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`UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF CALIFORNIA
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`SAN JOSE DIVISION
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`KEITH DEAN BRADT, et al.,
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`Plaintiffs,
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`v.
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`T-MOBILE US, INC., et al.,
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`Defendants.
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`Case No. 19-cv-07752-BLF
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`ORDER DENYING PLAINTIFFS’
`APPLICATION FOR TEMPORARY
`RESTRAINING ORDER AND ORDER
`TO SHOW CAUSE WHY
`PRELIMINARY INJUNCTION
`SHOULD NOT ISSUE; DENYING
`PLAINTIFFS’ ADMINISTRATIVE
`MOTION FOR AN ORDER
`EXPEDITING BRIEFING SCHEDULE
`ON PLAINTIFFS’ APPLICATION
`FOR TEMPORARY RESTRAINING
`ORDER AND ORDER TO SHOW
`CAUSE WHY PRELIMINARY
`INJUNCTION SHOULD NOT ISSUE,
`SETTING A HEARING ON
`PRELIMINARY INJUNCTION, AND
`FOR LIMITED, EXPEDITED
`DISCOVERY
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`[ECF 5, 35]
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`Plaintiffs, 24 individual customers of national cellular mobile service providers, filed a
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`complaint on November 25, 2019, seeking to enjoin the impending merger of T-Mobile US, Inc. (T-
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`Mobile”) and Sprint Corporation (“Sprint”), two providers of mobile communications services for
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`alleged violations of antitrust laws. ECF 1. On the same day, Plaintiffs filed an Application for
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`Temporary Restraining Order and Order to Show Cause Why Preliminary Injunction Should Not
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`Issue (“Application for TRO”). ECF 5. Plaintiffs filed their complaint and Application for TRO a
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`few days before a trial was to commence in the United States District Court for the Southern District
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`of New York, in which the Attorneys General of several states sought to enjoin the same merger for
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`the same alleged violations of antitrust laws. See New York, et al. v. Deutsche Telekom et al., Case
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`No. 1:19-cv-05434 (S.D.N.Y.) (the “SDNY Litigation”). The Court set a status conference on
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`Case 5:19-cv-07752-BLF Document 52 Filed 02/28/20 Page 2 of 6
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`November 26, 2019. ECF 8. Shortly thereafter, the parties stipulated to and the Court ordered a
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`briefing schedule, which in effect, stayed Plaintiffs’ Application for TRO until the SDNY Litigation
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`was decided or settled. See ECF 16. The parties later stipulated to and the Court ordered a modified
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`version of that briefing schedule. ECF 28.
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`On February 11, 2020, the court in the SDNY Litigation entered a final judgment for
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`Defendants. ECF 36. On February 12, 2020, Plaintiffs filed an administrative motion requesting
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`the Court to construe Plaintiffs’ Application for TRO as a motion for preliminary injunction, set an
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`expedited briefing schedule, permit limited discovery, and set an expedited hearing (consolidated
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`with a trial on the merits) on Plaintiffs’ motion for preliminary injunction (“Administrative
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`Motion”). ECF 35. Defendants, on the other hand, filed an opposition to Plaintiffs’ Application for
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`TRO – according to the parties’ stipulated briefing schedule. Defendants’ Opposition to Plaintiffs’
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`Application for Temporary Restraining Order (“Opp’n”), ECF 37. Defendants also opposed
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`Plaintiffs’ Administrative Motion. ECF 38. The Court set a hearing for Plaintiffs’ Application for
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`TRO and Plaintiffs filed a Reply brief. See ECF 39, 43, 42. The Court heard oral arguments on
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`February 27, 2020 (the “Hearing”).
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`I. LEGAL STANDARD
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`A. Temporary Restraining Order
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`The standard for issuing a temporary restraining order is identical to the standard for issuing
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`a preliminary injunction. Stuhlbarg Int’l Sales Co., Inc. v. John D. Brush & Co., 240 F.3d 832, 839
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`n.7 (9th Cir. 2001); Lockheed Missile & Space Co. v. Hughes Aircraft, 887 F. Supp. 1320, 1323
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`(N.D. Cal. 1995). An injunction is a matter of equitable discretion and is “an extraordinary remedy
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`that may only be awarded upon a clear showing that the plaintiff is entitled to such relief.” Winter
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`v. Natural Resources Defense Council, Inc., 555 U.S. 7, 22 (2008). A plaintiff seeking preliminary
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`injunctive relief must establish “[1] that he is likely to succeed on the merits, [2] that he is likely to
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`suffer irreparable harm in the absence of preliminary relief, [3] that the balance of equities tips in
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`his favor, and [4] that an injunction is in the public interest.” Id. at 20. “[I]f a plaintiff can only
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`show that there are serious questions going to the merits – a lesser showing than likelihood of
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`success on the merits – then a preliminary injunction may still issue if the balance of hardships tips
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`Case 5:19-cv-07752-BLF Document 52 Filed 02/28/20 Page 3 of 6
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`sharply in the plaintiff’s favor, and the other two Winter factors are satisfied.” Friends of the Wild
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`Swan v. Weber, 767 F.3d 936, 942 (9th Cir. 2014) (internal quotation marks and citations omitted).
