Antitrust Pleading Standards: A(nother) Cautionary Tale

A New Jersey federal district court’s March 18th opinion granting defendants’ motions to dismiss an antitrust complaint is yet another reminder of the need to inject precision and factual detail into an antitrust claim in order to meet the strict pleading requirements applicable to such claims. The putative class of indirect purchaser plaintiffs in In re Ductile Iron Pipe Fittings (“DIPF”) Indirect Purchaser Antitrust Litigation brought a total of ten claims, alleging principally that iron pipe fitting manufacturers and distributors conspired to fix prices and monopolized the domestic iron pipe fitting market in violation of Sherman Act Sections 1 and 2. In holding that the pleadings failed to establish antitrust impact with sufficient specificity (but granting plaintiffs leave to amend their complaint), the Court reasoned as follows:

  • First, certain of the offending conduct occurred in time periods encompassing less than the entire class period.  Because plaintiffs did not plead specifically when they bought the iron pipe fittings, the Court could not determine that they were directly injured in those abbreviated periods.
  • Second, although they alleged that they purchased product from “one or more” of the three defendants, several of their claims were directed at only two defendants.  It was therefore possible, the Court concluded, that no purchases were actually made from the defendants charged in those claims.
  • Third, plaintiffs did not differentiate between purchases of product made domestically and product imported from overseas.  Imported product, however, was not subject to the allegedly offending conduct soon after the start of the class period, thus leaving open the possibility that plaintiffs were not injured by any anticompetitive conduct if that is all they bought.

Underscoring the fact that the deficiency lay in the form of the pleadings and not their substance, the same Court, two weeks earlier, credited substantially similar, but more specific, allegations against the same defendants by direct purchasers in In re Ductile Iron Pipe Fittings (“DIPF”) Direct Purchaser Antitrust Litigation, allowing those claims to proceed to discovery.  It just goes to show that the soundest of claims, if not pleaded in accordance with Twombly/Iqbal standards, will die at discovery’s doorstep.

Kevin R. Reich is an Associate in the Gibbons Business & Commercial Litigation Department.
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