District Court Properly Granted Defense Motion to Dismiss Antitrust Class Action and did not Abuse its Discretion in Denying Leave to File an Amended Class Action Complaint Second Circuit Holds
Plaintiffs filed a putative antitrust class action lawsuit against various elevator companies alleging that defendants conspired to fix the prices of elevators and monopolized the market for the maintenance of elevators. In re Elevator Antitrust Litig., 502 F.3d 47, 48-49 (2d Cir. 2007). Defense attorneys moved to dismiss the class action complaint for failure to plead sufficient facts of the requisite agreement; the district court granted the defense motion, and denied plaintiffs’ leave to amend the class action complaint. Id., at 49-50. Plaintiffs appealed; the Second Circuit affirmed the dismissal of the class action, holding that “[t]he conspiracy claims provide no plausible ground to support the inference of an unlawful agreement, and the allegations of unilateral monopolization fail to allege a prior course of dealing.” Id., at 48-49.
With respect to the class action’s conspiracy claims, the Second Circuit held at page 50 that the complaint alleged mere conclusions, but under Bell Atlantic Corp. v. Twombly, ___ U.S. ___, 127 S.Ct. 1955, 1965 (2007), more is required: “To survive a motion to dismiss under Twombly, it is not enough to make allegations of an antitrust conspiracy that are consistent with an unlawful agreement; to be viable, a complaint must contain ‘enough factual matter (taken as true) to suggest that an agreement [to engage in anticompetitive conduct] was made.’” The complaint must allege sufficient facts to “‘nudge [plaintiffs’] claims across the line from conceivable to plausible.’” In re Elevator, at 50 (quoting Twombly, at 1974). The Circuit Court analyzed and rejected each of plaintiffs’ arguments, see id., at 50-52, and concluded that “plaintiffs are unable to allege facts that would provide ‘plausible grounds to infer an agreement,’” id., at 50 (citation omitted).
With respect to the class action’s monopoly claim, the Circuit Court noted that the thrust of the class action complaint was that defendants refused to do business with one another, and held that “because plaintiffs do not allege that defendants terminated any prior course of dealing – the sole exception to the broad right of a firm to refuse to deal with its competitors – the allegations are insufficient to state a unilateral-monopolization claim.” In re Elevator, at 52. Specifically, the class action complaint did not allege that defendants “terminated a prior relationship with elevator service providers – a change which (by taking advantage of their customers’ sunk costs) could evince monopolistic motives.” Id., at 54.
NOTE: Two points bear noting. First, the Second Circuit highlighted the “potentially enormous cost of fact discovery” as a supporting factor for exercising caution before permitting an antitrust class action to proceed. In re Elevator, at 50 n.4. Second, plaintiffs’ counsel alleged that they “knew of facts support more specific allegations of misconduct,” but at oral argument they refused to reveal that information to the district court on the ground that it was “confidential.” Id., at 54 n.9. The district court was unimpressed, and the Circuit Court agreed that “[b]ased on the record” the district court did not abuse its discretion in refusing plaintiff’s request for leave to file an amended class action complaint, id., at 54.