Date: 02-27-2011

Case Style: Bell Atlantic Corp. v. Twombly

Case Number: 127 S.Ct. 1955 (2007)

Judge:

Court: United States Supreme Court

Plaintiff's Attorney:

Defendant's Attorney:

Description: Liability under §1 of the Sherman Act, 15 U. S. C. §1, requires a “contract, combination . . . , or conspiracy, in restraint of trade or commerce.” The question in this putative class action is whether a §1 complaint can survive a motion to dismiss when it alleges that major telecommunications providers engaged in certain parallel conduct unfavorable to competition, absent some factual context suggesting agreement, as distinct from identical, independent action. We hold that such a complaint shouldbe dismissed.

I

The upshot of the 1984 divestiture of the AmericanTelephone & Telegraph Company’s (AT&T) local telephone business was a system of regional service monopolies(variously called “Regional Bell Operating Companies,”“Baby Bells,” or “Incumbent Local Exchange Carriers”(ILECs)), and a separate, competitive market for long-distance service from which the ILECs were excluded. More than a decade later, Congress withdrew approval of the ILECs’ monopolies by enacting the Telecommunications Act of 1996 (1996 Act), 110 Stat. 56, which “funda-mentally restructure[d] local telephone markets” and“subject[ed] [ILECs] to a host of duties intended to facili-tate market entry.” AT&T Corp. v. Iowa Utilities Bd., 525 U. S. 366, 371 (1999). In recompense, the 1996 Act set conditions for authorizing ILECs to enter the long-distance market. See 47 U. S. C. §271.

“Central to the [new] scheme [was each ILEC’s] obligation . . . to share its network with competitors,” Verizon Communications Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U. S. 398, 402 (2004), which came to be known as “competitive local exchange carriers” (CLECs), Pet. for Cert. 6, n. 1. A CLEC could make use of an ILEC’s network in any of three ways: by (1) “purchas[ing] local tele-phone services at wholesale rates for resale to end users,” (2) “leas[ing] elements of the [ILEC’s] network ‘on an unbundled basis,’” or (3) “interconnect[ing] its own facilities with the [ILEC’s] network.” Iowa Utilities Bd., supra, at 371 (quoting 47 U. S. C. §251(c)). Owing to the “considerable expense and effort” required to make unbundlednetwork elements available to rivals at wholesale prices, Trinko, supra, at 410, the ILECs vigorously litigated thescope of the sharing obligation imposed by the 1996 Act, with the result that the Federal Communications Commission (FCC) three times revised its regulations to narrow the range of network elements to be shared with the CLECs. See Covad Communications Co. v. FCC, 450 F. 3d 528, 533–534 (CADC 2006) (summarizing the 10-year-long regulatory struggle between the ILECs and CLECs).

Respondents William Twombly and Lawrence Marcus(hereinafter plaintiffs) represent a putative class consist-ing of all “subscribers of local telephone and/or high speedinternet services . . . from February 8, 1996 to present.” Amended Complaint in No. 02 CIV. 10220 (GEL) (SDNY) ¶53, App. 28 (hereinafter Complaint). In this action against petitioners, a group of ILECs,1 plaintiffs seektreble damages and declaratory and injunctive relief for claimed violations of §1 of the Sherman Act, ch. 647, 26Stat. 209, as amended, 15 U. S. C. §1, which prohibits“[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerceamong the several States, or with foreign nations.”

The complaint alleges that the ILECs conspired to restrain trade in two ways, each supposedly inflating charges for local telephone and high-speed Internet services.Plaintiffs say, first, that the ILECs “engaged in parallelconduct” in their respective service areas to inhibit the growth of upstart CLECs. Complaint ¶47, App. 23–26. Their actions allegedly included making unfair agreements with the CLECs for access to ILEC networks, providinginferior connections to the networks, overcharging, andbilling in ways designed to sabotage the CLECs’ relationswith their own customers. Ibid. According to the com-plaint, the ILECs’ “compelling common motivatio[n]” tothwart the CLECs’ competitive efforts naturally led themto form a conspiracy; “[h]ad any one [ILEC] not sought to prevent CLECs . . . from competing effectively . . . , the resulting greater competitive inroads into that [ILEC’s] territory would have revealed the degree to which competitive entry by CLECs would have been successful in theother territories in the absence of such conduct.” Id., ¶50, App. 26–27.

