Burtch v. Milberg Factors, Inc., 662 F.3d 212

Background

Factory 2-U, a garment retailer, faced credit declines from factors that financed garment manufacturers' receivables and affected its inventory and operations.
Factors determined credit terms, limits, and whether purchases by Factory 2-U would be financed, influencing Factory 2-U's ability to sell merchandise.
Burtch, as Chapter 7 Trustee, sued several factors under Section 1 of the Sherman Act alleging cartel-like information sharing and coordinated credit terms.
The original complaint asserted 3 Sherman Act claims: per se price fixing, per se group boycott, and a rule-of-reason challenge to an anticompetitive agreement.
The District Court granted motions to dismiss under Twombly/Iqbal, finding no plausible agreement; Burtch sought leave to amend (PAC) to add more allegations.
The District Court denied leave to amend, holding amendments would be futile; Burtch timely appealed.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Did Burtch plead a plausible Section 1 agreement?	Burtch contends the 27 conversations show a concerted plan to fix credit terms.	Defendants argue there is no direct or circumstantial evidence of an agreement; exchanges of credit information can be independent actions.	No; no plausible agreement pled.
Are exchanges of credit information per se illegal under Section 1?	Forward-looking credit information exchange can be unlawful per se.	Exchanging credit information without an agreement does not per se violate §1; price information exchanges require an agreement.	Not per se illegal; requires an agreement or plausible conspiracy.
Were the allegations sufficient under the Twombly/Iqbal plausibility standard?	Plaintiff argues repeated parallel actions and secret meetings imply an agreement.	Allegations are conclusory and lack specific time/place/person, plus lack plus-factors.	Not plausible; allegations insufficient.
Was the denial of leave to amend (Rule 59/15) proper in light of futility?	PAC would cure pleading deficiencies and add new theory (information sharing).	Amendment would be futile since no viable§1 claim is pled even with added allegations.	Yes; amendment futile; denial affirmed.

Key Cases Cited

Cement Mfrs. Protective Ass'n v. United States, 268 U.S. 588 (U.S. 1925) (exchanges of credit information without an agreement may not violate §1)
Zoslaw v. MCA Distributing Corp., 693 F.2d 870 (9th Cir. 1982) (exchange of credit information not per se violation; agreement required for liability)
Michelman v. Clark-Schwebel Fiber Glass Co., 534 F.2d 1036 (2d Cir. 1976) (exchange of credit information may be lawful if independent judgment exercised)
Goldfarb v. Virginia State Bar, 421 U.S. 773 (U.S. 1975) (forward-looking price information is not automatically illegal; requires naked price-fixing agreement)
Catalano v. Target, 446 U.S. 643 (U.S. 1980) (credit terms can be price-related but not per se violation)
United States v. Container Corp., 393 U.S. 333 (U.S. 1969) (exchange of price information can violate §1 where an agreement exists)
United States v. Citizens & Southern Nat'l Bank, 422 U.S. 86 (U.S. 1975) (dissemination of price information not per se violation)
Gypsum Co. v. United States, 438 U.S. 422 (U.S. 1978) (price data exchanges not inherently unlawful)
Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (plausibility pleading standard for §1 claims)
Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (plausibility standard refined; needs more than mere conclusions)
In re Baby Food Antitrust Litig., 166 F.3d 112 (3d Cir. 1999) (plus factors and plausibility in anti-trust pleading)
Great Western Mining & Min. Co. v. Rothschild LLP, 615 F.3d 159 (3d Cir. 2010) (contextual plausibility and pleading standards in conspiracy cases)
Ins. Brokerage Antitrust Litig., 618 F.3d 294 (3d Cir. 2010) (plus factors and plausibility framework for §1 pleadings)