Todd v. Exxon Corporation

Plaintiff-appellant Roberta Todd appeals from an order of the United States District Court for the Southern District of New York (Sprizzo, J.) granting defendants-appellees' motion to dismiss the complaint for failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(6). We hold that plaintiff adequately alleges a § 1 Sherman Act violation for an unlawful information exchange. Plaintiff's complaint alleges a plausible product market, a market structure that is susceptible to collusive activity, a data exchange with anticompetitive potential, and antitrust injury. We therefore vacate and remand.

Plaintiff brought this action against fourteen major companies in the integrated oil and petrochemical industry, collectively accounting for 80-90% of the industry's revenues and employing approximately the same percentage of the industry's workforce.1 Todd v. Exxon Corp., 126 F. Supp. 2d 321, 323 (S.D.N.Y. 2000); Second Am. Compl. ¶¶ 15-28, 101 [hereinafter "Compl."]. On behalf of herself and all other similarly situated current and former Exxon employees (the putative class),2 plaintiff alleges that defendants violated § 1 of the Sherman Act by regularly sharing detailed information regarding compensation paid to nonunion managerial, professional, and technical ("MPT") employees and using this information in setting the salaries of these employees at artificially low levels. Todd, 126 F. Supp. 2d at 322-23. Plaintiff seeks money damages and equitable relief pursuant to § 1 of the Sherman Act. Compl. ¶¶ 129, 132-133.

Accepting the allegations in the complaint as true, as we must on this motion to dismiss, the facts of this case are as follows. Defendants instituted a system whereby they periodically conducted surveys comparing past and current MPT salary information and participated in regular meetings at which current and future salary budgets were discussed. Todd, 126 F. Supp. 2d at 323; Compl. ¶ 88. The data exchanges were also accompanied by assurances that the information would be used in setting the salaries of MPT employees. Compl. ¶ 106. Defendants' "Job Match Survey" created a common denominator to facilitate the comparison of MPT salaries. Id. ¶ 50. The survey used certain jobs at defendant Chevron as benchmarks. The other defendants would submit detailed information regarding the jobs at their companies that were most comparable to the Chevron benchmark jobs so that they could be matched. Id. ¶ 51. The survey compared the responsibilities and compensation packages offered by defendants for certain jobs and job types against those of the benchmark positions at Chevron. Todd, 126 F. Supp. 2d at 323 n.4. This survey was coordinated by defendants Unocal and Chevron. Chevron and Unocal each would meet with half of the other companies involved to develop matches to the benchmarks, and then would gather the information before submitting it to a third-party consultant, Towers Perrin. Towers Perrin compiled the information, then analyzed, refined, and distributed it to the defendants on diskettes and in the form of hard copies. Compl. ¶ 52. Since not all jobs could be matched precisely, defendants agreed upon certain percentage "offsets" to facilitate the comparison. Id. ¶ 53. The Job Match Survey was performed every two years and was supplemented in the "off years" by the "Grade Average Update," which would calculate the change in grade average salaries since the last Job Match Survey and then adjust the salary level from the previous year's survey by the amount of the change. Id. ¶¶ 67-68.

Defendants' "Job Family Survey" provided the most current account of the compensation being paid in the industry. Each company submitted information on salaries actually paid in thirty different categories of jobs, or "job families," classified according to the nature of the work. Id. ¶ 69. The information exchanged for each family was broken down by the job level classification, experience level, and academic background of the MPT employee. Id. ¶ 69. This survey was coordinated by Exxon, and again the information was submitted to and compiled by Towers Perrin. Each participating company received the information from Towers Perrin in hard copy and disk form. The information gathered in the survey was updated and distributed to the participants several times per year. Todd, 126 F. Supp. 2d at 323 n.5.

Furthermore, each company was entitled to receive subsets of Job Family Survey data, consisting of salary information from as few as three companies at a time. Compl. ¶ 70. Plaintiff alleges that Exxon used these subsets to compare its own salaries with those of six particular competitors, referred to as the "Six Majors." Id. ¶ 75. These periodically updated data sets were used by each defendant to determine whether the announced budgets of its competitors had been implemented so that each could consider what adjustments should be made to coordinate salary levels. Id. ¶ 76.

