In Carrier Corporation v. Outokumpu OYJ, Nos. 07-6052/6114 (Mar. 2, 2012)(Carrier.pdf), the Sixth Circuit reviewed the dismissal of antitrust claims which had been brought by purchasers of air-conditioning and refrigeration copper tubing. Much of the lawsuit revolved around two decisions issued by the Commission of the European Communities (the “EC”) in 2003 and 2004, which determined that the defendants, along with other companies, participated in conspiracies to set price targets and other commercial terms “for industrial tubes, coordinated price increases, [and] allocated customers and market shares in violation of European law” and similar violations in the market for plumbing tubes. Notably, neither of these decisions identified any conspiratorial agreements with respect to U.S. markets, focusing exclusively on the European market.
In its complaint, Carrier claimed that the conspiracy was also directed at the U.S. market for air-conditioning and refrigerator tubing, thereby violating the Sherman Act and state law. Specifically, Carrier alleged that between 1998 and 2001, the defendants conspired to raise the price for copper tubing by developing “a customer and market allocation scheme” under which other conspirators agreed not to pursue Carrier’s U.S. business if the defendants did not aggressively pursue Carrier’s European business. The conspiracy resulted in Carrier paying “artificially inflated and supra-competitive prices . . . .”
In reversing the district court’s decision, the Sixth Circuit found the threshold jurisdictional requirement for the Sherman Act was met under the Supreme Court’s “effects test” because Carrier’s complaint alleged that the U.S. market was intertwined with the alleged conspiracy and the conspiracy had an effect on the U.S. market. Similarly, the Court found that subject matter jurisdiction was met because Carrier alleged a non-conclusory effect on U.S. commerce by virtue of a world-wide conspiracy in which the U.S. market was assigned to one of the conspirators thereby causing prices in the U.S. to increase, which in turn caused a direct antitrust injury. In making this determination, the Court appeared to look favorably on the specific factual allegations set forth in the complaint, including specific dates when the conspirators met and dates when the various agreements were entered into.
The Sixth Circuit also analyzed Carrier’s complaint under the Twombly pleading standard and emphasized that for claims under the Sherman Act, “allegations must be specific enough to establish the relevant who, what, where, when, how or why” and “how each defendant was involved in the alleged conspiracy.” The court found that the allegations in the complaint, which were based in part on the two decisions issued by the Commission of the European Communities, were sufficiently specific that the complaint crossed the threshold from “conceivable to plausible.”
It is unclear what impact Carrier Corporation will have on practice in the Sixth Circuit. The case appears to be fairly fact specific, particularly because the plaintiff had the benefit of two decisions from the EC which beefed up the specificity of the allegations in the complaint. The implication of the Sixth Circuit’s decision, however, is that specific factual allegations are required, which should generally include specific who, what, where, when, how or why allegations – and should specify how each defendant was involved in the alleged conspiracy. The Carrier decision follows in the wake of several notable pleadings decisions issued last year by the Sixth Circuit, and we’ll keep an eye out for how the Court (as well as the district courts) apply these various decisions.