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`B. Clayton Act Section 7
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`Section 7 prohibits a merger if its effect “may be substantially to lessen competition.” United
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`States v. Philadelphia Nat. Bank, 374 U.S. 321, 355 (1963). “It is well established that a section 7
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`violation is proven upon a showing of reasonable probability of anticompetitive effect.” F.T.C. v.
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`Warner Commc’ns Inc., 742 F.2d 1156, 1160 (9th Cir. 1984). To evaluate the probable
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`anticompetitive effect of a merger, courts examine “the particular market—its structure, history and
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`probable future[.]” United States v. Gen. Dynamics Corp., 415 U.S. 486, 498 (1974).
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`Section 7 claims are typically assessed under a burden-shifting framework. Saint Alphonsus,
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`778 F.3d at 783 (citation omitted). The plaintiff must first establish a prima facie case that a merger
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`is anticompetitive. Id. A prima facie case of probable anticompetitive effect can be shown based
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`on statistical evidence of market share. Olin Corp. v. F.T.C., 986 F.2d 1295, 1305 (9th Cir. 1993).
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`The burden then shifts to the defendant to rebut the prima facie case. Saint Alphonsus, 778 F.3d at
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`783. If the defendant successfully rebuts the prima facie case, the burden of production shifts back
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`to the plaintiff. Id.
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`II. ANALYSIS
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`A. Plaintiffs’ Application for TRO
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`Plaintiffs argue that the proposed merger of Sprint and T-Mobile would increase the
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`concentration of an already highly concentrated market. See Application for TRO at 4. A commonly
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`used metric for determining market share is the Herfindahl–Hirschman Index (“HHI”). Saint
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`Alphonsus, 778 F.3d at 786. An HHI above 2,500 indicates a highly concentrated market. Id. Also,
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`mergers that increase the HHI more than 200 points and result in highly concentrated markets are
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`“presumed to be likely to enhance market power.” Id. Citing to the 2018 Federal Communications
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`Commission’s (“FCC”) Communications Marketplace Report, Plaintiffs argue that the current HHI
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`concentration measure for the national wireless communication service provider market is 2,899 –
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`which is above 2,500 and establishes a highly concentrated market. Application for TRO at 4 (citing
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`Compl. Exh. A at 8). In addition, post-merger, the HHI of the national wireless communication
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`Case 5:19-cv-07752-BLF Document 52 Filed 02/28/20 Page 4 of 6
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`service provider market would increase by 443 HHI points – which is above 200 and is presumed
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`to be likely to enhance market power. Application for TRO at 4 (citing Compl. Exh. A at 8). The
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`Court is persuaded that Plaintiffs have made the prima facie showing that the merger is
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`anticompetitive.
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`While statistics reflecting the shares of the market controlled by the industry leaders and the
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`parties to the merger are “the primary index of market power; […] only a further examination of the
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`particular market—its structure, history and probable future—can provide the appropriate setting
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`for judging the probable anticompetitive effect of the merger.” Brown Shoe Co. v. United States,
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`370 U.S. 294, 322 n. 38 (1962). The burden now shifts to Defendants to rebut the prima facie case.
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`Here, Defendants provide evidence that the Department of Justice’s Antitrust Division
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`(“DOJ”) and the FCC each thoroughly investigated the merger, negotiated divestitures and other
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`relief, securing a merger that would “protect competition and promote the public interest.”
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`Statement of Interest of the United States of America (“Statement”) at 1, ECF 37-1, Exh. 3. The
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`DOJ and the FCC concluded that the merger (with the negotiated relief) “benefits consumers
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`through the combination’s enhanced output—the increased availability of a higher quality mobile
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`wireless network for consumers.” Id. at 1-2. Most significantly, the DOJ put in place certain
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`divestitures to Dish Network Corporation (“DISH”), which the DOJ and FCC conclude “will
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`maintain four providers of nationwide mobile wireless service and thus preserve the competitive
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`structure of the industry.” Statement at 10; see also [Proposed] Final Judgment in United States v.
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`Deutsche Telekom AG, 1:19-cv-02232 (D.D.C.), ECF 37-1, Exh. 5. The divestitures are designed
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`to empower DISH to be “an effective competitor while it builds a 5G network, even without a legacy
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`network like those of the other three nationwide mobile wireless service providers.” Statement at
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`10. The court in the SDNY Litigation, after a two-week bench trial and a thorough analysis of the
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`evidence, agreed with Defendants and concluded that “the FCC and DOJ remedies, and particularly
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`those designed to ensure that DISH becomes an aggressive fourth national MNO, significantly
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`reduce the concerns and persuasive force of Plaintiff States’ market share statistics.” New York v.