Second, the complaint charges agreements by the ILECs to refrain from competing against one another. These are to be inferred from the ILECs’ common failure “meaningfully [to] pursu[e]” “attractive business opportunit[ies]” in contiguous markets where they possessed “substantialcompetitive advantages,” id., ¶¶40–41, App. 21–22, and from a statement of Richard Notebaert, chief executive officer (CEO) of the ILEC Qwest, that competing in the territory of another ILEC “‘might be a good way to turn aquick dollar but that doesn’t make it right,’” id., ¶42, App. 22.

The complaint couches its ultimate allegations this way: “In the absence of any meaningful competition between the [ILECs] in one another’s markets, and in light of the parallel course of conduct that each en-gaged in to prevent competition from CLECs within their respective local telephone and/or high speed internet services markets and the other facts and market circumstances alleged above, Plaintiffs allegeupon information and belief that [the ILECs] have en-tered into a contract, combination or conspiracy toprevent competitive entry in their respective local telephone and/or high speed internet services markets and have agreed not to compete with one another and otherwise allocated customers and markets to one an-other.” Id., ¶51, App. 27.2

The United States District Court for the Southern District of New York dismissed the complaint for failure to state a claim upon which relief can be granted. The District Court acknowledged that “plaintiffs may allege a conspiracy by citing instances of parallel business behavior that suggest an agreement,” but emphasized that“while ‘[c]ircumstantial evidence of consciously parallel behavior may have made heavy inroads into the traditional judicial attitude toward conspiracy[, . . .] “consciousparallelism” has not yet read conspiracy out of the Sherman Act entirely.’” 313 F. Supp. 2d 174, 179 (2003) (quoting Theatre Enterprises, Inc. v. Paramount Film Distributing Corp., 346 U. S. 537, 541 (1954); alterations in original). Thus, the District Court understood that allegations of parallel business conduct, taken alone, do not state a claim under §1; plaintiffs must allege additional facts that “ten[d] to exclude independent self-interested conduct as an explanation for defendants’ paral-lel behavior.” 313 F. Supp. 2d, at 179. The District Court found plaintiffs’ allegations of parallel ILEC actions to discourage competition inadequate because “the behavior of each ILEC in resisting the incursion of CLECs is fullyexplained by the ILEC’s own interests in defending itsindividual territory.” Id., at 183. As to the ILECs’ sup-posed agreement against competing with each other, theDistrict Court found that the complaint does not “alleg[e]facts . . . suggesting that refraining from competing in other territories as CLECs was contrary to [the ILECs’]apparent economic interests, and consequently [does] not rais[e] an inference that [the ILECs’] actions were the result of a conspiracy.” Id., at 188.

The Court of Appeals for the Second Circuit reversed, holding that the District Court tested the complaint by the wrong standard. It held that “plus factors are not required to be pleaded to permit an antitrust claim based on parallel conduct to survive dismissal.” 425 F. 3d 99, 114 (2005) (emphasis in original). Although the Court of Appealstook the view that plaintiffs must plead facts that “include conspiracy among the realm of ‘plausible’ possibilities inorder to survive a motion to dismiss,” it then said that “to rule that allegations of parallel anticompetitive conduct fail to support a plausible conspiracy claim, a court would have to conclude that there is no set of facts that would permit a plaintiff to demonstrate that the particular parallelism asserted was the product of collusion rather than coincidence.” Ibid.

We granted certiorari to address the proper standard for pleading an antitrust conspiracy through allegations of parallel conduct, 547 U. S. ___ (2006), and now reverse.

