REVISED MARCH 9, 2010

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 09-50208

LINDSEY WAMPLER; MICHAEL J. PEACOCK,

Plaintiffs - Appellants

v.

SOUTHWESTERN BELL TELEPHONE COMPANY, doing business as

AT&T Southwest, doing business as AT&T Datacomm, doing business as

AT&T Texas; SBC ADVANCED SOLUTIONS, INC., doing business as AT&T

Advanced Solutions; AT&T, INC.; PARKMEED MALIBU CANYON LLC II;

PARKMEED MALIBU CANYON LLC; RICHARD H. MORAN; ROBERT S.

WELLS, as Trustee of the Wells Revocable Trust Dated July 2, 2002;

CHRISTA B. WELLS, as Trustee of the Wells Revocable Trust Dated July 2,

2002; CASTLE HILLS, L.P.; RENAISSANCE AT WEST AVENUE

APARTMENTS, L.P.; BUCA WEST AVENUE GENPAR, LLC; AT&T VIDEO

SERVICES, INC., doing business as AT&T Home Entertainment; GE-CWS

POOL, LLC,

Defendants - Appellees

Appeal from the United States District Court for the

Western District of Texas

USDC No. 1:07-CV-1039

Before REAVLEY, DAVIS, and STEWART, Circuit Judges.

REAVLEY, Circuit Judge:

United States Court of Appeals

Fifth Circuit

F I L E D

February 22, 2010

Charles R. Fulbruge III

Clerk
No. 09-50208

1 15 U.S.C. § 1.

2 300 F.3d 620, 624 (5th Cir. 2002) (citing Jackson v. City of Beaumont Police Dep't, 958

F.2d 616, 618 (5th Cir. 1992))

3 550 U.S. 544, 570, 127 S. Ct. 1955, 1974 (2007).

2

Plaintiffs/Appellants sue for themselves and on behalf of a class of all

residents of multiple dwelling units ("MDUs") in five states who are limited to

voice, video, and Internet service by contracts with Defendant/Appellee AT&T.

The claim is that a single MDU is itself a relevant geographic market and for

that reason the contracts are in violation of § 1 ofthe Sherman Act.1 The district

court dismissed the case and we AFFIRM.

The owner of the MDU where Appellants live in San Antonio entered into

contracts, whereby AT&T was granted the exclusive rightto provide video, voice

and broadband Internet ("Triple Play") services to MDU residents in exchange

for AT&T paying a "door fee" to the MDU owners. The contract also provides

AT&T with exclusive access to the copper wire, coaxial, and fiber optic cables

entering the MDU, thereby granting AT&T exclusive control to the "bottleneck"

through which all voice, video, and Internet services may enter the individual

residences.

Appellants filed this suit to claim that Appellees violated §§ 1-2 of the

Sherman Act because the contracts were both an illegal restraint on trade and

an attempt to monopolize the Triple Play services market. The district court

granted Appellees' motion to dismiss the case, holding that Appellants had failed

to demonstrate thattheir alleged geographic market was sufficient for antitrust

purposes.

We review a district court's ruling on a motion to dismiss de novo. See

Apani Sw. Inc. v. Coca-Cola Enters.

2 Antitrust cases are not subject to a

heightened pleading standard. Bell Atl. Corp. v. Twombly.

3 As in most cases,

a plaintiff must provide "a short and plain statement of the claim showing that
No. 09-50208

4

Id. at 555, 127 S. Ct. at 1964 (internal cites and quotes omitted).

5

Id. at 555, 127 S. Ct. at 1965.

6

Id. at 570, 127 S. Ct. at 1974.

7 Section 1 of the Sherman Act states that "[e]very contract, combination in the form

oftrust or otherwise, or conspiracy, in restraint oftrade or commerce among the several States,

or with foreign nations, is declared to be illegal." 15 U.S.C. § 1. 

8 See Apani, 300 F.3d at 627 (citing Spectators' Comm. Network Inc. v. Colonial Country

Club, 253 F.3d 215, 220 (5th Cir. 2001)).

9 See id.

3

the pleader is entitled to relief . . . in order to give the defendant fair notice of

what the . . . claim is and the grounds upon which it rests."4"Factual allegations

must be enough to raise a right to relief above the speculative level . . . on the

assumption that all of the complaint's allegations are true."5 Ultimately, a

plaintiff need only plead "enough facts to state a claim to relief that is plausible

on its face."6

Appellants appeal only the district court's dismissal of their claims based

on § 1 of the Sherman Act.7In order to demonstrate a violation of § 1,

Appellants must allege that (1) AT&T and the Manor owners engaged in a

conspiracy, (2) the conspiracy had the effect of restraining trade, and (3) trade

was restrained in the relevant market.8 The first step in this analysis is

determining the relevant market, which itself is a function of the relevant

product market and the relevant geographic market.9

Appellants have alleged, and Appellees have not disputed, that the

relevant product market in this case is Triple Play services. The sole issue on

appeal is whether a single MDU (or MDUs in the aggregate) may plausibly be

considered a relevant geographic market for antitrust purposes.
No. 09-50208

10 365 U.S. 320, 328, 81 S. Ct. 623, 628 (1961).

