W&T Offshore, Inc. et al v. Endurance Assurance Corporation et al

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
W&T OFFSHORE, INC., AND
W&T ENERGY VI, LLC,
v.
ENDURANCE ASSURANCE
CORPORATION AND LEXON
INSURANCE, CO., ET AL.,
§
§
§
§
§
§
§
§
Lead Case No. 4:24-cv-3047
JUDGE PALERMO’S
REPORT AND RECOMMENDATION 1
Before the Court is U.S. Fire Insurance Co. and Pennsylvania Insurance Co.’s
(collectively, “the Sureties”) motion to dismiss Plaintiffs W&T Offshore, Inc. and
W&T Energy VI, LLC’s (“W&T”) claims. ECF No. 63. 2 The Sureties move to
dismiss W&T’s claims, arguing that W&T lacks antitrust standing and fails to state
claims for antitrust violations, declaratory judgment, violations of the Texas
Insurance Code, tortious interference, and conspiracy. Id. Based on the briefing 3 and
relevant law, some of the Sureties’ arguments are more appropriately addressed at
summary judgment or otherwise fail to demonstrate W&T’s claims should be
1 The district judge to whom this case is assigned referred all pretrial proceedings to the
undersigned. ECF No. 77.
2 	The 	Court 	granted 	Defendant 	Lexon 	Insurance 	Company 	and 	Endurance 	Assurance
Corporation’s motion to withdraw their motion to dismiss. ECF No. 234; Order, ECF No. 235.
3 Plaintiff filed a response, ECF No. 76, and the Sureties filed a reply. ECF No. 82.
United States District Court
Southern District of Texas
ENTERED
April 10, 2026
Nathan Ochsner, Clerk
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dismissed. The Court recommends partially denying the motion to dismiss as set
forth below.
I. 	BACKGROUND
The Court presumes the facts in W&T’s operative complaint are true for the
purposes of evaluating the Sureties’ motion to dismiss. Pls.’ First Amended Compl.,
ECF No. 36. 4
W&T is an oil and natural gas producer in the Gulf of Mexico. ECF No. 36
¶¶ 42–43. The Bureau of Ocean Energy Management (“BOEM”) and the Bureau of
Safety and Environmental Enforcement issued regulations that require W&T and
other oil and natural gas producers to post surety bonds in favor of the United States
to secure its decommissioning obligations. ECF No. 36 ¶¶ 21–37. “The offshore
surety market in the United States is heavily concentrated and controlled by the
Sureties and other key players.” ECF No. 36 ¶ 35. The Sureties and other sureties
4 Throughout their motion to dismiss, the Sureties implore the Court to look outside of Plaintiff’s
operative allegations and consider alternative explanations for the Sureties’ conduct. See ECF
No. 63. The Court addresses certain of these arguments more fully later in its analysis as is
relevant, but notes at the outset that the Sureties do not analyze whether the elements of whether
the outside statements and evidence are appropriately addressed with their motion to dismiss, or
support with convincing caselaw that their contention that prior allegations amended in the
operative complaint must be relied upon. The Sureties’ alternative explanations are better suited
for summary judgment or trial, not the motion to dismiss stage. See Acad. of Allergy & Asthma in
Primary Care v. Louisiana Health Serv. & Indem. Co., No. CV 18-399, 2020 WL 4050243, at *7
(E.D. La. July 17, 2020) (“[t]he question at the pleading stage is not whether there is a plausible
alternative to the plaintiff’s theory; the question is whether there are sufficient factual allegations
to make the complaint's claim plausible”—“[t]he choice between two plausible inferences that
may be drawn from factual allegations is not a choice to be made by the court on a Rule 12(b)(6)
motion.”), on reconsideration in part, No. CV 18-399, 2021 WL 5029418 (E.D. La. May 14, 2021)
(citing Anderson News, LLC v. Am. Media, Inc., 680 F.3d 162, 185, 189 (2d Cir. 2012)).
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are “all part of and/or actively support similar trade associations” that track and
respond to threats to the surety industry. ECF No. 36 ¶ 35. The offshore surety
market “is united in their strategic plan” and regularly participate in meetings “to
respond to industry threats and jointly influence government decisions.” ECF No. 36
¶ 36. W&T alleges that the Sureties “use the same collective influence in the offshore
surety market.” ECF No. 36 ¶ 37. In 2024, “representatives of the Sureties and co-
conspirators met to discuss their collective response to the BOEM rule and agreed
to collectively change their analysis and terms at the expense of smaller companies
like W&T,” and then the Sureties’ “opportunities for collusion continue[d] through
major annual events, conferences, and meetings each year, with companies like
Sompo and [Pennsylvania] entrenched in trade associations and actively seeking to
influence other sureties to follow their lead.” ECF No. 36 ¶ 37.
W&T obtained BOEM-required surety bonds from the Sureties and executed
Indemnity Agreements memorializing the suretyship. ECF No. 36 ¶¶ 2, 76, 92–107.
Although the Indemnity Agreements contain provisions that permit the Sureties to
demand collateral from W&T—the parties dispute under what circumstances, if any,
the Sureties may make such demands. ECF Nos. 36, 116, 118.
Following 	April 	2024, 	Endurance 	Assurance 	Corporation 	and 	Lexon
Insurance Company (collectively, the “Sompo Sureties”) “began conspiring with
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others in the offshore surety market to retaliate against W&T, 5 interfere with its
contracts and business relationships, and force W&T back into submission at any
cost.” ECF No. 36 ¶ 84. The Sompo Sureties encouraged others, including the
Sureties, to demand additional collateral from W&T “in rapid succession” even
though W&T’s financial status remained substantially the same and even improved
and W&T had complied with all indemnity agreements and paid all required and
negotiated premiums. ECF No. 36 ¶¶ 86, 88, 97, 98, 100, 104, 108, 109. To no avail,
W&T tried to resolve the Sureties’ and others’ demands “in good faith,” such as
offering to provide collateral in forms other than cash or letter of credit, but the
Sureties refused. ECF No. 36 ¶¶ 87, 98. W&T alleges that “[t]he Sureties [] decided
to alter their business model by jointly squeezing smaller oil and gas companies like
W&T.” ECF No. 36 ¶ 90. In 2024, the Sompo Sureties met with other sureties to
“collectively change their analysis and terms for these companies,” which involved
“jointly restructuring their strategy for collateral calls.” ECF No. 36 ¶ 90 (cleaned
up). 	“Essentially, the [s]ureties jointly demand[ed] extreme and unprecedented
5 W&T alleged that “Sompo had previously issued bonds to a company unrelated to W&T,
Fieldwood Energy LLC (“Fieldwood”), which had filed for bankruptcy in 2020,” and “Quarter
North Energy (“QNE”) subsequently acquired a portion of Fieldwood’s assets, some of which
were later sold to W&T.” ECF No. 36 ¶ 75. “As part of that transaction, W&T purchased private
bonds of roughly $11 million from [Pennsylvania] to benefit QNE and guarantee W&T’s
decommissioning obligations.” ECF No. 36 ¶ 76. “W&T had no obligation to assume Sompo’s
separate financial exposure caused by the separate Fieldwood bankruptcy,” but “that is exactly
what Sompo demanded from W&T” when “[on] April 19, 2024, Sompo demanded that W&T
replace the Fieldwood bonds despite W&T’s total lack of liability.” ECF No. 36 ¶¶ 77–78.
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collateral amounts, requiring joint submission to all [s]ureties.” ECF No. 36 ¶ 90.
