Opinion ID: 206601
Heading Depth: 3
Heading Rank: 1

Heading: Facts And Inferences On DuPont's Motion To Dismiss

Text: When ruling on a Rule 12(b)(6) motion to dismiss, a judge must accept as true all of the factual allegations contained in the complaint. Erickson, 551 U.S. at 94, 127 S.Ct. 2197. See also Advanced Health-Care Servs., 910 F.2d at 147 (The factual allegations of the plaintiff with respect to the relevant markets and the defendants' market shares must be accepted as true at this point.). The complaint need only give the defendant fair notice of what the claim is and the grounds upon which it rests. Coleman, 626 F.3d at 190 (internal quotation marks omitted). And all reasonable inferences must be drawn in favor of the complainant. Nemet Chevrolet, 591 F.3d at 253. In deciding whether a complaint will survive a motion to dismiss, a court evaluates the complaint in its entirety, as well as documents attached or incorporated into the complaint. Sec'y of State for Defence v. Trimble Navigation Ltd., 484 F.3d 700, 705 (4th Cir.2007); Phillips v. LCI Int'l Inc., 190 F.3d 609, 618 (4th Cir.1999) (stating that a court may consider [a document outside the complaint] in determining whether to dismiss the complaint where the document was integral to and explicitly relied on in the complaint and there was no authenticity challenge). However, the district court cannot go beyond these documents on a Rule 12(b)(6) motion; if it does, it converts the motion into one for summary judgment. Fed. R.Civ.P. 12(b), 12(d), 56. Such conversion is not appropriate where the parties have not had an opportunity for reasonable discovery. Gay v. Wall, 761 F.2d 175, 178 (4th Cir.1985) (Because Gay was not afforded an opportunity for reasonable discovery, the district court's treatment of the motion to dismiss as a motion for summary judgment was an abuse of discretion.). Additionally, statements by counsel that raise new facts constitute matters beyond the pleadings and cannot be considered on a Rule 12(b)(6) motion. Dolgaleva v. Va. Beach City Pub. Sch., 364 Fed.Appx. 820, 825 (4th Cir.2010) (citing Hamm v. Rhone-Poulenc Rorer Pharms., Inc., 187 F.3d 941, 948 (8th Cir.1999)); cf. Smith v. Local No. 25, Sheet Metal Workers Int'l Ass'n, 500 F.2d 741, 744-45 (5th Cir.1974) (treating a Rule 12(b)(6) dismissal order as converted into summary judgment because district court relied on materials outside the pleadings, including oral argument). In Dolgaleva, rather than considering only the face of the complaint, the district court allowed the defendant to dispute allegations during a hearing. The district court then improperly dismissed the complaint based on statements the defendant made at the hearing. Dolgaleva, 364 Fed.Appx. at 825-26. (citing Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir.2001) (finding error where the district court assumed the existence of facts that favor defendants based on evidence outside plaintiffs' pleadings, [and] took judicial notice of the truth of disputed factual matters)). Similarly, in this case, the district court went beyond Kolon's Counterclaim in ruling on DuPont's motion to dismiss. The district court relied upon a statement made by DuPont's counsel during oral argument that Kolon had access to all of DuPont's relevant supply agreements during the time period in question. [J.A. 712] The district court reiterated several times that DuPont asserts that these are the only supply agreements relevant to Kolon's claims and that DuPont has affirmed, at oral argument in open court, that it has disclosed all supply agreements pertinent to Kolon's claims. [J.A. 745-46] The district court then made plain that it accepted the statement as true and would evaluate Kolon's complaint in light thereof: These documents, in essence, are Kolon's case for anticompetitive conduct. [J.A. 747] Similarly, the district court stated: The Court will not view these supply agreements as it would the entirety of both parties' evidence at summary judgment. But, DuPont has affirmed, at oral argument in open court, that it has disclosed all supply agreements pertinent to Kolon's claims. Thus, the legal sufficiency of Kolon's allegations depends upon whether its claims of market exclusion are plausible given the substance of the supply agreements. [J.A. 745] The problem: Kolon never suggested in its Counterclaim that it had received all of DuPont's contracts relevant to Kolon's antitrust claims. And it would surely have been difficult for Kolon to know whether it had all relevant DuPont contracts given that nothing in the record indicates that full discovery had been undertaken. [10] Nevertheless, the district court's anticompetitive conduct analysis is riddled with reliance on DuPont's statement about the contracts. For example, the district court stated that DuPont has executed supply agreements, covering various periods from 2006 through the end of 2010, with four of its top twelve customers. . . . [T]his percentage does not allow for a plausible claim of substantial foreclosure. [J.A. 738] In analyzing DuPont's market share for which Kolon was prevented from competing, the district court assumed only four anticompetitive contractsi.e., that four of DuPont's top twelve customers were constrained from buying Kolon's or other DuPont competitors' products. On that basis, the district court calculated an overall market foreclosure percentage of less than 25 percent and held that such a low percentage was not enough to have a significant effect on competition in violation of the Sherman Act. We hold that the district court erred in accepting statements beyond the Counterclaim and making inferences on that basis in favor of DuPont. And because the record indicates that the parties had not yet had the opportunity to conduct reasonable discovery, converting the motion to dismiss to one for summary judgment, where such statements, if appropriately presented, could be considered, would have been error. See Gay, 761 F.2d at 178 (Because Gay was not afforded an opportunity for reasonable discovery, the district court's treatment of the motion to dismiss as a motion for summary judgment was an abuse of discretion.). It remains for us to determine whether the district court's error was harmless. Where a district court errs in going beyond the complaint on a Rule 12(b)(6) motion, the error is harmless if the complaint would not have withstood the motion to dismiss on its face. Dolgaleva, 364 Fed.Appx. at 826. Stated differently, we can affirm the dismissal of the complaint on any basis fairly supported by the record. Eisenberg v. Wachovia Bank, N.A., 301 F.3d 220, 222 (4th Cir. 2002). We therefore look to Kolon's Counterclaim to determine whether Kolon sufficiently pled its two Sherman Act claims, taking Kolon's allegations as true and making all reasonable inferences in its favor. See Erickson, 551 U.S. at 94, 127 S.Ct. 2197; Nemet Chevrolet, 591 F.3d at 253. [11]