Although these were the primary forms of salary information exchange, defendants supplemented this information with data from other sources. Defendants' "Advancement Guides" established requirements for advancement within a given salary grade of employee. Id. ¶ 77. These guides were used by defendants to slow the rates of advancement for MPT employees in defendants' companies. Id. ¶ 79. The "ABC," "B-1" and "B- 2" surveys collected additional data regarding bonuses and other non- standard payments above base compensation that were not captured in the Job Match and Job Family Surveys. Id. ¶¶ 80, 82. The "Long-Term Incentive Survey" refined the comparison further by accounting for the economic value of certain non-cash benefits paid to MPT employees. Id. ¶ 83. The "Starting Salary Survey," in which only the Six Majors apparently participated, measured starting salaries of college graduates entering MPT positions. Id. ¶¶ 84-85. In addition to the data exchange surveys, human resource personnel at defendant companies held regular meetings - at least three times per year - to discuss and exchange salary and salary-related information. Id. ¶¶ 87, 91-95. These meetings included discussions of individual defendants' current and future salary budgets for MPT employees. Id. ¶¶ 88, 92.

Plaintiff contends that defendants' arrangement violated § 1 of the Sherman Act. Id. ¶¶ 127, 131. According to the complaint, these violations had the purpose and effect of depressing MPT salaries paid by defendants. Id. ¶¶ 117, 120. The arrangement reduced the incentive for defendants to bid up salaries in order to attract experienced MPT employees or to retain employees who might be lured to other firms. Id. ¶¶ 103-104. As a result, the plaintiffs in the putative class received compensation that was materially lower than what they would have received but for defendants' anticompetitive practices. Id. ¶¶ 128, 132.

Plaintiff alleges that Exxon, in particular, used this data to maintain a market position slightly above the so-called "Six Majors" and below three higher-paying competitors referred to as the "High Three." Id. ¶ 58. Exxon capitalized on the shared data to decrease its "competitive factor" - the percentage by which Exxon would have to adjust its salary levels in order to maintain alignment with the salaries offered by its competitors. Id. ¶ 108. Exxon's competitive factor dropped from 6.5% in 1991 to 0% in 1995, id. ¶ 109, and its salaries decreased 4.1% between 1987 and 1994 in comparison to the Six Majors, id. ¶ 75. The various information exchanges also allowed Exxon to reduce its overall salary index versus the competition from 110.7% in 1987 to 107.0% in 1993. Id. ¶¶ 89, 113.

The district court granted defendants' motion to dismiss the complaint for failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(6). Todd, 126 F. Supp. 2d at 328. The court held that (1) plaintiff failed to plead a plausible product market, undermining the claim that defendants control 80-90% of the relevant market; (2) even if the alleged market were plausible, plaintiff failed to allege that the market structure is susceptible to collusive activity; (3) plaintiff failed to allege facts supporting an agreement to fix salary levels; and (4) plaintiff failed to show detrimental effects on competition. Plaintiff appeals the dismissal.

We review de novo the district court's grant of defendants' motion to dismiss pursuant to Rule 12(b)(6). Gregory v. Daly, 243 F.3d 687, 691 (2d Cir. 2001). On a motion to dismiss for failure to state a claim, we construe the complaint in the light most favorable to the plaintiff, accepting the complaint's allegations as true. Connolly v. McCall, 254 F.3d 36, 40 (2d Cir. 2001). 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." Conley v. Gibson, 355 U.S. 41, 45- 46 (1957) (footnote omitted). Thus, "[t]he issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims." Scheuer v. Rhodes, 416 U.S. 232, 236 (1974).

No heightened pleading requirements apply in antitrust cases. "[A] short plain statement of a claim for relief which gives notice to the opposing party is all that is necessary in antitrust cases, as in other cases under the Federal Rules." George C. Frey Ready-Mixed Concrete, Inc. v. Pine Hill Concrete Mix Corp., 554 F.2d 551, 554 (2d Cir. 1977). Furthermore, "[i]n antitrust cases in particular, the Supreme Court has stated that `dismissals prior to giving the plaintiff ample opportunity for discovery should be granted very sparingly.'" George Haug Co. v. Rolls Royce Motor Cars Inc., 148 F.3d 136, 139 (2d Cir. 1998) (quoting Hosp. Bldg. Co. v. Trs. of Rex Hosp., 425 U.S. 738, 746 (1976)). It is nonetheless improper "to assume that the [plaintiff] can prove facts that it has not alleged or that the defendants have violated the antitrust laws in ways that have not been alleged." Associated Gen. Contractors of California, Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983).