The Sureties and their co-conspirators demanded roughly $250 million in collateral.
ECF No. 36 ¶¶ 106, 107, n.5.
Seeking to combine their leverage to extract the maximum amount of
collateral from their principals, even if it requires liquidation, the Sureties conspired
to participate in an unlawful scheme against smaller oil and gas companies like
W&T. ECF No. 36 ¶ 110. W&T alleges that the Sureties used BOEM’s proposed
new rule 6 as “the ideal pretext to execute their collective scheme.” ECF No. 36
¶¶ 110–15. The Sureties and the Sompo Sureties met one or more times in 2024 to
“jointly increase their premiums, expedite their collateral demands, and change the
terms of their contracts and dealings,” and were able to meet and agree to the scheme
based on their engagement in trade associations.” ECF No. 36 ¶¶ 119–20, 121. At
the Sompo-Pennsylvania presentation hosted by the National Association of Surety
Bond Producers, Pennsylvania’s representative noted “[e]veryone started generating
heartburn trying to figure out, okay, we used to make a lot of money; now we're not.
6 W&T explains the new rule: “in 2020, BOEM had announced a Proposed Rule (the “2020
Proposed Rule”) that required supplemental bonds only for sole-liability properties, which are
leases without an investment-grade party—typically a major company, such as Shell—in the chain
of title either as a predecessor or co-lessee. However, . . . the BOEM abandoned this 2020 Proposed
Rule and, instead, issued a 2023 Proposed Rule, under which the 2020 Proposed Rule’s financial
assurance criteria applied even to leases with an investment-grade company in the chain of title.
BOEM’s new rule, if enforced, would not require companies with an investment-grade credit
rating to provide supplemental bonds. But independent producers like W&T overwhelmingly do
not have the investment-grade credit rating. Importantly, though, this rule does not alter existing
bonds issued by sureties or their respective indemnity agreements.” ECF No. 36 ¶¶ 111–13.
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So how do we move forward on this space?,” which W&T alleged underscored that
Sompo and Pennsylvania previously met “to discuss recent bankruptcies and the
BOEM rule, agree to fix new terms against companies like W&T, and pursue a
‘collective’ strategy to benefit the surety industry.” ECF No. 36 ¶¶ 120–21.
W&T alleges that the Sureties possess “power in the relevant market during
the entire relevant time due to their substantial share of this market and substantial
barriers such as capital requirements and government regulations that prevent others
from readily entering the relevant market,” and can even “say no” to the federal
government. ECF No. 36 ¶ 128. W&T alleges that “[t]he Sureties’ illegal conspiracy
has harmed W&T and other offshore oil and gas producers that rely on robust
competition in the provision of federally certified surety bonds to make offshore oil
and gas drilling economically feasible. But for the Sureties’ conspiracy, W&T and
other offshore oil and gas producers would have been able to continue to obtain and
maintain the surety bonds on economically feasible terms.” ECF No. 36 ¶ 129.
On August 14, 2024, W&T filed the instant suit against the Sompo Sureties,
after the Sompo Sureties made a written demand to W&T to provide collateral in the
form of cash or a letter of credit under their Indemnity Agreements. W&T sought a
declaration that the Sompo Sureties’ Indemnity Agreement did not allow the Sompo
Sureties to demand the requested collateral. ECF No. 1. Thereafter, the Sureties
made formal demands on W&T to either replace the Sureties or deposit multiple
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millions of dollars as collateral. ECF No. 36 ¶¶ 2, 92–107. Despite the demand,
W&T did not deposit collateral with the Sureties. In response, the Sureties filed
lawsuits, which on November 22, 2024, the Court consolidated into the instant case.
Order, ECF No. 33.
The Sureties now move to dismiss W&T’s claims, arguing that W&T’s
antitrust claims should be dismissed because W&T: (1) lacks standing; (2) fails to
allege antitrust injury; (3) fails to allege an agreement; (4) fails to define the relevant
market; and (5) submits an unfounded price-fixing theory. ECF No. 63. The Sureties
also argue that W&T fails to state a claim for declaratory judgment, claims under
the Texas Insurance Code, a claim for tortious interference, and a claim for civil
conspiracy. Id.
II. 	RELEVANT LAW
Rule 12(b)(6) provides that a court may dismiss a complaint for “failure to
state a claim upon which relief can be granted.” F ED. R. CIV. P. 12(b)(6). “Under
Federal Rule of Civil Procedure 8(a)(2), a pleading must contain a ‘short and plain
statement of the claim showing that the pleader is entitled to relief.’” Ashcroft v.
Iqbal, 556 U.S. 662, 677-78 (2009). 	The complaint must include more than mere
“labels and conclusions, and a formulaic recitation of the elements of a cause of
action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (cleaned
up). A complaint must “contain sufficient factual matter … to ‘state a claim to relief
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that is plausible on its face.’” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at
570). A claim is plausible “when the plaintiff pleads factual content that allows the
court to draw the reasonable inference that the defendant is liable for the misconduct
alleged.” King v. Baylor Univ., 46 F.4th 344, 355–56 (5th Cir. 2022) (quoting Iqbal,
556 U.S. at 678). “[A] complaint does not need detailed factual allegations, but it
must provide the plaintiff’s grounds for entitlement to relief—including factual
allegations that when assumed to be true raise a right to relief above the speculative
level.” Ruiz v. Brennan, 851 F.3d 464, 468 (5th Cir. 2017) (quoting Taylor v. City of
Shreveport, 798 F.3d 276, 279 (5th Cir. 2015)) (cleaned up).
The ultimate question “is whether the complaint states a valid claim when all
well-pleaded facts are assumed true and are viewed in the light most favorable to the
plaintiff.” Ironshore Eur. DAC v. Schiff Hardin, L.L.P., 912 F.3d 759, 763 (5th Cir.
2019) (quoting Lone Star Fund V (U.S.), L.P. v. Barclays Bank PLC, 594 F.3d 383,
387 (5th Cir. 2010)) (cleaned up).
III. 	THE SURETIES’ MOTION TO DISMISS SHOULD BE DENIED AS
TO 	ALL 	CLAIMS 	EXCEPT 	THE 	TEXAS 	INSURANCE 	CODE
CLAIM.
A. 	The Sureties’ Motion to Dismiss W&T’s Antitrust Claims Should Be
Denied.
W&T raises two violations under the Sherman Act, 15 U.S.C. § 1, for:
(1) group boycott; and (2) price-fixing. W&T alleges that “[t]he Sureties, by and
through their officers, directors, employees, or other representatives, have entered
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into an unlawful agreement, combination, and conspiracy in restraint of trade, in
violation of 15 U.S.C. § 1.” ECF No. 36 ¶¶ 139, 145. W&T continues that “the
Sureties engaged in a conspiracy not to deal with smaller oil and gas companies,
including W&T, by demanding collateral terms that would effectively prevent them
from obtaining government-mandated bonding that is essential to engage in offshore
oil and gas production.” ECF No. 36 ¶ 140. W&T also alleges that “the Sureties
engaged in a conspiracy to artificially increase the cost, premiums, and collateral
requirements of their bonds through inflated and extortionate collateral demands. As
a result of the Sureties’ conduct, prices were actually raised, fixed, maintained, and
stabilized in the market.” ECF No. 36 ¶ 146. W&T alleges that these are both per se
violations of 15 U.S.C. § 1. ECF No. 36 ¶¶ 140, 146.
