business with any filtering company so the only question here is whether we possibly allege that the studios coordinated the boycott rather than each studio boycotting independently the most direct evidence of the studios collusion is the d g a agreement and here again the studio it's not dispute that if the d j agreement is ambiguous if we have at least a per miscible interpretation of the text then that's enough to allege collusion and you can get to that spot with the text of the d g a agreement for at least two reasons first the way that the d g agreement operates is to ban all edits without the director's participation and there is of course no exception for filtering streaming by secondary companies because it predates any of that right doesn't this agreement this collective bargaining date date date back several decades before we have this technology the initial language does but that just means that they use language that broad enough to then encompass the situation here and in two thousand and fourteen i believe is when it first mentioned streaming that's what it calls new media and so they were clearly contemplating streaming and now they are in fact applying it that way and all the studios conduct is exactly what you would expect if the g g a d j agreement did cover filtering but another point on the text because i do think that's important at least to get us to the ambiguity or come the motion to dismiss according to the studios the agreement only covers those specific scenarios that are discussed in the article seven but if that's true then as long as the studios are cleverer creative enough to avoid one of those situations they can make all the edits they want to a director is working the director has no say and so given the purpose and structure of the agreement we don't think that makes any sense and to be clear again for the studios to prevail on this point they have to show that their interpretation is an am big u s c correct and we just don't think that they have pointed to any text that that would do so we also have other evidence that shows not only coordination generally but that the coordination derives from the d j agreement as one example we have mark fleming's comments regarding google play the quarter calls from the briefing initially said that he would have to check to see you buy there were any offers on their partnership with that angel and then a few months later he came back and said well at least one m p a studio will in fact block the agreement and that gives so given that earlier context on what he would have to check we can infer that there was coordination there that derived from the agreement we also have lion scates comments which is that we can't grant a license without the ga permission and further there are the emails that the studios sent in response to our letters enter juicing our new technology and i think this is powerful evidence of coordination because here the studios keep saying that they did everything independently they keep just reacting independently to any stimulus in the marketplace but we sent these letters separately to the studios and there they did not react independently they sent one hundred and twenty four m mails immediately in one month alone to each other to other n p a studios and to the n p a itself and so we think that's powerful evidence of coronation and another point while we're on the emails the only reason that we're even aware of those emails is because we got the discovery in their copyright litigation and yet the studios here keep insisting that we won't find any evidence of any collusion if we actually get  that's most of the direct evidence on coronation we also have powerful i think circumstantial evidence of coronation first place they have refused to take advantage of this profitable sales outlet which is the filtering market it's demand of fifty six million people forty seven percent of parents that want filtering services and it's a powerful enough constituency that actually got congress to pass up protecting some filtering and so we think that's a pretty powerful constituency there and yet they haven't done anything to take advantage of those profits the reason that they haven't done so we think is their motive for joint action and just to know that and players in this industry and they want to preserve the status quo avoid the disruption that might occur from some studios acting differently in one studio going into the filtering market that's the same and they're trying to avoid that same disruptive consequence with the v c r and redbox and so you see that here and here there is a real risk that one studio will enter into the filtering industry because of that huge demand in so theory is that instead of what they did to  eliminate that uncertainty and eliminate that risk they decided to take the same action and boycott filtering companies and of course in the studio say well no we had independent reasons for doing all of this but again they're just trying to convert this into a motion dismissed under the p s l array or the summary judgment standard as the district court even recognized during the hearing at least twice that it seems like the studios are sure arguing fact issues and then unfortunately the district court was convinced by the studios not misunderstanding of the proper standard because the proper standard as this court can discuss and star versus  multiple other courts have discussed and that's we briefed that we simply do not have to exclude that they are possible alternative explanations at this stage all that matters is that we have  colluded to boycott filtering companies and we have that through our direct evidence of coordinated conduct and also the circumstantial evidence that absent collusion one state would have entered into the filtering market like to ask you a question about your e mails and is that what you're basing your conspiracy are you really hanging your hat on the conspiracy or is that the effect of the response that you got or no response i'm to i'd like you to address that plus the vertical conspiracy and arguments that you make how can you show that the studios have market power if each of the studios share of the market is below thirty percent i'll start with the e mails which are still on the horizontal plane and then i'll turn to the vertical common market power if that's all right with your hon so well good because aggregation is only appropriate if you can allege plausible facts and i believe we are each having the emails in there to know we are just to be clear and now i might reverse