My parter, Joan Marshall, and I wrote an article just published by Law 360 titled:  “In 2014 Plaintiffs Gained Some Ground Lost After Twombly.”  The article reviewed some key antitrust cases at the motion to dismiss stage and examined how the courts applied the “plausible” pleading standards announced in Twombly to various elements of the alleged offense.   (It is important to note that while Twombly involved and antitrust complaint, the Supreme Court announced a pleading standard that applied to all complaints.  The vast majority of post-Twombly cases do not involve antitrust pleadings).

Twombly motions and decisions are of course fact specific so its a bit of a stretch to say there is a trend.  The party who tells the best story consistent with Twombly and the underlying policy considerations will win.  But, after several appeals courts reminded lower courts that the standard at the motion to dismiss stage was “plausbility,” it seems plaintiffs chances have improved.   Reminders such as this certainly have helped plaintiffs:

First, at the pleading stage, the plaintiff is not required to allege facts showing that an unlawful agreement is more likely than lawful parallel conduct. * * *Second, in order to state a Section One claim, a plaintiff need not allege a fact pattern that “tends to exclude the possibility” of lawful, independent conduct.  Erie County, Ohio v. Morton Salt, 702 F.3d 860, 868-69 (6th Cir. 2012).

Law 360 is a subscription based service. If you don’t have access to Law 360 and would like to read our full article, please send me a note and I’d be happy to send it along.  [email protected]

Thanks for reading.

Last week I spent a few days at a Consero Corporate and Ethics Forum in San Jose, California. It was a very informative conference that brought together senior compliance executives in an intimate format to discuss many aspects of compliance such as “Internal Investigations: Soup to Nuts.” This was the third major compliance program I have attended since I retired from the Antitrust Division.  Earlier this year I was a speaker at the annual conferences for the Society of Corporate Compliance and Ethics (SCCE) and Ethics Compliance Officer Association. These conferences have their own personality and I enjoyed each. I have learned an enormous amount about the far-ranging responsibilities compliance attorneys and officers shoulder, often with limited resources. And, having been on the side of the prosecutor (regulator) for so long, I think I have been able to add some ideas to the discussion. Thus, the title of this post “Nobody like to see a competitor in trouble, but….”

The “but” is that when a competitor is in trouble it may be the best time to focus compliance resources on a particular area. Being able to go to management and say, “Company X is embroiled in this investigation and I think it may be something we need to focus on” can be a more persuasive than saying, “We need more resources.” One example may be if a competitor has an issue with a third-party vendor in an emerging market. That would be an ideal time to move any compliance efforts in that location to the top of the heap. In the antitrust area it is very common for investigations to start fairly localized and then spread.  A prime and recent example is the record-breaking auto parts cartel investigation. What started as an investigation in the United States of one auto part has spread to prosecutions involving virtually every auto part except the air freshener hanging from the front view mirror. This quote is from the most recent press release from the DOJ relating to another guilty plea in the auto parts investigation:  “Including today’s charges, 48 individuals have been charged in the department’s ongoing investigation into price-fixing and bid rigging in the auto parts industry.  Additionally, 32 companies have pledged guilty or agreed to plead guilty and have agreed to pay more than $2.4 billion in fines.” (here)  The auto parts investigation not only spread from one product to another, but also from the United States to competition authorities around the world including the EU, China, Japan, and Korea.   The auto parts investigation is an unusually large investigation, but industry “way of life” cartels are fairly common.

* * * * * Click Here for the Rest of the Story* * * * *

The Seventh Circuit issued its opinion in Motorola Mobility on November 26.   Motorola Mobility LLC v. AU Optronics Corp., 14-8003. In the opinion, written by Judge Posner, the Seventh Circuit panel ruled that the Foreign Trade Antitrust Improvements Act, (FTAIA) barred Motorola’s lawsuit because the harm was incurred by its foreign subsidiaries and not the parent company itself. The most critical fact in the case was this: “Motorola says that it “purchased over $5 billion worth of LCD panels from cartel members [i.e., the defendants] for use in its mobile devices.” That’s a critical misstatement. All but 1 percent of the purchases were made by Motorola’s foreign subsidiaries.” This key fact led to Motorola’s downfall:

What trips up Motorola’s suit is the statutory requirement that the effect of anticompetitive conduct on domestic U.S. commerce give rise to an antitrust cause of action. 15 U.S.C. § 6a(2). The conduct increased the cost to Motorola of the cellphones that it bought from its foreign subsidiaries, but the cartel-engendered price increase in the components and in the price of cellphones that incorporated them occurred entirely in foreign commerce.

* * * * *  Click Here for the Rest of the Story * * * * *