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Wednesday, October 10, 2007

The Necessity of Pleading Elements in Private Antitrust Conspiracy Claims

Posted by D. Daniel Sokol

Max Huffman of the University of West Virginia Law School addresses The Necessity of Pleading Elements in Private Antitrust Conspiracy Claims in the wake of Twombly.

ABSTRACT: The interplay between Rule 8 and the requirements for proving a conspiracy under Sherman One came before the federal courts in the context of a private antitrust suit, brought by end-user consumers, alleging a conspiracy among providers of local telephone and Internet services. The plaintiffs alleged the defendants conspired both (1) to prevent entry by other competitors into their respective service areas and (2) not to enter into each others' service areas in competition with one another. The result, according to plaintiffs, was that the petitioners maintained monopolies in their geographic markets, causing injury to consumers. The allegations made in Bell Atlantic Corp. v. Twombly, if they could be proved, would represent hard-core, per se violations of Sherman One, giving rise to treble damages liability in a civil suit and jail time and criminal fines in a criminal proceeding.

The essay undertakes a positivist justification of the rule announced in Twombly. It begins in Part II by concentrating on the procedural questions that arise at the motion to dismiss stage of litigation. Federal Rule 8 codifies a standard of pleading under which complaints must both provide proper notice to the defendants - a universally accepted basis for the pleading requirement - and show pleaders' entitlement to relief - a much more controversial proposition. The ?notice? requirement is not terribly vigorous. The ?demonstration? requirement is what keeps Rule 8 from being an open door. It also comports with the plain language of Rule 8 and the motion to dismiss construct of Rule 12(b)(6). Rule 8(f) is also relevant. It prescribes, simply, that district courts must use their discretion to do ?substantial justice.?

In Part III, the essay examines the implications of the Rule 8 pleading requirements for the private Sherman One claim. Viewing, as one must, the pleading requirement through the lens of the governing substantive law, properly to plead Sherman One a plaintiff's factual allegations must give rise to an inference of a conspiracy. To survive a motion to dismiss, a plaintiff must plead plus factors, which are facts that ?tend to exclude the possibility? that each defendant acted in its unilateral best interest. Couching plaintiffs' pleading responsibility in this manner makes clear that the Twombly rule is indeed trans-substantive in nature, and it is the substantively complex nature of the Sherman One claim that gives rise to any particular difficulties for private litigants.

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