by Michael G. Cecchini
In April 2012, the Second
Circuit reversed the opinion to dismiss plaintiffs' antitrust complaint in Anderson News, L.L.C. v. American Media,
Inc. With this ruling, the Second Circuit again demonstrated its
willingness to overturn its district courts and allow antitrust complaints to
proceed despite those district courts' well-considered rulings that plaintiffs
had not adequately pleaded facially plausible antitrust claims as required by
The Second Circuit has again demonstrated its willingness to overturn its
district courts and allow antitrust complaints to proceed despite those
district courts' well-considered rulings that plaintiffs had not adequately
pleaded facially plausible antitrust claims as required by Twombly. On
April 3, 2012, a panel of the United States Court of Appeals for the Second
Circuit reversed the opinion and order of Judge Paul A. Crotty of the Southern
District of New York to dismiss plaintiffs' antitrust complaint in Anderson
News, L.L.C. v. American Media, Inc. ("Anderson News").
The district court found that the plaintiff magazine wholesaler's original and
proposed amended complaints failed to allege facts plausibly suggesting
conscious parallel conduct among defendant magazine publishers and
distributors, and also failed to place the parallel conduct allegations in a
context plausibly suggesting collusion. Judge Crotty held that plaintiffs'
allegations failed under the pleading standards established by the Supreme
Court in Twombly, as clarified in Iqbal, because they amounted to
nothing more than the recitation of conclusory facts of parallel conduct, and
were belied by plaintiff's other allegations suggesting that the Defendants had
not acted in concert pursuant to any preexisting agreement. The Second
Circuit, however, reversed Judge Crotty's decision and determined that even if
the original complaint did not meet the requirements set out in Twombly,
the proposed amended complaint did so and should have been allowed.
Anderson News is the latest example of the Second Circuit misapplying
the more stringent Twombly pleading standards. The opinion creates
unnecessary uncertainty for antitrust pleading standards, and it appears to
gloss over the Supreme Court's statements in Twombly that allegations of
parallel conduct (and even conscious parallelism) in reaction to a common
stimulus are insufficient to plead Section 1 Sherman Act claims.
The Twombly Pleading Standard & The Second Circuit
In 2007, the Supreme Court in Bell Atlantic Corp. v. Twombly, 550 U.S.
544 (2007)-a case which reached the Supreme Court after the Second Circuit
improperly overturned a trial court's order of dismissal-provided guidance on
the pleading standard required at the motion to dismiss stage for claims under
Section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1. The Supreme Court held
in Twombly that a Section 1 plaintiff must plead "more than labels
and conclusions" or facts "merely consistent with" a defendant's
liability, and instead must allege enough facts to show that the claim to
relief "is plausible on its face." Id. at 555, 557, 570. The Twombly
decision thus effectively rejected the former and much less rigorous
"no set of facts" standard first enunciated in Conley v. Gibson,
355 U.S. 41, 45-46 (1957). The Court subsequently elaborated on the
requirements of this heightened pleading standard: "[W]here the
well-pleaded facts do not permit the court to infer more than the mere
possibility of misconduct, the complaint has alleged, but it has not 'show[n]
... that the pleader is entitled to relief.'" Ashcroft v. Iqbal,
129 S. Ct. 1937, 1950 (2009) (quoting Fed. R. Civ. P. 8(a)(2)). Thus,
"[d]etermining whether a complaint states a plausible claim for relief
will ... be a context-specific task that requires the reviewing court to draw
on its judicial experience and common sense." Id. In developing
this standard, the Court was cognizant of a practical policy issue,
specifically, avoiding the "potentially enormous expense of
discovery" in cases unlikely to yield evidence of a viable Section 1
claim. Twombly, 550 U.S. at 558-59.
subscribers can access enhanced versions of the opinions and annotated versions
of the statutes cited in this article:
Anderson News, L.L.C. v. American Media, Inc., 2012 U.S. App. LEXIS
Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007)
15 U.S.C. § 1
Conley v. Gibson,
355 U.S. 41 (1957)
Ashcroft v. Iqbal,
129 S. Ct. 1937 (2009)
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Cecchini is an associate in
the San Francisco office of Gibson, Dunn & Crutcher. He is a member of the
firm's Litigation Department. Mr. Cecchini's practice includes general business
litigation, antitrust, securities, and white collar defense. Prior to joining
the firm, Mr. Cecchini clerked for the Honorable Patricia D. Steele of the