SD3, LLC v. Black & Decker, No. 14-1746 (4th Cir. 2015)

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Justia Opinion Summary

SawStop filed suit against two dozen saw manufacturers and affiliated entities under section 1 of the Sherman Antitrust Act, 15 U.S.C. 1, contending that several major table-saw manufacturers conspired to boycott SawStop’s safety technology and corrupt a private safety-standard-setting process, all with the aim of keeping that technology off the market. The district court dismissed SawStop's amended complaint. The court concluded that SawStop's complaint does not plausibly allege any conspiracy to manipulate safety standards; the complaint also fails to allege any facts at all against several corporate parents and affiliates; and therefore, the court affirmed the district court's dismissal as to these claims. However, the court concluded that SawStop has alleged enough to suggest a plausible agreement to engage in a group boycott where the complaint offers enough to survive defendants’ motion to dismiss. Accordingly, the court vacated the district court's dismissal as to this claim and remanded for further proceedings.

The court issued a subsequent related opinion or order on October 29, 2015.

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PUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 14-1746 SD3, LLC; SAWSTOP LLC, Plaintiffs – Appellants, v. BLACK & DECKER (U.S.) INC.; BLACK & DECKER CORPORATION; CHANG TYPE INDUSTRIAL CO., LTD.; DELTA POWER EQUIPMENT CORP.; HITACHI KOKI CO., LTD.; HITACHI KOKI USA LTD.; MAKITA CORPORATION; MAKITA U.S.A., INC.; MILWAUKEE ELECTRIC TOOL CORP.; ONE WORLD TECHNOLOGIES, INC.; OWT INDUSTRIES, INC.; ROBERT BOSCH GMBH; ROBERT BOSCH TOOL CORPORATION; RYOBI TECHNOLOGIES, INC.; STANLEY BLACK & DECKER, INC.; TECHTRONIC INDUSTRIES, CO., LTD.; TECHTRONIC INDUSTRIES NORTH AMERICA, INC.; PENTAIR WATER GROUP, INC.; EMERSON ELECTRIC COMPANY; PENTAIR, INC., Defendants – Appellees, and DEWALT INDUSTRIAL TOOLS; EMERSON ELECTRIC COMPANY, PENTAIR CORPORATION; PORTER-CABLE CORPORATION; SKIL TOOLS, INC.; POWER Defendants. ---------------------------AMERICAN ANTITRUST INSTITUTE; NATIONAL CONSUMERS LEAGUE, Amici Supporting Appellants. Appeal from the United States District Court for the Eastern District of Virginia, at Alexandria. Claude M. Hilton, Senior District Judge. (1:14−cv−00191−CMH−IDD) Argued: May 12, 2015 Decided: September 15, 2015 Before WILKINSON, AGEE, and WYNN, Circuit Judges. Affirmed in part, vacated in part, and remanded by published opinion. Judge Agee wrote the opinion, in which Judge Wynn joined. Judge Wynn wrote a separate concurring opinion. Judge Wilkinson wrote an opinion concurring in part and dissenting in part. ARGUED: Joel Davidow, CUNEO GILBERT & LADUCA, LLP, Washington, D.C., for Appellants. James Scott Ballenger, LATHAM & WATKINS, LLP, Washington, D.C., for Appellees. ON BRIEF: Jonathan W. Cuneo, Matthew E. Miller, CUNEO GILBERT & LADUCA, LLP, Washington, D.C., for Appellants. John D. Harkrider, Richard B. Dagen, AXINN, VELTROP & HARKRIDER LLP, Washington, D.C., Bernard J. DiMuro, DIMURO GINSBERG PC, Alexandria, Virginia, for Appellees Stanley Black & Decker, Incorporated, Black & Decker (U.S.) Incorporated, and Black & Decker Corporation; Christopher S. Yates, Christopher B. Campbell, Aaron T. Chiu, LATHAM & WATKINS LLP, San Francisco, California, for Appellee Emerson Electric Company; Paul Devinsky, Stefan M. Meisner, MCDERMOTT WILL & EMERY LLP, Washington, D.C., for Appellees Hitachi Koki USA Ltd. and Hitachi Koki Co., Ltd.; Lee H. Simowitz, Elizabeth A. Scully, Katherine L. McKnight, BAKER & HOSTETLER LLP, Washington, D.C., for Appellees Makita USA Incorporated and Makita Corporation; David M. Foster, Washington, D.C., Layne E. Kruse, Eliot Fielding Turner, FULBRIGHT & JAWORSKI LLP, Houston, Texas, for Appellees Robert Bosch Tool Corporation and Robert Bosch GmbH; James G. Kress, BAKER BOTTS L.L.P., Washington, D.C., Scott W. Hansen, Steven P. Bogart, James N. Law, REINHART BOERNER VAN DEUREN S.C., Milwaukee, Wisconsin, for Appellees Milwaukee Electric Tool Corporation, One World Technologies, Incorporated, OWT Industries, Incorporated, Ryobi Technologies, Incorporated, Techtronics Industries Co., Ltd., and Techtronic Industries North America, Incorporated. Seth D. Greenstein, David D. Golden, CONSTANTINE CANNON LLP, Washington, D.C., for Amici Curiae. 2 AGEE, Circuit Judge: SD3, LLC and its subsidiary, SawStop, LLC (together, “SawStop”), contend that several major table-saw manufacturers conspired to boycott SawStop’s safety technology and corrupt a private safety-standard-setting process, keeping that technology off the market. all with the aim of Consequently, SawStop sued nearly two dozen saw manufacturers and affiliated entities, alleging that they violated § 1 of the Sherman Antitrust Act, 15 U.S.C. § 1. The district court dismissed SawStop’s amended complaint based on, among other things, its belief that SawStop had failed to plead facts establishing an unlawful agreement. See SD3, LLC v. Black & Decker (U.S.), Inc., No. 11:14-cv-191, 2014 WL 3500674 (E.D. Va. July 15, 2014). We agree with the district court SawStop’s case cannot go forward. SawStop appealed. that several parts of SawStop’s complaint does not plausibly allege any conspiracy to manipulate safety standards, so we affirm the district court’s decision to dismiss SawStop’s claims fails concerning to parents allege and standard-setting. any facts affiliates, so at all we Likewise, against affirm the the complaint several corporate district court’s decision to dismiss all claims against those defendants. But as to the remaining defendants, SawStop has alleged enough to suggest a plausible agreement to engage in a group boycott. Although that claim 3 may not prove ultimately successful at trial, or even survive summary judgment, the complaint offers enough to survive the defendants’ motion to dismiss. strikes “[A] well-pleaded complaint may proceed even if it a savvy judge that actual proof of those facts is improbable, and that a recovery is very remote and unlikely.” 1 Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007). Thus, we vacate the district court’s decision dismissing SawStop’s groupboycott claim and remand for further proceedings. I. A. Background Relevant Facts This appeal concerns a decision on a motion to dismiss, so we draw the relevant facts only from allegations in SawStop’s complaint and from sources incorporated into that complaint. “In reviewing the dismissal of a complaint, we must assume all well-pled facts to be true and draw all reasonable inferences in favor of the plaintiff.” (4th Cir. 2013). Cooksey v. Futrell, 721 F.3d 226, 234 Keeping that standard in mind, we now consider the relevant facts. 1 We have omitted any internal quotation marks, alterations, emphasis, or citations here and throughout this opinion, unless otherwise noted. 4 1. In the 1990s, SawStop’s founder, Dr. Stephen Gass, created a form of “active injury mitigation technology” (“AIMT”) meant to prevent some hand and finger injuries on table saws. In basic terms, Gass’ technology “detects contact between a person and the blade and then stops and retracts the blade to mitigate injury.” J.A. 83 ¶ 60. When this system works as it should, a table-saw user who makes contact with the blade will suffer only a small nick rather than more serious injury. Gass and his co-inventors initially sought to capitalize on their invention by pursuing licensing agreements with the major table-saw manufacturers. The effort began in August 2000, when SawStop first took a “prototype table saw” to a trade show to publicly demonstrate demonstration the spurred technology. meetings J.A. with 86 ¶ 66. some That table-saw manufacturers, including S-B Power Tool Corp.; Black & Decker (U.S.), Inc.; Emerson Electric Company; and Ryobi Technologies, Inc. J.A. 86 ¶ 67. royalties at During these meetings, SawStop sought “typical commercial rates” wholesale prices” in any license agreement. The ¶ 68. it technology “impressed” the of about “8% of J.A. 86 ¶ 65. manufacturers. J.A. 87 Ryobi, for instance, formed a team to determine whether could incorporate SawStop’s technology into its products; Ryobi’s counsel wanted to adopt the technology “as fast as they 5 [could].” J.A. 87 ¶ 69. S-B Power Tool likewise expressed interest in “going forward.” J.A. 88 ¶ 73. One Black & Decker U.S. employee told Gass that he felt a licensing agreement was “inevitable,” even though Black & Decker was “used to being able to crush little guys.” J.A. 88 ¶ 76. Emerson’s then-president also held in-person meetings with SawStop to discuss a potential deal. J.A. technical 88-89 ¶ studies to 77. Several evaluate manufacturers SawStop’s conducted effectiveness in preventing table-saw accidents, which produced positive results. J.A. 87-88 ¶¶ 70, 74. Still, table-saw manufacturers also held reservations, one of which was product liability exposure. If some manufacturers adopted AIMT while others did not, then an issue could arise as to whether the non-adopters inherently unsafe product. defendant noted infeasible, and that the therefore might be sued J.A. 90 ¶ 81. AIMT less producing an But a lawyer for one technology relevant for in might be deemed product-liability suits, if it did not enter the market for some period. J.A. 87- 88 ¶ 72. Putting aside product liability, some saw manufacturers held other concerns, including that engineering and cost factors could render the technology infeasible. By all accounts, SawStop had not yet tested its technology in the marketplace. That testing would take some time, and SawStop itself estimated 6 that the device could not have been fully implemented on all table saws until as late as 2008. J.A. 92 ¶ 90. At least one industry insider also believed that SawStop’s AIMT could induce consumers to dispense with other safety features. J.A. 87 ¶ 71. Furthermore, AIMT did not prevent certain other common table-saw injuries, like kickback. SawStop’s immediate Id. licensing results. One discussions did not manufacturer, S-B Power licensing discussions in September 2001. produce Tool, any ended J.A. 88 ¶ 75. 2. In October 2001, table-saw manufacturers allegedly met and “decide[d] how to [t]echnology.” respond, J.A. 89 as ¶ an 80. industry, The to meeting the SawStop occurred in conjunction with the annual meeting of the Power Tool Institute, a trade association. Like the broader annual meeting, the table-saw session drew representatives from across the industry, including S-B Power Tool; Ryobi; Makita USA, Inc.; Emerson; Porter-Cable Corp.; Hitachi Koki USA Ltd.; Black & Decker U.S.; and Milwaukee Electric Tool Corp. J.A. 89 ¶ 79. SawStop alleges that the October 2001 meeting gave birth to a group boycott against SawStop. The manufacturers first purportedly determined to take an “all” or “nothing” approach, in which technology all or table-saw none manufacturers would. J.A. 7 would 89-90 ¶ adopt 80. SawStop’s Then, they allegedly took the latter path: they “agree[d] not to purchase technology licenses from [SawStop] or otherwise implement AIMT.” J.A. 90 ¶ 80. “[N]o contrary views [were] articulated.” Id. By keeping SawStop out of the market, the manufacturers hoped that “it would remain . . . at least plausible for [them] to contend, in defending product liability lawsuits, that AIMT was not viable.” J.A. 90 ¶ 81. Ultimately, SawStop contends, the group boycott succeeded. “[T]hose Defendants not yet in license negotiations with SawStop refrained from requesting a license, [while] Defendants who were already in negotiations opportunities arose.” found ways to abort them as J.A. 91 ¶ 85. According to the complaint, it took only a matter of months for the few defendants who had been negotiating with SawStop to find ways instance, to end Ryobi those had discussions. agreed to a In January non-exclusive 2002, for licensing agreement with an initial 3% royalty and a 5% to 8% escalator clause. J.A. 91-92 ¶ 87. ambiguity” in “error.” J.A. SawStop that the 92 would SawStop, however, identified a “minor agreement ¶ 87. happen, and asked Although Ryobi Ryobi Ryobi’s instead to correct counsel ended the assured negotiations entirely; Ryobi stopped responding to SawStop’s communications, and never explained its failure to communicate further. Similarly, Emerson abruptly ended 8 negotiations, Id. “offering pretextual reasons for its lack of interest.” J.A. 92 ¶ 88. And Black & Decker U.S. offered a “disingenuous and not made in good faith” offer: a 1% royalty, paired with an indemnification provision that would “various risks.” have placed liability on SawStop manufacturer to a for J.A. 92 ¶ 89. 3. Having failed to sign any licensing agreement, SawStop turned to a private safety-standard-setting organization, Underwriters Laboratories, Inc. (“UL”), to advance the AIMT product. In December 2002, Gass submitted a proposal to that UL suggesting the organization modify its widely accepted safety standards to require AIMT on all table saws. J.A. 96 ¶ 104. UL in turn referred the proposal to Standards Technical Panel 745 (“STP 745”), a subgroup of UL that sets standards for table saws. J.A. 96 ¶ 104. SawStop’s proposal to modify the UL standards failed, and SawStop alleges that the failure traces to a second conspiracy, which we SawStop’s will view, term the “standard-rejection STP 745 was “under the conspiracy.” firm control of In the Defendants,” as its members comprised “either employees of the Defendants or . . . purportedly unaffiliated consultants . . . who are aligned with the Defendants.” J.A. 97 ¶ 106. Thus, the defendants allegedly “agreed to vote as a bloc” to “thwart” the proposal. J.A. 97 ¶ 105. After the vote, the defendants are 9 said to have “promulgated falsehoods, factual distortions and product defamation” to ensure that STP 745 would not adopt any standard incorporating AIMT. J.A. 101 ¶ 123. 4. Later, the defendants are alleged to have additionally conspired to develop their own safety standards, purportedly to impose unnecessary costs adoption of AIMT. on SawStop and foreclose any wide SawStop says that the defendants implemented this conspiracy in multiple stages. First, in October 2003, several defendants -- Black & Decker Corp.; Hitachi; Pentair, Inc.; Robert Bosch Tool Corp.; Robert Bosch GmbH; Ryobi; One World Technologies Inc.; and Techtronics Industries Co., Ltd. -formed a joint venture to develop blade avoidance technology. J.A. 97 ¶ 109. “smokescreen” Products SawStop maintains that this venture was a mere to Safety constituted an “fend off” intervention Commission, “act of a federal fraudulent defendants -- Black & Decker the safety Consumer agency, concealment.” venture failed to produce any results. four from Id. and The Later, in November 2004, Corp., Makita USA, Robert Bosch Tool Corp., and Techtronic Industries North America -formed another joint venture. J.A. 98 ¶ 111. This venture, too, was alleged to be a fake effort “to develop a uniform blade guard standard to preclude quality competition on blade guard 10 standards.” Id. Members of the Power Tool Institute also began work on a new blade guard design around the same time. This third conspiracy, which we will call the “contrivedstandards conspiracy,” led to two standards changes adopted by UL in 2005 and 2007. kickback devices. The first change added certain anti- The second “specified that the blade guard should not be a hood, but rather a modular design with a topbarrier element and two side-barrier guarding elements.” 99 ¶ 115. J.A. SawStop maintains that this second change is too designed-focused and ineffective; it deduces that the change must therefore serve an illegitimate purpose. SawStop further believes that the manufacturers are trying to extend “control” the contrived-standards the International European counterpart to UL. conspiracy Electrotechnical abroad, as Commission, they the J.A. 100 ¶ 122. 5. SawStop maintains that all of the alleged conspiracies have continued through today, and the defendants communicate weekly “to maintain” the conspiracies. ¶ 121. purportedly J.A. 100 Nonetheless, SawStop was eventually able to enter the market by making its own table saws employing AIMT in 2004. J.A. 95 ¶ 101. When SawStop filed its complaint, it sold three types of these saws. J.A. 95-96 ¶ 102. The company represented at oral argument that it now makes additional models. 11 B. Proceedings Below Based on the three purported conspiracies, SawStop filed a complaint in February 2014 in the U.S. District Court for the Eastern District complaint of Virginia. The 22 separate defendants against original three-count alleged that the manufacturer-defendants, conspiring with UL and the Power Tool Institute, violated § 1 defendants moved dismiss, amended to complaint -- of the the Sherman however, operative Act. SawStop After filed pleading on a the first appeal -- dropping some defendants and adding three new counts under state law. For convenience, we refer to the first amended complaint as simply “the complaint.” The district court dismissed SawStop’s complaint under Federal Rule of Civil Procedure 12(b)(6) after identifying a number of problems First, “Plaintiffs’ that it perceived conspiracy in the allegations facts [were] their negotiating history with varying Defendants.” 