Decided: September 15, 2015
The Fourth Circuit affirmed in part, vacated in part, and remanded.
SD3, LLC and its subsidiary, SawStop, LLC (“SawStop”) together allege that a group of table-saw manufacturers formed a conspiracy to boycott certain SawStop technology to keep it off of the market in a violation of §1 of the Sherman Antitrust Act (“§ 1”). The district court dismissed the case for failure to plead facts that established an unlawful agreement, and this appeal followed.
The Fourth Circuit begins with a discussion of the facts, since, as the appeal is of a motion to dismiss, the only facts it can consider are those in SawStop’s complaint. The Fourth Circuit first addresses what it sees as a problem with the entirety of SawStop’s complaint, that it has filed suit against a broad range of defendants and has not sufficiently alleged specific complaints against each individual defendants, as required in § 1. Specifically, SawStop has included certain corporate parents in the complaint even though it made no factual allegations against them, and so the Fourth Circuit concluded that the district court properly dismissed the claims as to those defendants. The Court next looks at the conspiracy element of §1, specifically looking at how the Act requires more than just “parallel conduct,” because such conduct “is equally consistent with lawful conduct.” In order to move forward with a § 1 claim, SawStop would have to have alleged parallel conduct plus “something more,” categorized as “further circumstances pointing toward a meeting of the minds.” The Court next determined if the district court properly applied the “plausibility-focused standard” derived from case law. Importantly, the Court determined that the district court committed two errors in applying that standard: that it used the incorrect standard as a basis for its ruling by using the standard for summary judgment instead of motion to dismiss, and, in looking at the facts, “applied a standard much closer to probability than plausibility.” This combination of errors, according to the court, meant that the district court imposed an improper heightened pleading requirement.
Since the Court reviewed the case de novo, it proceeded to determine if SawStop pleaded sufficiently to establish a group boycott. The Court concluded that SawStop had adequately alleged parallel conduct, because none of the defendants used SawStop’s technology, and the Court concluded that this was enough similarity to be plausible at the pleading stage. The Court next turned to whether SawStop had alleged the additional “more” that it asserted earlier was required. Because SawStop was able to point to a specific meeting in which the boycott was formed, how the boycott was sealed, and how the defendants intended to implement the boycott, the Court found that it had alleged enough to meet the “more” standard.
The Fourth Circuit then considered whether or not the plaintiff had sufficiently alleged that the conspiracy “produced adverse, anti-competitive effects within the relevant product and geographic market.” However, in looking at the lower court’s decision, it concluded that the issue was inadequately briefed and the district court did not adequately treat the issue, and stated that the defendants would be allowed to raise that issue on remand.
The Court then turned to address the standard-setting conspiracies that SawStop alleged in its complaint. It concluded, however, that SawStop did not adequately establish either of the two additional conspiracies that it alleged, because the facts implied “nothing beyond ordinary participation in lawful standard-setting processes.” It therefore affirmed the district court’s decision to dismiss the standard-setting claims and the group-boycott claims against certain of the defendants, but held that it erred in dismissing the group-boycott claims against the rest of the defendants, and partially remanded.