In Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955 (2007), read opinion here,  the U.S. Supreme Court recently changed the analysis for federal courts to use in deciding a Motion to Dismiss pursuant to FRCP 12(b)(6) and in light of the notice pleading standard in Rule 8(a)(2). The Delaware Chancery Court  and other Delaware state court rules of civil procedure are based on the federal rules of civil procedure so it will be important to watch to see if any Delaware state court decisions are influenced by this SCOTUS decision.

Thanks to William Jacobs, a summer associate at our firm, for preparing the summary of this case.

This case involved a putative class action suit against Incumbent Local Exchange Carriers (“ILEC’s”) alleging antitrust conspiracy in violation of Section 1 of the Sherman Act .

The United States District Court for the Southern District of New York dismissed the plaintiffs’ complaint for failure to state a claim upon which relief could be granted pursuant to Fed. R. Civ. P. 12(b)(6). The United States Court of Appeals for the Second Circuit reversed and the Supreme Court granted certiorari. 

The U.S. Supreme Court determined that the plaintiffs alleged no facts that made an inappropriate agreement or conspiracy any more plausible than independent business decisions; and since violation of Section 1 requires a “contract, combination, or conspiracy,” the complaint could not survive the motion to dismiss. In making their decision, the Court advanced a new pleading standard. The previous standard, set out in Conley v. Gibson, 355 U.S. 41, 78 (1957), provided that: “a complaint should not be dismissed for failure to state a claim unless it appears beyond a doubt that the plaintiff can prove no set of facts in support of his claim that would entitle him to relief.” Id. 

However, the High Court in Twombly said the “no set of facts” language in the Conley standard has earned its retirement. The Court held that complaints must now state enough facts to make it plausible that the plaintiff is entitled to relief. Put simply, the facts stated in a complaint must make the allegations alleged plausible under  the "new test" announced by the Court as opposed to merely possible as previously would pass muster under Conley. Thus, in this case, the plaintiffs’ complaint needed to allege sufficient facts that, taken as true, suggested that the ILECs conspired to keep upstarts out of their markets. Finding no such facts in the complaint, the Supreme Court reversed the Court of Appeals and dismissed the complaint.