                                                                      FILED
                                                          United States Court of Appeals
                                                                  Tenth Circuit
                   UNITED STATES COURT OF APPEALS
                                                               September 6, 2013
                               TENTH CIRCUIT
                                                              Elisabeth A. Shumaker
                                                                  Clerk of Court

 TKO ENERGY SERVICES, LLC, an
 Oklahoma limited liability company,

             Plaintiff - Appellant,
                                                       No. 13-5028
 v.                                        (D.C. No. 4:12-CV-00108-GKF-PJC)
                                                     N. D. Oklahoma
 M-I L.L.C., a Delaware limited
 liability company, d/b/a M-I Swaco,
 d/b/a Federal Wholesale Drilling Mud,

             Defendant - Appellee.


                          ORDER AND JUDGMENT *


Before TYMKOVICH, ANDERSON, and BACHARACH, Circuit Judges.



      After examining the briefs and appellate record, this panel has determined

unanimously that oral argument would not materially assist in the determination

of this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is

therefore ordered submitted without oral argument.




      *
       This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 32.1.
      Plaintiff and Appellant (TKO Energy Servs., L.L.C.) appeals the grant of

the Defendant’s (M-I L.L.C.) motion to dismiss its antitrust complaint under Fed.

R. Civ. P. 12(b)(6) for failing to satisfy the pleading requirements of Fed. R. Civ.

P. 8(a) and 9(b). For the following reasons, we affirm.



                                 BACKGROUND

      Plaintiff TKO, a small, family-owned Oklahoma company, is a retail

supplier of drilling fluids and related engineering services which are used in the

oil and gas industry to aid in drilling wells. Defendant M-I conducts business in

both the wholesale and retail drilling fluids markets. M-I has two separate

divisions—Federal Wholesale Drilling Mud (“Federal”), which operates in the

wholesale market, and M-I SWACO (“SWACO”), which operates in the retail

market, marketing drilling fluids to end-users. Thus, M-I is both a supplier of

materials to TKO through its Federal division, as well as a competitor of TKO in

the retail market, through SWACO. As averred in TKO’s First Amended

Complaint (“FAC”), “M-I Swaco represents that it is the leading supplier of

drilling and completions fluids. It is a wholly owned subsidiary of Schlumberger

Limited, the largest oilfield services company in the world.” FAC ¶ 7,

Appellant’s App. at 31.




                                         -2-
        The following undisputed facts are derived largely from the district court’s

order which, in turn, relied on the FAC, taking the allegations in the complaint as

true:

        Drilling fluids are used in oil and gas wells to facilitate the drilling process.

They are created by adding bentonite, barite, caustic soda, and sodium carbonite

to water, oil or synthetics. Two companies (M-I and Baroid Industrial Drilling

Products) largely control the mining and production of bentonite and barite,

thereby dominating the drilling fluids market at the wholesale and retail levels. 1

        M-I’s former parent company, M-I Drilling Fluids, was previously subject

to antitrust restrictions due to possible anticompetitive effects of a merger

between Dresser Industries, Inc. (the 64% owner of M-I Drilling Fluids) and

Baroid Corporation. 2 The United States filed a civil complaint in 1993 to block

the proposed merger, and the Final Judgment required Dresser to sell off its

interest in M-I Drilling Fluids before the merger could occur. Accordingly, Smith

International, Inc. acquired Dresser’s interest in M-I Drilling Fluids, subject to a




        1
        We take this representation as to the “dominance” of M-I and Baroid in the
bentonite and barite mining and production fields as true, as required when
reviewing a motion to dismiss under Fed. R. Civ. P. 12(b)(6). M-I avers that
other companies also mine and produce bentonite and barite. See Appellee’s Br.
at 5 n.3.
        2
      The parties do not specify whether there is any material difference
between “Baroid Corporation” and “Baroid Industrial Drilling Products.”

                                            -3-
condition that Smith could not sell or merge M-I Drilling Fluids with certain other

companies, including Schlumberger.

      In 1999, the defendant M-I was created as a joint venture between Smith

(as a 60% owner) and Schlumberger (as a 40% owner). The Department of

Justice brought criminal contempt charges against Smith and Schlumberger for

violating the order not to sell or merge M-I Drilling Fluids to or with

Schlumberger. Smith and Schlumberger were found in criminal contempt for

violating the Final Judgment, which subjected them to $15 million in

disgorgement of profits and fines. The Final Judgment remained in effect until

2006. After it lapsed, Schlumberger purchased Smith in August 2010, so that

100% of the defendant M-I is now owned by Schlumberger. TKO claims that the

alleged anti-competitive activity at issue in this case began in the fall of 2010.

