Brief Fact Summary.
Plaintiffs sued Defendants, alleging violations of anti-trust laws, allowing each local phone company to monopolize its own market.
Synopsis of Rule of Law.
To state a valid claim of conspiracy under § 1 of the Sherman Act, a plaintiff must: 1) allege in a complaint enough facts that, if true, would suggest that an agreement existed between the defendants, and 2) introduce evidence that tends to exclude the possibility that the alleged conspirators acted independently.
In Twombly, the plaintiffs alleged that the defendants conspired to restrain trade by inflating charges for local telephone and high-speed Internet services.View Full Point of Law
Plaintiffs on behalf of a putative class of telephone and high-speed internet subscribers, filed a complaint alleging that Defendants violated § 1 of the Sherman Act. The complaint alleged that Defendants conspired by means of conscious parallelism to inhibit the growth of upstart telecommunications companies and to eliminate competition. The alleged purpose of the conspiracy was to allow each involved local telephone company to dominate a specific market. Plaintiffs did not introduce any additional evidence of an agreement between the companies. Defendants moved to dismiss under FRCP Rule 12(b)(6). The court granted this motion. The U.S. Court of Appeals for the Second Circuit overturned the dismissal. The United States Supreme Court granted certiorari.
May a plaintiff claim a violation of §1 of the Sherman Act solely by alleging parallel conduct by defendants amounting to a conspiracy?
No. The court held that a plaintiff claiming a §1 violation must also allege facts that, if true, would suggest a conspiratorial agreement.
Justice Stevens & Ginsburg
The purpose of the pleading standards of the FRCP is to keep litigants in court so that the merits of the claim can be determined during discovery. The particular concerns regarding the high costs of the discovery process in private antitrust litigation can be prevented through various means, such as, but not limited to, careful case management, strict control of the discovery process, careful scrutiny of evidence at the summary-judgment stage, and clear instructions to juries. It is unwarranted for the majority to heighten the pleading standards to the plausibility standard. The suit should not have been dismissed because parallel conduct among competitors is circumstantial evidence suggesting conspiracy.
To state a valid claim of conspiracy under § 1 of the Sherman Act, a plaintiff must: 1) allege in a complaint enough facts that, if true, would suggest that an agreement existed between the defendants, and 2) introduce evidence that tends to exclude the possibility that the alleged conspirators acted independently. Claims are valid only if they allege facts that plausibly suggest a conspiracy. To allege facts that are merely consistent with a conspiracy is not sufficient. The suggestive facts need only be alleged; a suit can go forward even if the facts are unlikely to be proven by the plaintiff. In addition, parallel conduct does not suggest conspiracy. A plaintiff must also show evidence of some sort of agreement to restrain trade or commerce, beyond just parallel conduct.
Here, Plaintiffs’ complaint contained only conclusory allegations of a conspiracy. It did not include enough facts to plausibly suggest the existence of an agreement. In addition, while Plaintiffs introduced evidence of parallel conduct among the telecommunications companies, he failed to identify any facts that suggested illegal conspiracy over the alternative: a concurrent appraisal of the economic situation by several telecommunication companies. Therefore, the Court held that the lower court’s decision is reversed.