To establish a violation of § 1 of the Sherman Act, W&T “must demonstrate
that: ‘(1) [the defendants] engaged in a conspiracy, (2) the conspiracy had the effect
of restraining trade, and (3) trade was restrained in the relevant market.’” Doctors
Hosp. of Laredo v. Cigarroa, 782 F. Supp. 3d 406, 440 (W.D. Tex. 2025) (quoting
Marucci Sports, LLC v. National Collegiate Athletic Ass’n, 751 F.3d 368, 373 (5th
Cir. 2014) (quoting Apani Sw., Inc. v. Coca-Cola Enters., Inc., 300 F.3d 620, 627
(5th Cir. 2002))). Under § 1, “certain kinds of agreements will so often prove so
harmful to competition and so rarely prove justified that the antitrust laws do not
require proof that an agreement of that kind is, in fact, anticompetitive in the
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particular circumstances. An agreement of such kind is unlawful per se.” Id. at 446
(quoting NYNEX Corp. v. Discon, Inc., 525 U.S. 128, 133 (1998)).
1. 	The Sureties’ Antitrust Injury Arguments Fail.
The Sureties argue that W&T only alleges speculative contractual harm to
itself and not the market-wide competitive process and therefore fails to allege
sufficient antitrust injury. ECF No. 63 at 15, 16. The Sureties assert that W&T has
failed to establish standing because they do not “allege any traditional indicators of
competitive harm, such as reduced output, increased prices, or a decline in the
number of market participants,” and instead rest their antitrust claims on “conclusory
assertions that the Sureties engaged in a ‘collective boycott.’” ECF No. 63 at 15–16.
W&T responds that the Sureties confuse “the standards governing when there
is a violation under the Sherman Act and antitrust standing under the Clayton Act,”
so when the Sureties refer to harm to the “market-wide competition,” that harm
constitutes an element of the violation, not whether W&T has antitrust standing. ECF
No. 76 at 12–13. 7 W&T continues that it has established actual and threatened
injury-in-fact because the Sureties’ “price-fixing conspiracy and group boycott have
injured its business, its reputation, and its future viability.” ECF No. 76 at 13. W&T
also argues that the Sureties’ arguments that their allegations of contractual harm
fail to establish antitrust injury is unfounded because antitrust liability may be
7 The Sureties do not respond to this argument in their reply. See ECF No. 82.
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predicated on conduct that also creates a contract dispute. ECF No. 76 at 14.
As an initial matter, the Court finds that the Sureties improperly focus on
market-wide competition in arguing that W&T lacks standing to pursue their
antitrust claims. There is no such antitrust standing requirement.
The elements of antitrust standing are: “(1) injury-in-fact, an injury to the
plaintiff proximately caused by the defendants’ conduct; (2) antitrust injury; and
(3) proper plaintiff status, which assures that other parties are not better situated to
bring suit.” Eytalis v. Nat’l Ass’n of Realtors, No. 7:24-CV-00147-O-BP, 2025 WL
2054094, at *4 (N.D. Tex. June 9, 2025), adopted, No. 7:24-CV-00147-O-BP, 2025
WL 2053096 (N.D. Tex. July 22, 2025) (quoting Doctor’s Hosp. of Jefferson, Inc.
v. Southeast Med. Alliance, 123 F.3d 301, 305 (5th Cir. 1997)). But as pointed out
above, “[t]o establish a violation of Section 1 of the Sherman Act, a plaintiff must
demonstrate that: ‘(1) [the defendants] engaged in a conspiracy, (2) the conspiracy
had the effect of restraining trade, and (3) trade was restrained in the relevant
market.’” TravelPass Group, LLC v. Caesars Entm’t Corp., No. 5:18-CV-153-
RWS-CMC, 2019 WL 5691996, at *8 (E.D. Tex. Aug. 29, 2019), 	adopted,
No. 518CV00153RWSCMC, 	2019 	WL 	4727425 	(E.D. 	Tex. 	Sept. 	27, 	2019)
(quoting Marucci Sports, L.L.C. v. Nat’l Collegiate Athletic Ass’n, 751 F.3d 368,
373 (5th Cir. 2014) (quoting Apani Sw., Inc. v. Coca–Cola Enters., Inc., 300 F.3d
620, 627 (5th Cir. 2002))); Dexon Computer, Inc. v. Cisco Sys., Inc., No. 5:22-CV-
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53-RWS-JBB, 2023 WL 2941414, at *38 (E.D. Tex. Feb. 7, 2023), adopted,
No. 522CV00053RWSJBB, 2023 WL 2730656 (E.D. Tex. Mar. 31, 2023) (“The
Fifth Circuit has repeatedly distinguished between antitrust injury and injury to
competition.”) (citing Torrey v. Infectious Diseases Soc’y of Am., No. 5:17-CV-
00190-RWS, 2018 WL 10124894, at *8 (E.D. Tex. Sept. 27, 2018) (citing Doctor’s
Hosp. of Jefferson, 123 F.3d at 305 (“Since 1983, we have pointed out a distinction
between antitrust injury and injury to competition, the latter of which is often a
component of substantive liability.”))). In other words, injury to competition, while
often a necessary component of substantive liability, need not be pleaded as an
element of standing for a plaintiff’s antitrust claims to survive a motion to dismiss.
TravelPass Group, LLC, 2019 WL 5691996 at *24 (collecting cases). Accordingly,
the Sureties’ argument that W&T lacks standing because they failed to demonstrate
harm to market-wide competition is unfounded.
Nonetheless, the Court finds that W&T’s allegations sufficiently establish
antitrust injury. 8 “The second component of antitrust standing, antitrust injury,
8 The Sureties argue that “[e]ven if W&T could establish standing, its claims fail because it has
not alleged antitrust injury, which requires harm to the competitive process itself. . . . ” ECF No. 63
at 14–15. “Antitrust injury is a component of antitrust standing.” Dexon Computer, Inc., 2023 WL
2941414, at *36 (citing BRFHH Shreveport, L.L.C. v. Willis-Knighton Med. Ctr., 563 F. Supp. 3d
578, 589 (W.D. La. 2021), aff’d, 49 F.4th 520 (5th Cir. 2022)). As W&T explains, the Court
analyzes harm to competition when discussing “concerted action that unreasonably restrains
trade,” which as discussed later, is deemed per se unreasonable in horizontal price-fixing cases,
therefore “shortcutting” the analysis of anticompetitive harm. See TravelPass Group, LLC, 2019
WL 5691996, at *n.11 (“The rule of reason analysis also requires that the plaintiff show that the
defendants’ activities injured competition.”) (citing Marucci Sports, 751 F.3d at 374).
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requires that a plaintiff’s injury is ‘of the type the antitrust laws were intended to
prevent and . . . 	flows from that which makes the defendant’s acts unlawful.’”
TravelPass Group, LLC, 2019 WL 5691996, at *18 (quoting BRFHH Shreveport,
176 F. Supp. 3d at 626 (quoting Brunswick, 429 U.S. at 489)). Antitrust injury should
reflect “the anticompetitive effect either of the violation or of the anticompetitive
acts made possible by the violation.” Id. (quoting Anago, Inc. v. Tecnol Med.
Products, Inc., 976 F.2d 248, 249 (5th Cir. 1992) (citing Brunswick, 429 U.S. at
489)). The Fifth Circuit “has narrowly interpreted the meaning of antitrust injury,
excluding from it the threat of decreased competition.” Id. (quoting Anago, Inc., 976
F.2d at 249). 9
“An antitrust plaintiff must present plausible allegations establishing an
antitrust injury in its complaint,” but “the adequacy of a plaintiff’s contentions
regarding a transaction’s effect on competition is often a fact-intensive inquiry that
requires discovery.” Corrente v. Charles Schwab Corp., No. 4:22-CV-00470, 2023
WL 2244680, at *6 (E.D. Tex. Feb. 24, 2023) (citing In re Pool Prods. Distrib. Mkt.
