Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Amicus brief urges en banc rehearing of guitar price fixing conspiracy claim, (Sep 22, 2015)

By Michael Menzhuber, J.D., LL.M.

Three law school professors have filed an amicus brief, asking the Ninth Circuit to grant en banc rehearing to reverse a panel decision applying a heightened pleading standard of review to dismiss antitrust claims that guitar manufacturers conspired to fix musical instrument prices (Ramsey v. National Association of Music Merchants, Inc., Docket No. 12-56674).

According to the brief, the appeals court panel erroneously applied a heightened pleading standard that necessarily implicates the weighing of evidence and the drawing of inferences in favor of the moving party. The concern of the amici, which do not represent any of the parties and have no vested interest in the litigation, is for the proper development of the legal standards applicable to motions to dismiss at the pleading stage. Of specific concern is the application of Federal Rule of Civil Procedure 12(b)(6), as interpreted by the U.S. Supreme Court in Bell Atlantic v. Twombley, 550 U.S. 544 (2007) and Iqbal v. Ashcroft, 556 U.S. 662 (2009).

The amici noted that the plaintiffs in the class action case were consumers who alleged that five leading guitar manufacturers, at the urging of the largest retailer of musical instruments in the United States, entered into a price-fixing agreement. The plaintiffs pleaded six additional so-called “plus factors,” beyond parallel pricing behavior, that gave rise to the inference of a price-fixing agreement. According to the amici, in evaluating the plaintiffs’ allegations, and specifically the six “plus factors,” the panel’s majority imposed a heightened pleading standard that is inconsistent with U.S. Supreme Court decisions. As pointed out by the dissent, the panel majority separately evaluated each “plus factor” and explained that lawful, alternative explanations could be inferred in each instance, rather than evaluating the “plus factors” collectively and construing the evidence in a light most favorable to the plaintiffs.

According to the amici, this approach, if allowed to stand, can be read to impose a new burden at the pleading stage whereby lower courts apply inferences in favor of the non-moving party and further determine whether the allegations in an operative complaint are “probable” rather than merely “plausible.” The amici recommends an en banc review so that the appeals court can reaffirm the proper standards for reviewing a motion to dismiss at the pleading stage: (1) plaintiffs need only plead sufficient facts which, if “plausible on its face,” supports the legal claim and (2) courts must accept factual allegations in the complaint as true, and all inferences should be construed in a light most favorable to the non-moving party.

News: Antitrust