Burtch v. Milberg Factors, Inc.

PRECEDENTIAL

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________

No. 10-2818
_____________

JEOFFREY L. BURTCH, Chapter 7 Trustee,
Factory 2-U stores, Inc., et al.
Appellant

v.

MILBERG FACTORS, INC.; CAPITAL FACTORS, INC.;
THE CIT GROUP/COMMERCIAL SERVICES, INC.;
GMAC COMMERCIAL FINANCE, LLC;
HSBC BUSINESS CREDIT (USA), INC.;
ROSENTHAL & ROSENTHAL, INC.;
STERLING FACTORS CORPORATION;
WELLS FARGO CENTURY, INC.
_____________

APPEAL FROM THE UNITED STATES DISTRICT
COURT FOR THE DISTRICT OF DELAWARE
___________

(D.C. Civ. Action No. 1:07-cv-00556)
District Judge: Honorable Joseph J. Farnan
______________

Argued on April 28, 2011

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 ______________

Before: SLOVITER, GREENAWAY, JR., and ROTH,
Circuit Judges.

(Opinion Filed: October 24, 2011)

______________

Joseph D. Mancano (argued)
J. Peter Shindel Jr.
Pietragallo Gordon Alfano Bosick & Raspanti, LLP
1818 Market Street, Suite 3402
Philadelphia, PA 19103
Counsel for Appellant

Celia Goldwag Barenholtz (argued)
Cooley LLP
1114 Avenue of the Americas
New York, NY 10036
Counsel for Appellee HSBC Business Credit (USA),
Inc.

Bernard Beitel (argued)
Daniel Wallen
Lloyd M. Green
Otterbourg, Steindler, Houston & Rosen, P.C.
230 Park Avenue
New York, NY 10169
Counsel for Appellee Wells Fargo Century, Inc.

Ashley B. Stitzer

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Stephen B. Brauerman
Bayard, P.A.
222 Delaware Avenue, Suite 900
Wilmington, DE 19899
Counsel for Appellee HSBC Business Credit (USA),
Inc.

Denise Seastone Kraft
K. Tyler O‟Connell
Edwards Angell Palmer & Dodge LLP
919 N. Market Street, Suite 1500
Wilmington, DE 19801
Counsel for Appellee Wells Fargo Century, Inc.

C. Barr Flinn
Elena C. Norman
Karen E. Keller
Monté T. Squire
Young Conaway, Stargatt & Taylor, LLP
The Brandywine Building
1000 West Street, 17th Floor
Wilmington, DE 19801
Counsel for Appellee Rosenthal & Rosenthal, Inc.

Gregory A. Inskip
David J. Baldwin
Porter Anderson & Corron LLP
1313 North Market Street
P.O. Box 951
Wilmington, DE 19899
Counsel for Appellee Capital Factors, Inc.
______________

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 OPINION
______________

GREENAWAY, JR., Circuit Judge.

Jeoffrey L. Burtch (“Burtch” or “Appellant”), Chapter
7 Trustee of Factory 2-U Stores, Inc. (“Factory 2-U”), appeals
the District Court‟s May 31, 2009 Order granting Defendants‟
Motion to Dismiss as well as the District Court‟s June 4, 2010
Order denying leave to amend Burtch‟s Complaint. Capital
Factors, Inc. (“Capital”), HSBC Business Credit (“HSBC”),
Rosenthal & Rosenthal, Inc. (“Rosenthal”), and Wells Fargo
Century, Inc. (“Wells Fargo”), collectively (“Appellees,”
“Defendants,” or “Factors”)1 are “factors” who play a role in
financing purchase and sale transactions between garment
retailers, such as Factory 2-U, and garment manufacturers.
According to Appellant, the Factors (1) shared credit
information among themselves regarding Factory 2-U, (2)
unlawfully agreed to the terms upon which they would do
business with Factory 2-U, and (3) at approximately the same
time, worsened the terms on which the Factors would provide
financing services to Factory 2-U.

Based on these assertions, Appellant sued the Factors
under Section 1 of the Sherman Act for illegal price fixing

1
The complaint originally included Capital; HSBC;
Rosenthal; Wells Fargo; Milberg Factors Inc (“Milberg”);
CIT Group Commercial Services, Inc. (“CIT”); GMAC
Commercial Finance LLC (“GMAC”); and Sterling Factors
Corporation (“Sterling”) as defendants (collectively, the
“original Defendants”). The parties have stipulated to the
dismissal of Milberg, CIT, GMAC, and Sterling.

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and illegal group boycott and sought leave to amend his
Complaint. The District Court ruled that Appellant did not
adequately plead his Section 1 claims and that Appellant‟s
motion seeking leave to amend should be denied. The
question on appeal is whether Appellant adequately pled
claims under Section 1 of the Sherman Act and whether the
District Court abused its discretion in denying Appellant
leave to amend. We will affirm.

I. BACKGROUND

The garment industry is comprised of three categories
of participants—garment manufacturers,2 garment retailers,
and factors. Garment retailers purchase inventory from
garment manufacturers to sell to their customers. Factors
play a role in the garment industry by assuming the garment
manufacturers‟ risk of liability with respect to the amount
owed by the garment retailers. Factors assume risk by
purchasing garment manufacturers‟ accounts receivable for
those garment retailers that the factor approves.

If a factor declines to assume the risk of collecting the
accounts receivable from a particular garment manufacturer
based on the factor‟s determination of the garment retailer‟s
“creditworthiness,” the risk of any sale by the garment
manufacturer to this garment retailer remains with the
garment manufacturer. Garment manufacturers are typically
unable to make sales to garment retailers for which the factor
declines to assume the risk. Consequently, the factor‟s credit
check decision effectively determines whether or not sales
between the garment manufacturer and the garment retailer

1
The term “garment manufacturer” includes garment
wholesalers as well.

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are made. As a result, garment manufacturers are unable to
sell materials to garment retailers due to an inability to
quickly convert accounts receivable into cash and the garment
retailer is left with insufficient inventory to sell to its retail
customers. Additionally, factors determine the terms and
conditions, including the discount rate at which factors will
purchase receivables from manufacturers who are owed by
retailers, payment terms required of retailers, and whether
purchases by particular retailers will be financed.

Factory 2-U, a garment retailer, was a major discount
clothing retailer that operated more than 200 stores in ten
states. Factors competed with one another to provide credit to
Factory 2-U, through the purchase of garment manufacturers‟
accounts receivable, so that Factory 2-U could, in turn,
purchase inventory from various garment manufacturers to
sell to its customers. In fiscal 2001 and 2002, Factory 2-U
had sub-par operating performance and declining sales
volume. Between 2002 and 2003, Factors declined to extend
credit to Factory 2-U. At that time, Factory 2-U‟s access to
credit was more costly and was, at times, cut off all together.
Without credit, Factory 2-U‟s ability to purchase inventory
from garment manufacturers decreased. The company‟s costs
increased, its profitability and sales decreased, and ultimately,
Factory 2-U filed for bankruptcy on January 13, 2004.

Here, the parties dispute whether the Factors‟ decision
to decline to extend credit to Factory 2-U was a result of a
conspiracy among the Defendants. At the time of the
Complaint, approximately 80% of all garment manufacturers
relied on factors for their credit needs. In fact, the original
Defendants acted as factors to 305 of Factory 2-U‟s garment
manufacturers.

