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WASHINGTON-The U.S. Supreme Court’s recent and renewed interest in antitrust law played out in two challenges argued last week, both of which have the potential to significantly change business competition across the nation. The justices last term decided three antitrust cases-an unusually large number after something of an antitrust “drought” in the high court, noted antitrust scholars and litigators. Novel antitrust challenges tend to reach the high court when an administration is seeking antitrust frontiers or trying to extend antitrust law into new areas, said John Peirce, a partner in the Washington office of Bryan Cave and vice-chair of the antitrust committee of the American Bar Association Section of Public Utility, Communications and Transportation Law. “I don’t perceive the Bush administration as doing that,” he said. “I think they’re enforcing settled law and being aggressive against international cartels.” Antitrust scholar Edward D. Cavanagh of St. John’s University School of Law said he sees no discernible trend in the cases taken by the court. “I don’t know if there is any agenda,” said Cavanagh. “But for a long time, they didn’t take anything. It is very interesting.” A common thread If there is a common thread in the antitrust cases from last term and the present term, said W. Stephen Smith, co-chairman of the antitrust practice at Morrison & Foerster, it is that they represented situations in which either or both of the following was true: The court of appeals opinion not only was inconsistent with the trend in antitrust law but, if followed, it threatened to undermine the purposes of antitrust law. The circuit decisions articulated standards, he said, that threatened not only a number of companies with lawsuits where the underlying conduct was really pro-competitive, but also served to deter companies from engaging in pro-competitive conduct. “Lots of times, a court of appeals will write an opinion not in sync with where the law is headed and if there is not a plain conflict in the circuits, the Supreme Court will take a pass,” Smith said. “But where a circuit is way off and it may have very substantial effects on business, particularly by undermining the very purposes of the law, the court has shown over the last two terms a willingness to correct errors.” Last week’s arguments in Bell Atlantic v. Twombly, No. 05-1126, and the high court’s decision two years ago in Verizon v. Trinko, 540 U.S. 348, are consequences of the Telecommunications Act of 1996 and three court orders striking it down, according to Bryan Cave’s Peirce. In Trinko, the Supreme Court held that the 1996 act did not permit monopolization claims. “Regulatory upheaval in the telephone industry has matured into Supreme Court cases in the early 2000s,” he said. Undoubtedly to the dismay of many plaintiffs’ lawyers, the high court took Twombly to decide whether the usual notice- pleading standards in the Federal Rules of Civil Procedure apply to antitrust complaints. Bell Atlantic asks the high court whether an antitrust conspiracy complaint alleging only parallel conduct is sufficient or whether the complaint must state specific conspiratorial acts. William Twombly, the named plaintiff in the class action, alleges that four regional telephone carriers, the so-called Baby Bells, engaged in parallel business behavior to restrict entry into their territories by local telephone and Internet competitors. “The real question here is what is the appropriate role of courts in screening antitrust complaints for plausibility,” said Peirce. During last week’s arguments, Bell Atlantic’s counsel, Michael Kellogg of Washington’s Kellogg, Huber, Hansen, Todd & Evans, argued, along with the Bush administration, that courts cannot draw an inference of a conspiracy from an assertion of parallel conduct without the plaintiff’s having alleged additional facts. “You do more than simply parrot words of the allegation,” said Kellogg. “All they have alleged is conduct from which they seek to draw the inference of a conspiracy. Antitrust law limits the range of permissible inferences you can draw from parallel conduct.” That view encountered strong resistance from justices John Paul Stevens and Ruth Bader Ginsburg. Stevens called the Twombly allegation “a garden-variety antitrust claim,” and found “mind-boggling” Kellogg’s argument that it was not an allegation of fact. He said Bell and the government were seeking the same standard used at the summary judgment stage. On the other side, J. Douglas Richards of New York’s Milberg Weiss Bershad & Schulman, also faced tough questioning of his defense of the 2d Circuit’s standard. The appellate court, relying on Conley v. Gibson, 355 U.S. 41 (1957), said that to dismiss an antitrust conspiracy complaint, a district court would have to find that there are “no set of facts” that would allow a plaintiff to prove the parallel conduct was the result of an agreement rather than coincidence. Under that standard, Justice Stephen G. Breyer indicated that there will be many antitrust lawsuits in which plaintiffs are trying to prove conspiracies based on parallel business behavior, and the U.S. economy will be restructured. But Richards insisted the complaint set out all that was necessary-not just an allegation of parallel conduct but an allegation of an agreement. “If you strip away everything, you have a suspicion there was a conspiracy and you want to have discovery,” said Ginsburg. Richards responded, “That’s the situation in any horizontal conspiracy complaint.”

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