Opinion ID: 626562
Heading Depth: 2
Heading Rank: 1

Heading: The Sherman Act, Plausibility, and Standards of Review

Text: Rule 8 of the Federal Rules of Civil Procedure provides that a complaint seeking relief must contain ... a short and plain statement of the claim showing that the pleader is entitled to relief. Fed. R.Civ.P. 8(a)(2). This Rule does not countenance pleadings that are conclusory; it requires factual allegations that are sufficient to give the defendant fair notice of what the ... claim is and the grounds upon which it rests. Twombly, 550 U.S. at 555, 127 S.Ct. 1955 (internal quotation marks omitted). Conclusory allegations of participation in a conspiracy have long been held insufficient to state a claim. See, e.g., X-Men Security, Inc. v. Pataki, 196 F.3d 56, 71 (2d Cir.1999); Thomas v. Roach, 165 F.3d 137, 147 (2d Cir.1999); Ostrer v. Aronwald, 567 F.2d 551, 553 (2d Cir.1977). Rule 8(a) `contemplate[s] the statement of circumstances, occurrences, and events in support of the claim presented' and does not authorize a pleader's `bare averment that he wants relief and is entitled to it.' Twombly, 550 U.S. at 555 n. 3, 127 S.Ct. 1955 (quoting 5 C. Wright & A. Miller, Federal Practice & Procedure § 1202, at 94, 95 (3d ed.2004)). For a complaint to be sufficient, the claim asserted must be one that, in light of the factual allegations, is at least plausible. E.g., Twombly, 550 U.S. at 570, 127 S.Ct. 1955. To present a plausible claim, the pleading must contain something more ... than ... a statement of facts that merely creates a suspicion [of] a legally cognizable right of action. Id. at 555, 127 S.Ct. 1955 (internal quotation marks omitted) (emphasis ours). It must allege facts that would be sufficient to permit a reasonable inference that the defendant has engaged in culpable conduct: A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Iqbal, 129 S.Ct. at 1949. The Sherman Act prohibits, inter alia, [e]very contract, combination ..., or conspiracy, in restraint of trade or commerce among the several States. 15 U.S.C. § 1. Because § 1 of the Sherman Act does not prohibit [all] unreasonable restraints of trade ... but only restraints effected by a contract, combination, or conspiracy, Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 775 [104 S.Ct. 2731, 81 L.Ed.2d 628] (1984), [t]he crucial question is whether the challenged anticompetitive conduct stem[s] from independent decision or from an agreement, tacit or express .... Twombly, 550 U.S. at 553, 127 S.Ct. 1955 (quoting Theatre Enterprises, Inc. v. Paramount Film Distributing Corp., 346 U.S. 537, 540, 74 S.Ct. 257, 98 L.Ed. 273 (1954) (emphasis ours)). Agreements within the scope of § 1 may be either horizontal, i.e., agreement[s] between competitors at the same level of the market structure, or vertical, i.e., combinations of persons at different levels of the market structure, e.g., manufacturers and distributors. United States v. Topco Associates, Inc., 405 U.S. 596, 608, 92 S.Ct. 1126, 31 L.Ed.2d 515 (1972). As to horizontal agreements, [o]ne of the classic examples of a per se violation of § 1 is an agreement between competitors at the same level of the market structure to allocate territories in order to minimize competition. Id.; see id. at 609 n. 9, 92 S.Ct. 1126 (remov[ing any] doubt that horizontal territorial limitations, unaccompanied by price fixing, are per se violations of the Sherman Act). Vertical restraints that do not involve price-fixing are generally judged under the rule of reason, which requires a weighing of the relevant circumstances of a case to decide whether a restrictive practice constitutes an unreasonable restraint on competition. Monsanto Co. v. Spray-Rite Service Corp., 465 U.S. 752, 761, 104 S.Ct. 1464, 79 L.Ed.2d 775 (1984); see, e.g., Continental T.V., Inc. v. GTE Sylvania Inc., 433 U.S. 36, 97 S.Ct. 2549, 53 L.Ed.2d 568 (1977). The Supreme Court has long held that certain concerted refusals to deal or group boycotts are so likely to restrict competition without any offsetting efficiency gains that they should be condemned as per se violations of § 1 of the Sherman Act. Northwest Wholesale Stationers, Inc. v. Pacific Stationery & Printing Co., 472 U.S. 284, 290, 105 S.Ct. 2613, 86 L.Ed.2d 202 (1985); see, e.g., Klor's, Inc. v. Broadway-Hale Stores, Inc., 359 U.S. 207, 79 S.Ct. 705, 3 L.Ed.2d 741 (1959). In Klor's, the plaintiff retailer (Klor's), which competed against a national retail chain (Broadway-Hale), alleged a conspiracy that was both vertical and horizontal. It alleged, inter alia, that 10 national manufacturers of household appliances conspired among themselves and with Broadway-Hale ... not to sell to Klor's. Id. at 209, 79 S.Ct. 705. The Supreme Court noted that some