Among other allegations, Z-Tel claimed in an October 2003 lawsuit that SBC denied it access to network facilities necessary to provide local phone service, deliberately supplied false bills to Z-Tel and disparaged the company.
SBC, the second largest local phone company, filed a motion to dismiss the lawsuit, but Judge David Folsom only threw out a portion of Z-Tel’s claims in an August order. The judge has allowed Z-Tel to continue to pursue claims alleging violations of the Sherman Antitrust Act, the Racketeer Influenced and Corrupt Organizations (RICO) Act and the Lanham Act, according to Christopher Goodpastor, chief legal counsel of Z-Tel.
Z-Tel is seeking at least hundreds of millions of dollars from SBC, but the company has not disclosed an exact figure.
The court has suggested setting a trial date of April 2005, Goodpastor says. In the meantime, Z-Tel plans to collect evidence by taking depositions and requesting documents from SBC. “We are ready to go to trial. We are more than willing to try this case. We think there is a limited amount of evidence we need ... and we think we are going to be successful getting it,” Goodpastor says.
SBC spokesman Mike Balmoris says the judge’s order was mostly a procedural ruling and did not address the merits of the claims. “We’re pleased the court dismissed outright a number of Z-Tel’s claims, but mystified that the remaining claims have been permitted to go forward,” he says. “Unfortunately, we must continue devoting resources to this baseless case that better could be used to provide service to our customers. Since the court has concluded that complete dismissal of the case would be premature, we will continue with our vigorous defense.”
The development in the lawsuit comes on the heels of a Supreme Court decision in the landmark case Verizon Communications Inc. v. Law Offices of Curtis V. Trinko LLP. The high court unanimously overturned an appeals court ruling that found the New York law firm had the right to sue Verizon based on antitrust law.
The ruling signaled a loss for phone companies and consumers seeking to sue the regional Bell operating companies and possibly recover triple damages based on the Sherman Antitrust Act.
SBC argued Trinko barred all of Z-Tel’s antitrust claims concerning disputes over access to the incumbent local phone network. In a previous antitrust case known as Goldwasser v. Ameritech, a federal appeals court judge said the antitrust laws would add nothing to the oversight provided by the Telecommunications Act of 1996.
“When there exists a regulatory structure designed to deter and remedy anticompetitive harm, the additional benefit to competition provided by antitrust enforcement will tend to be small, and it will be less plausible that the antitrust laws contemplate such additional scrutiny,” Supreme Court Justice Antonin Scalia wrote in Trinko.
U.S. District Court Judge Folsom, however, said that the regional Bells’ duties under the ’96 Act do not shield them from being held accountable under antitrust law. “Trinko was clear: the simple fact that one has duties under the 1996 Act does not confer a grant of antitrust immunity ...,” he said.
