A litigation game changer, especially in antitrust cases—that is the inescapable consequence of the Supreme Court’s decision in Bell Atlantic Corp. v. Twombly1 (“Twombly”). The litigation advantage has dramatically shifted to defendants as bare allegations of conspiracy or parallel conduct are not enough to survive motions to dismiss, and to embark on expensive and burdensome discovery in order to try to find facts to support allegations of anti-competitive conduct.2 A plaintiff must provide in the complaint “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.”3 A plaintiff must specify in the complaint the who, what, when and where of the alleged conspiracy.4 And, where the plaintiff relies on parallel conduct to support conspiratorial allegations, the complaint must allege “enough facts to state a claim to relief that is plausible on its face.”5
A case brought in the United States District Court for the Eastern District of New York vividly demonstrates the benefits of Twombly to defendants. In All Star Carts and Vehicles, Inc., et al. v. BFI Canada Income Fund, et al., Reed Smith represented one of three defendants in a putative class action alleging (i) a conspiracy to restrain trade and (ii) an attempt to monopolize an alleged market in Nassau and Suffolk Counties in New York for small containerized waste hauling and disposal services in violation of the Sherman Act, 15 U.S.C. §§ 1 and 2. The conspiracy allegations, however, consisted only of conclusory statements that the defendants discussed and agreed in meetings (i) to the charges to be assessed customers for their services; and (ii) to engage in predatory pricing to induce their customers to enter into contracts containing allegedly anti-competitive provisions. But, the complaint was completely devoid of any specifics as to who met, when they met and what was actually agreed upon. Therefore, the defendants, employing Twombly, moved to dismiss the complaint.
In a reported decision, the United States District Court dismissed plaintiffs’ claims for conspiracy to restrain trade and conspiracy to monopolize the small containerized waste hauling and disposal market in Long Island, N.Y. All Star Carts6. At the outset, the court stated: “[a]s a case dealing specifically with pleading an antitrust case, Twombly is particularly on point here.”7 Then, in addressing plaintiffs’ complaint, the court found that the “allegations allude to nothing more than Defendants’ participation in meetings, conversations and communications. Defendants are stated to have reached agreement during these meetings as to their anticompetitive practices. These allegations are nothing more than a recitation of the terms of agreement and conspiracy, and nothing more.”8 Based on that finding, the court dismissed plaintiffs’ Section 1 claim because it did “not state facts sufficient to ‘nudge [plaintiffs’] claims across the line from conceivable to plausible.’”9
The court applied the very same Twombly standard to plaintiffs’ Section 2 Sherman Act conspiracy claim and found that plaintiffs’ lack of specificity doomed that claim as well. The court, however, found that plaintiffs had sufficiently alleged an attempt to monopolize the Long Island market.
This was a pyrrhic victory, however, since an attempt to monopolize claim against three non-conspiratorial defendants involving the same relevant market made no sense. As a result, Reed Smith was able to convince plaintiffs’ counsel to voluntarily dismiss its remaining attempted monopolization claim, thereby terminating the case against our client.