myself a little bit on what i said here put on the vertical claim and market power we are not relying on aggregation obviously if you agree with me that we have alleged the horizontal the whores all conspiracy then we we automatically have market power and i think even the studios can see that but we are also independently saying that the studios each studio had market power even if you disagree with me about showing collusion among the studios about the collusion in the emails it is just one factor that we are hang our hat on or how  being hung on against multiple wrongs we do think that the emails are useful because for two points one again is that it rebuts this idea that everything they did they did independently because when we finally actually got them to reveal anything about their internal communications it showed coordination and so that we think that that is poor and it also shows i think or helps us distinguish twamley in some way the main concern and the reason that the court of articulated this possibility requirement is that without that requirement there's really no i where for the defendants to begin in responding to in defending against the plaintiff allegations you need to give them somewhere to looks because if you just say well parallel conduct plus action a conspiracy label they don't know where to look but we've given the studios plenty of places to be and between everything that i discuss tube all of that in so we're not sold to relying on the emails if i could turn to the vertical climb as i do want to make sure i save some time for a bottle you know if you think you have given enough facts to survive trombley in a bar then you obviously disagree with the ruling but are you also addressing whether or not you would be able to add any factual allegations if given the opportunity to and then to complain what will we do think that we've stated enough we have if the court thinks that we have and we would be happy to fill in whatever gaps that the court might find i know that the studios have mentioned i think in fifteen or sixteen or something places in their briefs that we're adding new arguments we don't think that's true we think that's probably a misunderstanding of some things but we could fill in those gaps as far as the specific details if the court has any particular questions i'm happy to address that and do want to make sure that i get to the vertical claims and so your honor did ask about that and as you noted the district court dismissed that because of that thirty percent market share threshold and with respect to the district court it simply misread that case law three brief there that just doesn't exist in the case and i think the studios actually agree they try to frame it as a thirty percent presumption and i don't think ten you need to carefully analyze certain tell tell factors in the relevant market the market is going to different markets will have different factors that are relevant and here because of the ultimate question is whether someone can force a purchaser to do something that the purchaser would not do in a competitive market and i don't know if it takes much imagination to say that if disney for instance tells a downstream licensee that they don't get they don't get to license star wars if they partner with a filter that downstream licensee is going to part is going to listen to disney instead of these neo fight filtering companies out like that angel if i could reserve their main or my time with the courthouse for the questions right now are precisely the kinds of allegations that the supreme court said in tuam plea and a ball should be dismissed at the threshold and if i could i think a helpful place to start would be with the standard that ought to apply here now my friend has suggested that he wants you to supply comes from this decision of the circuit in starr i would respectfully suggest that there are two other precedents one in particular far more directly relevant to understanding how the tuam of the standard applies here that's the musical instruments case from two thousand and fifteen and seven and eight of third in the kendall case and with the courts permission i think maybe the best way to get past the standard that applies here is just if i could just quote the court two sentences from the from the good decision of musical instruments first one appears at the bottom of page eleven ninety three lead ninety four and here's what it says about this exact scenario the case of an allegation of horse are conspiracy to be inferred from parallel conduct what it says is twamley requires that when the alegate when allegations of parallel conduct are set out to make a section one claim i e as here plaintiffs must plead enough non conclusory facts to place that parallel conduct in a context that suggests that raises  suggestion of a proceeding agreement and then again quoting the kendall decision another this is from the circuit dismissing at the threshold under twamley a horizontal conspiracy claim allegations of fact that could just as easily suggest rational business behavior by defendants as they could suggest an illegal conspiracy or insufficient so what my friend says is you can't choose between competing in francis at the motion to dismiss stage but that principle only applies once the plaintiffs have crossed the threshold of plausibility and to cross the threshold of plausibility in an anti trust horizontals fears a case that got him beat the test but twamley and musical instruments out and they just don't and it's particularly important that that standard be applied in the way that tommy directed and that musical instruments did because after all in a case like this the parallel conduct alleged by each individual defendant for counter counter claim defendant here is perfectly lawful unless it is the product of a conspiracy it's one hundred percent lawful for each of us individually to do the things that each company was alleged to have done here only if it was a conspiracy that there's any there's any reason to move forward with litigation and so now if i could i'd turn to the specific allegations i make and turn first to the director's guild agreement and we think judge berat was one hundred percent correct in the way he read that agreement i think if you look at section seven five zero nine not only does it presuppose that the studios can enter into licensing agreements with television networks and airlines and everybody else that allows them to  commit to editing it says it right there and says it right there that they commit to editing it