II

A

Because §1 of the Sherman Act “does not prohibit [all] unreasonable restraints of trade . . . but only restraints effected by a contract, combination, or conspiracy,” Cop-perweld Corp. v. Independence Tube Corp., 467 U. S. 752, 775 (1984), “[t]he crucial question” is whether the challenged anticompetitive conduct “stem[s] from independent decision or from an agreement, tacit or express,” Theatre Enterprises, 346 U. S., at 540. While a showing of parallel “business behavior is admissible circumstantial evidence from which the fact finder may infer agreement,” it falls short of “conclusively establish[ing] agreement or . . . itselfconstitut[ing] a Sherman Act offense.” Id., at 540–541. Even “conscious parallelism,” a common reaction of “firms in a concentrated market [that] recogniz[e] their shared economic interests and their interdependence with respectto price and output decisions” is “not in itself unlawful.” Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U. S. 209, 227 (1993); see 6 P. Areeda & H. Hovenkamp, Antitrust Law ¶1433a, p. 236 (2d ed. 2003) (herein-after Areeda & Hovenkamp) (“The courts are nearlyunanimous in saying that mere interdependent parallel-ism does not establish the contract, combination, or con-spiracy required by Sherman Act §1”); Turner, The Defini-tion of Agreement Under the Sherman Act: ConsciousParallelism and Refusals to Deal, 75 Harv. L. Rev. 655, 672 (1962) (“[M]ere interdependence of basic price deci-sions is not conspiracy”).

The inadequacy of showing parallel conduct or interdependence, without more, mirrors the ambiguity of the behavior: consistent with conspiracy, but just as much in line with a wide swath of rational and competitive business strategy unilaterally prompted by common perceptions of the market. See, e.g., AEI-Brookings Joint Center for Regulatory Studies, Epstein, Motions to Dismiss Anti-trust Cases: Separating Fact from Fantasy, Related Publi-cation 06–08, pp. 3–4 (2006) (discussing problem of “falsepositives” in §1 suits). Accordingly, we have previously hedged against false inferences from identical behavior at a number of points in the trial sequence. An antitrust conspiracy plaintiff with evidence showing nothing beyond parallel conduct is not entitled to a directed verdict, see Theatre Enterprises, supra; proof of a §1 conspiracy must include evidence tending to exclude the possibility of independent action, see Monsanto Co. v. Spray-Rite Ser-vice Corp., 465 U. S. 752 (1984); and at the summary judgment stage a §1 plaintiff’s offer of conspiracy evidencemust tend to rule out the possibility that the defendantswere acting independently, see Matsushita Elec. Indus-trial Co. v. Zenith Radio Corp., 475 U. S. 574 (1986).

This case presents the antecedent question of what aplaintiff must plead in order to state a claim under §1 ofthe Sherman Act. Federal Rule of Civil Procedure 8(a)(2) requires only “a short and plain statement of the claimshowing that the pleader is entitled to relief,” in order to “give the defendant fair notice of what the . . . claim is and the grounds upon which it rests,” Conley v. Gibson, 355 U. S. 41, 47 (1957). While a complaint attacked by a Rule12(b)(6) motion to dismiss does not need detailed factual allegations, ibid.; Sanjuan v. American Bd. of Psychiatry and Neurology, Inc., 40 F. 3d 247, 251 (CA7 1994), a plain-tiff’s obligation to provide the “grounds” of his “enti-tle[ment] to relief” requires more than labels and conclu-sions, and a formulaic recitation of the elements of a cause of action will not do, see Papasan v. Allain, 478 U. S. 265, 286 (1986) (on a motion to dismiss, courts “are not bound to accept as true a legal conclusion couched as a factual allegation”). Factual allegations must be enough to raise aright to relief above the speculative level, see 5

C. Wright & A. Miller, Federal Practice and Procedure §1216, pp. 235–236 (3d ed. 2004) (hereinafter Wright & Miller)(“[T]he pleading must contain something more . . . than. . . a statement of facts that merely creates a suspicion [of] a legally cognizable right of action”),3 on the assumption that all the allegations in the complaint are true (even if doubtful in fact), see, e.g., Swierkiewicz v. Sorema N. A., 534 U. S. 506, 508, n. 1 (2002); Neitzke v. Williams, 490 U. S. 319, 327 (1989) (“Rule 12(b)(6) does not countenance. . . dismissals based on a judge’s disbelief of a complaint’sfactual allegations”); Scheuer v. Rhodes, 416 U. S. 232, 236 (1974) (a well-pleaded complaint may proceed even if itappears “that a recovery is very remote and unlikely”).

