Court Rules in Favor of Telecom Firms

A Verizon payphone is seen in Philadelphia, in this April 30, 2007 file photo. The Supreme Court on Monday, May 21, 2007 sided with the nation's largest local phone companies in a lawsuit by consumers alleging anticompetitive business practices. The court ruled 7-2 that the suit lacked any specifics in accusing the companies of secretly agreeing not to compete in each other's territories for local telephone and high-speed Internet service. (AP Photo/Matt Rourke, file) (Matt Rourke - AP)

WASHINGTON -- The nation's largest local phone companies won a Supreme Court victory Monday in a lawsuit by consumers alleging anticompetitive business practices.

The court ruled 7-2 that the suit lacked any factual support for its accusations that the companies secretly agreed to stay out of each other's territories for local telephone and high-speed Internet service.

It is not enough to make a bare assertion of conspiracy, Justice David Souter wrote in the majority opinion.

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 Ginsburg joined Stevens in dissenting.

The 2nd U.S. Circuit Court of Appeals had sided with the consumers, concluding those filing the lawsuit had stated "a plausible claim of conspiracy."

The case underscores the Supreme Court's recent emphasis on antitrust law, and the justices still have two major antitrust cases before them this term. One is an investors' suit against Wall Street investment banks, the other a 96-year-old Supreme Court ruling that bans agreements between manufacturers and retailers setting price floors for products.

The Supreme Court seems intent on "making over the antitrust landscape by cleaning up areas they think need to be cleaned up," said attorney Joseph Simons, a former chief antitrust enforcer at the Federal Trade Commission.

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.

Richards called it "disturbing" that the court isn't permitting such cases to continue long enough to force disclosure of any of the basic evidence that only the companies possess. Richards declined to discuss whether the plaintiffs would refile the lawsuit with additional information.

The case arose from changes to the telecommunications law in 1996 in which the local phone companies were to open their monopoly markets to competition. In return, they were given the opportunity to enter the long-distance business. At the time, the four companies controlled more than 90 percent of the market for local phone service.