May 21 (Bloomberg) -- The U.S. Supreme Court put new limits on class actions and other lawsuits, throwing out an antitrust case that accused Verizon Communications Inc. and other telephone companies of agreeing not to compete in each other's home territories.

The justices, voting 7-2, today said the lawyers pressing the case had no evidence of collusion when they filed their complaint against Verizon, AT&T Inc. and Qwest Communications International Inc. An appeals court had let the case go forward.

``There is no reason to infer that the companies had agreed among themselves to do what was only natural anyway,'' Justice David Souter wrote for the court.

The ruling may shield companies in a variety of industries from antitrust claims. DuPont Co., MasterCard International Inc., Visa USA Inc., Northwest Airlines Corp., UAL Corp., Louisiana- Pacific Corp. and all urged the court to restrict suits.

The decision also will help corporate defendants outside the antitrust context, said Roy Englert, who filed a brief on behalf of the U.S. Chamber of Commerce and other business trade groups. The majority disavowed a 1957 high court ruling that said dismissal was appropriate only when ``no set of facts'' would entitle the plaintiff to win the case.

In addition, Souter pointed to the expense of defending against an antitrust lawsuit -- a factor that also comes into play in class action shareholder suits, Englert said.

`Very Big Deal'

``It's a very big deal,'' said Englert, a lawyer at Robbins Russell Englert Orseck & Untereiner in Washington. ``There's not going to be so much letting cases go forward to see what might turn up in discovery,'' he added, referring to the evidence- gathering stage of litigation.

The high court majority faulted the class action consumer lawsuit for making only a general allegation about an illegal agreement not to compete. The court said the companies might have made independent decisions not to venture into territory where another business has a dominant presence.

``Because plaintiffs here have not nudged their claims across the line from conceivable to plausible, their complaint must be dismissed,'' Souter wrote.

Justices Ruth Bader Ginsburg and John Paul Stevens dissented. Stevens wrote that dismissing the claim without evaluating the evidence ``marks a fundamental -- and unjustified -- change in the character of pretrial practice.''

Douglas Richards, the lead lawyer for the consumers, said the ruling ``has the potential to portend a seismic shift'' on the standards for lawsuits. He called the ruling ``a triumph of the voices for America's wealthiest corporations over established legal traditions and corporate accountability.''

`Freedom to Decide'

Richards pressed the suit as an attorney at Milberg Weiss & Bershad, the New York law firm indicted for paying plaintiffs to lend their names to securities suits. Richards joined Pomerantz Haudek Block Grossman & Gross in New York earlier this year.

Verizon Senior Vice President John Thorne said in a statement that the ruling ``affirms the freedom to decide when and how to enter new markets.'' He said the high court in recent years has established that ``firms will not be challenged under antitrust for making independent choices that benefit consumers.''

The case was one of four antitrust cases the court is considering in its 2006-07 term, which will conclude around the end of June. In February the court shielded companies from claims that they illegally tried to drive a competitor out of business, overturning a $78.8 million award against Weyerhaeuser Co.

The Verizon dispute stemmed from a 1996 federal law that sought to encourage regional phone companies -- those once known as ``Baby Bells'' -- to vie for each other's local-phone customers. That aspect of the law had limited success, as the largest companies proved reluctant to challenge each other.

`Bare Assertion'

The lawsuit contended that the likely explanation was an illegal agreement. The suit also said the phone companies worked together to keep smaller rivals from making inroads.

The 2nd U.S. Circuit Court of Appeals in New York said the suit could proceed to the discovery stage. That would have forced the companies to answer questions about their business practices and turn over documents.

In reversing that ruling, the Supreme Court majority said that ``an allegation of parallel conduct and a bare assertion of conspiracy will not suffice.''

The lawyers pressing the suit said the lower court approach was a fair one because consumers rarely have evidence of an illegal agreement before filing suit.

90 Percent

San Antonio-based AT&T is the nation's largest phone company, followed by New York-based Verizon and Denver-based Qwest. Those three companies control more than 90 percent of the U.S. local-phone business, according to the suit.

The Bush administration backed the phone companies, though the government didn't go quite so far in urging restrictions on antitrust suits.

The case is a follow-up to a 2004 Supreme Court ruling. That decision said consumers can't use a separate section of the antitrust laws to accuse phone companies of failing to open up their networks to competition, as the 1996 law requires. Under U.S. antitrust law, successful damage claims are automatically tripled.

The case is Bell Atlantic v. Twombly, 05-1126.

To contact the reporter on this story: Greg Stohr in Washington at gstohr@bloomberg.net.

Last Updated: May 21, 2007 17:21 EDT