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 The crux of the Complaint is that the Factors here
engaged in “cartel-like behavior.” (Compl. ¶ 34.) According
to the Complaint, they unlawfully exchanged information and
entered into illegal agreements with one another at highly-
secretive weekly meetings and through telephone
conversations. Between February 27, 2002 and September
17, 2003, the Factors exchanged credit information about
Factory 2-U through at least 27 telephone conversations.
Through these telephone conversations, the Factors
exchanged information about the Factors‟ existing credit
limits with Factory 2-U, individual Factors‟ decisions to
decline credit or withhold orders to Factory 2-U, and
decisions to maintain, approve, or increase Factory 2-U‟s
credit limit.

As a result of their allegedly “unlawful discussions and
communications, the Defendants . . . . declined and limited
credit to Factory 2-U at approximately the same time . . . .
[and] based their future course of action on their previously
unlawful communications and discussions.” (Id. ¶ 37.)
Resulting from these telephone conversations were
“agreements” on: “whether credit would be extended by
Defendants to Factory 2-U for its purchases from garment
manufacturers;” “the amount of credit that would be extended
by Defendants to Factory 2-U;” “the terms on which credit
would be extended;” and “whether surcharges would be
imposed by Defendants on garment manufacturers as a
condition of financing Factory 2-U‟s purchases from those
manufacturers.” (Id. ¶ 38.)

The Factors ostensibly used these “unlawful means” to
“(1) minimize their risks and cost of doing business with
garment manufacturers and their customers; (2) maintain and
stabilize pricing structures for factoring services; and (3)

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stabilize their respective market shares . . . .” (Id. ¶ 33.) As a
result of the Factors‟ agreement to decline or refuse to extend
credit to Factory 2-U, competition between garment retailers
decreased. After the Factors declined credit to Factory 2-U,
its credit costs increased and it did not have sufficient
inventory to conduct business. Factory 2-U suffered a loss in
profits.

On January 13, 2004, Factory 2-U filed a voluntary
petition for relief under Chapter 11 of Title 11 of the United
States Code in the United States Bankruptcy Court for the
District of Delaware. On January 27, 2005, the bankruptcy
case was converted to a Chapter 7 case and Burtch was
appointed as interim trustee, pursuant to Section 701 of the
Bankruptcy Code, and is serving as Trustee of the estate
pursuant to Section 702(d) of the Bankruptcy Code.

On September 17, 2007, Burtch filed a complaint
against the original Defendants, pleading violations of
Section 1 of the Sherman Act, 15 U.S.C. § 1 (“Section 1”)
and unlawful restraint of trade under the New York State
Donnelly Act, N.Y. Gen. Bus. Law §§ 340-47. Burtch
alleges three Section 1 claims: (1) per se unlawful price-
fixing; (2) per se unlawful group boycott; and (3) an
anticompetitive agreement violating the rule of reason.

On December 14, 2007, CIT moved to dismiss the
Complaint, pursuant to Federal Rule of Civil Procedure
12(b)(6) for failure to state a claim under Section 1 of the
Sherman Act and the New York Donnelly Act. On December
17, 2007, GMAC, Sterling, and Century jointly moved to
dismiss, pursuant to Federal Rule of Civil Procedure 12(b)(6)
and on the basis that the Complaint was time-barred. Within
three days, Rosenthal, Milberg, HSBC, and Capital each

8
separately moved to dismiss. Magistrate Judge Leonard P.
Stark held a hearing on all the pending motions on October
20, 2008.

On March 30, 2009, the Magistrate Judge issued a
Report and Recommendation (“R&R”) recommending that
Defendants‟ Motions to Dismiss be granted. The Magistrate
Judge based his conclusion on Appellant‟s failure to allege its
Section 1 claims under the following principles established in
Bell Atlantic v. Twombly, 550 U.S. 544 (2007): (1) a Section
1 claim may not be predicated solely on allegations of parallel
conduct by the defendants; (2) conclusory assertions of an
unlawful agreement are insufficient and the complaint must
set forth specific factual allegations of an agreement; and (3)
the plaintiff fails to state a claim where the defendants‟
alleged conduct may just as likely be the result of wholly
lawful independent reactions to common economic stimuli.

According to the R&R, Appellant‟s allegations did not
satisfy the requisite pleading standard because, assuming that
Appellant had alleged parallel conduct, Appellant still did not
proffer additional well-pleaded factual allegations to indicate
the existence of an agreement between the Defendants to fix
credit terms.

The Magistrate Judge emphasized that

At best, the Plaintiff has alleged
that the Defendants might have
reached an agreement to limit or
decline credit to Factory 2-U and
then acted on that agreement by
doing just that, at approximately
the same time as one another.

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 However there is no factual detail
in the Complaint that makes it any
more likely that the Defendants‟
parallel conduct was the result of
an unlawful agreement than,
instead, the result of independent
rational, and wholly lawful
decisions by each Defendant to
limit its exposure to Factory 2-U‟s
deteriorating financial condition.

(App. at 28.) The Magistrate Judge rejected Appellant‟s
conclusory allegations of an agreement and rejected
Appellant‟s theory that the exchange of future credit
information without an agreement to fix credit terms was
adequate to survive a motion to dismiss for a Section 1 claim.
Appellant‟s New York Donnelly Act claim was also
recommended for dismissal because the claim was patterned
after the Sherman Act claim.

The Trustee timely filed objections to the R&R,
requesting that the District Court deny the Motion to Dismiss,
or alternatively, grant leave to file an amended complaint. On
May 31, 2009, the District Court issued an Order overruling
the Trustee‟s objections, adopting the R&R, and dismissing
the Complaint. The District Court applied Twombly and the
two-step approach set forth in Ashcroft v. Iqbal, 556 U.S.
662, 129 S. Ct. 1937 (2009), rejecting Appellant‟s conclusory
allegations and determining whether the well-pleaded factual
allegations plausibly gave rise to an entitlement to relief.
Based on essentially the same reasoning as the R&R, the
District Court held that the Complaint did not pass muster
under Twombly and Iqbal.

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 After the District Court‟s entry of its Order dismissing
the Complaint, Burtch brought a Motion to Alter or Amend
Judgment under Federal Rules of Procedure 59(e) and 15(a).
Burtch included a Proposed Amended Complaint (“PAC”)
with its Motion. The PAC pled the same violations of
Section 1 of the Sherman Act as the original Complaint for
illegal price fixing, illegal group boycott, a rule of reason
claim, and unlawful restraint of trade under the New York
State Donnelly Act. The PAC also included an additional
rule of reason claim for illegal information sharing.

In addition to the 27 telephone conversations that
Burtch pled in the original Complaint, the PAC alleges 33
more telephone conversations amongst the original
Defendants. The additional 33 conversations, much like the
conversations in the original Complaint, are allegations that
the Factors exchanged information about existing credit limits
with Factory 2-U as well as their individual decisions to
decline credit or withhold orders. Included in the additional
allegations is information regarding Factory 2-U‟s delayed
payments to individual Factors. The PAC expanded upon the
original Complaint by adding allegations of the status of the
Defendants‟ credit lines to Factory 2-U in January 2002, prior
to any known alleged collusion, in July 2003, and in
November and December 2003 when Factory 2-U was forced
out of business.3

3
The PAC alleges that in January 2002, Defendants‟ credit
lines to Factory 2-U were as follows: CIT had a credit line of
$10 million; HSBC had a credit line of $5 million; GMAC
had a credit line of $4.5 million; Rosenthal had a credit line of
$1 million; Sterling had a credit line of $500,000; Milberg
had a credit line of $1.3 million; Capital had a credit line of

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 On June 4, 2010, the District Court denied the Motion,
declining to re-open the judgment and denying leave to
amend. The District Court concluded that Rule 59 governs
post-judgment requests for leave to amend and Burtch failed
to allege any of the requirements of Rule 59(e). Burtch filed
a timely appeal.

