Pleadings and Procedural Issues

This chapter focuses on the practical issues of pleading and
procedure facing the litigator who encounters or advances a state action
argument. The plaintiff’s counsel anticipating a state action issue should
prepare at the outset for the inevitable motions because the state action
defense may bar an antitrust claim at its inception. For the same reason,
defense counsel should carefully assess the best means for presenting the
state action defense, whether by a motion to dismiss or a motion for
summary judgment. Whether state, municipal, or private action is at
issue primarily determines the stage in the litigation at which the court
may resolve the state action issue.
A. Initial Pleadings
1. Complaint
Plaintiffs counsel who anticipate a state action defense should, if
possible, plead facts that will prevent a defendant from succeeding on a
motion to dismiss based on the state action doctrine. Of course, a
plaintiff faced with a state action argument in a motion to dismiss may
amend the complaint within 21 days after service of the motion and
attempt to allege facts to overcome the defense once it is raised.1 So long
as the plaintiff has not amended once already, the plaintiff also may
amend within 21 days after service of the answer.2 Otherwise, the
plaintiff must seek consent from the defendant or leave of court to amend
the complaint.3 Because the court may deny leave to amend, counsel
who choose not to plead preemptively against a state action defense are
at risk. For example, in Nursing Registry v. Eastern North Carolina
1. FED. R. CIV. P. 15(a)(1)(B); see also, e.g., Nattah v. Bush, 605 F.3d 1052,
1056 (D.C. Cir. 2010) (holding that motion to dismiss is not a
responsive pleadingwithin the meaning of Rule 15(a) (1)(A)).
2. FED. R. CIV. P. 15(a)(1)(B).
3. FED. R. CIV. P. 15(a)(2).
152 State Action Practice Manual
Regional Emergency Medical Services Consortium,4 the court denied a
plaintiffs motion for leave to amend its complaint to address the state
action defense raised by the governmental defendants.5 The court held,
in part, that the plaintiffs proposed amended complaint was as defective
as its original complaint in that it failed to allege facts sufficient to defeat
the governmental defendantsclaim to state action protection; thus,
amendment would have been futile.6 In light of these risks, plaintiffs
counsel should consider anticipating the state action defense in the
original complaint. Among the allegations pleaded by plaintiffs that
have served to overcome a motion to dismiss based on state action
protection are:
Facts sufficient to show that there was no clearly articulated state
policy authorizing the restraint;7
Facts sufficient to show that a private defendants conduct is not
actively supervised;8 and
Facts sufficient to show that a private defendant usurped the
decision-making process of a governmental body.9
Moreover, in the absence of a Supreme Court opinion expressly
adopting or rejecting a “market participantexception to the state action
4. 959 F. Supp. 298 (E.D.N.C. 1997).
5. Id. at 310.
6. See id. at 309-10. Other courts have reached similar conclusions, denying
plaintiffs leave to amend because the proposed amendments would not
defeat the defendantsstate action immunity. See, e.g., Buck v. Ky.
Horse Racing Commn, 2014 U.S. Dist. LEXIS 131871, at *19-21 (D.
Utah 2014); PTI, Inc. v. Philip Morris Inc., 100 F. Supp. 2d 1179, 1209
(C.D. Cal. 2000); Bonollo Rubbish Removal v. Town of Franklin, 886 F.
Supp. 955, 966 (D. Mass. 1995).
7. See, e.g., Wesley Health Sys. v. Forrest Cnty. Bd. of Supervisors, 2012
U.S. Dist. LEXIS 145121, at *15-16 (S.D. Miss. 2012); Apani Sw., Inc.
v. Coca-Cola Enters., 128 F. Supp. 2d 988, 999-1000 (N.D. Tex. 2001)
(considering claims against a private defendan t); Fisichelli v. Town of
Methuen, 653 F. Supp. 1494, 1499-1502 (D. Mass. 1987) (considering
claims against a municipal defendant).
8. See, e.g., Ticket Ctr. v. Banco Popular de P.R., 441 F. Supp. 2d 354, 358
(D.P.R. 2006); see also Apani, 128 F. Supp. 2d at 1000 (finding that a
nongovernmental defenda nt was not entitled to state action immunity
because its conduct was supervised by a municipality, not the state).
9. See, e.g., Mercatus Group v. Lake Forest Hosp., 528 F. Supp. 2d 797, 814
(N.D. Ill. 2007).
Pleadings and Procedural Issues 153
doctrine,10 it may be an exception worth pleading initially in appropriate
cases. Plaintiffs counsel, therefore, should consider whether pleading
facts to support the market participant exception is justified.
2. Defendants Response
Although a defendant may elect to move to dismiss in lieu of
answering,11 defense counsel should keep in mind that even after the
Supreme Court reformulated the pleading standard required by Rule 8(a)
in Bell Atlantic Corp. v. Twombly,12 many district courts continue to
view with skepticism motions to dismiss for failure to state a claim.13 As
a tactical matter, defense counsel who seek dismissal based on state
action grounds risk not just an adverse decision, but a judicial opinion
highlighting for the plaintiff the facts the trial judge considers important
to a finding that state action protection attaches. In cases where a
municipal or executive agency defendant can point to a clearly
10. See FTC v. Phoebe Put ney Health Sys., Inc ., 133 S. Ct. 1003, 1010 n.4
(2013) (declining to consider whether a market participant exception to
state action immunity applies); City of Columbia v. Omni Outdoor
Adver., 499 U.S. 365, 374-75 (1991) (stating in dictum that certain
language in Parkersimply [clarifies] that [state action] immunity does
not necessarily obtain where the State acts not in a regulatory capacity but
as a commercial participant in a given market). See Chs. IV.D.2 and
VI.C for more detailed discussions of a market participant exception to
the state action doctrine.
11. FED. R. CIV. P. 12(b). In the e vent that the defe ndant moves to dis miss,
and the plaintiff a mends the complaint in response, the d efendant should
file another motion to dismiss to meet the plaint iff’s additional
allegations. See Adams v. Quattlebaum, 219 F.R.D. 195, 197 (D.D.C.
2004); see also Turner v. Kight, 192 F. Supp. 2d 391, 397 (D. Md. 2002)
(holding that an amended complaint supersedes the original complaint
and renders moot any pending motions to dismiss the original complaint).
12. 550 U.S. 544 (2007); see also Ashcroft v. Iqbal, 556 U.S. 662, 684 (2009)
(clarifying that Twombly pleading standard applies to all civil actions, not
just antitrust cases).
13. See, e.g., Andretti Sports Mktg. La., LLC v. NOLA Motorsports Host
Comm, Inc., 2015 U.S. Dist. LEXIS 158698, at *23 (E.D. La. 2015);
Stone v. Life Pners Holdings, Inc., 26 F. Supp. 3d 575, 583 (E.D. Tex.
2014); Glenbrook Capital L.P. v. Kuo, 525 F. Supp. 2d 1130, 1135-36
(N.D. Cal. 2007); Graphia v. Balboa Ins. Co., 517 F. Supp.2d 854, 856
(E.D. La. 2007).

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