Appeals Court Reverses Decision Blocking Antitrust Suit

The U.S. Court of Appeals for the Second Circuit reversed a decision Thursday that blocked an antitrust suit against Verizon Communications Inc. in a case experts say could encourage widespread antitrust litigation against the regional Bell operating companies.

During the past few years, judges throughout the country have been tossing out antitrust suits filed against the Bells. In these cases, the judges refer to an appeals court ruling that found plaintiffs could not litigate an antitrust case if the complaints were related to the 1996 Telecommunications Act, antitrust experts say. The Bells have cited the Seventh Circuit opinion in Goldwasser vs. Ameritech in a successful bid to get the cases thrown out of court, sources say.

In the Goldwasser case the Seventh Circuit basically said the 1996 Telecom Act is so regulation-intensive that antitrust litigation simply would be too confusing because of overlapping mandates, said Chris Savage, a lawyer for communications firm Cole Raywid & Braverman, who heads up the Internet telecom group.

The new ruling, however, recognizes the right of competitive service providers and consumers to sue the Bells for anti-trust damages, lawyers say.

“It is monumental because all the district courts around the country have focused on that erroneous Goldwasser decision and they are throwing out cases left and right,” said Maxwell Blecher, a partner for Blecher Collins, who has been practicing antitrust law since 1956. “That doesn’t comment on whether anybody has the wherewithal or audacity to actually do the litigation. There are a handful of people but there probably should be dozens of them.”

The U.S. Court of Appeals for the Second Circuit made two important decisions last week in the Trinko case, a suit that was originally filed against Bell Atlantic, Verizon’s predecessor, anti-trust experts say.

First, it found consumers could sue the Bells based on anti-trust litigation.

Second, The Appeals Court found court orders known as injunctions could be issued. However the Appeals Court recognized courts would have to be careful issuing the Bell companies such orders as to not obstruct the regulations stipulated in the Telecom Act, Savage said.

Last week’s ruling is a “significant development in the law,” Savage said. “What we had before Thursday was one court of appeals having spoken on a topic in a way not favorable to the little guys suing the big guys.”

Bell competitors have had little to cheer about in the way of antitrust victories. But there are exceptions. For example, last year a California-based competitive local exchange carrier won an antitrust suit versus Pacific Bell, convincing a jury the Bell had blocked the entry of competitors into the local phone market, said Blecher, who litigated the case. The CLEC, CalTech International Telecom, was awarded approximately $4 million.

Currently, nearly half a dozen antitrust suits against the Bells are either pending or are on appeal around the country, according to pulver.com Telecom Antitrust Intelligence Report.

Lawyers say last week’s appeals court decision may fuel more antitrust litigation. But could the outcome of such cases really wound the nation’s largest telecommunications companies, encouraging them to cease what critics perceive as monopolistic practices?

Savage said he believes court injunctions could play a role in changing the Bell’s decision-making.

With an “infinite number” of potential complainants, the Bells could have “so much antitrust exposure it will bankrupt them,” said Daniel Berninger, editor of pulver.com Telecom Antitrust Intelligence Report.

Clearly that may be a stretch. At the least, antitrust experts say the ruling could help to balance out the interests of the Bells, their competitors and American telephone consumers in the courts. “I think it will create balance in which cases will go forward as originally intended by Congress,” Blecher said.

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