11 Apani, 300 F.3d at 626 (citing Tampa Elec. Co., 365 U.S at 327, 81 S. Ct. at 628).

12 370 U.S. 294, 336-37, 82 S. Ct. 1502, 1530 (1962) (internal quotes omitted).

13 Apani, 300 F.3d at 626 (citations omitted).

14 Id. at 627 (quoting EARL W. KINTNER, FEDERAL ANTITRUST LAW: VOLUME IV THE

CLAYTON ACT SECTION 3; SECTION 7; MERGERS AND MARKETS § 38.2 (1984)).

15 Id. at 628-29.

16 Id. at 629.

4

In defining the relevant geographic market, this Court looks at "the area

of effective competition." Tampa Elec. Co. v. Nashville Coal Co.10 This is the

area "in which the seller operates and to which buyers can practicably turn for

supplies."11 In addition, the proposed market must "correspond to the

commercial realities of the industry and be economically significant." Brown

Shoe Co. v. United States.

12 These "commercial realities" include "size,

cumbersomeness, and other characteristics of the relevant product" along with

"regulatory constraints impeding the free flow of competing goods into an area,

[such as] perishability of products, and transportation barriers."13 When

determining the "economic significance" of a proposed market, we look to

whether the proposed market is "'largely segregated from, independent of, or not

affected by’ competition elsewhere.'"14

In Apani, we held that the bottled-water business on city-owned facilities

in Lubbock, Texas, was not a plausible relevant market for antitrust purposes.

Specifically, we affirmed the lower court's holding that bottled water was not

limited by its size, cumbersomeness, or perishability to just the facilities owned

by the city.15 In addition, we affirmed the holding that bottled-water business

on those facilities was not economically segregated or insulated from the sale of

bottled water elsewhere in the city.16 In the instant case, the district court relied
No. 09-50208

17 237 F.3d 81, 87 (2d Cir. 2000) (noting that if students forced to live on campus did not

like their living facilities, "they could matriculate elsewhere"), abrogated on other grounds by

Swierkiewicz v. Sorema N.A., 534 U.S. 506, 122 S. Ct. 992 (2002). 

5

exclusively on this Court's ruling in Apani to conclude that Appellants' defined

market of a single individual MDU was too narrowly drawn. By comparing the

bottled-water business on city-owned facilities in Apani to the Triple Play

services business in a single MDU,the district court determined that"Plaintiffs'

alleged geographic market of MDUs essentially identifies specific venues

(collections of apartment homes) that simply narrow the broader economic

market in which these MDUs are located, which in this case is the City of San

Antonio." We agree.

There are obvious physical differences between an easily portable bottle

of water and the home-bound Triple Play services, such that the commercial

realities facing consumers of each product are different. However, we hold that

there are too many competitive forces bearing on a SmartMoves contract for a

single MDU to be sufficiently isolated and thus economically significant. First,

it is undisputed that MDUs compete with each other for a tenant's business.

Accordingly, an MDU owner has an incentive to provide the lowest cost and

highest quality services to attract a tenant's business. Second, it is also

undisputed that service providers such as AT&T compete with each other to

provide the Triple Play contracts in each MDU. It is therefore in the interest of

each service provider to provide lower-cost and higher-quality services than its

competitors in order to attractthe MDU's business. Finally, when a tenant signs

a lease, that tenant has the opportunity to inquire into what services are

available at the MDU. Therefore, the cost and quality of Triple Play services

likely play a factor in where a tenant chooses to live. If a tenant does not like

the services of a particular MDU, that tenant can make other living

arrangements. See Hack v. President & Fellows of Yale Coll.17 Even if these
No. 09-50208

18 Despite making such arguments in their briefs, Appellants made no allegations in

their complaint that any of them were "locked in" to SmartMoves contracts mid lease.

19 Appellants also point to various reports by the Federal Trade Commission declaring

that contracts similar to the SmartMoves contract result in higher costs and lower quality

services for MDU residents. Such reports do little to support Appellants' argument on appeal.

As Appellees point out and Appellants apparently concede, these reports provide no definition

of a relevant geographic market, because such an antitrust-specific definition is not directly

relevant to the FTC reports. While the FTC's conclusions are informative regarding the

anticompetitive nature of certain behavior, those conclusions are not dispositive of whether an

antitrust violation has occurred. See, e.g., Goldwasser v. Ameritech Corp., 222 F.3d 390,

399-400 (7th Cir. 2000) (violations of FTC enabling statutes do not equate with violations of

antitrust laws).

6

SmartMoves contracts were imposed in the middle of a particular tenant's

lease,18 the modern leasehold rarely lasts more than a year, and a tenant is

therefore "locked in" to these services only for a brief time. Accordingly, given

the competition that exists between MDU owners, the competition that exists

between service providers, and given the highly mobile nature of today's society,

we cannot hold that a single MDU is so segregated as to be economically

significant and thus represents a plausible geographic market.19

Appellants have failed to properly allege a relevant geographic market and

their § 1 claim fails.

AFFIRMED.