In applying these general standards to a §1 claim, wehold that stating such a claim requires a complaint with enough factual matter (taken as true) to suggest that anagreement was made. Asking for plausible grounds to infer an agreement does not impose a probability require-ment at the pleading stage; it simply calls for enough fact to raise a reasonable expectation that discovery will reveal evidence of illegal agreement.4 And, of course, a well-pleaded complaint may proceed even if it strikes a savvyjudge that actual proof of the facts alleged is improbable, and “that a recovery is very remote and unlikely.” Ibid. In identifying facts that are suggestive enough to render a §1 conspiracy plausible, we have the benefit of the priorrulings and considered views of leading commentators,already quoted, that lawful parallel conduct fails to bespeak unlawful agreement. It makes sense to say, there-fore, that an allegation of parallel conduct and a bare assertion of conspiracy will not suffice. Without more, parallel conduct does not suggest conspiracy, and a con-clusory allegation of agreement at some unidentified point does not supply facts adequate to show illegality. Hence, when allegations of parallel conduct are set out in order to make a §1 claim, they must be placed in a context thatraises a suggestion of a preceding agreement, not merelyparallel conduct that could just as well be independentaction.

The need at the pleading stage for allegations plausibly suggesting (not merely consistent with) agreement reflectsthe threshold requirement of Rule 8(a)(2) that the “plainstatement” possess enough heft to “sho[w] that the pleaderis entitled to relief.” A statement of parallel conduct, evenconduct consciously undertaken, needs some setting sug-gesting the agreement necessary to make out a §1 claim;without that further circumstance pointing toward a meeting of the minds, an account of a defendant’s com-mercial efforts stays in neutral territory. An allegation ofparallel conduct is thus much like a naked assertion of conspiracy in a §1 complaint: it gets the complaint close tostating a claim, but without some further factual en-hancement it stops short of the line between possibility and plausibility of “entitle[ment] to relief.” Cf. DM Re-search, Inc. v. College of Am. Pathologists, 170 F. 3d 53, 56 (CA1 1999) (“[T]erms like ‘conspiracy,’ or even ‘agreement,’ are border-line: they might well be sufficient in conjunc-tion with a more specific allegation—for example, identi-fying a written agreement or even a basis for inferring a tacit agreement, . . . but a court is not required to acceptsuch terms as a sufficient basis for a complaint”).5

We alluded to the practical significance of the Rule 8 entitlement requirement in Dura Pharmaceuticals, Inc. v. Broudo, 544 U. S. 336 (2005), when we explained that something beyond the mere possibility of loss causationmust be alleged, lest a plaintiff with “‘a largely groundlessclaim’” be allowed to “‘take up the time of a number of other people, with the right to do so representing an in terrorem increment of the settlement value.’” Id., at 347 (quoting Blue Chip Stamps v. Manor Drug Stores, 421 U. S. 723, 741 (1975)). So, when the allegations in a com-plaint, however true, could not raise a claim of entitlementto relief, “‘this basic deficiency should . . . be exposed at the point of minimum expenditure of time and money by the parties and the court.’” 5 Wright & Miller §1216, at 233–234 (quoting Daves v. Hawaiian Dredging Co., 114 F. Supp. 643, 645 (Haw. 1953)); see also Dura, supra, at 346; Asahi Glass Co. v. Pentech Pharmaceuticals, Inc., 289 F. Supp. 2d 986, 995 (ND Ill. 2003) (Posner, J., sitting bydesignation) (“[S]ome threshold of plausibility must be crossed at the outset before a patent antitrust case shouldbe permitted to go into its inevitably costly and protracteddiscovery phase”).

