The plaintiffs in this class action lawsuit against Bell Atlantic Corp. and other telecommunications companies alleged that the companies violated §1 of the Sherman Act by agreeing not to branch out and compete in one another’s territories. The Supreme Court addressed what a plaintiff must plead in a conspiracy case.
To sufficiently claim a §1 violation the plaintiffs needed to establish that the defendants' behavior would be against their economic self-interest absent a conspiratorial agreement. The trial court dismissed the lawsuit and held that the plaintiffs failed to "allege sufficient facts from which a conspiracy can be inferred.”
On appeal, the Second Circuit reversed and ruled that the plaintiffs needed only to allege a conspiracy and provide limited supporting facts. Since the plaintiffs alleged that the companies had engaged in suspicious "parallel conduct" and conspired to preserve monopoly conditions, the claim was sufficient and the suit could proceed.
The Supreme Court reversed the Second Circuit. The Court held that a plaintiff cannot claim a violation of §1 of the Sherman Act by merely alleging parallel conduct by defendants. A plaintiff must also allege facts that, if true, would suggest a conspiratorial agreement. Under this standard, it will be impossible (or nearly so) for plaintiffs to plead an antitrust conspiracy based on nothing more than allegations that the defendants all charged similar prices.