Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S. Ct. 1955, 167 L.Ed. 2d 929
Citation | 127 S. Ct. 1955,550 U.S. 544 |
Decision Date | 21 May 2007 |
Docket Number | No. 05-1126,05-1126 |
Parties | BELL ATLANTIC CORPORATION, et al., Petitioners v. WILLIAM TWOMBLY, et al. |
Court | United States Supreme Court |
Michael Kellogg argued the cause for petitioners.
Thomas O. Barnett argued the cause for the United States, as amicus curiae, by special leave of court.
J. Douglas Richards argued the cause for respondents.
OPINION
Liability under § 1 of the Sherman Act, 15 U.S.C. § 1, requires a "contract, combination . . ., or conspiracy, in restraint of trade or commerce." The question in this putative class action is whether a § 1 complaint can survive a motion to dismiss when it alleges that major telecommunications providers engaged in certain parallel conduct unfavorable to competition, absent some factual context suggesting agreement, as distinct from identical, independent action. We hold that such a complaint should be dismissed.
The upshot of the 1984 divestiture of the American Telephone & Telegraph Company's (AT&T) local telephone business was a system of regional service monopolies (variously called "Regional Bell Operating Companies," "Baby Bells," or "Incumbent Local Exchange Carriers" (ILECs)), and a separate, competitive market for long-distance service from which the ILECs were excluded. More than a decade later, Congress withdrew approval of the ILECs' monopolies by enacting the Telecommunications Act of 1996 (1996 Act), 110 Stat. 56, which "fundamentally restructure[d] local telephone markets" and "subject[ed] [ILECs] to a host of duties intended to facilitate market entry." AT&T Corp. v. Iowa Utilities Bd., 525 U.S. 366, 371, 119 S. Ct. 721. In recompense, the 1996 Act set conditions for authorizing ILECs to enter the long-distance market. See 47 U.S.C. § 271.
"Central to the [new] scheme [was each ILEC's] obligation . . . to share its network with competitors," Verizon Communications Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398, 402, 124 S. Ct. 872, which came to be known as "competitive local exchange carriers" (CLECs), Pet. for Cert. 6, n 1. A CLEC could make use of an ILEC's network in any of three ways: by (1) "purchas[ing] local telephone services at wholesale rates for resale to end users," (2) "leas[ing] elements of the [ILEC's] network 'on an unbundled basis,'" or (3) "interconnect[ing] its own facilities with the [ILEC's] network." Iowa Utilities Bd., supra, at 371, 119 S. Ct. 721, (quoting 47 U.S.C. § 251(c)). Owing to the "considerable expense and effort" required to make unbundled network elements available to rivals at wholesale prices, Trinko, supra, at 410, 124 S. Ct. 872, the ILECs vigorously litigated the scope of the sharing obligation imposed by the 1996 Act, with the result that the Federal Communications Commission (FCC) three times revised its regulations to narrow the range of network elements to be shared with the CLECs. See Covad Communs. Co. v. FCC, 450 F.3d 528, 533-534 (CADC 2006) ( ).
Respondents William Twombly and Lawrence Marcus (hereinafter plaintiffs) represent a putative class consisting of all "subscribers of local telephone and/or high speed internet services . . . from February 8, 1996 to present." Amended Complaint in No. 02 CIV. 10220 (GEL) (SDNY) P 53, App. 28 (hereinafter Complaint). In this action against petitioners, a group of ILECs,1 plaintiffs seek treble damages and declaratory and injunctive relief for claimed violations of § 1 of the Sherman Act, ch. 647, 26 Stat. 209, as amended, 15 U.S.C. § 1, which prohibits "[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations."
The complaint alleges that the ILECs conspired to restrain trade in two ways, each supposedly inflating charges for local telephone and high-speed Internet services. Plaintiffs say, first, that the ILECs "engaged in parallel conduct" in their respective service areas to inhibit the growth of upstart CLECs. Complaint P 47, App. 23-26. Their actions allegedly included making unfair agreements with the CLECs for access to ILEC networks, providing inferior connections to the networks, overcharging, and billing in ways designed to sabotage the CLECs' relations with their own customers. Ibid. According to the complaint, the ILECs' "compelling common motivatio[n]" to thwart the CLECs' competitive efforts naturally led them to form a conspiracy; "[h]ad any one [ILEC] not sought to prevent CLECs . . . from competing effectively . . ., the resulting greater competitive inroads into that [ILEC's] territory would have revealed the degree to which competitive entry by CLECs would have been successful in the other territories in the absence of such conduct." Id., P 50, App. 26-27.