II. JURISDICTION AND STANDARD OF REVIEW

We exercise plenary review of the District Court‟s
grant of a motion to dismiss under Federal Rules of Civil
Procedure 12(b)(6). Santiago v. Warminster Twp., 629 F.3d
121, 128 (3d Cir. 2010) (citation omitted). The District
Court‟s denial of a motion to amend, pursuant to Federal Rule
of Civil Procedure 15(a), is reviewed for abuse of discretion.
Bjorgung v. Whitetail Resort, LP, 550 F.3d 263, 266 (3d Cir.

$4.5 million; and Wells Fargo had a credit line of $2 million.
At the end of July 2003, the purported credit lines were as
follows: CIT had a credit line of $4 million, backed by a $2.5
million letter of credit; HSBC had pulled its credit line;
GMAC was approving orders on an ad hoc basis with no
formal credit line; Rosenthal had pulled its credit line;
Sterling had a credit line of $250,000, reduced from
$750,000; Milberg had a credit line of $250,000, reduced
from $750,000; Capital had pulled its credit line; and Wells
Fargo had pulled its credit line. In November and December
2003, the credit lines were as follows: CIT had a credit line
of $2 million; HSBC had pulled its credit line; GMAC had
pulled its credit line and was no longer approving orders;
Rosenthal had pulled its credit line; Sterling had pulled its
credit line; Milberg had pulled its credit line; Capital had
pulled its credit line; and Wells Fargo had pulled its credit
line.

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2008). We review the District Court‟s denial of a Rule 59(e)
motion to amend the complaint for abuse of discretion, In re
Adams Golf, Inc. Sec. Litig., 381 F.3d 267, 280 (3d Cir.
2004), but we review the District Court‟s underlying legal
determinations de novo and factual determinations for clear
error, Howard Hess Dental Labs. Inc. v. Dentsply Int‟l, Inc.,
602 F.3d 237, 246 (3d Cir. 2010).

III. ANALYSIS

1. Motion to Dismiss

A complaint may be dismissed for “failure to state a
claim upon which relief can be granted.” FED. R. CIV. P.
12(b)(6). Federal Rule of Civil Procedure 8(a)(2) requires
“only „a short and plain statement of the claim showing that
the pleader is entitled to relief‟ in order to „give the defendant
fair notice of what the . . . claim is and the grounds upon
which it rests.‟” Twombly, 550 U.S. at 555 (quoting Conley
v. Gibson, 355 U.S. 41, 47 (1957)). “[A] plaintiff‟s
obligation to provide the grounds of his entitle[ment] to relief
requires more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action will not do.”
Id. at 555 (citation and internal quotation marks omitted)
(alteration in Twombly). When reviewing a motion to
dismiss, we construe the complaint “in the light most
favorable to the plaintiff.” In re Ins. Brokerage Antitrust
Litig., 618 F.3d 300, 314 (3d Cir. 2010) (citations and internal
quotation marks omitted).

The Supreme Court in Twombly set forth the
“plausibility” standard for overcoming a motion to dismiss
and refined this approach in Iqbal. The plausibility standard
requires the complaint to allege “enough facts to state a claim

13
to relief that is plausible on its face.” Twombly, 550 U.S. at
570. A complaint satisfies the plausibility standard when the
factual pleadings “allow[] the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged.” Iqbal, 129 S. Ct. at 1949 (citing Twombly, 550 U.S.
at 556). This standard requires showing “more than a sheer
possibility that a defendant has acted unlawfully.” Id. A
complaint which pleads facts “„merely consistent with‟ a
defendant‟s liability, [] „stops short of the line between
possibility and plausibility of „entitlement of relief.‟” Id.
(citing Twombly, 550 U.S. at 557).

To determine the sufficiency of a complaint under
Twombly and Iqbal, we must take the following three steps:4

First, the court must “tak[e] note
of the elements a plaintiff must
plead to state a claim.” Second,
the court should identify
allegations that, “because they are
no more than conclusions, are not
entitled to the assumption of
truth.” Finally, “where there are
well-pleaded factual allegations, a
court should assume their veracity
and then determine whether they
plausibly give rise to an
entitlement for relief.”
4
Iqbal describes the process as a “two-pronged approach” but
the Supreme Court took note of the elements a plaintiff must
plead to state a claim before proceeding to its two-step
approach. In Santiago, this Circuit deemed the process a
three-step approach. 629 F.3d at 130.

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Santiago, 629 F.3d at 130 (quoting Iqbal, 129 S. Ct. at 1947,
1950); see also Great Western Mining & Min. Co. v.
Rothschild LLP, 615 F.3d 159, 177 (3d Cir. 2010).

a. The Elements of Burtch’s Claim

Section 1 of the Sherman Act provides that “[e]very
contract, combination in the form of trust or otherwise, or
conspiracy, in restraint of trade or commerce among the
several States, or with foreign nations, is hereby declared to
be illegal.” 15 U.S.C. § 1. An antitrust plaintiff must plead
the following two elements: (1) “that the defendant was a
party to a contract, combination . . . or conspiracy” and (2)
“that the conspiracy to which the defendant was a party
imposed an unreasonable restraint on trade.” Ins. Brokerage,
618 F.3d at 315 (citation and internal quotation marks
omitted).

The first element—a contract, combination, or
conspiracy—requires “„some form of concerted action,‟”
which we define as “„unity of purpose or a common design
and understanding or a meeting of minds‟ or „a conscious
commitment to a common scheme.‟” Id. (citing In re Baby
Food Antitrust Litig., 166 F.3d 112, 117 (3d Cir. 1999); In re
Flat Glass Antitrust Litig., 385 F.3d 350, 357 (3d Cir. 2004)).
In other words, Section 1 claims always require “the
existence of an agreement.” Id. (citations and internal
quotation marks omitted); see also Howard Hess, 602 F.3d at
254 (“Section 1 claims are limited to combinations, contracts,
and conspiracies and thus always require the existence of an
agreement.”); West Penn Allegheny Health Sys. v. UPMC,
627 F.3d 85, 99 (3d Cir. 2010) (“To prevail on a section 1
claim . . . a plaintiff must establish the existence of an
agreement.”). Unilateral action, regardless of the motivation,

15
is not a violation of Section 1. Ins. Brokerage, 618 F.3d at
321.

The second requirement of a Section 1 claim, an
unreasonable restraint on trade, is analyzed under either the
per se standard or the rule of reason standard. The per se
illegality rule applies when a business practice “on its face,
has no purpose except stifling competition.” Eichorn v.
AT&T Corp., 248 F.3d 131, 143 (3d Cir. 2001). Agreements
that fall under established per se illegality categories are
“conclusively presumed to unreasonably restrain
competition.” Ins. Brokerage, 618 F.3d at 316 (citation and
internal quotation marks omitted). “Paradigmatic examples
are „horizontal agreements among competitors to fix prices or
to divide markets.‟” Id. (citing Leegin Creative Leather
Prods., Inc. v. PSKS, Inc., 551 U.S. 877, 886 (2007)); see also
Klor‟s, Inc. v. Broadway-Hale Stores, Inc., 359 U.S. 207,
211-12 (1959) (group boycotts are per se violations of the
Sherman Act). Per se illegality “is reserved for only those
agreements that are so plainly anticompetitive that no
elaborate study of the industry is needed to establish their
illegality.” Deutscher Tennis Bund v. ATP Tour, Inc., 610
F.3d 820, 830 (3d Cir. 2010) (citations and internal quotation
marks omitted); Ins. Brokerage Antitrust Litig., 618 F.3d at
317 (“If the court determines that the restraint at issue is
sufficiently different from the per se archetypes to require
application of the rule of reason, the plaintiff‟s claims will be
dismissed.” (citations omitted)).

