                      RECOMMENDED FOR FULL-TEXT PUBLICATION
                           Pursuant to Sixth Circuit Rule 206
                                  File Name: 09a0353p.06

               UNITED STATES COURT OF APPEALS
                              FOR THE SIXTH CIRCUIT
                                _________________


                                                 X
                                                  -
 In re: TRAVEL AGENT COMMISSION
                                                  -
 ANTITRUST LITIGATION.
 _____________________________________            -
                                                  -
                                                      No. 07-4464

                                                  ,
                                                   >
                        Plaintiffs-Appellants, -
 TAM TRAVEL, INC., et al.,

                                                  -
                                                  -
                                                  -
          v.
                                                  -
                                                  -
                       Defendants-Appellees. -
 DELTA AIRLINES, INC., et al.,
                                                  -
                                                 N
               Appeal from the United States District Court for the
                      Northern District of Ohio at Cleveland.
               No. 03-30000—Peter C. Economus, District Judge.
                               Argued: October 24, 2008
                          Decided and Filed: October 2, 2009
              Before: MERRITT, BOGGS, and GRIFFIN, Circuit Judges.

                                  _________________

                                      COUNSEL
ARGUED: Joseph M. Alioto, Jr., Thomas Paul Pier, ALIOTO LAW FIRM, San Francisco,
California, for Appellants. Peter K. Huston, LATHAM & WATKINS, San Francisco,
California, James A. Reeder, Jr., VINSON & ELKINS L.L.P., Houston, Texas, Lee H.
Simowitz, BAKER & HOSTETLER, Washington, D.C., for Appellees. ON BRIEF:
Joseph M. Alioto, Jr., Thomas Paul Pier, Joseph Alioto, Sr., ALIOTO LAW FIRM, San
Francisco, California, for Appellants. James A. Reeder, Jr., Lauren J. Harrison, Elizabeth
A. Pannill, VINSON & ELKINS L.L.P., Houston, Texas, for Appellees.
     GRIFFIN, J., delivered the opinion of the court, in which BOGGS, J., joined.
MERRITT, J. (pp. 22-28), delivered a separate dissenting opinion.




                                            1
No. 07-4464            Tam Travel, et al. v. Delta Airlines, et al.                               Page 2


                                        _________________

                                              OPINION
                                        _________________

         GRIFFIN, Circuit Judge. Plaintiff travel agencies appeal the district court’s
dismissal of their Amended Complaint for failure to state a claim under § 1 of the Sherman
Antitrust Act. Plaintiffs allege that defendants conspired to reduce, cap, and eventually
eliminate the payment of base commissions in a concerted effort to drive plaintiffs out of
business in violation of 15 U.S.C. § 1. We affirm. In doing so, we hold that plaintiffs’
claims against United Airlines were discharged in bankruptcy and that plaintiffs’ claims
against the remaining defendants failed to allege sufficient facts to plausibly suggest a prior
illegal agreement.

                                                    I.

                                                   A.

         Plaintiffs are the owners of forty-nine travel agencies engaged in the business of
                                         1
selling defendants’ airline services. When a plaintiff sold an airline ticket before 2002,
it received a sales commission from the servicing airline that equaled a percentage of the
purchased ticket price. This practice, commonly referred to as the payment of “base
commissions,” was industry-wide.

         Plaintiffs allege a § 1 conspiracy based on a series of uniform base commission
cuts adopted by defendants over a seven-year period. According to plaintiffs, each
defendant’s decision to match its competitors’ base commission cut was the product of
defendants’ prior illegal agreement to eliminate the practice of paying all base
commissions – a result achieved in March 2002.




         1
           The following airlines were named as defendants in plaintiffs’ Amended Complaint: Air
Canada, Alaska Airlines, Inc. (“Alaska”), Alaska Air Group, Inc. (“AAG”), ATA Airlines, Inc., American
Airlines, Inc., America West Airlines, Inc., Continental Airlines Inc., Delta Air Lines, Inc., Hawaiian
Airlines, Inc., Horizon Air Industries, Inc., Frontier Airlines, Inc., KLM Royal Dutch Airlines, Northwest
Airlines, Inc., United Airlines, Inc., US Airways, Inc., and US Airways Group, Inc.
No. 07-4464        Tam Travel, et al. v. Delta Airlines, et al.                    Page 3


        Plaintiffs assert the conspiracy began in 1995, when Delta, American, Northwest,
United, and Continental each announced a $25 cap on base commissions for one-way
domestic tickets and a $50 cap for round-trip domestic tickets. Plaintiffs further contend
that United’s decision to cut its base commission rate on September 18, 1997, from 10%
of the purchased ticket price to 8% is further evidence of the alleged illegal agreement
because American, Delta, Northwest, US Airways, Continental, and America West each
matched United’s commission cut on or before September 29, 1997. On March 31,
1998, Frontier Airlines announced that it, too, would reduce its base commission rate
from 10% to 8%, as did Alaska Airlines on September 30, 1997.

        Plaintiffs allege that defendants’ conspiracy continued into mid-November 1998,
when United imposed base commission caps of $50 and $100 for one-way and round-
trip international airfare, respectively.    By December 2, 1998, American, Delta,
Continental, Northwest, and US Airways each adopted United’s $50 and $100 base
commission caps.

        Almost one year later, on October 7, 1999, United instituted its third commission
cut, reducing its base commission rate from 8% to 5% on all domestic and international
flights. American, Delta, Northwest, Continental, and US Airways each adopted
United’s 5% commission cut by the following week. America West and Alaska each
matched United’s 5% commission cut on October 18, 1999, as did Frontier in November
1999.

        On August 17, 2001, American implemented base commission caps of $10 for
one-way tickets and $20 for round-trip tickets, effective the following day. Within ten
days, United, Delta, Northwest, Continental, US Airways, and America West each
adopted American’s $10 and $20 caps.            Frontier and Alaska followed suit on
September 4, 2001, and November 1, 2001, respectively.

        Finally, on March 14, 2002, Delta announced that it would eliminate its practice
of paying base commissions to travel agencies for both domestic and international
airfare, effective immediately.     Within ten days, American, United, Northwest,
No. 07-4464        Tam Travel, et al. v. Delta Airlines, et al.                    Page 4


Continental, US Airways, and America West likewise eliminated the payment of base
commissions. Frontier and Alaska followed suit in late May 2002.

       Plaintiffs allege that each defendant’s decision to cut, cap, and eventually
eliminate its practice of paying travel agencies a base commission would not have
occurred without collusion because such action, if taken independently, was contrary to
the individual defendant’s economic self-interest.          Plaintiffs point to United’s
unsuccessful attempt to cut base commission rates in 1981 and American’s similar failed
attempt in 1983 as evidence of collusion in the present case. In addition, plaintiffs’
Amended Complaint refers to the deposition of a former American Airlines executive,
Michael Gunn, who testified that “industry consensus” was necessary for industry-wide
commission cuts to hold. Gunn also testified that “he had to match commission cuts
exactly or he would undercut the movement.” Plaintiffs assert that Gunn’s statements
are persuasive evidence of defendants’ common motive to conspire.

