Class Action suit against T-Mobile claims it lied to Congress and ripped off minority-owned stores

T-Mobile is currently embroiled in a class action suit (via Top Class Actions) brought by individually-owned T-Mobile stores. The owners of these stores say that T-Mobile lied to Congress when it said that the merger with Sprint would result in the opening of hundreds of retail stores. Instead, these store owners say that T-Mobile ended up buying up minority-owned locations for little to no compensation.

Per Top Class Actions, the stores and T-Mobile met virtually on December 18th trying to reach a mediated agreement. In a letter to Judge U.S. District Judge Diane Gujarati, the plaintiffs said that the two sides could not reach an agreement. T-Mobile will now ask the court to hear its motion to dismiss the suit while the stores are asking the court to begin the discovery process during which both sides exchange a list of the evidence they plan on presenting in court.  

The class action suit claims that T-Mobile conspired with national T-Mobile retailer and Master Dealer Arch Telecom to close or buy the mostly minority-owned T-Mobile stores. The complaint alleges that "Arch Telecom attempts to close the Plaintiffs' stores for absolutely zero compensation, depriving them of their livelihood and disgorging them of their investments. This is occurring as of the time this Complaint is being filed" (which was this past March). Arch Telecom is the third largest T-Mobile retailer with over 400 stores in 32 states.  

The filing goes on to say, "The Plaintiffs are essentially community-based T-Mobile stores, and they are what T-Mobile and Arch Telecom prefer to call "Sub-Dealers." T-Mobile and Arch Telecom hold the latter out to be a "Master Dealer." Using its operating standards, T-Mobile controls substantially every aspect of the Plaintiffs' business."

The suit cites comments made by former T-Mobile CEO John Legere at the time of the merger announcement with Sprint that said, "We’ll build hundreds of stores. Legere also pushed "jobs" as a reason why the T-Mobile purchase of Sprint made sense. The Plaintiffs noted that "T-Mobile never informed Sub-Dealers, prior to the approval of the merger, that it
planned to close stores such as the Plaintiffs' stores.

The Plaintiffs seek $100 million in compensatory damages and $1 billion in punitive damages plus attorney fees which are likely to be substantial. The filing explains how many of the Plaintiffs took a hit financially. One Sub-Dealer was initially offered $35,000 for its store which was raised to $100,000. However, the store had been recently renovated costing the owner $120,000 so that offer was turned down.

But with the contracts between T-Mobile and the Plaintiffs set to expire in June of 2024, T-Mobile had the upper hand as it tried to create what the Plaintiff's called an "artificial termination date" of March, 2023. The Plaintiffs say T-Mobile played a dirty game of  "squeeze and buy."

The lawsuit says that the April 2020 merger between T-Mobile and Sprint was an anticompetitive acquisition that collectively cost U.S. small businesses and AT&T and Verizon subscribers billions of dollars.

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