Thus, it is one thing to be cautious before dismissing an antitrust complaint in advance of discovery, cf. Poller v. Columbia Broadcasting System, Inc., 368 U. S. 464, 473 (1962), but quite another to forget that proceeding to antitrust discovery can be expensive. As we indicated over 20 years ago in Associated Gen. Contractors of Cal., Inc. v. Carpenters, 459 U. S. 519, 528, n. 17 (1983), “a district court must retain the power to insist upon some specificityin pleading before allowing a potentially massive factualcontroversy to proceed.” See also Car Carriers, Inc. v. Ford Motor Co., 745 F. 2d 1101, 1106 (CA7 1984) (“[T]he costs of modern federal antitrust litigation and the in-creasing caseload of the federal courts counsel againstsending the parties into discovery when there is no rea-sonable likelihood that the plaintiffs can construct a claimfrom the events related in the complaint”); Note, Modelingthe Effect of One-Way Fee Shifting on Discovery Abuse in Private Antitrust Litigation, 78 N. Y. U. L. Rev. 1887, 1898–1899 (2003) (discussing the unusually high cost ofdiscovery in antitrust cases); Manual for Complex Litiga-tion, Fourth, §30, p. 519 (2004) (describing extensivescope of discovery in antitrust cases); Memorandum from Paul V. Niemeyer, Chair, Advisory Committee on Civil Rules, to Hon. Anthony J. Scirica, Chair, Committee onRules of Practice and Procedure (May 11, 1999), 192 F. R. D. 354, 357 (2000) (reporting that discovery accounts for as much as 90 percent of litigation costs when discov-ery is actively employed). That potential expense is obvi-ous enough in the present case: plaintiffs represent a putative class of at least 90 percent of all subscribers tolocal telephone or high-speed Internet service in the conti-nental United States, in an action against America’s larg-est telecommunications firms (with many thousands of employees generating reams and gigabytes of businessrecords) for unspecified (if any) instances of antitrustviolations that allegedly occurred over a period of seven years.

It is no answer to say that a claim just shy of a plausible entitlement to relief can, if groundless, be weeded out early in the discovery process through “careful case man-agement,” post at 4, given the common lament that thesuccess of judicial supervision in checking discovery abuse has been on the modest side. See, e.g., Easterbrook, Dis-covery as Abuse, 69 B. U. L. Rev. 635, 638 (1989) (“Judges can do little about impositional discovery when partiescontrol the legal claims to be presented and conduct the discovery themselves”). And it is self-evident that the problem of discovery abuse cannot be solved by “careful scrutiny of evidence at the summary judgment stage,” much less “lucid instructions to juries,” post, at 4; the threat of discovery expense will push cost-conscious defen-dants to settle even anemic cases before reaching those proceedings. Probably, then, it is only by taking care to require allegations that reach the level suggesting con-spiracy that we can hope to avoid the potentially enor-mous expense of discovery in cases with no “‘reasonably founded hope that the [discovery] process will reveal rele-vant evidence’” to support a §1 claim. Dura, 544 U. S., at 347 (quoting Blue Chip Stamps, supra, at 741; alteration in Dura).6 ——————

Plaintiffs do not, of course, dispute the requirement ofplausibility and the need for something more than merely parallel behavior explained in Theatre Enterprises, Mon-santo, and Matsushita, and their main argument against the plausibility standard at the pleading stage is its osten-sible conflict with an early statement of ours construing Rule 8. Justice Black’s opinion for the Court in Conley v. Gibson spoke not only of the need for fair notice of the grounds for entitlement to relief but of “the accepted rulethat a complaint should not be dismissed for failure tostate a claim unless it appears beyond doubt that theplaintiff can prove no set of facts in support of his claimwhich would entitle him to relief.” 355 U. S., at 45–46. This “no set of facts” language can be read in isolation as saying that any statement revealing the theory of theclaim will suffice unless its factual impossibility may beshown from the face of the pleadings; and the Court ofAppeals appears to have read Conley in some such waywhen formulating its understanding of the proper plead-ing standard, see 425 F. 3d, at 106, 114 (invoking Conley’s “no set of facts” language in describing the standard for dismissal).

