Supremes Raise the Bar on Antitrust Lawsuits
Striking another blow to the plaintiffs’ bar, the Supreme Court toughened the standards to get into court on civil antitrust litigation claims. In a 7-2 opinion, the justices ruled that an allegation that two or more companies are acting in parallel isn’t enough for an antitrust lawsuit to proceed; plaintiffs must include some allegation indicating that the companies were actively working together. Here are stories from the WSJ and FT.
On the winning side, representing the Bells: Michael Kellogg (pictured) of D.C.’s Kellogg Huber; on the losing team, representing the plaintiffs: J. Douglas Richards, formerly of Milberg Weiss now at the Pomerantz law firm.
In Twombly, a group of consumers sued the Regional Bells alleging they conspired to jack up prices. The district court dismissed the case for lack of a sufficient pleading. But the Second Circuit reversed, ruling that the plaintiffs’ complaint was sufficient. When that happened, a host of industry groups airlines, credit cards, oil asked the court to take the case, fearing vexatious civil antitrust suits.
Law Blog colleague Jess Bravin writes that while the ruling doesn’t radically upend the rules for antitrust actions, it does mark the latest in a sequence of cases where the court has tightened the scope of the Sherman Act.
Writing for the majority, Justice Souter noted the high bar of antitrust litigation, writing that “the problem of discovery abuse” could cost innocent defendants huge sums. In dissent, Justice Stevens said the majority was driven not by settled law but a “transparent policy concern” to protect antitrust defendants from litigation costs.
Nothing in the opinion limits its reach to antitrust suits. The Supremes raised the bar on all federal complaints.
This seems to be falling under the radar. I also think the bar is raised for all federal complaints. How will the Federal Courts react when determining whether a claim crosses “the line from conceivable to plausible”?
It appears from reading of the opinion that only Stevens and Ginsburg have read the Federal Rules of Civil Procedure.
“How will the Federal Courts react when determining whether a claim crosses ‘the line from conceivable to plausible’”?
Easy. They’ll require more than general averments. Now the courts will require factual assertions to support the general averments. A case that is investigated and filed in good faith necessarily must include specific factual allegations, and maybe now the courts will also start enforcing Rule 11 for those complaints that are not filed with any good faith basis (i.e., actual factual support rather than general averments which are tantamount to a mere complaint in search of a case). Whether plaintiffs like it or not the intitial burden is on them to bring a factually legitimate case prior to requiring the defendant to undergo the harassment of meritless discovery.
I specially demur.
p.s.
What happened to notice pleading? This case should have been resolved under Rule 56 rather than Rule 12.
It appears from reading of the opinion that only Stevens and Ginsburg can’t read Rule 11.
In reply to the two anonymous postings, the majority states: “We granted certiorari to address the proper standard for pleading an antitrust conspiracy through allegations of parallel conduct. . .and now reverse”.
Sounds to me like a special pleading rule confined to antitrust!
In reply to the two anonymous postings, the majority states: “We granted certiorari to address the proper standard for pleading an antitrust conspiracy through allegations of parallel conduct. . .and now reverse”.
Sounds to me like a special pleading rule confined to antitrust!
Yo, demur: without any specific factual allegations to support the general averments there is no notice pleading to the defendant. That’s the problem. Alleging that the defendants “conspired to jack up prices” does not put them on notice of the underlying basis upon which they purportedly concluded. I for one never thought that plaintiff class action lawyers were terribly smart; rather, their success — at least to date — was crafting complaints with general averments with a newspaper article or two as attachments, and then just hoping on a wing and a prayer that it stuck. Maybe now the courts will hold their feet to the fire at the 12(b)(6) stage, and start looking at the specific factual predicates alleged rather than blindly accepting general averments that may or may not turn up in discovery. Surely a plaintiff must have a higher burden to survice a motion to dismiss than simply chanting “conspiracy” and “collusion” as their mantra to coerce a settlement against defendants who’d rather not spend millions in discovery to respond to such baloney.
Smaxinn,
I wrote the first anonymous post. The decision may contain the language you quote, but it clearly applies to all Rule 8 (as opposed to Rule 9) pleadings. Go back and read it. They explicitly overrule the language from Conley v. Gibson which heretofore governed all Rule 8 complaints.
This is a great day in America. We continue our march towards reigning in the abusive plaintiff’s trial bar and will not stop until we have severly cut back or eliminated what a citizen can recover against a corporation or insurance company. This ruling will surely help our American companies reap higher profits and compete in the world marketplace more effectively.
Tort Reform: No one is saying that an injured plaintiff cannot recover for a wrong by the mean bad corporation; however, the problem is that most plaintiff complaints do not specifically allege what the evil corporation did, and how this sinister conduct injured the consumer. It’s simply not enough anymore for a plaintiff’s lawyer to say “bad, bad company” give me attorneys’ fee and a coupon for my horribly injured client.
Was that a comment from Tort Reform or Tort Former?
WSJ.com's law blog focuses on law and business, and the business of law. Peter Lattman is the lead writer. Peter joined The Wall Street Journal Online from Forbes Magazine. Before becoming a journalist, Peter worked on Wall Street and as a litigator at a New York law firm. The blog also includes contributions from reporters and editors at The Wall Street Journal and Dow Jones Newswires. Have a comment? Write to 
