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Daniel Crane, May 22, 2007
Yesterday, in the Twombly case, the U.S. Supreme Court ruled that plaintiffs alleging a contract, combination, or conspiracy in violation of Section 1 of the Sherman Act must plead more than the conclusion that the defendants agreed to the illegal conduct. They must assert facts that, if proven true, would plausibly support the inference that the defendants conspired to commit an antitrust violation. Twombly is an important decision for Section 1 cases specifically and for all antitrust cases more generally. At issue is the degree to which courts will employ the two critical screening moments in civil litigation–motion to dismiss and summary judgment–to weed out unmeritorious cases. Before Twombly, the Court had already implemented a rigorous screen at the summary judgment stage, admonishing district courts to throw out cases that were not economically plausible. Summary judgment prevents cases from going to juries, which are often ill-equipped to resolve complex matters of industrial policy. Data collected by the administrative offices of the federal courts suggest that only about one percent of all filed anitrust cases end up in front of juries. The question that Twombly raises is whether the motion to dismiss stage should be used as aggressively as a screen as the summary judgment stage. Whereas summary judgment prevents cases from getting to juries, a motion to dismiss seeks to prevent the plaintiff from getting into discovery, which in antitrust cases often costs millions of dollars. In Twombly, the Court seemed to give a nod to aggressive use of the motion to dismiss stage, thus screening out more antitrust cases at the very outset. What is still not clear–and will only be resolved with time as lower courts implement Twombly–is the degree to which courts will use the motion to dismiss stage to scrutinize the economic plausibility of the plaintiff’s allegations. After the Supreme Court’s 1986 Matsushita decision, this is a role that the courts already play on summary judgment. Justice Souter’s majority decision in Twombly opens the door to such an inquiry at the motion to dismiss stage also, although the opinion also warned that district courts should not be making “probability” decisions at the motion to dismiss stage. Thus, Twombly suggests that “plausibility,” not “probability,” will be the question to be addressed in testing the sufficiency of the plaintiff’s allegations. What that means practically–how strong the motion to dismiss screen will be post-Twombly–remains an open question.
