In a 7-2 decision, the U. S. Supreme Court in Bell Atlantic Corp. v. Twombly, 2007 WL 1461066 (U.S. May 21, 2007) reversed the Second Circuit and held that a complaint which alleged mere parallel behavior among telecommunications companies coupled with stray statements of agreement that amounted only to legal conclusions failed as a matter of law to state a claim for conspiracy in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1. The Supreme Court ruled that in order to withstand a motion to dismiss, an antitrust conspiracy complaint must plead enough factual material (taken as true) to suggest that the defendants have entered into an unlawful agreement. Plaintiffs need not set forth detailed factual allegations, but the Supreme Court emphasized that "grounds showing entitlement to relief requires more than labels and conclusions, and a formulaic recitation of elements of a cause of action will not do.” A complaint must contain plausible grounds from which to infer an agreement and allege enough facts to raise a reasonable expectation that discovery will reveal evidence of illegality.

The Supreme Court also made several other observations applicable to pleading in complex litigation generally: 

  • It restated and significantly limited its holding in Conley v. Gibson, 355 U.S. 41 (1957), which for 50 years has been the governing standard for motion to dismiss under Fed. R. Civ. P. 12(b)(6). The Supreme Court ruled that Conley merely describes the breadth of opportunity to prove what an adequate complaint contains and does not set a minimum standard of adequate pleading. 
  • It stressed that the high costs of discovery in antitrust cases make it critical to expose the deficiencies in cases at the motion to dismiss stage to minimize expenditures of time and money by the parties and the courts. 
  • It reiterated the long-recognized rule that on a motion under Fed. R. Civ. P. 12(b)(6), a court is not free to dismiss the claim merely because it disbelieves the complaint's factual allegations.
  • It reaffirmed its holding in Swierkiewicz v. Sorema, N.A., 534 U.S. 506 (2002) that courts may not impose heightened pleading standards except as required under Fed. R. Civ. P. 9(b), but stated that a plaintiff must plead sufficient facts to show that it is plausibly entitled to relief in order to meet the minimum standard for notice pleading under Fed. R. Civ. P. 8.

Twombly ratchets up the threshold pleading requirements for plaintiffs generally and for antitrust plaintiffs in particular. In the wake of Twombly, federal courts will likely be more receptive to defendants' motions to dismiss at the pleading stage.


Twombly arose against the backdrop of the break-up of AT&T in 1982 and the enactment of the Telecommunications Act in 1996. The AT&T Consent Decree created a system of Regional Bell Operating Companies, referred to by the Supreme Court as Incumbent Local Exchanges Carriers (ILECs), who were granted monopolies in local phone service. The decree also created a competitive long-distance market from which the ILECs were excluded.

Thereafter, Congress enacted the Telecommunications Act of 1996 which fundamentally restructured the market for local phone service by ending the regional monopolies held by the ILECs and, in an effort to stimulate local competition, requiring each ILEC to share its local network with rivals. ILECs were slow to enter into each others’ service areas and vigorously litigated the scope of their sharing obligations against the Federal Communications Commission. Twombly, a consumer of local phone and high speed Internet services, brought a putative class action against the ILECs under Section 1 of the Sherman Act, 15 U.S.C. § 1, alleging that the ILECs (1) "engaged in parallel conduct" in their respective service areas to inhibit the growth of rival local service providers, by, inter alia, limiting access to their networks, overbilling, and sabotaging rivals' relationships with their customers; and (2) agreed not to compete in each other's service areas.

The conspiracy allegation consisted of descriptions of parallel conduct coupled with a conclusory assertion that defendants had conspired. The trial court granted defendants' motion to dismiss, concluding that an antitrust complaint that alleged mere parallel behavior without more does not allege an actionable agreement under Section 1 and is, therefore, deficient as a matter of law. The Second Circuit reversed, holding that the complaint was adequate under the standard enunciated in Conley v. Gibson, 355 U.S. 41 (1957).

The United States Supreme Court's Opinion

The Supreme Court reversed, holding that for a conspiracy complaint under the Sherman Act to survive a motion to dismiss, the plaintiff must plead allegations sufficient to "raise the right to relief above the speculative level.” Accordingly, a pleading must do more than create a "suspicion [of] a legally cognizable right of action.” Applying this standard to conspiracy cases under the Sherman Act, the Supreme Court held that to avoid a motion to dismiss, a complaint must contain "enough factual material (taken as true) to suggest that an agreement was made," that is, "enough fact to raise a reasonable expectation that discovery will reveal evidence of illegal agreement.” Allegations of parallel conduct coupled with a bare assertion of conspiracy do not meet that standard and will not withstand a motion to dismiss.

The Supreme Court reasoned that this pleading standard was necessary to prevent plaintiffs with largely groundless claims from exacting higher settlements from defendants. Stressing the high costs of discovery, the Supreme Court underscored the need to expose deficiencies in pleadings early in the litigation, at a point of minimum expenditure of time and money by the parties and the courts. The Supreme Court also suggested that such scrutiny at the pleading stage was necessary to filter out groundless claims, noting that hands-on case management, judicious use of summary judgment and lucid instructions to jurors had had little impact on reining in the high costs of litigation.

In addition, the Supreme Court rejected plaintiffs' argument that the complaint must be upheld under Conley v. Gibson, 355 U.S. 41, 45-46 (1957), which had been understood to mean that a complaint will survive a motion to dismiss "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.” The Supreme Court noted that the "no set of facts" language had been often criticized by lower courts and stated that this phrase "has earned its retirement" and is "best forgotten as an incomplete, negative gloss on an accepted pleading standard.” Rather, Conley, properly understood, describes "the breadth of opportunity to prove what an adequate complaint claims, not the minimum standard of adequate pleading to govern a complaint's survival.”

Still, the Supreme Court chose not to draw a bright line distinguishing "conceivable" claims from "plausible" claims and thus provided little guidance to lower courts on implementing the new pleading standard. It will likely take time for a new consensus to emerge. At the same time, the Supreme Court unequivocally re-affirmed its holding in Swierkiewicz that the courts may not create particularized pleading requirements not mandated in the Federal Rules of Civil Procedure. In Twombly, the Supreme Court was not insisting on “detailed factual allegations” but rather pleading enough facts to “raise a right to relief above the speculative level.” Moreover, the threat of Rule 11 sanctions will presumably constrain plaintiffs seeking to meet this standard from alleging more than those factual allegations for which they have a reasonable basis.


Twombly is a landmark decision and may represent the most significant pronouncement on pleadings by the U.S. Supreme Court in the past half-century. While some lower courts have applied a more exacting pleading standard in practice, Twombly marks a clear and visible departure from the liberal standards that have governed pleadings in federal litigation but which have faced mounting criticism from bench and bar. The decision underscores the Supreme Court’s sensitivity to the high costs of discovery and the need to evaluate the legal viability of claims before substantial discovery costs are incurred. Defendants in complex federal cases – especially antitrust actions – now have an important new precedent to support motions to dismiss complaints that are based largely on speculation and conclusory assertions of the elements of the cause of action.