2014 WL 3500674, at *3. could not plausibly alleged. belied by SD3, LLC, In the district court’s view, SawStop allege a refusal to deal when several defendants had actually offered to deal, and the facts alleged did not “tend[] to exclude” lawful explanations. Id. at *4. Second, to SawStop defendants, complaint failed instead without to allege choosing to explanation. lump Id. 12 anything as several them together in the Third, SawStop did not allege “direct evidence” of agreement by referring to testimony from a Ryobi engineer, David Peot. The district court found that Peot’s testimony, when read in its full context, indicated only that certain defendants launched a joint venture to develop technology to prevent table-saw accidents. Id. at *5. Fourth, SawStop had not established any harm from any of its alleged conspiracies because the “purported motivation for the alleged conspiracy is non-existent.” Id. And fifth, SawStop’s standard-setting conspiracies alleged nothing more than ordinary participation in trade groups, standard-setting organizations, and joint ventures, which does not create antitrust liability. Id. at *6. SawStop timely appealed, challenging the district court’s decision as to its three Sherman Act claims. address the district court’s remaining state law claims. decision to SawStop does not dismiss 2014). Acquisition XVI, three As to those claims, SawStop has forfeited review, and we do not consider them. Palisades its LLC, 782 F.3d 119, See Powell v. 127 (4th Cir. We have jurisdiction under 28 U.S.C. § 1291. II. Standard of Review “We review the district court’s grant of the defendants’ motion to dismiss de novo.” Johnson v. Am. Towers, LLC, 781 F.3d 693, 706 (4th Cir. 2015). “[W]e accept as true all well13 pled facts in the complaint and construe them in the light most favorable to [SawStop].” United States v. Triple Canopy, Inc., 775 F.3d 628, 632 n.1 (4th Cir. 2015). “accept as true allegation.” a legal conclusion We do not, however, couched as a factual Anand v. Ocwen Loan Servicing, LLC, 754 F.3d 195, 198 (4th Cir. 2014). Nor do we accept “unwarranted inferences, unreasonable conclusions, or arguments.” United States ex rel. Oberg v. Pa. Higher Educ. Assistance Agency, 745 F.3d 131, 136 (4th Cir. 2014). We can further put aside any “naked assertions devoid of further factual enhancement.” Id. III. Allegations Against Parents and Affiliates We begin by addressing a problem common to all counts of the complaint. A plaintiff in a § 1 case cannot assemble some collection of defendants and then make vague, against all of them as a group. be required to make a “factual non-specific allegations At trial, a § 1 plaintiff will showing that conspired in violation of the antitrust laws.” each defendant AD/SAT, Div. of Skylight, Inc. v. Associated Press, 181 F.3d 216, 234 (2d Cir. 1999); cf. United States v. Foley, 598 F.2d 1323, 1336 (4th Cir. 1979) (examining whether a jury charge in a criminal antitrust case “require[d] a sufficient involvement by each defendant”). Thus, the complaint must forecast that factual showing, and if 14 it fails to defendant, allege then particular the defendant facts must be against a particular dismissed. In other words, the complaint must “specify how these defendants [were] involved in the “indeterminate alleged assertions” conspiracy,” against all without relying “defendants.” on In re Travel Agent Comm’n Antitrust Litig., 583 F.3d 896, 905 (6th Cir. 2009); see also Total Benefits Planning Agency, Inc. v. Anthem Blue Cross & Blue Shield, 552 F.3d 430, 436 (6th Cir. 2008); In re Elevator Antitrust Litig., 502 F.3d 47, 50-51 (2d Cir. 2007). Nevertheless, SawStop means to bring claims against some corporate parents -- including Hitachi Koki Co., Ltd.; Makita Corporation; and Chang Type Industrial Co., Ltd. -- even though no factual allegations are made against them. Instead, SawStop nakedly alleges only that all of the corporate subsidiaries are “dominated by, and [are] parents. J.A. 73-78. alter That ego[s] allegation of,” these offers only corporate a legal conclusion, and SawStop has alleged no facts suggesting the kind of unity of interests that we usually require a party to plead before permitting them to advance an alter ego theory. See, e.g., C.F. Trust, Inc. v. First Flight Ltd. P’ship, 306 F.3d 126, 134 (4th Cir. 2002). “The fact that two separate legal entities may have a corporate affiliation does not alter [the] pleading requirement” to separately 15 identify each defendant’s involvement in the conspiracy. In re Aluminum Warehousing Antitrust Litig., No. 13–md–2481 (KBF), 2015 WL 1344429, at *2 (S.D.N.Y. Mar. 23, 2015). The complaint also fails to allege any facts pertaining to certain of the alleged group corporate boycott, subsidiaries. for example, In discussing SawStop never the mentions Techtronic Industries North America, Inc.; OWT Industries, Inc.; or Pentair Water Group, Inc. OWT Industries, Inc. and Pentair Water Group also go unmentioned in SawStop’s allegations as to the UL safety standards. A defendant obviously may not pursue an antitrust claim against a defendant who is not alleged to have done anything at all. Antitrust law doesn’t recognize guilt by mere association, imputing corporate liability to any affiliate company unlucky enough to be a bystander to its sister company’s alleged misdeeds. SawStop tries to tie other defendants to the purported conspiracies with nothing more than conclusory statements, even though after those these Decker, “persons defendants conspiracies Inc., for speaking entered allegedly instance, for the is [the table-saw began. Stanley purportedly company] industry liable have well Black & because affirmed its understanding of the purpose of [the conspiracies], and agreed to participate in [them].” same as to Delta Power J.A. 99 ¶ 117. Equipment, 16 Inc. SawStop alleges the J.A. 99 ¶ 116. “[U]nadorned conclusory allegations” like these are akin to no allegations at all. Vitol, S.A. v. Primerose Shipping Co., 708 F.3d 527, 543 (4th Cir. 2013). For these reasons, SawStop cannot proceed against all of the defendants. In particular, Hitachi Koki Co., Ltd.; Makita Corporation; Chang Type Industrial Co., Ltd.; OWT Industries, Inc.; Pentair Water Group, Inc.; Stanley Black & Decker, Inc.; and Delta Power Equipment, Inc. must be dismissed as to all counts. The group-boycott claim against Techtronic Industries North America, Inc. must also be dismissed. The district court correctly dismissed these defendants because, at least as to them, the “complaint was vague, never explained its case, and lumped [them] together without sufficient detail.” Bates v. City of Chicago, 726 F.3d 951, 958 (7th Cir. 2013). We now consider whether SawStop has properly alleged an antitrust conspiracy against the remaining manufacturers. IV. Pleading a § 1 Conspiracy Section 1 of the Sherman Antitrust Act prohibits “[e]very contract, combination trade.” 15 U.S.C. . § . 1. ., or “To conspiracy establish in a § restraint 1 of antitrust violation, a plaintiff must prove (1) a contract, combination, or conspiracy; (2) that imposed an unreasonable restraint of 17 trade.” N.C. State Bd. of Dental Exam’rs v. FTC, 717 F.3d 359, 371 (4th Cir. 2013). This appeal conspiracy. principally concerns the first element, the “[S]ection one’s prohibition against restraint of trade applies only to concerted action, which requires evidence of a relationship between at least two legally distinct persons or entities.” Robertson v. Sea Pines Real Estate Cos., 679 F.3d 278, 284 (4th Cir. 2012). have specifically made To be actionable, the defendants must a “conscious commitment scheme designed to achieve an unlawful objective.” to a common Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752, 764 (1984). Not even “conscious parallelism” is enough, Brooke Grp. Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 227 (1993), as “independent action is not proscribed by § 1,” Va. Vermiculite, Ltd. v. Historic Green Springs, Inc., 307 F.3d 277, 280 (4th Cir. 2002). Accordingly, a plaintiff bringing a § 1 claim must first plead an agreement to restrain trade. In Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 556 (2007), the Supreme Court explained that such a plaintiff must plead “enough factual matter (taken as true) to suggest that [the requisite] agreement was made.” In other words, the complaint must contain “enough fact to raise a reasonable expectation that discovery will reveal evidence of illegal agreement.” Id. For 18 this reason, “allegations of parallel conduct [on the part of the defendants] . . . must be placed in a context that raises a suggestion of a preceding agreement, not merely parallel conduct that could just as well be independent action.” Id. at 557. “[A] conclusory allegation of agreement at some unidentified point [also] does not supply facts adequate to show illegality.” At bottom, Twombly Id. applies a long-held principle in antitrust law to the pleading stage: parallel conduct, standing alone, does not establish the required agreement because it is equally consistent with lawful conduct. The Twombly plaintiffs asked the Court to reject that idea and assume a conspiracy “exclusively” from action that seemed too coincidentally similar to be independent. good reason. Id. at 565 n.11. The Court refused, and for “Parallel conduct or interdependence,” after all, is “just as much in line with a wide swath of rational and competitive business strategy perceptions of the market.” Twombly parallel failed because conduct” that unilaterally Id. at 554. it rested could be by common Thus, the complaint in only just prompted as on “descriptions easily explained “natural, unilateral reaction[s]” from each defendant. of by Id. at 564, 566; see also Robertson, 679 F.3d at 289 (“Twombly required contextual evidence to substantiate a speculative claim about the existence and substance of a conspiracy.”). 19 For a § 1 claim to survive, then, a plaintiff must plead parallel conduct and something “more.” 557. That “more” must consist of Twombly, 550 U.S. at “further pointing toward a meeting of the minds.” Id. circumstance[s] Allegations could suffice, for instance, where a plaintiff demonstrates that the parallel behavior “would probably not result from chance, coincidence, independent responses to common stimuli, or mere interdependence unaided by an advance understanding among the parties.” plus’ or Id. at 556 n.4. ‘plus factors,” Often “characterized as ‘parallel Evergreen Partnering Grp., Inc. v. Pactiv Corp., 720 F.3d 33, 45 (1st Cir. 2013), these facts must be evaluated holistically, see Cont’l Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 699 (1962) (cautioning courts not to “compartmentaliz[e] the various factual components” of an antitrust case). We do not take the approach that the dissent pursues, which seems to parse each “plus factor” individually and ask whether that factor, standing alone, would be sufficient to provide the “more.” Cf. Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 310 (2007) (explaining that “courts must consider the complaint facts in its alleged, inferences, allegation, entirety” taken rather to determine collectively,” than scrutinized in asking give “whether isolation, 20 whether meets rise “all to of the relevant any individual that standard”). Actions that might seem otherwise neutral in isolation can take on a different shape when considered in conjunction with other surrounding circumstances. See William E. Kovacic, et al., Plus Factors and Agreement in Antitrust Law, 110 Mich. L. Rev. 393, 426-34 (2011) (explaining why plus factors must be analyzed in groups or “constellations”). Importantly, “more” than Twombly’s parallel requirement conduct does not standard at the motion-to-dismiss stage. 556 U.S. 662, 678 (2009). subject the “preponderance the plead impose a something probability See Ashcroft v. Iqbal, Courts must be careful, then, not to complaint’s of to allegations evidence” to standard. the familiar Text Messaging Antitrust Litig., 630 F.3d 622, 629 (7th Cir. 2010). court confuses probability and plausibility, it When a inevitably begins weighing the competing inferences that can be drawn from the complaint. stage to But it is not our task at the motion-to-dismiss determine “whether a lawful alternative explanation appear[s] more likely” from the facts of the complaint. Houck v. Substitute Tr. Servs., Inc., 791 F.3d 473, 484 (4th Cir. 2015). Post-Twombly appellate courts have often been called upon to correct district courts that mistakenly engaged in this sort of premature weighing exercise in antitrust cases. See, e.g., Evergreen Partnering Grp., 720 F.3d at 50; Erie Cnty., Ohio v. Morton Salt, Inc., 702 F.3d 860, 868-69 (6th Cir. 2012); 21 Anderson News, L.L.C. v. Am. Media, Inc., 680 F.3d 162, 189 (2d Cir. 2012). Similarly, courts must be careful not to import the summary-judgment standard into the motion-to-dismiss stage. summary judgment in a to § 1 exclude case, the a plaintiff possibility must of At summon “evidence tending independent action.” Twombly, 550 U.S. at 554; see also Monsanto, 465 U.S. at 764; Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 588 (1986). But the motion-to-dismiss stage concerns an “antecedent question,” Twombly, 550 U.S. at 554, and “[t]he ‘plausibly remains suggesting’ considerably threshold less than for the a conspiracy ‘tends to rule complaint out the possibility’ standard for summary judgment,” Starr v. Sony BMG Music Entm’t, 592 F.3d 314, 325 (2d Cir. 2010). Thus, “[a]lthough Twombly’s articulation of the pleading standard for § 1 cases draws from summary judgment jurisprudence, the standards applicable to Rule 12(b)(6) and Rule 56 motions remain distinct.” In re Ins. Brokerage Antitrust Litig., 618 F.3d 300, 323 n. 21 (3d Cir. 2010). extending stage.” the “[T]here is no authority . . . for [Monsanto/Matsushita] Erie Cnty., 702 F.3d at 869. standard to the pleading Indeed, such an extension would be wholly unrealistic, as “a plaintiff may only have so much information at his disposal at the outset.” F.3d at 291. Robertson, 679 Here, for instance, SawStop was three months into 22 its case and had not conducted any discovery when the defendants moved to dismiss. We can hardly expect it to have built its entire case so early on. We therefore consider whether the district court properly applied this plausibility-focused standard. V. Group Boycott SawStop initially alleges a group boycott, which generally constitutes a “concerted refusal[] by traders to deal with other traders.” Klor’s, Inc. v. Broadway-Hale Stores, Inc., 359 U.S. 207, 212 (1959). Most often, group boycotts involve “horizontal agreements among direct competitors” with the aim of injuring a rival. NYNEX Corp. v. Discon, Inc., 525 U.S. 128, 135 (1998). This sort of “naked concerted refusal occurs when the defendants are not engaged in any significant integration of production or distribution, and the only rationale for the restraint is the elimination of additional, lower-cost, higher-quality, or more innovative output from the market.” Phillip E. Areeda & Herbert Hovenkamp, Fundamentals of Antitrust Law § 22.02a (4th ed. 2014 supp.). “[S]uch agreements . . . cripple the freedom of traders and thereby restrain their ability to sell in accordance with their own judgment.” Kiefer-Stewart Co. v. Joseph E. Seagram & Sons, 340 U.S. 211, 213 (1951). 23 A. The district court held that SawStop had not adequately alleged an agreement to boycott. However, in reaching that conclusion, the district court committed the two errors that we earlier cautioned against. First, it confused the motion-to-dismiss standard with the standard for summary judgment. The district court twice cited Matsushita -- the case defining the “tends to exclude” standard for summary judgment -- as a basis for its ruling. See SD3, LLC, 2014 WL 3500674, at *3, 4. It then mistakenly dismissed certain alleged exclude” claims because independent the facts action. Id. at did *4. not It “tend[] made to explicit findings of fact -- including a finding that motive was “nonexistent” -- that were plainly contradicted by the terms of the complaint. See J.A. 89-90 ¶¶ 80-81 (alleging motive). The district court further required SawStop to definitively “show an agreement,” SD3, LLC, 2014 WL 3500674, at *3, rather than asking whether the allegations “plausibly agreement, Twombly, 550 U.S. at 557. to summary See, e.g., judgment SD3, cases LLC, 2014 to define WL suggest[ed]” such an And it erroneously looked the 3500674, relevant at *3 standards. (citing Gtr. Rockford Energy & Tech. Corp. v. Shell Oil Co., 998 F.2d 391, 396 (7th Cir. 1993)). 