      Meanwhile, TKO was established in January 2010. In February 2010, TKO

contacted M-I’s wholesale division, Federal, to obtain pricing and terms for the

wholesale purchase of drilling fluids. TKO filled out a credit application and

Federal informed TKO that it could receive wholesale drilling fluid under “net

30” terms. “Net 30” terms provided that materials would be delivered up front,

followed by payment from TKO within 30 days of receipt of Federal’s invoice.

As TKO’s business increased, its orders increased.

      As the district court stated, “[a]t some point, Federal issued materially

incorrect invoices to TKO. Federal did not deliver all ordered materials. And

                                          -4-
Federal failed to properly credit TKO for returned delivery pallets and returned

unused product. TKO paid the incorrect invoices less the amounts they thought

were erroneously charged or not credited—a practice referred to as ‘short pay.’”

Opinion & Order at 3-4 (citing FAC ¶ 23). Citing the FAC, the district court

further described the situation as follows:

             Further invoicing and order problems occurred. Federal’s
      inability to reliably meet TKO’s orders threatened TKO’s business
      model. TKO alleges Federal provided higher quality products to its
      own retail division—M-I Swaco—while providing damaged goods to
      TKO. In April 2011, Federal increased its prices. Communication
      breakdowns led to situations in which one Federal employee assured
      TKO that a “short pay” would suffice while another employee would
      state that short payments might threaten TKO’s credit standing with
      Federal. Eventually, Federal began to threaten a credit hold if TKO
      did not pay the amounts Federal claimed it was owed. A credit hold
      would have been disastrous for TKO.

             The business relationship continued to spiral downward.
      Federal delivered order forms on several occasions to one of TKO’s
      customers that revealed what TKO was paying for the wholesale
      drilling fluid it then resold to the customer. In January 2012, Federal
      again increased its prices. On January 23, 2012, Federal sent TKO
      an email indicating TKO owed over $125,000, and stated that if the
      funds were not provided overnight Federal would place TKO on a
      credit hold. Federal also informed TKO that it had never been
      “formally approved” for credit and would need to finish a credit
      application that day to avoid a credit hold. TKO completed the
      credit application and paid two invoices it claims it had not
      previously received. On February 20, 2012, Federal emailed TKO,
      asking about an allegedly unpaid invoice from December 2011 and
      informing TKO that a credit conference concerning TKO was going
      to occur the next day.

            On February 21, 2012, Federal put TKO on a credit hold and
      refused to tell TKO why. That same afternoon, a different Federal
      employee, Linda Norvell, provided TKO with a statement showing

                                         -5-
      allegedly past due balances and stated that “I am still working on a
      credit limit for your account as your account was never formally
      approved. I need your balance cleared up immediately to move
      forward with this.” TKO provided a response that detailed how the
      requested balances were false. On February 22, 2012, Ms. Norvell
      responded that TKO would have to pay “cash in advance” prior to
      orders being placed. TKO sought further information from Federal,
      but Federal did not respond.

Id. at 4-5. See FAC ¶ ¶ 25-43.

      TKO filed its complaint in the instant matter on March 2, 2012, alleging

against M-I (1) monopolization, in violation of Sherman Act § 2; (2) attempted

monopolization, in violation of Sherman Act § 2; (3) manipulation and control of

“essential facilities,” in violation of Sherman Act § 2; (4) fraudulent

misrepresentation, in violation of Oklahoma law; (5) tortious interference with

business relations, in violation of Oklahoma law; and (6) violation of Oklahoma’s

Antitrust Laws. Before M-I filed its Answer, TKO filed its FAC, which included

the allegations described above. The thrust of the FAC was that M-1 used

threatened and actual limitations on its access to drilling fluids products to

attempt to monopolize and further its monopoly over drilling fluids products in

the Southern Mid-Continent Region. More specifically, TKO alleged that M-I

drove competitors from the market by forcing retail suppliers of drilling fluids to

purchase bentonite, barite, and other drilling fluids components from Federal, at

excessive prices. Thus, M-I’s use of supracompetitive pricing, its restriction of




                                          -6-
access to essential products, and its imposition of credit holds on competitors

deterred competitors to M-1 Swaco from supplying fluids products to end users.