On such a focused and literal reading of Conley’s “no set of facts,” a wholly conclusory statement of claim would survive a motion to dismiss whenever the pleadings left open the possibility that a plaintiff might later establish some “set of [undisclosed] facts” to support recovery. So here, the Court of Appeals specifically found the prospect of unearthing direct evidence of conspiracy sufficient topreclude dismissal, even though the complaint does not set forth a single fact in a context that suggests an agreement. 425 F. 3d, at 106, 114. It seems fair to say that this ap-proach to pleading would dispense with any showing of a“‘reasonably founded hope’” that a plaintiff would be ableto make a case, see Dura, 544 U. S., at 347 (quoting Blue Chip Stamps, 421 U. S., at 741); Mr. Micawber’s optimismwould be enough.

Seeing this, a good many judges and commentators have balked at taking the literal terms of the Conley passage asa pleading standard. See, e.g., Car Carriers, 745 F. 2d, at 1106 (“Conley has never been interpreted literally” and, “[i]n practice, a complaint . . . must contain either direct orinferential allegations respecting all the material elementsnecessary to sustain recovery under some viable legaltheory” (internal quotation marks omitted; emphasis and omission in original); Ascon Properties, Inc. v. Mobil Oil Co., 866 F. 2d 1149, 1155 (CA9 1989) (tension between Conley’s “no set of facts” language and its acknowledgmentthat a plaintiff must provide the “grounds” on which his claim rests); O’Brien v. DiGrazia, 544 F. 2d 543, 546, n. 3 (CA1 1976) (“[W]hen a plaintiff . . . supplies facts to sup-port his claim, we do not think that Conley imposes a duty on the courts to conjure up unpleaded facts that might turn a frivolous claim of unconstitutional . . . action into a substantial one”); McGregor v. Industrial Excess Landfill, Inc., 856 F. 2d 39, 42–43 (CA6 1988) (quoting O’Brien’s analysis); Hazard, From Whom No Secrets Are Hid, 76 Tex. L. Rev. 1665, 1685 (1998) (describing Conley as having“turned Rule 8 on its head”); Marcus, The Revival of FactPleading Under the Federal Rules of Civil Procedure, 86 Colum. L. Rev. 433, 463–465 (1986) (noting tension be-tween Conley and subsequent understandings of Rule 8).

We could go on, but there is no need to pile up further citations to show that Conley’s “no set of facts” language has been questioned, criticized, and explained away longenough. To be fair to the Conley Court, the passageshould be understood in light of the opinion’s preceding summary of the complaint’s concrete allegations, whichthe Court quite reasonably understood as amply stating a claim for relief. But the passage so often quoted fails to mention this understanding on the part of the Court, andafter puzzling the profession for 50 years, this famous observation has earned its retirement. The phrase is bestforgotten as an incomplete, negative gloss on an acceptedpleading standard: once a claim has been stated ade-quately, it may be supported by showing any set of facts consistent with the allegations in the complaint. See Sanjuan, 40 F. 3d, at 251 (once a claim for relief has been stated, a plaintiff “receives the benefit of imagination, solong as the hypotheses are consistent with the complaint”);accord, Swierkiewicz, 534 U. S., at 514; National Organi-zation for Women, Inc. v. Scheidler, 510 U. S. 249, 256 (1994); H. J. Inc. v. Northwestern Bell Telephone Co., 492 U. S. 229, 249–250 (1989); Hishon v. King & Spalding, 467 U. S. 69, 73 (1984). Conley, then, described the breadth of opportunity to prove what an adequate complaint claims, not the minimum standard of adequate pleading to govern a complaint’s survival.8

