have here is a twelve b six motion that was granted by the district court and before i launch into the alleged facts i want to just to cover with the court i do a good bit of antitrust and  know the case law says there's no heightened pleading standard but i'm here to tell you the courts routinely look at it differently although i know what you say and i know what you put in here that you know it's like any other want to tell the court is my burden is not heightened because i'm alleging in and i trust case in fact the courts the supreme court specifically has said a summary judgment summary disposition should be very sparingly used  distract you but you're just point of view i think you all do in the back of your minds look at it as a heightened thing but that the law is very clear you shouldn't do that and one of the reasons is because i don't have all the facts when i file this lawsuit the facts are held by the defendants particular when it comes to very very discrete issues about what their cost of producing a product is i won't know that until i have discovery so the supreme court has his advise to the district courts and the appellate court says hold off give them an opportunity to conduct discovery and that giving dismissals private discovery should be done very sparingly having said that getting to what we're really here about my client was in the patch business that's the product we've we've alleged the product in question is a polyurethane substance that they used to patch plywood we've alleged a geographic market we've explained to the court in our complete arse a supplement a minute of restating complain exactly why the market geographic market is the way it is we've gone into great details to explain the barriers to enter that market of actually going into a historical context to show that will limit valley company the defendant has a history of taking x to get people out of the market remarkably this is one of the few cases in my forty one year career where i have a one hundred percent monopoly i've alleged a one hundred percent monopoly and the market power that a one hundred percent not monopoly brings to the table that's very rare normally we're up here arguing about the size of the geographic market because that that really dictates what percentage of the market a definitive has here they have a nationwide a one hundred percent monopoly i'm alleging my client was involved in the southern market in that they have one hundred percent they are going into great detail about what they did buy him out to buy other companies out they always attach a non compete with allege that after the not compete ran out he took a look at the numbers that he could get and he saw they were charging two or three times what they were charging back in the ninety's where the cost to dili gone up about fifty percent from his peers point of view having been in the market before it's a little bit easier for him to get in the market and he did one of the barriers to entry is in order to get the a p a a p a approval you've got to go and produce some in a plant it's not like you open up a lemonade stand and you lower your price a little bit people come by and buy it you've got to find a company that's that's willing to say ok we've got this big eight hundred pound gorilla out here who we buy our patch from b them david why don't you come in here in the corner over there set up a shop and maybe if you if you run some panels out send it to the a p a they'll approve you you can get your stamps on the stuff it takes six weeks the company that allows them to do this according to allegations loses money when they do that why would they do that well they found out david eps got in got to do it a p a approved it he was charging a couple of dollars less than the other others the defend it was charging that's competition that is competition within a short period of time david eps goes down to twelve dollars and ninety five cents which is substantially below what the defendants were charging we've alleged in the defense make most of this we've alleged that we can't compete ten dollars and above we can compete we can't compete below that i have no idea today without looking at their documentation and having an expert really examine what their actual variable cost to produce a gallon of patchi is the court doesn't know i don't know all i can do is look at the smoke look at what's alleged these facts saying that what they did is they to get rid of this company they went to the the company that had agreed to let him try and said look we'll knock down the discount three or four other products as long as you keep buying our patch the company comes today and in says you can't compete we're done we're covered and they did say we're covered for the long run the judge looks at this and says but i here what you say and why would they do that that's not plausible for me it had a cup it would sell its product below its its average cost that's what they did think about this they're taking a loss at this one company and perhaps one of the others we allege but all over the united states they're still getting seventeen dollars they're making a huge profit they could afford to give the patch a way to get rid of my client as a competitor they didn't have to go to just below ten dollars they could a given it away and still they're going to make make money but for of a climb under section two for predatory pricing there are some standards we have costs and then that there has to be a showing or allegations that they had a plan was they were going to recruit these costs in the future and one of the one of the issues there is is the reality if they're buried at the court wants to see barriers to entry in other words how are they going to recruit their losses if