Agreements that do not fall under per se illegality are
analyzed under the “rule of reason” to determine whether they
are an unreasonable restraint on trade. Under the rule of
reason analysis, “the plaintiff „bears the initial burden of
showing that the alleged [agreement] produced an adverse,

16
anticompetitive effect within the relevant geographic
market.‟” Id. at 315 (quoting Gordon v. Lewistown Hosp.,
423 F.3d 184, 210 (3d Cir. 2005)). Satisfying this burden
typically includes “a demonstration of defendants‟ market
power.” Id. (citation omitted).

Here, Appellant erroneously contends that the mere
exchange of future credit information is a per se price-fixing
claim or group boycott claim on the following three premises:
(1) the case law that has held that the exchange of credit
information is not per se unlawful applies only to the
exchange of historical credit information and not future credit
information; (2) discussions about the creditworthiness of
customers are equivalent to discussions about the prices
offered to customers; and (3) the mere exchange of price
information is per se unlawful. All three of these assertions
are flawed.

First, Appellant‟s opening salvo is incorrect.
Exchanging information regarding the creditworthiness of
customers does not violate the Sherman Act. Cement Mftrs.
Protective Ass‟n v. United States, 268 U.S. 588, 599-600
(1925). The Supreme Court has stated that the mere
exchange of credit information without “any understanding
on the basis of which credit has to be extended to customers
or that any co-operation resulted from the distribution of this
information, or that there were any consequences from it
other than such as would naturally ensue from the exercise of
the individual judgment of manufacturers in determining, on
the basis of available information, whether to extend credit”
does not violate the Sherman Act. Catalano v. Target, 446
U.S. 643, 648 n.12 (1980) (quoting Cement Mfrs, 268 U.S. at
600); see also Zoslaw v. MCA Distributing Corp., 693 F.2d
870, 885-86 (9th Cir. 1982) (holding that the exchange of

17
credit information is not a per se violation of Section 1 of the
Sherman Act, but “assuming plaintiff could prove that the
defendants agreed to fix credit terms to their customers, such
an agreement would be a per se violation of section 1”);
Michelman v. Clark-Schwebel Fiber Glass Co., 534 F.2d
1036, 1048 (2d Cir. 1976) (holding that “[g]iven the
legitimate function of [the creditworthiness of customers], it
is not a violation of § 1 to exchange such information,
provided that any action taken in reliance upon it is the result
of each firm‟s independent judgment, and not of agreement”).

Appellant attempts to distinguish Cement
Manufacturers and Michelman by arguing that these cases
only permitted the exchange of historical credit information
and that this case is governed by Goldfarb v. Virginia State
Bar, 421 U.S. 773 (1975), which Appellant asserts prohibited
the exchange of forward-looking price information.
Appellant‟s interpretation of Cement Manufacturers,
Michelman, and Goldfarb is incorrect. The basis for the
holdings in Cement Manufacturer and Michelman was not
whether the information exchanged was historical or future,
but whether any agreement to extend or refuse credit resulted
from the information. See Cement Mftrs., 268 U.S. at 599-
600; Michelman, 534 F.2d at 1048.

Contrary to Appellant‟s position, Goldfarb does not
suggest that the forward-looking nature of the information, as
distinguished from historical information, is a violation of the
Sherman Act. 421 U.S. at 781. In Goldfarb, the county bar
association published a minimum fee schedule which “did not
concern past standards, but rather minimum fees to be
charged in future transactions.” Id. The Court determined
that this was price-fixing, however not as Appellant suggests,
because of the forward-looking nature of the information.

18
Rather, the Court explained that “[t]his is not merely a case of
an agreement that may be inferred from an exchange of price
information, for here a naked agreement was clearly shown,
and the effect on prices is plain.” Id. at 782. The basis of the
Court‟s holding was whether the defendants had an
agreement to fix prices.

Second, contrary to Burtch‟s position, credit
information and price are distinct. Burtch relies on the
statement in Catalano that “credit terms must be characterized
as an inseparable part of price.” 446 U.S. at 648. However,
Appellant mischaracterizes Catalano. Catalano did not
suggest that price information and credit information are
equivalent for purposes of antitrust violations. It held that an
agreement to temporarily extend interest-free credit was
“equivalent to giving a discount equal to the value of the use
of the purchase price for that period of time.” Id. at 648.

Thus, we do not conclude based on Catalano that
sharing information regarding the creditworthiness of a
defendant without an agreement should be treated the same as
discussions concerning price. See Zoslaw, 693 F.2d at 886
(explaining that Catalano did not suggest that all exchange of
credit information is a per se violation and that it permitted
the “exchange of credit information for the individual use of
each member in determining whether to exercise credit”).
Exchanges regarding price typically serve no other purpose
than to suppress competition and violate the Sherman Act;
conversely, information concerning the creditworthiness of
customers can protect competitors from insolvent customers.
See, e.g., Michelman, 534 F.2d at 1048.

Third, even if we did assume that price and credit
information are indistinct, the exchange of price information

19
still requires showing that the defendants had an agreement.
The Supreme Court has made clear that “the dissemination of
price information is not itself a per se violation of the
Sherman Act.” United States v. Citizens & So. Nat‟l Bank,
422 U.S. 86, 113 (1975) (citation omitted); see also United
States v. Gypsum Co., 438 U.S. 422, 441 n.16 (1978)
(holding that “[t]he exchange of price data and other
information among competitors does not invariably have
anticompetitive effect . . . we have held that such exchanges
of information do not constitute a per se violation of the
Sherman Act”).

Burtch relies on the Supreme Court‟s decision in
United States v. Container Corporation, 393 U.S. 333 (1969),
for the proposition that the exchange of information
concerning prices is a per se violation, regardless of the
existence of any agreement. In Container Corporation, the
Supreme Court held that the exchange of price information
amongst container manufacturers who accounted for about 90
percent of the shipments in a certain area violated Section 1
of the Sherman Act. The container industry operated such
that the containers were substantially identical, no matter who
produced them, when made to particular specifications.
Assuming costs stayed the same, a defendant would naturally
quote the same price on additional orders. However, as a
result of the exchange of price information, where a
competitor was charging a lower price, the defendant
manufacturer would quote the same price or lower.