Section 1 of the Sherman Act prohibits "[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." 15 U.S.C. § 1. Traditional "hard-core" price fixing remains per se unlawful under the seminal case United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 212-24 (1940), and its progeny. If the plaintiff in this case could allege that defendants actually formed an agreement to fix MPT salaries, this per se rule would likely apply. Furthermore, even in the absence of direct "smoking gun" evidence, a horizontal price-fixing agreement may be inferred on the basis of conscious parallelism, when such interdependent conduct is accompanied by circumstantial evidence and plus factors such as defendants' use of facilitating practices. See, e.g., Interstate Circuit, Inc. v. United States, 306 U.S. 208, 226-27 (1939); Ambook Enters. v. Time Inc., 612 F.2d 604, 614-18 (2d Cir. 1979). Information exchange is an example of a facilitating practice that can help support an inference of a price- fixing agreement.

There is a closely related but analytically distinct type of claim, also based on § 1 of the Sherman Act, where the violation lies in the information exchange itself - as opposed to merely using the information exchange as evidence upon which to infer a price-fixing agreement. This exchange of information is not illegal per se, but can be found unlawful under a rule of reason analysis. See Battipaglia v. N.Y. State Liquor Auth., 745 F.2d 166, 174-75 (2d Cir. 1984) (Friendly, J.). The state of the law on this issue was not always so clear. Compare Am. Column & Lumber Co. v. United States, 257 U.S. 377, 411-12 (1921), and United States v. Am. Linseed Oil Co., 262 U.S. 371, 389-90 (1923), with Maple Flooring Mfrs. Ass'n v. United States, 268 U.S. 563, 582-83 (1925), Sugar Inst., Inc. v. United States, 297 U.S. 553, 598 (1936), and Cement Mfrs. Protective Ass'n v. United States, 268 U.S. 588, 602-03, 606,45 S. Ct. 586, 69 L.Ed. 1104 (1925). In United States v. Container Corp. of America, the Supreme Court held that information exchange itself could constitute a § 1 violation, upholding the sufficiency of a complaint charging "an exchange of price information but no agreement to adhere to a price schedule." 393 U.S. 333, 334 (1969). The Court found that under the market conditions present in that case, and in light of the nature of the information disseminated, the data exchange caused a stabilization of prices and thus had an anticompetitive effect on the market for corrugated containers. See id. at 337, 89 S. Ct. 510. Unclear in the wake of Container Corp. was whether such exchanges were per se unlawful or subject to a rule of reason. The Court used some of the language of the Court's per se jurisprudence, yet conducted a market analysis that suggested a rule of reason. See id. at 336-38, 89 S. Ct. 510. In a well-known concurrence, Justice Fortas urged that a per se rule was not appropriate. See id. at 338-40, 89 S. Ct. 510 (Fortas, J., concurring).

The Supreme Court resolved the confusion in United States v. Citizens & Southern National Bank, clarifying that "the dissemination of price information is not itself a per se violation of the Sherman Act." 422 U.S. 86, 113 (1975). In United States v. United States Gypsum Co., the Court explained its reasoning: "The exchange of price data and other information among competitors does not invariably have anticompetitive effects; indeed such practices can in certain circumstances increase economic efficiency and render markets more, rather than less, competitive." 438 U.S. 422, 441 n.16 (1978). The Court then set out the basic framework for the rule of reason inquiry in this context: "A number of factors including most prominently the structure of the industry involved and the nature of the information exchanged are generally considered in divining the procompetitive or anticompetitive effects of this type of interseller communication." Id.

As plaintiff does not allege an actual agreement among defendants to fix salaries, we analyze plaintiff's complaint solely as to whether it alleges unlawful information exchange pursuant to this rule of reason.

An important factor to analyze in a Gypsum data exchange case is the market power of the defendants. One traditional way to demonstrate market power is by defining the relevant product market and showing defendants' percentage share of that market. Plaintiff argues that the relevant market in this case is the market for "the services of experienced, salaried, non-union, managerial, professional and technical (MPT) employees in the oil and petrochemical industry, in the continental United States and various submarkets thereof." Compl. ¶ 97. If the market is defined in this way, defendants would have a substantial market share of 80-90%. If the market cannot be limited in this way, defendants' percentage market share would drop substantially. Cf. United States v. E.I. Du Pont de Nemours & Co., 351 U.S. 377, 379 (1956) (defining product market as broader flexible packaging market instead of narrower cellophane market would lower defendant's market share from roughly 75% to less than 20%).