24 Second, the district court applied a standard much closer to probability than plausibility. court’s opinion licensing adopts negotiations For instance, the district defendants’ and then characterizations draws unsurprisingly inferences against SawStop based on them. of the adverse The district court noted, for example, that Emerson had made a pre-conspiracy offer to license, but believed that SawStop had made “no allegation that Emerson rescinded that offer.” at *4. SawStop specifically SD3, LLC, 2014 WL 3500674, alleged to the contrary that “Emerson cut off all license negotiations with SawStop, offering pretextual reasons for its lack of interest, and did not renew them.” J.A. 92 ¶ 88. “disingenuous” offer In much the same way, it concluded that a to license from Black & Decker USA was inconsistent with conspiracy, SD3, LLC, 2014 WL 3500674, at *4, without explaining why an offer that SawStop pled was intended to be rejected was unavoidably inconsistent with a refusal to license. colored On by the the whole, district these court’s inferences belief seem that to have SawStop been was technology with uncertain commercial viability and safety.” “a Id. at *5. In short, the district court imposed a heightened pleading requirement -- but such a standard does not apply on a Rule 12(b)(6) motion, even in an antitrust case. See Marucci Sports, L.L.C. v. Nat’l Collegiate Ath. Ass’n, 751 F.3d 368, 373 (4th 25 Cir. 2014); W. Penn Allegheny Health Sys., Inc. v. UPMC, 627 F.3d 85, 98 (3d Cir. 2010). was error. Instead, This heightened pleading standard the district court should have asked whether SawStop has alleged parallel action and something “more” that indicates agreement, as Twombly provides. Our de novo standard of review means that we can decide the matter without deference to the lower court. the appropriate, Twombly-based standard Thus, we may apply ourselves rather than remanding to the district court for another attempt of its own. See, e.g., Houck, 791 F.3d at 484-86; Triple Canopy, 775 F.3d at 637-40. Further, we enjoy the benefit of the parties’ briefs, and can read and understand the complaint in the same way as could the district court. Thus, we proceed to consider whether SawStop has adequately alleged a group boycott. B. A facts plaintiff establishes indicating that the parallel conduct defendants when acted it pleads “similarly.” Petruzzi’s IGA Supermarkets, Inc. v. Darling-Delaware Co., 998 F.2d 1224, 1243 (3d Cir. 1993); see also Hyland v. HomeServices of Am., Inc., 771 F.3d 310, 320 (6th Cir. 2014) (considering whether the defendants’ actions were “uniform”). SawStop adequately alleged parallel conduct. The similar or uniform actions alleged are obvious: none of the defendants ultimately took a license or otherwise 26 implemented SawStop’s technology. business As a result, SawStop could not pursue its initial strategy of entering the market through agreement with a major table-saw manufacturer. a license Such actions are classically anticompetitive, as “parallel action that excludes new entrants innovation.” both facilitates price elevation and can slow C. Scott Hemphill & Tim Wu, Price Exclusion, 122 Yale L.J. 1182, 1185 (2013). The manufacturers incorrectly insist that their conduct must be deemed dissimilar at this stage because some licensing negotiations continued after district court agreed. the conspiracy formed. The See SD3, LLC, 2014 WL 3500674, at *4 (“The sequence of all of these events undermines the Plaintiffs’ group boycott allegations.”). So does the dissent. But that argument misunderstands the nature of the alleged boycott, while “plausibility.” alleged objective again The of confusing manufacturers keeping “probability” could SawStop have off the with achieved market their in any number of ways: they could refuse any licensing discussions at all, they could engage in spurious licensing discussions, see, e.g., J.A. 93 ¶ 94, they could sign a license agreement and then never implement it, or they could scare SawStop off with commercially unreasonable offers. All of these actions could be consistent ultimate with the boycott’s exclusion from the marketplace. 27 alleged objective, See Evergreen Partnering Grp., 720 F.3d at 51 (faulting weigh[ing] [the] responses”); Anderson the district defendants’ News, 680 court for alleged[ly] F.3d at “improperly inconsistent 191 (holding that defendants’ “varied” actions during the initial stages of the alleged conspiracy did not render the existence of a conspiracy implausible). SawStop never alleged that the manufacturers agreed on a common manner of preventing SawStop’s entry into the market. That’s not surprising. Commercially sophisticated parties like the defendants could well understand the red flags that would be raised from a blanket, total refusal to negotiate. See, e.g., Am. Tobacco Co. v. United States, 328 U.S. 781, 800-01 (1946) (detailing a price-fixing conspiracy in which the defendants used a variety of differing methods to achieve the same ultimate objective, an understood and settled price for tobacco). SawStop might have become suspicious if all of the defendants fled the negotiations en masse without any pretextual cover. But if the defendants employed different courses of action, then their conspiracy might better avoid detection. they did exactly that. See J.A. 94 ¶ SawStop alleges 96 (“Defendants fraudulently concealed the AIMT Boycott by, among other things, giving separate excuses for not taking a license[.]”); J.A. 95 ¶ 100 (“[SawStop]’s inquiries were met with denials . . . and misleading explanations[.]”). 28 silence, false The dissent, however, is unwilling to credit SawStop’s factual allegation that the different paths of negotiations were themselves part of the claimed conspiratorial ruse. It contends that, in crediting SawStop’s allegation, we “underestimate[] the difficulty of getting a group of competitors to agree on a course of action that separate contract negotiations may or may not have shown to be Dissenting op. at 85. in their best commercial interest.” But the same thing could be said about most any alleged agreement between competing businesses -- and yet the law has never embraced a presumption against business agreements. Much agreements. of antitrust law is premised on such More importantly, we are in no position at this stage to make “estimates” of the sort the dissent posits. It should hardly need to be said again that we must proceed “on the assumption that all the allegations in the complaint are true (even if 12(b)(6) doubtful does in not fact).” Twombly, countenance dismissals 550 U.S. based 555. on disbelief of a complaint’s factual allegations.” a “Rule judge’s Colon Health Ctrs. of Am., LLLC v. Hazel, 733 F.3d 535, 545 (4th Cir. 2013). We must be careful not to rely on our own subjective disbelief here, as even the acts that the manufacturers and the dissent say deception. are Ryobi dissimilar and might Emerson, also for be read example, to suggest suddenly ended negotiations without sufficient explanation after proceeding all 29 the way to a draft license agreement. This sort of abrupt and See J.A. 92 ¶¶ 77, 87-88. unexplained shift in behavior can suggest that a defendant’s acts were not entirely independent, as the shift came after the alleged October 2001 agreement to launch the boycott. See, e.g., Toys “R” Us, Inc. v. FTC, 221 F.3d 928, 935 (7th Cir. 2000) (explaining that the defendants’ sudden “decision to stop dealing,” which was an “abrupt shift from the past,” agreement). provided For its more part, reason Black to & infer Decker a USA horizontal purportedly tendered only a “disingenuous” offer that was “not made in good faith.” J.A. 92 ¶ 89. Assuming that characterization is accurate (as we must), few benign purposes would be served by such an offer. But the dissent would require more, even at this early stage of the proceedings; it would find “parallel conduct” only when defendants move common anticompetitive identical means. in relative ends lockstep, (exclusion) only achieving by their substantially So far as we can tell, this standard finds no support in any existing authority. The three decisions that the dissent cites do not support the proposed rule, as they all involved non-parallel “ends.” One involved inconsistent pricing in an alleged price-fixing conspiracy, see City of Moundridge v. Exxon Mobil Corp., 429 F. Supp. 2d 117, 131-32 (D.D.C. 2006), 30 while another addressed wildly varying alleged surcharges (in both fuel-surcharge-fixing amount conspiracy, and timing) LaFlamme v. Air France, 702 F. Supp. 2d 136, 151 (E.D.N.Y. 2010). in an Societe The last, an appeal from a summary judgment decision, held only that the defendant had not established conscious parallelism on the part of one defendant; it assumed, however, that the actions alleged were parallel. See Cosmetic Gallery, Inc. Corp., 495 F.3d 46, 54 (3d Cir. 2007). stand for an unremarkable proposition: produce parallel results. v. Schoeneneman At best, these cases parallel conduct must And they further recognize the very point so hotly contested by the dissent: parallel conduct “need not be exactly simultaneous and identical in order to give rise to an inference of agreement.” LaFlamme, 702 F. Supp. 2d at 151; cf. City of Moundridge v. Exxon Mobil Corp., Civil Action No. 04-940 (RWR), 2009 WL 5385975, at *5 (D.D.C. Sept. 30, 2009) (“Price-fixing can occur even though the price increases are not identical in absolute or relative terms.”). Our own precedent does not support the dissent’s view. Take, for example, United States v. Foley, 598 F.2d 1323 (4th Cir. 1979), convicted in of commissions. which violating a group § 1 by of real estate conspiring to fix brokers real were estate It seems an understatement to say that the Foley defendants did not move in any way close to perfect tandem: some defendants did not act to implement 31 the commission-fixing agreement until months after it formed, while at least one defendant implemented the new commissions before the conspiracy formed. Id. at 1332-34. Still other defendants only “partially” joined, taking higher commissions when available but otherwise pursuing lower ones. Id. Had Foley been decided under the dissent’s framework, these “divergent paths to the same end” (higher commissions) would apparently have required reversal of the convictions. The Court, however, reached a different result -- it affirmed all nine criminal convictions after finding sufficient evidence of agreement. Foley, then, effectively rejects the Id. at 1335. dissent’s proposed methodology. Lastly, we disagree that the dissent’s definition is needed to avoid imposing antitrust liability on innocent activities. The dissent inexorably principle enough proceeds leads is to that impose plaintiff’s to as if finding liability. parallel antitrust initial a showing But conduct, of ensure required that of an innocent standing business In parallel antitrust parallel Twombly’s liability. initial step in a multi-step process. steps of conduct foundational alone, conduct not words, other is the is only an It is the additional plaintiff activities that are are not meant to tarred as antitrust violations, whether at the motion-to-dismiss stage or later. 32 Thus, conduct. the we think plain that SawStop alleged parallel The remaining question is whether SawStop also pleads requisite minds.” it “more” that “point[s] toward a meeting of the move its Twombly, 550 U.S. at 557. C. SawStop has alleged the “more” necessary to allegations of parallel conduct into the realm of plausibility. The group-boycott detailed story. claim pled in the complaint builds a SawStop identifies the particular time, place, and manner in which the boycott initially formed, describing a separate meeting held for that purpose during the Power Tool Institute’s October 2001 annual meeting. 81. See J.A. 89-90 ¶¶ 79- The complaint names at least six specific individuals who took part in forming the boycott, noting which defendant each person ostensibly represented. See J.A. 89 ¶¶ 78-79. The complaint further tells us the means by which the defendants sealed their boycott agreement: a majority vote. ¶ 80. See J.A. 89 And the complaint then explains how the manufacturers implemented the boycott: refusing to respond to entreaties from SawStop, going silent after long negotiations, or offering only bad-faith terms that were intended to be rejected. Thus, “[u]nlike the plaintiffs in Twombly . . ., [SawStop] clearly has alleged an express agreement to restrain trade.” Watson Carpet & Floor Covering, Inc. v. Mohawk Indus., Inc., 648 F.3d 452, 457 33 (6th Cir. 2011); cf. Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514 (2002) (explaining that a Title VII complaint should not have been dismissed where it “detailed the events leading to his termination, provided relevant dates, and included the ages and nationalities of at least some of the relevant persons involved with his termination”). Antitrust complaints, like SawStop’s, “that include detailed fact allegations as to the ‘who, what, when and where’ of the claimed dismissal.” antitrust misconduct not surprisingly survive William Holmes & Melissa Mangiaracina, Antitrust Law Handbook § 9:14 (2014 supp.); see also Carrier Corp. v. Outokumpu Oyj, 673 F.3d 430, 445 (6th Cir. 2012); Kendall v. Visa U.S.A., Inc., 518 F.3d 1042, 1048 (9th Cir. 2008); cf. Goldfarb v. Mayor & City Council of Balt., 791 F.3d 500, 511 (4th Cir. 2015) (“A complaint should not be dismissed as long as it provides sufficient detail about the claim to show that the plaintiff has a more-than-conceivable chance of success on the merits.”). Detail in a complaint of “further circumstances pointing toward a meeting of the minds” allays the suspicion that the plaintiff is merely speculating existence from coincidentally similar action. at 557. a conspiracy into Twombly, 550 U.S. That, after all, was Twombly’s principal concern. See Swanson v. Citibank, N.A., 614 F.3d 400, 405 (7th Cir. 2010) (“A more complex case [like one] 34 involving . . . antitrust violations[] will require more detail, both to give the opposing party notice of what the case is all about and to show how, in the plaintiff’s mind at least, the dots should be connected.”). The dissent contends that the complaint rests on a “casual presumption” of liability. But that view overlooks the complaint’s detailed account of the alleged events -- an account that, again, we must take as true for Rule 12(b)(6) purposes. Instead, the dissent seems to rely on a series of factual suppositions that might “perhaps” explain the relevant parallel conduct. But that approach forces us to ignore the factual allegations that form particular meeting the on a heart of SawStop’s particular day complaint: with a particular participants making a particular agreement that generated the conspiracy at issue. And by favoring its perception of the relevant events over the narrative offered by the complaint, the dissent makes the very mistake that the district court made, recasting “plausibility” into “probability.” The dissent underscores the weakness in its position by mischaracterizing the factual allegations in SawStop’s complaint as “conclusory” in an effort to avoid them. dissent but doesn’t that believe “conclusory.” skepticism See the does Iqbal, complaint’s not 556 detailed render U.S. It may be that the at the 681 allegations, allegations (explaining allegations cannot be called “conclusory” merely because a judge 35 views them as “extravagantly “nonsensical”). Indeed, fanciful,” just two weeks “unrealistic,” after Twombly, or the Supreme Court reversed one of our sister circuits for making much the same error. See Erickson v. Pardus, 551 U.S. 89, 90 (2007) (reversing dismissal of a complaint as “conclusory” where the complaint alleged harm only by saying that prison officials “endanger[ed] his life” by taking away needed treatment). And, as a practical matter, demanding more than the particularized allegations that SawStop offered here would compel an antitrust plaintiff to plead evidence -- and we have already expressly refused to impose such a requirement. See Robertson, 679 F.3d at 291. In any event, we observe that SawStop not only alleges the “who, what, when, and where” in its complaint, but also the “why.” “[M]otivation for common action” is a key circumstantial fact. and Einer R. Elhauge & Damien Geradin, Global Antitrust Law Economics (listing 837 “common (2007); motive see to also Hyland, conspire” as 771 a F.3d at potential 320 plus factor); Mayor & City Council of Balt. v. Citigroup, Inc., 709 F.3d 129, 136 (2d Cir. 2013) (same). According to the complaint, the defendants here were motivated to conspire out of a fear of adopted the face product-liability technology, liability exposure then from exposure: non-adopting their 36 if one manufacturer manufacturers failure to employ could AIMT. Thus, under SawStop’s theory, the manufacturers conceived a group boycott to keep AIMT off the market, thereby preventing its use as a design alternative in product-liability cases. And even though a complaint need not “forecast evidence” to support its theory, Robertson, 679 F.3d at 291, SawStop’s complaint does so by referencing engineer), who testimony agrees that from Peot non-adopting (the former manufacturers Ryobi “could” have been in “real legal trouble” if a major manufacturer had adopted AIMT. Transcript of Trial at 4-125, Osorio v. One World Techs. Inc., No. 06-CV-10725 (D. Mass. Feb. 25, 2010), ECF No. 137 (cited at J.A. 89 ¶ 80). The complaint further describes statements in which Black & Decker’s counsel is alleged to have said that product liability could be lessened “if a couple of years passed [t]echnology.” The without implementation of the SawStop J.A. 87 ¶ 72. defendants insist that this implausible, and the dissent agrees. alleged motive is They theorize that, if SawStop’s theory of motive were true, one would have expected all of the manufacturers to take a license once SawStop began making its own AIMT-equipped saws in 2004. The complaint indicates that course of events did not occur. Once more, the manufacturers’ argument -- embraced by the dissent -- seems SawStop entered to the misconstrue the market a as 37 complaint’s peripheral allegations. player. See Appellant’s constitute United Br. 1% of 44 (“SawStop’s total States[.]”). sales . sales of industry Thus, the . . did table manufacturers not saws even in were the still conceptually able to argue that SawStop was peddling a fringe technology, as position. reflected in its “marginaliz[ed]” market See J.A. 90 ¶ 81; see, e.g., Osorio v. One World Techs., Inc., 659 F.3d 81, 87-88 (1st Cir. 2011) (describing defendant’s argument that SawStop’s technology was not viable). Indeed, the fact that the conspiracy did not include every player in the table-saw industry implies that the conspirators were concerned with major manufacturers taking a license, not smaller ones. Thus, the defendants’ post-2004 actions -- which, in any event, are not fully discussed in the complaint -- are not much help in evaluating the manufacturers’ potential motives. Even if the “who, what, where, when, and why” were not enough, the complaint also describes a number of communications among the defendants. meetings among agreement because conspire. See, e.g., Allegations conspirators they can provide the of support means communications an and and inference of opportunity to Evergreen Partnering Grp., Inc., 720 F.3d at 49; Hyland, 771 F.3d at 320; Mayor & City Council of Balt., 709 F.3d at 136. Here, in addition to discussing the October 2001 meeting where the alleged conspiracy formed, the complaint 38 describes various phone calls, meetings, conspirators. Such and discussions “allegation[s] among identif[y] the a practice, not illegal in itself, that facilitates [an antitrust conspiracy] detect.” that would be difficult for the authorities to Text Messaging, 630 F.3d at 628; accord Todd v. Exxon Corp., 275 F.3d 191, 213 (2d Cir. 2001); see also Sharon E. Foster, LIBOR Manipulation and Antitrust Allegations, 11 DePaul Bus. & Com. L.J. 291, 304 (2013) (“Facilitating practices . . . may evidence the plus factors necessary to establish the inference of an agreement.”). A market in which sales power is concentrated in the hands of the few can also facilitate coercion. See, e.g., Evergreen Partnering Grp., 720 F.3d at 48; Todd, 275 F.3d at 208; In re High Fructose Corn Syrup Antitrust Litig., 295 F.3d 651, 656 (7th Cir. 2002). market. Fewer “minds” must “meet” in a concentrated And the complaint implies that the table-saw market is so concentrated, as the defendants here purportedly control 85% of that market. J.A. 81 ¶¶ 44, 48; see, e.g., Starr, 592 F.3d at 323 (listing the defendants’ control of 80% of the market as a relevant plus factor). in which the Further, the complaint describes ways manufacturers attempted to hide their actions, including a mutual agreement not to “leave a paper trail.” See J.A. 93-94 manufacturers ¶¶ to 92-97. hide their These alleged actions 39 could attempts by the suggest that the defendants knew their actions “would attract antitrust scrutiny,” Starr, 592 F.3d at 324; in other words, the alleged facts suggest consciousness of guilt. Those actions give us further reason to conclude that a group boycott is plausibly alleged. 2 D. Generally, “[i]n addition to establishing a conspiracy, a successful plaintiff must also show . . . that the conspiracy produced adverse, anti-competitive effects within the relevant product and geographic market.” Terry’s Floor Fashions, Inc. v. Burlington Indus., Inc., 763 F.2d 604, 611 n.10 (4th Cir. 1985). In a viable complaint, “the plaintiff must allege, not only an injury to himself, but an injury to the market as well.” Agnew v. Nat’l Collegiate Ath. Ass’n, 683 F.3d 328, 335 (7th Cir. 2012); accord Todd, 275 F.3d at 213. “Actual anticompetitive effects include, but are not limited to, reduction of output, 2 SawStop also argued that the complaint alleged sufficient direct evidence of a conspiracy to avoid dismissal. See Robertson, 679 F.3d at 289 (holding that a complaint can state a § 1 claim if it alleges “direct evidence” of the agreement itself); but see Am. Chiropractic Ass’n v. Trigon Healthcare, Inc., 367 F.3d 212, 226 (4th Cir. 2004) (indicating that “smoking gun” direct evidence is “extremely rare in antitrust cases”). As SawStop’s complaint meets “Twombly’s requirements with respect to allegations of illegal parallel conduct,” Robertson, 679 F.3d at 290, we need not determine whether SawStop has adequately alleged direct evidence. 40 increase in price, or deterioration in quality.” Jacobs v. Tempur-Pedic Int’l, Inc., 626 F.3d 1327, 1339 (11th Cir. 2010). In cases involving “per se” violations of the Sherman Act, however, this “[C]ertain anti-competitive agreements or harm practices” is essentially have such a presumed. “pernicious effect on competition” that they “are conclusively presumed to be unreasonable and therefore illegal without elaborate inquiry as to the precise harm” that they caused. Schaefer, 242 F.3d 198, 209 (4th Cir. 2001). agreements “lacked irrelevant.” anticompetitive effects TFWS, Inc. v. Claims that such . . . are simply In re Cardizem CD Antitrust Litig., 332 F.3d 896, 909 (6th Cir. 2003). Although the manufacturers contend that SawStop failed to allege anticompetitive harm, SawStop maintains that its alleged group boycott violates the Sherman Act per se -- such that no separate allegations circumstances violation.” a group of harm were boycott may necessary. be considered “[I]n a some per se Precision Piping & Instruments, Inc. v. E.I. du Pont de Nemours & Co., 951 F.2d 613, 617 n.4 (4th Cir. 1991). And the alleged agreement here comes close to the “paradigmatic boycott,” in which “a group of competitors” (here, the manufacturers) take “collective action” (here, the refusal to license or implement) that “may inhibit the competitive vitality of rivals” (here, SawStop). NYNEX Corp., 525 U.S. at 135; see 41 also Nw. Wholesale Stationers, Inc. v. Pac. Stationery & Printing Co., 472 U.S. 284, 294 (1985) (explaining that per se illegal boycotts “often cut off access to a supply, facility, or market necessary to enable the boycotted firm to compete and frequently the boycotting firms possessed a dominant position in the relevant market”). Despite the facial appeal of SawStop’s per se argument, neither the manufacturer’s brief nor the district court’s opinion directly address it. The district court remarked only in “fail[ed] passing that SawStop had to establish boycott organized for a concerted refusal to deal.” 2014 WL 3500674, at *5. a SD3, LLC, It did not discuss the issue further, and offered only a cursory citation to Northwest Wholesale. manufacturers similarly naked assert, without explanation, The that SawStop “failed to allege any per se violation of the Sherman Act.” Response Br. 58. Because the issue of competitive harm is inadequately briefed, and because the district court’s opinion likewise gives us no guidance, we cannot decide that issue or affirm on that basis. If the manufacturers so choose, however, they may again raise the issue of competitive harm before the district court on remand so that it may fully consider and discuss the question with the benefit of proper argument. 42 E. In sum, SawStop’s complaint is very different from the one seen in Twombly, which rested solely on “descriptions of parallel conduct and not on any independent allegation of actual agreement.” Twombly, 550 U.S. at 564; see also id. at 548 (“[T]he question . . . is whether a § 1 complaint can survive when it alleges . . . certain parallel conduct . . . , absent some factual context suggesting agreement[.]” (emphasis added)). SawStop’s complaint alleges an actual agreement to boycott in detail and does not rely, as in Twombly, on parallel conduct alone. The respectfully, dissent’s simply Dissenting Op. 75. rejected the an observation inaccurate to reading the of contrary Twombly. is, See In particular, the Supreme Court directly dissent’s reading of the Twombly complaint: “Although in form a few stray statements sp[oke] directly of agreement, on fair reading these [were] merely legal conclusions resting on the prior allegations.” Twombly, 550 U.S. at 564. The finding Supreme Court was explicit in that the Twombly complaint did not contain “any independent allegation of actual agreement among the ILECs.” Id. As to the district court, it erred by applying a summaryjudgment standard to SawStop’s group boycott claim and by confusing “plausibility” with “probability.” Again, because the complaint conjunction pleads parallel conduct 43 in with “circumstance[s] pointing toward a meeting of the minds,” Twombly, 550 U.S. at 557, SawStop has adequately alleged the agreement needed to support a Sherman Act § 1 conspiracy. course, it remains to be seen whether SawStop has Of also adequately alleged any requisite harm to the market. Our decision should not be mistaken for an endorsement of the ultimate merits of SawStop’s case. At this point, SawStop’s prospects for success are largely irrelevant, as “[a] lawsuit need not be meritorious to proceed past the motion-to-dismiss stage.” Ringgold-Lockhart v. Cnty. of Los Angeles, 761 F.3d 1057, 1066 (9th Cir. 2014). In fact, “a well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those facts is improbable, and that a recovery is very remote and unlikely.” Twombly, 550 U.S. at 556; accord Cardigan Mountain Sch. v. N.H. Ins. Co., 787 F.3d 82, 89 (1st Cir. 2015); N.J. Carpenters Health Fund v. Royal Bank of Scotland Grp., PLC, 709 F.3d 109, 125 (2d Cir. 2013); cf. Iqbal, 556 U.S. at 681 (“[W]e do not reject these bald allegations on the ground that they are unrealistic or nonsensical.”). complaint mistakenly because of “collapse some initial discovery, skepticism summary into the pleading stages of a case.” United States, 90 Fed. Cl. 51, 71 (2009). 44 To dismiss SawStop’s would judgment[,] and be to trial Petro-Hunt, L.L.C. v. Our decision also is not meant to afford SawStop a license for unlimited discovery. Like the dissent, we are well aware of the substantial cost that discovery in an antitrust case can impose, Twombly, 550 U.S. at 558-59, and recognize that the cost largely falls on the defendants. When not appropriately managed, that cost can have an extortionate effect, compelling some defendants to enter early settlements even in meritless suits. But we are neither the Advisory Committee on the Rules of Civil Procedure, nor the Supreme Court, nor Congress. We must take the rules as we find them. District courts possess a number of tools -- including limitations on discovery or consideration of a timely motion for summary judgment -- to combat any sort of predatory discovery. See Federal § 30.1 Judicial (4th litigation ed. Center, 2004) requires Manual (“Effective identifying, for Complex management clarifying, Litigation of antitrust and narrowing pivotal factual and legal issues as soon as practicable[.]”). Although tools like these do not permit us to give the benefit of the doubt to groundless claims, Twombly, 550 U.S. at 559, they confirm that our antitrust jurisprudence cannot be driven solely by fears litigation. will and about the expense of modern antitrust We have faith that district courts possess both the the ability to make 45 good use of available case- management mechanisms, employing them as needed to preserve a level playing field -- particularly in antitrust cases. 3 VI. Standard-Setting Conspiracies In addition to its group-boycott claim, SawStop alleges two separate but related conspiracies concerning private standardsetting -- the standard-rejection conspiracy and the contrivedstandards conspriacy. influence over UL to Industry particpants allegedly used their prevent the private adopting AIMT as a required safety device. organization from The defendants then purportedly encouraged UL to adopt other standards that imposed needless costs on SawStop and insulated the defendants from liability. We find that the complaint does not plausibly establish either conspiracy. contrived-standards Although conspiracies the are standard-rejection separately alleged, and they fail for the same fundamental reason: the facts alleged imply nothing beyond ordinary participation in lawful standard-setting processes. Thus, in contrast 3 to its group-boycott claim, Many of the same allegations that carry SawStop’s complaint past a motion to dismiss –- the “who, what, when, and where” –- may substantially focus the discovery in a way that was not possible in Twombly. See id. at 560 n.6 (noting the difficulty and expense of discovery directed toward “some illegal agreement” “between unspecific persons” “at some point over seven years.”). 46 SawStop’s standards-focused conspiracies fail to allege the “more” necessary to raise an inference of agreement. A. Standard-setting organizations organizations whose specifications to are ensure that membership develop participants voluntary “technical products from different manufacturers are compatible with each other,” address certain threshold safety concerns, or serve other beneficial functions. Microsoft Corp. v. Motorola, Inc., 696 F.3d 872, 875 (9th Cir. 2012). These organizations have enjoyed a rather complicated relationship with associations often competition and antitrust have [] law. “[M]embers economic the product incentives standards of to such restrain set by such associations have a serious potential for anticompetitive harm.” Allied Tube & Conduit Corp. v. Indian Head, Inc., 486 U.S. 492, 500 (1998); see also Soc’y of Mech. Eng’rs v. Hydrolevel Corp., 456 U.S. setting 556, 571 (1982). associations antitrust scrutiny.” Still, procompetitive such have a result, traditionally “private been standard- objects of Allied Tube, 486 U.S. at 500. ventures effects” interoperability,” As by generating “incentives to innovate.” can also encouraging “network have “decidedly “greater effects,” and product building Princo Corp. v. Int’l Trade Comm’n, 616 F.3d 1318, 1335 (Fed. Cir. 2010); accord Lotes Co., Ltd. v. 47 Hon Hai Precision Indus. Co., 753 F.3d 395, 400 (2d Cir. 2014); Broadcom Corp. v. Qualcomm Inc., 501 F.3d 297, 308 (3d Cir. 2007). “As a result, one can hardly infer intent to exclude from rule making alone[.] anticompetitive . . . Antitrust must therefore seek out the exceptional case, where rule making is used to facilitate collusion or the exclusion of rivals whose competitiveness makers.” or innovation threatens the relevant decision Areeda & Hovenkamp, supra, § 22.06b. Courts have found standard-setting organizations and their members to have violated the antitrust laws in some cases, but those cases are relatively few and far between. Of most relevance here, “an entity may be prosecuted for an antitrust violation setting on the basis body.” of improper Coalition for coercion ICANN of a standards- Transparency, VeriSign, Inc., 611 F.3d 495, 506 (9th Cir. 2010). is the oft-cited example of that concept. Inc. v. Allied Tube In that case, the defendant deliberately packed a standard-setting panel with paid supporters who then banned a competing product. 486 U.S. at 496. example. Allied Tube, Coalition for ICANN Transparency is another There, the Ninth Circuit found potential antitrust liability when a powerful corporation allegedly used vexatious litigation organization and financial into pressure providing to advantages coerce to a that Coalition for ICANN Transparency, 611 F.3d at 501, 506. 