       As additional support for the alleged conspiracy, plaintiffs point to several
meetings where defendants had an opportunity to conspire, including committee
meetings of the International Air Transport Association in 1997 and 1998, as well as
industry meetings such as the “Conquistadores Del Cielo” (Conquerors of the Sky), the
Air Transport Association, the Japan Air Summit, the British Air Summit, the Paris Air
Show, the Alex Brown Transportation Conference, the International Aviation
Symposium, and the Merrill Lynch conference. Plaintiffs do not identify defendants’
attendees by name or title.

       More specifically, the Amended Complaint asserts that “in mid-1999 an
Executive Vice-President of Marketing & Distribution for Northwest Airlines, a Senior
Vice President of Planning for US Airways, and a Senior Vice President of Marketing
for American met for three hours in a Dallas hotel conference room.” Plaintiffs further
allege that “[i]n 2001, a Delta senior executive met for a weekend of golf and socializing
at the home of an American executive responsible for setting American’s commission
levels.”
No. 07-4464            Tam Travel, et al. v. Delta Airlines, et al.                                Page 5


         By May 31, 2002, each defendant had eliminated its practice of paying travel
agencies a base commission. In addition, several defendants filed for and have emerged
from Chapter 11 bankruptcy, including Delta, Northwest, and United.2

                                                    B.

         On April 9, 2003, plaintiff Tam Travel, Inc. and forty-eight other travel agencies
filed a complaint against defendants for illegally agreeing to cap, cut, and eliminate base
commissions in violation of § 1 of the Sherman Antitrust Act. 15 U.S.C. § 1.3 On
September 13, 2007, plaintiffs had dismissed defendants US Airways and US Airways
Group from the suit without prejudice. On September 14, 2007, the district court
determined that the Supreme Court’s decision in Bell Atlantic Corp. v. Twombly, 550
U.S. 544 (2007), could impact the present case and allowed plaintiffs to file an Amended
Complaint. On September 28, 2007, several defendants filed a joint motion to dismiss
the Amended Complaint under FED. R. CIV. P. 12(b)(6).

         On October 29, 2007, the district court granted defendants’ motion to dismiss,
ruling that: (1) plaintiffs failed to allege any conduct other than sporadic parallel
conduct regarding America West, Alaska, Frontier, and Horizon; (2) plaintiffs failed to
allege any parallel conduct as to KLM; (3) the emergence of Northwest, United, and
Delta from bankruptcy discharged plaintiffs’ claims; (4) with regard to Continental and
United, plaintiffs failed to aver sufficient facts to plausibly suggest an illegal agreement
under Twombly;4 and (5) with regard to AAG, a holding company that does not itself pay
commissions, plaintiffs failed to allege any facts.




         2
         For the purposes of this appeal, only United’s bankruptcy is relevant. United filed its Chapter
11 bankruptcy petition on December 9, 2002, and the bankruptcy court confirmed its reorganization plan
on January 20, 2006.
         3
         Plaintiffs opted out of the putative class in Hall v. United Air Lines, Inc., 296 F. Supp. 2d 652
(E.D.N.C. 2003).
         4
           The district court unintentionally omitted American from its identification of “remaining
Defendant airlines” for the purposes of this holding. It is clear from the substance of the opinion however,
that the district court did not intend to suggest that claims against American were any more meritorious
than against Continental and United.
No. 07-4464             Tam Travel, et al. v. Delta Airlines, et al.                                 Page 6


         Plaintiffs filed a timely motion for reconsideration, which the district court
denied on March 13, 2008. This appeal followed.5

                                                     II.

         Plaintiffs first contend that the district court erred when it ruled that their § 1
claims against United were discharged by the bankruptcy court. By operation of the
Bankruptcy Code, confirmation of a reorganization plan “discharges the debtor from any
debt that arose before the date of . . . confirmation.” 11 U.S.C. § 1141(d). Section
101(12) of the Bankruptcy Code defines a “debt” as “liability on a claim.” Pursuant to
11 U.S.C. § 101(5), a “claim” includes a “right to payment, whether or not such right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, [or]
unmatured.”

         The district court ruled that because United filed for bankruptcy in December
2002 and its reorganization plan was not confirmed until January 2006, United’s
emergence from bankruptcy discharged any liability on claims that arose before its
reorganization. Because plaintiffs alleged that United made its last commission cut in
March 2002, the district court dismissed plaintiffs’ claims against United as discharged
debt under 11 U.S.C. § 101(5).

         As a preliminary matter, plaintiffs’ brief does not challenge the district court’s
decision to dismiss United under 11 U.S.C. § 101(5), other than to mention in a single
sentence that “[e]ach of these airlines emerged from bankruptcy before Travel Agents
filed their complaint.” Moreover, the record and the Amended Complaint refute this
assertion. Because plaintiffs present only a perfunctory argument regarding United’s
dismissal under 11 U.S.C. § 101(5), plaintiffs have waived this argument. See United
States v. Phinazee, 515 F.3d 511, 520 (6th Cir. 2008) (issues adverted to in a perfunctory



         5
           After the parties filed their appellate briefs, we were notified that Frontier and ATA filed for
Chapter 11 bankruptcy under 11 U.S.C. § 362(a)(1). The filing of a bankruptcy petition operates as an
automatic stay of the continuation of a judicial action against the debtor. Spirit Airlines, Inc. v. Northwest
Airlines, Inc., 431 F.3d 917, 921 n.1 (6th Cir. 2005) (automatic stay under § 362(a)(1) applies to appellate
proceedings). Following oral argument, we also accepted the stipulated dismissal of defendants Delta,
Northwest, and KLM.
No. 07-4464         Tam Travel, et al. v. Delta Airlines, et al.                       Page 7


manner, unaccompanied by some effort at developed argumentation, are deemed
waived). In any event, we find no error in the district court’s ruling that United’s
potential liability qualified as discharged debt under 11 U.S.C. § 101(12).

        Plaintiffs assert that United is nonetheless liable under a continuing violation
theory because United allegedly rejoined the conspiracy after emerging from bankruptcy
in 2006. Specifically, plaintiffs contend that United’s decision to “continue” the
“conspiracy commission rate” (which, at this point, was 0%) after its reorganization
created a new § 1 claim under the Sherman Act.

        As a general rule, a successfully reorganized debtor under Chapter 11 of the
Bankruptcy Code is liable for any independent conduct that arises after the confirmation
of its bankruptcy plan. In re WorldCom, Inc., 546 F.3d 211, 221 (2d Cir. 2008);
O’Loghlin v. County of Orange, 229 F.3d 871, 875 (9th Cir. 2000). In short, the debtor
gets a fresh start, but that “does not [provide] a continuing license to violate the law.”
Id. In the present case, the district court concluded that United’s post-reorganization 0%
commission policy did not create a new § 1 claim because its decision was “merely a
reaffirmation of a previous act.”

        Plaintiffs rely on Klehr v. A.O. Smith Corp., 521 U.S. 179 (1997), to argue that
United’s conduct qualifies as a continuing violation. The Klehr case, however, did not
involve a formerly bankrupt corporation. Id. at 186. Klehr simply reiterates that the
antitrust laws recognize continuing violations and, more precisely, that a new § 1 claim
arises each time a company sells a price-fixed product. Id. at 188.

