In re Text Messaging Antitrust Litig..Appeal Of: Verizon Wireless

• Citation: 630 F.3d 622
• Decision Date: 29 December 2010
• Docket Number: No. 10–8037.,10–8037.
• Parties: In re TEXT MESSAGING ANTITRUST LITIGATION.Appeal of: Verizon Wireless, et al., Defendants.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

630 F.3d 622

2010-2 Trade Cases P 77,281

In re TEXT MESSAGING ANTITRUST LITIGATION.Appeal of: Verizon Wireless, et al., Defendants.

No. 10–8037.

United States Court of Appeals, Seventh Circuit.

Submitted Dec. 2, 2010.Decided Dec. 29, 2010.Rehearing and Rehearing En Banc* Denied Jan. 26, 2011.

Michael K. Kellogg, Attorney (submitted), Kellogg, Huber, Hansen, Todd, Evans & Figel, P.L.L.C., Washington, DC, Charles H.R. Peters, Attorney, Schiff Hardin LLP, Chicago, IL, for Cellco Partnership.John W. Treece, Attorney, Sidley Austin, Chicago, IL, for AT & T Mobility, LLC.Dane H. Butswinkas, Attorney, Williams & Connolly LLP, Washington, DC, for Sprint Nextel Corporation.Joe R. Whatley, Jr., Whatley Drake & Kallas LLC, New York, NY, for Jim Morris and Michelle McClain.Mary Jane Fait, Attorney, Wolf, Haldenstein, Adler, Freeman & Herz, Chicago, IL, for Vaughanzella Smith–Howard.Jonathan B. Andry, Andry Law Firm, New Orleans, LA, for Deborah Sparks.Charles Barrett, Barrett & Associates, Nashville, TN, for John Flint.Before POSNER, WOOD, and TINDER, Circuit Judges.POSNER, Circuit Judge.

A class action suit that has been consolidated for pretrial proceedings in the district court in Chicago charges the defendants with conspiring to fix prices of text messaging services in violation of federal antitrust law. The district court allowed the plaintiffs to file a second amended complaint despite the defendants' objection, based on Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), that the second complaint like the first failed to state a claim. The defendants asked the district judge to certify, for interlocutory appeal under 28 U.S.C. § 1292(b), the question of the complaint's adequacy. The judge agreed. He said: “Though (as plaintiffs argue) the Seventh Circuit had issued dozens of decisions concerning the application of Twombly, the contours of the Supreme Court's ruling, and particularly its application in the present context, remain unclear. The Court believes this is a subject on which reasonable minds could differ. The question presented is controlling, because there is at least a decent chance (though it is by no means certain) that were a court to rule the second amended complaint deficient, the case would be over. Finally, there is a good chance that immediate review may materially advance the ultimate conclusion of the case.”

Section 1292(b) requires our permission to appeal as well as the district court's. The defendants have asked our permission and the plaintiffs urge us to turn them down. They argue that the proposed appeal does not present a “controlling question of law,” as the statute requires. The question presented is whether the second amended complaint states a claim under the standard for pleading set forth in Twombly. It is a controlling question, because if the second amended complaint does not state a claim, the case is likely (though, as the district judge said, not certain) to be over; the plaintiffs are unlikely without discovery to be able to allege additional facts that would persuade the district court to allow them to file a third amended complaint if we held that the second should have been dismissed.

But is it a controlling question of law? It is not an abstract legal question such as whether the Sherman Act forbids price fixing; it is a question whether a particular complaint satisfies the pleading standard of Twombly. Yet the question's narrowness should not disqualify it, at least in the rather special circumstances presented by the appeal. Suppose the defendants had been overheard to say to each other “let's fix our ice machines,” and the controlling question in the case was whether “ice machines” was a euphemism for prices of text messaging services. That would be a question of fact—and it would be pointless to allow an interlocutory appeal from its resolution. Disputed facts are resolved at trial—by the verdict if it's a jury trial and if it's a bench trial by the judge's findings of fact—and thus resolution comes at the end of the trial, which ordinarily is too late for an interlocutory appeal. Though there are cases in which a protracted hearing on relief follows the determination of liability, one can understand why Congress didn't think it necessary to authorize interlocutory appeals to decide whether a finding of fact by a district court was clearly erroneous.

The interlocutory appeal that we are asked to authorize in this case does not seek to overturn any findings of fact. The defendants are arguing rather that even if all the factual allegations of the complaint are true, the complaint is insufficiently plausible to satisfy Twombly. They are asking us to apply a legal standard—the pleading standard set forth in Twombly—to a set of factual allegations taken as true for purposes of the appeal.

