IN RE: TEXT MESSAGING ANTITRUST LITIGATION (December 29, 2010)

Class-action plaintiffs assert that the four defendants violated federal antitrust law by conspiring to fix the prices of text messaging services. Over the defendants' objection, Judge Kennelly (N.D. Ill) allowed the filing of a second amended complaint. The defendants sought certification for an interlocutory appeal on the adequacy of the complaint under Twombly. The court so certified. Defendants appeal.

In their opinion, Seventh Circuit Judges Posner, Wood, and Tinder accepted the appeal and affirmed. The Court first addressed plaintiffs' argument that they not even consider the appeal because it does not involve a "controlling question of law" as required by the rules. The Court rejected that argument. Certainly the question is controlling, since an adverse decision would probably terminate the case. And, although it is not a strict question of law like the interpretation of a statute or the Constitution, it does require the interpretation and application of the Twombly legal standard. Since the development of the standard is relatively recent and its interpretation and application not yet routine, the Court granted the application. On the merits, the Court agreed with the district court that the complaint's allegations were sufficiently plausible to satisfy Twombly. The complaint does allege parallel behavior -- the kind of allegation that was found insufficient in Twombly. But it alleges more: that the four defendants control 90% of the market, that the four defendants belonged to a trade association and exchanged information, that the four defendants each increased its prices at a time of falling costs, and that the four defendants each moved from very different and complex pricing structures to a uniform approach. There is no smoking gun, no direct evidence of conspiracy, but the allegations do amount to the "parallel plus" behavior required by Twombly. The plaintiffs should be allowed to proceed with discovery.