        We have held that an “antitrust cause of action accrues . . . each time a defendant
commits an act that injures the plaintiff’s business.” DXS, Inc. v. Siemens Med. Sys.,
Inc., 100 F.3d 462, 467 (6th Cir. 1996) (citing Zenith Radio Corp. v. Hazeltine Research,
Inc., 401 U.S. 321, 338 (1971)). “[T]he focus is on the timing of the causes of injury,
i.e., the defendant’s overt acts, as opposed to the effects of the overt acts.” Peck v. Gen.
Motors Corp., 894 F.2d 844, 849 (6th Cir. 1990) (per curiam) (emphasis added). “[T]he
fact that [] injuries have a rippling effect into the future only establishes that [plaintiffs]
might have been entitled to future damages . . . .” Id.
No. 07-4464         Tam Travel, et al. v. Delta Airlines, et al.                      Page 8


        Here, we reject plaintiffs’ attempt to characterize United’s decision to maintain
its 0% commission policy as an overt act. “Since the Supreme Court decided Zenith,
federal courts have uniformly defined a continuing antitrust violation as one in which
the plaintiff’s interests are repeatedly invaded.” Peck, 894 F.2d at 849 (quoting Pace
Indus., Inc. v. Three Phoenix Co., 813 F.2d 234, 237 (9th Cir. 1987) (internal quotation
marks and alterations omitted)).       Although United’s participation in the alleged
conspiracy would certainly create a rippling effect, plaintiffs assert that United’s final
act to effectuate that conspiracy occurred in 2002, long before United emerged from
bankruptcy. We also cannot ignore the consequence of concluding that an overt act
occurred under these facts. If we were to adopt plaintiffs’ continuing violation theory,
the applicable limitations period for a § 1 claim would be infinite – an antitrust plaintiff
could routinely salvage an otherwise untimely claim by asserting that it continues to lose
revenue because of past alleged anticompetitive conduct. We therefore hold that the
district court properly dismissed plaintiffs’ claims against United.

                                             III.

        We review de novo the district court’s dismissal of plaintiffs’ Amended
Complaint under FED. R. CIV. P. 12(b)(6). Johnson v. City of Detroit, 446 F.3d 614, 618
(6th Cir. 2006). In Twombly, the Supreme Court held that a complaint alleging
violations under § 1 of the Sherman Act cannot survive a motion to dismiss unless it
avers facts that raise a reasonable expectation that discovery will reveal evidence of an
illegal agreement. Twombly, 550 U.S. at 556. In the wake of Twombly, allegations of
parallel conduct and bare assertions of conspiracy no longer supply an adequate
foundation to support a plausible § 1 claim. Id.

        Specifically, the complaint’s “[f]actual allegations must be enough to raise a right
to relief above the speculative level,” id. at 555, and “state a claim to relief that is
plausible on its face.” Id. at 570. Of course, we must still “construe the complaint in the
light most favorable to the plaintiff, accept its allegations as true, and draw all reasonable
inferences in favor of the plaintiff.” Jones v. City of Cincinnati, 521 F.3d 555, 559 (6th
Cir. 2008) (internal quotation and citation omitted). “Yet, to survive a motion to
No. 07-4464        Tam Travel, et al. v. Delta Airlines, et al.                       Page 9


dismiss, the complaint must contain either direct or inferential allegations respecting all
material elements to sustain a recovery under some viable legal theory.” Eidson v. State
of Tenn. Dep’t of Children’s Servs., 510 F.3d 631, 634 (6th Cir. 2007). “We need not
accept as true legal conclusions or unwarranted factual inferences,” Jones, 521 F.3d at
559 (alteration and internal citation omitted), and “[c]onclusory allegations or legal
conclusions masquerading as factual allegations will not suffice.” Eidson, 510 F.3d at
634 (internal citation omitted).

                                            A.

       Allegations of concerted action by competitors are frequently based on a pattern
of uniform business conduct, which courts often refer to as “conscious parallelism.”
Conscious parallelism, however, is not in itself prohibited under § 1 of the Sherman Act.
As the Supreme Court explained in Twombly:

       Because § 1 of the Sherman Act “does not prohibit [all] unreasonable
       restraints of trade . . . but only restraints effected by a contract,
       combination, or conspiracy,” Copperweld Corp. v. Independence Tube
       Corp., 467 U.S. 752, 775 (1984), “[t]he crucial question” is whether the
       challenged anticompetitive conduct “stem[s] from independent decision
       or from an agreement, tacit or express,” Theatre Enters. v. Paramount
       Film Distrib. Corp., 346 U.S. [537, 540 (1954)]. While a showing of
       parallel “business behavior is admissible circumstantial evidence from
       which the fact finder may infer agreement,” it falls short of “conclusively
       establish[ing] agreement or . . . itself constitut[ing] a Sherman Act
       offense.” Id. at 540-41. Even “conscious parallelism,” a common
       reaction of “firms in a concentrated market [that] recogniz[e] their shared
       economic interests and their interdependence with respect to price and
       output decisions” is “not itself unlawful.” Brooke Group Ltd. v. Brown
       & Williamson Tobacco Corp., 509 U.S. 209, 227 (1993).
       The inadequacy of showing parallel conduct or interdependence, without
       more, mirrors the ambiguity of the behavior: consistent with conspiracy,
       but just as much in line with a wide swath of rational and competitive
       business strategy unilaterally prompted by common perceptions of the
       market. Accordingly, we have previously hedged against false inferences
       from identical behavior at a number of points in the trial sequence. An
       antitrust-conspiracy plaintiff with evidence showing nothing beyond
       parallel conduct is not entitled to a directed verdict, see Theatre Enters.,
       supra; proof of a § 1 conspiracy must include evidence tending to
No. 07-4464         Tam Travel, et al. v. Delta Airlines, et al.                   Page 10


        exclude the possibility of independent action, see Monsanto Co. v. Spray-
        Rite Serv. Corp., 465 U.S. 752 (1984); and at the summary judgment
        stage a § 1 plaintiff’s offer of conspiracy evidence must tend to rule out
        the possibility that the defendants were acting independently, see
        Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (1986).
Twombly, 550 U.S. at 554 (some internal citations omitted).

        The Twombly decision provides an additional safeguard against the risk of “false
inferences from identical behavior” at an earlier stage of the trial sequence – the pleading
stage. A district court’s early assessment of the sufficiency of a § 1 claim under FED. R.
CIV. P. 12(b)(6) or FED. R. CIV. P. 12(c) addresses the dilemma of the extensive litigation
costs associated with prosecuting and defending antitrust lawsuits. As the Twombly
Court acknowledged, “the costs of modern federal antitrust litigation and the increasing
caseload of the federal courts counsel against sending the parties into discovery when
there is no reasonable likelihood that the plaintiffs can construct a claim from the events
related in the complaint.” Id. at 558 (internal citation and quotation marks omitted).