Thus, in Container Corporation the exchange of price
information had the effect of stabilizing prices at a downward
level since “knowledge of a competitor‟s price usually meant
matching that price” and, contrary to Appellant‟s position
here, the defendants had an “agreement,” even if it was, as the

20
Supreme Court described, “somewhat casual.” 393 U.S. at
336-37. While concluding that the particular facts in
Container Corporation led to a violation of the Sherman Act,
the Supreme Court cautioned that “[p]rice information
exchanged in some markets may have no effect on a truly
competitive price.” Id. at 337. Container Corporation
provides no solace to Appellant.

b. The Allegations That Are Not Entitled To The
Assumption Of Truth

Under Iqbal, we next identify allegations that “are no
more than conclusions, [and] are not entitled to the
assumption of truth . . . [and] disregard naked assertions . . . .”
Santiago, 629 F.3d at 131 (quoting Iqbal, 129 S. Ct. at 1949,
1950). “[M]ere restatements of the elements of [a] claim[] . .
. are not entitled to the assumption of truth.” Id. In
Twombly, the Court rejected the plaintiff‟s bare assertions
that “in light of the parallel course of conduct that each
engaged in to prevent competition . . . [appellants] have
entered into a contract, combination or conspiracy to prevent
competitive entry” in the industry. 550 U.S. at 551; see also
Iqbal, 129 S. Ct. at 1951 (rejecting bald assertions that
petitioners “knew of, condoned, and willfully and
maliciously” agreed to subject plaintiff to harsh conditions of
confinement); Santiago, 629 F.3d at 131-32 (concluding that
a recitation of the elements of supervisor liability was not
entitled to an assumption of truth); Great Western Mining
Co., 615 F.3d at 178 (“Applying Twombly, Great Western‟s
statement that Defendants engaged in a concerted action of a
kind not likely to occur in the absence of agreement is
inadequate to properly plead an agreement.”).

Burtch contends that the Appellants “regularly and

21
unlawfully shared highly confidential information relating to
factored customers and clients, and then reached illegal
agreements regarding the terms and conditions of credit to be
extended.” (Compl. ¶ 34.) Appellants allegedly “declined
and limited credit to Factory 2-U at approximately the same
time” and “acted in concert when limiting or refusing to
extend credit to Factory 2-U.” (Id. ¶¶ 37, 47.)

In light of the conclusory nature of these allegations, they
are not entitled to assumptions of truth. See Twombly, 550
U.S. at 557 (“[A] conclusory allegation of agreement at some
unidentified point does not supply facts adequate to show
illegality.”). We further reject bare statements that the
Defendants purportedly “conspired and agreed among
themselves” to “fix, maintain, and stabilize Factory 2-U‟s
terms and amount of credit” and “boycott Factory 2-U from
the garment retailer business.” (Compl. ¶¶ 44, 47, 50); see
also Twombly, 550 U.S. at 556 (“[A] bare assertion of
conspiracy will not suffice.”).

c. The Plausibility Of Burtch’s Claims

Finally, Iqbal requires courts to determine whether the
well-pleaded facts state a plausible claim for relief. 129 S.
Ct. at 1950. “A claim has facial plausibility when the
plaintiff pleads factual content that allows the court to draw
the reasonable inference that the defendant is liable for the
misconduct alleged.” Santiago, 629 F.3d at 128.

Burtch alleges that Appellant‟s conduct was a (1) per
se illegal price fixing agreement; (2) a per se illegal group
boycott; and (3) a conspiracy violating the rule of reason.
Claims subject to both the per se analysis and the rule of
reason require alleging the existence of an agreement. See

22
Ins. Brokerage, 618 F.3d at 315. To adequately plead an
agreement, a plaintiff must plead either direct evidence of an
agreement or circumstantial evidence. Id. at 320-21. The
question then becomes whether these alleged facts make it
plausible that Appellees had an agreement to fix credit terms.
This plausibility determination is “a context-specific task that
requires the reviewing court to draw on its judicial experience
and common sense.” Iqbal, 129 S. Ct. at 1950 (citation
omitted).

In the case before us, the factual allegations that
Burtch puts forth in the Complaint include “highly-secretive
weekly meetings of formal groups, ” (Compl. ¶ 34), at least
27 alleged telephone conversations between the original
Defendants regarding the creditworthiness of Factory 2-U and
individual Factors‟ credit terms with Factory 2-U.
Defendants, according to the Complaint, discussed their
individual decisions to decline credit or withhold orders to
Factory 2-U and decisions to maintain, approve, or increase
the credit limit. As a result of the dominant market power of
the original Defendants, this purported illegal concerted
action led to an inability of Factory 2-U to obtain credit.
According to Burtch, the Appellees‟ actions led to a loss in
profits and ultimately bankruptcy for Factory 2-U.

i. Direct Evidence of an Agreement

Direct evidence of a conspiracy is “evidence that is
explicit and requires no inferences to establish the proposition
or conclusion being asserted.” Ins. Brokerage, 618 F.3d at
324 n.23 (quoting Baby Food, 166 F.3d at 118). Appellant
does not allege direct evidence that the Defendants had an
agreement or “a conscious commitment to a common
scheme.” Id. at 315 (citation and internal quotation marks

23
omitted). Instead of alleging direct evidence, the Complaint
alleges telephone conversations regarding Factory 2-U‟s
creditworthiness and whether the individual Factors would
decline or extend credit. Yet, none of these allegations
specify a time or place that any actual agreement to fix credit
terms occurred, nor do they indicate that any particular
individuals or Factors made such an agreement. See
Twombly, 550 U.S. at 565 n.10 (explaining that the plaintiff‟s
failure to allege a “specific time, place, or person involved in
the alleged conspiracies” left “no clue as to which of the
[defendants] (much less which of their employees)
supposedly agreed, or when and where the illicit agreement
took place”); see also Great Western, 615 F.3d at 179 (“Great
Western has failed to allege except in general terms the
approximate time when the agreement was made, the specific
parties to the agreement (i.e., which [defendants]), the period
of the conspiracy, or the object of the conspiracy.”); Ins
Brokerage, 618 F.3d at 324 n.23 (“A document or
conversation explicitly manifesting the existence of the
agreement in question” is an example direct evidence.).

In fact, nowhere in the Complaint does Burtch plead
any direct evidence of an agreement to withhold credit or
provide credit on similar terms. Cf. West Penn., 627 F.3d at
100 (finding allegations of a letter between the defendants
and the CEO‟s admission of concerted action against the
plaintiff as adequate allegations of direct evidence on the
agreement element). The Complaint itself notes that the
“precise scope and duration of the Factory 2-U discussions
and agreements are at present unknown,” (Compl. ¶ 35), and
that there is “no written record” of the telephone
conversations, (Id. ¶ 40).

Appellant argues that these 27 alleged conversations

24
suffice as direct evidence on the theory that the mere
exchange of future information is enough to constitute a
violation of the Sherman Act. Appellant‟s position is without
merit. As discussed in the previous section, the mere
exchange of credit information, without an agreement, does
not violate Section 1 of the Sherman Act. See Cement Mftrs.,
268 U.S. at 599-600; Zoslaw, 693 F.2d at 885-86;
Michelman, 534 F.2d at 1048. To state a plausible claim for
Section 1, the plaintiff must allege that the defendants had an
agreement to fix credit terms regarding Factory 2-U. See Ins.
Brokerage, 618 F.3d at 315.5 Here, Appellant failed to plead
direct evidence of an agreement.

ii. Circumstantial Evidence of an Agreement

In light of Burtch‟s failure to allege direct evidence of
an agreement, we now must determine whether the Complaint
contains allegations of circumstantial evidence to plausibly

5
Appellant contends that Watson Carpet & Floor Covering,
Inc. v. Mohawk Ind., Inc., 648 F.3d 452 (6th Cir. 2011),
supports his position. In that case, the Sixth Circuit reversed
the District Court‟s dismissal of an antitrust complaint, stating
that “[o]ften, defendants‟ conduct has several plausible
explanations [and] [f]ettering out the most likely reason for
the defendants‟ actions is not appropriate at the pleadings
stage.” Id. at 458. Contrary to Appellant‟s assertion that this
principle was misapplied by the District Court, Watson is
clearly distinguishable from the case sub judice. In Watson,
plaintiff “articulated in detail the facts of the 1998
agreement,” id., whereas Burtch has not alleged facts of a
specific agreement.