      On April 20, 2012, M-I filed a Motion to Dismiss the FAC for failure to

state a claim under Rule 12(b)(6). TKO then filed its Response; M-I filed a

Reply. Rather than ruling immediately on the Motion to Dismiss, the district

court entered a scheduling order which allowed the parties to proceed with

extensive pre-trial discovery, including several sets of extensive document

requests, interrogatories, requests for admission. After eleven months of

discovery, the district court entered its opinion and order granting M-I’s motion

to dismiss. The order dismissed with prejudice all of TKO’s antitrust claims and

all of TKO’s state law claims without prejudice.

      The district court found that TKO had failed to state a claim for

monopolization under section 2 of the Sherman Act, concluding that TKO’s

complaint did not allege facts sufficient to show that M-1 possesses monopoly

power in the relevant market, nor did it allege facts sufficient to show that M-1

willfully acquired or maintained a monopoly using anticompetitive means. The

court accordingly found that TKO had failed to state a claim for a violation of the

federal antitrust laws and dismissed the antitrust claims with prejudice. The

district court further found that TKO failed to state claims under Oklahoma law

for fraudulent misrepresentation, tortious interference with business relations, and

antitrust violations. TKO subsequently notified the court that it was electing to

                                         -7-
stand on the allegations contained in its FAC and requested that the court enter a

final judgment from which TKO could immediately appeal. This appeal followed.



                                    DISCUSSION

      TKO alleges the district court erred when it: (1) dismissed TKO’s antitrust

claims with prejudice and without allowing TKO leave to amend; (2) failed to

accept TKO’s allegations as true, contrary to our decision in Robbins v.

Oklahoma, 519 F.3d 1242, 1247 (10th Cir. 2008); (3) failed to apply the correct

standard for “plausibility” under Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); (4)

concluded that TKO’s complaint did not allege sufficient facts to state a claim for

monopolization under § 2 of the Sherman Act; (5) concluded that TKO’s

complaint did not allege sufficient facts to state a claim for attempted

monopolization under § 2 of the Sherman Act; (6) concluded that TKO’s

complaint did not allege sufficient facts to state a claim for essential facilities

manipulation under § 2 of the Sherman Act; (7) concluded that TKO’s complaint

did not state facts sufficient to allege that M-I possesses monopoly power in the

relevant markets; (8) concluded that TKO’s complaint did not state facts

sufficient to allege M-I willfully acquired or maintained a monopoly using

anticompetitive means; (9) concluded that TKO’s complaint did not state

sufficient facts to allege a claim for fraudulent misrepresentations; (10) concluded

that TKO’s complaint failed to state a claim for tortious interference with

                                          -8-
business relations; and (11) concluded that TKO’s complaint failed to state a

claim for violation of Oklahoma’s antitrust law, 79 Okla. Stat. § 203. TKO also

argues that, assuming the case would be remanded, this case should be reassigned

to a different judge to ensure that TKO has a fair and impartial tribunal. We

begin with TKO’s argument that the district court misapplied the standard of

review.

      I. Standard of Review

      TKO claims the district court utilized an improper standard in dismissing

TKO’s FAC. 3 TKO avers that, rather than taking the allegations of the FAC as

true, the district court improperly required TKO to prove its case in its FAC.

TKO argues, in particular, that the district court failed to take its allegations as

true and thereby contravened our decision in Robbins v. Oklahoma, 519 F.3d

1242 (10th Cir. 2008).

      In Robbins, we recognized the new, albeit “less than pellucid,” formulation

by the Supreme Court of the standard for dismissing a claim under Fed. R. Civ. P.

8(a)(2): “to withstand a motion to dismiss, a complaint must contain enough

      3
         The district court dismissed the federal antitrust claims with prejudice,
stating, “[i]f this [the previously explained problem with TKO’s claims] were the
only deficiency with plaintiff’s antitrust claims, the court would grant leave to
permit a Second Amended Complaint with more specific factual allegations;
however, the issues discussed below preclude plaintiff from being able to state an
antitrust claim here.” Opinion & Order at 8; Appellant’s App. at 134. The court
dismissed the state claims without prejudice, giving TKO the opportunity to re-
file its state claims. TKO rejected that offer, however, and asked the court to
enter a final judgment, which it did.