48 standards defendant. The common thread in the few cases finding liability in the private standard-setting context is unique, external applied to achieve an anti-competitive end. pressure “[T]he principal concern has been the use of standards setting as a predatory device . . . ; normally there is a showing that the standard was deliberately sometimes influence, distorted through in foreclosure.” by lies, addition competitors bribes, to or a of the other further injured improper showing party, forms of of market DM Research, Inc. v. Coll. of Am. Pathologists, 170 F.3d 53, 57-58 (1st Cir. 1999). In other words, a plaintiff must ordinarily show that the standard-setting activity had a market-closing effect that was committed “through the use of unfair, or improper practices or procedures.” Clamp-All Corp. v. Cast Iron Soil Pipe Inst., 851 F.2d 478, 488 (1st Cir. 1998) (Breyer, J.). In the usual case, neither the standard-setting organization nor its participants will run afoul of antitrust law when they standards. use It ordinary is processes “axiomatic to that adopt a unexceptional standard setting organization must exclude some products, and such exclusions are not themselves antitrust violations.” Golden Bridge Tech., Inc. v. Motorola, Inc., 547 F.3d 266, 273 (5th Cir. 2008); see also Gtr. Rockford Energy & Tech. Corp., 998 F.2d at 396 (“The failure of a private, standard-setting body to certify a product 49 is not, by itself, a violation of § 1.”); Plant Oil Powered Diesel Fuel Sys., Inc. v. ExxonMobil Corp., 801 F. Supp. 2d 1163, 1193 (D.N.M. 2011) (holding that the plaintiff did not plausibly allege an antitrust conspiracy based on the defendant’s mere opposition to a particular standard). “To hold otherwise functions of such 547 at 273. would stifle organizations[.]” the Golden beneficial Bridge Tech., F.3d Similarly, it is not problematic, standing alone, for market participants to try to influence the standard-setting process through the organization’s ordinary procedures. See Clamp-All Corp., 851 F.2d at 488. B. SawStop thwarted, or never alleges that the external misconduct. that UL’s defendants normal engaged procedures in some form were of Instead, it asks us to infer malfeasance because some of the defendants’ representative served on the relevant authority standard-setting drawing found none. that panel. sort of But naked SawStop inference, provides and we no have “Certifiers may reasonably believe that they can do their job properly (a job that benefits consumers) only if all interested parties are allowed present their views, and vote.” to present proposals, frankly Id. SawStop’s complaint takes issue with UL’s actions largely because the organization is alleged to have erred in rejecting 50 SawStop’s proposed standard and selecting another one. The unstated assumption of this argument is that, lacking a valid “technical” justification, the only remaining explanation must be an antirust conspiracy. Even if UL’s ultimate decision can be called “wrong,” that mistake alone does not indicate concerted action to manipulate the result. simple “[S]tandard-setting error creates further indication “merely a ploy producers.” no that to bodies reason the for sometimes liability organization’s obscure a conspiracy err,” without but some activities against are competing Consol. Metal Prods., Inc. v. Am. Petroleum Inst., 846 F.2d 284, 294 (5th Cir. 1988); see also DM Research, 170 F.3d at 57 (“Merely to say that the standards are disputable or have some market effects has not generally been enough to condemn them as ‘unreasonable’ under the Sherman Act.”); Moore v. Boating Indus. Ass’ns, 819 F.2d 693, 711-13 (7th Cir. 1987) (finding no evidence of an actionable conspiracy despite the jury’s finding that the association was “unreasonable and arbitrary” in setting standards); cf. Brookins v. Int’l Motor Contest Ass’n, 219 F.3d 849, 854 (8th Cir. 2000) (“So long as IMCA made game-defining rules decisions based upon its purposes as a sports concerned organization, with the an antitrust rationality or court need fairness of not be those decisions.”); M & H Tire Co. v. Hoosier Racing Tire Corp., 733 51 F.2d 973, 984 (1st Cir. 1984) (“We discern no duty to provide an absolutely objective or scientific basis for decision.”). “[A]ntitrust is not concerned with whether a standard might be unreasonable as an abstract proposition.” Areeda & Hovenkamp, supra, § 22.06c. If antitrust suits were permitted to go forward based solely on an allegation that the standard-setting body erred, courts would be cast into the role of standard-setting appellate bodies. Consol. Metal Prods., 846 F.2d at 297. Any disagreement big or small with the ultimate adoption of a safety standard would, to follow SawStop’s reasoning, create potential antitrust liability. the federal courts, second-guessing would industry standards.” Beyond its “Not only would this tax the abilities of but fear of discourage treble the damages and establishment judicial of useful Id. error-based allegations, the complaint’s only assertions of concerted action are conclusory and non-specific: “a collective decision was made,” or the defendants “agreed to vote as a bloc,” or non-SawStop designs were a “smokescreen.” J.A. 96-97 ¶¶ 103, 105, 109. The complaint identifies no fact other than consistent votes against SawStop’s proposal (and for the other designs) to establish the alleged illegal agreements. That would be parallel conduct, consistent with legal behavior. 52 but such conduct is equally After all, even if SawStop is right that setting technical reasons organizations explanations remain. did decisions, not support other the standard- non-anticompetitive See, e.g., Golden Bridge Tech., 547 F.3d at 272-73 (“[T]he existence of an independent financial motive to [change the standard] might be an independent reason for each Appellee company to support [the change].”); Advanced Tech. Corp., Inc. v. Instron, Inc., 925 F. Supp. 2d 170, 179 (D. Mass. 2013) (dismissing a complaint where “[t]he crux of [the plaintiff’s] antitrust claim [wa]s simply that competitors in a market declined to support a standard that would promote another competitor’s technology”). Lastly, we note that SawStop does not allege the sort of anticompetitive objectives that are ordinarily seen in standardsetting cases. Usually, standard-setting cases are brought when products are effectively excluded from the market by adopted safety standards. Here, SawStop largely complains that it could not use the standard-setting process to impose its own product on everyone else. The anticompetitive harms of a “refusal to impose” are much harder to identify. Nothing that UL or the standards-setting groups did barred SawStop’s AIMT-equipped saws from the market, as SawStop’s entry into the competitive tablesaw market establishes. From all appearances, SawStop remains free to offer its saws with the UL seal of approval, along with its perceived market advantage of also offering AIMT on those 53 saws. And if UL’s newer standards generate some additional costs, those costs are common to each member of the industry who chooses to make a UL-compliant table saw. We see nothing anticompetitive or exclusionary in that. The district court thus did not err in granting the defendants’ motions to dismiss on the standard-setting claims. VII. For the reasons described above, the district court correctly dismissed the standard-setting claims as to all the defendants. group-boycott The district court also correctly dismissed the claims against Hitachi Koki Co., Ltd.; Makita Corporation; Chang Type Industrial Co., Ltd.; OWT Industries, Inc.; Pentair Water Group, Inc.; Stanley Black & Decker, Inc.; Delta Power Equipment, America, Inc. Inc.; and Techtronic Industries North However, the district court erred in dismissing the group-boycott claims against the remaining defendants. Therefore, the district court’s decision dismissing SawStop’s complaint is AFFIRMED IN PART, VACATED IN PART, AND REMANDED FOR PROCEEDINGS CONSISTENT WITH THIS OPINION. 54 WYNN, Circuit Judge, concurring: “Judges ought to remember that their office is jus dicere, and not jus dare—to interpret law, and not to make law, or give law.” Francis Bacon, “Essay LVI: Of Judicature,” Essays (1625), reported in Richard Whately, Bacon’s Essays With Annotations 511 (1857). Here, the judiciously well-reasoned majority opinion resists the temptation to move beyond our limited role and into the colorful realm of policy. Respectfully, the dissenting opinion strays beyond our limited review here and encroaches on policy issues best left to other branches of government. I. First, rather than confront the issues actually in play, the dissenting opinion dresses up points of agreement as dire rifts. The dissent asserts, for example, that plaintiffs “seek to achieve through litigation a monopoly for their product” and claims that the majority opinion “turns a blind “anticompetitive impulse[s]” driving SawStop’s claims. 70, 96. eye” to Post at The dissenting opinion claims that the majority opinion “ignores all [the benefits of ventures such as standards setters and trade groups] in its rush to flatten pleading standards, make communications isolationist ends.” perilous, and Id. at 97. consign antitrust law to Thus, the dissent takes the policy view that today’s opinion will doom “American companies” to “competitive disadvantage at the very time global commercial 55 interactions are becoming more commonplace.” Id. Nonsense (beyond the obvious problem that a competitive disadvantage is meaningful only in the context of a comparison with America’s global competitors, many of whom also have antitrust laws). The majority “[j]oint opinion ventures, association fully accords standard-setting meetings may allow with the organizations, view individuals and of that trade different specialties to benefit from each other’s expertise. These fora may prove invaluable for efficient development.” Post at 96. states, ventures” “such effects by effective product As the majority opinion plainly can encouraging and have greater effects, and “decidedly product procompetitive interoperability, generating network building incentives to innovate.” Ante at 47 (quotation marks and citations omitted). The majority opinion in no uncertain terms affirms the district court’s dismissal of SawStop’s standards-setting-related claims— a crucial fact relegated to a dissenting footnote. Second, rather than address SawStop’s complaint as it is written, the dissenting opinion employs verbiage like “commercial interactions” to revise the complaint so as to omit the allegations of a secret agreement to refuse to deal. sounding in majority “drape[s] garb” policy, because the the dissenting innocent complaint opinion commercial “hardly 56 asserts activity bespeaks in a Again that the sinister collective agreement not to deal.” Post at 67, 73. Thus, the dissenting opinion editorializes that due to the majority opinion, “HOLDING OR ATTENDING [A] TRADE ASSOCIATION MEETING WILL INCREASE YOUR EXPOSURE TO ANTITRUST SUITS.” Id. at 68 (emphasis added). Yet, when read with a judicious eye, SawStop’s complaint clearly alleges that Defendants entered into a secret agreement to refuse to deal at a trade association meeting—not just that Defendants “held” or “attended” such meetings. Indeed, the complaint plainly bespeaks a collective agreement not to deal. Specifically, the complaint alleges, among other things: • “In conjunction with the [Power Tool Institute] annual meeting, a separate meeting of representatives of table saw manufacturers was held. Attendees at the meeting included, but were not necessarily limited to, Domeny (on behalf of SBTC and Bosch), Peot (on behalf of Ryobi, TIC and affiliates), Stanley Rodrigues (for Makita), Ray Mayginnes (for Emerson), David V. Keller (of Porter-Cable, who also spoke for Pentair and DICM), Steven Karaga (for Hitachi), and representatives of B&D and Milwaukee Electric. Mr. Domeny, at the time, was the Chair of the [Power Tool Institute]’s Product Liability Committee, and chaired the meeting.” J.A. 89 ¶ 79 (emphasis added). • “At the meeting, Mr. Domeny and the other participants expressed concerns that if one manufacturer adopted SawStop Technology, then all manufacturers would be subject to greater liability in future product liability cases. Mr. Peot shared this concern. [Power Tool Institute]’s table saw manufacturers determined at that meeting that they would decide how to respond, as an industry, to the SawStop Technology. A consensus was reached that (1) all should take a SawStop license and/or implement AIMT, or (2) none take it or otherwise implement AIMT; since if one or more took a license and/or offered a product with AIMT, the others would be more vulnerable to product 57 liability. It was also agreed that collective action would proceed only if all, or at least a substantial majority, of participants voted to participate. Members also discussed developing something like SawStop Technology, without having to pay a royalty to Dr. Gass. The consensus reached by the attendees, with no contrary views articulated, was that industry members would collectively agree not to purchase technology licenses from Plaintiffs or otherwise implement AIMT.” J.A. 89-90 ¶ 80 (emphasis added and citations omitted). • “The consensus reached at the meeting was based on a calculated economic determination that the manufacturers would, collectively, fare better by collectively agreeing to marginalize SawStop and AIMT, than by allowing the marketplace to determine whether any manufacturers did business with SawStop or otherwise implemented AIMT. The Defendants believed that bringing AIMT into the mass market would have catastrophic product liability consequences for them. Purchasers of their existing and prior inventories of table saws (and, perhaps, other products) would point to the viability of AIMT as evidence that other products were inherently unsafe because they lacked AIMT. Defendants believed that, in the short term, if SawStop was unable to obtain a major manufacturing partner, it would not be able to produce or market a meaningful quantity of saws with its AIMT – this way, the major manufacturers could continue to earn current profit margins on their existing inferior product lines without paying royalties to Plaintiffs, and it would remain (for the time being) at least plausible for the major manufacturers to contend, in defending product liability lawsuits, that AIMT was not viable. Thus, Defendants’ business calculation was that they, collectively, would fare better by marginalizing SawStop and AIMT, than by working with SawStop and/or otherwise adopting AIMT.” J.A. 90 ¶ 81. • “It was agreed at the meeting and thereafter that all discussions concerning a collaborative response to SawStop would be confidential and concealed from persons other than [Power Tool Institute] members who manufactured table saws. It was further agreed that, going forward, information relevant to SawStop and table saw product liability defense issues would only 58 be shared among those industry participants who affirmatively agreed to act collectively in response to SawStop.” J.A. 90 ¶ 82 (emphasis added). • “At, or within a period of months following the October 2001 meeting, each of Defendants Bosch, Ryobi, Makita, Hitachi, Pentair, Emerson and Milwaukee Electric, and entities affiliated with them, had agreed to enter into a boycott (the ‘AIMT Boycott’) of SawStop’s intellectual property, by collectively (1) refusing to license SawStop technology, and (2) agreeing not to otherwise implement AIMT.” J.A. 90-91 ¶ 83 (emphasis added). • “During this time frame, in which [Power Tool Institute]’s table saw manufacturers voted to respond collectively to SawStop Technology, those Defendants not yet in license negotiations with SawStop refrained from requesting a license, and the Defendants who were already in negotiations found ways to abort them as opportunities arose.” J.A. 91 ¶ 85 (emphasis added). In other words, SawStop’s complaint alleges a specific meeting in which Defendants agreed to refuse to deal with SawStop and to keep that pact a secret. Around the same time, Defendants refrained from seeking SawStop’s technology or, if in licensing negotiations dissenting with SawStop, opinion’s found dismissive ways to abort them. characterization of The these detailed allegations as mere “conclusory assertions,” post at 71, thus plainly misses the mark. On the contrary, SawStop’s allegations squarely conform to what we require Sherman Act § 1 plaintiffs to plead. “To establish a § 1 antitrust violation, a plaintiff must prove, and therefore plead, (1) a contract, combination, or conspiracy; (2) that imposed an unreasonable restraint of trade.” 59 Robertson v. Sea Pines Real Estate Companies, Inc., 679 F.3d 278, 284 (4th Cir. 2012) omitted). (Wilkinson, Further, J.) “Iqbal (quotation and marks Twombly do and not plaintiff to prove his case in the complaint.” citation require a Id. at 291. Instead, the complaint “need only allege facts sufficient to state elements of citations omitted). the claim.” Id. (quotation marks and And at the Rule 12(b)(6) stage, which is where we are, the complaint is to be “construed liberally so as to do substantial justice.” Pub. Employees’ Ret. Ass’n of Colo. v. Deloitte & Touche LLP, 551 F.3d 305, 311 (4th Cir. 2009) (Wilkinson, J.) (quotation marks and citation omitted). In its revisionist account of SawStop’s allegations, the dissenting opinion essentially turns the Rule 12(b)(6) standard on its head. “A motion to dismiss under Rule 12(b)(6) tests the sufficiency of a complaint; importantly, it does not resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses.” Republican Party of N.C. v. Martin, 980 F.2d 943, 952 (4th Cir. 1992). Instead, “a well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of the facts alleged is recovery is very remote and unlikely.” improbable and that a Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 556 (2007) (quotation marks and citation omitted). 