Bell Atlantic Corp. v. Twombly

550 U.S. 544 · Supreme Court of the United States · 2007

Facts

After the 1984 AT&T divestiture, regional service monopolies (ILECs) were established. The 1996 Telecommunications Act aimed to introduce competition by requiring ILECs to share their networks with new competitors (CLECs). Plaintiffs, subscribers of local telephone and high-speed internet services, alleged that ILECs conspired to restrain trade in two ways. First, they claimed ILECs engaged in parallel conduct to inhibit CLEC growth through unfair agreements, inferior connections, and overcharging. Second, they alleged ILECs agreed not to compete against each other in contiguous markets, inferred from their common failure to pursue attractive business opportunities. These actions allegedly inflated charges for local telephone and high-speed Internet services.

Procedural history

The United States District Court for the Southern District of New York dismissed the complaint for failure to state a claim. The Court of Appeals for the Second Circuit reversed, holding that the District Court applied the wrong standard. The Supreme Court granted certiorari and now reverses the Court of Appeals' decision.

Issue

Can a complaint alleging parallel conduct by major telecommunications providers, without additional factual context suggesting an agreement, survive a motion to dismiss under Section 1 of the Sherman Act?

Holding

No, such a complaint should be dismissed because it fails to state a claim upon which relief can be granted, as it does not allege enough factual matter to suggest a plausible agreement.

Rule

To state a claim under Section 1 of the Sherman Act, a complaint must contain enough factual matter to suggest that an agreement was made, raising a reasonable expectation that discovery will reveal evidence of an illegal agreement. Parallel conduct alone, even conscious parallelism, is not sufficient to establish a conspiracy. Conclusory allegations of agreement, without further factual enhancement suggesting a preceding agreement as distinct from independent action, will not suffice. The standard requires factual allegations to raise a right to relief above the speculative level, making the claim plausible, not merely conceivable, and retires the 'no set of facts' language from Conley v. Gibson.

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