Racism Accusations vs. AT&T as ‘Offensive’ as They Are ‘Baseless,’ Says Motion to Dismiss
The complaint in which Legacy Equity Advisors alleges AT&T deprived the private equity firm of bidding for Cricket Wireless, DirecTV and other noncore assets because of its African American ownership (see 2305040065) “is as offensive as it is baseless,” said AT&T’s memorandum of law Monday (docket 3:23-cv-00979) in U.S. District Court for Northern Texas in Dallas in support of its motion to dismiss.
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AT&T has been “repeatedly recognized as a champion of diversity and inclusion by third-party organizations,” said the memorandum. In 2022, AT&T spent $16.3 billion with minority-owned companies, which represented 26.3% of its “overall procurement spend,” it said. This year, DiversityInc ranked AT&T as the top company for supplier diversity, it said.
Our own check of the DiversityInc website found that the nonprofit's 2023 Fair360 lists didn't place AT&T among the top 28 companies for representation of Black executives or among the top 50 companies overall for diversity employment.
Despite AT&T’s “stalwart commitment to diversity,” Legacy speculates that AT&T refused to sell it certain assets because of its African American ownership, said the memorandum. But the complaint “pleads no facts plausibly supporting” a valid Civil Rights Act Section 1981 claim, it said. Legacy’s claims instead “rest on conclusory, threadbare allegations that AT&T intentionally discriminated against Legacy,” it said.
In Legacy’s view, Section 1981 requires defendants to accept minority-owned companies’ unsolicited bids to buy multibillion dollar assets, or to “actively invite any allegedly well-financed minority-owned companies to the negotiating table even though they have no experience in the industry,” said the memorandum. Even when they are invited, according to Legacy, defendants are required “to take care not to offer terms that might lead those companies to back out of negotiations,” it said.
But Section 1981 doesn’t work like that “as a matter of law,” said the memorandum. Legacy’s allegations don’t plausibly support a Section 1981 claim involving any of the assets that AT&T decided to sell, it said. The complaint also doesn’t plausibly allege that Legacy “was similarly situated to the buyers of any of the assets AT&T decided to sell,” or that AT&T breached any “legal obligations” to Legacy, it said. AT&T denies its decision-makers “acted with any racial intent, let alone that racism was the but-for cause of any of Legacy’s alleged injuries,” it said.
The Cricket Wireless claim fails because Legacy doesn’t and can’t allege that AT&T “sold this business to anyone,” said the memorandum. That “plainly” negates “any plausible inference” that AT&T refused to contract with Legacy on the basis of race or was the but-for cause of any injury, it said. The noncore assets claim fails because Legacy “alleges no facts that it was qualified to purchase these assets, had any legal right to participate in the bidding process, or what it was willing or able to bid on these assets,” it said.
Legacy’s claims related to AT&T’s DirecTV divestiture “similarly fail to identify any facts that AT&T personnel made any racial statements” in connection with the transaction or “treated a similarly situated non-minority-owned business more favorably during the bidding or contracting process,” said the memorandum. AT&T spun off DirecTV two years ago into a separate entity, selling a 30% stake for $7.1 billion to the private equity firm TPG, while keeping a 70% stake in the new stand-alone company.
Legacy’s “conclusory assertion” that AT&T sold DirecTV and the other noncore assets to white-owned companies that were less qualified and on more favorable terms is “insufficient” to allege that racial or other discrimination was “the plausible, rather than just the possible reason” that AT&T didn’t contract with Legacy, said the memorandum. “Wholly absent” from the complaint are any “factual allegations” that Legacy submitted bids for those assets or that AT&T rejected its bids, said the memorandum.
Legacy also can’t factually allege that AT&T “accepted other offers from similarly situated companies” on terms that were less favorable, said the memorandum. Legacy also can’t assert that it had “any of the qualifications and industry experience necessary to purchase the assets,” or but for any “hypothetical” racially motivated conduct, “the outcome would have been different,” it said. The allegations in the complaint “merely recite the elements of the claim,” which can’t as a matter of law “support a plausible inference of intentional discrimination” based on race, it said.