Antitrust – Saw Company Group Boycott Claim Survives

SD 3LLC v. Black & Decker (U.S.) Inc. (Lawyers Weekly No. 001-155-15, 98 pp.) (Agee, J.) No. 14-1746, Sept. 15, 2015; USDC at Alexandria, Va. (Hilton, S.J.); 4th Cir.

Holding: Plaintiff table-saw manufacturer states an antitrust claim by alleging defendant manufacturers voted to engage in a group boycott of plaintiff’s “active injury mitigation technology” in an effort to reduce their exposure in products liability suits, and a split 4th Circuit panel vacates dismissal of this claim and remands the matter.

SD3, LLC and its subsidiary, SawStop LLC (together, SawStop), contend that several major table-saw manufacturers conspired to boycott SawStop’s safety technology and to corrupt a private safety-standard-setting process, all with the aim of keeping that technology off the market. SawStop sued nearly two dozen saw manufacturers and affiliated entities, alleging they violated § 1 of the Sherman Antitrust Act, 15 U.S.C. § 1. The district court dismissed SawStop’s amended complaint based on, among other things, its belief that SawStop had failed to plead facts establishing an unlawful agreement. SawStop appealed.

We agree with the district court that several parts of SawStop’s case cannot go forward. SawStop’s complaint does not plausibly allege any conspiracy to manipulate safety standards, so we affirm the district court’s decision to dismiss SawStop’s claims concerning standard-setting. Likewise, we affirm the district court’s decision to dismiss all claims against those defendants.

But as to the remaining defendants, SawStop has alleged enough to suggest a plausible agreement to engage in a group boycott.

The group-boycott claim pled in the complaint builds a detailed story. SawStop identifies the particular time, place, and manner in which the boycott initially formed, describing a separate meeting held for that purpose during the Power Tool Institute’s October 2001 annual meeting. The complaint names at least six specific individuals who took part in forming the boycott, noting which defendant each person ostensibly represented. The complaint further tells us the means by which the defendants sealed their boycott agreement: a majority vote. And the complaint then explains how the manufacturers implemented the boycott: refusing to respond to entreaties from SawStop, going silent after long negotiations, or offering only bad-faith terms that were intended to be rejected. Plaintiff clearly has alleged an express agreement to restrain trade.

SawStop not only alleges the “who, what, when, and where” in its complaint, but also the “why.” According to the complaint, the defendants here were motivated to conspire out of a fear of product-liability exposure: if one manufacturer adopted the technology, then non-adopting manufacturers could face liability exposure from their failure to employ active injury mitigation technology (AIMT.) Under SawStop’s theory, the manufacturers conceived a group boycott to keep AIMT off the market, thereby preventing its use as a design alternative in product-liability cases. The complaint also describes a number of communications among the defendants.

The district court erred by applying a summary-judgment standard to SawStop’s group boycott claim and by confusing “plausibility” with “probability.” Again, because the complaint pleads parallel conduct in conjunction with circumstances pointing toward a meeting of the minds, SawStop has adequately alleged the agreement needed to support a Sherman Act § 1 conspiracy.

Affirmed in part, vacated in part and remanded.

Concurrence

Wynn, J.: Here, the judiciously well-reasoned majority opinion resists the temptation to move beyond our limited role and into the colorful realm of policy. Respectfully, the dissenting opinion strays beyond our limited review here and encroaches on policy issues best left to other branches of government. I join in the judicious and well-reasoned majority opinion.

Concurrence & Dissent

Wilkinson, J.: The majority’s view of modern commerce is unfortunate. It takes an isolationist approach in which each business must all but lock itself in semi-solitary or risk the taint of antitrust claims. Whatever validity the isolationist approach may once have had, it is profoundly injurious in an increasingly interconnected, necessarily collaborative, and globalized marketplace. The majority rightly observes that agreement is the crux of an antitrust claim, but it has made mere communication the touchstone of liability.

It is disappointing that such a skimpy complaint pressing such anticompetitive ends should be allowed to traduce the Twombly standard and coopt antitrust law for the precise monopolistic purposes that the Sherman Act was designed to prevent. The fallout will disable American companies from all sorts of cooperative communication, from the most innocuous to the most productive. If the complaint had spun even a remotely plausible narrative of impermissible collusion, I should have been the first to wave it through the Twombly gates. But I cannot conspire with my colleagues in the demise of the Twombly decision. I respectfully dissent.