60 Despite our crystal-clear mandate in reviewing this Rule 12(b)(6) dismissal, the dissenting opinion nevertheless attacks the complaint in a light least favorable to SawStop, viewing the facts and reasonable inferences in the light most favorable to Defendants. For example, the dissenting opinion opines that “[i]gnoring the many practical reasons for declining [SawStop]’s offers, the majority hones in on the fear of product liability as the key motivation behind defendants’ alleged boycott.” at 91. Yet, products the majority liability alleges it. opinion rightly reasoning—because See, e.g., J.A. 89-91. focuses SawStop on Post the specifically We are thus not at liberty to swap that pled reasoning out for other “practical reasons” we might make up out of whole cloth. A further example: The dissenting opinion asserts that “it was consistent with each manufacturer’s best interest to reject an expensive, unproven, undeveloped, and possibly unsafe technology. Each defendant could easily have arrived at this business decision on its own.” Post at 90. decision But SawStop alleges that they didn’t arrive at that independently. Instead, the complaint specifically alleges that Defendants expressly agreed to refuse to deal and to keep that agreement secret. See, e.g., J.A. 89-91. Ignoring such specific allegations to SawStop’s detriment is nothing shy of an all-out perversion of the generous lens through which we 61 must view the complaint. Pub. Employees’ Ret. Ass’n of Colo., 551 F.3d at 311. Finally, the dissenting opinion focuses on its own policy preferences, thereby abandoning this Court’s limited role—which is simply to assess whether SawStop plausibly alleges the elements of its Section 1 claim. Because the majority opinion sticks steers to things its limited like role, different it clear “approach[es]” of a in considering “globalized marketplace,” whether the word “‘conspiracy’ is bound to stoke paranoia,” or the appropriate amount of “lag time” in “product development.” Post at 66, 79, 91. The dissenting opinion sees itself in no way so bound and thus insists, for example, that “[h]ere, plaintiffs are the ones acting anti-competitively.” Post at 70. It is simply not our job in reviewing a Rule 12(b)(6) motion to assess which party’s conduct we deem more pro-competitive. In refusing to stick to our limited role, the dissenting opinion engages in breathtaking judicial activism. “As the Supreme Court has repeatedly emphasized, Congress is the policymaker—not the courts.” Corp., 361 F.3d 257, 269 (4th Cir. 2004). . . . In re Sunterra See also, e.g., Hartford Underwriters Ins. Co. v. Union Planters Bank, N.A., 530 U.S. 1, 13-14 (2000) (“Achieving a better policy outcome . . . is a task for Congress, not the 62 courts.”). It is thus inappropriate to suggest, for example, that, as a matter of law, a boycott conspiracy may not be motivated by liability concerns. Congress can pencil such categorical limitations into the Sherman Act; we cannot. The dissenting opinion embarks on yet another odyssey into policy, as well as assumptions untethered to reality, much less the complaint at issue here, when it asserts that “[t]hese days secrets are harder to keep. A secret is something that is held by only one. Or maybe two. But twenty-two? Managers everywhere must be relieved to learn from my concurring colleague that you can let twenty-two people in on a secret and have nothing leak out.” 12(b)(6) Post at 87. purposes, we Yet in reviewing may not peer a into complaint a crystal for ball Rule and decide how many people we personally believe can keep a secret and kick complaints out of court on such a basis. Moreover, to the extent the dissenting opinion suggests that a large, multi-firm conspiracy by definition cannot exist, it is simply uninformed. Large antitrust conspiracies have not only existed but have been caught—a perfect example being the famous international vitamin scandal of the 1990s—which involved 21 firms engaged in a conspiracy that lasted over a decade: From 1988 to 1992 21 chemical manufacturers headquartered in seven nations joined . . . vitamins cartels . . . . Sales by these cartels exceeded $30 billion . . . . The pharmaceutical manufacturers involved became virtually addicted to the infusion of 63 monopoly profits, giddy financial results that prompted the conspirators to continue their clandestine activities for up to 15 years. These illegal activities persisted in the face of [among other things] several public prosecutions of parallel conspiracies [and] multiple antitrust investigations . . . . The conspirators simply burrowed deeper and developed more elaborate methods of subterfuge. John M. Connor, The Great Global Vitamins Cartels 8, available at http://ssrn.com/abstract=885968. In other words, large, multi-player conspiracies involving elaborate ruses can indeed exist as a matter of law and fact. And here, SawStop alleges that one did, and that it undertook a group boycott marketplace. to freeze SawStop technology out of the In refusing to accept those allegations, as we must at this stage, the dissenting opinion plainly oversteps its bounds. II. In sum, courts exist to resolve disputes, not to pervert procedural rules into swords with which to fight policy battles. And today, we do not confront whether SawStop should ultimately succeed on its boycott claim. Instead, we confront only whether, when viewing SawStop’s complaint with an unjaundiced eye and using the proper standard, we can say that it has made allegations sufficient to withstand failure to state such a claim. a It has. 64 motion to dismiss for Accordingly, with all due respect for the dissenting view, I join in the judicious and well-reasoned majority opinion. 65 WILKINSON, Circuit Judge, concurring in part and dissenting in part: The majority’s view of modern commerce is unfortunate. It takes an isolationist approach in which each business must all but lock itself in semi-solitary or risk the taint of antitrust claims. have Whatever had, it interconnected, validity is the profoundly necessarily isolationist injurious approach in collaborative, an may once increasingly and globalized marketplace. The majority rightly observes that agreement is the crux of an antitrust claim, but it has made mere communication the touchstone of liability. Ante at 29. The majority rejects this as a statement of policy, ante at 45, 56, but it is hardly that. It is rather a statement of consequences that flow from the majority’s refusal to follow the Supreme Court’s decision in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), which established pleading requirements for a Sherman Act Section 1 complaint. The Supreme Court lacks the institutional resources to ensure full compliance with its decisions. Among other things, it has room on its docket for a limited number of cases, and the Twombly decisions from the lower courts may be routinely pitched as pertaining to no more than the particulars of an individual complaint. It just may be, however, that the institutional limitations at the Court impart institutional obligations on the courts of 66 appeals to approach. respect In in this fullest measure obligation, I the believe highest the Court’s majority has defaulted. I shall show throughout how it has failed to follow Twombly at every turn. I would suggest, most respectfully, that the majority has committed basic conceptual errors and that the consequences of those errors, which the majority prefers not to face and to regrettable, dismiss however, as is policy, the are treatment regrettable. of a Supreme Most Court decision, even a controversial one, at the hands of this court. Among Twombly’s insights was that markets, every bit as much as conspiracies, play a significant role in governing commercial conduct. See 550 U.S. at 557. Twombly counsels that we not leap to pejorative explanations when legitimate business considerations are more likely at play. Id. at 554. The fact that Sherman Act conspiracies in restraint of trade do assuredly continue to exist does not mean that we should rush too quickly to drape innocent commercial activity in sinister garb. The majority, fashions a Whenever routine however, template for business adopts the the reverse frustrated decisions don’t sequence. market go It participant: your way, for whatever reason, simply claim an industry conspiracy under the Sherman casual Act and the presumptions courts of will antitrust infer malfeasance. infractions can But only such chill communications among companies, which in turn may hinder product 67 development, innovative joint ventures, and useful trade association conclaves. WARNING: HOLDING OR ATTENDING THIS TRADE ASSOCIATION MEETING WILL INCREASE YOUR EXPOSURE TO ANTITRUST the majority be parallel SUITS. The chilling considers effect independent is most market-driven acute when behavior to conduct warranting antitrust scrutiny. Parallel industry conduct is, of course, the lynchpin of many a Sherman Act Section 1 claim. The adoption majority’s of an cardinal ends-based conceptual approach to error parallel lies in conduct the in a circumstantial antitrust case. See infra Part II.A. The end of course is the fact that a plaintiff’s product was not adopted. But the products most likely to meet the end of rejection are those of the least utility or those that would cause the most expense. reward The the possibility majority least of thus uses marketable litigation its ends-based products success. with WARNING: analysis the FAILURE to greatest TO ADOPT THIS PRODUCT FOR WHATEVER REASON WILL INCREASE YOUR EXPOSURE TO ANTITRUST SUITS. This treatment of ends and means in antitrust litigation undermines the Twombly decision. An analysis of means rather than ends is the most sensitive tool we possess to measure the plausibility of a complaint. See Twombly, 550 U.S. 544. And here, the means by which the so-called conspiracy was carried 68 out paint a clear picture of non-parallel conduct. The complaint is the best evidence of that. After SD3 introduced its product, certain defendants entered into licensing negotiations that continued well after the alleged group boycott agreement. Some of them offered to license the technology, again after the supposed agreement, and were rebuffed by SD3. Other negotiations yielded no offers, with one defendant leaving the table saw industry altogether. The vast majority of named defendants are not even mentioned in SD3’s account of the supposedly “parallel” behavior. Their negotiation posture, which would seem well within plaintiffs’ knowledge, is nowhere set forth or detailed. While the successfully disparate majority alleged actions highlights parallel such as cases conduct, these. If in none which of plaintiffs them features defendants’ behavior qualifies as parallel conduct, then plainly divergent actions among competitors in any field will now give rise to antitrust claims. This is but part and parcel of the majority’s attempt to impose a presumption of guilt on antitrust defendants who now must bear the burden of proving a negative when the burden properly lies with the party bringing the claim. It is no accident that Twombly itself was an antitrust decision. For what we confront in antitrust law is a perfect storm of treble damages, large discovery costs, and relaxed pleading standards. It is the three factors in combination that 69 pose a threat to legitimate marketplace behavior. The Supreme Court in Twombly sought to calm the waters by addressing the latter two. The majority, however, adds to the turbulence by sanctioning complaints that would in all likelihood have failed even under pre-Twombly standards. Here, plaintiffs are the ones acting anti-competitively. They seek to achieve through litigation a monopoly for their product that neither the table saw market nor contractual negotiations would yield. The result, as noted, is that marketplace failures will increasingly lead to litigation success. And that is only the beginning of the difficulty. The majority appears to believe that the full course of discovery is the proper mechanism for winnowing out meritless claims. In many fields, that observation would be correct. The bone of contention in federal civil litigation is most frequently over summary judgment versus trial. In antitrust law, however, the flashpoint is often over motions to dismiss versus summary judgment. For the Supreme Court has clearly recognized that in the area of antitrust it is the threat of steep litigation costs that produces deleterious consequences in and of itself, no matter who the victor in the antitrust marathon may ultimately prove to be. As Twombly emphasized, discovery costs have escalated dramatically since the adoption of the Federal Rules. Twombly, 70 550 U.S. at 558-60; see Brian T. Fitzpatrick, Twombly and Iqbal Reconsidered, Multiplying 87 Notre electronic Dame L. and paper Rev. 1621, records, 1638 (2012). combined with increased regulatory obligations, have caused discovery costs to mount even further since the issuance of Twombly itself. Before we impose these climbing costs on companies, there must exist confidence that the claims leveled against them allege actual facts that make conspiracy and other illicit intentions plausible. SD3 fails to clear this bar, but still the majority just piles it on. I. A. The majority’s approach to Twombly tells an old intermediate appellate story. The majority alights on a minor motif of that Supreme Court decision, while leaving its main point wholly unobserved. The Court made clear in Twombly, and reiterated in Iqbal, that a plaintiff must allege enough factual content in the complaint to render his legal claim for relief “plausible on its face” in order to survive a motion to dismiss under Rule 12(b)(6). Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 570). Plausibility requires “more than a sheer possibility that a defendant acted unlawfully.” Id. (citation omitted). SD3’s complaint cannot clear this hurdle. Its conclusory assertions that defendants agreed to an industry71 wide “boycott” of its product are fully consistent with, and most plausibly reflect, independent and legitimate business decisions. Put simply, the majority proceeds as if Twombly were at most persuasive authority, and not very persuasive authority at that. Twombly is particularly important here, for the Supreme Court in that case addressed the meaning of plausibility in the context of a conspiracy allegation based on descriptions of parallel conduct. The Court instructed that “when allegations of parallel conduct are set out in order to make a § 1 claim, they must be placed in a context that raises a suggestion of a preceding agreement, not merely parallel conduct that could just as well be independent action.” Twombly, 550 U.S. at 557. “Even ‘conscious parallelism,’ concentrated market a common that reaction recognize of their ‘firms shared in a economic interests and their interdependence with respect to price and output decisions’ is ‘not in itself unlawful.’” Id. at 553-54 (citations companies natural omitted). had agreed anyway.” Id. Nor should among at a court themselves 566. Thus, to a infer do “that what plaintiff the was only fails to adequately plead his claim that a defendant unlawfully conspired under Section explanation” 1 for if there exists the defendant’s 72 an “obvious conduct that alternative renders the prohibited explanation implausible. Iqbal, 556 U.S. at 682 (citation omitted); Twombly, 550 U.S. at 567. This could not be directives, SD3’s plausibility more requirement. clear. allegations The In fall light well complaint of short hardly Twombly’s of the bespeaks a collective agreement not to deal. Instead, it most plausibly reflects typical market forces at work and rational business choices being made -- the kind of things that happen every day. Why did the manufacturers not adopt SD3’s product? Perhaps they realized the technology was too nascent to license, in short unproven. Perhaps it would not have been cost effective for the manufacturers product to actually incorporate increased it. the Or risk perhaps of SD3’s injury to incipient consumers. These varied market explanations may well have been different for different companies. They reflect business decisions of the most common alternative and ordinary explanations” character. and have They not are been “obvious sufficiently rebutted by any valid assertions of a preceding agreement to collude. All compatible the with, behavior but described indeed was by more SD3 likely “was not explained only by, lawful, unchoreographed free-market behavior.” Iqbal, 556 U.S. at 680 (quoting Twombly, 550 U.S. at 567). In the majority’s eyes, however, the above discussion is all wasted effort, merely “practical 73 reasons” and “factual suppositions” that must not be considered. Ante at 35, 61. Instead, we should take plaintiffs’ allegations at face value and call it a day. It is certainly true that we assume the truth of factual allegations at the motion-to-dismiss stage. Twombly, 550 U.S. at plaintiffs’ 572 claims (citations as true, omitted). however, Even the after court accepting must further analyze whether those allegations are “plausible” under Twombly. Id. at 556. The majority refuses to undertake this second, more analytic step. My concurring