Because market definition is a deeply fact-intensive inquiry, courts hesitate to grant motions to dismiss for failure to plead a relevant product market. See Found. for Interior Design Educ. Research v. Savannah Coll. of Art & Design, 244 F.3d 521, 531 (6th Cir. 2001) ("Market definition is a highly fact-based analysis that generally requires discovery.") (citing Eastman Kodak Co. v. Image Technical Servs., Inc., 504 U.S. 451, 482 (1992)); Double D Spotting Serv., Inc. v. Supervalu, Inc., 136 F.3d 554, 560 (8th Cir. 1998) (noting that "courts are hesitant to dismiss antitrust actions before the parties have had an opportunity for discovery"); Queen City Pizza, Inc. v. Domino's Pizza, Inc., 124 F.3d 430, 436 (3d Cir. 1997) (explaining that "in most cases, proper market definition can be determined only after a factual inquiry into the commercial realities faced by consumers") (citing Eastman Kodak, 504 U.S. at 482); cf. Hayden Publ'g Co. v. Cox Broad. Corp., 730 F.2d 64, 70 n.8 (2d Cir. 1984) ("The conclusion that genuine issues of material fact preclude a finding as to [the] relevant market as a matter of law is not unexpected. It frequently has been observed that `a pronouncement as to market definition is not one of law, but of fact....'") (citations and alterations omitted). There is, however, no absolute rule against the dismissal of antitrust claims for failure to allege a relevant product market. Queen City, 124 F.3d at 436.

To survive a Rule 12(b)(6) motion to dismiss, an alleged product market must bear a "rational relation to the methodology courts prescribe to define a market for antitrust purposes - analysis of the interchangeability of use or the cross-elasticity of demand," Gianna Enters. v. Miss World (Jersey) Ltd., 551 F. Supp. 1348, 1354 (S.D.N.Y. 1982), and it must be "plausible." Hack v. President & Fellows of Yale Coll., 237 F.3d 81, 86 (2d Cir. 2000). Cases in which dismissal on the pleadings is appropriate frequently involve either (1) failed attempts to limit a product market to a single brand, franchise, institution, or comparable entity that competes with potential substitutes3 or (2) failure even to attempt a plausible explanation as to why a market should be limited in a particular way.4

In the instant case, the district court held that "the relevant market proposed by plaintiff does not rise to the level of plausibility required in an antitrust action." Todd, 126 F. Supp. 2d at 325. The court explained that market definition is guided by an "`analysis of the interchangeability of use or the cross-elasticity of demand for potential substitute products.'" Id. (quoting Gianna Enters., 551 F. Supp. at 1354). Applying the test to the instant case, the court stated that "plaintiff must plead facts which tend to show that the `products' at issue here - MPT employees - are reasonably interchangeable or that there is a cross-elasticity of demand for potential substitutes." Id. The court found plaintiff's proposed market to be both over-inclusive and under-inclusive. We disagree on both counts.

1. Whether Plaintiff's Alleged Market Is Over-Inclusive

The district court held that the proposed product market was over- inclusive because the plaintiff "failed to explain how it is that accountants, lawyers, chemical engineers and other MPT employees in the oil and petrochemical industry are interchangeable with one another when the jobs they perform are so different." Id. Defendants offer the same argument on this appeal. Indeed, plaintiff does not attempt to argue that such varying professionals are interchangeable. Plaintiff instead urges that the district court looked through the "wrong end of the telescope," failing to consider that "[t]his case involves the exercise of oligopsony power, that is, buying power." We agree with plaintiff that the interchangeability of these employees is not part of defining the relevant market.

The traditional horizontal conspiracy case involves an agreement among sellers with the purpose of raising prices to supracompetitive levels. The Sherman Act, however, also applies to abuse of market power on the buyer side - often taking the form of monopsony or oligopsony. See Roger D. Blair & Jeffrey L. Harrison, Antitrust Policy and Monopsony, 76 Cornell L. Rev. 297, 297-301, 308 (1991). Plaintiff is correct to point out that a horizontal conspiracy among buyers to stifle competition is as unlawful as one among sellers. See Mandeville Island Farms, Inc. v. Am. Crystal Sugar Co., 334 U.S. 219, 235 (1948) ("It is clear that the agreement is the sort of combination condemned by the [Sherman] Act, even though the price-fixing was by purchasers, and the persons specially injured... are sellers, not customers or consumers.") (footnotes omitted); Nat'l Macaroni Mfrs. Ass'n v. FTC, 345 F.2d 421, 426-27 (7th Cir. 1965) (applying the per se rule against horizontal price fixing to an agreement by pasta producers to standardize the amount of durum wheat they used in an effort to depress the price of durum wheat). There is thus no reason to doubt that a Gypsum data exchange claim - a close cousin of traditional price fixing - can be brought against a group of buyers. See Alabama Power Co. v. Fed. Power Comm'n, 511 F.2d 383, 389 n.10 (D.C. Cir. 1974) ("Although the anticompetitive effects of information are usually discussed with reference to a market characterized by oligopoly on the supply side alone, concentration may occur among purchasing firms as well; circulation of transaction data may allow a few buyers to gain at the expense of many sellers.").

