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California District Court Grants Motion To Dismiss Antitrust Counterclaims Against Telecommunications Companies
11/11/2025On October 31, 2025, the U.S. District Court for the Central District of California granted the motion to dismiss counterclaims brought by Defendant, which alleged that plaintiff telecommunications companies (“Plaintiffs”) violated Sherman Act § 1 and Sherman Act § 2 by using restrictive lease terms, defensive acquisitions, and litigation to maintain monopsony power and suppress prices paid to EBS license holders. T‑Mobile USA, Inc., et al. v. WCO Spectrum, LLC, et al., No. 2:23‑cv‑04347‑AH‑E (C.D. Cal. Oct. 31, 2025). In response, Plaintiffs asserted that Defendant failed to plausibly allege an antitrust injury, any anticompetitive conduct, and a relevant market. The district court granted Plaintiffs’ motion, finding that Defendant failed to sufficiently allege any antitrust injury or actual anticompetitive conduct.
The complaint, filed by Plaintiffs against Defendant, stems from a change in the Federal Communications Commission’s (“FCC”) Educational Broadband Service (“EBS”) license permitting process. In 2020, the FCC revised its historical approach to EBS license permitting, authorizing the sale of EBS licenses to commercial entities. Defendant alleged that, as a result of the change in policy, Plaintiffs were able to acquire approximately 90% of the market for EBS licenses in the 2.5 GHz band.
Defendant’s counterclaims centered on five practices: (i) exclusivity provisions in Plaintiffs leases, (ii) burdensome “right to participate” terms, (iii) rights of first refusal (“ROFRs”) that survived lease terms, (iv) defensive acquisitions of licenses, and (v) weaponized lawsuits or threats of suit against lessors. Defendant brought antitrust counterclaims under Sherman Act § 1 and Sherman Act § 2. Defendant alleged Plaintiffs monopsonized and attempted to monopsonize the EBS license permit market, in violation of Sherman Act § 2. Additionally, Defendant alleged Plaintiffs participated in an agreement to restrain trade in violation of Sherman Act § 1. Defendant asserted that it was excluded from consummating license purchases because Plaintiffs repeatedly matched Defendant’s bids by exercising contractual ROFRs as a market‑wide price suppression tactic, thereby harming Defendant.
The court focused its opinion on three core issues: antitrust injury, anticompetitive conduct, and the relevant market. First, the court held Defendant failed to plausibly allege an antitrust injury stemming from alleged market exclusion, price suppression, and exclusive dealing. The court rejected Defendant’s theory of market exclusion because the factual allegations showed Defendant could and did bid against Plaintiffs, even acquiring at least one license. As such, Defendant’s alleged losses stemmed from competitive bid matching rather than anticompetitive exclusionary conduct. Additionally, the court found Defendant’s price suppression allegation did not constitute a standalone antitrust injury because, as a buyer, Defendant benefited from lower prices. Moreover, allegations that Plaintiffs bid more in the face of competition and less when it was the sole offeror reflected rational competitive behavior, not harm to competition. Defendant also expressly disclaimed allegations of predatory bidding. Lastly, the court dismissed allegations of impermissible exclusive dealing. The court highlighted that Defendant alleged only one concrete example of Plaintiffs’ exclusivity agreement blocking a sale. Thus, the court found the allegation insufficient to plausibly plead substantial foreclosure.
Second, the court held that Defendant failed to plausibly allege anticompetitive conduct. Rather, the court held that Plaintiffs’ litigation activity was immunized under the Noerr‑Pennington doctrine. To assess whether Plaintiffs’ litigation activity constituted “sham” litigation, and thus was not immunized from antitrust liability by the Noerr-Pennington doctrine, the court first had to determine the appropriate legal framework under which to review Plaintiffs’ actions. Specifically, the court assessed whether the POSCO framework (applicable to allegations that a party is engaged in a policy or pattern of starting legal proceedings without regard to the merits of the actions) or the stricter PREI framework (applicable to allegations of a single “sham” lawsuit, or small but discrete number of proceedings) was the appropriate standard of review. The court found that the POSCO framework—excluding a lawsuit from Noerr-Pennington protection if, taken as a whole, the litigation campaign was brought primarily to burden a rival—did not apply. The court held that three alleged lawsuits and six alleged threats did not amount to a “series” of lawsuits as required under POSCO. Accordingly, the court reviewed Plaintiffs’ litigation activity pursuant to the PREI objective baselessness test—excluding a lawsuit from Noerr-Pennington protection only if the claim so lacked probable cause that no reasonable litigant could expect success. Using the PREI framework, the court held that Defendant did not plausibly allege that Plaintiffs’ lawsuits or threats, predicated on enforcing lease ROFRs and bona fide offer terms, were objectively baseless. The court noted that the suits mooted when lessors abandoned sales, and settlement or voluntary cessation indicate at least probable cause. Absent objective baselessness, subjective intent was irrelevant, and the litigation could not support anticompetitive conduct.
Notably, the court held that Defendant’s monopsony market definition, a buyer‑side market for 2.5 GHz spectrum rights, was facially adequate at the pleading stage. The court discounted Plaintiffs’ argument that Defendant failed to account for substitutes, holding that those contentions were premature at the motion to dismiss stage, particularly in a buyer‑side market where seller perceptions of buyer interchangeability are central. Nonetheless, because Defendant did not plausibly allege antitrust injury or actionable anticompetitive conduct, the Sherman Act claims were dismissed.
The district court granted the motion to dismiss all counterclaims. The district court granted leave to file amended counterclaims within thirty days.
This decision underscores the stringent pleading requirements for buyer‑side antitrust claims in concentrated upstream markets. Plaintiffs must tether their claims of harm from anticompetitive acts to specific, actionable conduct rather than assertions of lost deals to rival bids. Exclusive‑dealing theories of harm also require facts demonstrating substantial foreclosure, not isolated anecdotes. In terms of theories of weaponized litigation, Noerr‑Pennington remains a formidable shield. Absent particularized facts showing objective baselessness, efforts to enforce contractual rights such as ROFRs cannot underpin claims of antitrust liability. Finally, while monopsony market definitions may survive challenges at the pleading stage, plaintiffs must still plausibly allege antitrust injury that is distinct from a rival’s commercial success and that flows from the conduct asserted as unlawful.
