Bell Atlantic Corp. V. Twombly - Holding

Holding

The Supreme Court reversed the decision of the Second Circuit, which had reversed the decision of the District Court (Lynch D.J.) dismissing the complaint for failure to state a claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure.

As an initial matter, the Supreme Court clarified the requirements of proving a claim of anti-competitive behavior under Section 1 of the Sherman Act. The Sherman Act prohibits entering into a "contract, combination, or conspiracy" to restrain trade. The Court held that while parallel conduct — actions by competing companies that might be seen as implying some agreement to work together — is "admissible circumstantial evidence" from which an agreement to engage in anti-competitive behavior may be inferred, parallel conduct alone is insufficient to prove a Sherman Act claim.

The Court then upheld the District Court's dismissal of the plaintiff's complaint, holding that the mere allegations contained in the complaint that the competitors had agreed not to compete were insufficient to state a claim of conspiracy under the Sherman Act. The Court found that Twombly's complaint had not provided enough facts for the court to find it plausible that the companies had engaged in a conspiracy; instead, the complaint provided factual bases for parallel conduct — not enough under the Court's new interpretation of the Sherman Act — and merely stated that an agreement had taken place, with no details to support that allegation. The Court held that the dismissal of the complaint was therefore proper.

The Court's opinion changed the existing interpretation of the notice pleading requirements of Federal Rule of Civil Procedure 8(a)(2) (and the standards for dismissal under Federal Rule of Civil Procedure 12(b)(6)), creating a new, stricter standard of a pleading's required specificity. Previously, under the standard the Court set forth in Conley v. Gibson, a complaint need only state a "conceivable" set of facts to support its legal claims — that is, that a court could only dismiss a claim if it appeared, beyond a doubt, that the plaintiff would be able to prove no set of facts in support of her claim that would entitle her to relief. In Twombly, the court adopted a more strict, "plausibility" standard, requiring in this case "enough fact to raise a reasonable expectation that discovery will reveal evidence of illegal agreement".

The general applicability of this heightened standard of pleading outside of antitrust cases was established in Ashcroft v. Iqbal. In this subsequent decision, the Court also provided guidance as to how lower courts should apply the Bell Atlantic Corp. v. Twombly test:

Two working principles underlie our decision in Twombly. First, the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. ... Second, only a complaint that states a plausible claim for relief survives a motion to dismiss. Determining whether a complaint states a plausible claim for relief will, as the Court of Appeals observed, be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense. In keeping with these principles a court considering a motion to dismiss can choose to begin by identifying plead­ings that, because they are no more than conclusions, are not entitled to the assumption of truth. While legal con­clusions can provide the framework of a complaint, they must be supported by factual allegations. When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief. Our decision in Twombly illustrates the two-pronged approach.

Attorneys Michael Kellogg and Thomas Barnett argued the case successfully for the petitioners.