The fact that this case involves a buyer-side conspiracy affects how the market is defined. Normally, the market "is composed of products that have reasonable interchangeability for the purposes for which they are produced - price, use and qualities considered." AD/SAT v. Associated Press, 181 F.3d 216, 227 (2d Cir. 1999). "In economists' terms, two products or services are reasonably interchangeable where there is sufficient cross-elasticity of demand. Cross-elasticity of demand exists if consumers would respond to a slight increase in the price of one product by switching to another product." Id.; see also IIA Phillip E. Areeda et al., Antitrust Law: An Analysis of Antitrust Principles and Their Application ¶ 562a (1995). Thus, the inquiry is whether a "hypothetical cartel" would be "substantially constrain[ed]" from increasing prices by the ability of customers to switch to other producers. AD/SAT, 181 F.3d at 228.

There is a danger in applying these factors mechanically in the context of monopsony or oligopsony. These factors are reversed in the context of a buyer-side conspiracy. Blair & Harrison, supra, at 324; see also IIA Areeda et al., supra, ¶ 574, at 302 n.12 (explaining that the equation for measuring market power in monopsony is a "`mirror image' of the relationships that create market power in a seller"). In such a case, "the market is not the market of competing sellers but of competing buyers. This market is comprised of buyers who are seen by sellers as being reasonably good substitutes." Blair & Harrison, supra, at 324. A greater availability of substitute buyers indicates a smaller quantum of market power on the part of the buyers in question. See id.; see also IIA Areeda et al., supra, ¶ 574, at 302 n.12 (explaining that when elasticity is high in the monopsony context, "a given price decrease engenders a relatively large increase in purchases by the fringe firms").

The district court's analysis reflects a failure to reverse all of the factors involved in light of the buyer-side nature of the alleged activity. Using Areeda's language, the district court's "equation" is not a complete "mirror image" of the traditional seller-side market analysis. IIA Areeda et al., supra, ¶ 574, at 302 n.12. Plaintiff is right to urge that "[t]he proper focus is... the commonality and interchangeability of the buyers, not the commonality or interchangeability of the sellers." The question is not the interchangeability of, for example, lawyers with engineers. At issue is the interchangeability, from the perspective of an MPT employee, of a job opportunity in the oil industry with, for example, one in the pharmaceutical industry.5

2. Whether Plaintiff's Alleged Market is Under-Inclusive

The issues discussed above overlap with the district court's under- inclusiveness argument. The district court found that "plaintiff fails to adequately explain why an antitrust lawyer employed by an oil company does not compete in the same market as an antitrust lawyer at a commercial bank or in a private law firm." Todd, 126 F. Supp. 2d at 325. Defendants make the same argument on appeal. By "underinclusive," the district court appears to mean that the market should not be limited to employers in the oil and petrochemical industry. There may be merit to the district court's argument as it relates to less specialized job categories, but this fact-specific question cannot be resolved on the pleadings. At this stage, it is sufficient that plaintiff has alleged specific facts that support a narrow product market in a way that is plausible and bears a rational relation to the methodology courts prescribe to define a market for antitrust purposes.