25
show the existence of an agreement. Circumstantial evidence
of parallel behavior must be pled in “a context that raises a
suggestion of a preceding agreement, not merely parallel
conduct that could just as well be independent action.”
Twombly, 550 U.S. at 557. The law is well-established that
“evidence of parallel conduct by alleged co-conspirators is
not sufficient to show an agreement.” Ins. Brokerage, 618
F.3d at 321; see also Twombly 550 U.S. at 556-57 (“Without
more, parallel conduct does not suggest conspiracy, and a
conclusory allegation of agreement at some unidentified point
does not supply facts adequate to show illegality.”).

Conscious parallelism, “a common reaction of „firms
in a concentrated market [that] recognize[e] their shared
economic interests and their interdependence with respect to
price and output decisions‟” does not suffice as an agreement
under Section 1. Twombly, 550 U.S. at 553-54 (alterations in
Twombly). Alleging parallel conduct “is thus much like a
naked assertion of conspiracy in a § 1 complaint: it gets the
complaint close to stating a claim, but without some further
factual enhancement it stops short of the line between
possibility and plausibility of entitlement to relief.” Id. at 557
(citation and internal quotation marks omitted). Parallel
conduct in itself is insufficient to state a plausible claim
because it is “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.” Id. at 554.

When relying on circumstantial evidence to
sufficiently plead the existence of an agreement, we have
identified at least three types of facts, often referred to as
“plus factors,” that tend to demonstrate the existence of an
agreement: “(1) evidence that the defendant had a motive to

26
enter into a price fixing conspiracy; (2) evidence that the
defendant acted contrary to its interests; and (3) evidence
implying a traditional conspiracy.” Ins. Brokerage, 618 F.3d
at 321-22 (citation and internal quotation marks omitted).

We have cautioned that the first two plus factors may
indicate that “defendants operate in an oligopolistic market,
that is, may simply restate the (legally insufficient) fact that
market behavior is interdependent and characterized by
conscious parallelism.” Id. at 322 (citation omitted); see also
Baby Food, 166 F.3d at 135 (“[E]vidence of action that is
against self-interest or motivated by profit must go beyond
mere interdependence.”). Evidence of the third plus factor is
“non-economic evidence that there was an actual, manifest
agreement not to compete, which may include proof that the
defendants got together and exchanged assurances of
common action or otherwise adopted a common plan even
though no meetings, conversations, or exchanged documents
are shown.” Ins. Brokerage, 618 F.3d at 322 (citation and
internal quotation marks omitted).

Requiring plausibility to infer an agreement from
circumstantial evidence “does not impose a probability
requirement at the pleading stage; it simply calls for enough
fact[s] to raise a reasonable expectation that discovery will
reveal evidence of illegal agreement.” Twombly, 550 U.S. at
556. In Twombly, the plaintiffs contended that they alleged
circumstantial evidence that the defendants had violated
Section 1 in two ways. First, the defendants allegedly
engaged in parallel conduct to inhibit the growth of the
defendants by making unfair agreements for access to the
plaintiffs‟ networks, providing inferior connections to the
networks, overcharging, and billing in ways designed to
sabotage plaintiffs‟ customer relations. Id. at 550-51.

27
Second, the defendants allegedly refrained from competing
with one another. Id. at 551.

The Court rejected the plaintiffs‟ first theory because
nothing indicated that the resistance to the plaintiffs “was
anything more than the natural, unilateral reaction of each
[defendant] intent on keeping its regional dominance.” Id. at
566. Resisting competition was “routine market conduct” and
there was “no reason to infer that the companies had agreed
among themselves to do what was only natural anyway.” Id.
Similarly, the Court determined that when “viewed in light of
common economic experience,” plaintiffs failed to
sufficiently allege facts for the second theory and the
complaint‟s allegations that the defendant‟s actions were
independently motivated. Id. at 565. In pleading both
theories, defendants‟ parallel conduct “was not only
compatible with, but indeed was more likely explained by,
lawful, unchoreographed free-market behavior.” Iqbal, 129
S. Ct. at 1950 (explaining Twombly).

Appellant argues that the Magistrate Judge improperly
applied a “probability” rather than the requisite “plausibility”
standard in resolving Appellant‟s claim and that the District
Court incorrectly adopted the approach in the R&R. This
argument is based on the Magistrate Judge‟s contention that

At best, the Plaintiff has alleged
that the Defendants might have
reached an agreement to limit or
decline credit to Factory 2-U and
then acted on that agreement by
doing just that, at approximately
the same time as one another.
However there is no factual detail

28
 in the Complaint that makes it any
more likely that the Defendants‟
parallel conduct was the result of
an unlawful agreement than,
instead, the result of independent
rational, and wholly lawful
decisions by each Defendant to
limit its exposure to Factory 2-U‟s
deteriorating financial condition.

(App. at 28.) Yet, the Magistrate Judge mirrored his
reasoning after Twombly‟s proposition that parallel conduct
is “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.”
550 U.S. at 554. Twombly further required allegations “be
placed in a context that raises a suggestion of a preceding
agreement, not merely parallel conduct that could just as well
be independent action.” Id. at 557. Based on Twombly, we
disagree with Burtch‟s assertion that the R&R adopted by the
District Court applied a probability, rather than a plausibility,
standard.

In this case, Appellant does not adequately plead
circumstantial evidence of an agreement. Conversations
between the Appellees of Factory 2-U‟s creditworthiness do
not alone raise an inference of an agreement. See Venture
Tech., Inc. v. Nat‟l Fuel Gas Co., 685 F.2d 41, 45 (2d Cir.),
cert. denied, 459 U.S. 1007 (1982) (“[F]requent meetings
between the alleged conspirators . . . will not sustain a
plaintiff‟s burden absent evidence which would permit the
inference that those close ties led to an illegal agreement.”).

While Appellant argues that the Appellees “acted in

29
concert by declining or limiting Factory 2-U‟s credit at
approximately the same time” (Compl. ¶ 44), the Complaint
fails to even allege this parallel conduct. Appellant contends
that as of March 13, 2002, HSBC was declining orders, while
Rosenthal had approved Factory 2-U orders. On April 23,
2003, Wells Fargo was allegedly declining all orders, while
GMAC and CIT were extending at least some credit.
Similarly, as of July 22, 2003, Capital was declining orders
from Factory 2-U except for small orders that were accepted
as accommodations for Capital‟s best clients, while on July
28, 2003, Sterling was willing to extend credit to Factory 2-U.
And, as of September 15, 2003, GMAC was potentially
increasing its credit limit to Factory 2-U, while Rosenthal was
still not approving orders.

These allegations fall far short of demonstrating
parallel behavior by Appellees because the Factors were
choosing to decline, decrease, and even increase credit to
Factory 2-U at different time periods. See Santiago, 629 F.3d
at 133 (“While it is possible that there was such a plan . . .
„possibility‟ is no longer the touchstone for pleading
sufficiently after Twombly and Iqbal. Plausibility is what
matters.” (citation omitted)).

Further, Appellant does not sufficiently plead any
“plus factors” to suggest that the Appellees had entered into
an agreement. The first plus factor, whether the Factors had a
motive to enter into a conspiracy, is not alleged here. The
Complaint includes a statement that through the alleged
illegal activity, the Factors sought to “(1) minimize their risks
and costs of doing business with garment manufacturers and
their customers; (2) maintain and stabilize pricing structures
for factoring services; and (3) stabilize their respective market
shares.” (Compl. ¶ 33.)