can't possibly be read as a bar thing and so and what it does and the and the rights that it itself describes are rights of consultation for directors so i think judge brown was absolutely right about that your honest point that this was written in one thousand nine hundred seventy eight before anybody even thought something extreme in could occur also suggests how implausible it sounds but you know you don't need to reach a definitive interpretation here in order well at the hub is the directors guild each studio agrees to the collective bargaining agreement and from that fact you can infer that each studio at the end of each spoke of agreement agreed with all the other studios to do that that's their theory just take a step back it doesn't make any sense each studio has an independent interest as a district court found and is music exactly the same as in musical instruments and independent interest to enter into that agreement because they don't want to alienate the directors who are critical to their business and not only that but of course it's a collective bargaining agreement if they don't they can't have any directors work for them so and then and then you're my friend aside interstate circuit but you think about interstate circuit in that it's just the polar opposite of this case interstate circuit was a situation in which the the most powerful movie exhibitor went to the distributors and said look the second run movie houses are killing us so i'm going i want each of you to agree to set a minimum resale price it was a price fixing conspiracy and a price fixing conspiracy you you would be crazy to agree to that unless you knew that all of your other competitors were going to agree because you'd be slitting your own throat if that's the situation in which you can infer a horizontal conspiracy from spoke situation but you don't have anything like that here it's exactly the opposite so with respect to the d g a agreement this record completely right no plausible inference of conspiracy now moving to there they have a narrower horizontal conspiracy cla every one of the allegations that they have is parallel conduct no non conclusory factual allegation of collusion and once again as with the hub and spoke to a conspiracy in this situation we have not one but two very powerful explanations what each studio independently would make a judgment not to do business with that angel the first of the same one that applies in the g t a context which is they don't want to alienate the directors who are critical to the business but the second of course is that the reason all of this transpired is because each of these studios received a letter from vigil in july of two thousand and fifteen which was led to the copyright auction was the subject of this court's prior ruling that they infringe that finding dollars doing that i want you to license and also i think there's very strong arguments one being that the that the agreement is a collective bargaining agreement and a powerful incentive to not alienate that group i think is  very powerful and you make it loudly and clearly and the other is the one you just alluded to that we finally got to about that where this all started which is that there that the reverse of positions on allegations an infringement but his argument  in response of letter what is what is your response to that he has enough to get to the next step of litigation that's his argument your honor in a situation in which the several things are true one explanation for why each company individually would refuse to deal is so powerful and so obvious from exactly the same as musical instruments we are by the way there was also communication among the various parties so were alleged to have conspired that was still dismissed but when you have that on top of that these were emails from lawyers back and forth to each other trying to figure out what to do in about whether to sue for copyright infringement that's what the were there's no there's no they don't have any no but that any of that involved efforts to collude that they were deciding whether or not to sue which they have every right to do and of course the suits themselves are protected by your panic and they can't possibly be a basis for finding any trust liability here and i do think that's of a piece with their other allegations i think it's important to look at them you know they say well you know there's other evidence out there that shows that there was actually basis to infer collusion here even in this you know the sort of second horizontal sense and they talk about you tube well i would do ask the court to look at page two seventy seven of the excerpts of record in page and paragraph forty seven of the complaint which you find there because look at the allegation it's totally one hundred percent conclusory they just say well you told us that we were acting in violation of their terms of service the reason they did as because the studios told them to do it is not but it's completely conclusory same thing with sony which is on the same page with google squeezers on same page two seventy seven paragraph forty five exactly the same thing totally conclusory and those are allegations just like the ones just like the ones in the ball that th create get you over the threshold at the beginning remember it ballers a the allegation was somebody who was detained in the immediate aftermath of nine eleven subjected from some very harsh treatment he alleged that he a that that treatment was visited upon him in a discriminate for discriminatory reasons because it was not this ethnicity and religion and be he that it was ordered by the attorney general and the director of the f b i and what the supreme court said was well yes you've  alleged that the director of the f b i and the attorney general ordered this but you don't have any space non conclusory factual allegation to support that and therefore it doesn't get over the plausibility threshold at the beginning this is exactly the same the question about amendment let me ask one question where you leave the subject of who what is your response to studio response to that who is it lions gate interpretation of the d g a agreement so several points about that your honor first i mean if one looks at the allegation all that all it's alleged is that lions gate said i'm not going to business with you unless you get the director's approval doesn't say anything about whether that was based on their interpretation of the agreement or not could have it's in microcosm the same problem that their theory has in macrocosm