Friday, December 3, 2010

11th Circuit Applies Iqbal "Judgment" and "Experience" to Tempur-Pedic Antitrust Complaint; Complaint Now Sleeps With the Fishes



Courtesy of the Chef, I see that the 11th Circuit yesterday applied Iqbal to an interesting antitrust complaint alleged against those crappy, overpriced flexible beds, and found the complaint lacking in terms of alleging a submarket specifically for crappy, overpriced flexible beds:
Here, because the district court dismissed his complaint based on its legal insufficiency, Jacobs argues that he did not have the chance to add facts in discovery which would have established visco-elastic foam mattresses as a separate relevant product submarket.

We cannot accept this argument, however, because it would absolve Jacobs of the responsibility under Twombly to plead facts “plausibly suggesting” the relevant submarket’s composition. Jacobs’s skimpy allegations of the relevant submarket do not meet this obligation. The complaint alleges, without elaboration, that “[v]isco-elastic foam mattresses comprise a relevant product market, or submarket, separate and distinct from the market for mattresses generally, under the federal antitrust laws.” This conclusional statement merely begs the question of what, exactly, makes foam mattresses comprise this submarket. The complaint provides no factual allegations of the cross-elasticity of demand or other indications of price sensitivity that would indicate whether consumers treat viscoelastic foam mattresses differently than they do mattresses in general. Consumer preferences for visco-elastic foam mattresses versus traditional innerspring mattresses, and the costs associated with their sale, may vary widely, may vary little, or may not vary at all. Jacobs’s complaint, however, gives no indication of which of these is the case. The allegations that visco-elastic foam mattresses are more expensive than traditional innerspring mattresses and that visco-elastic foam mattresses have “unique attributes” are similarly of little help. They do not indicate the degree to which consumers prefer visco-elastic foam mattresses to traditional mattresses because of these unique attributes and differences in price.  Would, for example, a consumer whose innerspring mattress was due for replacement be more likely to purchase another innerspring mattress or substitute a visco-elastic foam model for it? Are visco-elastic foam mattresses put to different uses (as luxury goods, such as in fine hotels and within higher income brackets) than are traditional mattresses? These types of questions, which our precedent makes clear are crucial to understanding whether a separate market exists, go unanswered in the complaint.
Ok, these are fair points raised by the 11th, and since it was the plaintiffs' first shot at a complaint and they never amended and the defendant never answered, I would assume they'll get a chance to fill in this helpful factual detail at the amended complaint stage, which was inexplicably denied by the district court below.

That assumption would be wrong:
Having read Jacobs’s motion, we conclude that it did nothing but ask the district court to reexamine an unfavorable ruling. Reconsidering the merits of a judgment, absent a manifest error of law or fact, is not the purpose of Rule 59. We find nothing in the district court’s order that would constitute a manifest error of law or fact. Jacobs’s remedy, if he thought the district court ruling was wrong, was to appeal, a step he has taken. Since we have concluded that the court did not err in dismissing Jacobs’s complaint, it necessarily follows that it did not abuse its discretion in denying Rule 59(e) relief.
As noted in the LA Times and USA Today just this morning, there is a major judicial crisis, with huge vacancies and overloaded courts struggling to administer justice.

So it's good to see the 11th Circuit doing its part to quickly clear all those clogged federal dockets.

24 comments:

  1. SFL,

    I'm very glad that you decided to write about this case. After numerous tries, beginning with Sinaltrainal, the Eleventh Circuit finally incorporated the "two-pronged approach" that Iqbal says courts may -- and I think really ought -- to use. That is, first, isolate and disgard all legal conclusions. Second, determine whether the reminaing well-pleaded allegations plausibly give rise to an entitlement to relief.

    Without following this approach, TwIqbal is, to put it nicely, tricky to apply.

    The Second Circuit has explicitely followed this approach for some time. It's nice that the Eleventh has finally jumped on board as well.

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  2. What happened to giving guidance to litigants especially when the standard is so vague???

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  3. Thanks a lot. Nice picture. I have three meetings today outside the office and another in a restaurant tonight to collect money. After your post, I am sitting with my back to the wall. No one, and I mean no one, is walking behind me!

    ReplyDelete
  4. The Eleventh Circuit has jumped the shark over to neanderthal land. how they can affirm a judgment on a first time complaint on an Iqbal pleading issue is beyond me. Time for these old geezers to go. Tjoflat in particular has lost his marbles. I realize most eleventh circuit judges probably agree; but they probably won't bother trying to fix this nor tell Tjoflat that it is really time for him to go. The sad fact is that this complaint should probably be dismissed. There is no separate market for these mattresses than matresses in general. But give a brother a chance to make a case, sheesh.

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  5. ditto 10:56, these judges are out of touch.

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  6. THE 11 TH CIRCUIT = DICKS

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  7. Nice post, kind of drawn out though. Really good subject matter though.

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  8. Wow, that's crazy man. They should really try to do something to fix that.

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