Antitrust Litig., 940 F. Supp. 2d 367, 399 (E.D. La. 2013); Sanger Ins. Agency v.
HUB Intern., Ltd., 802 F.3d 732, 738 (5th Cir. 2015) (noting that antitrust injury and
other standing issues “may present disputed issues of fact”); Pfizer Inc. v. Johnson
9 W&T also addresses the first element of antitrust standing: injury-in-fact, an injury to the plaintiff
proximately caused by the defendants’ conduct, but the Court finds that the Sureties’ arguments
are more appropriately addressed under the second element: antitrust injury. See ECF No. 76 at 14.
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& Johnson, 333 F. Supp. 3d 494, 501 (E.D. Pa. 2018) (noting that “the adequacy of
a plaintiff’s contentions regarding the effect on competition is typically resolved
after discovery, either on summary judgment or after trial”)). “[T]he existence of an
antitrust injury is not typically resolved through motions to dismiss.” Id. (quoting
TravelPass Group, LLC, 2019 WL 5691996, at *22 n.25 (quoting Brader v.
Allegheny Gen. Hosp., 64 F.3d 869, 876 (3d Cir. 1995))). “[I]n assessing whether a
plaintiff has adequately alleged an antitrust injury, the Court must assume that an
antitrust violation has occurred.” Id. (citing Sanger Ins. Agency, 802 F.3d at 738).
Here, W&T alleged that “its business is threatened to be destroyed due to a
coordinated effort by the [S]ureties to demand higher prices in the form of increased
premiums and demands for tens upon tens of millions of dollars in collateral.” ECF
No. 76 at 15–16 (citing ECF No. 36 ¶¶ 1, 5, 85, 98, 103–107, 122, 129, 168). At this
stage of the proceedings, the Court accepts as true all well-pleaded facts in the
complaint and views those facts in the light most favorable to W&T. See TravelPass
Group, LLC, 2019 WL 5691996, at *22. 10 So with this in mind, W&T has adequately
10 The Sureties also assert that W&T’s statements in a 10-Q statement and 2023 annual report to
the SEC admit that W&T’s financial capability, not any anticompetitive conduct, dictates access
to surety bonds. ECF No. 63 at 14, 15. The Sureties contend that W&T may not “shield itself
behind the four corners of its Amended Complaint,” and ask the court to disregard contradictory
statements in public filings. ECF No. 82 at 4. As support, the Sureties cite to Carrillo v. Buendia,
No. 2:20-CV-28, 2020 WL 4584380, at *4 (S.D. Tex. Aug. 10, 2020), wherein the court compared
allegations in the original pleading with purportedly contradictory allegations in an amended
complaint in the context of a motion to strike. Here, the Sureties have not made a motion to strike
the allegedly contradictory statements, and instead, request the Court reject W&T’s operative
allegations and take W&T’s statements in public filings as true—this is not what the Buendia court
did—and ask the Court to weigh evidence at the motion to dismiss stage.
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alleged antitrust injury—W&T alleged that the Sureties coordinated increased
premiums and collateral calls on W&T, and now W&T faces exclusion from the
market. See In re DDAVP Direct Purchaser Antitrust Litig., 585 F.3d 677, 688 (2d
Cir. 2009) (“In this case, the Plaintiffs are purchasers of the defendants’ product who
allege being forced to pay supra-competitive prices as a result of the defendants’
anticompetitive conduct. Such an injury plainly is ‘of the type the antitrust laws were
intended to prevent.’”) (quoting Brunswick, 429 U.S. at 489; citing AGC, 459 U.S.
at 530); see also Corrente, 2023 WL 2244680, at *6 (“Plaintiffs allege that, as a
result of the anticompetitive effects of the merger, they pay higher prices for
securities transactions due to reduced price improvements and rebates. . . .”) (citing
Anago, Inc. v. Tecnol Med. Products, Inc., 976 F.2d 248, 249 (5th Cir. 1992)
(“Typical anticompetitive effects include increased prices and decreased output.”)).
W&T sufficiently alleged antirust injury to survive a motion to dismiss. The
fact that W&T’s allegation of antitrust liability is intertwined with contractual
liability does not alter this result. See MM Steel, LP v. JSW Steel (USA) Inc., 806
F.3d 835, 842–43 (5th Cir. 2015) (in a case where plaintiff brought both breach of
contract claim and antitrust claim for a §1 violation, “MM elected to recover on its
antitrust claims, foreclosing recovery on its contract claim, and the district court
trebled the damages, entering a final judgment holding all defendants jointly and
severally liable.”). The Sureties’ motion should be dismissed as to this argument.
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2. 	The Sureties’ Anticompetitive Agreement Arguments Fail.
The Sureties argue that W&T’s antitrust claims should be dismissed because
their allegations fail to establish an anticompetitive agreement among the Sureties.
ECF No. 63 at 16. The Sureties argue that W&T fails to allege any direct evidence
of an anticompetitive agreement because the misconstruction of a presentation at a
trade industry event and ordinary business interactions do not reflect “an explicit
anticompetitive agreement between the Sureties.” ECF No. 63 at 17. The Sureties
continue that W&T also fails to allege circumstantial evidence of collusion because
mere similarity in business decisions does not rise to collusion—the Sureties’
collateral demands were not a coordinated effort, but a rational response to W&T’s
filing suit against other sureties. ECF No. 63 at 18. Further, the Sureties argue that
aside from mere participation in industry groups, W&T fails to demonstrate the
Sureties had an opportunity to conspire and who attended these meetings or what
was said or agreed upon. ECF No. 63 at 19.
W&T responds that they sufficiently allege direct and circumstantial evidence
of concerted action by the Sureties “to collectively increase the financial terms on
which they would do business with [W&T] and other smaller offshore oil-and-gas
companies—whether through calls for additional collateral, increased rates, or
both—to the detriment of the oil-and-gas companies.” ECF No. 76 at 17.
W&T must allege an agreement between two or more persons because
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“unilateral conduct is excluded from [the Sherman Act’s] purview.” JSW Steel
(USA) Inc. v. Nucor Corp., 586 F. Supp. 3d 585, 596 (S.D. Tex. 2022), aff’d, No. 22-
20149, 2025 WL 832801 (5th Cir. Mar. 17, 2025) (quoting Johnson v. Hosp. Corp.
of Am., 95 F.3d 383, 392 (5th Cir. 1996)). Neither “conclusory allegation of
agreement at some unidentified point,” nor “an allegation of parallel conduct and a
bare assertion of conspiracy” will survive a motion to dismiss. Id. (quoting Twombly,
550 U.S. at 556, 557). Rather, W&T must plead factual allegations sufficient for the
Court 	to 	draw 	a 	reasonable 	inference 	that 	the 	Sureties 	made 	a 	“conscious
commitment to a common scheme designed to achieve an unlawful objective.” Id.
(quoting Marucci Sports, L.L.C. v. NCAA, 751 F.3d 368, 373-74 (5th Cir. 2014);
citing Abraham & Veneklasen v. Am. Quarter Horse Ass’n, 776 F.3d 321, 330 (5th
Cir. 2015) (agreement requires a “common design and understanding, or a meeting
of the minds in an unlawful agreement”)). However, “[i]mportantly, antitrust cases
are not subject to a heightened pleading standard.” Dexon Computer, 2023 WL
2941414, at *18 (citing Torrey, 2018 WL 10124894, at *7 (citing Wampler v. Sw.
