AT&T Sues to Clear Merger

AT&T Sues to Clear Merger

AT&T sued a law firm for trying to stop its pending merger with T-Mobile, in a move that may thwart future class-action lawsuits against its deal.

The Dallas, Texas-based carrier said it is fighting New York law firm Bursor & Fisher, which in July filed an arbitration request for 11 clients alleging the $39 million merger violates the Clayton Antitrust Act. The firm also created a website for the case to encourage customers to sign up for lawyers at AT&T’s expense, hoping to collect enough people to file a class action lawsuit.

The carrier filed suits in eight U.S. jurisdictions to block Bursor & Fisher, claiming an arbitration clause in its contracts with customers prevents them from filing class action lawsuits. The law firm said it signed up more than 1,000 customers who want to stop the AT&T/T-Mobile merger, but AT&T says those customers can’t join together to fight the merger because of the arbitration clause.

“The bottom line here is an arbitrator has no authority to block the merger or affect the merger process in any way,” AT&T said in a statement Friday. “AT&T’s arbitration agreement with our customers — recently upheld by the U.S. Supreme Court — allows individual relief for individual claims. Bursor & Fisher is seeking class-wide relief wrapped in the guise of individual arbitration proceedings, which is specifically prohibited by AT&T’s arbitration agreement.”

Even if the clause does stop class action lawsuits against the merger, individual lawsuits are still likely in the months leading up to its potential approval, since some disapprove of the power AT&T may get as a result.

AT&T’s attempt to quash a possible class-action lawsuit comes as opposition mounts against its impending acquisition of T-Mobile. Sprint CEO Dan Hesse has been lobbying in Washington for months, and has gotten several lawmakers to question whether the merger will violate federal antitrust standards.

Some senators have agreed with Hesse, but others favor the merger because of the potential of financial gain for their states.

Lawsuits and Congressional pressure may lead some observers to conclude the merger may be in trouble. However, the deal has garnered support from states such as Louisiana, whose Public Service Commission said it would not block the merger because of AT&T’s promise to expand next-generation wireless Internet to most of the U.S., creating thousands of jobs.

The final decision belongs to the Federal Communications Commission, which began its 180-day review period of the deal April 28.

The merger, though, may face legal challenges for years. If granted, the merger would propel AT&T to the top of the wireless communications market, putting Verizon in second place and Sprint in a distant third. Verizon and Sprint, along with other future wireless providers, may eventually ask the courts to intervene when they find it increasingly difficult to compete through their everyday business practices.

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