U.S. Supreme Court Raises The Pleading Standard For Antitrust Conspiracies And—Maybe—All Civil Complaints

Court Rejects Traditional "No Set of Facts" Formulation of Conley v. Gibson

On May 21, in a closely watched antitrust case, the Supreme Court raised the bar for plaintiffs alleging an antitrust conspiracyóand possibly for plaintiffs in all federal cases.

In Bell Atlantic Corp. v. Twombly, No. 05-1126, the Court specifically addressed the proper standard for pleading an antitrust conspiracy under Section 1 of the Sherman Act, 15 U.S.C. ß 1, with allegations of conspiracy evidenced by parallel conduct. The Court, in a 7-2 decision, held that "an allegation of parallel conduct and a bare assertion of conspiracy" does not survive a motion to dismiss. Instead, allegations of parallel conduct "must be placed in a context that raises a suggestion of a preceding agreement, not merely parallel conduct that could just as well be independent action."

In doing so, the Court explicitly rejected the common formulation of the standard for a motion to dismiss set forth in Conley v. Gibson, 355 U.S. 41, 45-46 (1957)ó"the accepted rule that a complaint should not be dismissed 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" (emphasis added). From now on, in antitrust cases if not in all cases, a complaint will be tested on the basis of facts actually allegedónot facts that might possibly be alleged and that might be consistent with the allegations of the complaint. Twombly will therefore hold plaintiffs to more rigorous pleading standards than older precedents might have been seen to require.

The Case

In Twombly, plaintiffs alleged that incumbent telephone service providers "engaged in parallel conduct" to inhibit the growth of upstart service providers and conspired to prevent competitive entry in their markets and not to compete with one another. The Court characterized plaintiffs' allegations as resting on "descriptions of parallel conduct" and "legal conclusions" of an agreement and held that such allegations were insufficient.

Under settled antitrust law, parallel conductóeven consciously parallel conductóis insufficient to prove that defendants entered into a "contract, combination or conspiracy" in violation of Section 1. Theatre Enters., Inc. v. Paramount Film Distrib. Corp., 346 U.S. 537, 540-41 (1954). More must be shownóbut, at the same time, a conspiracy can be proven by circumstantial evidence, if that evidence would tend to exclude the possibility of...