Bell Tel. Co., 597 F.3d 741, 744 (5th Cir. 2010))).
a. 	W&T Sufficiently Alleged Direct Evidence of Concerted Action.
“A 	concerted 	action 	can 	be 	proven 	by 	either 	direct 	or 	circumstantial
evidence.” Quadvest, L.P. v. San Jacinto River Auth., No. 4:19-CV-4508, 2020 WL
5034155, at *8 (S.D. Tex. Aug. 14, 2020), aff’d, 7 F.4th 337 (5th Cir. 2021) (citing
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Tunica Web Advert. v. Tunica Casino Operators Ass’n, Inc., 496 F.3d 403, 409 (5th
Cir. 2007)). “Direct evidence explicitly demonstrates an understanding between the
alleged conspirators while circumstantial evidence requires ‘additional inferences in
order to support a claim of conspiracy.’” Id. (quoting Tunica Web Advert., 496 F.3d
at 409); see also Kjessler v. Zaappaaz, Inc., No. CV 4:18-0430, 2019 WL 3017132,
at *10 (S.D. Tex. Apr. 24, 2019) (“[d]irect evidence of an agreement includes ‘a
document or conversation explicitly manifesting the existence of the agreement in
question—“evidence that is explicit and requires no inferences to establish the
proposition or conclusion being asserted.”’”) (quoting Ins. Brokerage, 618 F.3d at
324 n.23 (quoting In re Baby Food Antitrust Litig., 166 F.3d 112, 118 (3d Cir.
1999))).
W&T asserts that they have alleged direct evidence of a conspiracy. W&T
claims that it has shown through “the sureties’ own words and actions,” “the sureties’
ongoing agreement to collectively demand increased financial terms from W&T and
other offshore oil-and-gas companies.” ECF No. 76 at 18. W&T alleges that they
have established “the overarching nature of the conspiracy and that the participants
met to discuss their plan to collectively increase premiums, increase their collateral
demands, and change the terms on which they would do business with their
customers:
• “[I]n 2024, representatives of the Sureties and co-conspirators met to
discuss their collective response to the BOEM rule and agreed to
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collectively change their analysis and terms at the expense of smaller
companies like W&T.” Dkt. 36 ¶37.
• “Sompo formulated a scheme with all other sureties of W&T to
demand roughly $250 million in collateral. Through their demand, the
Sureties planned to: (1) jointly squeeze their targets’ assets; (2) jointly
force their targets to accept commercially unreasonable terms it would
not otherwise accept with any individual; and (3) jointly increase
premiums, collateral, and bonding costs against their targets.” Id. ¶ 122.
• Sompo “encouraged and enlisted the support of other Sureties, in rapid
succession, to demand additional collateral, including U.S. Specialty,
[Pennsylvania], and U.S. Fire.” Id. ¶ 86.
• “Sompo’s own representative admittedly met with other sureties in
2024 to ‘collectively’ change their ‘analysis’ and ‘terms’ for these
companies.” Id. ¶ 90.
• “[T]he Sureties met one or more times in 2024 to jointly increase their
premiums, expedite their collateral demands, and change the terms of
their contracts and dealings.” Id. ¶ 119.
• “The Sureties and their representatives, including Mr. Hennesy and
Mr. Kilpatrick, continued meeting throughout 2024 to further plan and
execute their scheme.” Id. ¶ 124.
• “As admitted during the [November 12, 2024] Sompo-[Pennsylvania]
Presentation, 	Sompo’s 	and 	[Pennsylvania]’s 	representatives 	. 	. 	.
agree[d] to fix new terms against companies like W&T, and pursue a
‘collective’ strategy to benefit the surety industry. According 	to
[Pennsylvania], ‘[E]veryone started generating heartburn trying to
figure out, okay, we used to make a lot of money; now we’re not. So
how do we move forward on this space?” Id. ¶ 121.
• The November 2024 meeting “was not the first time W&T’s sureties
met to discuss their scheme, nor their last: they meet regularly to
collude and profit against companies like W&T, including through
NASPB’s and SFAA’s events.” Id.
ECF No. 76 at 18–19. W&T also argues that “they not only provide[d] facts
regarding the parties’ agreement,” but “also allege[d] the dates the Defendants
discussed their plan for concerted action as well as the specific dates they carried out
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their plans: (1) February 29, 2024 SFAA-NASBP Legislative Meeting. [ECF No.
36] ¶¶ 121, 124; (2) April 30-May 3, 2024 NASBP Annual Meeting, id.; (3) May 9,
2024 SFAA Annual Meeting, id.; (4) July 2, 2024 Philadelphia Insurance Company
demands collateral, id. ¶ 107. n.5; (5) July 9, 2024 Sompo demands collateral, id.
¶ 85; (6) July 31, 2024 U.S. Specialty demands collateral; id. ¶ 103; (7) October 1,
2024 Applied demands collateral and increased premiums, id. ¶ 98 & Ex. J; and
(8) October 14, 2024 U.S. Fire demands collateral, id. ¶ 104.” ECF No. 76 at 18–19
(citing ECF No. 36).
Again, the Sureties oversimplify W&T’s allegations. See ECF Nos. 63; 82.
The above allegations demonstrate more than mere participation in a trade industry
event and ordinary business interactions and decisions—the above allegations
expressly allege an agreement among the sureties. ECF No. 36 ¶¶ 37, 86, 122.
Taking their allegations as true, W&T alleges the dates, attendees, and aim of
numerous meetings to reach an agreement over roughly six to eight months
preceding the Sureties’ increases in premiums and collateral demands—demands
which the Sureties made within mere months of one another amidst these meetings.
W&T’s allegations provide factual support that the above meetings and
conversations were for the intent and purpose of reaching an agreement to
unreasonably restrain trade and that their intent was fulfilled in an agreement to
jointly squeeze W&T’s and other targets’ assets. W&T alleges that the Sureties’
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representatives, some of whom are named in the complaint, met to discuss their
collective response to the BOEM rule and explicitly agreed that to protect the surety
industry profits, they would collectively demand $250 million in collateral from
W&T to jointly arrest W&T’s assets, force it to accept unreasonable terms, and
increase premiums, collateral, and bonding costs. The Court will not guess whether
W&T will be able to provide evidence to substantiate these allegations or whether
the Sureties’ proffered justifications will win out, but that is not the focus at this
stage in the litigation. See Austin Legal Video, LLC v. Deposition Sols., LLC, No.
1:23-CV-00421-DAE, 2023 WL 9107726, at *8–9 (W.D. Tex. Nov. 16, 2023) (“Any
justification for the decline in business such as the rise of virtual depositions due to
the Covid-19 pandemic is not to be decided in this motion.”). The facts alleged, taken
as true, create a plausible inference that concerted action existed. See Quadvest, L.P.,
2020 WL 5034155, at *8; see also Dillard v. Merrill Lynch, Pierce, Fenner & Smith,
Inc., 961 F.2d 1148, 1159 (5th Cir. 1992) (holding that plaintiffs’ pleadings were
sufficient because in addition to simply alleging that a conspiracy existed, the
complaint indicated that the defendants met and collectively agreed on a method of
manipulating the relevant market); Acad. of Allergy & Asthma in Primary Care v.