        In Ashcroft v. Iqbal, 129 S. Ct. 1937, 1950 (2009), the Supreme Court explained
the Twombly decision as follows:

        [In Twombly], we considered the sufficiency of a complaint alleging that
        incumbent telecommunications providers had entered an agreement not
        to compete and to forestall competitive entry, in violation of the Sherman
        Act, 15 U.S.C. § 1. Recognizing that § 1 enjoins only anticompetitive
        conduct “effected by a contract, combination, or conspiracy,”
        Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 775
        (1984), the plaintiffs in Twombly flatly pleaded that the defendants “ha[d]
        entered into a contract, combination or conspiracy to prevent competitive
        entry . . . and ha[d] agreed not to compete with one another.” 550 U.S.,
        at 551 (internal quotation marks omitted). The complaint also alleged
        that the defendants’ “parallel course of conduct . . . to prevent
        competition” and inflate prices was indicative of the unlawful agreement
        alleged. Ibid. (internal quotation marks omitted).
        The Court held the plaintiffs’ complaint deficient under Rule 8. In doing
        so[,] it first noted that the plaintiffs’ assertion of an unlawful agreement
        was a “‘legal conclusion’” and, as such, was not entitled to the
        assumption of truth. Id., at 555. Had the Court simply credited the
        allegation of a conspiracy, the plaintiffs would have stated a claim for
        relief and been entitled to proceed perforce. The Court next addressed
No. 07-4464        Tam Travel, et al. v. Delta Airlines, et al.                   Page 11


       the “nub” of the plaintiffs’ complaint – the well-pleaded, nonconclusory
       factual allegation of parallel behavior – to determine whether it gave rise
       to a “plausible suggestion of conspiracy.”              Id., at 565-566.
       Acknowledging that parallel conduct was consistent with an unlawful
       agreement, the Court nevertheless concluded that it did not plausibly
       suggest an illicit accord because it was not only compatible with, but
       indeed was more likely explained by, lawful, unchoreographed
       free-market behavior. Id. at 567. Because the well-pleaded fact of
       parallel conduct, accepted as true, did not plausibly suggest an unlawful
       agreement, the Court held the plaintiffs’ complaint must be dismissed.
       Id., at 570.
Id. (emphasis added).

                                            B.

       Plaintiffs first argue that Twombly is distinguishable because their Amended
Complaint “makes independent allegations of actual agreement.” Plaintiffs contend that
¶¶ 90, 91, and 121 independently allege an illegal agreement. In ¶ 121, plaintiffs use the
word “agreement,” asserting that “the conduct of Defendants described hereinabove, and
. . . the agreement between and among Defendants to reduce, cap and eliminate
commissions paid to plaintiffs” violates the Sherman Act. (Emphasis added.) This
averment is nothing more than a legal conclusion “masquerading” as a factual allegation.
See Eidson, 510 F.3d at 634. The Supreme Court rejected a similar argument in
Twombly, holding that “a few stray statements speak[ing] directly of agreement . . . are
merely legal conclusions resting on [] prior allegations.” Twombly, 550 U.S. at 564.

       Paragraphs 90 and 91 of the Amended Complaint assert that defendants’
executives, who were “responsible for [] setting [] commission levels . . . met frequently
during the period of cuts and caps,” which “afforded these persons the opportunity to . . .
conspire” and “communicate[] with one another for the purpose of . . . implementing . . .
their common plan . . . .” These allegations, however, aver only an opportunity to
conspire, which does not necessarily support an inference of illegal agreement. In fact,
¶¶ 90 and 91 are located in a section of the Amended Complaint entitled “Opportunities
for Defendants to Combine and Conspire.” We conclude that plaintiffs’ attempt to
distinguish Twombly on the basis that plaintiffs allege “actual agreement” fails.
No. 07-4464        Tam Travel, et al. v. Delta Airlines, et al.                   Page 12


                                            C.

       Next, plaintiffs argue that the district court erred when it dismissed their § 1
claim against Alaska, AAG, Horizon, and America West because the Amended
Complaint contained more than bare assertions of conspiracy and parallel conduct. We
disagree.

       In each of the four references to Alaska in the Amended Complaint, plaintiffs
allege only that Alaska adopted uniform commission cuts in 1997, 1999, 2000, and 2001.
The Amended Complaint does not contain any factual allegations to support Alaska’s
involvement in the conspiracy, beyond its parallel behavior. America West is also
referred to four times but, like Alaska, plaintiffs allege parallel conduct alone and fail
to aver facts sufficient to implicate America West in any conspiracy.

       AAG and Horizon are also named defendants and parties to this appeal, but
neither is mentioned in the body of the Amended Complaint, nor do plaintiffs specify
how these defendants are involved in the alleged conspiracy. Consequently, if these
“defendant[s] [sought] to respond to plaintiffs’ [] allegations in the § 1 context, [they]
would have little idea where to begin.” Twombly, 550 U.S. at 564 n.10.

       Plaintiffs attempt to implicate these defendants in the purported conspiracy by
relying on several vague allegations contained in the Amended Complaint that refer to
“defendants” or “defendants’ executives.” However, plaintiffs’ reliance on these
indeterminate assertions is misplaced because they represent precisely the type of naked
conspiratorial allegations rejected by the Supreme Court in Twombly. See Twombly, 550
U.S. at 565 n.10 (stating that where “complaint [] furnishes no clue” as to which
defendants supposedly agreed or when and where the illicit agreement took place, the
complaint fails to give adequate notice as required by Fed. R. Civ. P. 8). “A statement
of parallel conduct, even conduct consciously undertaken, needs some setting suggesting
the agreement necessary to make out a § 1 claim; without that further circumstance
pointing toward a meeting of the minds, an account of a defendant’s commercial efforts
stays in neutral territory.” Id. at 557. For these reasons, we hold that the district court
No. 07-4464            Tam Travel, et al. v. Delta Airlines, et al.                              Page 13


properly dismissed plaintiffs’ § 1 claim against Alaska, AAG, Horizon, and America
West. Thus, only defendants Continental and American remain.

                                                   D.

         Finally, plaintiffs argue that factual allegations in their Amended Complaint raise
a reasonable expectation that discovery will reveal circumstantial evidence sufficient to
suggest an antitrust conspiracy similar to that present in Interstate Circuit v. United
States, 306 U.S. 208 (1939). In this regard, plaintiffs’ Amended Complaint alleges that:

         Each Defendant knew that concerted action to reduce and cap
         commissions was contemplated and invited. Each Defendant adhered to
         the common scheme to reduce and cap commissions and participated in
         it. Each Defendant was advised that every other Defendant was invited
         to participate. Each Defendant knew that cooperation was essential to
         successful operation of the plan.
         In Interstate Circuit, the Supreme Court held that a pattern of uniform admission
ticket prices at subsequent-run theaters was sufficient to permit a fact-finder to infer the
existence of an illegal agreement.6 Plaintiffs focus on the following language of
Interstate Circuit:

         Each was aware that all were in active competition and that without
         substantially unanimous action with respect to the restrictions for any
         given territory there was risk of a substantial loss of the business and
         good will of the subsequent-run and independent exhibitors, but that with
         it there was the prospect of increased profits.
306 U.S. at 222.

