Court Opinion

ID: 3065260
Source: CourtListenerOpinion
Date Created: 2015-10-14 22:30:17.481376+00
Date Added: 2024-06-11T11:49:44.380464
License: Public Domain

FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

WILLIAM O. GILLEY ENTERPRISES,          
INC., a Nevada corporation doing
business in California and the
estate of William O. Gilley,
deceased; DENNIS DECOTA, an
individual; PATRICK PATRICK
PALMER, an individual on behalf of
themselves and all others similarly
situated,
               Plaintiffs-Appellants,        No. 06-56059
                 v.                            D.C. No.
ATLANTIC RICHFIELD COMPANY;                CV-98-0132-BTM
CHEVRON CORPORATION; EXXON                   ORDER AND
CORPORATION; MOBIL OIL                         OPINION
CORPORATION; EXXON/MOBIL
CORPORATION; SHELL OIL COMPANY;
TEXACO INC.; TOSCO CORPORATION;
ULTRAMAR DIAMOND SHAMROCK;
VALERO CORPORATION; CONOCO-
PHILIPS PETROLEUM CORPORATION;
CHEVRON/TEXACO CORPORATION;
TESORO CORPORATION,
              Defendants-Appellees.
                                        
       Appeal from the United States District Court
           for the Southern District of California
       Barry T. Moskowitz, District Judge, Presiding

                   Argued and Submitted
          February 13, 2008—Pasadena, California

                   Filed December 2, 2009

                            15675
15676             GILLEY v. ATLANTIC RICHFIELD
        Before: Stephen S. Trott, Richard R. Clifton and
            Consuelo M. Callahan, Circuit Judges.

                     Per Curiam Opinion
15678            GILLEY v. ATLANTIC RICHFIELD

                         COUNSEL

Charles M. Kagay, Spiegel, Liao & Kagay LLP, San Fran-
cisco, California, for the plaintiffs-appellants.

Timothy D. Cohelan, Cohelan & Khoury, San Diego, Califor-
nia, for the plaintiffs-appellants.

Hojoon Hwang, Munger, Tolles & Olson LLP, San Francisco,
California, for the defendant-appellee.

Peter H. Mason, Fulbright & Jaworski LLP, Los Angeles,
California, for the defendant-appellee.

David M. Foster, Fulbright & Jaworski LLP, Washington DC,
for defendant-appellee.

Patrick J. Sullivan, Law Offices of Patrick J. Sullivan, Ocean-
side, California, for the defendant-appellee.
                 GILLEY v. ATLANTIC RICHFIELD             15679
                           ORDER

  The Opinion filed April 3, 2009, slip op. 4188, and appear-
ing at 561 F.3d 1004 (9th Cir. 2009), is withdrawn. It may not
be cited as precedent by or to this court or any district court
of the Ninth Circuit.

   The superseding opinion will be filed concurrently with this
order. The parties may file an additional petition for rehearing
or rehearing en banc. All other pending motions are denied as
moot.

                          OPINION

PER CURIAM:

   The district court granted Defendants’ motion to dismiss
Plaintiffs’ antitrust claim founded on § 1 of the Sherman Act,
holding that 1) Aguilar v. Atlantic Richfield Co., 24 P.3d 493
(Cal. 2001), precludes the allegations made in the operative
pleading; 2) Defendants’ exchange agreements can not be
aggregated to establish market power and anticompetitive
effect; and 3) even if the exchange agreements could be
aggregated, the absence of a conspiracy to limit supply and
raise prices eliminates a causal connection between the
exchange agreements and anticompetitive effect. We have
jurisdiction pursuant to 28 U.S.C. § 1291, and we affirm.

                               I

                      BACKGROUND

  Plaintiff-Appellant William O. Gilley filed this class-action
lawsuit in 1998 on behalf of himself and other wholesale pur-
chasers of CARB gasoline in the state of California. CARB
gas is a cleaner-burning fuel, and since 1996 it is the only
15680            GILLEY v. ATLANTIC RICHFIELD
type of gas that can be sold in California. The complaint
alleged that Defendants-Appellees, major oil producers, vio-
lated § 1 of the Sherman Act by entering into a conspiracy to
limit the supply of CARB gasoline and to raise prices.

