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To the surprise of some antitrust observers and the unease of many plaintiffs lawyers, the Supreme Court hears argument on Nov. 27 in Bell Atlantic Corp. v. Twombly. The Court must decide whether the usual notice-pleading standards under the Federal Rules of Civil Procedure apply in antitrust cases. Bell Atlantic and its fellow defendants are making the case for heightened pleading standards. Twombly asks whether an antitrust conspiracy complaint alleging only parallel conduct can withstand a motion to dismiss or whether the complaint must allege specific conspiratorial acts. More broadly stated, the question is whether, at the motion-to-dismiss stage, courts should keep giving complaints the benefit of all favorable inferences or whether courts should apply the more restrictive standards of summary judgment. The decision to hear Twombly is surprising because twice in recent years — in Leatherman v. Tarrant County Narcotics and Intelligence Coordination Unit (1993) and again in Swierkiewicz v. Sorema N.A. (2002) — the Court has ruled that court-made rules requiring specificity in pleading in civil rights cases do not trump the notice-pleading provisions of the Federal Rules and that any change in pleading rules must come from Congress. Neither decision was based on any perceived special characteristics of civil rights cases. Accordingly, many courts, albeit not all, have rejected the notion that special pleading rules should prevail in antitrust litigation. THE ALLEGED CONSPIRACY In Twombly, plaintiffs brought a putative class action on behalf of consumers against the four Bell companies left from the AT&T breakup in 1982. The AT&T consent decree provided that the Bells would have exclusive rights to provide local phone service in their assigned areas. In 1996 the Telecommunications Act ended regional exclusivity to promote competition. The Twombly plaintiffs now allege that the defendants violated Section 1 of the Sherman Act by resisting rivals’ efforts to enter local markets and failing to compete in one another’s territories. The plaintiffs claim that the Bells acted pursuant to a conspiracy, but their complaint did not make any factual allegations describing that conspiracy. The trial court granted the defense motion to dismiss, ruling that a pleading is deficient as a matter of law unless the conduct alleged is sufficient to support an inference of conspiracy under substantive antitrust law. Such a factual showing is necessary to demonstrate that the plaintiff is entitled to relief, as well as to furnish defendants with “some idea of how and why” they allegedly conspired, said the court. The court concluded that the allegations of mere conscious parallelism were not probative enough to support an inference of conspiracy and, indeed, the alleged acts were as consistent with lawful competition as with conspiracy. Applying a summary-judgment standard, the court ruled that the complaint needed to establish “at least one �plus factor’ that tends to exclude independent self-interested conduct as an explanation.” The U.S. Court of Appeals for the 2nd Circuit reversed, citing the well-established pleading standard under the Federal Rules of Civil Procedure adopted by the Supreme Court in Conley v. Gibson (1957). The 2nd Circuit ruled that a complaint alleging parallel conduct as part of an antitrust conspiracy will withstand a motion to dismiss “unless there is no set of facts that would permit a plaintiff to demonstrate that the particular parallelism asserted was the product of collusion rather than coincidence.” The court noted that the purpose of pleading is to “facilitate a proper decision on the merits,” not to “screen out complaints based on a lack of artful lawyering.” It also observed that the decision below was at odds with Leatherman and Swierkiewicz, wherein the Supreme Court specifically declined to extend heightened pleading requirements to contexts beyond “fraud or mistake.” Swierkiewicz ruled that “Rule 8(a)’s simplified pleading standard applies to all civil actions, with limited exceptions.” Antitrust is not among those exceptions. At the same time, the 2nd Circuit emphasized that minimal standards do not mean no standards. Implausible or speculative complaints will not pass muster under Rule 12(b)(6). The court concluded that although prior decisions “do not offer a bright-line rule for identifying the factual allegations required to state an antitrust claim, they suggest that the burden is relatively modest.” LAW AND ITS REASONS The battle lines have been drawn. Defendants argue that a summary judgment standard should be applied to motions to dismiss in antitrust conspiracy cases. As the Supreme Court held in Matsushita Electric Industrial Co. v. Zenith Radio Corp. (1986), an antitrust complaint must be dismissed on summary judgment if the conduct alleged is susceptible to pro-competitive as well as anti-competitive inferences. The plaintiffs, on the other hand, urge continued application of notice pleading standards. Under Conley and its progeny, the complaint at issue would likely pass muster. In the real world of antitrust litigation, courts have usually steered a middle course. They have generally respected the differing standards on which motions to dismiss and motions for summary judgment are weighed. At the same time, they tend to judge intuitively whether a complaint has sufficient merit to warrant a full-blown trial. When the court’s visceral reaction is favorable, Conley is invoked and the motion to dismiss is denied. When the court views the complaint as a nonstarter, the motion is granted, Conley notwithstanding. Typically, the court in the latter scenario will fault the complaint for failure to allege facts supporting a substantive element of the antitrust claim. The Supreme Court has never directly addressed the issue of pleading specificity in the antitrust context. Proponents find support for a heightened standard in Associated General Contractors Inc. v. California State Council of Carpenters (1983), in which the Court observed in a footnote, “Certainly in a case of this magnitude, a district court must retain the power to insist upon some specificity in pleading before