10/12/2011 1:13:00 PM Bell Atlantic v.

Twombley Facts: P (Twombley) filed a claim under 1 of the Sherman Act against D (Bell Atlantic) which requires P to show that D entered into a conspiracy to thwart the demonopolization of their respective markets. P instead showed in their complaint that D restrained trade and engaged in anticompetitive practices. These practices are not illegal in themselves. It must be proven that the Ds agreed among themselves to do this. P showed "parallel conduct" - D preventing competitors from entering the market and failure of any D to attempt to compete in the market area of any other D. Procedural History: District court dismissed P's complaint concluding that parallel business conduct allegations taken alone do not state a claim. Second Circuit reversed, found P's complaint valid. SCOTUS reversed, dismissed P's complaint. Issues: Can an antitrust claim survive a motion to dismiss when it only alleges that the monopolists engaged in certain parallel conduct unfavorable to competition, absent some factual context suggesting conspiracy or agreement to do so? Are there any other times besides fraud and mistake cases when complaints that conform to FRCP 8(a)(2) are insufficient? Holding/Rule: An antitrust claim cannot survive a motion to dismiss when it only alleges that the monopolists engaged in certain parallel conduct unfavorable to competition, if there is no factual context suggesting conspiracy or agreement to do so. An antitrust claim is insufficient if it only conforms to FRCP 8(a)(2); it must include some contextual facts that make the claim plausible. Reasoning: The factual allegations must be enough to raise a right to relief above the speculative level on the assumption that all the allegations in the complaint are true.

At the summary judgment stage, an antitrust P's offer of conspiracy evidence must tend to rule out the possibility that the Ds were acting independently. Something beyond the mere possibility of impropriety must be alleged so that Ps with groundless claims cannot be allowed to take up the time of other people during the discovery phase. Antitrust discovery is very expensive; the threat of this expense will push cost-conscious Ds to settle even weak cases. Conley's "no set of facts" doctrine needs to be retired and replaced. Nothing in the complaint intimates that the resistance to the upstarts was anything more than the natural, unilateral reaction of each D intent on keeping its regional dominance. If alleging parallel decisions to resist competition were enough to imply an antitrust conspiracy, pleading an antitrust violation against almost any group of competing businesses would be a sure thing. There is a plausible explanation for the noncompetition of the Ds -- each was sitting tight, expecting their neighbors to do the same. "We do not require heightened fact pleading of specifics, but only enough facts to state a claim to relief that is plausible on its face. Because the Ps have not nudged their claims across the line from conceivable to plausible, their complaint must be dismissed." Dissent: The simplified notice pleading standard of the FRCP relies on liberal discovery rules and summary judgment motions to define disputed facts and issues and to dispose of unmeritorious claims. The fact that the Sherman Act authorizes the recovery of 3x damages and attorney's fees for successful plaintiffs indicates that Congress intended to encourage private enforcement of the law. Notes: Huge win for Ds

Stradford v. Zurich Insurance Brief Fact Summary. Plaintiff Dr. Stradford brought an action against his property insurer seeking payment under policy for water damage to his dentists office, to which the insurance company responded by filing several

counterclaims against the insured. Synopsis of Rule of Law. Counterclaims that do not satisfy the first sentence of Rule 9(b), requiring that the time, place, and nature of the alleged misrepresentations be disclosed to the party accused of fraud, will be dismissed. Facts. Plaintiff had previously notified Defendant Zurich Insurance co. that on January 17, 2000, he returned to his office from his vacation and found water dripping from frozen pipes and extensive water damage to his personal property and the interior of his office. He further notified Defendant that certain dental implants, worth more than $100,000, which had been stored in his office had become wet and ruined. After receiving these payments, Plaintiff submitted a revised claim under the Policy totaling $1,385,456.70, consisting of $168,000.00 for property damage, and a business interruption claim of $1,209,456.70. Following an investigation of Plaintiffs claim, Defendant, by letter dated January 31, 2001, disclaimed coverage for Plaintiffs claim and demanded the return of the $151,154.74 it had already paid. Slightly less than one year later, Plaintiff commenced this suit seeking $1,385,456.70 on the Policy, less the $151,154.74 already paid, or $1,234,301.96. Defendant counterclaimed, asserting that Plaintiff had made fraudulent claims, and sought the return of the $151,154.74, punitive damages, and investigation expenses. Plaintiff moved to dismiss those counterclaims that are based in fraud for failure to state their claims with sufficient particularity under Federal Rule of Civil Procedure Rule 9(b), and to dismiss certain other counterclaims for failure to state a claim. Issue. What degree of specificity is required for counterclaims alleging fraud under Fed. R. Civ. Pr. 9(b) ? Held. The court granted Plaintiffs motion to dismiss Defendants counterclaims. Rule 9(b) provides, In all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity. Malice, intent, knowledge, and other condition of mind of a person may be averred generally. Counterclaims that do not satisfy the first sentence of Rule 9(b), requiring that the time, place, and nature of the alleged

misrepresentations be disclosed to the party accused of fraud, will be dismissed. Discussion. In dismissing Zurichs counterclaims, the Court noted that the defendants counterclaims simply failed to identify the statement made by Plaintiff that they claimed

to be false. Essentially, the Court is stating that the counterclaims are insufficient because they do not provide a sufficient basis for the plaintiff, or the Court, to understand what it is exactly they are alleging that constituted fraudulent conduct.