   The allegations of the complaint were plainly similar to
those alleged in Aguilar, a class-action suit filed in California
Superior Court in 1996. That suit was brought under the Cart-
wright Act, CAL. BUS. & PROF. CODE § 16720 et seq., Califor-
nia’s equivalent to the Sherman Act. Aguilar, 24 P.3d at 502.
The plaintiff in Aguilar was a retail purchaser and consumer
of gasoline and sought to represent a class of retail purchas-
ers. The plaintiff in this action was a wholesale purchaser and
retail dealer of gasoline and sought to represent a class of
wholesale purchasers. Both plaintiffs were represented by the
same attorneys, and both actions targeted the same defendants
for essentially the same allegedly unlawful conduct. Because
of the similarity in the cases, the district court hearing this
case stayed the suit pending the outcome of Aguilar.

   In Aguliar, the state superior court granted summary judg-
ment to the defendants, concluding that there was insufficient
evidence presented by the plaintiffs to allow a reasonable
juror to find a conspiracy to limit supply and raise prices
among the several gasoline companies. Id. at 503. The Cali-
fornia Supreme Court affirmed. Id. at 521. As a result, Defen-
dants in this case brought a motion for summary judgment
arguing that Gilley’s claims were barred by collateral estop-
pel. In response, Gilley offered a proposed amended com-
plaint, which the court found insufficient. The district court,
however, granted Gilley leave to provide another proposed
amended complaint, which he did.

   On May 6, 2002, the district court granted Defendants’
motion for summary judgment on that complaint, holding that
Gilley was precluded by Aguilar from relitigating whether a
conspiracy existed to limit supply and raise prices. However,
the court granted Gilley further leave to amend the complaint
                 GILLEY v. ATLANTIC RICHFIELD             15681
to allege that “each of the bilateral agreements, entered into
independently between various defendant gasoline companies,
ha[s] anti-competitive effects and therefore violate[s] the
Sherman Act.”

   On May 24, 2002, Gilley filed the third post-Aguilar com-
plaint, alleging that forty-four bilateral exchange agreements
had the effect of unreasonably restraining trade in violation of
§ 1 of the Sherman Act and in violation of CAL. BUS. & PROF.
CODE § 17200. On March 27, 2003, the district court granted
Defendants’ motion to dismiss that complaint with prejudice.
With respect to the § 1 claim, the court explained that Gilley
had not alleged any theory as to how any individual exchange
agreement, which accounts for a small percentage of the rele-
vant market, is able to inflate the price of CARB gasoline.
The district court rejected Gilley’s argument that the court
could consider the aggregate effects of the individual bilateral
agreements to allege an anticompetitive effect—namely
higher gas prices.

   Gilley appealed to this Court, which reversed and
remanded, holding that the district court erred in not giving
Gilley an opportunity to correct the newly identified deficien-
cies. After the remand, the second amended complaint
(“SAC”) was filed.

   The district court granted Defendants’ motion to dismiss
the SAC, holding that Plaintiffs failed to allege that the
exchange agreements, when considered individually, would
be capable of producing significant anticompetitive effects.
We now review the district court’s dismissal of the SAC.

                               II

                       DISCUSSION

A.   Standard of Review

  We review de novo a dismissal for failure to state a claim
pursuant to Rule 12(b)(6). Knievel v. ESPN, 393 F.3d 1068,
15682             GILLEY v. ATLANTIC RICHFIELD
1072 (9th Cir. 2005). All allegations of material fact are taken
as true and construed in the light most favorable to the non-
moving party. Id. On a motion to dismiss in an antitrust case,
a court must determine whether an antitrust claim is “plausi-
ble” in light of basic economic principles. Bell Alt. Corp. v.
Twombly, 550 U.S. 544, 556 (2007).