Am. Acad. of Allergy, 2014 WL 12497080, at *4 (W.D. Tex. Sept. 8, 2014) (“Here,
however, Plaintiffs have alleged more than parallel conduct. They allege particular
discussions, meetings, agreements, and joint undertakings among Defendants related
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to the development of a ‘standard of care’ and the advocacy of that ‘standard of care’
to primary care physicians and third-party payors.”). The motion to dismiss should
be denied on this ground.
b. 	W&T Sufficiently Alleged Circumstantial Evidence of Concerted
Action.
Finding that W&T has sufficiently alleged direct evidence of concerted
activity, the Court need not take up analysis of W&T’s circumstantial evidence.
However, the Court finds that W&T sufficiently alleged circumstantial evidence
demonstrating concerted action.
The Sureties argue that although W&T alleges each surety made collateral
demands in close succession, this does not demonstrate collusion and instead shows
that each surety independently evaluated W&T’s finances and took action to secure
its own financial position. ECF No. 63 at 18. The Sureties argue that W&T fails to
establish certain of the plus factors: that the Sureties’ actions were not against their
self-interest absent an agreement because they demanded collateral based on W&T’s
deteriorating financials; the Sureties lacked a motive to conspire because the Sureties
do not profit from driving their principals into insolvency; the Sureties lacked an
opportunity to conspire. ECF No. 63 at 19.
W&T responds that it sufficiently alleged concerted action in that the Sureties
demanded “unprecedented, excessive collateral or increased premiums around the
same time in mid-2024,” ECF No. 76 at 20, “to impose higher prices and more
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onerous financial terms on their customers via the sureties’ agreement not to
compete against one another on price or terms.” ECF No. 76 at 21. W&T points to
its alleged numerous plus factors: (1) the Sureties’ demands would be against their
self-interest if acting independently because if they made these demands unilaterally,
then other sureties could undercut their business by offering better terms, but by
moving together, the Sureties could reap higher profits by forcing W&T to accept
their terms, ECF No. 76 at 22; (2) the Sureties shared a common motive to stop their
declining profits as they announced during the Sompo-Pennsylvania presentation,
ECF No. 76 at 22; (3) the Sureties gave pretextual reasons to conceal their illegal
scheme by erroneously claiming the new BOEM rule permitted their demands, ECF
No. 76 at 23; and (4) the offshore surety market is highly concentrated with ample
opportunities for sellers to collude and high barriers to entry that keep new
participants out, ECF No. 76 at 24–25.
“[A]ntitrust law limits the range of permissible inferences from ambiguous
evidence in a § 1 case.” JSW Steel, 586 F. Supp. 3d at 596 (quoting Matsushita Elec.
Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 588 (1986)). “Any conduct that is
as consistent with permissible competition as with illegal conspiracy does not,
standing alone, support an inference of antitrust conspiracy.” Id. (quoting A&V, 776
F.3d at 331). And an “inference of a conspiracy is always unreasonable when it is
based solely on parallel behavior that can be explained as the result of the
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independent business judgment of the defendants.” 	Id. 	(emphasis in original)
(quoting Southway Theatres, Inc. v. Georgia Theatre Co., 672 F.2d 485, 494 (5th
Cir. 1982)). If W&T’s § 1 claim relies on alleged parallel conduct, they “must plead
so-called ‘plus factors’ that are indicative of conspiracy.” See id. (quoting In re Pool
Products Distrib. Market Antitrust Litig., 988 F. Supp. 2d 696, 711 (E.D. La. 2013)).
“Courts 	have 	identified 	numerous 	‘factual 	enhancements’ 	potentially
supporting the inference of a conspiracy, including:
the existence of an ongoing government investigation, 	see In re
Propranolol Antitrust Litig., 249 F. Supp. 3d 712, 723 (S.D.N.Y. 2017);
a common motive to enter into a price fixing conspiracy, beyond merely
making more money, see Burtch v. Milberg Factors, Inc., 662 F.3d 212,
227 (3d Cir. 2011); conduct that would be irrational in a competitive
market, see In re Blood Reagents Antitrust Litig., 266 F. Supp. 3d 750,
772 (E.D. Pa. 2017); ‘whether the defendants have exchanged or have
had the opportunity to exchange information relative to the alleged
conspiracy,’ see Hyland v. HomeServices of Am., Inc., 771 F.3d 310,
318 (6th Cir. 2014); and ‘evidence that the industry is conducive to
collusion,’ see In re Pool Prods. Distrib. Mkt. Antitrust Litig., 158 F.
Supp. 3d 544, 569 (E.D. La. 2016).
Kjessler, 2019 WL 3017132, at *10. “Caution, however, is required when examining
these ‘plus factors,’ as many also give rise to a competing inference of non-collusive
behavior.” Id. (citing Tunica Web Advert., Inc., 496 F.3d at 409 (noting, in the
summary judgment context, that circumstantial evidence of conspiracy is subject to
the competing inference of independent action)).
As 	an 	initial 	matter, 	the 	Sureties’ 	arguments 	mostly 	raise 	competing
inferences, which are more appropriately addressed at summary judgment. Rather
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than arguing that W&T’s allegations are insufficient, the Sureties argue that their
interpretation of the events giving rise to the complaint should be accepted over
W&T’s interpretation. But “[t]he question at the pleading stage is not whether there
is a plausible alternative to the plaintiff’s theory; the question is whether there are
sufficient factual allegations to make the complaint's claim plausible”—“[t]he
choice between two plausible inferences that may be drawn from factual allegations
is not a choice to be made by the court on a Rule 12(b)(6) motion.” Acad. of Allergy
& Asthma in Primary Care, 2020 WL 4050243, at *7 (citing Anderson News, LLC,
680 F.3d at 189). Even so, the Court finds that W&T has sufficiently alleged plus
factors to demonstrate circumstantial evidence of concerted action.
W&T alleged that had the Sureties acted independently or unilaterally to
demand excessive collateral or increase premiums, then they would have been
undercut by other sureties—instead, by acting together, the Sureties hoped to
“jointly force their targets to accept commercially unreasonable terms it would not
otherwise accept with any individual” and the Sureties agreed to collectively remain
profitable by collectively agreeing to change their approach to companies like W&T.
ECF No. 36 ¶¶ 122, 128. Next, W&T alleged that the Sureties shared a common
motive to stop declining profits, which the Sureties expressed at the November 2024
presentation when Pennsylvania and Sompo met to “discuss recent bankruptcies and
the BOEM rule, agree to fix new terms against companies like W&T, and pursue a
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‘collective’ 	strategy 	to 	benefit 	the 	surety 	industry,” 	and 	the 	Pennsylvania
representative expressed during the presentation that “everyone started generating
heartburn trying to figure out, okay, we used to make a lot of money; now we’re not.
So how do we move forward on this space?’ ECF No. 36 ¶ 121. Along this same
vein, W&T alleged that the Sureties used the new BOEM rule as a cover to conceal
their illegal scheme of price-fixing to gain profits, even though the Sureties
acknowledged that the BOEM rule did not permit the demands. ECF No. 36 ¶¶ 52–
54, 70–74, 85–89, 96–101, 103, 105, 108–109, 112–118. And finally, W&T alleged
that the offshore surety market is highly concentrated with ample opportunities for
sellers to collude and high barriers to entry that keep new participants out—“there
are no close economic and/or functional substitutes for these federally certified
surety bonds;” the Sureties claim they can say no even to the federal government
and can decide to not write a single bond in the Gulf of Mexico; and the Sureties
have the opportunity to collude based on interconnected associations, presentations,
meetings, and business relationships and even did collude at the November 2024
meeting and presentation. ECF No. 36 ¶¶ 35–37, 116–18, 121, 123–24, 126, 128.
