Trouble for Private Enforcement of the Sherman Act: Twombly, Pleading Standards, and the Oligopoly Problem

I. INTRODUCTION Courts and commentators have long struggled with the proper treatment of parallel conduct by competitors in oligopoly markets.1 In such markets it is possible to achieve supra-competitive pricing through recognized interdependence, rather than agreement.2 Although interdependent pricing results in the same harm to competitors as an agreement to fix prices, it is clear that the latter is per se illegal and the former, lacking a viable remedy, is legal.3 However, courts have disagreed about what is sufficient evidence of agreement, as opposed to mere interdependence, to submit an oligopoly pricing4 case to a jury.5 In Bell Atlantic Corp. v. Twombly,6 the Supreme Court recently addressed the antecedent question of what are sufficient allegations of agreement to survive a motion to dismiss a Sherman Act § 1 claim7 in an oligopoly market. The Court concluded that simple allegations of parallel conduct with conclusory assertions of agreement could not survive a motion to dismiss.8 Nonetheless, the opinion contained little clear guidance as to what would be sufficient, other than indicating that the claim alleged must be "plausible."9 The decision's effect on oligopoly pricing cases in particular was (and remains) uncertain because the case involved non-price parallel conduct that the Court found could not plausibly be the result of agreement.10 The Court's discussion of general pleading standards also generated great confusion.11 The opinion contained many seemingly conflicting statements12 and its "retirement"13 of the venerable language from Conley v. Gibson,1* the grandfather of "notice pleading," that "a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that a plaintiff can prove no set of facts in support of his claim which would entitle him to relief,"15 arguably suggested an intent to dramatically change pleading practice. Twombly is a confusing opinion replete with inconsistent statements. Although it is impossible to discuss the opinion without being critical of its lack of clarity, this Article is not merely a critique of the Court's decision. Rather, through a review of the decisions of lower courts in the first six months following Twombly, it analyzes the consequences of the Court's opinion and seeks to resolve some of the confusion that Twombly created. The Article demonstrates that Twombly has had virtually no effect in routine cases.16 In complex cases outside the antitrust arena, however, Twombly appears to have increased lower courts' discretion to require additional factual allegations when necessary.17 In exercising that discretion, the lower courts have seemed to consider logical factors and to have exercised their discretion reasonably.18 Ironically, in most antitrust cases, the Supreme Court decision has had no effect on pleading requirements. In the specific context of oligopoly pricing cases, however, the Twombly decision appears to have had a great and regrettable effect. Lower courts have made private suits alleging price fixing in oligopoly markets near impossible to pursue absent a prior government suit.19 It is unclear if this is the result the Twombly Court intended or the consequence of several flaws in the lower courts' decisions that are detailed below.20 In either case, blame falls on the Supreme Court as any lower court errors result from the Twombly Court's failure to provide consistent reasoning and clear guidance. Part II describes Twombly. Part III addresses the ambiguities contained in the Court's opinion and the effect the case has had on pleading practice in the lower courts. Special attention is given to the lower courts' treatment of oligopoly pricing cases, as those are the cases in which Twombly has seemed to have the greatest effect. The Article concludes that if private enforcement of price fixing violations is to remain viable, these lower courts' interpretations of Twombly must be corrected. …