B.     Analysis

   We address the following issues in this appeal: 1) the pre-
clusive effect of the California Supreme Court’s decision in
Aguilar; 2) the pleading standard for § 1 claims; 3) the suffi-
ciency of Plaintiffs’ SAC; and 4) the state law claim under
CAL. BUS. & PROF. CODE § 17200.1

  1.    The Preclusive Effect of the California Supreme
        Court’s Aguilar Decision.

   Gilley does not dispute that the decision in Aguilar has
some preclusive effect in the current lawsuit, but he contends
that his current claim is not entirely extinguished by Aguilar.
In contrast, Defendants argue that all of the allegations as
pleaded in the SAC are precluded by Aguilar. We conclude
that Gilley’s claims are precluded by the California Supreme
Court’s decision.

   [1] Section 1 of the Sherman Act prohibits “[e]very con-
tract, combination in the form of trust or otherwise, or con-
spiracy, in restraint of trade or commerce among the several
States.” 15 U.S.C. § 1. The Supreme Court has clearly estab-
lished that the section is limited to prohibiting unreasonable
restraints of trade. See Texaco Inc. v. Dagher, 547 U.S. 1, 5
(2006). Whether a plaintiff pursues a per se claim or a rule of
reason claim under § 1, the first requirement is to allege a
  1
   Our holding renders moot the issue of Plaintiff’s standing to add
Tesoro as a Defendant.
                 GILLEY v. ATLANTIC RICHFIELD            15683
“contract, combination in the form of trust or otherwise, or
conspiracy.”

  [2] The core of the plaintiff’s claims in Aguilar was a per
se claim based on an alleged unlawful conspiracy among
petroleum companies. The California Supreme Court’s opin-
ion in Aguilar states:

    Just as the superior court’s order granting the petro-
    leum companies summary judgment was not errone-
    ous as to Aguilar’s primary cause of action for an
    unlawful conspiracy under section 1 of the Cart-
    wright Act to restrict the output of CARB gasoline
    and to raise its price, neither was it erroneous as to
    her derivative cause of action, which was for an
    unlawful conspiracy under the unfair competition
    law for the same purpose.

    ...

    The petroleum companies carried their burden of
    persuasion to show that there was no triable issue of
    material fact and that they were entitled to judgment
    as a matter of law as to Aguilar’s unfair competition
    law cause of action. They did so by doing so as to
    her Cartwright Act cause of action. Again, they car-
    ried their burden of production to make a prima facie
    showing of the absence of any conspiracy, but she
    did not carry her shifted burden of production to
    make a prima facie showing of the presence of an
    unlawful one.

    It is true, as Aguilar argues, that her unfair competi-
    tion law cause of action is not based on allegations
    asserting a conspiracy unlawful under the Cartwright
    Act. But it is indeed based on allegations asserting a
    conspiracy, specifically, one unlawful at least under
    the unfair competition law itself. As stated, the
15684            GILLEY v. ATLANTIC RICHFIELD
    petroleum companies showed that there was no tri-
    able issue of the material fact of conspiracy. Aguilar
    claims that conspiracy is not an element of an unfair
    competition law cause of action in the abstract as a
    matter of law. Correctly so. (See Bus. & Prof. Code,
    § 17200). But she simply cannot deny that conspir-
    acy is indeed a component of the unfair competition
    law cause of action in this case as a matter of fact.

Id. at 521 (emphasis in original).

   [3] This portion of Aguilar holds that the plaintiffs had
failed to demonstrate the existence of a conspiracy that was
per se illegal or otherwise illegal under the Sherman Act.

   The preclusive effect of Aguilar is woven through the
numerous court decisions in Gilley’s federal action. Gilley
filed this class action in 1998, and its proceedings were stayed
pending the outcome of Aguilar. After the California Supreme
Court issued its opinion in Aguilar, the defendants filed a
motion for summary judgment. Gilley opposed the motion
and also offered to file an amended complaint. The district
court granted the motion for summary judgment. The district
court held that pursuant to the doctrine of issue preclusion,
Gilley was barred from relitigating the conspiracy alleged in
Aguilar. The court denied Gilley’s request to amend the com-
plaint to allege continuing violations of antitrust laws subse-
quent to the time period involved in Aguilar, reasoning:

