In re Text Messaging Antitrust Litig.
| Decision Date | 19 May 2014 |
| Docket Number | No. 08 C 7082,MDL No. 1997,08 C 7082 |
| Citation | 46 F.Supp.3d 788 |
| Parties | In re: Text Messaging Antitrust Litigation This Order Applies To: All Actions |
| Court | U.S. District Court — Northern District of Illinois |
OPINION TEXT STARTS HERE
Plaintiffs' motion denied; defendants' motion granted.
Plaintiffs filed this suit on behalf of all those who purchased text-messaging services on a fee-per-text-message basis directly from four of the five defendants in this case: AT & T, Sprint, T–Mobile, and Verizon Wireless. Plaintiffs allege that these national wireless communications service providers, along with defendant CTIA–The Wireless Association, entered into and implemented a continuing contract, combination, and conspiracy to fix, raise, maintain, and stabilize prices for Text Messaging Services sold in the United States in violation of section 1 of the Sherman Act, 15 U.S.C. § 1.3d Am. Compl. ¶ 1. The Court dismissed plaintiffs' original complaint. Plaintiffs then amended their complaint, the Court denied a second motion to dismiss, and the Seventh Circuit affirmed this Court's order on interlocutory appeal. See In re Text Messaging Antitrust Litig., 630 F.3d 622 (7th Cir.2011).
Plaintiffs contend that certain defendants engaged in spoliation of evidence, and they have moved for sanctions and an adverse inference. In addition, defendants have moved for summary judgment. For the reasons stated below, the Court grants defendants' motion and denies plaintiffs' motion.1
On September 9, 2008, shortly after the last carrier increased its PPU SMS price to twenty cents, Senator Herbert Kohl, chairman of the antitrust subcommittee of the United States Senate Committee on the Judiciary, sent a two-page letter to the chief executive officers of the four carrier defendants. He wrote the CEOs “to express my concern regarding what appear to be sharply rising rates your companies have charged to wireless phone customers for text messaging.” Pls.' Ex. 414 at VZWTM–517–000061252. Senator Kohl told the executives that “[s]ome industry experts had opined that the price increases do not appear to be justified by any increases in the costs associated with text messaging services, but may instead be a reflection of a decrease in competition, and an increase in market power of their companies.” Id. The senator noted that the price charged for a text message had increased 100 percent since 2005, highlighting the carriers' most recent increase to twenty cents per message. Senator Kohl then said that the “alarming” feature of this increase was that “it does not appear to be justified by rising costs in delivering text messages.” Id. at VZWTM–517–000061253. He noted the low cost of processing a single text message, and he stated that the companies' identical price increases at nearly the same time was “hardly consistent with the vigorous price competition we hope to see in a competitive marketplace.” Id. Senator Kohl concluded by asking the CEOs to explain why text messaging rates have dramatically increased in recent years, and he requested data on SMS use since 2005, pricing comparisons, and a statement regarding any differences between their various pricing structures. Id. He asked the CEOs to respond by October 6, 2008.
One day after Senator Kohl sent his letter, the Wall Street Journal published an article about it with the headline “Text–Messaging Rates Come Under Scrutiny.” Pls.' Ex. 415; see also http:// online.wsj.com/news/articles/SB122100918492217655 (last visited May 15, 2014). That same day at 5:28 a.m., a person named Andrew Davies—presumably a T–Mobile employee, although the parties do not identify him specifically—sent the text of the article via e-mail to several individuals, including T–Mobile employees Adrian Hurditch, then the company's vice president of services and strategic pricing, and Lisa Roddy, then the company's director of marketing planning and analysis. At some point after Davies sent his message, Hurditch and Roddy e-mailed each other about it. Their entire e-mail thread, however, appears no longer to exist. At 6:10 a.m., Roddy's e-mail account sent an out-of-office autoreply to Hurditch; two minutes later, Hurditch replied, stating, “Make sure you delete that last message!” Pls.' Ex. 266 at TMO_TEXT00010081. At 7:50 a.m., Roddy responded to Hurditch, presumably addressing his suggestion to delete the previous message, “I will & u this one!!!” Id. at TMO_ TEXT00010080. She proceeded to state that she did not know whether she agreed—with what is unsaid—and she asked Hurditch if he agreed that the average SMS cost at T–Mobile was greater now than it was three years prior because of the value in bundles. Id. Hurditch responded at 7:55 a.m.:
We might make less margin on a per message basis driven by revenue but that's not driven by higher cost. At the end of the day we know there is no higher cost associated with messaging. The move was colusive [sic] and opportunistic. Clearly get why but it doesn't surprise me why public entities and consumer advocacy groups are starting to groan.