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`Deutsche Telekom AG, No. 19 CIV. 5434 (VM), 2020 WL 635499, at *39 (S.D.N.Y. Feb. 11, 2020).
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`Moreover, Defendants provide evidence that the combination of Sprint’s and T-Mobile’s
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`Case 5:19-cv-07752-BLF Document 52 Filed 02/28/20 Page 5 of 6
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`complementary assets will result in a superior network and lower costs. See Opp’n at 8-9 (citing
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`trial testimony from the SDNY Litigation). The court in the SDNY Litigation found “substantial
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`merit to Defendants’ claims that the efficiencies arising from the Proposed Merger will lead T-
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`Mobile to compete more aggressively to the ultimate benefit of all consumers, and in particular the
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`subscribers of each of the four major competitors.” New York v. Deutsche Telekom AG, 2020 WL
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`635499, at * 21; see also Saint Alphonsus Med., 778 F.3d 775 at 790 (allowing rebuttal of a prima
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`facie case with evidence that the proposed merger will create a more efficient combined entity and
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`thus increase competition).
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`For the reasons stated on the record and in this Order, the Court is persuaded that Defendants
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`have successfully rebutted the prima facie showing of anticompetitive effect. This shifts the burden
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`back to Plaintiffs. Plaintiffs, however, have failed to provide any analysis whatsoever – either in
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`their reply brief or at the Hearing – of the effects of the proposed merger, in light of the divestitures
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`and other remedies imposed by the DOJ and the FCC. See generally, Plaintiffs’ Reply Brief in
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`Support of Application for Temporary Restraining Order and Order to Show Cause Why
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`Preliminary Injunction Should Not Issue (“Reply”), ECF 42. Plaintiffs’ arguments seem to be
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`limited to the market share analysis, some criticism of the order in the SDNY Litigation, and the
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`DOJ consent decree process. See Reply at 1-2. This is not enough. Plaintiffs have failed to offer
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`any evidence to demonstrate that the mitigating requirements imposed by the DOJ and the FCC are
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`insufficient to ameliorate the anticompetitive effects of the proposed merger or that those
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`requirements are unlikely to actually occur. For the foregoing reasons, the Court concludes that
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`Plaintiffs have failed to show that they are likely to succeed on the merits or that there are serious
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`questions going to the merits.
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`The Court further finds that the balance of equities tips sharply in favor of Defendants.
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`Plaintiffs delayed nineteen months after the merger was announced in April 2018, five months after
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`the SDNY Litigation commenced in June 2019, and four months after the DOJ approved the merger
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`in July 2019, before filing their Application for TRO. On the other hand, Defendants have
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`undergone nearly two years of review and litigation, demonstrated that funding opportunities
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`critical to the closing of the merger are set to expire on May 1, 2020, and DISH has a contractual
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`Case 5:19-cv-07752-BLF Document 52 Filed 02/28/20 Page 6 of 6
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`right to withdraw if the merger does not close by July 26, 2020. See Opp’n at 21. Plaintiffs’ lack
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`of diligence in bringing their Application for TRO weighs heavily against granting an extraordinary
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`remedy such as a TRO at this juncture.
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`B. Plaintiffs’ Administrative Motion
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`The Court also DENIES Plaintiffs’ Administrative Motion. The Court reviewed the parties’
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`briefing along with the evidence submitted therein and heard arguments on Plaintiffs’ Application
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`for TRO. Having denied the Application for TRO and recognizing that the standard for issuing a
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`TRO is identical to the standard for issuing a preliminary injunction, the Court is not persuaded that
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`an expedited hearing or discovery on the preliminary injunction is warranted.
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`III. ORDER
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`For the foregoing reasons:
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`(1) Plaintiffs’ Application for Temporary Restraining Order and Order to Show Cause
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`Why Preliminary Injunction Should Not Issue at ECF 5 is DENIED.
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`(2) Plaintiffs’ Administrative Motion for an Order Expediting Briefing Schedule on
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`Plaintiffs’ Application for Temporary Restraining Order and Order to Show Cause
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`Why Preliminary Injunction Should Not Issue, Setting a Hearing on Preliminary
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`Injunction, and for Limited, Expedited Discovery at ECF 35 is DENIED.
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`This Order is without prejudice to Plaintiffs’ filing of a motion for preliminary injunction.
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`IT IS SO ORDERED.
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`Dated: February 28, 2020
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`______________________________________
`BETH LABSON FREEMAN
`United States District Judge
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