Disapproving 'Conley' Supreme Court Requires Conspiracy Complaint to Render Collective Action Plausible

In Bell Atlantic v. Twombly, No. 05-1126, 2007 WL1461066 (May 21, 2007), the United States Supreme Court clarified the standard for motions to dismiss a complaint alleging an agreement or conspiracy in violation of ß 1 of the Sherman Act. In the process, the Court disapproved the general formulation for a 12(b)(6) motion to dismiss articulated in Conley v. Gibson, 355 U.S. 41, 45-46 (1957) that "a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief."

Observing that "a plaintiff's obligation to provide the 'grounds' of his 'entitle[ment] to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do," the Court held that "stating such a claim requires a complaint with enough factual matter (taken as true) to suggest that an agreement was made." The Court noted that "[a]sking for plausible grounds to infer an agreement does not impose a probability requirement" but does impose an affirmative obligation upon an antitrust plaintiffs to plead sufficient factual "allegations plausibly suggesting (not merely consistent with) agreement."

Applying this standard to a complaint alleging a conspiracy and independent parallel conduct among the defendants, the Court ruled that "an allegation of parallel conduct and a bare assertion of conspiracy will not suffice. Without more, parallel conduct does not suggest conspiracy, and a conclusory allegation of agreement at some unidentified point does not supply facts adequate to show illegality." To survive a motion to dismiss, a ß 1 claim must contain factual allegations that tend to exclude independent self-interested conduct as an explanation for the conduct and that provide a plausible suggestion of an agreement that is sufficient to create a reasonable expectation that discovery will reveal evidence of illegal agreement. Absent such factual allegations, the Court noted that the complaint would fail to satisfy the threshold requirement of Rule 8(a)(2) that the "plain statement" of the claim "sho[w] that the pleader is entitled to relief."

In its analysis the Court particularly stressed concern about the cost of discovery to resolve a "largely groundless claim," citing Dura...