After Twombly and Iqbal: Motions to Dismiss in Parallel Conduct Cases

by Dennis D. Palmer and Adam K. Fuemmeler

This article analyzing recent court decisions considering motions to dismiss in antitrust cases is presented in two parts. Part I examines the Court's landmark decisions in Twombly and Iqbal, and discusses how courts have analyzed motions to dismiss in antitrust parallel conduct cases in the wake of these decisions. Part II of this article reviews recent case law interpreting and applying the pleading standards set forth in Twombly and Iqbal.

Excerpt:

In a ground breaking decision in 2007, the U.S. Supreme Court in Bell Atlantic Corporation v. Twombly [an enhanced version of this opinion is available to lexis.com subscribers] tightened up the standards for pleading the element of conspiracy that is necessary to establish a violation of Section 1 of the Sherman Act. The Complaint in Twombly alleged that Incumbent Local Exchange Carriers ("ILECs" also known as "baby Bells") agreed to a nationwide market-division agreement to avoid competing with each other by not expanding into contiguous territories. Twombly held that the Complaint failed to state a claim for relief under Rule 12(b)(6) Fed. R. Civ. Proc. because it lacked sufficient "factual matter" to allege an anticompetitive conspiracy that is plausible. Two years later in Ashcroft v. Iqbal [enhanced version], the U.S. Supreme Court applied the pleading standards in Twombly to all civil complaints.

Commentators have criticized Twombly and Iqbal on various grounds, including the fact that the Court failed to enumerate the facts that must be alleged to plead conspiracy in antitrust cases where direct evidence of an anticompetitive agreement is kept secret and thus unavailable. Complaints based on antitrust conspiracies often do not involve explicit agreements. By its nature parties to a conspiracy want to keep them secret. Thus, direct evidence of an agreement is many times lacking. In cases involving parallel conduct, meaning that one or more companies intentionally adopt the practices of some competing company, proof of conspiracy to violate Section 1 of the Sherman Act requires additional evidence of assent by the defendants to participate in collusive conduct. These additional facts to prove collusion among conspirators are commonly referred to as "plus factors."

Prior to Twombly and Iqbal, courts frequently permitted the inference of antitrust conspiracies at the pleading stage from allegations falling short of explicit communications of an anticompetitive agreement. After Twombly and Iqbal, bare allegations of a conspiracy and parallel conduct will not suffice without more specific allegations of an anticompetitive agreement by defendants. This article discusses the new pleading standards required by Twombly and Iqbal. It examines several post Twombly and Iqbal antitrust cases involving parallel conduct and plus factors to determine what allegations are sufficient to state a claim of anticompetitive conspiracy. It also suggests some allegations that plaintiffs should make in conscious parallel antitrust cases to satisfy the pleading standards of Twombly and Iqbal. Finally, it suggests some actions that defendants should take and not engage in to improve their chances of succeeding in motions to dismiss under Twombly and Iqbal or avoid conscious parallelism claims. [footnotes omitted]

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Dennis D. Palmer is a shareholder at Polsinelli Shughart PC and his practice focuses on business litigation including antitrust.

Adam K. Fuemmeler is an associate at Polsinelli Shughart PC and is practicing in business litigation.