complaint alleging predatory pricing in violation of federal and state antitrust laws the procedural posture of this appeal is critical the district court dismissed the complaint for failure to state a claim these two rules require a reversal here because my client beechnut can prove facts to support its antitrust claims we just want our day in court to present those facts the district  dismissed the complaint for failure to state a predatory pricing claim as a matter of law in an unpublished opinion and without oral argument that's not right the allegations in the complaint are more than sufficient to survive recoupment there is no question that the complaint pleaded both these elements the complaint alleges that the defendant gerber currently exercises monopoly power in the baby food industry with a national market share of over seventy percent and over eighty percent share in infant cereal the complaint alleges that gerber did substantially the low cost to wean the sole source with contracts for infant cereal in california and texas gerber is losing money on every box of infant cereal it sells to the states the complaint alleges that gerber engaged in predatory pricing on the wood contracts to prevent a competitor like beech winning those contracts which would allow the competitor to become a real player in those states and a threat to gerber's current existing monopoly power the complaint alleges that gerber could rec these barriers include gerber's dominance of limited shelf space strong brand recognition and entrenched consumer loyalty at the end of the day this case is different than most other predatory  critical but it's exercising its current existing monopoly power to prevent real competition from developing through a competitor winning a weak sole source contract in other words this is not just  pleading that was one of the big innovations of the federal rules back in the thirty's that they were going to really simplify the complaint as a mechanism to put the other side on notice and emotion all you have to do under rule eight this is actually really civil procedure there some special i don't know what the right word is even rule or maybe i should say interpretation that would prevent a company here are not going to prevent a company from something giving something to the government in the hopes that it would allow them to make a lot of money at some waiter time i think for example during world war two lucky strikes were given out free to the troops which produced are enormous brand loyalty after the war is that potentially an antitrust violation to give that away to the government show low cost pricing and the possibility of recruitment that we would state an antitrust claim they'd never claim that they're within some kind of iraq in hood kind of immunity or early because the government is the ultimate customer here and that's why your own around there we're not aware of any any such exception and i didn't see it in the papers it occurred to me for the first time because they're talking to question had that interesting aspect with ok right the key point here is that ould really emphasize that what the district court here did essentially and actually literally on page three of its opinion is impose a heightened pleading standard for predatory pricing claims and he said from what you know from your knowledge you have some time  i'm going cross that workers and gerber products company i will i will address your question directly it is true that you don't have to plead all facts that you intend to prove it is also true  not sufficient to plead the word recoupment we have a way of proving recoupment mr landau just said we can prove recoupment you have to plead facts that lead a court to conclude that there's a rational recruitment scheme that can only succeed if you eliminate competitors or discipline them well this is not securities fraud or congressman courts that layered on a requirement that results in these three hundred page complaints with notice requirements of a rule eight and if you have you haven't the rest is up to discovery or what but what the pleading requirement does require is that what you do please when you please notice is that what they please makes sense because they've gotten used to the wonderful the cereal that they had when the babies were infants and they will buy more jarred seriously answer the mr landau's questions why would we did this our contract low is because we bid the contract low as they please and their complaint will sell more a perfectly rational business scheme that has nothing to do with preparation has nothing to do with driving competitors from market has nothing to do with increasing market power or damaging competition it has to do with winning a bad so that will sell more simple business decision by a company who wants to cooperate with the government in providing decent infant formula to only income families and it's more that we don't recoup that any more than lucky strike did when it gave cigarettes to world war two soldiers right i agree with you that those two motions will be made if this case is remanded by more point on the pleading stage though i don't think we can plead that rational bad business decision whether our cost or below cost are not low cost or w to look at foreign pricing to determine whether the book cost those are questions of fact but when they pleaded recoupment what they pleaded is a set of facts that you know you will continue to sell at the prices you've always been stalling and that doesn't lead recoupment because if you think about what's is they plead a scenario in which we get that two million dollars back and the answer is they don't because we're never going to get it back we're still going to sell a baby food in fact we may sell more for our baby food but we're not going to get that two million dollars back under their please i'll be driven from the market which is what was played in book group in all cases the with that they cite if you plead that you were driven from the market then it makes sense because the i'm an apple standing all alone and you can do anything you want with price you can raise prices you can hurt competition that simply by winning the wick contract gerber is driving each not off the shelf and that for the sales within the app store there are super competitive prices because of course gerber infant formula it within our store is being sold to my customers that is to say about half goes to non work customers and if they're the only infant dollars in from formula seller within that store well that's a pretty good deal because you well i disagree with what you could have let me explain or are in this in this in this particular case with this particular complaint the fact that these prices are not super competitive is contained within the four corners of the complaint because what they do plead is that they were trying to merge with heinz that heist exercise to competitors going on gerber they exercise a competitive strain on gerber hunters a huge player they don't mention here in the what the point is is that you're talking about whether or not competition will be injured they're saying they've been injured and lost to supermarket chains california the last one in texas they've lost some distribution but they don't say that competition has been injured they don't say that consumer choice has been reduced by by our ways bet it's very artful putting i give them credit that's a don't care what happen to them they care what happens to competition they care what choice is consumers have who's on the shelf of their losing distribution in california or not is not the us we're in one hundred percent of the stores they don't allege that our share of the market in california has gone up if they lost market share  simultaneous for recruitment takes place they played it but i have an idea that's an interesting theory and it's an interesting it's an interesting question but if you along but the i think the answer to it is so long as there are viable competitors in the marketplace we'll never be able to in that kind of scenario they have to plead something pretty special to say that competition is going to be hurt we recognize that they say they've been hurt but that's not the issue and i could without having to think where you're going to finance was very helpful  getting low on these contracts and winning them at by these predatory pricing actions they more than recoup their investment in that by avoiding competition from us in the market for non wak have monopoly power and they that means by the thinnish and that they have the power to set prices unconstrained by rivals doesn't matter whether it's one rival or two rival it could be if it was one or two it really doesn't matter because what we have alleged is that they have this power and that gives them the ability to recoup so when when you're hearing this morning that we haven't always alleges a legal conclusion of recoupment that's simply not true the complaint goes i think far beyond the requirements of rule a day which is again a short and plain statement of the claim and really explains a recruitment scheme for avoiding competition in these other markets that again whether or not we can prove that whether or for these kind of claims and there's a big difference between the ultimate substance of the injury standard as you understand then the and the evidentiary hearing and the pleading requirements and so when they say we haven't pleaded any kind of a plausible scheme for recruitment