Walker v. Norwest Corp Brief Fact Summary. Jimmy Lee Walker, III, his guardian, Cynthia Walker and their attorney James Harrison Massey appeal from the district courts award of sanctions against Massey for filing a diversity case in which he failed to plead complete diversity of citizenship and pleaded facts which tended to show there was not complete diversity.

Synopsis of Rule of Law. Rule 11 does not require the court to identify diversity and allege citizenship for defendants. The attorney representing the plaintiffs should identify citizenship of the defendants and establish diversity.

Facts. In a dispute over Jimmy Lee Walker, IIIs trust fund, his guardian, Cynthia Walker and their attorney James Harrison Massey appeal from the district courts award of sanctions against Massey for filing a diversity case in which he failed to plead complete diversity of citizenship and pleaded facts which tended to show there was not complete diversity. Mr. Massey had not alleged a citizenship for many of the defendants and did not identify which defendants should be dismissed to create diversity jurisdiction. Upon receiving the complaint the attorney for Norwest Corporation informs Mr. Massey that his complaint showed on its face that there was no diversity jurisdiction and asked him to dismiss or face sanctions. Massey did not dismiss and merely acknowledged Norwests correspondence. Issue. Whether Rule 11 requires the kind of complicated, in-depth, and possibly impossible inquiry that would have been necessary to determine the defendants citizenship before filing a complaint based on diversity of citizenship. Held. This court affirmed the district courts entry of Rule 11 sanctions which granted the Fed. R. Civ. P. 12(b)(1) motion to dismiss for lack of jurisdiction and sanctioned attorney Massey under Fed. R. Civ. P. 11, awarding $4,800 in fees and expenses. The district court did not abuse its discretion in determining that Rule 11 sanctions were appropriate.

Dissent.

Concurrence

Discussion. Finding out the defendants citizenship is a burden the plaintiffs desire in order to invoke diversity jurisdiction. Massey failed to show diversity and also failed to argue the point of Masseys financial circumstances, allowing for an award of monetary sanctions- there was no abuse of discretion. Christian v. Mattell Brief Fact Summary. Plaintiff James Hicks appeals from a District Court order requiring him, pursuant to Federal Rule of Civil Procedure 11, to pay Defendant Mattel, Inc. $501,565 in attorneys fees that it incurred in defending against what the District Court determined to be a frivolous action. Synopsis of Rule of Law. Rule 11 sanctions are limited to misconduct regarding signed pleadings, motions, and other filings. Facts. Attorney James Hicks brought suit on behalf of Harry Christian, claiming that Mattels Barbie dolls infringed Christians Claudene doll sculpture copyright. The District Court found that Plaintiff should have discovered prior to commencing the civil action that Defendants dolls could not have infringed Christians copyright because, among other things, the Defendants dolls had been created well prior to the Claudene doll and the Defendants dolls had clearly visible copyright notices on their heads. After determining that Plaintiff had behaved boorishly during discovery and had a lengthy rap sheet of prior litigation misconduct, the District Court imposed sanctions. The District Court ordered Plaintiff, pursuant to Federal Rule of Civil Procedure 11, to pay Defendant $501,565 in attorneys fees that it incurred in defending against what the District Court determined to be a frivolous action.

Issue. Whether Rule 11 sanctions are permissible for the filing of what the Court determines to be a frivolous action. Held. Yes. Although the Ninth Circuit Court of Appeals held that the District Court did not abuse its discretion in determining that the complaint filed by Hicks was frivolous under Rule 11 it nevertheless vacated the District Courts orders and remand for further proceedings because Rule 11 sanctions are limited to misconduct regarding signed pleadings, motions, and other filings. Discussion. In reaching its decision, the Ninth Circuit Court of Appeals relied on the fact that the district court had failed to make clear what specific conduct of Hicks it was ordering sanctions pursuant to. Thus, because the Ninth Circuit Court of Appeals was unable to tell whether the misconduct being sanctioned occurred outside the pleadings, such as in oral argument, at a meeting of counsel, or at a key deposition, the Ninth Circuit Court of Appeals had no choice but to reverse the sanctions order given that Rule 11 sanctions are limited to misconduct regarding filing of court papers.

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