         However, plaintiffs fail to acknowledge the salient evidence of unlawful
collusion presented in Interstate Circuit. Specifically, in Interstate Circuit, a Texas
movie theater chain sent an identical letter to eight major movie distributors threatening



         6
            We recognize that Interstate Circuit was decided at a more advanced stage of the legal process,
and we do not suggest that the same standards ought to be applied on a motion to dismiss, even under
Twombly. However, plaintiffs argue that they have alleged enough factual matter “to raise a reasonable
expectation that discovery will reveal” circumstantial “evidence of illegal agreement,” Twombly, 550 U.S.
at 556, analogous to the circumstantial evidence discovered in Interstate Circuit. Thus, we examine
plaintiffs’ complaint with an eye to any factual allegations that would make it “reasonable” to “expect []”
that similar circumstantial evidence would surface during discovery. Id.
No. 07-4464        Tam Travel, et al. v. Delta Airlines, et al.                   Page 14


to discontinue showing their films if the distributors did not require all subsequent-run
theaters to charge a minimum admission price of twenty-five cents. Id. at 216-17. The
admission price customarily charged in independently operated subsequent-run theaters
in Texas at that time was less than twenty-five cents. Id. at 217. Soon thereafter, each
distributor required all subsequent-run theaters showing their films to charge a minimum
of twenty-five cents.

       The Supreme Court concluded that Interstate Circuit’s letter, which listed all
eight distributors as addressees, provided uncontested evidence that each distributor
knew about the involvement of the others and constituted persuasive evidence of a
conspiracy, particularly because the defendants could offer no alternative reason for their
parallel pricing demands. Id.

       Plaintiffs point to the Airline Reporting Corporation (“ARC”), which is an
information clearinghouse for airlines. The ARC provides information on ticket
distribution, reporting and settlement services, and base commission rates paid to travel
agents. However, there is no allegation in the Amended Complaint that ARC could
provide defendants with commission reduction information before defendants
implemented their rate reductions. According to the Amended Complaint, every leader
airline (the first to announce and implement a commission cut) publicly announced its
cut and implemented the change almost immediately. Thus, defendants’ access to ARC
does not suggest a viable means to collude on commission rates before such reductions
occurred.

       In Monsanto Co. v. Spray-Right Service Corp., 465 U.S. 752, 768 (1984)
(emphasis added), the Supreme Court established the modern standard to evaluate
evidence bearing on concerted action:

       The correct standard is that there must be evidence that tends to exclude
       the possibility of independent action . . . . That is, there must be direct
       or circumstantial evidence that reasonably tends to prove that the
       [defendant] and others had a conscious commitment to a common
       scheme designed to achieve an unlawful objective.
No. 07-4464            Tam Travel, et al. v. Delta Airlines, et al.                               Page 15


         We applied this standard in Re/Max Int’l, Inc. v. Realty One, Inc., 173 F.3d 995
(6th Cir. 1999), wherein the plaintiff, a national real estate brokerage franchiser, sued
two local real estate firms, alleging a violation of § 1 of the Sherman Act.7 Under the
local firms’ adverse-splits policy, whenever Re/Max agents were involved in a
transaction, defendants paid them only 25 or 30 percent of the commission, rather than
the industry norm of a 50/50 split. Re/Max alleged that the adverse-splits policy, the
means by which defendants controlled the market for hiring real estate agents, violated
§ 1. 173 F.3d at 1010. Re/Max claimed that the adverse-splits policy lowered its sales
revenue and prevented it from recruiting knowledgeable and experienced sales agents
because both defendants adopted a policy that paid its agents less than the industry norm.
Id.

         We reversed the district court’s grant of summary judgment in favor of the
defendants, holding that the plaintiff provided sufficient circumstantial evidence tending
to exclude the possibility of independent conduct. Id. at 1025. We concluded the
following “plus factors” were important when evaluating circumstantial evidence of
concerted action:

         (1) whether the defendants’ actions, if taken independently, would be
         contrary to their economic self-interest; (2) whether defendants have
         been uniform in their actions; (3) whether defendants have exchanged or
         have had the opportunity to exchange information relative to the alleged
         conspiracy; and (4) whether defendants have a common motive to
         conspire. Ordinarily, an affirmative answer to the first of these factors
         will consistently tend to exclude the likelihood of independent conduct.
Id. at 1009 (internal citation omitted).

         Key to our decision in Re/Max was evidence that use of the adverse-splits policy
would not be in either defendant’s independent economic interest. If only one defendant
adopted the policy, Re/Max agents would simply deal with the other defendant, and thus


         7
           We note that Re/Max Int’l, Inc. was an appeal from a grant of summary judgment. Here, our
review is constrained by Fed. R. Civ. P. 12(b)(6). Nonetheless, plaintiffs argue they have put forth factual
allegations that would make it reasonable to expect that discovery will reveal evidence of the Re/Max “plus
factors.” This analysis is instructive insofar as it illuminates the plausibility of defendants’ lawful,
unchoreographed free-market behavior.
No. 07-4464         Tam Travel, et al. v. Delta Airlines, et al.                    Page 16


sales and revenue would shift away from one defendant to the other. Id. at 1010-11.
Moreover, even if one defendant adopted the “adverse splits policy on its own (a ‘highly
unlikely’ event in the first place),” the other local real estate firm had a strong incentive
not to do likewise. Id. Thus, we concluded that the local firms’ decision to adopt the
adverse-splits policy, despite a natural inclination not to do so, was persuasive evidence
of prior agreement. Id.

        Citing Re/Max, plaintiffs assert that no rational airline would attempt to cut
commission rates without entering into a prior agreement because the leader airline
would lose revenue to its competitors. In support of this position, plaintiffs point to
American’s unsuccessful attempt to cut base commission rates from 10% to 7% in 1983
and United’s similar attempt to reduce base commission rates in 1981. Plaintiffs assert
that both airlines quickly retracted their base commission cuts because the travel
agencies retaliated by booking their customers on airlines that maintained the status quo
commission rate.      Plaintiffs contend that when one of defendants’ competitors
announced a base commission cut, each defendant had a strong incentive not to adopt
that cut because its natural economic inclination would be to absorb any revenue shifted
away from its competitor.

        First, Michael Gunn, former Executive Vice President of Marketing and Planning
at American, testified that an independent reduction in commission rates would advance
each defendant’s economic self-interest.         Each defendant could have calculated
reasonably that a successful commission cut would yield greater net revenue than the
likely net loss due to business diverted by plaintiffs to their competitors. This decision
is especially plausible in a marketplace that has changed fundamentally since 1983 due
to technological advances in airline ticket purchasing. Defendants contend that new,
alternate methods for airfare purchase – including direct purchases by customers on the
internet – provided a greater economic incentive to cut commission rates on a trial-and-
error basis. Defendants also assert that it was simple and inexpensive for a leader airline
to innovate and then wait and see, with the hope and expectation that its competitors
would institute similar cuts. If the industry did not follow, the leader airline could
No. 07-4464             Tam Travel, et al. v. Delta Airlines, et al.                                   Page 17


simply retract the cut.            Thus, defendants have offered a reasonable, alternative
explanation for their parallel pricing behavior. In addition, if we follow plaintiffs’
argument to its logical end, it is difficult to imagine a scenario where a commission cut
could ever occur without collusion. Based on these facts, we conclude that each
defendant had a reasonable, independent economic interest in adopting a competitor’s
commission cut rather than to maintain the status quo.