30
 The foregoing allegations of Appellees‟ motivation of
market behavior are precisely the legally insufficient facts we
have cautioned against using as circumstantial evidence of an
agreement. See Ins. Brokerage, 618 F.3d at 322. “In a free
capitalistic society, all entrepreneurs have a legitimate
understandable motive to increase profits” and without a
“scintilla of evidence of concerted, collusive conduct,” this
motive does not on its own constitute evidence of a “plus
factor.” Baby Food, 166 F.3d at 137.

Thus, beyond the legally insufficient allegations,
Appellant points to no self-interested motivation of the
Appellees to fix credit terms regarding Factory 2-U. To the
contrary, the removal of a garment retailer from the industry
would reduce the demand for a factors‟ services. See Ins.
Brokerage, 618 F.3d at 322 n.20 (citation omitted) (“[M]ost
courts rely on the absence of motivation or offense to self-
interest to preclude a conspiracy inference from ambiguous
evidence or parallelism.” (citation omitted)); Cf. Matsushita
Elec. Indus. Co., Ltd v. Zenith Radio Corp., 475 U.S. 574,
596-97 (1986) (“[I]f petitioners had no rational economic
motive to conspire, and if their conduct is consistent with
other, equally plausible explanations, the conduct does not
give rise an inference of conspiracy.”).

Appellant does not present any allegations of the
second plus factor, i.e., that Appellees acted contrary to their
interests. Appellant‟s theory of conspiracy is based on the
belief that it was in the Appellees‟ best interest to extend
credit to Factory 2-U and by declining to do so, the Appellees
were acting contrary to their interests. This hypothesis
ignores the routine conduct of Factors to determine the risk of
a garment retailer prior to extending credit. In fact, the
District Court considered a statement by Factory 2-U‟s chief

31
executive officer that the company had experienced a
“sustained period of sub-par operating performance . . . [and]
declining sales volume in both fiscal 2001 and 2002,” the
time period prior to the time the Factors began declining
credit to Factory 2-U. (App. at 28-29 n.11); Twombly, 550
U.S. at 568 n.13 (“[T]he District Court was entitled to take
notice of the full contents of the published articles referenced
in the complaint.”).

The Complaint presents no allegations that the
Appellees‟ decision to limit or refuse credit to Factory 2-U
was against each company‟s interest rather than a natural
response to Factory 2-U‟s declining financial situation. See
Baby Food, 166 F.3d at 135 (“[E]vidence of action that is
against self-interest . . . must go beyond mere
interdependence.”); Cf. Cosmetic Gallery v. Schoeneman
Corp., 495 F.3d 46, 54-55 (3d Cir. 2007) (explaining that the
plaintiff failed to demonstrate how the defendant‟s decision
not to sell to the plaintiff was against the company‟s
economic interest).

The final plus factor—evidence implying a traditional
conspiracy—is not alleged in the Complaint. The Complaint
includes allegations that the Appellees shared what their
individual companies were planning on doing with Factory 2-
U‟s credit limit, but does not allege “assurances of common
action” between the Defendants. See Ins. Brokerage, 618
F.3d at 322.

In light of Appellant‟s failure to allege the first
element of a Section 1 claim—an agreement to apply similar
credit terms—we do not need to consider whether Appellant

32
satisfied the remaining elements.6 We hold that the
Complaint does not plausibly state a claim for a violation of
Section 1 of the Sherman Act because Appellant failed to
allege direct or circumstantial evidence of an agreement
between the Appellees.

2. Denial Of Leave To Amend

A district court may enter final judgment after granting
a Rule 12(b)(6) motion to dismiss when the plaintiff has not
properly requested leave to amend its complaint. Fletcher-
Harlee Corp. v. Pote Concrete Contractors, Inc., 482 F.3d
247, 253 (3d Cir. 2007). After judgment dismissing the
complaint is entered, “a party may seek to amend the
complaint (and thereby disturb the judgment) only through
Federal Rules of Civil Procedure 59(e) and 60(b).” Id. at 252.
After a final judgment is entered, Rules 59(e) and 60(b)
provide a window to seek to reopen the judgment and amend
the complaint. Id. at 253.7 Federal Rule of Civil Procedure

6
Appellees argued to the District Court and again on appeal
that Appellant‟s antitrust claim is barred by the statute of
limitations. The District Court did not reach this issue.
Because Appellant failed to plead a Section 1 claim sufficient
to overcome a motion to dismiss, we need not reach the issue
of whether the statute of limitations bars such a claim. In re
Exxon Mobil Corp. Sec. Litig., 500 F.3d 189, 202 n.16 (3d
Cir. 2007) (declining to address whether plaintiffs‟ claims
were barred by the applicable statute of limitations given the
court‟s affirmance of dismissal of the claims).
7
Rule 60(b) motions must be filed within one year after the
entry of judgment. FED. R. CIV. PROC. 60(c). A Rule 60(b)
motion is inapplicable in this case because Appellants‟

33
59(e) states that “[a] motion to alter or amend a judgment
must be filed no later than 28 days after the entry of the
judgment.” FED. R. CIV. PROC. 59(e).8

Generally, motions for reconsideration under Rule
59(e) must rely on one of the following three grounds: “(1) an
intervening change in controlling law; (2) the availability of
new evidence; or (3) the need to correct clear error of law or
prevent manifest justice.” Lazardis v. Wehmer, 591 F.3d
666, 669 (3d Cir. 2010) (citation omitted). The factors that
guide our review in a Rule 59(e) motion may be affected by
the underlying judgment. See Adams v. Gould, 739 F.2d 858,
864 (3d Cir. 1984). In this Circuit, “„where a timely motion
to amend judgment is filed under Rule 59(e), the Rule 15 and
59 inquiries turn on the same factors.‟” Adams Golf, 381
F.3d at 280 (quoting Cureton v. NCAA, 252 F.3d 267, 272
(3d Cir. 2001)); see also Gould, 739 F.2d at 864. The Rule
15(a) factors include “undue delay, bad faith, prejudice, or
futility.” Adams Golf, 381 F.3d at 280 (citation omitted).

In Ahmed v. Dragovich, 297 F.3d 201 (3d Cir. 2002),
we noted that “the liberality of [Rule 15(a)] is no longer
applicable once judgment has been entered” because Rule
15(a) and 59(e) should not be employed in a manner contrary

Motion to Alter or Amend Judgment was filed within 28 days
after the entry of judgment and is governed by Rule 59(e).
8
Rule 59(e) motions require that a final judgment be issued.
The District Court ordered that the “Complaint in the above-
captioned action is DISMISSED.” (App. at 47.) Where an
order “d[oes] not specify that the dismissal was without
prejudice, under Fed. R. Civ. P. 41(b), the dismissal „operates
as an adjudication upon the merits.‟” Shane v. Fauver, 213
F.3d 113, 115 (3d Cir. 2000).

34
to “favoring finality of judgments and the expeditious
termination of litigation . . . . that would render those
provisions meaningless.” Id. at 208 (citation and internal
quotation marks omitted). The District Court interpreted this
language to reflect a conflict in our jurisprudence when
confronted with a Rule 59(e) and Rule 15(a) motion and
applied the general Rule 59(e) requirements: that the plaintiff
must present an intervening change in law or new evidence.9
Yet, Ahmed is not inconsistent with this Court‟s other
precedent requiring that we consider Rule 15(a) and Rule
59(e) motions together and apply the analysis typical to Rule
15(a). Ahmed considered the Rule 60(b) motion and the Rule
15(a) motion together on the grounds that it “would be a
needless formality for the court to grant the motion to reopen
the judgment only to deny the motion for leave to amend” and
denied both motions because the amended pleading was
futile. 297 F.3d at 209.

