Bell Atlantic Corp. v. Twombly, the landmark 2007 US Supreme Court antitrust ruling that created heightened pleading requirements for antitrust cases, has drastically increased the number of antitrust cases dismissed at an early stage, according to the Antitrust Digest, a new report from Shearman & Sterling.

Shearman & Sterling’s Antitrust Digest contains a comprehensive examination of roughly 90 antitrust cases that have applied new plausibility pleading standard of Bell Atlantic Corp. v. Twombly. In that case, the Court replaced the “no set of facts” or “notice pleading” standard with the plausibility standard. This new standard requires that plaintiffs must allege “specific facts”—and not bald conspiracy assertions—that suggest that defendants conspired to harm competition.

The firm’s analysis found that Twombly’s impact is significant as it has reduced antitrust actions or, at a minimum, provided more stringent requirements for taking these actions forward.

“You can really look at antitrust litigation as ‘BT’ and ‘AT’—before Twombly and after Twombly,” says Heather Kafele, a Shearman & Sterling antitrust litigation partner based in Washington, DC, and the author of the Antitrust Digest.

In Kafele’s view, these more stringent plausibility standards have facilitated the early dismissal of federal antitrust claims in favor of defendants, thereby alleviating the pressure to settle frivolous claims. The Shearman & Sterling analysis found that federal courts, post-Twombly, have been dismissing federal antitrust actions almost at a ratio of 2:1.

“This is very significant,” she says. “The message to plaintiffs is loud and clear: proceed to the courts if you must, but be sure to do so with cause. Frivolous cases are no longer being entertained by the courts.”

In fact, Kafele says, without sufficient factual allegations to support every element of a federal antitrust action, federal courts are dismissing complaints prior to discovery phase of trial.

“This spares corporate defendants from the escalating expense of discovery and e-discovery,” she adds.

The cases examined by Shearman & Sterling illustrate four emerging trends.

1. Twombly’s plausibility standards applies to all elements of a complaint. Twombly’s clearest effect appears to be a stricter adherence to threshold issues confronting any federal antitrust action, such as failing to plead antitrust injury, relevant market, market power, or an unlawful agreement between defendants.

2. Proliferation of widely-accepted plus standards. Plus factors are allegations that, when pled, nudge an antitrust claim across the line from conceivable to plausible. Since Twombly, courts are requiring more detailed allegations and specific facts of the who, what, where, why, when and how of the conduct at issue prior to allowing claimants to move forward.

3. Alternative and legitimate explanations for defendants’ parallel conduct. Even when a complaint alleges plus factors, a court is likely to dismiss the complaint if it identifies a reasonably legitimate noncompetitive explanation for defendants’ conduct mirroring that of their competitors.

4. Allowing amendment. Even after Twombly, most circuits continue to allow plaintiffs to remedy identified deficiencies by filing an amended complaint. Defendants should not expect to encounter any heightened requirements with respect to allowing amendment.

Other key findings include:

• In light of Twombly, defendants should move to dismiss a complaint at the earliest possible stages of the dispute. This strategy effectively places the onus on the plaintiff to file a specifically detailed complaint with minimal cost to the defendant.
• Plaintiffs most commonly filed their complaints in the Ninth, Second and Third Circuits, respectively. Of these three circuits, however, the Third Circuit was the most averse to granting a defendants’ motion to dismiss, while the Ninth Circuit was the most favorable to granting defendants’ motion to dismiss.

“There is little doubt that Twombly has ushered in a new era in antitrust litigation,” Kafele says. “We expect to continue to see the courts serve as gatekeepers in providing plaintiffs with ready access to the courts without burdening potentially innocent defendants.”

Shearman & Sterling is considered a leader in antitrust litigation matters. The firm’s Antitrust Digest includes a comprehensive analysis of the key cases that followed the 2007 US Supreme Court ruling in Bell Atlantic Corp. v. Twombly.

For additional information contact: Ron Brandsdorfer | New York | T +1.212.848.5081 |