Second, the complaint charges agreements by the ILECs to refrain from competing against one another. These are to be inferred from the ILECs' common failure "meaningfully [to] pursu[e]" "attractive business opportunit[ies]" in contiguous markets where they possessed "substantial competitive advantages," id., PP 40-41, App. 21-22, and from a statement of Richard Notebaert, chief executive officer (CEO) of the ILEC Qwest, that competing in the territory of another ILEC "'might be a good way to turn a quick dollar but that doesn't make it right,'" id., P 42, App. 22.
The complaint couches its ultimate allegations this way "In the absence of any meaningful competition between the [ILECs] in one another's markets, and in light of the parallel course of conduct that each engaged in to prevent competition from CLECs within their respective local telephone and/or high speed internet services markets and the other facts and market circumstances alleged above, Plaintiffs allege upon information and belief that [the ILECs] have entered into a contract, combination or conspiracy to prevent competitive entry in their respective local telephone and/or high speed internet services markets and have agreed not to compete with one another and otherwise allocated customers and markets to one another." Id., P 51, App. 27.2
The United States District Court for the Southern District of New York dismissed the complaint for failure to state a claim upon which relief can be granted. The District Court acknowledged that "plaintiffs may allege a conspiracy by citing instances of parallel business behavior that suggest an agreement," but emphasized that "while '[c]ircumstantial evidence of consciously parallel behavior may have made heavy inroads into the traditional judicial attitude toward conspiracy[, . . .] "conscious parallelism" has not yet read conspiracy out of the Sherman Act entirely.'" 313 F. Supp. 2d 174, 179 (2003) (quoting Theatre Enterprises, Inc. v. Paramount Film Distributing Corp., 346 U.S. 537, 541, 74 S. Ct. 257; alterations in original). Thus, the District Court understood that allegations of parallel business conduct, taken alone, do not state a claim under § 1; plaintiffs must allege additional facts that "ten[d] to exclude independent self-interested conduct as an explanation for defendants' parallel behavior." 313 F. Supp. 2d, at 179. The District Court found plaintiffs' allegations of parallel ILEC actions to discourage competition inadequate because "the behavior of each ILEC in resisting the incursion of CLECs is fully explained by the ILEC's own interests in defending its individual territory." Id., at 183. As to the ILECs' supposed agreement against competing with each other, the District Court found that the complaint does not "alleg[e] facts . . . suggesting that refraining from competing in other territories as CLECs was contrary to [the ILECs'] apparent economic interests, and consequently [does] not rais[e] an inference that [the ILECs'] actions were the result of a conspiracy." Id., at 188.
The Court of Appeals for the Second Circuit reversed, holding that the District Court tested the complaint by the wrong standard. It held that "plus factors are not required to be pleaded to permit an antitrust claim based on parallel conduct to survive dismissal." 425 F.3d 99, 114 (2005) (emphasis in original). Although the Court of Appeals took the view that plaintiffs must plead facts that "include conspiracy among the realm of 'plausible' possibilities in order to survive a motion to dismiss," it then said that "to rule that allegations of parallel anticompetitive conduct fail to support a plausible conspiracy claim, a court would have to conclude that there is no set of facts that would permit a plaintiff to demonstrate that the particular parallelism asserted was the product of collusion rather than coincidence." Ibid.
We granted certiorari to address the proper standard for pleading an antitrust conspiracy through allegations of parallel conduct, 548 U.S. 903, 126 S. Ct. 2965, and now reverse.
A Because § 1 of the Sherman Act "does not prohibit [all] unreasonable restraints of trade . . . but only restraints effected by a contract, combination, or conspiracy," Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 775, 104 S. Ct. 2731, "[t]he crucial question" is whether the challenged anticompetitive conduct "stem[s] from independent decision or from an agreement, tacit or express," Theatre Enterprises, 346 U.S., at 540, 74 S. Ct. 257. While a showing of parallel "business behavior is admissible circumstantial evidence from which the fact finder may infer agreement," it falls short of "conclusively establish[ing] agreement or . . . itself constitut[ing] a Sherman Act offense." Id., at 540-541, 74 S. Ct. 257. Even ...