    The exchange agreements were already judged by
    the California Supreme Court not to be evidence of
    a conspiracy. The court finds that the proposed
    amended complaint merely alleges the ongoing use
    of these supply agreements and not any new con-
    duct. Issue preclusion therefore bars Gilley from reli-
    tigating whether use of the ongoing agreements
    constitute an illegal conspiracy under the Sherman
    Act.
                 GILLEY v. ATLANTIC RICHFIELD              15685
   The district court, however, agreed with Gilley that “his
rule-of-reason claim has not been litigated to the extent that
he is alleging that the individual bilateral exchange agree-
ments violate the anti-trust laws due to their anti-competitive
effect.” Accordingly, it granted Gilley leave to file an
amended complaint “only to the extent that it alleges that each
of the bilateral agreements, entered into independently
between various defendant gasoline companies, have unrea-
sonable anti-competitive effects and therefore violate the
Sherman Act.”

   Gilley amended his complaint. Defendants responded by
filing a motion to dismiss the First Amended Complaint
(“FAC”). The district court granted the motion, explaining:

    After careful scrutiny of the FAC, the court has been
    unable to discern any allegation that any of the par-
    ties in any of the bilateral agreements entered these
    agreements with an unlawful intent or purpose to
    restrain competition. In the few instances that Plain-
    tiff does allege an improper purpose, he does so by
    alleging joint action among all, or substantially all of
    the defendants. As discussed below, Plaintiff’s
    pleading of such joint purpose or action regarding
    the various defendants is improper and will not be
    considered by the court. Therefore, Plaintiff has
    failed to properly allege “concerted action” regard-
    ing any individual bilateral exchange agreement.

The district court dismissed the case with prejudice, com-
menting that because “Plaintiff was already granted leave to
amend his complaint previously, and at this late date was
unable to set forth a valid anti-trust claim, it appears that
Plaintiff cannot allege sufficient facts constituting a valid § 1
claim.”

  Gilley appealed, and we reversed and remanded to allow
Gilley an opportunity to file a further amended complaint. We
15686            GILLEY v. ATLANTIC RICHFIELD
held that the district court had abused its discretion by deny-
ing Gilley an opportunity to amend his complaint.

   When Gilley filed a Second Amended Complaint, defen-
dants again moved to dismiss, and the district court granted
the motion. It explained:

    Plaintiffs do not allege that each exchange agree-
    ment has a discrete effect on competition which can
    be viewed together with the separate effects of the
    other exchange agreements. Instead, Plaintiffs allege
    the existence of a network of exchange agreements
    that allow Defendants to coordinate their production
    and output, thereby limiting the amount of CARB
    gasoline on the rack or spot market and allowing
    Defendants to raise prices to branded dealers.

    Even if a single defendant and all of the defendants
    who contracted with that defendant cumulatively had
    sufficient market power to substantially impair com-
    petition, Plaintiffs would need to make the further
    showing that all of these defendants worked together
    through the use of the exchange agreements and stra-
    tegic shutdowns or decreased production to stabilize
    the spot market and avoid the depression of gasoline
    prices. . . .

    Plaintiffs cannot avoid the fact that their Sherman
    Act claim is, at its core, a conspiracy claim. Plain-
    tiffs’ theory of recovery rests upon the existence of
    a web of exchange agreements that allegedly allows
    all of the Defendants to engage in a precise dance of
    give-and-take with the goal of maintaining the deli-
    cate balance of CARB production. Coordinated
    action is essential to Plaintiffs’ claim.

    After four attempts to plead around a conspiracy
    claim, Plaintiffs still fail to allege that the bilateral
                  GILLEY v. ATLANTIC RICHFIELD              15687
    exchange agreements, viewed independently, consti-
    tute an unreasonable restraint on trade. Plaintiffs’
    inability to establish a causal connection between the
    individual exchange agreements, and anti-
    competitive harm is fatal to Plaintiffs’ Sherman Act
    claim.

