Barton recently achieved a landmark ruling in the New York Court of Appeals, the highest level Appellate Court in the State of New York. Like the United States Supreme Court, the New York Court of Appeals agrees to hear only a relatively small number of important cases every year. Unanimously overruling the lower courts (including the trial court and a five-member panel of the intermediate “First Department” appellate court), the Court of Appeals affirmed that New York courts should apply a liberal pleading standard in evaluating antitrust claims in New York state courts.
The Court also reiterated that the Donnelly Act has a wider scope than the Federal Sherman Act because the Donnelly Act prohibits anticompetitive “arrangements,” which the Sherman Act does not. The Court of Appeals therefore confirmed that New York Courts must not follow the restrictive “plausibility” pleading standard that the United States Supreme Court in Bell Atlantic v. Twombly mandated for claims under the Sherman Act.
Rather, in evaluating pleadings under the Donnelly Act, the Court of Appeals confirmed that New York courts are to determine only whether the fact as alleged “and all the possible inferences to be drawn therefrom are sufficient to allege concerted action between two or more entities and support a cognizable Donnelly Act counterclaim under our liberal notice pleading standards.”
The Court of Appeals recognized that the antitrust theory in the counterclaims filed by Barton was viable and adequately pled. This important ruling reflects New York’s policy in support of free and fair competition and recognizes that attorneys should be encouraged and permitted to aggressively pursue antitrust claims under the Donnelly Act.
Barton client Go New York Tours, Inc., which offers a “hop-on, hop-off” bus tour experience, claimed that rival tour companies, including Gray Line New York Tours, Inc., as well as local affiliates of the Big Bus Group, were engaging in anticompetitive behavior to shut Go New York out of relevant tourism markets. Go New York alleged that as a consequence, consumers paid higher prices and had fewer options in the relevant markets, and that Go New York suffered substantial damages as a result of the anticompetitive conspiracy involving its primary competitors.
A New York trial court originally granted Gray Line a motion to dismiss Go New York’s counterclaim, failing to properly apply New York’s liberal pleading standard on claims arising under the Donnelly Act. The Appellate Division, First Department, an intermediate appellate court, unanimously affirmed the ruling of the trial court. However, the Court of Appeals unanimously reversed both the intermediate appellate court and the trial court and remanded the case to permit Go New York to conduct discovery and otherwise pursue its antitrust claims.
This landmark holding may well be the most significant win for prospective antitrust plaintiffs since Twombly. New York arguably is the financial capital of the world, and the Court of Appeals has made clear that it is an attractive venue for plaintiffs to pursue antitrust claims where their market competitors engage in anticompetitive “arrangements” and other anticompetitive tactics that have a substantial impact within the State of New York.
The case has been covered by both Wolters Kluwers (read here) and New York Magazine’s publication Curbed (read here).