To continue reading
Request your trial-
Quiroga v. Graves
...statements, do not suffice," Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 1949 (2009) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955 (2007)), and courts "are not required to indulge unwarranted inferences," Doe I v. Wal-Mart Stores, Inc., 572 F.3d 677, 68......
-
Yucaipa Am. Alliance Fund I, L.P. v. Ehrlich
...its face.’ " Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). The plausibility standard requires more than a "sheer possibility that a defendant has acted unla......
-
C.S.B. Commodities, Inc. v. Urban Trend (Hk) Ltd.
...defendant is given "fair notice of what the * * * claim is and the grounds upon which it rests." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1969, 167 L.Ed.2d 929 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). Second, the factual alle......
-
Koch v. Ahlin
...statements, do not suffice," Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 1949 (2009) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955 (2007)), and courts "are not required to indulge unwarranted inferences," Doe I v. Wal-Mart Stores, Inc., 572 F.3d 677, 68......
-
Patent Law And The Supreme Court: Certiorari Petitions Pending (April 2014)
...in the pleadings of a patent case or do the lower courts have to abide by the decision in: Bell Atlantic Corp. v. Twombly, --- U.S. ----, 127 S.Ct. 1955, 1965, 167 L.Ed.2d 929 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)) ("Bell Atlantic") 4; see also ......
-
Patent Law And The Supreme Court: Certiorari Petitions Pending (July 2014)
...in the pleadings of a patent case or do the lower courts have to abide by the decision in: Bell Atlantic Corp. v. Twombly, --- U.S. ----, 127 S.Ct. 1955, 1965, 167 L.Ed.2d 929 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)) ("Bell Atlantic") 4; see also ......
-
Supreme Court Grapples With Showing Required For Evidentiary Hearing Before Summons Enforcement
...world" [referencing the Supreme Court's decisions in Ashcroft v. Iqbal, 556 U.S. 662 (2009) and Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), which interpreted the pleading standards in Federal Rule of Civil Procedure (Rule) 8 to require a complainant to describe facts that give rise......
-
A View From The Trenches: Section 101 Patent Eligibility Challenges In The Post-Bilski Trial Courts
...126772, at *15 (D. Mass. Sept. 5, 2013). 42 Ultramercial, 722 F.3d at 1339 (emphasis in original) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 43 35 U.S.C. § 282. 44 Versata Software, Inc. v. Sun Microsystems, Inc., 2009 U.S. Dist. LEXIS 37811, at *4-5 (E.D. Tex. Mar. 31, 2009)......
-
Table of Cases
...153, 154, 155, 169 Bell Atl. Corp. v. AT&T Corp., 339 F.3d 294 (5th Cir. 2003), 56, 172, 178, 179, 180, 184 Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007), 15, 29, 118 Bell v. Ascendant Solutions, 422 F.3d 307 (5th Cir. 2005), 216 Bell v. Showa Denko K.K., 899 S.W.2d 749 (Tex. Ct. App. 199......
-
Summary Judgment
...statement of the claim must meet a “plausibility standard” and must be more than mere speculation. Bell Atlantic Corp. v. Twombly , 127 S. Ct. 1955, 550 U.S. 544 (2007). A complaint need not set forth detailed factual allegations, but a “pleading that offers labels and conclusions or a form......
-
Life After Gross: Creating a New Center for Disparate Treatment Proof Structures
...to state a claim that is “plausible” on its face. See Ashcroft v. Iqbal, 129 S. Ct. 1937, 1940 (2009); Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007). Since the Court adopted these new pleading standards, Title VII plaintiffs have had difficulty stating “plausible” employment discrimin......
-
Defending and Responding in General
...infra ). It provides a step-by-step generic list. The last step will then lead you to whatever “specific” weapon you may be confronting. 4 550 U.S. 544 (2007). 5 556 U.S. 662, 129 S.Ct. 1937 (2009). 6 See Form 12.3. 12-697 deFendinG and respOndinG in General §12.12 that requires the reviewi......