agreements[']... validity depend[s] on the surrounding circumstances, while other classes of restraints ... from their `nature or character' [a]re unduly restrictive, and hence forbidden by both the common law and the statute, id. at 211, 79 S.Ct. 705 (quoting Standard Oil of New Jersey v. United States, 221 U.S. 1, 58, 65, 31 S.Ct. 502, 55 L.Ed. 619 (1911)). Reversing the grant of summary judgment against Klor's, the Court found that Klor's allegations clearly show one type of trade restraint and public harm the Sherman Act forbids, Klor's, 359 U.S. at 210, 79 S.Ct. 705. Group boycotts, or concerted refusals by traders to deal with other traders, have long been held to be in the forbidden category. Id. at 212, 79 S.Ct. 705. In order to establish a conspiracy in violation of § 1, whether horizontal, vertical, or both, proof of joint or concerted action is required; proof of unilateral action does not suffice. See, e.g., Monsanto, 465 U.S. at 761, 104 S.Ct. 1464 (there is [a] basic distinction between concerted and independent actiona distinction not always clearly drawn by parties and courts). Circumstances must reveal `a unity of purpose or a common design and understanding, or a meeting of minds in an unlawful arrangement.' Id. at 764, 104 S.Ct. 1464 (quoting American Tobacco Co. v. United States, 328 U.S. 781, 810, 66 S.Ct. 1125, 90 L.Ed. 1575 (1946)). Independent action is not proscribed. A manufacturer of course generally has a right to deal, or refuse to deal, with whomever it likes, as long as it does so independently.  Monsanto, 465 U.S. at 761, 104 S.Ct. 1464 (emphasis added). Although the district court in the present case, as noted in Part I.D. above, faulted Anderson's Complaint for not contain[ing] allegations of direct evidence of a conspiracy, 732 F.Supp.2d at 397 (emphasis added), conspiracies are rarely evidenced by explicit agreements, but nearly always must be proven through inferences that may fairly be drawn from the behavior of the alleged conspirators, Michelman v. Clark-Schwebel Fiber Glass Corp., 534 F.2d 1036, 1043 (2d Cir.1976); see, e.g., United States v. Snow, 462 F.3d 55, 68 (2d Cir.2006) (conspiracy by its very nature is a secretive operation, and it is a rare case where all aspects of a conspiracy can be laid bare in court with ... precision) (internal quotation marks omitted), cert. denied, 549 U.S. 1150, 127 S.Ct. 1022, 166 L.Ed.2d 770 (2007). In order to prove a conspiracy, the antitrust plaintiff should present direct or circumstantial evidence that reasonably tends to prove that the [defendant] and others had a conscious commitment to a common scheme designed to achieve an unlawful objective. Monsanto, 465 U.S. at 764, 104 S.Ct. 1464 (internal quotation marks omitted) (emphasis added). At the pleading stage, a complaint claiming conspiracy, to be plausible, must plead enough factual matter (taken as true) to suggest that an agreement was made, i.e., it must provide some factual context suggesting [that the parties reached an] agreement, not facts that would be merely consistent with an agreement. Twombly, 550 U.S. at 556, 549, 557, 127 S.Ct. 1955. A complaint alleging merely parallel conduct is not sustainable: A statement of parallel conduct, even conduct consciously undertaken, needs some setting suggesting the agreement necessary to make out a § 1 claim[, some] further circumstance pointing toward a meeting of the minds .... An allegation of parallel conduct is thus much like a naked assertion of conspiracy in a § 1 complaint: it gets the complaint close to stating a claim, but without some further factual enhancement it stops short of the line between possibility and plausibility of entitle[ment] to relief.... [T]erms like conspiracy, or even agreement, are border-line: they might well be sufficient in conjunction with a more specific allegationfor example, identifying a written agreement or even a basis for inferring a tacit agreement .... Id. at 557, 127 S.Ct. 1955 (other internal quotation marks omitted) (emphases added). However, to present a plausible claim at the pleading stage, the plaintiff need not show that its allegations suggesting an agreement are more likely than not true or that they rule out the possibility of independent action, as would be required at later litigation stages such as a defense motion for summary judgment, see, e.g., Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 597-98, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986), or a trial, see, e.g., Monsanto, 465 U.S. at 768, 104 S.Ct. 1464; Theatre Enterprises, 346 U.S. at 540-41, 74 S.Ct. 257. Asking for plausible grounds to infer an agreement does not impose a probability requirement at the pleading stage; it simply calls for enough fact to raise a reasonable expectation that