if anybody could just come along behind apps and say well apps didn't do it but we're going to try we're going to come in at ten dollars and fifty cents mostly how we do that's why it was so important for us to allege the barriers to entry we alleged numerous half a dozen barriers to interest in treating the most significant of which is willamette has a one hundred percent monopoly ah when we go to talk to these companies as we as we allege one company we're dealing with just says no it's not going to work after we'll  out we're going to a third mill to pitch our wares they say no what are the barriers to entry this is a highly technical chemical you can't buy it off the shelf the application materials the tools you can't buy them willamette doesn't sell and they're not going to tell you how to make them the owner of apps knew how to make them and he put it together what he saw as he could improve on what was existing because they haven't bothered to improve their equipment in twenty years because they have a monopoly the judge looked at that and he said well i don't think it's plausible that a company would want to lose money and you haven't really told me what their their their cost are i can't tell them what the costs are to discovery i can only look legit what we see he says well then but on the barriers to entry i just don't think there's a legally significant in our brief we go entry control of essential a superior resources of barry's we've alleged all this the the courts have said entrenched buyer prefer a preference is a barrier where you have an eight hundred pound gorilla as your come as your competitor that is a the judge just said actually judge is a friend of mine and he just says that i just don't think that's legally significant he just he just did not believe the allegations  i found it it was i didn't understand it at one point time he did ask us would you give me the amendment and give me some more information he asked about untreated barrier he asked about products substitutes because that's usually another argument we get into whether there's alternative products we went to great detail the point out to him there are no substitutes there are numerous barriers to entry and we listed them all and then he said well tell me that what they did was illegal and we pointed out to it in our amended complaint you can't engage in predatory pricing for the purpose of running someone out of business that is an illegal practice  he goes back to well i just it just doesn't seem plausible to me that they would do that we had another cause of action actually under clayton section seven of the clayton act because after we were put out of business we still had the equipment somebody could have used it and started competing with them the owner of one of the offices of a lamb and as we allege was contacted he said let me look into it my client asking why did you put me out of business he contacts us that the company contacts apps and says well we want to buy all that equipment they don't need the equipment they donated it out why would they buy the equipment and then they say we're not only do we want your equipment but if we're going to buy this equipment which is of no use to my client you have to sign another hold another not compete under under the section seven of claim clayton you can't buy a company for the purpose of buy by another company for the purpose of maintaining your monopoly it's clear they did that it's absolutely crystal clear from our allegations if you accept them as true that they're liable  we also allege another violation of the two which is along the same lines you undertake acts two to maintain your monopoly the judge goes back and says well if i found that there was no predatory pricing i don't see how they could possibly have been gauged any competitive conduct we allege any competitive conduct beyond just the predatory pricing of the acts of maintaining your monopoly with any competitive conduct doesn't have to be illegal or criminal it's just the way you under reasonably relate to your competition you go to these retailers and you tell him these manufacturers you say if you don't use our product we're done that had to have happen not whether was my client wouldn't get a call saying we're not even talking to you anymore we build ledge these facts and then we also allege your honors i don't know what else i could say to this judge to this court now with the do novo review we've made the allegations of fact if there except it is true there's this this company has violated the antitrust statutes on multiple different different ways it's as simple as that u that's the end i trust cases the parallel conduct case it but i think was an immigration case but it's the same thing they make the same point and the point is this and you just step in back from that about an interest law competition normal competition often involves driving people out of business involves harming harm to competitors and the other trust laws should not be understood to allow losing parties to come in and plead the bare elements of a claim without any factual basis to believe that those elements which are really just legal conclusions disguised as factual allegation that but bear plead those bare elements of the claim and then impose what a talk about say a price factual context says as counsel just explained was that they came in and proposed twelve dollars or ninety cents a gallon they also allege so they have enough information forget about our costs for a moment they have enough information about costs to understand that you can profitably sell or to allege that you can profitably sell pacha ten dollars and so they come in and they price about thirty percent above a profitable and sustainable price for patch and