Gary Jacobson, Mar 26, 2010
In Starr v. Sony BMG, the Second Circuit became the first court of appeals to vacate a district court’s judgment which had dismissed a federal antitrust complaint as failing to meet the standards for pleading a Sherman Act conspiracy enunciated in Twombly. The court directed that the case be remanded to the district court, where Plaintiffs may prosecute their allegations that the Defendants, the four major music labels, agreed to fix prices and restrain trade in the market for Internet Music.
While the federal courts continue to wrestle with the issues of the nature and extent of the pleading changes wrought by Twombly, the Starr panel unanimously agreed that Twombly did not elevate the standard on a motion to dismiss Section 1 claims to that for summary judgment. The court further held that the complaint made adequate allegations not only of parallel conduct but also of “further circumstances” sufficient to make plausible the suggestion that the Defendants’ alleged conduct was undertaken pursuant to an agreement to restrain trade, rather than independently by each firm.