discovery will reveal evidence of illegal agreement. Twombly, 550 U.S. at 556, 127 S.Ct. 1955 (emphases added). Because plausibility is a standard lower than probability, a given set of actions may well be subject to diverging interpretations, each of which is plausible. See generally Anderson v. Bessemer City, 470 U.S. 564, 575, 105 S.Ct. 1504, 84 L.Ed.2d 518 (1985) (two or more witnesses may tell mutually inconsistent but coherent and facially plausible stor[ies]). The choice between or among plausible inferences or scenarios is one for the factfinder, see id.; Monsanto, 465 U.S. at 766 & n. 11, 104 S.Ct. 1464 (the meaning of documents that are subject to divergent reasonable ... interpret[ations] either as referring to an agreement or understanding that distributors and retailers would maintain prices or instead as referring to unilateral and independent actions, is properly ... left to the jury); id. at 767 n. 12, 104 S.Ct. 1464 (The choice between two reasonable interpretations of... testimony properly [i]s left for the jury.). The choice between two plausible inferences that may be drawn from factual allegations is not a choice to be made by the court on a Rule 12(b)(6) motion. [F]act-specific question[s] cannot be resolved on the pleadings. Todd v. Exxon Corp., 275 F.3d 191, 203 (2d Cir.2001) ( Todd ). A court ruling on such a motion may not properly dismiss a complaint that states a plausible version of the events merely because the court finds a different version more plausible. Rather, in determining whether a complaint states a claim that is plausible, the court is required to proceed on the assumption that all the [factual] allegations in the complaint are true. Twombly, 550 U.S. at 555, 127 S.Ct. 1955 (emphasis added). Even if their truth seems doubtful, Rule 12(b)(6) does not countenance ... dismissals based on a judge's disbelief of a complaint's factual allegations, id. at 556, 127 S.Ct. 1955 (internal quotation marks omitted). Given that the plausibility requirement  does not impose a probability requirement at the pleading stage, the Twombly Court noted that a well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of the facts alleged is improbable, and that a recovery is very remote and unlikely. Id. (internal quotation marks omitted) (emphases added). Whether a complaint alleges sufficient facts to state a claim on which relief can be granted is a question of law, see, e.g., De Jesus v. Sears, Roebuck & Co., 87 F.3d 65, 69 (2d Cir.1996), which we consider de novo, see, e.g., Starr v. Sony BMG Music Entertainment, 592 F.3d 314, 321 (2d Cir.2010) ( Starr ), cert. denied, ___ U.S. ___, 131 S.Ct. 901, 178 L.Ed.2d 803 (2011); Arar v. Ashcroft, 585 F.3d 559, 567 (2d Cir.2009) (en banc) ( Arar ), cert. denied, ___ U.S. ___, 130 S.Ct. 3409, 177 L.Ed.2d 349 (2010); Todd, 275 F.3d at 197. In reviewing the complaint, we giv[e] no effect to assertions of law or to legal conclusions couched as factual allegations, Starr, 592 F.3d at 321; but we accept as true the factual allegations of the complaint, and construe all reasonable inferences that can be drawn from the complaint in the light most favorable to the plaintiff, Arar, 585 F.3d at 567; see, e.g., Papelino v. Albany College of Pharmacy of Union University, 633 F.3d at 85 n. 1; Pension Committee of University of Montreal Pension Plan v. Banc of America Securities LLC, 568 F.3d 374, 381 (2d Cir. 2009); Roth v. Jennings, 489 F.3d 499, 501 (2d Cir.2007). When a party requests leave to amend its complaint, permission generally should be freely granted. See, e.g., Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962); Fed.R.Civ.P. 15(a)(2). We review the district court's denial of a request for leave to amend for abuse of discretion. See, e.g., Foman, 371 U.S. at 182, 83 S.Ct. 227; Starr, 592 F.3d at 321. An abuse of discretion may consist of an erroneous view of the law, a clearly erroneous assessment of the facts, or a decision that cannot be located within the range of permissible decisions. See, e.g., Sims v. Blot, 534 F.3d 117, 132 (2d Cir. 2008). Leave to amend may properly be denied if the amendment would be futile, see, e.g., Foman, 371 U.S. at 182, 83 S.Ct. 227, as when the proposed new pleading fails to state a claim on which relief can be granted, see, e.g., Ricciuti v. N.Y.C. Transit Authority, 941 F.2d 119, 123 (2d Cir. 1991). The adequacy of a proposed amended complaint to state a claim is to be judged by the same standards as those governing the adequacy of a filed pleading. See, e.g., id. Hence, a denial of leave to amend on the ground that the proposed new complaint does not state a claim on which relief can be granted is a decision based on a legal ruling and is one that we also review de novo. See, e.g., Starr, 592 F.3d at 321.