they have nothing else they have nothing else except paragraph forty of the complaint which is a conclusory allegation that we respond to a price that's thirty percent above a profitable compared competing price by going blowing past that competitive price all the way to below average variable cost and what we're what the district court observed rightly in our view is that that's  sense and it doesn't even stop there because remember paragraph thirty eight of the comply what they say is marco didn't just get a better price from us it got a better price over the long term so now you have to conclude that we responded to a price three percent above a plausible profitable price by implausibly taking on a loss for the long term with a large customer because marco has twenty percent of the market and then the kicker is they allege in paragraph forty four of the complaint that we offered similar deals to hood and coastal plywood so now in response again this is how impossible the scans in response to a price that's almost thirty percent above a profitable competing price we below passes that profitable competing price take a loss long term on something even greater than twenty percent of the market now with all due respect i think the district court was right to say that is utterly implausible and in fact if you understand what the plausibility standard is therefore it makes perfect sense to say that you have to allege more than that because probably case was about parallel conduct another situation where conduct of competitors moving you know moving in parallel responding to price movements and the like in  actually what you'd expect in a functioning competitive marketplace and what you don't want to have is an i trust law that basically says whenever you have conduct that looks like the way it would normally operat competitive environment by a losing party who gets run out of the market for whatever reason can just create an antitrust claim out of that purely innocent conduct standing alone that's what the spring court made very clear in two amply brooks group competition and that's all that's at issue here now on that basis alone with all due respect this this case is over because the predatory pricing claims really the only anti competitive conduct at the back of any  of any of the claims at issue in this case and without the average below cause without average of without below average variable cost pricing adequately elations case the predatory pricing claim fails as a matter of law and and you know  i understand counsel said we don't have access to their two to one i am it's average there because that's true that's true but they do have access they did have enough facts about cause to allege the ten dollar competitive price they certainly know their average variable costs they could have talked about that none of that's in the complaint in all that's in the complaint and this is why it's so implausible all that's in the complaint is that they priced thirty percent above a profitable competing price and we came in and marcus said we did better and that was the end and then that that was it but the second element as well as the district court win on the hope just touch on this briefly also is know it's absolutely clear that average variable costs in this contents on this complaint has to be something meaningfully below ten dollars so you know when i talk about thirty percent above the profitable price the actual what it would actually take to have a predatory pricing claim would actually go significantly below that because you know average variable cost backs out fixed costs and overhead and profit and here we know also that the price of patching paragraph six it's alleged but the price of patch includes things like the equipment that's provided to apply the patch so there's a there's just there's just a huge gap here and that i think is a big part of the problem but in addition on the second element of br ability to recoup losses the ability to maintain and sustain over a long enough period of time super competitive pricing super competitive profits so that we can recover with kooky investment that also we became allegedly became the exclusive seller in two thousand bates came in i was in was in the business nine months later that's a lesson and look what happened when the p p s his owner decided to come back in the market if you look at paragraphs thirty and thirty two of the complaint it took less than a year less than a year for him to have ten percent of the marketed to to get one of those product lines from marco and to be invited to get twenty percent of the market by offering a better price and not that long after he's alleged that he passed a test with hood there's no reason to believe zooming out from all of the specifics that they allege which i'll get to in a minute is no reason to believe that the that it's difficult or time consuming or slow for a customer for other sellers to enter this market and when you look at it is true it is true that they allege a variety of specific costs of doing business but it's absolutely clear this court made clear in stern's aircraft the third circuit in add those is an excellent case on this point the cost of doing business is not and cannot be barriers to entry i legally significant barriers to entry or something more there more significant than just what's alleged here which are things like designing and building equipment well any manufacturer design has to design and build equipment establish a supply chain that's the kind of cost that any manufacturer if you're going to sell patch need a formula into develop a formula for patch these are just the costs of doing business even the a p eight meeting a p a standards which is really just getting into the into the