in that lions gate may have had the same independent incentive everybody else did not to alienate the directors and say look we're not going to this business with you until you get the directors on board but even if and then i think this is a very important point even if one misinterpreted this agreement in defiance of its plain terms as requiring permission before any editing or filtering could occur that still doesn't tell you anything about whether there's a horizontal conspiracy that gets back to the hub and spoke and interstate circuit discussion we had before doesn't tell you anything about that so the lionsgate allegation doesn't it is it isn't any doesn't provide any factual support from which you can infer conspiracy at the at the end of the spokes there because you know what lionsgate made the state right and that's all there is that's all they got and then they said well you know if you give us leave to a man we can add what i tried to convey before first there is no aside from parallel conduct there are no non conclusory factual allegations from which one could infer conspiracy and second there isn't an economic motive for a conspiracy everybody in who signs at the ga has a powerful individual incentive to sign it it's a collective bargaining agreement can't work with the directors without him you don't want to alienate the directors on this issue anyway and and so given that every week i mean each individual studio would sign at the g eight even if some of the studios crazy enough not to sign it ok so there's just no basis for for inferring that they colluded with each other to make this whole system come about is this no basis for  knew based on its familiarity of the case and concluded that there was there were no factual allegations that they could please and that would remedy the problem that's exactly the rationale a judge rock even his order here in this case and i think puts it very important to read they saw our arguments about what was deficient about their compound claim complaint they saw we moved to dismiss they on their own initiative filed a first amendment complaint in response to our motion to dismiss so they know they knew what what the problems were they did what they could do to solve those problems and then we filed a renewed motion to dismiss and was that renewed motion to dismiss that was adjudicated and the judge wrote the site and then the second point if i could on this without a second conflicts point that you think is critical on the merits you're not given leave to amend or should i give that leave them in and what our counsel said at that moment was before doing that your honor you should have them identify to you what specific additional facts they would plead if you gave discovery and if you look at that opinion on pages it's ten five one to ten five to the court specifically notes that it is denying lead to men because they already had an opportunity to obtain some discovery in capital but  kristen's arguments one of those was the director's preferences against editing and of course that provides a possible explanation for their conduct but it is not the only plausible explanation we have our own story and you address the on the wishes particularly a two point one is that as we discussed at page of seventeen to eighteen of our reply brief the directors have allowed multiple exceptions to what the studios seem to think is this blanket no editing policy including product placement and making changes to the films to make them more commercial in response to test audience reactions and so again this is a factual issue that they're trying to raise they want to have some kind of smoking gun here is fair to call it a factual x issue you do have the burden to give us a plausible theory and these seem to me to be two really important reasons obvious reasons for what it is you're complaining about so i think it seems like an two responses first even if they are all responding to the demand of a common important you know extremely important constituency if they're doing it together that is collusion and we know that because of interstate circuit this is from and i know they're doing it together because each of them signed the agreement knowing that the others were also signing but even keeping the director's preferences at face value we have stole a ledge that there is this huge demand for filtering services and they don't deny this and so we have a plausible story as many court has courts have held that it's suspicious to avoid a profitable sales outlet and so that's why there is this hospitable sales that i mean in fairness what is your response to the notion that that it's made perhaps a profitable potentially profitable business model they're free to take or leave and that in this case perhaps they're leaving it because their view is that your client infringe a to respond to the one is it can that is a possible calculation that one studio might make but we have a plausible story especially given all our other allegations that what actually happened here w the studios got together and agreed that we should all respond to the debt director's preferences in the same way to avoid any disruptive consequences to avoid one studio going first into the filtering market because there is some uncertainty there and so they were getting together to eliminate some studios doing one thing some studios doing another just like an interstate circuit where the defendants had that same kind of motive and that's why it is important that the directors have allowed some exceptions because that means that it is reasonable to think that given this huge demand to enter the filtering market while at least one studio what i see of about thirty seconds if i could address the copyright issue that your hon mention and its initial matter we of course that litigation is ongoing we are planning on fighting that all the way to final judgment but the important point here is that most until you see that ongoing of all it's been stayed pending rabbit angels bankruptcy isn't respond to your concern about the copyright litigation your honor it simply does not mean that the studios acted independently because most of our allegations address conduct that occurred before we even enter juiced that technology and so the copyright issue cannot possibly explain everything that happened before that and this is you tube chromecast google play all of that occurred before and so the copyright issue simply has no relevance thank you thank you both  argument going take a short recess about five minutes and then we'll be back