Judge Sets Trial Date in WorldCom MCI Merger Suit

(July 11, 1998)  A federal judge decided Friday that GTE's antitrust suit to enjoin the merger of WorldCom and MCI will go to trial on May 10, 1999.  Discovery will proceed according to standard Federal Rules of Civil Procedure, and will close on March 31, 1999.  GTE had sought a more accelerated discovery process and disposition of the case.

U.S. District Court Judge Thomas Jackson heard oral argument on scheduling from attorneys for GTE, WorldCom, and MCI in his Washinton DC courtroom on Friday morning.   Judge Jackson was openly disturbed that the parties had not reached any agreement regarding scheduling or pre-trial discovery.  He set a trial date, a date for close of discovery, and ordered all discovery to be kept confidential.  Otherwise, all other matters will proceed according to the FRCP.

He refused to resolve any specific discovery disputes.  However, he threatened to appoint a special master to preside over discovery if the parties could not cooperate.   He promised that neither side would like his appointment.

Telecommunications and Internet services companies WorldCom and MCI announced last fall that they would merge.  Shareholders have approved the deal.  However, the proposed merger also needs the approval of many government regulators, including the Antitrust Division of the U.S. Department of Justice, the Federal Communications Commission, the Competition Directorate of the European Commission, and a host of state public utilities commissions.  The European Commission announced in a press release on July 8 that it was conditionally approving the deal.

Their telecommunications and Internet competitor, GTE, last year sought to merge with MCI, and then opposed WorldCom's deal with MCI.  GTE filed a complaint in federal court in May 11 alleging that the other two will concentrate too much Internet backbone in one company, in violation of antitrust laws.

At yesterday's hearing the lawyers traded accusations that the other was dragging out the suit.  "MCI and WorldCom want to drag out discovery," charged GTE lawyer Steve Bradbury (Kirkland & Ellis).  "In the mean time, they would be able to close their merger," said Bradbury.  "They have every desire to delay for that reason."

WorldComm lawyer Paul Sanders (Cravath Swain) rebutted that GTE could have filed suit last year, but waited until May.  Moreover, it still has served no discovery requests or motion for preliminary injunction.

Judge Jackson was unimpressed.  He is one of few judges who can brush off lawyers embroiled in $37 Billion dispute with the statement, "You are not the only litigants on my docket."   Judge Jackson's docket also includes both of the Department of Justice's cases against Microsoft.  "There are other litigants who would like to be heard in this court," he reminded the dozen posh lawyers who sat before him.

GTE wanted the Defendants to be ordered to immediately turn over all the documents that they had produced for government regulators.  MCI and WorldCom sought complex litigation treatment.  Judge Jackson granted neither request, and instead ruled that the case would proceed according to the FRCP, just as in any other case.  Defendants will have 30 days to respond to a request for production of documents.  Asked for clarification, Judge Jackson quoted Rule 34: "30 days."

Trial Date

 The trial is scheduled to begin on May 10.  The judge told the parties not to expect a change of trial date.  He said that it "is carved in granite, come hell or high water."

Discovery Schedule

Discovery will close on March 31, 1999.  However, Jackson ruled that the parties by mutual agreement can do further discovery after that date.  He declined requests to resolve specific disputes.  "I will not, unless absolutely obliged to so, establish any order regarding the order in which discovery will be conducted."   He added, "Follow the Federal Rules of Civil Procedure."

The Judge did state that after the close of discovery the matter will be referred to a Magistrate Judge for a pretrial conference.

Hart Scott Rodino Production

At the heart of the scheduling and discovery dispute was GTE's request that it immediately get copies of everything that WorldCom and MCI have produced to government regulators pursuant to the Hart-Scott-Rodino Act.

GTE's Bradbury argued that "there is no burden in turning over a cache of documents that has already been assembled."  He also argued that all these records are "a priori relevant."

MCI lawyer Carl Nagler (Jenner & Block) said it had "1,000 to 1,500 boxes sitting in a warehouse," but that "we have contracts with hundreds of third parties who have documents in those boxes ... we did not get permission to turn them over to (the Plaintiff, GTE)."  He said it would take time to sort through the records, and get permissions.  Both defense lawyers claimed that many of these Hart Scott Rodino records are not relevant to the GTE suit.

Judge Jackson made no ruling on this.  However, he did state that "if we try to segregate documents, ... that is an open invitation for me to appoint a special master."

Protective Order

Defendants also sought a protective order.  Jackson ruled that "all discovery is deemed confidential" and is "confined to counsel."  He conceded that "that is a little heavy handed."