                                          -9-
allegations of fact ‘to state a claim to relief that is plausible on its face.’” Bell

Atlantic v. Twombly, 550 U.S. 544, — (2007). As we observed in Ridge at Red

Hawk, L.L.C. v. Schneider:

      the mere metaphysical possibility that some plaintiff could prove
      some set of facts in support of the pleaded claims is insufficient; the
      complaint must give the court reason to believe that this plaintiff has
      a reasonable likelihood of mustering factual support for these claims.

493 F.3d 1174, 1177 (10th Cir. 2007). The burden is on the plaintiff to frame a

“complaint with enough factual matter (taken as true) to suggest” that he or she is

entitled to relief. Gee v. Pacheco, 627 F.3d 1178, 1183 (10th Cir. 2010) (quoting

Twombly, 550 U.S. at 556). We must distinguish between well-pleaded factual

allegations and unsupported conclusory allegations. Furthermore, “[t]he nature

and specificity of the allegations required to state a plausible claim will vary

based on context.” Kansas Penn Gaming, LLC v. Collins, 656 F.3d 1210, 1215

(10th Cir. 2011).

      We review de novo the district court’s dismissal of the case pursuant to

Fed. R. Civ. P. 12(b)(6), bearing in mind the above standards. See Khalik v.

United Airlines, 671 F.3d 1188, 1190 (10th Cir. 2012). As the following analysis

indicates, the district court utilized the proper standard of review in determining

that TKO had failed to state a claim for violations of the antitrust laws and other

pertinent laws. We note that, in this particular case, there was some degree of

discovery conducted before the district court issued its decision.


                                           -10-
      II. Federal Antitrust Claims

      TKO alleged that M-I engaged in monopolization, attempted

monopolization and exploited essential facilities, all in violation of Sherman Act

§ 2. 15 U.S.C. § 2. The district court found that TKO had failed to allege facts

sufficient to plausibly show any of those claims.

      “Section 2 of the Sherman Act prohibits actions by ‘person[s] who shall

monopolize, [or] attempt to monopolize . . . any part of the trade or commerce.”

Cohlmia v. St. John Med. Center, 693 F.3d 1269, 1280 (10th Cir. 2012) (citing 15

U.S.C. § 2). To state a claim for monopolization, TKO must plead facts that

plausibly show “the possession of monopoly power in the relevant market and . . .

the willful acquisition or maintenance of that power as distinguished from growth

or development as a consequence of a superior product, business acumen, or

historic accident.” Id. (quoting United States v. Grinnell Corp., 384 U.S. 563,

570-71 (1966)).

      To state a claim for attempted monopolization, TKO must plead facts that

plausibly show “(1) that the defendant has engaged in predatory or

anticompetitive conduct with (2) a specific intent to monopolize and (3) a

dangerous probability of achieving monopoly power.” Christy Sports, LLC v.

Deer Valley Resort Co., 555 F.3d 1188, 1192 (10th Cir. 2009) (further quotations

omitted). Finally, an essential facilities claim is not an independent antitrust

claim, but is, rather, a description of one way a monopolist could willfully

                                        -11-
acquire or maintain monopoly power (by manipulating essential facilities). The

district court concluded that TKO’s FAC failed to allege facts sufficient to show

that M-I possessed monopoly power in the relevant market or that it willfully

acquired or maintained such a monopoly using anticompetitive means. It thus

concluded that TKO failed to state a claim under the Sherman Act. We agree

with the district court’s careful and thorough analysis, and only supplement to

emphasize the correctness of the court’s discussion.

      As the district court observed, TKO states several broad antitrust legal

conclusions, but it fails to allege supporting facts: the FAC alleges “M-I has

acquired and is maintaining a monopoly in the Drilling Fluids Market,” ¶ 58;

“M-I has the power to control prices and exclude competition,” ¶ 58;

“[s]ubstantial barriers to entry and expansion exist in the Drilling Fluids Market,”

¶ 59; “prices in the Drilling Fluids Market . . . were higher than they would have

been in a competitive market; innovation has been stifled; and the number and

effectiveness of competitors have been diminished,” ¶ 61. But TKO does not

plead who M-I’s competitors are, what market share they (M-I or its competitors)

control, what substantial entry barriers exist, or what competitors have been

excluded. The FAC does state, and the district court accepted as true, the factual

allegations that the two companies (M-I and Baroid Industrial Drilling Products)

“dominated” the drilling fluids market, that they “largely control” bentonite and

barite production, and that there were antitrust problems in the past. However,

                                        -12-
“TKO does not plead that M-I has a monopoly on bentonite or barite production,

only that two companies have a significant share. TKO does not plead M-I’s

market share in the Southern Mid-Continent Region or facts that plausibly suggest

M-I’s market share is sufficient to enable M-I to exercise monopoly power.”