   [4] A critical aspect of the district court’s perspective was
its determination that the SAC did not allege “that each
exchange agreement has a discrete effect on competition
which can be viewed together with the separate effects of
other exchange agreements.” Rather, the district court saw the
SAC as alleging “a network of exchange agreements” that
“allow Defendants to coordinate their production and output.”
In essence, the district court read the SAC as not alleging that
the bilateral agreements “violate the anti-trust laws due to
their anti-competitive effect,” but rather that the agreements
facilitate coordinated action by the defendants that unlawfully
restrains trade. We agree.

   [5] This distinction is critical. If the bilateral agreements in
themselves have an illegal effect on competition (when aggre-
gated), then the bilateral agreements constitute the “contract,
combination or conspiracy” required for a claim under § 1 of
the Sherman Act. If, however, the bilateral agreements only
facilitate coordinated activity, then to maintain a claim under
§ 1 of the Sherman Act, Gilley must show some meeting of
the minds, some “contract, combination or conspiracy,”
between those defendants whom Gilley alleges coordinated
their actions. Although a plaintiff might well be able to do so
in the abstract, here, Gilley is precluded by Aguilar from
asserting that the defendants so conspired.

   [6] The Second Amended Complaint implicitly, if not
explicitly, asserts a conspiracy. The charging paragraphs of
the SAC describe the defendants’ parallel actions and imply
the existence of a conspiracy. The SAC asserts:
15688            GILLEY v. ATLANTIC RICHFIELD
       California’s CARB gas supply is generally manu-
    factured primarily by defendants, California branded
    refiners, who are engaged in the business of refining,
    distributing and selling almost 100% of the CARB
    gas in the state of California during the class period.
    California remains largely isolated from external
    sources of supply.

       All California refiners, now also major retail mar-
    keters, control supply and pricing from production to
    distribution, in part, through supply agreements that
    require dealers to purchase gasoline exclusively at
    each branded refiner’s present DTW price, a price
    that is always greater than the rack price and cost of
    distribution.

       California refiners’ weekly refinery production
    decisions are influenced by, among other things, spot
    price impact, refiner margins, bilateral exchange
    partners’ market needs, ability to draw inventory
    from bilateral exchange partners, and overall market
    supply.

       With the impending introduction of CARB gaso-
    line in 1996, each of the defendants or their pre-
    decessors in interest, entered into new sales and/or
    exchange agreements with other defendants, many of
    which provided for the provision of CARB gas “as
    mutually agreed” (AMA) with no minimum or maxi-
    mum.

The determination that these paragraphs assert a conspiracy is
reinforced by the next paragraph of the SAC which reads:

    The sales and exchange agreements known to plain-
    tiffs that are subject of this action are listed on the
    attached Exhibit . . . . On information and belief,
    plaintiffs allege that defendants have entered into
                    GILLEY v. ATLANTIC RICHFIELD                    15689
      other sales and exchange agreements, presently
      unknown to plaintiffs, with similar intent and effect.

Certainly the tenor of this paragraph is that the “similar intent
and effect” violates antitrust laws. Moreover, in light of the
preceding paragraphs and the failure to assert any other spe-
cific violation of the Sherman Act, the alleged violation must
be one of conspiracy or collusion.

   This allegation of conspiracy is carried forward in the
SAC’s allegations against particular defendants, starting with
Chevron.2 It lists three exchange agreements that Chevron
entered into with Exxon, Shell, and Tosco Refining Co., and
alleges, on information and belief, that Chevron has entered
similar agreements “for the delivery of CARB in Northern
California.” The SAC then alleges:

         Chevron’s intent and purpose in entering into
      these exchange agreements was to limit refining
      capacity for CARB gas and/or to keep CARB gas
      out of the spot market and away from unbranded
      marketers.

         Through the use of these exchange agreements,
      coupled with its own refining capacity and that of
      its contracting partners, Chevron has obtained suf-
      ficient market power to limit the supply of CARB
      gas to unbranded marketers and to raise the price at
      which it sells CARB gas in Northern California to
      supracompetitive levels. These agreements have had
      the effect of raising CARB gas prices in Northern
      California above competitive levels, without any
      countervailing procompetitive benefit.
  2
    The allegations against the other defendants are similar to the allega-
tions against Chevron.
15690               GILLEY v. ATLANTIC RICHFIELD
(emphasis added).

