Kenneth Logan, Jonathan Youngwood, Mar 26, 2010
On January 13, 2010, in Starr v. SONY BMG Music Entertainment, a panel of the United States Court of Appeals for the Second Circuit reversed the October 9, 2008 opinion and order of the Honorable Loretta A. Preska, United States District Judge for the Southern District of New York. In Starr, Judge Preska had found that plaintiffs’ second amended complaint fell short of the standards set forth by the Supreme Court in Twombly. The panel found that the amended complaint attempts to allege a Section 1 Sherman Act conspiracy claim was based on no more than conclusory descriptions of parallel conduct among defendants.
In reversing Judge Preska, we submit that the Second Circuit’s decision in Starr undermines and cannot be reconciled with a fundamental tenet of the Supreme Court’s instructions in Twombly that allegations of parallel business behavior resulting from independent action, including interdependent conscious parallelism, do not state a Section 1 Sherman Act conspiracy claim. The Second Circuit’s misapplication of Twombly in Starr muddles the standard for pleading antitrust claims in the Second Circuit and beyond. The decision conflicts with the Supreme Court’s decision in Twombly, as clarified by the Court in Iqbal, as well as other post-Twombly appellate opinions.
This article provides an overview of plaintiffs’ allegations, Judge Preska’s opinion, the Second Circuit’s decision, and outlines the authors’ views on the Second Circuit’s errors and the implications Starr will have on antitrust pleading standards in the Second Circuit and elsewhere.