         We therefore hold that plaintiffs have failed to allege sufficient facts plausibly
suggesting (not merely consistent with) an agreement in violation of § 1 of the Sherman
Act because defendants’ conduct “was not only compatible with, but indeed was more
likely explained by, lawful, unchoreographed free-market behavior.” Ashcroft v. Iqbal,
129 S. Ct. at 1950.8 Pursuant to Twombly, district courts must assess the plausibility of
an alleged illegal agreement before parties are forced to engage in protracted litigation
and bear excessive discovery costs. Twombly, 550 U.S. 558-59. In this regard, we note
that the plausibility of plaintiffs’ conspiracy claim is inversely correlated to the
magnitude of defendants’ economic self-interest in making the cuts.9 See Matsushita,
475 U.S. at 57 (defining ambiguous evidence as that which is as consistent with
permissible competition as with illegal conspiracy). We are not persuaded by plaintiffs’
argument that defendants would not seek to reduce base commissions independently,
especially during the late 1990s and into 2002, where changes in the marketplace
provided consumers with alternate ticket-purchasing options. As the Court stated in



         8
             We note that plaintiffs opted-out of a class action that alleged an identical § 1 claim against these
defendants. Hall v. United Air Lines, Inc., 296 F. Supp. 2d 652 (E.D.N.C. 2003), aff’d sub nom. Hall v.
Am. Airlines, Inc., 118 F. App’x 680 (4th Cir. 2004). In Hall, the district court granted summary judgment
in favor of defendants, finding “overwhelmingly compelling evidence that the commission cuts and caps
. . . were just as likely the result of competitive conduct and natural changes in the market as of the illegal
conspiracy alleged by plaintiffs.” Id. at 671. Although a district court decision affirmed by the Fourth
Circuit is not authoritative in the Sixth Circuit, we think that the result in Hall is something we should at
least consider (when analyzing plausibility), “both for its persuasive power, and because it involves the
same facts.” Premier Elec. Constr. Co. v. Nat’l Elec. Contractors Ass’n, Inc., 814 F.2d 358, 367 (7th Cir.
1987) (citation omitted) (considering Fourth Circuit decision in antitrust action involving defendants whose
activities spanned more than one court of appeals). We also acknowledge the Seventh Circuit’s statement
in Premier, which warned, “[o]nly the gravest reasons should lead [a] court in [an] opt-out suit to come
to a conclusion that departs from that in the class suit.” Id. at 367-68.
         9
           Defendants assert that “each percentage point reduction in travel agent commissions was worth
approximately $56 million, and that by 2002, the combined value of the commission cuts was more than
a billion dollars.”
No. 07-4464        Tam Travel, et al. v. Delta Airlines, et al.                   Page 18


Twombly, “there is no reason to infer that [these defendants] had agreed among
themselves to do what was only natural anyway.” 550 U.S. at 566.

       Next, plaintiffs rely upon ¶ 87 of their Amended Complaint, which includes an
excerpt from the deposition of Michael Gunn. Gunn testified that “industry consensus”
on new commission levels was necessary for the commission cuts and caps to hold.
Gunn also testified that “he had to match commission cuts exactly or he would undercut
the movement.” Plaintiffs argue that Gunn’s testimony provides strong evidence of an
antecedent agreement. We disagree.

       The district court reviewed Gunn’s deposition testimony in its entirety and
carefully considered all of the factual allegations which, taken as true, could plausibly
imply that defendants entered into a preceding agreement. After doing so, the district
court ruled that there were insufficient facts to raise a reasonable expectation that
discovery would reveal evidence of an illegal agreement. In reaching its conclusion, the
district court noted the importance of the following portion of Gunn’s testimony:

       Q. [Mr. Alioto (counsel for plaintiff)]: It was, in fact, represented to you
       by another person at American that in order for these reductions of
       commissions to work that you had to get common agreement of the
       industry; that was the most important thing?
       A. [Mr. Gunn]: I would respond again that my belief is you have to be
       matched if the cut is to be [successful]. But I don’t know I don’t care if
       there’s a common agreement or other. All I care about is how people
       behave if I do something or how I believe if they do something. To me
       that’s not consensus. That’s taking a common action after the fact which
       is to me a lot different than consensus. Consensus speaks to prior
       agreement. There certainly wasn’t any prior agreement in these cases.


       Based on the facts alleged by plaintiffs, it is just as likely that American’s 2001
commission cap was an effort to reduce its internal commission costs, with the ancillary
hope that its competitors would follow its lead. As stated by a respected antitrust
authority:

       When one oligopolist raises its price, each of its rivals must decide
       whether to follow. Continuing the previous price would allow each of
No. 07-4464        Tam Travel, et al. v. Delta Airlines, et al.                   Page 19


       the others to increase its sales if the leader persists in charging a higher
       price. But each knows that the leader is likely to retract an increase that
       is not followed. Accordingly, each rival asks itself whether it is better
       off at the lower price when it is charged by all or at the higher price when
       charged by all. If the latter, as will often be the case, the leader’s price
       increase is likely to be followed.
                                          * * *
       The price leader may assume that others have made a similar calculation
       about which price will maximize profits. Or the leader may simply
       proceed by trial and error: raise the price and see what happens,
       especially where reversing an unfollowed price rise is not very costly.
6 PHILLIP E. AREEDA & HERBERT HOVENKAMP, ANTITRUST LAW ¶ 1410b (2d ed. 2003).

       In addition, the matching of American’s 2001 commission cap by the other
defendants is not necessarily indicative of prior agreement. On this issue, the Seventh
Circuit has observed that:

       [a] firm in a concentrated industry typically has reason to decide
       (individually) to copy an industry leader.                After all, a
       higher-than-leader’s price might lead a customer to buy elsewhere, while
       a lower-than-leader’s price might simply lead competitors to match the
       lower price, reducing profits for all. One does not need an agreement to
       bring about this kind of follow-the-leader effect in a concentrated
       industry.
Reserve Supply Corp. v. Owens-Corning Fiberglas Corp., 971 F.2d 37, 53 (7th Cir.
1992). Thus, each defendant’s decision to match a new commission cut was arguably
a reasoned, prudent business decision. Moreover, if each defendant asked “itself”
whether it was “better off” paying base commissions (paid by all) or not paying base
commissions (eliminated by all), each defendant would plausibly elect the latter (from
a purely economic standpoint).

       Plaintiffs also argue that their factual allegations regarding defendants’
opportunities to conspire are enough to nudge their § 1 claim across the line from
conceivable to plausible. Twombly, 550 U.S. at 570. Specifically, plaintiffs rely upon
¶ 100, which alleges that “an Executive Vice-President of Marketing & Distribution for
Northwest Airlines, a Senior Vice President of Planning for US Air, and a Senior Vice
No. 07-4464        Tam Travel, et al. v. Delta Airlines, et al.                 Page 20


President of Marketing for American met for three hours in a Dallas hotel conference
room”; and upon ¶ 102 as well, which avers that “in 2001, a Delta senior executive met
for a weekend of golf and socializing at the home of an American executive responsible
for setting American’s commission levels.         Four months later, American led an
industry-wide reduction on commission caps from $20 to $10 . . . .”

