AT&T’s Terrible Horrible No Good Very Bad Day In Court

Today AT&T and the Department of Justice met to have a status conference with Judge Huvelle on the pending litigation. It unfolded very much as I predicted last week, but even better than I could possibly have imagined.  Most of the news coverage has been surprisingly anemic and failed to capture how Judge Huvelle spent 45 minutes racking AT&T Counsel Mark Hansen over the coals. (Cecilia Kang at Washpo and Brent Kendall at Marketwatch being the exception, but even they cannot capture the utter savageness of the beat down Judge Huvelle gave). Mind you, Hansen did not help himself with his “nothing to see here judge, move along” attitude. Also, when the judge says: “I think I should hear from the government now” that is not the time for you to make the same argument she just dissed again. You shut up and sit down.

Some rapturous details, indecent gloating, and a few further predictions below . . . .

First, here’s what I predicted last week:

Assuming AT&T continues its Black Knight v. King Arthur strategy, I expect them to show up at the next status conference all rarin’ to go. With this Order in their back pocket, I expect DoJ to be equally rarin’ to go. But I do expect Judge Huvelle to press both parties on whether there is any point in going on, given that AT&T has withdrawn its application and three Commissioners made it abundantly clear that if AT&T and DT come back with precisely the same application, they will vote the hearing designation order as soon as the FCC’s ULS database confirms receipt.

It is also entirely possible that if AT&T wants to buy time, either to work out some possible new deal or put pressure on DT to renegotiate the break up fee by dragging things out, will ask the court to hold the case in abeyance. And, of course, DoJ could ask for that as well – although I don’t see why they would at this point.

I do not expect Judge Huvelle to make any immediate decision at the status hearing. She may even ask the parties to brief the question of whether to hold in abeyance or not. My bet is, if no one asks the court to hold this in abeyance, then she probably won’t do it on her own. As I noted last time, nothing requires companies merging to go in any particular order and, until AT&T and DT officially call it quits, there remains a live controversy for the court to decide. So might as well stick to schedule and decide it now rather than wait to see if the parties restructure and go back to the FCC with something different.

 My prediction about Huvelle wanting to know why to continue was spot on. The one thing I missed was that DoJ said it would ask to hold the case in abeyance (or dismiss). I am not entirely sure they planned to ask for it, however, until they saw Judge Huvelle in motion. She said several times during her smackdown of Hansen that she wondered why on Earth DoJ had not filed a request to hold in abeyance. DoJ would have been fools to ignore this sort of invitation.

AT&T Started Out Badly And Went Down Hill

Perhaps I am unfair to Hansen, given that he doesn’t have a lot of good arguments. But he made things worse, in my opinion, by trying to minimize the importance of withdrawing from the FCC and by making ridiculous arguments over a “pocket veto” by DoJ. In his shoes, I would have acknowledged the issue but stood on AT&T’s legal right to pursue its application in whatever way it thought best.  Not that this would necessarily have helped.

Instead, Judge Huvelle started by saying: “I originally intended this to be a routine status hearing on the progress of discovery, but I think we need to discuss the developments of the last few weeks.”

Hansen: Your honor, as far as my client is concerned, nothing has changed in the last few weeks.

At this point, Judge Huvelle’s eyes did not quite bug out. But she clearly did a full and complete hard-stop-and-stare and this statement so utterly divorced from reality.

“Counsel, didn’t your client withdraw its application from the FCC?”

“Yes. But that in no way has any material effect on what will happen here.”

And it went down hill from there for AT&T.  Judge Huvelle simply could not believe her ears. She pointed out that AT&T was asking taxpayers and third parties to spend millions of dollars when she had “no confidence” AT&T planned to go forward — especially given that AT&T wanted an accelerated schedule.

Hansen responded that the court had already set a discovery schedule and granted AT&T’s request for an accelerated schedule, why bring up old stuff? As for withdrawal from the FCC, the prospect of a pesky second trial at the FCC seemed so gosh darn inefficient that it would be better to have the one trial right here on the already agreed upon accelerated schedule. “This way, the FCC will have your expert guidance,” concluded Hansen.

“You could have the FCC’s guidance instead of mine,” Huvelle shot back. She pressed Hansen on whether AT&T was “trying to use the court” to short circuit FCC review. “Presumptuous is not the only word that would apply” to AT&T’s attitude warned Judge Huvelle. “Don’t you understand that this ‘strategy’ has a slight aura of using the court?” she asked at another point.

Huvelle also asked why there was any need to rush, placing burdens on everyone else. “If you have a problem, it is of your own making,” said Huvelle. “And if this is such a great deal, why can’t you and Deutsche Telekom renegotiate [the deadline to close]?” With regard to the previous schedule, she pointed out that this was before Sprint and C. Spire were in the case. “Those issues don’t just go away, and I don’t see any reason now to have two trials.”

Hansen’s growing frustration began to show. At one point he said “Your honor, just forget the FCC for a minute!” This generated laughter from the assembled crowd. Several times, Huvelle said: “well, I think I should hear from the government on this . . .” and then, instead of sitting down like an intelligent lawyer, Hansen would say: “But your honor!” and would start an even more aggressive recap of his basic argument that DoJ should not get a “pocket veto” by delaying the trial, that AT&T was confident they could get everything wrapped up here, trot over to the FCC, and resolve any outstanding issues at the FCC.

As an aside, I was absolutely appalled at Hansen’s utter misstatement of applicable FCC law and procedure. For example, he kept insisting that “the government” would be “estopped from relitigating at the FCC” any issues it lost in court. But as I keep explaining to people, the government is not the litigant at the FCC. I (and everyone else who filed a timely Petition to Deny) am the litigant before the ALJ. As I am not in the current case before the court, I am not estopped from raising any argument I think is appropriate at the FCC — should it come to that.

Judge Huvelle, apparently noticing Hansen’s utter lack of familiarity with FCC law or practice, suggested to DoJ that it would be an excellent idea to bring the FCC’s General Counsel to the hearing on the 15th when they reexamine this issue.

There is more, but you get the flavor. DoJ will file its motion Tuesday, AT&T will reply, then they will have argument on Thursday. Believe me, I will try to get there early for good seating. You just don’t get the flavor of this from the press — most of whom are still obsessed with figuring out how AT&T can still somehow win.

Stay tuned . . . . .

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