Plaintiff claims that MPT employees accumulate industry-specific knowledge that renders them more valuable to employers in the oil and petrochemical industry than to employers in other industries. Plaintiff supports this contention by arguing that "[w]orkers receive compensation for skills that are specific to a set of firms that produce similar products," and thus MPT employees would "suffer large wage losses if they switch industries." According to the complaint, "[a]s the employees gain experience, the only practical outlets to sell their services at an amount reflecting the value of their experience are the integrated oil and petrochemical companies, i.e., Defendants." Compl. ¶ 115. While the complaint could perhaps be more specific about the experience that renders these employees more valuable within the oil industry, plaintiff's point is hardly counter-intuitive. It is consistent with common sense and empirical research that employees' industry-specific experience may cause them to suffer a pay cut if forced to switch industries. See Elisabetta Magnani, Risk of Labor Displacement and Cross-Industry Labor Mobility, 54 Indus. & Lab. Rel. Rev. 593, 593-94 (2001) (referring to the empirical research indicating that wage losses generally accompany industry mobility). To be sure, the district court and defendants may be correct to assume that industry specificity affects certain MPT employees less than others. Todd, 126 F. Supp. 2d at 325. Less technical jobs tend to involve skills that are not as industry-specific, creating greater cross-elasticity for these employees. See Bruce C. Fallick, A Review of the Recent Empirical Literature on Displaced Workers, 50 Indus. & Lab. Rel. Rev. 5, 12 (1996) (noting that "executives, administrators, and managers, as well as more highly educated workers" tend to have greater industry mobility than sales and production employees).

This is not to say, however, that less technical jobs require no industry-specific experience, and the extent to which they do involves a question of fact not resolvable on a Rule 12(b)(6) motion. It is not implausible that less technical MPT employees develop industry-specific expertise that affects their value in the labor market. A lawyer, for example, who works for an oil company may gain expertise on regulatory issues regarding the environment and natural resources, while a lawyer for a pharmaceutical company becomes proficient in such matters as FDA approval and warning labels.6 While plaintiff's contention that it is "virtually self-evident" that employers will pay more for employees with relevant experience may oversimplify the issues of market definition in this case, it cannot be said that plaintiff's alleged market is implausible.

It may well be that the availability of employment in alternative industries places some constraints on the ability of the alleged conspirators to limit salary increases. Market definition is generally a matter of degree. Even a monopolist is subject to limitations on how far it can increase price. See Donald F. Turner, Antitrust Policy and the Cellophane Case, 70 Harv. L. Rev. 281, 308-10 (1956). In accordance with this Court's formulation in AD/SAT, 181 F.3d at 227-28, plaintiff is simply alleging that a slight decrease in salary by a hypothetical oligopsonist cartel in the oil/petrochemical industry would not cause MPT employees to leave the industry because they would have difficulty finding compensation fully reflecting the value of their experience elsewhere. At trial, plaintiff would have to prove this theory with economic evidence regarding the cross-industrial elasticity of MPT employees. Evidence could include information regarding, for example, the extent to which decreases in oil/petrochemical industry salaries, or increases that do not keep pace with increases in other industries, cause MPT employees to leave the industry; whether MPT employees who leave or are displaced from the oil/petrochemical industry suffer pay cuts upon switching industries;7 and whether it takes longer for MPT employees who leave or are displaced from oil/petrochemical industry jobs to find employment in other industries than within the same industry. The outcome of fact-intensive inquiries such as these would help the court determine whether plaintiff's proposed market can be sustained.

Defendants attempt to invoke our statement in AD/SAT that "[i]f the sales of other producers substantially constrain the price-increasing ability of the hypothetical cartel, these others are part of the market." AD/SAT, 181 F.3d at 228 (citation omitted). Defendants' reference to AD/SAT merely restates the test; it does not predict its outcome in this case. The fact that electronic transmission of newspaper advertisements does not constitute its own product market - the finding in AD/SAT - sheds little light on the fact-specific question of whether MPT employment opportunities in the oil and petrochemical industry constitute the relevant market in the instant case. It is also significant that AD/SAT was decided on summary judgment, not a Rule 12(b)(6) motion to dismiss, and thus the Court considered evidence such as the newspapers' use of the different transmission services and research by consultants regarding market conditions. Id. at 228-29; cf. Virgin Atl. Airways Ltd. v. British Airways PCL, 257 F.3d 256, 259 (2d Cir. 2001) (affirming grant of defendant's motion for summary judgment in predatory pricing case but only "[a]fter reviewing the voluminous exhibits filed under seal in this case").

In finding that plaintiff's allegation about the industry-specific expertise of MPT employees supports a plausible product market, we do not indicate whether plaintiff will succeed in proving the alleged market. It remains to be seen whether every category of MPT employee in the plaintiff class can demonstrate the requisite degree of inelasticity.8 We find only that the allegation of a market limited to employers in the oil and petrochemical industry is plausible on its face.

Plaintiff also contends that defendants' own conduct and apparent perceptions support the alleged product market. The complaint alleges that defendants "perceive and recognize the relatively low level of cross-elasticity of demand for the services of MPT emplo