       However, plaintiffs’ Amended Complaint does not cite any specific meetings that
involved both Continental and American, the only two remaining defendants. The fact
that American and Continental gathered at industry trade association meetings during
the seven-year period when defendants reduced commission rates should not weigh
heavily in favor of suspecting collusion. The Supreme Court rejected a similar argument
in Twombly:

       From the allegation that [defendants] belong to various trade
       associations, . . . the dissent playfully suggests that they conspired to
       restrain trade, an inference said to be buttressed by the common sense of
       Adam Smith. If Adam Smith is peering down today, he may be surprised
       to learn that his tongue-in-cheek remark would be authority to force his
       famous pinmaker to devote financial and human capital to hire lawyers,
       prepare for depositions, and otherwise fend off allegations of conspiracy;
       all this just because he belonged to the same trade guild as one of his
       competitors when their pins carried the same price tag.
Twombly, 550 U.S. at 567 n.12 (internal citation omitted). Moreover, a mere opportunity
to conspire does not, standing alone, plausibly suggest an illegal agreement because
American’s and Continental’s presence at such trade meetings is more likely explained
by their lawful, free-market behavior. Iqbal, 129 S. Ct. at 1950.

       Finally, plaintiffs argue that we should rely upon a statement made in 1983 by
a former American Airlines executive who “approved commission cuts that are the
subject of this action.”    Plaintiffs allege that this unnamed American executive
encouraged an executive of a competitor airline (also unnamed) to increase its fares by
20% to “make more money.”

       Plaintiffs presumably refer to a statement made by Robert Crandall, former
President of American, to Howard Putnam, former President of the now-defunct Braniff
No. 07-4464        Tam Travel, et al. v. Delta Airlines, et al.                   Page 21


airlines. See United States v. Am. Airlines, 743 F.2d 1114, 1116 (5th Cir. 1984). First,
we note that Crandall made this statement more than twenty-five years ago. Second, the
Amended Complaint avers only that Crandall “approved commission cuts” and fails to
allege that he was actually involved in the conspiracy at issue here. In addition, we note
that Crandall retired from American in 1998, placing his departure as CEO at the very
beginning of plaintiffs’ conspiratorial time line.

       We conclude that Crandall’s prior statement is too remote in time to support a
plausible inference of agreement. We also do not view his statement as tending to raise
a reasonable expectation that discovery will reveal evidence of an illegal agreement
between Continental and American. See Twombly, 550 U.S. at 555-56.

                                            IV.

       For these reasons, we affirm the judgment of the district court.
No. 07-4464            Tam Travel, et al. v. Delta Airlines, et al.                              Page 22


                                       __________________

                                            DISSENT
                                       __________________

         MERRITT, Circuit Judge, dissenting. In the recent Twombly and Iqbal cases,
quoted and discussed at length by my colleagues in their majority opinion, the Supreme
Court has started to modify somewhat, but not drastically, the notice pleading rules that
have reigned under Conley v. Gibson, 355 U.S. 41, 45 (1957) (“a complaint should not
be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff
can prove no set of facts in support of his claim which would entitle him to relief”).
These two cases now require more than simple notice and conclusory statements of
ultimate facts about the case. Instead plaintiffs must plead “sufficient factual matter” to
state a legal claim or cause of action that is not only “conceivable” but also “plausible,”
independently of the notice given and the legal conclusions stated — in short, a set of
“well-pleaded factual allegations” that make the cause of action “plausible.” Iqbal, 129
S. Ct. at 1949-51 (2009). The Supreme Court majority has made clear that it is not
making a major change in the law of pleading with Twombly and its progeny.1

         As with any other new, general legal standard, the nature and meaning of the
newly modified standard can be understood and followed only by analyzing how the
standard is applied in actual cases like this case. Here my colleagues have seriously
misapplied the new standard by requiring not simple “plausibility,” but by requiring the
plaintiff to present at the pleading stage a strong probability of winning the case and
excluding any possibility that the defendants acted independently and not in unison. My
colleagues are requiring the plaintiff to offer detailed facts that if true would create a
clear and convincing case of antitrust liability at trial without allowing the plaintiff the
normal right to conduct discovery and have the jury draw reasonable inferences of
liability from strong direct and circumstantial evidence.


         1
           The Court has been careful to point out that Twombly should not be read to impose a “probability
requirement,” or a “‘heightened’ pleading standard.” Twombly, 550 U.S. at 556, 595 n. 14. The Court
commented that an otherwise “well-pleaded complaint may proceed even if it strikes a savvy judge that
actual proof of those facts is improbable, and that recovery is very remote and unlikely.” Id. at 556
(internal quotations omitted).
No. 07-4464         Tam Travel, et al. v. Delta Airlines, et al.                     Page 23


                                              I.

        Twombly itself was a telephone antitrust case in which the only non-conclusory
factual allegations in the complaint of a “contract, combination or conspiracy in restraint
of trade” was that the former Baby Bell telephone companies continued to do business
in their former home territories and did not “attack” and try to take market share away
from the other operating Baby Bell companies in their home region. This was the full
extent of the Twombly factual allegations of anti-competitive behavior. There was no
allegation of action, as opposed to nonaction, misfeasance as opposed to nonfeasance.
The Supreme Court sensibly pointed out that there could be many explanations for this
similar economic nonaction other than the kind of agreement not to compete required for
liability under § 1 of the Sherman Act. Thus the Supreme Court held that this one
specific factual allegation of similar conduct was insufficient alone to state a “plausible”
claim, though the Court seems to say that this kind of factual statement alone makes the
pleading issue “close.” Twombly, 550 U.S. at 557 (“allegation of parallel conduct . . .
gets the complaint close to stating a claim”).

        If the Twombly pleading issue was “close,” but insufficient, based only on
similar, stand-pat nonfeasance toward each other’s historical territory, the allegations
concerning the in unison, affirmative behavior of the airlines in this case are obviously
sufficient. The factual allegations in this case create an overwhelming case for the
plaintiff to get by a motion to dismiss on the pleading.

        Five times the airlines acted affirmatively, aggressively and publicly in unison
to cut, fix and hold the price the airlines would pay the travel agents. Although at
present there is no written contract to that effect, the facts alleged present so plain a case
that they might as well have put the plan in writing.

        1. The complaint alleges that United and American tried in 1981 and 1983,
respectively, to fix the price lower to the travel agents but the other airlines would not
go along. The allegations recite the statements of an American Airlines executive that
the airlines learned not to try again until everyone was on board. The complaint alleges
inside information tantamount to a partial confession.
No. 07-4464        Tam Travel, et al. v. Delta Airlines, et al.                   Page 24


        2. Then when they tried again in 1995 the plan went like clock-work. Everyone
followed the leader five straight times until the price reached zero. The allegations of
fact, based on testimony of insiders, was that the plan could not work without agreement
but could work if the airlines acted in unison. Since the plan worked like a charm, the
allegations raise a strong inference of agreement. Not as strong as allegations raising an
inference that “the sun will rise in the morning” based on history, but strong enough to
be more than “plausible.”

