Pleading Standards After Twombly: Surviving a Motion to Dismiss - April 2008 - the Civil Litigator

• Publication year: 2008
• Pages: 29
• Citation: Vol. 37 No. 4 Pg. 29

37 Colo.Law. 29 Colorado Lawyer 2008.

2008, April, Pg. 29. Pleading Standards After Twombly: Surviving a Motion to Dismiss - April 2008 - The Civil Litigator

The Colorado Lawyer
April 2008
Vol. 37, No. 4 [Page 29]

Articles
The Civil Litigator
Pleading Standards After Twombly: Surviving a Motion to Dismiss
by Timothy Beyer, Amy Benson, Mark Mathews

The Civil Litigator articles address issues of importance and interest to litigators and trial lawyers practicing in Colorado courts. The Civil Litigator is published six times a year.

Article Editors

Donald Kelso, Denver, of Holme Roberts & Owen LLP - (303) 861-7000, donald.kelso@hro.com; Eric Bentley, Colorado Springs, of Holme Roberts & Owen LLP - (719) 473-3800 eric.bentley@hro.com

About the Authors

Timothy Beyer, Amy Benson, and Mark Mathews are shareholders at Brownstein Hyatt Farber Schreck, P.C. and members of the firm's corporate litigation practice group. Beyer is the chairman of the litigation group, and Mathews chairs the firm's natural resources practice group. The authors represented Qwest Communications International, Inc., one of the four defendants in Bell Atlantic Corp. v. Twombly.

The U.S. Supreme Court's decision in Bell Atlantic Corp. v. Twombly retired the widely recognized federal pleading standard that a complaint will not be dismissed unless it appears beyond doubt that the plaintiff can prove no set of facts in support of the claim. Under the new standard, at least in federal court, a complaint must contain sufficient factual allegations to raise a right to relief beyond a speculative level.

For fifty years, judges and legal scholars often have quoted and relied on the pronouncement in Conley v Gibson(fn1) that "a complaint 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."(fn2) As a result of the U.S. Supreme Court's recent decision in Bell Atlantic Corp. v Twombly,(fn3) this "no set of facts" pleading standard is no longer good law. In considering the proper standard for evaluating a motion to dismiss in an action alleging an antitrust claim under § 1 of the Sherman Act, Justice Souter announced for the seven-to-two majority that Conley's "famous observation has earned its retirement" and defined its legacy as "an incomplete, negative gloss on an accepted pleading standard" that is "best forgotten."(fn4)

Twombly marks a clear departure from prior liberal federal pleading standards - and may represent one of the most significant pronouncements on pleading by the Supreme Court in the past fifty years. However, it is not entirely clear what pleading standard replaces the standard delineated in Conley.

The Twombly Case

The Twombly action was brought on behalf of a putative class of local phone and high-speed Internet consumers against the four then-existing "Baby Bell" telephone companies. The complaint alleged that the Baby Bells had violated § 1 of the Sherman Act(fn5) by agreeing not to compete in one another's geographic territories and to exclude other upstart competitors from competing.(fn6) The complaint contained no factual allegations of an actual agreement beyond a conclusory statement that "upon information and belief defendants have entered into a contract, combination or conspiracy. . . ." It relied on allegations of parallel conduct, including an allegation that each of the Baby Bells had not entered the others' markets even in geographically contiguous areas.

A plaintiff seeking to prove a collusive agreement in violation of the Sherman Act cannot rely solely on parallel business conduct by the defendants.(fn7) Competitors sometimes act in parallel because they agreed to do so, but companies often act in parallel as the result of independent reaction to market forces. A plaintiff relying on parallel conduct therefore must offer evidence - often referred to as "plus factors" - that tends to rule out the possibility that the defendants were acting independently to defeat a motion for summary judgment.(fn8)

At issue in Twombly was whether, to survive a motion to dismiss, the plaintiffs had to plead plus factors to rule out the possibility that the defendants had acted independently. The district court dismissed the complaint for failing to state a claim on which relief could be granted, because the plaintiffs had not alleged any plus factors to suggest collusion.(fn9)

The Second Circuit reversed, holding that plus factors need not be pled for an antitrust claim premised on parallel conduct to survive a motion to dismiss. Citing Conley, the Second Circuit held that "a court would have to conclude that there is no set of facts that would permit a plaintiff to demonstrate that the particular parallelism asserted was the product of collusion rather than coincidence."(fn10)

The U.S. Supreme Court Decision

The Supreme Court reversed the Second Circuit and granted the motion to dismiss, holding that factual allegations of parallel conduct alone did not state a claim for relief under § 1 of the Sherman Act.(fn11) In response to the plaintiffs' argument that under Fed. R. Civ. P. 8(a)(2) only a "short and plain statement of the claim" was required, Justice Souter noted that the Rule "requires a 'showing,' rather than a blanket assertion of entitlement to relief"...