Bell Atlantic Corp. v. Twombly

Brief Fact Summary.

Plaintiffs bring a class action suit against communications companies for alleged conspiracy. The court determined that Plaintiffs’ complaint was not sufficient to show the conspiracywas plausible.

Synopsis of Rule of Law.

In order to state a claim under § 1 of the Sherman Act, the complaint must contain enough factual information to suggest that an agreement existed between defendants.

To prove an illegal conspiracy under § 1 of the Sherman Act, the plaintiff must introduce evidence that tends to exclude the possibility that the alleged conspirators acted alone.

Facts.

Plaintiffs represented by Twombly bring a class action against Defendant Bell Atlantic Corp. for alleged conspiracies in violation of § 1 of the Sherman Act which prohibits conspiracies in restraint of trade. Plaintiffs only alleged that Defendant conspired with other local telephone companies through conscious parallelism to stop the growth of new telecommunications companies and eliminate competition with one another. They also alleged that the purpose of the conspiracy was to allow each local telephone company to dominate a specific market. No other information was introduced as to the agreement between the companies.

Issue.

To state a claim under § 1 of the Sherman Act, must the complaint contain enough factual information to suggest that an agreement between the defendants existed?

To satisfy the standard for illegal conspiracy under § 1 of the Sherman Act, must the plaintiff provide evidence that tends to exclude the possibility that the alleged conspirators acted alone?

Held.

Yes, to state a claim under § 1 of the Sherman act the complaint must contain enough factual information to suggest that an agreement existed between defendants.

Yes, to prove an illegal conspiracy under § 1 of the Sherman Act the plaintiff must provide evidence that tends to exclude the possibility that the alleged conspirators acted alone.

Judgement of the Court of Appeals for the Second Circuit is reversed and the cause is remanded for further proceedings consistent with the opinion.

Dissent.

Justice Justice Stevens with Justice Ginsburg dissenting

The purpose of FRCP is to keep litigants in court so that the merits of the claim can be determined during discovery. Concerns about costs of discovery can be managed through case management, strict control of the discovery process, careful scrutiny of evidence at the summary judgement stage, and clear instructions to juries. It is therefore indefensible for the majority to raise the bar for the pleadings stage to one of plausibility of a violation, up from legal sufficiency to state a claim. The case should not have been dismissed because parallel conduct is circumstantial evidence supporting conspiracy, and is thus a sufficient claim upon which relief may be granted.

Discussion.

1. A complaint must have enough factual information to suggest that an agreement existed to inhibit plaintiffs from beginning meritless claims with the hope of finding evidence in the discovery
2. Discovery is expensive and time-consuming and should only be reached if a plaintiff’s claim is sufficient. And the district court’s job is to act as a gatekeeper to discovery and determine whether a plaintiff’s complaint meets this standard.
3. In previous decisions, the court has not dismissed a complaint so long as the complaint left open the possibility that the plaintiff would find some fact to support recovery. But this standard is no longer workable.
4. Conclusory statements will no longer survive a motion to dismiss.
5. A complaint must now have enough facts to make the claim plausible on its face and not just speculative.
6. The allegations in the complaint must raise a reasonable expectation that discovery will reveal relevant evidence to support the claim.
7. Here, the complaint provided conclusory allegations of conspiracy without enough facts to plausibly suggest the existence of an agreement between defendants.
8. Also, according to § 1 of the Sherman Act, a plaintiff must also show evidence of some sort of agreement between companies to restrain trade.
9. This extra requirement keeps meritless claims from being brought.
10. The keeping out of meritless claims, or false positives in this case, reduces litigation costs and helps the economy by ensuring companies are not unjustly penalized for legitimate business practices.
11. Plaintiffs introduced evidence of parallel conduct among defendants, but they did not introduce evidence that could exclude the possibility that the companies acted alone. Thus, Plaintiffs have not sufficiently stated a claim of violation of § 1 of Sherman Act.
12. Thus, the district court properly dismissed the complaint and the decision of the Court of Appeals for the Second Circuit is reversed and the case is remanded to the lower court for dismissal.