        3. The airline executives in charge must not only have had hundreds of telephone
conversations with each other and through intermediaries, but the specific, time-and-
place factual allegations are that they met frequently over the period the airlines were
acting in unison and according to plan. To suggest that they did not ever in all the
meetings and personal contacts discuss their union of interests and how the cuts were
working defies belief. The father of laissez faire economic theory, the liberal Scottish
moral philosopher, Adam Smith, made the same basic point even more forcefully in The
Wealth of Nations (1776), 230 years ago: “People of the same trade seldom meet
together, even for merriment and diversion, but the conversation ends in a conspiracy
against the public.” Book 1, Chap. 10, part 1, 148 (New York: Modern Library, 2000).
If the factual allegations of meetings are true — a matter not yet determined by an
impartial fact finder — the case of liability is certainly strong enough to go to the jury.

        4. The airlines, and specifically American Airlines’ CEO Robert Crandall,
attempted this type of coordinated scheme in the past. In 1984, Crandall was implicated
in a price-fixing conspiracy because of comments he made to a competing airline
president. In a recorded telephone conversation, the president of the competing airline
asked Crandall how both airlines could continue to enjoy a monopoly over service to
Dallas-Fort Worth International Airport, and Crandall instructed his competitor to raise
its price and American would follow suit the very next day with a price increase of its
own. U.S. v. American Airlines, Inc., 743 F.2d 1114, 1116 (5th Cir. 1984). Having
proposed to fall in line behind one another before strongly suggests that the airlines
would do it again. In fact, when Delta announced a cap on travel agent commission in
1995,    Crandall was responsible for setting American Airline’s travel agent
No. 07-4464        Tam Travel, et al. v. Delta Airlines, et al.                  Page 25


commissions. Appellants’ Reply Brief at 18. Unsurprisingly, American followed Delta’s
lead the very next day. Id.

       To summarize, the complaint alleges that price cuts could not be made absent
unilateral, follow-the-leader action by all of the defendants. It provides specific times
and locations of numerous meetings attended by the defendants. Finally, and most
importantly, the complaint ties the dates of those meetings with industry-wide
simultaneous rate cuts that followed immediately thereafter. Reading these allegations
as a whole, the complaint clearly satisfies the Twombly standard. In fact, the Supreme
Court in Twombly noted that multiple competitors making “complex and historically
unprecedented changes in pricing structure . . . for no other discernible reason” would
properly state a claim under § 1 of the Sherman Act. 550 U.S. at 557 n. 4. That appears
to be exactly the situation here.

                                            II.

       The antitrust cases decided in both courts of appeals and district courts since
Twombly and Iqbal are few, and most of the cases decided by district courts have yet
to reach the courts of appeals. But see St. Clair v. Citizens Fin. Group, No. 08-4870,
2009 WL 2186515 (3rd Cir. Jul. 23, 2009). That said, district court judges across the
country have dismissed a large majority of Sherman Act claims on the pleadings
misinterpreting the standards from Twombly and Iqbal, thereby slowly eviscerating
antitrust enforcement under the Sherman Act. See, e.g., In re Hawaiian & Guamanian
Cabotage Antitrust Litig., No. 08-md-1972 TSZ, 2009 WL 2581510 (W.D. Wash. Aug.
18, 2009); Bailey Lumber & Supply Co. v. Ga.-Pac. Corp., No. 1:08CV1394LG-JMR,
2009 WL 2872307 (S.D. Miss. Aug. 10, 2009); Burtch v. Milberg Factors, Inc., No. 07-
556-JJF-LPS, 2009 WL 1529861 (D. Del. May 31, 2009).

       The uniformity needed for the rule of law and equal justice to prevail is lacking.
This irregularity may be attributed to the desire of some courts, like my colleagues here,
to use the pleading rules to keep the market unregulated, while others refuse to use the
pleading rules as a cover for knocking out antitrust claims. Compare In re California
Title Ins. Antitrust Litig, 2009 WL 1458025 (N.D. Cal. May 21, 2009) (dismissing price-
No. 07-4464           Tam Travel, et al. v. Delta Airlines, et al.                          Page 26


fixing complaint against major title insurance agencies who jointly set rates in states
where they belonged to statutorily authorized rate setting organizations and employed
similar rates in other states) with Standard Iron Works v. Arcelormittal, No. 08-C-5214,
2009 WL 1657449 (N.D. Ill. 2009) (finding plausibility despite lack of direct evidence
of collective action by looking at a series of industry meetings attended by steel
executives that were followed by industry-wide production cuts).

                                                III.

        The Sherman Act was enacted in 1890 at the height and in the heat of
controversy during a former Gilded Age. It was enacted to deter price fixing, market
allocation among producers, and monopolization at a time of extreme disparities in
economic power and wealth brought on by an extreme version of laissez faire economic
theory.2 After a long, slow climb toward a more equal distribution of economic power
over the past century, in part because of the enforcement of the Sherman Act, we have
recently returned to the great disparities that formerly existed. The failure to regulate




        2
          See 21 Cong. Rec. 2460 (1889) (This inequality “has grown within a single generation out of
the concentration of capital into vast combinations to control production and trade and to break down
competition.”).
No. 07-4464              Tam Travel, et al. v. Delta Airlines, et al.                             Page 27


the marketplace through antitrust enforcement is probably related to the mind-set that
has dramatically reversed the earlier trend toward equality.3

         There are many, including my colleagues, whose preference for an unregulated
laissez faire market place is so strong that they would eliminate market regulation
through private antitrust enforcement. Using the new Twombly pleading rule, it is


         3
             A picture of the recent reversal of the long trend toward equality is as follows:




Forty years ago the average CEO made twenty times what the average worker did; now it is nearly 400
times. Thomas Piketty & Emmanuel Saez, Income Inequality in the United States: 1913-1998, 118 Q.J.
Econ. 1 (2003), data updated through 2007 available at http://elsa.berkeley.edu/~saez/.
          From the time of Herodotus in 500 B.C. to the present, historians and political philosophers have
believed that a high level of inequality of economic and political power undermines the basis of
constitutional democracy and stable government generally: “So the Athenians had increased in strength,
which demonstrates that an equal voice in government has beneficial impact not merely in one way, but
in every way.” THE LANDMARK HERODOTUS: THE HISTORIES 400 (Robert B. Strassler ed. 2007). “The
constitutional essential here is rather that below a certain level of material and social well-being, and of
training and education, people simply cannot take part in society as citizens, much less equal citizens...it
is what is required to give due weight to the idea of society as a fair system of cooperation between free
and equal citizens....” JOHN RAWLS, POLITICAL LIBERALISM 166 (1993).
No. 07-4464         Tam Travel, et al. v. Delta Airlines, et al.                     Page 28


possible to do away with price fixing cases based on reasonable inferences from strong
circumstantial evidence. As in this case, the proponents of this strategy propose to
require either an express written agreement among competitors or a transcribed oral
agreement to fix prices. Nothing less will do. Insider testimony, a strong motivation to
collude, and aggressive, lock-step unanimity by competitors in pricing become
insufficient to state a case. Over time, the antitrust laws fall further into desuetude as the
legal system and the market place are manipulated to benefit economic power, cartels,
and oligopolies capable of setting prices. This case is just one small step in that
direction. But this direction is unlikely to be changed unless the Supreme Court steps
in to make it clear that Twombly may not be used, as my colleagues propose, as a cover
for repealing regulation of the marketplace through private antitrust enforcement.