colleague simply wishes it away. There is a time warp here, a nostalgia for the old pleading ways and days. Those earlier standards were easier on us, I admit. But our nostalgia now flies in the face of a controlling Supreme Court decision. SD3’s boycott claim is not “plausible” for the same reasons Twombly’s was not plausible. SD3’s boycott claim is hardly distinguishable from the very allegations that the Supreme Court rejected in Twombly. According to the complaint in that case, defendants -- who, like the defendants here, owned a significant share of the market -- agreed to “engage in parallel conduct” and “prevent competitive entry.” Twombly, 550 U.S. at 550-51, 550 n.1. The complaint charged that the defendants’ “‘compelling common motivation’ to thwart plaintiffs’ competitive efforts naturally led them to form a conspiracy.” Id. at 551. If these allegations sound familiar, it is because they almost perfectly 74 parrot the claims made by SD3 in its complaint. SD3 argued that the defendants -- at least the few named defendants it actually bothered to discuss -- “agreed among themselves to collectively refuse” SD3’s licensing offers “based on a calculated economic determination” that they would fare better in the marketplace if SD3 were excluded. J.A. 71, 90. If Twombly’s complaint could not pass as well-pleaded, then SD3’s should not fare any better. The majority claims that the complaint in Twombly “rested solely on descriptions independent allegation of of parallel actual conduct, and agreement.” not on any Ante at 43 (citation and internal quotation marks omitted). This is simply incorrect. The majority overlooks the actual language in the Twombly complaint: “Defendants had compelling common motivations to include in their unlawful horizontal agreement an agreement that each of them would engage in a course of concerted conduct calculated to prevent effective competition from [plaintiffs] . . . .” Amended Complaint at ¶ 50, Twombly v. Bell Atl. Corp., 313 F. Supp. 2d 174 (S.D.N.Y. 2003); see also id. at ¶ 51 (noting that defendants “have agreed not to compete with one another”). To be sure, after Twombly complaints have sought length in the hope that courts would mistake such length for substance. But the substance here is thin gruel. The complaint’s allegation of an agreement is weaker than in Twombly, boiling down to a contention that the 75 defendants met at a trade association meeting followed by the inconvenient fact for the majority that non-parallel conduct ensued. In fact, the Twombly complaint was much stronger than the one in this case and it went much further. That complaint relied on evidence that defendants refused to provide plaintiffs with network connections and services of equal quality, that they billed plaintiffs’ customers in a manner to ruin plaintiffs’ customer relations, that they refused plaintiffs access to certain facilities and delayed the provision of network elements after plaintiffs Twombly, 313 plaintiffs’ each F. invested Supp. conspiracy defendant plaintiffs,” plaintiffs had “had and out, at tens 177-78. of Despite allegations, reason each to the want defendant regardless of billions “would the defendants. Twombly, 550 U.S. at 566. this Court to of support maintained avoid dealing attempt actions dollars. of to the for that with keep other” Defendants’ actions in Twombly, like defendants’ actions in this case, were “just as much in line with a wide swath of rational and competitive business strategy unilaterally prompted by common perceptions of the market.” Id. at 554 (citation omitted). Consequently, plaintiffs’ conspiracy claims in both cases “stop short of the line between possibility and plausibility.” Id. at 557 (citation omitted). If only the plaintiffs in Twombly could have called upon this court to refashion their complaint. 76 B. But, complaint mistakenly insists because the of ‘collapse majority, some initial discovery, “[t]o dismiss skepticism summary SawStop’s would judgment[,] be and to trial into the pleading stages of a case.’ . . . District courts possess a number of tools . . . to combat any sort of predatory discovery.” Ante at 45-46 (citation omitted). That approach is astonishing, for it is precisely what Twombly warned against: “It is no answer to say that a claim just shy of a plausible entitlement to relief can, if groundless, be weeded out early in the discovery process . . . given the common lament that the success of judicial supervision in checking discovery abuse has been on the modest side.” Twombly, 550 U.S. at 559 (citation omitted). The majority’s assurance that of course district courts can control discovery is the sort of appellate wand-waving that ignores every reality on the ground. Trial judges are busy; they must set priorities. Many understandably feel that time is better spent in trial or in dealing with dispositive motions to dismiss or for summary judgment than in wading into the big muddy of discovery disputes. There is the temptation, and it is again an understandable one, to say to the parties, “Folks, go work this out among yourselves.” The problem has become even more acute with the advent of e-discovery. Modern electronic 77 devices generate information. It and is record now a easier great and variety faster to and volume store of evidence, which in turn has spawned greater opportunities for discovery requests and conflict. Regulatory mandates from governments at every level add to the store of both paper and electronic files. All of this makes companies more and more vulnerable to openended discovery requests. The majority pays no more than lip service to what has become a serious problem. Its casualness stands in contrast to the gravity of the Twombly Court’s concern. To overlook this concern is to resurrect the dangers that Twombly sought to lay to rest. Conley v. Gibson was doubtless correct Twombly, when 550 decided. U.S. See 544. It 355 U.S. made 41 sense (1957), to abrogated skip through by the pleadings on the theory that discovery would somehow sort it all out. See id. at 47-48. But times have changed. Although the majority pooh-poohs “the expense of modern antitrust litigation,” ante at 46, it is altogether legitimate for the Supreme Court to take cognizance of the shifting interplay between causes of action (here Sherman Act Section 1 claims) and the Federal Rules (here those of pleading and discovery). Thus, the Court in Twombly sought to shield defendants from what it later described as the “heavy costs of litigation in terms of efficiency and expenditure of valuable time and resources” by 78 allocating the plausibility burden to those who allege unlawful conduct. Iqbal, 556 U.S. at 685. The Court understood what the majority does not: that an antitrust complaint provides a is often tantalizing too weapon tempting for to parties pass whose up. It business endeavors are going badly. The term “conspiracy” is bound to stoke paranoia, and to kindle an effort to pin on others the blame for business failures of one’s own. The treble damages awards of antitrust actions are a further temptation for floundering companies armed with the knowledge that defendants would rather especially Twombly, settle with 550 than the U.S. at face the attendant 558-59. prospect high Twombly of such litigation sought to damages, costs. reduce See these dangers in language of no moment to the majority: “It is only by taking care to require allegations that reach the level suggesting conspiracy that we can hope to avoid the potentially enormous expense of discovery . . . .” Id. at 559. So much for that hope: the majority just loads it on. II. A. With its inverted version of Twombly, the majority allows plaintiffs to contort normal marketplace behavior into a potential antitrust violation. Even by the majority’s diluted pleading standard, however, SD3’s group boycott claim fails as 79 its complaint plainly alleges non-parallel conduct. The majority bases its contrary conclusion on an expansive definition of parallel conduct focused solely on a perceived uniformity of ends without regard to dissimilarity of means. The majority observes: “The similar or uniform actions alleged are obvious: none of the defendants ultimately took a license or otherwise implemented SawStop’s technology.” Ante at 26-27. The defendants’ vastly “different courses of action” are seen as part of some grand scheme to conceal the underlying conspiracy. Ante at 28. By that logic, the majority would find parallel conduct as long as defendants all allegedly reached the same end -- not adopting a product -- regardless of how the dealings between plaintiffs and defendants proceeded or fell apart. Such an ends-based focus misses the entire point of Twombly, which is to determine whether allegedly anticompetitive conduct “stems from independent decision or from an agreement, tacit or express.” Twombly, 550 U.S. at 553 (citation omitted). If defendants act in parallel whenever they arrive at the same general end independent forces -- or but outcome, identical precisely the then parallel business conduct conduct decisions that will borne Twombly by embrace market excluded from antitrust liability. In distinguishing horizontal conspiracies from innocuous coincidences, the means matter. That competitors 80 travelled divergent paths to the same end reflects the absence, not the presence, of illicit coordination or agreement. Certainly, direct evidence of a collusive end would amount to a plausible Section 1 claim. See American Chiropractic Ass’n v. Trigon Healthcare, Inc., 367 F.3d 212, 226 (4th Cir. 2004) (“Direct evidence in antitrust cases is explicit and requires no inferences to establish the proposition or conclusion being asserted.”). By contrast, when plaintiffs rely on circumstantial evidence of conspiracy, as in Twombly and the case at hand, the ends-based approach carries an unacceptably high risk of finding parallel conduct independent in economic wildly disparate concerns. With behaviors its motivated over-inclusive by sweep, the majority erodes the long-recognized right of one party not to deal with another. Monsanto Co. v. Spray-Rite Service Corp., 465 U.S. 752, 761 (1984). As long as competitors respond in the same way to an unappealing offer or product, a business’s refusal to deal now becomes part of parallel conduct potentially triggering antitrust liability. The SawStop assumption was the running only throughout product anyone the complaint could have is that thought of adopting. No other business decision could have been reasonable. Therefore, defendants’ rejection of SawStop must have been part of a group boycott. Case closed. We are not told exactly why SD3’s product was demonstrably 81 superior to other competing products in terms of cost effectiveness and safety, such that only one business decision with respect to it was conceivable. The naked assumption of its irresistible appeal and inevitable adoption operates in a comparative vacuum. But defendants faced comparative decisions. They had to weigh options. The majority’s ready acceptance of SD3’s unsupported superiority assumption is part of the fallacy of its ends-based perspective, namely that any ultimate refusal to adopt is nothing more than one more instance of parallel behavior. A means-based analysis, one that focuses on the means by which the so-called conspiracy was carried out, is the most sensitive gauge of parallel conduct and complaint plausibility. The majority contends the dissent would find parallel conduct “only when defendants move in relative lockstep” or “by substantially identical means.” Ante at 30. Not so. A focus on means-based analysis comes nowhere close to requiring identical means. As circumstantial evidence of a conspiracy, the similarity of conduct lies along a spectrum. Beyond a certain point, starkly dissimilar means render a secret agreement among competitors less plausible. The majority dismisses this meansbased analysis, apparently because dissimilar means “might also be read to suggest deception” rather than independent business activity. Ante at 29. The majority thus sets a nifty trap: if defendants engage in similar means, 82 it’s collusion; if they engage in dissimilar means, it’s deceit. Given those options, businesses should either keep to themselves or close up shop. For good majority’s reason then, ends-driven courts have conception shied of away parallel from the conduct and instead required more specific similarities. See, e.g., Cosmetic Gallery, Inc. v. Schoeneman Corp., 495 F.3d 46, 54 (3d. Cir. 2007) (deeming conscious uniform parallelism refusal because to one sell insufficient distributor to decided show not to deal prior to the alleged agreement); LaFlamme v. Societe Air France, 702 F. Supp. 2d 136, 151 (E.D.N.Y. 2010) (casting doubt on parallel conduct claim where defendants engaged in disparate strategies Mobil at different Corp., 429 F. times); Supp. City 2d of 117, Moundridge Exxon (D.D.C. 131-32 v. 2006) (expressing skepticism towards an allegation of parallel conduct based on evidence information). foundered failing Although on was that findings in fact defendants the of did no majority than exchange insists “non-parallel patently more disparate these cases ends,” their common means. Ante at 30-31 (emphasis added) (internal quotation marks omitted). Turning to the means here, there is simply nothing parallel about separate licensing discussions proceeding along separate timetables with different results and different motivations. SD3 alleges that defendants collectively agreed not to license its technology in October 2001. J.A. 83 89-90. Defendants then supposedly “found ways to abort” the negotiations and conceal their agreement by “giving separate excuses.” J.A. 91, 94. As stated in the complaint, however, three defendants continued to negotiate with SD3 after October 2001 while the fourth, Bosch, ended negotiations years later. J.A. a month 88, 92. before Ryobi and sent restarted a signed discussions non-exclusive licensing agreement to SD3 in January 2002 -- three months after the so-called collective refusal to deal. J.A. 91-92. The contract offered a 3% royalty initially that would increase to 5%-8% if the technology proved successful on the market. J.A. 91-92. SD3 refused to accept what appear to be generous terms based on a minor wording issue. J.A. 92. Emerson offered the same royalty rate as Ryobi and participated in negotiations for several months after October 2001, eventually ending talks and leaving the table saw industry altogether the following year. J.A. 56-57, 97. Six months after the alleged refusal to deal, Black & Decker offered SD3 a licensing agreement with a 1% royalty. J.A. 92. SD3 balked at what it considered unreasonably stingy terms for its untested and undeveloped technology. Id. If all this is parallel conduct and evidence of a refusal to deal, well then anything will qualify. And yet, despite all this, the agreement is repeatedly characterized as a refusal to deal. E.g., ante at 27-28. How can this be? Defendants did deal and did offer to purchase SD3’s 84 technology. How were the eighteen defendants not discussed in the complaint supposed to deal when, insofar as the complaint is concerned, they were never even approached? In short, all four discussed defendants were willing to deal with SD3 but their negotiations broke down at various times for various reasons, not least because SD3 demanded more than defendants were willing to offer. The record shows no refusal to deal, much less parallel means to that end. It is not plausible to think that the defendants’ disparate actions were somehow a carefully choreographed plan to exclude SD3 from the market. By supposing it possible, the majority severely underestimates the difficulty of getting a group of competitors to agree on a course of action that separate contract negotiations may or may not have shown to be in their best commercial interest. It would be quite a feat of stage management, moreover, to have some of those competitors actually extend generous but different licensing offers at different times to the very party that was the subject of the supposed group boycott. This is the type of claim on the far margins of conceivability that Twombly condemned. The Hail Mary nature of SD3’s complaint is underscored by the fact that only four of twenty-two named defendants are even so much as discussed in the allegations (the “twenty-two” figure comes from the original complaint 85 as one defendant somehow failed to appear in the amended version). Compare J.A. 30 (original complaint) with J.A. 70 (amended complaint). Indeed, even the majority chides plaintiffs for “assembl[ing] some collection of defendants and then mak[ing] vague, non-specific allegations against all of them as a group.” Ante at 14. Even plaintiffs appear to realize how tenuous their claim of parallel conduct is. In contrast to the original complaint, SD3’s amended complaint collapses its description of the various negotiations and timelines to create an illusion of uniformity. Compare J.A. 55-58 (original complaint) with J.A. 88-93 (amended complaint). While the original version