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The Oral Argument in Bell Atlantic Corp. v. Twombly

Nov.28.2006

Twombly poses the question of what facts must a plaintiff allege to avoid dismissal of a claim of an agreement in restraint of trade. Plaintiffs had alleged parallel conduct by defendants and made a bare assertion that it was part of a conspiracy in restraint of trade. The District Court dismissed on the grounds that plaintiffs must allege facts sufficient to show that the resultant parallel conduct was “suspicious enough to suggest that defendants are acting pursuant to a mutual agreement.” The Second Circuit reversed, holding that alleged parallel conduct plus a bare assertion of conspiracy are sufficient to state a claim under section 1 of the Sherman Act.

A very active Supreme Court heard oral argument on November 27, 2006. Justices Stevens, Ginsburg, Souter, Breyer, Scalia, Roberts, Kennedy and Alito all asked questions. The Assistant Attorney General for Antitrust argued that “parallel action or inaction is ubiquitous in our economy and often reflects beneficial competitive forces.” Tr. 18. Justices Breyer, Ginsburg and Roberts all seemed to agree. Tr. 32, 39, 46-7.

The Court may, of course, affirm or reverse. But, based on the questions at oral argument, one possible out come would be for the Court to dismiss the writ of certiorari as improvidently granted. The questions revealed a potentially serious problem with the record in that ¶ 51 of the Complaint ends by alleging on information and belief a conspiracy in restraint of trade. The Justices devoted much of the time to probing this discrete allegation.

In another case decided just last term, Laboratory Corp. of America v. Metabolite Labs., the Court also heard oral argument, expressed concerns about problems in the record, and then dismissed the writ as improvidently granted, with three Justices dissenting.

Several Justices raised serious issues. Justice Stevens, for example, asked whether plaintiffs had adequately pled conspiracy in ¶ 51 by alleging “upon information and belief that defendants have entered into a contract combination or conspiracy to prevent competitive entry in their respective . . . markets” and remained incredulous when counsel answered “no.” Tr. 4.

Justice Ginsburg then picked up the same point asking whether Petitioners were not really arguing that Respondents must plead “a statement of facts” that supports their alleged conclusion, noting that our rules “assiduously avoid using the word fact throughout” and that from 1938 on it has been the rule that “you’re not required to plead facts.” Tr. 5.

She then pointed to Form 9’s model complaint alleging that defendant “negligently drove” the car into plaintiff and asked whether that was sufficient to state a tort claim. Tr. 6-7.

Justice Stevens then asked if an allegation that defendants “agreed orally not to compete with one another” would be sufficient. Counsel said “yes.” Tr. 12.

Justice Scalia then said “I wish you would reconsider that. Because if that’s, if that’s all you’re arguing, I don’t see anything to be gained by – by such a holding.” Tr. 15.

Justices Breyer and Scalia also seemed troubled by the fact that petitioners had not moved under Rule 12(e) for a more definite statement. Tr. 14 and 17.

Justice Scalia also pointed out that “some parallel action would indicate [an agreement] wouldn’t it? I mean, if for example they, you have nine companies that change their price at the same hour of the same day, 10 months in a row.” Tr. 20. Counsel for the United States agreed.

Justices Roberts, Breyer, and Scalia were also troubled by the task of defining more precisely exactly what more would be required to state a claim, e.g., the date of the agreement, whether it was in writing, etc. Tr. 23-24, 27.

All in all, it was a very active oral argument. A final decision is not expected for several months.

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Wm. Randolph Smith
Partner – Washington, D.C.
Phone: +1 202.624.2700
Email: wrsmith@crowell.com