The Sureties’ motion to dismiss should be denied on this ground. See Kjessler, 2019
WL 3017132, at *10–11.
3. 	The Sureties’ Price-Fixing and Market Arguments Fail.
The Sureties argue that W&T fails to properly define the relevant market
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because the complaint only “vaguely refers to the ‘surety bond market for offshore
oil and gas producers’ without providing essential details such as the geographic
scope, competitive dynamics, or the identities of market participants.” ECF No. 63
at 20. 11 W&T respond that, because they have alleged price-fixing via group boycott
and horizontal price fixing theories, which are per se unreasonable restraints of trade,
anticompetitive harm is presumed and W&T is not required to define a market or
establish market power. ECF No. 76 at 26–28.
The Sureties contest W&T’s price-fixing theory and argue that W&T’s
allegations do not demonstrate that the Sureties “agreed to fix premiums, collateral
levels, or any other pricing term,” and instead, show that “each surety demanded
unique collateral payments based upon the terms of their unique, separate preexisting
contracts, contradicting any claim of a coordinated pricing scheme.” ECF No. 63
at 22. The Sureties also argue that “a collateral demand is not a ‘price’ that can be
‘fixed’ under antitrust law” because “[t]he Sureties did not create a new charge, fee,
or price adjustment in response to market conditions; rather, W&T was contractually
11 The Sureties continue that even if the alleged market is properly alleged, the Court should look
outside the complaint and find that “the surety defendants collectively control only approximately
8% of [the surety market],” which is too low to suggest market power and W&T’s public filings
acknowledge that W&T can obtain replacement bonds. ECF No. 63 at 20, 21. W&T points out that
it alleged a relevant market for “federally certified surety bonds for offshore oil and gas producers,”
which is comprised of a smaller number of companies than those listed in the Sureties’ outside
evidence. ECF No. 76 at 29 (citing ECF No. 36 ¶ 125). For this reason, the Court declines to take
judicial notice of the Sureties’ outside evidence. The Sureties also ask the Court to look at W&T’s
public filings concerning W&T’s ability to find replacement bonds—for the same reasons
articulated above, the Court declines to do so and considers the complaint’s allegations as true.
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required to post collateral to match any undischarged liability under its indemnity
agreements,” which “was neither negotiable nor a new financial demand—it existed
from the moment W&T executed its indemnity agreements.” ECF No. 63 at 22.
“Once a plaintiff establishes that a conspiracy occurred, whether it violates
§ 1 is determined by the application of either the per se rule or the rule of reason.”
TravelPass Group, LLC, 2019 WL 5691996, at *9 (quoting Marucci Sports, 751
F.3d at 374 (quoting Golden Bridge Tech., 547 F.3d at 271)). “Most arrangements
challenged under Section 1 are analyzed under the ‘rule of reason,’ which ‘requires
the factfinder to decide whether under all the circumstances of the case the restrictive
practice imposes an unreasonable restraint on competition.’” Id. (quoting EuroTec
Vertical Flight Sols., LLC. v. Safran Helicopter Engines S.A.A., No. 3:15-CV-3454-
S, 2019 WL 3503240, at *14 (N.D. Tex. Aug. 1, 2019) (quoting Arizona v. Maricopa
Cty. Med. Soc’y, 457 U.S. 332, 343 (1982))). 12 But “certain arrangements are
generally found to be unlawful under the rule of reason, and so are presumed to
unreasonably restrain competition;” these are per se violations and include certain
types of “price fixing, division of markets, group boycotts and tying arrangements.”
Id. (quoting EuroTec, 2019 WL 3503240, at *14 (citing Maricopa Cty., 457 U.S.
at 344)); N. Tex. Specialty Physicians v. FTC, 528 F.3d 346, 360 (5th Cir. 2008)
12 The Sureties do not expressly raise arguments regarding whether W&T sufficiently raised
allegations sufficient under the rule of reason. See ECF No. 63.
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(quoting Maricopa Cty., 457 U.S. at 344 n.15)); Elec. Med. Tr. v. U.S. Anesthesia
Partners, Inc., No. 4:23-CV-04398, 2024 WL 5274650, at *9 (S.D. Tex. Sept. 27,
2024) (“Under the Sherman Act, ‘price-fixing agreements are unlawful per se.’”)
(quoting United States v. Jindal, No. CV 4:20-CR-00358, 2021 WL 5578687, at *4
(E.D. Tex. Nov. 29, 2021) (citing United States v. Socony-Vacuum Oil Co., 310 U.S.
150, 218 (1940))).
“Some agreements among firms that compete with each other at the same level
of the market (i.e., ‘horizontal’ agreements) are viewed as per se anticompetitive and
generally do not require proof that the agreement was actually anticompetitive.”
K&F Rest. Holdings, Ltd. v. Rouse, No. CV 16-293-JWD-EWD, 2018 WL 3553422,
at *9 (M.D. La. July 24, 2018), aff’d on other grounds, 798 F. App’x 808 (5th Cir.
2020) (citing Tunica Web Advert., 496 F.3d at 412). “The scope of conduct found
to constitute horizontal price-fixing agreements warranting application of the per se
rule is broad.” Elec. Med. Tr., 2024 WL 5274650, at *9 (S.D. Tex. Sept. 27, 2024)
(quoting Jindal, 2021 WL 5578687, at *4).
“Given that horizontal restraints involve agreements between competitors not
to compete in some way, this Court . . . did not need to precisely define the relevant
market to conclude that these agreements were anticompetitive.” Ohio v. Am.
Express Co., 585 U.S. 529, 544, n. 7 (2018) (citing FTC v. Indiana Federation of
Dentists, 476 U.S. 447, 460–61 (1986), Catalano, Inc. v. Target Sales, Inc., 446 U.S.
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643, 648–649 (1980) (per curiam)); see also Quadvest, L.P., 2020 WL 5034155, at
*9 (“while the Court engages in an inquiry of the market power to determine if the
restraint creates anti-competitive effects, alleging market power is not necessary to
state a § 1 claim.”); United States v. Joyce, 895 F.3d 673, 677–78 (9th Cir. 2018)
(“The very purpose of the per se rule is to ‘avoid[] the necessity for an incredibly
complicated and prolonged economic investigation into the entire history of the
industry involved, as well as related industries, in an effort to determine at large
whether a particular restraint has been unreasonable.’”) (quoting N. Pac. Ry. Co.,
356 U.S. at 5).
The Sureties first argue that W&T’s price-fixing claim should be dismissed
because W&T’s allegations are based on each surety’s demand of unique collateral
payments according to the terms of their separate, preexisting agreements, which
undermines any claim of a coordinated price-fixing scheme. ECF No. 63 at 22.
Notably, the Sureties do not cite any authority for this argument. See ECF No. 63. 13
13 The Sureties focus certain of their arguments under this section on their individual agreements
with W&T and not their agreement with each other and the other sureties. The Court is not
convinced that this is the proper focus for analyzing restraint of trade. See Catalano, 446 U.S.
at 649–50 (“there is a plain distinction between the lawful right to publish prices and terms of sale,
on the one hand, and an agreement among competitors limiting action with respect to the published
prices, on the other.”). Along this same line, the Sureties argue that the complaint hinges on
contract questions related to W&T’s agreements with the Sureties, not antitrust allegations,
because some of the agreements permit collateral demands for any or no reason and, therefore, the
Sureties could not conspire because the agreements would ultimately not allow this. The Court
disagrees – W&T clearly alleged that the Sureties’ actions violated their agreements with W&T,
but regardless of whether the agreement permitted their actions or not, their concerted actions
allegedly demonstrate their conspiracy to “cripple W&T.” ECF No. 36 ¶¶ 133–36; 139–49.