   [7] These paragraphs reveal how Gilley proposes to meet
the market power requirement for a claim under § 1 of the
Sherman Act, but they leave the reader uninformed as to how
the individual exchange agreements allegedly violated the
Sherman Act “without a conspiracy to control supply or to set
prices.” In his brief, Gilley responds by pointing to the para-
graphs concerning the relationship between Chevron and
Tosco. These paragraphs set forth various reasons for why the
defendants purportedly entered into particular agreements,3
suggest an industry-wide conspiracy,4 and assert that the indi-
vidual agreements facilitated a combination or conspiracy.5
  3
     For example, the SAC sets forth a 1994 individual exchange agreement
between Chevron and Tosco and alleges:
      Chevron’s intent and purpose in entering into this agreement with
      Tosco was to place its surplus CARB gas with other branded
      refiners to maximize returns. Chevron intended to and did rear-
      range its CARB gas supply to avoid a market imbalance caused
      by CARB gas flowing to independent marketers.
If Chevron and Tosco agreed to restrain the production of gas, the individ-
ual exchange agreement might well be a contract to restrain trade pursuant
to § 1 of the Sherman Act. The paragraph, however, does not say that the
parties agreed. Instead, it only addresses Chevron’s intent and purpose.
This purpose and intent would presumably motivate Chevron to act inde-
pendently or interdependently without any agreement as to purpose or
intent with Tosco.
   4
     For example, the SAC alleges that “[t]hrough the use of these exchange
agreements, coupled with its own refining capacity and that of its contract-
ing partners, Chevron has obtained sufficient market power to limit the
supply of CARB gas to unbranded marketers and to raise the price at
which it sells CARB gas.” This implies a broader conspiracy, though the
SAC does not allege that there was a meeting of the minds of the parties
to raise the price of gasoline specifically in connection with any of the
individual exchange agreements.
   5
     For example, the SAC alleges that “Tosco’s intent and purpose in
entering into this agreement with Chevron was [to] join the ‘club’ of major
branded refiners and to give Chevron the opportunity to place its surplus
CARB gas with other branded refiners to maximize returns.” This is con-
fusing, as it indicates that Tosco’s intent was to give Chevron “the oppor-
tunity” to maximize its return. This seems to suggest that the individual
exchange agreement facilitated, but did not in itself provide for, the max-
imization of Chevron’s return.
                      GILLEY v. ATLANTIC RICHFIELD                   15691
Again, the paragraphs seem to allege a conspiracy. They cer-
tainly do not clearly allege that the exchange agreements
themselves constitute a restraint of trade or suggest why the
defendants’ actions were “collusive, rather than independent,
action.” See Aguilar, 24 P.3d at 519.

   [8] In sum, the SAC, plainly and fairly read, is not limited
to alleging that the bilateral exchange agreements are them-
selves restraints of trade. Instead, its broad allegations encom-
pass conspiracy claims that are precluded by Aguilar.

