For the second time this week, the Sixth Circuit reviewed a district court’s dismissal of an antitrust complaint for failure to state a claim upon which relief can be granted. As reported here, Judges Merritt, Clay and Griffin earlier this week upheld the dismissal of an antitrust complaint, even though the information necessary to establish Plaintiff’s claims was solely in the purview of the Defendants. In contrast, in Watson Carpet & Floor Covering, Inc. v. Mohawk Industries, Inc., Nos. 09-6140/09-6173 (6th Cir. June 22, 2011) (PDF), Judges Siler, Moore and Griffin reversed the district court’s dismissal for failure to state a claim under Twombly of a complaint alleging a conspiracy to restrain trade in violation of the Sherman Act.
The Panel in Watson focused primarily on the fact that, even though Defendants offered alternative reasons for their refusal to sell to Plaintiff, the alleged agreement to drive Plaintiff out-of-business plausibly explained the complained-of-actions; it did not have to be the probable or exclusive explanation. Remarkably – and notably absent from the Complaint discussed in our previous post - Plaintiff Watson alleged specific facts surrounding the agreement among Defendants to drive it out of business, including who made the agreement, when it was made, and the specifics as to how it was carried out. Though the basis for how Plaintiff was able to learn the facts to support its Complaint (which would presumably be solely within the purview of Defendants) was not specifically addressed in the opinion, the factual history suggests that Plaintiff may have learned the specifics in discovery in a related litigation involving a conspiracy among the same parties. That related litigation predated Twombly, and thus would not have been subject to the same strict pleading standards. Fortunately for the Plaintiff, it may have provided the factual basis for Plaintiff to survive a motion to dismiss.
It remains to be seen, however, how other plaintiffs, with similar claims based upon conduct within the exclusive purview of the defendants, and without the benefit of discovery, will be able to survive in a post-Twombly world. The Sixth Circuit is clearly grappling with that question, but it looks like it is being sorted out on a case-by-case basis.