Supreme Court’s Dismissal of Antitrust Conspiracy Complaint May Ease Path for Early Dismissals Of Weak Claims Generally

On May 21, 2007, the United States Supreme Court in Bell Atlantic Corp. v. Twombly (No. 05- 1126) dismissed a Sherman Act ß 1 antitrust conspiracy claim brought in a putative customer class action against various "Baby Bell" telephone companies as not having been pled with sufficient facts to sustain the claim. The decision was notable not just for the antitrust principles being applied to an important segment of the telecommunications industry, but also because the Court's ruling potentially may signal a desire to impose more restrictive requirements on the pleading of complaints that could create a more favorable atmosphere for obtaining early dismissals of many types of seemingly weak or speculative claims.

The antitrust conspiracy claim in Bell Atlantic was based upon the allegation that the defendant "Baby Bell" companies had engaged in certain parallel conduct in the marketplace to inhibit the growth of competitors. Because the complaint alleged only parallel conduct by the companies ó which under longstanding antitrust precedent is insufficient by itself to evidence an unlawful Sherman ß 1 conspiracyó the Supreme Court in a 7-2 ruling reversed the Second Circuit ruling and dismissed the complaint, notwithstanding the complaint's express allegations of an unlawful conspiratorial agreement among the defendant Baby Bells.

The Court indicated that the complaint's allegations of a conspiratorial agreement were merely an inference being drawn from allegations of parallel conduct. While the alleged parallel conduct was not inconsistent with there being an unlawful conspiracy, the Court noted that it was equally consistent with there being no such conspiracy, particularly since there existed logical economic reasons other than conspiracy that could account for the alleged parallel conduct in the circumstances of this case. As the complaint failed to allege any basis for concluding that the parallel conduct was the product of unlawful conspiracy as opposed to other causes, the Court held the complaint to be insufficient and dismissed it before even an answering pleading was filed or any discovery was taken.

Standard for Pleading Claims

The Supreme Court's ruling was based not simply on application of antitrust law principles but also on the Court's revisiting of some of the most basic principles of "notice pleading" that are applied in civil cases. In particular, the Court notably took issue with well-known and frequently cited language...