What some have perceived as a swing to the right in the Supreme Court may have called it wrong. It's more like they're saying "Katie bar the door" against flimsy, class-action complaints. In a decision earlier today, the Supreme Court took down a class-action complaint for failing to meet basic, minimum pleading standards. In the case of Bell Atlantic Corp. v. Twombly, the Plaintiffs alleged that a group of the Baby Bells engaged in antitrust actions designed to stifle competition from upstart telephone companies in their respective geographical regions.
The Plaintiffs' theory centered around the parallel behavior of the various Baby Bells, but did not allege any specific facts to support their allegations of an unlawful agreement between the Baby Bells. Essentially, the complaint theorized, because the Baby Bells weren't competing with each other by invading the others' regional territories, there must have been behavior worthy of an antitrust claim.
While it may at first sound like a boring day in a law school civil procedure class, the case will likely ring a death knell for a group of poorly pleaded class action complaints.
The Court essentially ruled that without further factual enhancement, the Plaintiff's complaint "stops short of the line between possibility and plausibility," and the Court wanted to see a plausible complaint, not one with the mere possibility that their may be a valid antitrust claim against the Defendants. The Court said, "Because the plaintiffs here have not nudged their claims across the line from conceivable to plausible, their complaint must be dismissed."
The opinion struck down a largely disregarded pleading standard that allowed class action complaints to proceed if there were "no set of facts that would permit plaintiffs to demonstrate that the particular parallelism asserted was the product of collusion rather than coincidence." In other words, the Court struck down the negative pregnant concept. In plain English, class action plaintiffs can no longer just "gin up" their claims and hold businesses hostage.
The Court also gave a tip of the hat to businesses, noting the cost of dealing with class action complaints: "... [its] quite another [thing] to forget that proceeding to antitrust discovery can be expensive. That potential expense is obvious here, where plaintiffs represent a putative class of at least 90 percent of subscribers to local telephone or high-speed Internet service in an action against America's largest telecommunications firms for unspecified instances of antitrust violations that allegedly occurred over a 7-year period.
Do we still need tort reform? Not when we get rulings like this one.