Using Twombly in Your Favor | Practical Law

Using Twombly in Your Favor | Practical Law

This update highlights how Bell Atlantic Corp. v. Twombly is being applied in key antitrust district courts and sets out tips to help antitrust litigators use Twombly to increase their chances of winning at the motion to dismiss stage.

Using Twombly in Your Favor

Practical Law Legal Update 5-573-2325 (Approx. 5 pages)

Using Twombly in Your Favor

by Practical Law Antitrust
Published on 08 Jul 2014 • USA (National/Federal)
This update highlights how Bell Atlantic Corp. v. Twombly is being applied in key antitrust district courts and sets out tips to help antitrust litigators use Twombly to increase their chances of winning at the motion to dismiss stage.
Bell Atlantic Corp. v. Twombly has shaped antitrust law more than any other case in the past decade (550 U.S. 544 (2007)). To survive a motion to dismiss for failure to state a claim, an antitrust plaintiff must meet the exacting standards for pleading set out in Twombly (see Practice Note, Twombly’s Effect on Antitrust Pleading Standards). The Twombly standard is clear: a plaintiff must allege sufficient facts to suggest its claim is plausible on its face. However, what constitutes sufficient allegations is not as clear and lower courts have been fleshing out this analysis since the Supreme Court issued its decision in Twombly in 2007.

Know How Your Court Is Applying Twombly

Parties to antitrust litigation should familiarize themselves with recent motions to dismiss decisions in the district court hearing their case and if possible before their presiding judge. Counsel can use this information as a road map showing how the court is applying the standard and to shape either the complaint or a motion to dismiss to meet the court's requirements.
To do this, parties can use Practical Law's charts that analyze and track antitrust motion to dismiss decisions in key district courts. These resources offer both an at-a-glance assessment of how courts apply Twombly and a case-by-case breakdown of the allegations courts found sufficient or insufficient under the Twombly framework in five of the districts with the most active antitrust case loads:
For example, in In re High Tech Employees Antitrust Litigation, Judge Koh of the US District Court for the Northern District of California held that the plaintiffs successfully alleged an agreement among competitors to refrain from recruiting each others' employees under Section 1 of the Sherman Act by alleging:
  • Who entered the agreements, including executives at each of the defendant companies.
  • The agreements' victims and timing.
  • Specific locations where the agreements were entered.
  • A Department of Justice investigation regarding the same agreements.
  • Activity beyond mere parallel conduct including defendants':
    • means and motive to carry out the agreement; and
    • opportunity to conspire through overlapping board memberships.
(856 F. Supp. 2d 1103 (N.D. Cal. 2012).)
On the other hand, in MedioStream, Inc. v. Microsoft Corp., also in the Northern District of California, Judge Whyte held that plaintiffs failed to allege agreements in their failure to allege:
  • Whether the agreements were written, oral or tacit.
  • When the agreements were executed.
  • Who decided to enter the agreements.
  • With whom the agreements were made.
  • Other facts from which to infer an agreement.
(869 F. Supp. 2d 1095 (N.D. Cal. 2012)) and see Practice Note, Establishing an Agreement Under Section 1 of the Sherman Act

Statistical Guidance

Counsel can also use these charts for guidance when clients ask what their chances of success are at the motion to dismiss stage. While answering that question with certainty is impossible, Practical Law's charts provide a statistical look at how five courts with heavy antitrust case loads decided motions to dismiss under Twombly over the past two years.
For example, in the Southern District of New York, of the 16 cases tracked, only three motions to dismiss were completely denied for antitrust claims, while two were denied in part and granted in part. Eleven motions to dismiss (almost 70%) were completely granted for antitrust claims.

Tips for Preparing a Complaint or Motion to Dismiss under Twombly

When preparing a complaint or motion to dismiss, counsel should keep the following in mind in order to use Twombly to the client’s advantage:
  • The plausibility standard is subjective. Courts and individual judges vary greatly in how they apply the Twombly standard.
  • Focus on facts. A plaintiff should supply as many facts as possible to support its legal contentions. Conversely, when moving to dismiss the complaint, defense counsel should focus on allegations that are legal conclusions and are missing supporting facts.
  • Pay attention to the elements. Under Twombly, a plaintiff must establish each element of a claim to achieve plausibility. Counsel should assess the sufficiency of each element individually to see if the claim is valid, including whether the plaintiff has antitrust standing (In re TFT-LCD (Flat Panel) Antitrust Litig., Viewsonic Corp. v. AU Optronics Corp., No. C 12-0335, (N.D. Cal. Nov. 28, 2012)).
  • Look at the complaint as a whole. Before filing a complaint, plaintiff's counsel should analyze up front the facts that it has and those that it does not have to assess whether, if taken all together, the facts plausibly state a claim. When moving to have a complaint dismissed, defense counsel should argue that the complaint as a whole does not plausibly state a claim (even if particular elements are well-pleaded).
  • Consider state law claims. If it appears that a plaintiff does not have access to the facts necessary to plead the elements of a federal antitrust claim, counsel should consider whether bringing a state antitrust claim is feasible with the available facts. For example, if a plaintiff does not have enough information about a defendant's costs to plausibly allege a price discrimination claim under the Robinson-Patman Act, it may still have enough facts to allege a state unfair competition action. Counsel should be aware, however, that some states have implemented Twombly-like pleading standards.