Opinion & Order at 7-8.

      Furthermore, TKO’s complaint fails to allege facts sufficient to show that

M-I willfully acquired or maintained a monopoly using anticompetitive means.

While TKO’s complaint certainly details a number of disputes with M-I, it largely

consists of conclusory accusations that M-I’s conduct had an anticompetitive

motive and intent, with no supporting factual averments. For example, the FAC

alleges “Federal issued materially incorrect invoices to TKO. Federal failed, in

some instances, to deliver all the material that TKO would order, did not properly

credit to TKO its return to Federal of the delivery pallets, and failed to properly

credit TKO for returned, unused product. This conduct was intentional, and

committed by defendant with the specific intent of impairing the operations of

plaintiff.” FAC ¶ 23. Other such conclusory paragraphs exist. The FAC

provides no basis for distinguishing between a business arrangement with

problems and true anticompetitive conduct on behalf of M-I.

      In short, we agree with the district court that “‘[w]ithout further factual

enhancement [the complaint] stops short of the line between possibility and

plausibility.’ The facts alleged could possibly show anticompetitive targeting by

                                         -13-
M-I to monopolize the retail drilling fluids market in the relevant region. But

they cannot plausibly do so.” Opinion & Order at 11. As the district court

summed up:

      M-I never had to deal with TKO in the first place. . . . M-I could
      entirely refuse to sell to TKO without violating the Sherman Act. . . .
      Second, if TKO is correct that M-I has a monopoly over barite and
      bentonite, then drilling fluid retail customers will be paying the
      monopoly price [for those items] regardless of whether TKO serves
      as an intermediary. . . . A vertically integrated company with a
      monopoly over an input—barite or bentonite here—can charge a
      monopoly price over the final product—drilling fluids. And selling
      the input at monopoly price to an intermediary that then sells the
      final product would not lower the ultimate price. Thus, the barite or
      bentonite monopoly will lead to monopoly prices regardless of
      whether TKO succeeds or fails. While a competitor may be harmed,
      competition will not.

Id. at 11-12.

      III.      State Law Claims of Fraudulent Misrepresentation and Tortious
                Interference with Business Relations

      TKO also claims that M-I made fraudulent misrepresentations to it and that

it tortiously interfered with its business relations. Under Oklahoma law, the

elements of fraud are “1) a false material misrepresentation, 2) made as a positive

assertion which is either known to be false or is made recklessly without

knowledge of the truth, 3) with the intention that it be acted upon, and 4) which is

relied on by the other party to his (or her) detriment.” Bowman v. Presley, 212

P.3d 1210, 1218 (Okla. 2009).




                                        -14-
      The district court held that TKO failed to allege sufficient well-pleaded

facts to state a claim for fraud, primarily because the allegations fail to state that

TKO actually relied on any allegedly false representation and do not identify

specific false statements meant to lure TKO into detrimental reliance. We agree

with the district court’s analysis of this point.

      Regarding the tortious interference with business relations claim, the

elements under Oklahoma law are “1) interference with a business or contractual

right; 2) malicious and wrongful interference that is neither justified, privileged,

nor excusable; and 3) damage proximately sustained as a result of the

interference.” Tuffy’s, Inc. v. City of Oklahoma City, 212 P.3d 1158, 1165

(Okla. 2009). Once again, the court explained why TKO failed to state a claim

for tortious interference, and we agree completely with its analysis.

      Finally, with respect to claims under Oklahoma’s antitrust laws, the court

held correctly that failure to state a claim under federal antitrust law doomed

TKO’s claim under state antitrust law. We accordingly so find.




                                          -15-
                               CONCLUSION

      For the foregoing reasons, we AFFIRM the dismissal of the complaint in

this case.

                                            ENTERED FOR THE COURT


                                            Stephen H. Anderson
                                            Circuit Judge




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