Antitrust – Panel Splits on Twombly Standard for Antitrust Claim

SD3 LLC v. Black & Decker U.S. Inc. (Lawyers Weekly No. 001-164-15, 98 pp.) (Agee, J.) No. 14-1746, Oct. 29, 2015; USDC at Alexandria, Va. (Cacheris, 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 safety technology in an effort to reduce their exposure in products liability suits; on rehearing, a split 4th Circuit panel vacates dismissal of this claim as to certain manufacturers and remands the matter.

Plaintiffs 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. Consequently 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, the complaint fails to allege any facts at all against several corporate parents and affiliates, so we affirm the district court’s decision to dismiss all claims against those defendants.

The district court correctly dismissed the standard-setting claims as to all the defendants. The district court also correctly dismissed the group-boycott claims against Hitachi Koki Co., Ltd.; Makita Corporation; Chang Type Industrial Co., Ltd.; OWT Industries, Inc.; Pentair Water Group, Inc.; Stanley Black & Decker, Inc.; Delta Power Equipment, Inc.; Techtronic Industries North America, Inc.; and Techtronic Industries Co., Ltd. However, the district court erred in dismissing the group-boycott claims against the remaining defendants.

The district court held that SawStop had not adequately alleged an agreement to boycott. However, in reaching that conclusion, the district court committed the two errors that we earlier cautioned against. First, it confused the motion-to-dismiss standard with the standard for summary judgment. Second, the district court applied a standard much closer to probability than plausibility. In short, the district court imposed a heightened pleading requirement — but such a standard does not apply on a Rule 12(b)(6) motion, even in an antitrust case.

SawStop has alleged enough to suggest a plausible agreement to engage in a group boycott. Although that claim may not prove ultimately successful at trial, or even survive summary judgment, the complaint offers enough to survive the defendant’s motion to dismiss. We vacate the district court decision dismissing SawStop’s group-boycott claim and remand for further proceedings.

Concurrence

Wynn, J.: Courts exist to resolve disputes, not to pervert procedural rules into swords with which to fight policy battles. And today, we do not confront whether SawStop should ultimately succeed on its boycott claim. Instead, we confront only whether, when viewing SawStop’s complaint with an unjaundiced eye and using the proper standard, we can say that it has made allegations sufficient to withstand a motion to dismiss for failure to state such a claim. It has. Accordingly, with all due respect for the dissenting view, I join in the judicious and well-reasoned majority opinion.

Concurrence & Dissent

Wilkinson, J.:  The majority has failed to follow Twombly at every turn. I would suggest, most respectfully, that the majority has committed basic conceptual errors and that the consequences of those errors, which the majority prefers not to face and to dismiss as policy, are regrettable. Most regrettable, however, is the treatment of a Supreme Court decision, even a controversial one, at the hands of this court.

It fashions a template for the frustrated market participant: Whenever routine business decisions don’t go your way, for whatever reason, simply claim an industry conspiracy under the Sherman Act and the courts will infer malfeasance. But such casual presumptions of antitrust infractions can only chill communications among companies, which in turn may hinder product development, innovative joint ventures, and useful trade association conclaves.

Even applying the most generous assumptions, one is hard pressed to find a plausible group boycott claim in defendants’ divergent and market-explicable conduct. After all, SD3 has not been excluded from the marketplace. Its SawStop technology is currently available through its own production. Though it would have liked to corner the market through the industry’s leading manufacturers and standard-setting organization, it had no right to establish what was in effect a monopoly all its own. SD3 aims to force all manufacturers, through its group boycott claim, to adopt its technology at its prices and to have the industry’s standard setting organization do the same. 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.