit will be brought against these phone companies with additional information attached to the original lawsuit.

Read more about this decision at Yahoo News