manufacturing line and showing that your patch creates a sufficient quality grade material coming off the line which is what they succeeded in doing with marco fairly quickly again all of these things these are not the kind of barriers to entry that are discussed in the cases you know federal regulations high overhead fixed overhead costs all these things delayed entry and deterring and none of that is present here and if these kinds of things requirement that recruitment put in place and this this this of course a court cannot do and it's again referring you know zooming out that element is there because it's important to ensure that the entrust laws serve their purpose as the ninth circuit explained in c u fifty years ago the internet trust laws are not there to deal with circumstances where the market is built and structured in such a way that any kinds of u ld behavior by any party self corrects that's why barriers to entry are so significant and here the allegations are when something happens the market self corrects look what marco got this is a very very strange and i trust complaint it's one with the plaintiff alleges that consumers have benefited from competition it drove competition drove price coke prices down marco the consumer about whom the most specific information is alleged got exactly what it wanted out of this arrangement a lower price over a long term contract other customers hood in coastal plywood are alleged to have received discounts to in sum there's no reason to believe in this complain that women will i am it had to resort to or did resort to predatory pricing to win the business and there's absolutely no reason to believe it could have profitably done so because of the low barriers to entry in other words it just won business in short this is a common case in a trust a case where competition worked for customers even though it didn't work for one of the competitors the district court rightly dismissed the claim unless this court has further questions i respectfully request from the ninth circuit we've cited where the market conditions with the paltry entry into the market conditions of competitors is certainly something the court case and consideration as a part of the barriers to entry we've alleged that in the last what twenty thirty years of lost track of time twenty thirty years only two people have tried to get into this they lasted about a year and they were they were basically bought out  indicates they were successful they were successful getting into it they could but two in the whole united states two companies in twenty years have competitors that's that's highly highly significant and once they got it and they were immediately to worded within a year and the the scheme that they ploy here the way we've alleged it is what they did it's not just bundling the products that they discounted they took products that this many fact this plywood manufacturer had to buy and he's buying it from them and said look we're going to discount discount discount discount these four things i can't tell you today how much that is all i know is when my client gets there he can't compete anymore it's below ten dollars he can't do it i can't swear to the court i can't put in a pleading that theirs is nine dollars and fifty cents or it's ten dollars their average for the variable production costs off i'll find out if the court will give me a chance and come back and we'll say it's nine dollars and ninety cents and when you consider these discounts they were selling it for seven dollars when he says oh it has to be thirty percent below ten dollars no ten dollars is where my guy makes not that he starts making a dime it to not but what i don't see the economic sense discounting your prices on a whole bunch of other products long term but we don't know what long term is i was just a statement made by the company we're trying to do business with and it was a phone conversation and we put it in the complaint to be thorough he said non protective long term but these people are already making profits at the place next door this is only ten percent or twenty percent of the market they've got one hundred percent they can afford to guess what i said they could afford to give the patch to this guy and wait and then raise prices as they can if it's a two year deal or whatever we were going to do a two year deal i don't know what long term is we try to have a contract for two years that twelve dollars and ninety five cents so when the guy says long term maybe beings long term they can wait ten years they have one hundred percent of the market and it in any point in time they can say well look what you're going to do we're going to raise it and you know you're going to go to what if they sell to to attend fifty or eleven i mean they're still making a profit we don't know that that's what they did they could have done that because they are your profit was thirty percent well if you say i was selling it at almost thirteen dollars that's thirty percent above ten dollars and maybe i should have been honest and but my clients baseline in there because i you know i haven't had an expert look at it this is the client telling me i'm a can do it for ten i lose money after that so i made those allegations i know the people who are trying to sell to didn't come back to us and say how about ten dollars and fifty cents how about just ten dollars it was over they didn't want to do any dealings with us they had cut a deal with these people because of all these discounts the allegation is it had to be below what was competitive it reality if you really take those discounts patches being so way below their cost way below their cost i mean if you don't believe the allegation i understand that but the court is is bound to believe these