III

When we look for plausibility in this complaint, we agree with the District Court that plaintiffs’ claim of conspiracy in restraint of trade comes up short. To beginwith, the complaint leaves no doubt that plaintiffs rest their §1 claim on descriptions of parallel conduct and not on any independent allegation of actual agreement among the ILECs. Supra, at 4. Although in form a few straystatements speak directly of agreement,9 on fair readingthese are merely legal conclusions resting on the prior allegations. Thus, the complaint first takes account of the alleged “absence of any meaningful competition between[the ILECs] in one another’s markets,” “the parallel course of conduct that each [ILEC] engaged in to prevent compe-tition from CLECs,” “and the other facts and market circumstances alleged [earlier]”; “in light of” these, the complaint concludes “that [the ILECs] have entered into a contract, combination or conspiracy to prevent competitive entry into their . . . markets and have agreed not to com-pete with one another.” Complaint ¶51, App. 27.10 The nub of the complaint, then, is the ILECs’ parallel behavior,consisting of steps to keep the CLECs out and manifestdisinterest in becoming CLECs themselves, and its suffi-ciency turns on the suggestions raised by this conduct when viewed in light of common economic experience.11

We think that nothing contained in the complaint in-vests either the action or inaction alleged with a plausible suggestion of conspiracy. As to the ILECs’ supposed agreement to disobey the 1996 Act and thwart the CLECs’ attempts to compete, we agree with the District Court that nothing in the complaint intimates that the resistance to the upstarts was anything more than the natural, unilat-eral reaction of each ILEC intent on keeping its regional dominance. The 1996 Act did more than just subject the ILECs to competition; it obliged them to subsidize their competitors with their own equipment at wholesale rates. The economic incentive to resist was powerful, but resist-ing competition is routine market conduct, and even if theILECs flouted the 1996 Act in all the ways the plaintiffsallege, see id., ¶47, App. 23–24, there is no reason to infer that the companies had agreed among themselves to dowhat was only natural anyway; so natural, in fact, that if alleging parallel decisions to resist competition were enough to imply an antitrust conspiracy, pleading a §1violation against almost any group of competing busi-nesses would be a sure thing.

The complaint makes its closest pass at a predicate for conspiracy with the claim that collusion was necessary because success by even one CLEC in an ILEC’s territory “would have revealed the degree to which competitive entry by CLECs would have been successful in the other territories.” Id., ¶50, App. 26–27. But, its logic aside, thisgeneral premise still fails to answer the point that therewas just no need for joint encouragement to resist the 1996 Act; as the District Court said, “each ILEC has rea-son to want to avoid dealing with CLECs” and “each ILEC would attempt to keep CLECs out, regardless of the ac-tions of the other ILECs.” 313 F. Supp. 2d, at 184; cf. Kramer v. Pollock-Krasner Foundation, 890 F. Supp. 250, 256 (SDNY 1995) (while the plaintiff “may believe the defendants conspired . . . , the defendants’ allegedly conspiratorial actions could equally have been prompted by lawful, independent goals which do not constitute aconspiracy”).12

Plaintiffs’ second conspiracy theory rests on the com-petitive reticence among the ILECs themselves in the wake of the 1996 Act, which was supposedly passed in the“‘hop[e] that the large incumbent local monopoly compa-nies . . . might attack their neighbors’ service areas, as they are the best situated to do so.’” Complaint ¶38, App.20 (quoting Consumer Federation of America, Lessonsfrom 1996 Telecommunications Act: Deregulation BeforeMeaningful Competition Spells Consumer Disaster, p. 12(Feb. 2000). Contrary to hope, the ILECs declined “‘toenter each other’s service territories in any significant way,’” Complaint ¶38, App. 20, and the local telephoneand high speed Internet market remains highly compart-mentalized geographically, with minimal competition.Based on this state of affairs, and perceiving the ILECs tobe blessed with “especially attractive business opportuni-ties” in surrounding markets dominated by other ILECs,the plaintiffs assert that the ILECs’ parallel conduct was “strongly suggestive of conspiracy.” Id., ¶40, App. 21.

