## Facts

- Tera entities formed to create and operate TeraExchange, an electronic swap execution facility (SEF) for credit-default swaps (CDS) intended to provide anonymous, transparent trading under the post–Dodd-Frank regulatory regime.
- Before SEF trading, CDS transactions commonly occurred through bilateral dealer quoting, which allegedly gave dealer banks pricing and informational advantages.
- Tera obtained CFTC registration, invested in building the platform, and marketed it to dealer banks and buy-side market participants.
- After the platform’s first anonymous CDS trade (June 12, 2014), Tera alleged that major dealer banks nearly simultaneously refused to provide liquidity or trade on TeraExchange.
- Tera alleged the dealers coordinated communications and used market power to pressure buy-side customers away from SEF trading, preserving off-SEF CDS trading.
- Tera sued multiple dealer-bank entities asserting a Sherman Act § 1 conspiracy (group boycott) and related state-law claims (including tortious interference and unjust enrichment).
- After prior rulings narrowed the case, the remaining defendants moved to dismiss under Rule 12(b)(6) for failure to plausibly plead an unlawful agreement.

## Issues

1. Whether the complaint plausibly alleged a Sherman Act § 1 agreement to boycott TeraExchange, rather than independent parallel decisions not to trade on the platform.
2. Whether allegations of parallel conduct, a shared economic motive, and general inter-firm communications plausibly supported an inference of conspiracy under Twombly/Iqbal.
3. Whether the state-law claims could proceed if the federal antitrust claim was inadequately pleaded.

## Decision

- The court granted the remaining defendants’ Rule 12(b)(6) motions and dismissed the Sherman Act § 1 claim.
- The court held that the pleaded facts did not plausibly allege an actual agreement; the alleged near-simultaneous refusal to trade was consistent with lawful, rational independent conduct.
- The court found the complaint lacked adequate “plus factors” (such as defendant-specific, concrete coordination facts) that would tend to exclude independent action.
- The court dismissed the pendent state-law claims as well, treating them as dependent on, or undermined by the same pleading deficiencies as, the failed conspiracy theory.

## Legal Principles

- A Sherman Act § 1 claim requires plausible factual allegations of an agreement; parallel conduct and common incentives, without more, do not establish concerted action.
- Under Twombly/Iqbal, allegations must include factual matter that makes conspiracy more plausible than lawful conscious parallelism and must tend to exclude independent action.
- Generalized allegations of “industry communications” or market concentration, without defendant-specific details (who acted, what was said or done, and when), are typically insufficient.
- Group pleading that lumps multiple defendants together can fail Rule 8 and Rule 12(b)(6) where the claim depends on attributing particular coordinated acts to particular actors.
- When the federal claim providing the principal basis for the suit is dismissed at the pleading stage, related state-law claims tied to the same alleged conduct may be dismissed as well.

## Conclusion

The court dismissed Tera’s alleged group-boycott case because the complaint described parallel nonparticipation and shared motives but did not plead concrete, defendant-specific facts supporting a plausible inference of a coordinated agreement, and the related state-law theories fell with the inadequately pleaded conspiracy claim.


Tera Grp., Inc. v. Citigroup, Inc., 2019 WL 3457242 (S.D.N.Y. 2019)