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Bell Atlantic Corp. v. Twombly

Supreme Court of the United States · 2007 · Civil Procedure

pleadingplausibility standardRule 12(b)(6)Sherman Act Section 1parallel conductRule 8(a)(2)Rule 12(b)(6)Sherman Act § 1

Facts

After the Telecommunications Act of 1996 opened local telephone markets to competition, plaintiffs sued major incumbent local exchange carriers, alleging two conspiracies under Sherman Act § 1. First, they claimed the carriers engaged in parallel conduct to impede new competitors by making unfair access agreements, providing inferior connections, overcharging, and sabotaging billing relationships. Second, they alleged the carriers agreed not to compete in one another's territories, pointing to their common failure to pursue entry into neighboring markets and to a statement by Qwest's CEO. The complaint ultimately alleged, on information and belief, that defendants had entered a contract, combination, or conspiracy to prevent competitive entry and to allocate markets.

Issue

Whether a complaint alleging parallel conduct by major telecommunications firms, without factual context suggesting an actual agreement rather than independent action, states a claim under Sherman Act § 1 sufficient to survive a Rule 12(b)(6) motion to dismiss. More generally, the Court asked what Rule 8 requires a plaintiff to plead to state a plausible antitrust conspiracy claim.

Rule

A complaint must contain enough factual matter, accepted as true, to state a claim for relief that is plausible on its face. In a Sherman Act § 1 case, allegations of parallel conduct and a bare assertion of conspiracy do not suffice; the complaint must place the parallel conduct in a context that plausibly suggests a preceding agreement, not merely conduct consistent with independent action. Rule 8 does not demand detailed factual allegations or probability, but it requires more than labels, conclusions, and a formulaic recitation of the elements.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Four bottled-water distributors serving Phoenix, Tucson, Albuquerque, and El Paso each announced the same new surcharge within two weeks. A class action complaint alleges the distributors engaged in parallel pricing and then states, on information and belief, that they entered into a conspiracy to restrain trade, but it alleges no meetings, communications, or other surrounding facts.

On the distributors' Rule 12(b)(6) motion, how should the court rule?

Explanation. A § 1 complaint must contain enough factual matter to suggest that an agreement was made. Allegations of parallel conduct, coupled only with a conclusory assertion of conspiracy, stop short of plausibility because the conduct is equally consistent with independent action. Rule 8 does not require detailed facts or probability, but it requires more than labels and conclusions. (Derived from Bell Atlantic Corp. v. Twombly (2007).)