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.
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.