   [9] The breadth of the SAC is inconsistent with the spirit
of Twombly, 550 U.S. 544. Although Twombly involved an
alleged conspiracy based on parallel conduct and this case is
ostensibly not a conspiracy case, we have held that Ashcroft
v. Iqbal, ___ U.S. ___, 129 S. Ct. 1937, 1953 (2009), makes
clear that the pleading requirements stated in Twombly apply
in all civil cases, including this one. Doe I v. Wal-Mart Stores,
Inc., 572 F.3d 677, 683 (9th Cir. 2009). The Supreme Court
reiterated that Federal Rule of Civil Procedure 8(a)(2)
requires “ ‘a short and plain statement of the claim showing
that the pleader is entitled to relief,’ in order to ‘give the
defendant fair notice of what the . . . claim is and the grounds
upon which it rests.’ ” Twombly, 550 U.S. at 554-55 (quoting
Conley v. Gibson, 355 U.S. 41, 47 (1957)).6 It commented that
a plaintiff’s obligation “requires more than labels and conclu-
sions, and a formulaic recitation of the elements of a cause of
  6
    The Court went on to disapprove the language in Conley that “a com-
plaint should not be dismissed for failure to state a claim unless it appears
beyond doubt that the plaintiff can prove no set of facts in support of his
claim which would entitle him to relief.” Twombly, 550 U.S. at 561 (quot-
ing Conley, 355 U.S. at 45-46). The Court held that:
      [t]he phrase is best forgotten as an incomplete, negative gloss on
      an accepted pleading standard: once a claim has been stated ade-
      quately, it may be supported by showing any set of facts consis-
      tent with the allegations in the complaint.
Twombly, 550 U.S. at 563.
15692                  GILLEY v. ATLANTIC RICHFIELD
action” and that “[f]actual allegations must be enough to raise
a right to relief above the speculative level.” Id. at 555 (inter-
nal citations omitted). The Supreme Court reaffirmed its ear-
lier decisions holding that “something beyond the mere
possibility of loss causation must be alleged, lest a plaintiff
with a largely groundless claim be allowed to take up the time
of a number of other people with the right to do so represent-
ing an in terrorem increment of the settlement value,” and
that “when the allegations in a complaint, however true, could
not raise a claim of entitlement to relief, this basic deficiency
should . . . be exposed at the point of minimum expenditure
of time and money by the parties and the court.” Id. at 558
(internal quotation marks and citations omitted). The Court
concluded that allegations of parallel conduct in themselves
do not provide a sufficient basis to sustain a conspiracy claim.7

  Moreover, in Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009), the
Supreme Court affirmed that its decision in Twombly “ex-
pounded the pleading standard for all civil actions.” Id. at
  7
   The Court noted:
      We think that nothing contained in the complaint invests either
      the action or inaction alleged with a plausible suggestion of con-
      spiracy. As to the ILECs’ supposed agreement to disobey the
      1996 Act and thwart the CLECs’ attempts to compete, we agree
      with the District Court that nothing in the complaint intimates
      that the resistance to the upstarts was anything more than the nat-
      ural, unilateral reaction of each ILEC intent on keeping its
      regional dominance. The 1996 Act did more than just subject the
      ILECs to competition; it obliged them to subsidize their competi-
      tors with their own equipment at wholesale rates. The economic
      incentive to resist was powerful, but resisting competition is rou-
      tine market conduct, and even if the ILECs flouted the 1996 Act
      in all the ways the plaintiffs allege, . . . there is no reason to infer
      that the companies had agreed among themselves to do what was
      only natural anyway; so natural, in fact, that if alleging parallel
      decisions to resist competition were enough to imply an antitrust
      conspiracy, pleading a § 1 violation against almost any group of
      competing businesses would be a sure thing.
550 U.S. at 566.
                  GILLEY v. ATLANTIC RICHFIELD             15693
1953 (internal quotation marks and citation omitted). The
Court reiterated that “where the well-pleaded facts do not per-
mit the court to infer more than the mere possibility of mis-
conduct, the complaint has alleged — but it has not ‘show[n]’
— ‘that the pleader is entitled to relief.’ Fed. R. Civ. P.
8(a)(2).” Id. at 1950.

   In this case the district court read the complaint as not stat-
ing a viable cause of action. It determined that the SAC did
not allege that “each exchange agreement has a discrete effect
on competition which can be viewed together with the sepa-
rate effects of other exchange agreements,” but rather as
alleging “the existence of a network of exchange agreements
that allow Defendants to coordinate their production and out-
put.” We read the SAC as not asserting that the bilateral
agreements, in themselves, restrain trade, but that they facili-
tate or make it easier for the defendants to coordinate their
actions to restrain trade. The district court explained:

    Even if a single defendant and all of the defendants
    who contracted with that defendant cumulatively had
    sufficient market power to substantially impair com-
    petition, Plaintiffs would need to make the further
    showing that all of these defendants worked together
    through the use of the exchange agreements and stra-
    tegic shutdowns or decreased production to stabilize
    the spot market and avoid the depression of gasoline
    prices. . . .

