Articles Posted in Pleading standards

Antitrust Pleading StandardsI won’t hide the ball; I’ll just tell you the answer: Federal district courts deciding motions to dismiss an antitrust case too often apply the summary-judgment standard to conspiracy allegations, particularly when confronted with non-parallel-conduct cases.

This isn’t scientific or empirical—it is my observation and is enough of an issue that more than one federal appellate court has complained about it over the last few years.

The motion to dismiss standard for antitrust conspiracies is, to be fair, somewhat confusing thanks to a case called Bell Atlantic v. Twombly. You can read my prior article about Twombly and pleading standards here.

Before the US Supreme Court decided Twombly in 2007, courts applied a very deferential standard to antitrust motions to dismiss, including conspiracy allegations.

Courts used to follow an old Supreme Court case called Conley v. Gibson (1957) (which you will find cited in many, maybe even most, motion-to-dismiss decisions preceding Twombly). Under Conley, a complaint satisfied specificity requirements if it stated facts that made it “conceivable” that plaintiff could prove its legal claims. A court could only dismiss a claim if it appeared that a plaintiff could prove—the famous phrase—“no set of facts” in support of his or her claim that would entitle the plaintiff to relief.

The Twombly Decision

I remember when I read the Supreme Court’s Twombly decision for the first time. Justice Souter wrote the majority opinion. At the time, I was with DLA Piper and represented a defendant in the In re Insurance Brokerage Antitrust Litigation (Here is an article about the litigation from Bill Kolasky, who was one of the joint defense group leaders). The case was still with the trial court during one of the motion-to-dismiss briefing rounds. (Usually when a court dismisses an antitrust complaint for the first time, it will do so without prejudice and with leave to amend, which leads to another round of motion-to-dismiss briefing).

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Antitrust lawsuit costsIf you ask this question to an antitrust lawyer, you will receive some form of “it depends” in response. That’s true. It does depend. And you will inevitably follow up with, “What does it depend upon?” Let’s see if we can begin to answer that question.

What we are discussing here is not a class-action antitrust lawsuit, but an antitrust claim by one business or individual against another. Class-action antitrust cases usually incorporate some contingency-fee approach and are lawyer-centered rather than client-centered cases. That is, the plaintiff law firms act as “private-attorney generals” to enforce the antitrust laws through the class-action vehicle. Those cases are very different than the typical case brought by a company against its competitor, supplier, or customer. You can read our article on defending against class certification in antitrust cases here.

Antitrust cases are expensive. Usually. But if managed effectively, they don’t need to cost nearly as much as they did when big law firms held a virtually monopoly on the cases by convincing clients that only they had the requisite resources to file such a massive claim.

With the combination of technological advancements and third-party providers, I believe that, in many instances, hiring a big law firm to run your antitrust case is a costly mistake. We’ll get into that more below.

I am not going to get into actual numbers here because fees and other costs vary and will change over time. But if you are considering antitrust litigation, studying the components of an antitrust lawsuit will help you (1) understand what you are paying for and (2) figure out how to reduce your costs.

Below are the primary-cost drivers of an antitrust case. Of course, every case is different and a lot can come up in litigation that is unexpected and unusual. That keeps it interesting, but also increases cost variances. The list below doesn’t hit everything, but I hope it helps you.

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In 2007, the Supreme Court issued a bombshell of a case called Bell Atlantic v. Twombly, which caused both antitrust lawyers and civil procedure law professors to rethink how they go about their work.

For those of you not obsessed with law or antitrust, Twombly changed the antitrust pleading standards in federal court from one of extreme permissibility to the current “plausibility” standard.

Courts quickly began applying Twombly beyond antitrust cases, and it now is THE case for motions to dismiss that argue that plaintiffs have not plead enough to move to the next stage of litigation.

When the Supreme Court decided Twombly, it created a surge of excitement, and federal courts began dismissing cases left and right because plaintiffs had not alleged sufficient facts to show a “plausible” claim to relief, under antitrust or other laws.

Since then, I don’t think I have seen any antitrust complaint that wasn’t followed by a motion to dismiss, usually citing Twombly. Notably, courts coupled this elevated standard with refusals to start discovery until after plaintiffs leaped the motion-to-dismiss hurdle.

I believe, however, that the antitrust-pleading-standard pendulum is beginning to shift back toward the plaintiff.

Update: On November 10, 2014, the United States Supreme Court in Johnson v. City of Shelby issued a new plaintiff-friendly pleading decision.

Update 2: You can read my new article on antitrust pleading standards here: “What is the Biggest Mistake that District Court Judges Make in Antitrust Cases?”

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