allowing a potentially massive factual controversy to proceed.” This language is hardly a clarion call for heightened standards. Although the Court suggests that “some specificity” might assist the trial judge, it does not propose that deficient complaints be dismissed, only redrafted. Yet this is clearly at odds with the Court’s more recent, plaintiff-friendly assertions in Leatherman and Swierkiewicz. It is also difficult to square with Rule 8(a), which requires only “a short and plain statement of the claim showing that the pleader is entitled to relief.” More importantly, recognition of a court-made specificity in pleading antitrust cases would shift the playing field dramatically in favor of defendants. First, antitrust plaintiffs already face a daunting task in proving a Section 1 conspiracy — they must establish an agreement and underlying wrongful conduct. Where the conduct is as consistent with competition as with conspiracy, it is insufficient to create an inference of conspiracy. To require that a complaint be essentially summary-judgment-proof at the pleading stage, before pretrial discovery, imposes an impossibly high burden. Second, requiring specificity in pleading would thwart the basic rationale of discovery — to provide equal access to proof. Conspiracy defendants have usually gone to great lengths to keep their clandestine conduct secret, and any evidence is typically under their exclusive control. A heightened pleading standard would therefore make it virtually impossible to bring a viable conspiracy claim. Antitrust plaintiffs would be caught in a Catch-22: They could not plead conspiracy unless they had the facts, but they could not get the facts unless they had properly pleaded a conspiracy. The Federal Rules’ liberal discovery provisions were designed to eliminate this type of conundrum. Third, a specificity rule in antitrust cases would turn the clock back to before the Federal Rules. A pleading would become a vehicle to “screen out complaints based on a lack of artful lawyering” rather than a means to facilitate proper outcomes. The focus of litigation would be on the form rather than the substance of the pleadings. Technical proficiency would be rewarded over substantive merit, in direct conflict with Rule 8(f), which directs that all pleadings “be so construed as to do substantial justice.” Moreover, as the Supreme Court has noted, pleading rules are not meant to impose significant burdens on plaintiffs. Fourth, a new specificity-in-pleading rule for antitrust would be destabilizing. This ad hoc approach to pleading standards would invite more exceptions inside and outside the antitrust field. That, in turn, would undermine the pleadings protocol in place for nearly 70 years. CHECKS IN PLACE Critics argue that notice pleading stacks the deck against antitrust defendants, forcing them to settle insubstantial claims rather than shoulder the cost of litigation. But that is simply not true. First, all pleadings are subject to scrutiny under Rule 11, which requires attorneys to investigate before filing and to certify that allegations have evidentiary support and are warranted by existing law or a good-faith argument for changing that law. If the court finds that allegations are frivolous, it may impose sanctions, including substantial monetary penalties, on the plaintiff and its counsel. Any concern that notice pleading encourages antitrust plaintiffs to file baseless claims is clearly addressed by Rule 11. Second, complaints can be tested for sufficiency at the outset of the litigation and dismissed if they fail to state a claim upon which relief can be granted pursuant to Rule 12(b)(6). Thus, complaints truly lacking in merit can still be dismissed early on. Third, the merits of a claim can be tested before trial — typically at the close of discovery — through a motion for summary judgment pursuant to Rule 56. If a court, treating all allegations as true, concludes that a reasonable person could not find for the plaintiff, then it must enter summary judgment in the defendant’s favor. While the courts may have hesitated a bit in granting summary judgment in early antitrust cases, the Supreme Court made clear in Matsushita that no special exception existed for antitrust. Since Matsushita, courts have regularly granted summary judgment in cases where the evidence adduced in discovery is not sufficient to create a jury question. In short, the checks and balances built into the Federal Rules — Rule 11 sanctions, Rule 12 motions to dismiss, and Rule 56 summary judgment — offset any argument that notice pleading unfairly tilts the playing field in favor of plaintiffs. The rules proposed by the Twombly defendants, however, are likely to have ripple effects in other areas of the law, especially torts. Indeed, a review of the amici suggests that the broader issue of “tort reform” is at stake here. But if tort reform is necessary, the appropriate vehicle is Congress, not the courts. The DECISION COMING Predicting how the Supreme Court will decide any question of law is a tricky business. Nevertheless, it will be difficult for the Court to walk away from Leatherman and Swierkiewicz, while at the same time reaching back to a footnote in Associated General Contractors to endorse a specificity standard particular to antitrust. It will be even more difficult for the Court to abandon the 50 years of precedent embodied in Conley and to endorse a Matsushita-type summary judgment standard at the pleading stage. Instead, the Court may very well conclude that it has been right all along to leave to Congress the question of requiring greater specificity in pleading antitrust claims, to avoid ad hoc exceptions to Rule 8 and to permit trial courts to deny motions to dismiss in light of Conley. The Court may also be tempted to offer a bright-line rule for identifying factual allegations necessary to state an antitrust claim, but that slippery slope should be avoided. Lower court decisions suggest that the burden of pleading remains “relatively modest.” Precisely how modest, the justices need not determine.
Edward D. Cavanagh is a professor of law at St. John’s University School of Law in Queens, N.Y.

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