This is the type of “in terrorem increment of the settlement
value” that the Supreme Court mentioned in Twombly. Id. at
558. Moreover, when viewed in the light of the preclusive
effect of Aguilar, the SAC simply “does not raise a claim of
entitlement to relief.” Id.

  [10] There can be little doubt that the broad scope of the
SAC was intentional. Gilley has known since 2002 that fol-
lowing Aguilar, he was precluded from alleging a conspiracy.
15694                GILLEY v. ATLANTIC RICHFIELD
Nonetheless, he has thrice been given the opportunity to
amend his complaint to limit it to a claim based solely on the
alleged anti-competitive effect of the individual exchange
agreements absent a conspiracy, and has thrice proffered
amended complaints that continue to assert, albeit ever more
subtly, the existence of a conspiracy. It might be possible for
Gilley to allege an antitrust claim limited to issues that are not
precluded by Aguilar, but he has declined to do so. Accord-
ingly, the district court properly struck the SAC.

   [11] Furthermore, the district court’s final denial of leave
under the circumstances of this case was not an abuse of discre-
tion.8

                                    III

                            CONCLUSION

  We recently reiterated in Kendall v. Visa U.S.A., Inc., 518
F.3d 1042, 1047 (9th Cir. 2008), that “[t]o state a claim under
Section 1 of the Sherman Act, 15 U.S.C. § 1, claimants must
plead not just ultimate facts (such as a conspiracy), but evi-
dentiary facts which, if true, will prove: (1) a contract, combi-
nation or conspiracy among two or more persons or distinct
  8
    In Griggs v. Pace Amn. Group, Inc., 170 F.3d 877, 880 (9th Cir. 1999),
we held that the “district court determines the propriety of a motion to
amend by ascertaining the presence of any of four factors: bad faith, undue
delay, prejudice to the opposing party, and/or futility.” Generally, “this
determination should be performed with all inferences in favor of granting
the motion.” Id. Nonetheless, “we have noted that a district court does not
abuse its discretion in denying a motion to amend a complaint . . . when
the movant presented no new facts but only new theories and provided no
satisfactory explanation for his failure to fully develop his contentions
originally.” Nunes v. Ashcroft, 375 F.3d 805, 808 (9th Cir. 2004) (quoting
Vincent v. Trend W. Technical Corp., 828 F.2d 563, 570-71 (9th
Cir.1987)) (internal quotation marks omitted). Here, assuming that Gilley
could, in the abstract, amend his complaint to state a claim that is not pre-
cluded by Aguilar, his repeated failure to do just that suggests that it
would be futile to offer him another chance to do so.
                 GILLEY v. ATLANTIC RICHFIELD             15695
business entities; (2) by which the persons or entities intended
to harm or restrain trade or commerce . . . (3) which actually
injures competition.” Gilley, in order to state a § 1 claim,
must plead “a contract . . . by which the persons or entities
intended to harm or restrain trade.” Despite its length and
detail, the SAC does not clearly assert which individual agree-
ment or agreements constitute in themselves a “contract . . .
by which the persons or entities intended to harm or restrain
trade.” Rather, the SAC is fairly read as alleging the existence
of a network of exchange agreements that arguably allowed
the defendants to unlawfully coordinate their production and
output. But given the preclusive effect of Aguilar, Gilley can-
not show such coordination. The SAC is not saved by the
argument that it could be read to encompass a claim that the
individual agreements in themselves constitute a restraint of
trade because the SAC does not provide the defendants fair
notice of such a claim and the grounds upon which it rests.
See Twombly, 550 U.S. at 555. Moreover, aggregation does
not save the SAC because it does not show that the defen-
dants’ adjustments of CARB production were part of any
agreement or conspiracy, rather than independent efforts to
maximize profits. See Twombly, 550 U.S. at 566. For these
reasons, we affirm the district court’s dismissal of the Second
Amended Complaint without leave to amend, and we affirm
the court’s dismissal of Plaintiffs’ state law claim brought
pursuant to CAL. BUS. & PROF. CODE § 17200.

  AFFIRMED.