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In re Text Messaging Antitrust Litig. - 630 F.3d 622 (7th Cir. 2010)

Rule:

At the complaint stage, the test for whether to dismiss a case turns on the complaint's "plausibility." The plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully. This is a little unclear because plausibility, probability, and possibility overlap. Probability runs the gamut from a zero likelihood to a certainty. What is impossible has a zero likelihood of occurring and what is plausible has a moderately high likelihood of occurring. The fact that the allegations undergirding a claim could be true is no longer enough to save a complaint from being dismissed; the complaint must establish a nonnegligible probability that the claim is valid; but the probability need not be as great as such terms as "preponderance of the evidence" connote.

Facts:

Plaintiff consumers filed a class action lawsuit in federal district court against defendants, several entities that sold text messaging services, for alleged violations of federal antitrust law. The consumers alleged that the sellers conspired to fix prices of text messaging services. The consumers filed a motion for leave to file a second amended complaint. The sellers objected, arguing that, like the complaints before it, the second amended failed to state a claim. The district court rejected the sellers' objection and permitted the consumers to file a second amended complaint. Pursuant to 28 U.S.C.S. § 1292(b), the sellers sought to certify the question of the complaint's adequacy for interlocutory appeal. The consumers opposed the motion, arguing that the proposed appeal did not present a "controlling question of law," as required by § 1292(b). The district court granted the motion.

Issue:

Was interlocutory appeal warranted to address the interpretation and application of the Twombly pleading standard to the consumers' second amended complaint?

Answer:

Yes.

Conclusion:

The court of appeals affirmed the district court's order. The court first rejected the consumers' claim to the contrary and held that the interpretation and application of the Twombly pleading standard was a controlling question of law for purposes of § 1292(b). The question presented by the appeal, the court explained, was the sufficiency of the allegations of a complaint, which required the interpretation, and not merely the application, of a legal standard—that of Twombly. The court then turned to the merits and ruled that the second amended complaint alleged an antitrust conspiracy with sufficient plausibility to satisfy the Twombly standard. The complaint alleged a mixture of parallel behaviors, details of industry structure, and industry practices that facilitated collusion. It was alleged that the sellers sold 90 percent of text messaging services in the United States. They allegedly belonged to a trade association and exchanged price information at association meetings. The sellers also were alleged to have increased their prices in the face of falling costs and to have all at once changed their pricing structures to a uniform structure and imposed a uniform price increase. The complaint therefore provided a sufficiently plausible case of price fixing to allow the consumers to proceed to discovery.

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