Hold-Ups and Highway Robberies: A Proposal to Return to the Pre-Bell Atlantic 12(b)(6) Pleading Standard While Subsidizing Defendants' Discovery Costs (Including Discovery-Related Attorney Fees) in Meritless Cases

Anthony C. Biagioli, Georgetown University

Abstract

Antitrust pleading practice is plagued by a normative dilemma. Under a lenient pleading standard, plaintiffs may proceed to discovery on a showing of parallel conduct alone, leading undeserving plaintiffs to extort blameless defendants into settling meritless lawsuits through the threat of imposing on defendants prohibitive discovery costs. Under a more stringent pleading standard, plaintiffs might be required to plead more than parallel conduct, leading deserving plaintiffs to see their complaints dismissed at the pleading stage due to a lack of sufficient factual support for their claims. The latter is a function of blameworthy defendants’ asymmetric information advantage through which defendants who know whether they behaved unlawfully make strategic economic and litigation decisions against plaintiffs who have no idea whether the defendants behaved unlawfully.

The Supreme Court in Bell Atlantic v. Twombly rejected the five-decades-old pleading standard from the seminal Supreme Court holding in Conley v. Gibson and attempted to fashion a more stringent pleading standard, but it failed to specify the contours of pleading practice outside the antitrust context. Lower courts have accordingly interpreted Bell Atlantic’s import in wildly divergent manners. Irrespective of that confusion, the Bell Atlantic standard is undesirable even in the antitrust context. This Paper articulates an alternative standard that embraces pre-Bell Atlantic pleading practice and, in antitrust suits and cases with similarly extensive discovery costs, subsidizes defendants' discovery costs in meritless cases.