Here, the District Court resolved the Rule 59(e) and
Rule 15(a) motions by concluding that Appellant had not
introduced an intervening change in law or new evidence.
Procedurally, we believe that the appropriate manner to
dispose of this issue is to consider the motions together and
determine what outcome is permitted by consideration of the
Rule 15(a) factors. In our view, the end result remains the

9
The District Court also relied on the not precedential
opinion, Walsh v. Quinn, 327 F. App‟x 353 (3d Cir. 2009), to
conclude that an intervening change in law, new evidence, or
manifest injustice was required to grant the Rule 59(e)
motion. Under Third Circuit internal operating procedure
Rule 5.7, not precedential opinions are not binding on this
Court.

35
same. The Proposed Amended Complaint is futile and the
Rule 59(e) and Rule 15(a) motions were properly denied.

Futility is a basis on which to deny a Rule 59(e)
motion accompanied by a Rule 15(a) motion. See Gould, 739
F.2d at 864. Futility “means that the complaint, as amended,
would fail to state a claim upon which relief could be
granted.” Great Western, 615 F.3d at 175 (citation and
internal quotation marks omitted). Futility of an amended
complaint is reviewed under the “same standard of legal
sufficiency as applies under [F.R.C.P.] 12(b)(6).” Ahmed,
297 F.3d at 209 (citations and internal quotation marks
omitted).

To determine whether the PAC is futile, we question
whether the additional allegations are sufficient to state a
claim under Section 1 of the Sherman Act. The PAC includes
an additional claim in Count I, namely, a rule of reason claim
based on illegal information sharing. It also contains
allegations of 37 additional telephone conversations between
the original Defendants. The amended pleadings do not
amount to direct or circumstantial evidence of an agreement
to fix credit terms regarding Factory 2-U. Nowhere in the
PAC does Appellant allege any specific agreement to
conspire regarding credit terms. See Twombly, 550 U.S. at
565 n.10 (explaining that the plaintiff‟s failure to allege a
“specific time, place, or person involved in the alleged
conspiracies” left “no clue as to which of the [defendants]
(much less which of their employees) supposedly agreed, or
when and where the illicit agreement took place”).

Factual allegations in Count I of the PAC add nothing
to the Plaintiff‟s attempt in the original Complaint at alleging
a claimed agreement. Count I of the PAC asserts an

36
agreement to illegally share information. The essence of this
new claim remains the same as what the Plaintiff asserted in
the rule of reason claim in the original Complaint in Count
III, which is repeated verbatim in Count IV of the PAC.

As discussed at length in this opinion, we reject
Appellant‟s contention that the telephone conversations
between the Appellees with respect to Factory 2-U‟s
creditworthiness are enough to constitute direct evidence of a
violation of the Sherman Act. Without evidence of an
agreement, the mere exchange of credit information is not
enough to withstand a motion to dismiss for a Section 1
claim. See Cement Mftrs., 268 U.S. at 599-600; Zoslaw, 693
F.2d at 885-86; Michelman, 534 F.2d at 1048.10

The PAC‟s allegations are deficient regarding
circumstantial evidence of an agreement necessary to
overcome a motion to dismiss. At the outset, the PAC
includes allegations of Factors‟ differing approaches to
dealing with Factory 2-U. Appellant contends that as of
March 13, 2003, HSBC was declining orders, while
Rosenthal had approved Factory 2-U orders. On March 28,
2003, CIT had opened up a $3 million partially secured credit
line. The PAC itself describes a secured credit line as a
“„special arrangement‟ above and beyond ordinary credit
term.” (App. at 246.) On April 23, 2003, Wells Fargo was

10
Judge Roth agrees with the conclusion here that the mere
exchange of credit information is not enough to withstand a
motion to dismiss. Nevertheless, when the commodity being
exchanged is credit itself, Judge Roth believes that particular
attention should be paid to the allegations of exchange of
credit information.

37
allegedly declining all orders, while GMAC and CIT were
extending at least some credit.

The PAC also alleges conduct by the Appellees in July
or August of 2003. HSBC had stopped checking Factory 2-
U‟s credit as far back as October 2002 and would continue to
decline Factory 2-U‟s account. Milberg was approving up to
$750,000 on some terms and in another phone call stated it
was approving up to $500,000. Rosenthal was holding $2
million in orders and HSBC was not approving orders. Wells
Fargo credit limit was $466,000 and it was declining
$360,000 in orders. GMAC was declining $1 million in
future orders. Capital had Factory 2-U on an order to order
basis.

Similarly, as of July 22, 2003, Capital was declining
orders from Factory 2-U except for small orders that were
accepted as accommodations for Capital‟s best clients;
meanwhile, on July 28, 2003, Sterling was willing to extend
credit to Factory 2-U. And, as of September 15 and 16, 2003,
GMAC was potentially increasing its credit limit to Factory
2-U and Milberg planned to recommend $500,000 to
$600,000, while Rosenthal was still not approving orders and
Wells Fargo was declining orders. In October 2003,
Rosenthal and HSBC were declining all Factory 2-U orders,
HSBC was declining all Factory 2-U orders, Milberg was still
offering a $500,000 credit line, and Capital was approving
Factory 2-U‟s account up to $300,000.

The PAC‟s attempts to allege parallel conduct are
minimal. On July 28, 2003, Sterling wanted to reduce
Factory 2-U‟s high credit line from $750,000 to $250,000 and
on the following day, Milberg would reduce its credit line
from $750,000 to $250,000. Furthermore, the PAC highlights

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a progression of the Appellees‟ credit lines to Factory 2-U
from January 2002, before the Appellees‟ alleged collusion,
to July 2003, where the Appellees were either pulling,
reducing, or maintaining its credit line to Factory 2-U.

Even if we assume that Appellant cured the complaint
by alleging parallel conduct, parallel conduct alone is not
enough to satisfy the requirements of an agreement. As in the
original Complaint, Burtch does not include any allegations
of plus factors—Defendants‟ motive, or that Defendants acted
contrary to their interests, or evidence implying a traditional
conspiracy. Nor does the PAC allege that Defendants‟
actions were anything more than “routine market conduct”
based on Factory 2-U‟s financial condition. Twombly, 550
U.S. at 566. In fact, in one instance, the PAC indicates the
contrary, that GMAC would potentially increase Factory 2-
U‟s credit limit “depending on Factory 2-U‟s financial plan.”
(App. at 252.)

The exchange of credit information without any direct
or circumstantial evidence of an agreement does not plausibly
state a Section 1 claim under the Sherman Act. We hold that
the futility of the Proposed Amended Complaint is reason to
deny both the Rule 59(e) motion and the 15(a) motion and
that the District Court did not abuse its discretion in doing so.
See Ahmed, 297 F.3d at 209 (explaining that the failure to
“cure the defects in the original pleading . . . may be a valid
reason both for denying a motion to amend under Rule 15(a)
and for refusing to reopen the judgment under Rule 60(b).”);
see also Adams Golf, 381 F.3d at 280 (holding that the
district court did not abuse its discretion in denying leave to
amend because the “new allegations consist . . . [of] facts not
necessarily curative of the pleading problems at issue.”
(citation and internal quotation marks omitted)).

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 IV. CONCLUSION

For the reasons discussed above, we will affirm the
judgment of the District Court.

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