But it was not suggestive of conspiracy, not if historyteaches anything. In a traditionally unregulated industry with low barriers to entry, sparse competition among large firms dominating separate geographical segments of the market could very well signify illegal agreement, but here we have an obvious alternative explanation. In the decade preceding the 1996 Act and well before that, monopoly wasthe norm in telecommunications, not the exception. See Verizon Communications Inc. v. FCC, 535 U. S. 467, 477– 478 (2002) (describing telephone service providers astraditional public monopolies). The ILECs were born in that world, doubtless liked the world the way it was, andsurely knew the adage about him who lives by the sword. Hence, a natural explanation for the noncompetitionalleged is that the former Government-sanctioned mo-nopolists were sitting tight, expecting their neighbors to do the same thing.

In fact, the complaint itself gives reasons to believe that the ILECs would see their best interests in keeping totheir old turf. Although the complaint says generally thatthe ILECs passed up “especially attractive business oppor-tunit[ies]” by declining to compete as CLECs against other ILECs, Complaint ¶40, App. 21, it does not allege thatcompetition as CLECs was potentially any more lucrativethan other opportunities being pursued by the ILECsduring the same period,13 and the complaint is replete with indications that any CLEC faced nearly insurmount-able barriers to profitability owing to the ILECs’ flagrantresistance to the network sharing requirements of the1996 Act, id., ¶47; App. 23–26. Not only that, but evenwithout a monopolistic tradition and the peculiar difficultyof mandating shared networks, “[f]irms do not expandwithout limit and none of them enters every market thatan outside observer might regard as profitable, or even a small portion of such markets.” Areeda & Hovenkamp ¶307d, at 155 (Supp. 2006) (commenting on the case atbar). The upshot is that Congress may have expected some ILECs to become CLECs in the legacy territories of other ILECs, but the disappointment does not make con-spiracy plausible. We agree with the District Court’sassessment that antitrust conspiracy was not suggested bythe facts adduced under either theory of the complaint, which thus fails to state a valid §1 claim.14 Plaintiffs say that our analysis runs counter to Swierkiewicz v. Sorema N. A., 534 U. S. 506, 508 (2002), which held that “a complaint in an employment discrimi-nation lawsuit [need] not contain specific facts establish-ing a prima facie case of discrimination under the frame-work set forth in McDonnell Douglas Corp. v. Green, 411 U. S. 792 (1973).” They argue that just as the prima faciecase is a “flexible evidentiary standard” that “should not be transposed into a rigid pleading standard for discrimi-nation cases,” Swierkiewicz, supra, at 512, “transpos[ing]‘plus factor’ summary judgment analysis woodenly into arigid Rule 12(b)(6) pleading standard . . . would be un-wise,” Brief for Respondents 39. As the District Court correctly understood, however, “Swierkiewicz did not change the law of pleading, but simply re-emphasized . . . that the Second Circuit’s use of a heightened pleadingstandard for Title VII cases was contrary to the Federal Rules’ structure of liberal pleading requirements.” 313 F. Supp. 2d, at 181 (citation and footnote omitted). Even though Swierkiewicz’s pleadings “detailed the eventsleading to his termination, provided relevant dates, andincluded the ages and nationalities of at least some of the relevant persons involved with his termination,” the Court of Appeals dismissed his complaint for failing to allege certain additional facts that Swierkiewicz would need at the trial stage to support his claim in the absence of direct evidence of discrimination. Swierkiewicz, 534 U. S., at 514. We reversed on the ground that the Court of Appeals had impermissibly applied what amounted to a heightened pleading requirement by insisting that Swierkiewicz allege “specific facts” beyond those necessary to state his claim and the grounds showing entitlement to relief. Id., at 508.

Here, in contrast, we do not require heightened factpleading of specifics, but only enough facts to state a claimto relief that is plausible on its face. Because the plaintiffshere have not nudged their claims across the line fromconceivable to plausible, their complaint must be dismissed.

* * *

See: http://www.supremecourt.gov/opinions/06pdf/05-1126.pdf

Outcome: The judgment of the Court of Appeals for the Second Circuit is reversed, and the cause is remanded for further proceedings consistent with this opinion.

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