A challenge to a trial court's application of a legal standard to a set of facts is often described as presenting a “mixed question of fact and law” or an “ultimate question of fact,” but these are not helpful labels. The appellate court's task in such a case is to determine the legal significance of a set of facts. In Pullman–Standard v. Swint, 456 U.S. 273, 289 n. 19, 102 S.Ct. 1781, 72 L.Ed.2d 66 (1982), the Supreme Court left open the question whether appellate review of such a determination should be deferential, just as it is when reviewing findings of fact, but the rule in our court is that it should be. The main task of an appellate court, which is to maintain the coherence, uniformity, and predictability of the law, is not engaged by review of the application of a legal standard to a unique, nonrecurring set of particular facts. Wellpoint, Inc. v. Commissioner, 599 F.3d 641, 644 (7th Cir.2010); Barber v. Ruth, 7 F.3d 636, 642–43 (7th Cir.1993); Mucha v. King, 792 F.2d 602, 605–06 (7th Cir.1986). No matter; in this case we have neither factfindings nor the application of a legal standard to factfindings; the question presented by the appeal is the sufficiency of the allegations of a complaint; and, most important, that question requires the interpretation, and not merely the application, of a legal standard—that of Twombly.

Furthermore, when the question presented by an appeal is whether Twombly requires dismissal of a complaint, the concerns underlying that decision argue for empowering the district court and the court of appeals to authorize an interlocutory appeal. Twombly, even more clearly than its successor, Ashcroft v. Iqbal, ––– U.S. ––––, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009), is designed to spare defendants the expense of responding to bulky, burdensome discovery unless the complaint provides enough information to enable an inference that the suit has sufficient merit to warrant putting the defendant to the burden of responding to at least a limited discovery demand. When a district court by misapplying the Twombly standard allows a complex case of extremely dubious merit to proceed, it bids fair to immerse the parties in the discovery swamp—“that Serbonian bog ... where armies whole have sunk” ( Paradise Lost ix 592–94)—and by doing so create irrevocable as well as unjustifiable harm to the defendant that only an immediate appeal can avert. Such appeals should not be routine, and won't be, because as we said both district court and court of appeals must agree to allow an appeal under section 1292(b); but they should not be precluded altogether by a narrow interpretation of “question of law.”

Now it is true that we ruled in Ahrenholz v. Board of Trustees of University of Illinois, 219 F.3d 674, 676 (7th Cir.2000), that the term “question of law” in section 1292(b) refers “to a question of the meaning of a statutory or constitutional provision, regulation, or common law doctrine rather than to whether the party opposing summary judgment had raised a genuine issue of material fact.” We pointed out that “to decide whether summary judgment was properly granted requires hunting through the record compiled in the summary judgment proceeding to see whether there may be a genuine issue of material fact lurking there; and to decide a question of contract interpretation may require immersion in what may be a long, detailed, and obscure contract,” whereas “if a case turned on a pure question of law, something the court of appeals could decide quickly and cleanly without having to study the record, the court should be enabled to do so without having to wait till the end of the case.” Id. at 677; see also Johnson v. Jones, 515 U.S. 304, 309, 115 S.Ct. 2151, 132 L.Ed.2d 238 (1995); Boim v. Quranic Literacy Institute, 291 F.3d 1000, 1007 (7th Cir.2002); In re Hamilton, 122 F.3d 13 (7th Cir.1997); Malbrough v. Crown Equipment Corp., 392 F.3d 135, 136 (5th Cir.2004); Foster Wheeler Energy Corp. v. Metropolitan Knox Solid Waste Authority, Inc., 970 F.2d 199, 202 (6th Cir.1992); Harriscom Svenska AB v. Harris Corp., 947 F.2d 627, 631 (2d Cir.1991). As we read in Malbrough v. Crown Equipment Corp., supra, 392 F.3d at 136, “the underlying issue of whether [the plaintiff] has presented sufficient evidence to show a ‘genuine issue ... [of] material fact’, and thus avoid summary judgment ..., is not a question of law within the meaning of § 1292(b).”

But in this case there is no question of hunting through a record or immersing ourselves in a complicated contract, and moreover we do have a question of the meaning of a common law doctrine—namely the federal common law doctrine of pleading in complex cases, announced in Twombly. Decisions holding that the application of a legal standard is a controlling question of law within the meaning of section 1292(b) are numerous. See Portis v. City of Chicago, 613 F.3d 702 (7th Cir.2010); Armstrong v. LaSalle Bank Nat'l Ass'n, 552 F.3d 613, 615–16 (7th Cir.2009); Florence v. Board of Chosen, 621 F.3d 296, 301 (3d Cir.2010); Weintraub v. Board of Educ. of City School Dist., 593 F.3d 196,...