Monday, November 27, 2006

Supreme Court Hears Important Antitrust Case Today

SCOTUSblog lays out (in plain English) Bell Atlantic Corp. v. Twombly (U.S. No. 05-1126) here.

The plaintiff-respondents allege a conspiracy on the part of the Baby Bells and other competitive local exchange carriers (CLECs) (read the big guys) to prevent incumbent local exchange carriers (ILECs) (read, the little guys) from entering formerly monopolized markets. In support of this averment, plaintiffs offer ... well nothing ... at least not until they get a shot at discovery. The district court dismissed the claim on the pleadings.

The 2d. Cir. reversed, holding no evidence was necessary--indeed, that the burden on antitrust claimants is "relatively modest." Among other curious rulings, the 2d Cir. would shift antitrust pleading's "plus factors"--necessary where there are hazy allegations such as the conspiracy here alleged--to after discovery is completed. What pleading?

The plaintiff-respondents principally argue notice pleading. They say Fed. R. Civ. Pro. 8(e)(1) & 9(b) are broad enough to encompass bare assertions of conspiracy--even under the Sherman Act, where the S. Ct. has been tightening the screws on plaintiffs for decades. Treble damages and attorney fees are more than enough to incentivize fishing in every single nook of every business. The 2d Cir.'s standard would create a real moral hazard--an industry of antitrust investigation to the extent one does not already exist.

I think the S. Ct. will see the plaintiff-respondent's claim for the fishing invitation it would seem to be, and dismiss the case.

As those in antitrust can attest, Prof. Drake thinks this one's huge. Oral arguments should be here later today or tomorrow.

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