Id. (emphasis added). Hurditch followed up four minutes later with another e-mail, telling Roddy it was “[m]ore important [to] go forward” and that they Id. Roddy responded at 11:04 a.m. that she “agree[s] we should engage with legal,” asking Hurditch to “tee up and I can engage when I get back.” Id.
The parties otherwise have submitted a considerable amount of evidence, consisting of e-mails, PowerPoint presentations, meeting minutes, and expert reports, among other things, on the nuts and bolts of each company's decisions to increase PPU SMS prices, as well as the structure of the wireless industry. In essence, defendants say the carriers' decisions to increase PPU SMS prices were made individually and that the industry's structure discourages collusion; plaintiffs dispute both contentions.
In addition to defendants' summary judgment motion, the Court has before it plaintiffs' motion for an adverse inference jury instruction and sanctions. Plaintiffs contend that defendants T–Mobile and CTIA destroyed material and relevant evidence in this litigation. Plaintiffs request an adverse inference and in particular instructions to the jury that the missing evidence would have been unfavorable to defendants T–Mobile and CTIA.3 Plaintiffs also request attorneys' fees and expenses in connection with the motion. T–Mobile, CTIA, and the remaining defendants not named in the motion have filed separate responses. Those latter defendants contend that granting the motion would “severely prejudice[ ]” them. Resp. of AT & T, Sprint, and Verizon at 1. Both T–Mobile and CTIA contend that plaintiffs have not established the requisite bad faith.
Plaintiffs' motion in reference to T–Mobile involves two issues. The first concerns the e-mail chain between T–Mobile employees Roddy and Hurditch, described in detail above. Plaintiffs argue that T–Mobile, “post-Kohl investigation[,] deleted an e-mail that precedes a direct admission to the PPU text messaging price-fixing conspiracy.” Pls.' Spoliation Mem. at 17.
Second, plaintiffs contend that the “eleventh hour reappearance” of some, but not all, of the notebooks regarding Roddy's daily activities she kept during her employ at T–Mobile warrants imposition of sanctions as well as an adverse inference. Id. Plaintiff argue that T–Mobile did not produce certain of Roddy's notebooks until three years after plaintiffs asked for them, claiming they were “lost,” and then produced them, but only after a Department of Justice investigation into defendants closed and Roddy's deposition had already been taken in the present case. Id. at 17. The notebooks evidently were found “under a T–Mobile paralegal's desk.” Id. at 5. Plaintiffs further contend that even then, although Roddy said she kept daily notes on her daily activities, notebooks were still missing “for crucial time periods that match the times that the carriers, including T–Mobile, were considering PPU price increases.” Id. at 2. These notebooks, plaintiffs argue, could have contained “notes that may have existed regarding T–Mobile's reactions to competitors' SMS price increases” as well as information regarding T–Mobile's own price increases. Id. at 23. Plaintiffs note that Roddy testified during her deposition that she did not recall ceasing her attendance at weekly company meetings during the relevant time periods. Id. at 23–24. They argue that this gives rise to a “logical inference” that evidence harmful to defendants is part of what is still missing. Id. at 17–18.
In sum, plaintiffs argue, “T–Mobile's failure to explain why the Hurditch e-mail is missing and the eleventh hour reappearance of some, but not all, of the notebooks under a T–Mobile paralegal's desk warrant spoliation sanctions.” Id. at 18. Plaintiffs argue that T–Mobile breached a duty to preserve these items, which they contend arose on September 9, 2008, when Senator Kohl wrote to the wireless carriers requesting information on SMS pricing. Plaintiffs further say that they have been prejudiced by this breach, because they cannot “deploy[ ]” the evidence in this litigation. Id. at 25. Finally, they argue that T–Mobile's failure to preserve and produce this evidence stemmed from T–Mobile's “willfulness, bad faith or fault” and thus warrants imposition of sanctions. Id. at 26–29. “Failure to suspend a routine document destruction policy in the face of a litigation ‘crosses the line between negligence and bad faith,’ ” plaintiffs argue. Id. at 26 Krumwiede v. Brighton Assocs., LLC, No. 05 C 3003, 2006 WL 1308629, at *8 ).
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