details each of the discussed defendant’s negotiation history in a separate section, plaintiffs’ second effort weaves those divergent strands into one vague narrative, obscuring dates and distinctions along the way. Id. This attempt at obfuscation hardly inspires confidence in SD3’s promise that discovery will bolster its claims. Even with its artful redrafting, however, SD3 falls short of the bare minimum required for alleging a group boycott. To hold otherwise is to use antitrust law to badly skew the market forces normally at play in contract negotiations. From now on, defendants decline to deal with an entity proposing any new design feature of product development at their peril. They also cannot refuse to purchase a product in the course of licensing negotiations 86 because that too, under the majority’s rubric, is grounds for possible antitrust liability if others arrive independently at a similar business judgment. Again, SD3’s attempt to achieve through litigation more than what markets or contracts would ever independently confer is precisely the kind of abuse of Sherman Act claims that Twombly sought to prohibit. B. The majority believes that all the non-parallel behavior and disparate means of proceeding were hatched in secret. The concurrence makes much of the fact that the meeting among table saw manufacturers was “secret.” Ante at 56-58. In fact, no fewer than four times does the concurring opinion refer to the alleged agreement not to deal as a “secret agreement” or a “pact [kept] secret.” Id. This is manifestly a cover for the fact that my concurring colleague is unable to point to the traces of an agreement, hoping, I suppose, that a fishing expedition will unearth them. But there is a larger problem here. These days secrets are harder to keep. A secret is something that is held by only one. Or maybe two. But twenty-two? Managers everywhere must be relieved to learn from my concurring colleague that you can let twenty-two people in on a secret and have nothing leak out. We also run into a significant collective action difficulty here. The larger the alleged conspiracy, the larger the number 87 of alleged participants that need to be brought into line both as to the object and execution of the conspiracy as well as the need to keep it secret. The vast number of antitrust cases involve a much smaller number of conspirators, and it is telling that my concurring friend must venture back to the 1990s even to find an inapposite situation. The concurrence again labels the dissent’s discussion of collective action problems a foray into policy. It is not. It is an inquiry into plausibility, which Twombly absolutely requires that we undertake. The failure to do this is but one more example of the majority’s failure to follow that decision. C. Assuming, though only for the sake of argument, that plaintiffs had properly alleged parallel conduct, the amended complaint still fails to show the “something more” needed to turn conscious parallelism into a plausible conspiracy. Twombly, 550 U.S. at 560. The majority contends that the “more” necessary to nudge SD3’s group boycott claim across the goal line is the complaint’s identification of “the particular time, place, and manner in which the boycott initially formed, describing a separate meeting [among table saw manufacturers] held for that purpose during the Power Tool Institute’s October 2001 annual meeting.” Ante at 33 (citation omitted). This, we are told, is “the heart of SawStop’s complaint.” Ante at 35. 88 But perfectly lawful trade association meetings do in fact take place on a particular day at a particular time for a particular purpose. And the majority’s assertion that table saw manufacturers broke off in a “separate meeting” in the course of a larger trade convention is nothing more than a description of ordinary conduct. association Indeed, meeting, it health would care be unusual convention, for or a any bar other industry-wide gathering not to break out into more specialized subgroups to discuss matters of common interest. We need not coin the term “breakout discussion liability” to note that these sessions have long been a staple of business and professional life, and the majority has now made even this form of communication more perilous. Courts economic have recognized interests as a behavior plus contrary factor for to defendants’ showing concerted action. See, e.g., Hyland v. HomeServices of America, Inc., 771 F.3d 310, 320 (6th Cir. 2014). It is hard to see how any defendant in this case acted against its economic interest. SD3 boldly asserts that, but for the boycott, all table saw manufacturers would have licensed its technology. J.A. 92. There is little support for such inflated self-confidence. Plaintiffs conceded that any licensing agreements could not have taken effect until 2004, and that its technology would not have been fully implemented until 2008 89 -- years after it demanded industry-wide acceptance. J.A. 92. Defendants were also concerned that the new technology could actually increase hand injuries, discourage the use of blade guards, and fail to address “kickback” injuries. J.A. 87, 101. Despite the lukewarm reception, SD3 set its royalty rate at approximately 8% of wholesale prices, a costly gamble for manufacturers operating on often thin and always uncertain profit margins. Response Br. 1; J.A. 86. For all these reasons, it was consistent with each manufacturer’s best interest to reject an expensive, unproven, undeveloped, and possibly unsafe technology. Each defendant could easily have arrived at this business decision on its own. One recalls the World’s Fairs at the end of the nineteenth and beginning of the twentieth century. They were held almost annually, most often serving as the epicenter for a brisk competition among participating countries to produce the most creative and technologically advanced exhibitions. It was then, as now, a time of unusual inventiveness. The fairs were humming with booths, tables, exhibits, and displays all designed to show off new technologies and create a buzz about new products. Some of those products succeeded spectacularly; a far larger number cratered. The point is simply that manufacturers should be able to take into account the time it takes, after the initial hype, for an utility invention that to would become not one expose 90 of practical consumers and to marketable injury or manufacturers to liability. The majority, however, takes no cognizance of lag time, which not only exists, as it always has, in product development but in the most highly touted medical discoveries. Yet consciousness of lag time is something no prudent business is without. Ignoring the many practical reasons for declining SD3’s offers, the majority hones in on the fear of product liability as the key motivation behind defendants’ alleged boycott. Ante at 37-39. This, we are told, is the “why.” 1 Ante at 37. Defendants counter that no manufacturer rushed to adopt SawStop technology even after SD3 began producing its own saws in 2004. Response Br. 32. The majority answers on plaintiffs’ behalf: SD3 remained too small a player in the table saw market to pose a significant threat in products liability suits. Ante at 38. Yet the technology earlier focused products on the liability cases “mechanical 1 involving feasibility,” SawStop not the In making this point, the majority credits scraps of testimony from David Peot cherry-picked by SD3 while it ignores the district court’s diligent review of the full trial transcript. Ante at 37. When read in full, Peot’s testimony focused on defendants’ joint venture, formed years after the alleged group boycott. J.A. 134-40. Far from revealing a collective refusal to deal, Peot clarified that defendants planned “to use whatever technology we felt would be best to prevent table saw accidents. There were no limitations that I can remember one way or the other.” J.A. 140. This discrepancy is emblematic of plaintiffs’ attempt to conjure a conspiracy and of the majority’s willingness to overlook the holes in the narrative. 91 market share, of a “safer alternative design.” Osorio v. One World Technologies Inc., 659 F.3d 81, 85 (1st Cir. 2011) (citation omitted). Different design features anywhere in use are routinely litigation. defendants used SD3’s at a comparatively entry into serious the in products market disadvantage in liability should have products put liability suits. J.A. 90. And yet still defendants refused to bite at SD3’s product. Either they were never motivated by product liability concerns in the first place or those concerns were outweighed by other drawbacks (too costly, ineffective, or unsafe) to licensing SawStop technology. Of course, if manufacturers miscalculate in failing to adopt safer technologies, products liability lies in wait. But products liability and antitrust law each serve different and valid interests. Nothing is to be gained by scrambling them in a way that has the two bodies of law working at cross purposes such that liability, manufacturers from are forbidden, discussing and on weighing pain of antitrust product liability concerns. D. By casting anticompetitive communication seemingly product conduct, critical want liability to the concerns majority technological manufacturers to 92 be as the risks driver curtailing development. concerned of about We would products liability. Products liability law exists to make businesses cognizant of the risks their products create and to encourage them to take steps to avoid such liability. Open and honest dialogue among vulnerabilities competitors and formulate can help solutions, locate hopefully product leading to improved consumer safety. But the majority forces the defendants into yet another a double bind: They face product liability suits either for refusing to use what SD3 alleges is a safer product or for adopting an untested product that could well fail to work as advertised. The industry would have been foolish not to discuss the risks either way. It makes little sense to dampen such discussions prematurely with the specter of antitrust liability. Working together, whether cooperating in a joint venture or simply exchanging information at a trade association meeting, can not only save industry participants -- and therefore consumers -- time and money but can also spawn innovations that no participant could have achieved alone. Given the speed at which product specialization development of many now industries, moves “much and the innovation increased today is likely to require lateral and horizontal linkages as well as vertical ones.” Thomas M. Jorde & David J. Teece, Rule of Reason Analysis Advance of Horizontal Innovation and Arrangements: Commercialize 93 Agreements Technology, Designed 61 to Antitrust L.J. 579, limited 590 (1993). resources or Particularly in for patent-heavy smaller firms industries, with professional conclaves offer an efficient means of acquiring information. In an ever more complex world, sharing information becomes vital to the holistic perspectives so crucial for highly specialized companies to keep pace. To that end, sharing information assists American industry in the increasingly competitive global marketplace. To been a take but driving semiconductor one force example, for technological manufacturing. established a consortium information from across industry-wide In that what 1987, pooled was coordination progress in semiconductor resources then a and stagnant has American producers gathered industry. Thomas M. Jorde & David J. Teece, Innovation, Cooperation and Antitrust, 4 Berkeley Tech. L.J. 1, 35 (1989). Since then, semiconductor manufacturers not only reduced the size of their circuits -- from 500 nanometers (nm) to 45 nm -- but they also more than quadrupled the number of transitors, or amplifiers, in semiconductor chips. Rahul Kapoor & Patia J. McGrath, Unmasking the Interplay Collaboration: Manufacturing Between Evidence Industry, Technology from the 1990-2010, (2014). 94 43 Evolution Global Res. and R&D Semiconductor Pol’y 555, 559 Standard-setting bodies offer similar advantages. See Allied Tube & Conduit Corp. v. Indian Head, Inc., 486 U.S. 492, 500-01 (1988). Compatibility efficient by making producers and consumers around. Joseph parts make interchangeable, who Farrell standards want & to Garth change Saloner, markets more benefitting both products shop or Standardization, Compatibility, & Innovation, 16 Rand J. Econ. 70, 70-71 (1985). And properly some devised guarantee of safety minimum standards safety both and provide encourage consumers producers to adopt safer albeit more expensive features, buoyed by the hope that consumers may realize these products are more expensive because they are prevent cheaper, safer to use. The shoddy or unsafe standards products from thus help to undercutting manufacturers trying to protect consumer welfare. These and many other benefits to consumers and competition alike can accrue from standardization. I commend the majority for recognizing some of the virtues of standard-setting organizations. 2 Ante at however, it acknowledges gets the caught in monopolistic a contradiction: aims 2 48. in In doing so, the plaintiffs’ majority standard- I thus concur in Part VI of the majority opinion dismissing SD3’s challenge to the actions of the standardsetting organization, Underwriters Laboratories, Inc. (UL). I also concur in Part III rejecting SD3’s claims against a number of defendants simply lumped into a conspiracy through nothing more than conclusory allegations. 95 setting conspiracy claim but turns a blind eye to the same anticompetitive impulse driving SD3’s group boycott allegation. Compare ante at 51-54 with ante at 37. Its opinion fails to comprehend the totality of what SD3 aims to achieve here. When taken in its entirety, plaintiffs’ use of antitrust law strikes at the heart of even the most constructive horizontal cooperation. I recognize that collaboration may shade into collusion, the very evil that the Sherman Act was designed to prevent. See, e.g., Am. Soc’y of Mech. Eng’rs, Inc. v. Hydrolevel Corp., 456 U.S. 556 (1982) (finding liability where competitors incorrectly declared product unsafe to exclude it from market); Radiant Burners, Inc. v. Peoples Gas Light & Coke Co., 364 U.S. 656 (1961) (finding valid cause of action when competitors excluded innovative product from market through nonobjective safety standards). And yet many minds may be better than one. Joint ventures, standard-setting organizations, and trade association meetings may allow individuals of different specialties to benefit from each other’s expertise. These fora may prove invaluable for efficient and effective product development. Those efficiencies in turn generate reduced costs of doing business that can then be passed along to the consumer in the form of reduced prices and better products. Some forms of collaborative endeavors, in other words, are not so inherently conspiratorial that their 96 benefits can be overlooked. The majority ignores all this in its rush to flatten pleading standards, make communications perilous, and consign antitrust law to isolationist ends. It is an odd stance. time It for the raises majority the risk to assume that a more antitrust law isolationist will render American companies comparatively incommunicative and thus at a competitive disadvantage at the very time global commercial interactions are becoming more commonplace. III. I have seldom read a complaint where so many defendants were named in the complaint (twenty-two) and so few were actually discussed (four). I have seldom seen a complaint in which a supposed group boycott fell apart for so many reasons and in so assumptions, boycott conduct. many one claim is in After marketplace. directions. Its hard Even pressed defendants’ all, SD3 SawStop applying the to a find divergent has not and most plausible group market-explicable been technology generous excluded is currently from the available through its own production. Though it would have liked to corner the market through the industry’s leading manufacturers and standard-setting organization, it had no right to establish what was in effect a monopoly all its own. SD3 aims to force all manufacturers, through its group boycott claim, to adopt its 97 technology at its prices and to have the industry’s standardsetting organization do the same. It is disappointing that such a skimpy complaint pressing such anticompetitive Twombly standard monopolistic ends and purposes should coopt that be allowed antitrust the law Sherman Act to for traduce the was the precise designed to prevent. The fallout will disable American companies from all sorts of cooperative communication, from the most innocuous to the most productive. If the complaint had spun even a remotely plausible narrative of impermissible collusion, I should have been the first to wave it through the Twombly gates. See, e.g., Robertson v. Sea Pines Real Estate, 679 F.3d 278 (4th Cir. 2012). But I cannot conspire with my colleagues in the demise of the Twombly decision. For the respectfully dissent. 98 reasons stated above, I