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Further, W&T provides authority that establishes that the Sureties’ argument is
unsupported. See ECF No. 76 at 27 (citing Socony-Vacuum Oil Co., 310 U.S. at 223).
Indeed, the Supreme Court held in Socony-Vacuum:
Nor is it important that the prices paid by the combination were not
fixed in the sense that they were uniform and inflexible. Price-fixing . .
. has no such limited meaning. An agreement to pay or charge rigid,
uniform prices would be an illegal agreement under the Sherman Act.
But so would agreements to raise or lower prices whatever machinery
for price-fixing was used. That price-fixing includes more than the mere
establishment of uniform prices is clearly evident. . . .
Socony-Vacuum Oil Co., 310 U.S. at 222; see also Burnett v. Nat’l Ass’n of Realtors,
No. 4:19-CV-00332-SRB, 2022 WL 17741708, at *9 (W.D. Mo. Dec. 16, 2022)
(“Under the Sherman Act a combination formed for the purpose and with the effect
of raising, depressing, fixing, pegging, or stabilizing the price of a commodity in
interstate or foreign commerce is illegal per se.”) (quoting Socony, 310 U.S. at 223).
This argument lacks merit.
Without addressing their alleged increase in premiums, the Sureties next argue
that collateral demand is a not a “price” that can be fixed because the agreements
between W&T and the Sureties required W&T to post collateral to match any
undischarged liability—this was neither negotiable, nor a new financial demand.
ECF No. 63 at 22. Again, the Sureties do not cite any authority for this argument in
their motion. See ECF No. 63.
Again, the “[t]he scope of conduct found to constitute horizontal price-fixing
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agreements warranting application of the per se rule is broad.” Jindal, 2021 WL
5578687, at *4. 14 “[A]ny naked agreement among competitors—whether by sellers
or buyers—that fixes 	components that affect price 	meets the definition of a
horizontal price-fixing agreement.” Id. (emphasis added)(citing Socony-Vacuum,
310 U.S. at 221 (“Any combination which tampers with price structures is engaged
in an unlawful activity.”)); Jacobi v. Bache & Co., Inc., 377 F. Supp 86, 95–96
(S.D.N.Y. 1974) (“When the purpose of an agreement is to fix or stabilize prices,
even if the means used affects only one element of the price structure, or only
indirectly affects prices, the agreement is illegal per se. . . .”).
In response, W&T cites to authority that “an agreement to adhere to
previously 	announced 	prices 	and 	terms 	of 	sale, 	even 	though 	advance 	price
announcements are perfectly lawful and even though the particular prices and terms
were not themselves fixed by private agreement” was an unlawful agreement. ECF
No. 76 at 27 (citing Catalano, Inc., 446 U.S. at 647 (citing Sugar Institute v. United
States, 297 U.S. 553, 601–02 (1936))). In the instant case, W&T alleged that the
14 The Jindal court rejected the argument that “price fixing has not been limited to conduct that
literally directly fixes the price of a commodity.” Id. (cleaned up). “[C]ourts have applied the per
se rule to price-fixing agreements: 1) establishing minimum prices, United States v. Trenton
Potteries Co., 273 U.S. 392, 401 (1927); 2) setting maximum prices, Maricopa Cnty., 457 U.S. at
335; 3) fixing credit terms, Catalano, Inc., 446 U.S. at 648; 4) setting fee schedules, Goldfarb v.
Va. State Bar, 421 U.S. 773, 783 (1975); 5) purchasing surplus product to keep it off the market,
Socony-Vacuum, 310 U.S. at 167; 6) refusing to advertise prices, United States v. Gasoline
Retailers Ass’n, 285 F.2d 688, 691 (7th Cir. 1961); and 7) excluding purchasers unless they
increased the price they paid for a service, Fed. Trade Comm’n. v. Superior Ct. Trial Laws. Ass’n,
493 U.S. 411, 436 n.19 (1990).” Id.
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Sureties engaged in an unlawful agreement with one another to make collective
demands 	to 	raise 	premiums 	and/or 	demand 	additional 	collateral 	under 	their
respective lawful agreements with W&T, which increased the cost W&T had to pay
for bonds. ECF No. 36 ¶¶ 1, 4, 90, 114, 119, 122. In Catalano, the Supreme Court
held that an agreement among competing wholesalers to terminate the practice of
giving credit and instead require retailers to pay in cash constituted price-fixing. See
Catalano, 446 U.S. at 648. Like in Catalano, the Sureties and other sureties have
allegedly agreed to collectively demand collateral and/or increase premiums,
essentially increasing the price that W&T must pay for bonds. See id.
Because the Sureties fail to support their arguments for dismissal, the motion
to dismiss should be denied on this ground. 15
B. 	The Sureties’ Declaratory Judgment Arguments Fail.
W&T seek a declaration that: “(1) the Sureties may not enforce their
indemnity agreements such that their actions constitute an abuse of right; (2) the
Sureties’ interpretation of the indemnity agreements render the agreements illusory;
(3) the Sureties may not make an unreasonable demand for collateral; (4) the Sureties
must accept reasonable collateral as offered by W&T; (5) no additional collateral is
15 W&T also brings a claim for a violation of the Texas Free Enterprise and Antitrust Act, Tex.
Bus. & Com. Code § 15.05. ECF No. 36. The Sureties argue that this claim should be dismissed
for failure to define the relevant market. For the reasons stated above, the Sureties’ argument
should be rejected.
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required of W&T; (6) the Sureties may not make demands for collateral that are
inconsistent such that W&T cannot comply with each others’ demands; and (7) the
Sureties’ changed business model and scheme are not legitimate grounds to demand
further collateral beyond that offered by W&T.” ECF No. 36 ¶ 137.
The Sureties move to dismiss W&T’s declaratory judgment claims arguing
that the claim is “an attempt to litigate a defense in disguise,” 16 fail to present a
justiciable controversy, and “seek[] nothing more than a ruling negating the Sureties’
contractual rights, an issue already before the Court.” ECF No. 63 at 23–25. W&T
responds that it “asks the Court to make declarations that will clarify the Parties’
relationship going forward,” which are declarations they would not be entitled to
under any defense or claim. ECF No. 76 at 30–31.
“The Declaratory Judgment Act, 28 U.S.C. §§ 2201–02, gives federal courts
broad discretion to grant or refuse to grant declaratory judgment.” Amerisure Ins.
Co. v. Thermacor Process, Inc., No. 4:20-CV-01089-P, 2021 WL 1056435, at *6
(N.D. Tex. Mar. 19, 2021) (citing Torch, Inc. v. LeBlanc, 947 F.2d 193, 194 (5th
Cir. 1991)). “In determining whether to decide a declaratory judgment action, the
court must ascertain: (1) if the action is justiciable; (2) if the court has authority to
grant the requested relief; and (3) whether the court should exercise its discretion to
16 The Sureties contend that W&T’s claim “does not introduce any new substantive legal question
but instead mirrors its anticipated defenses to the Sureties’ contractual enforcement actions.” ECF
No. 63 at 23. The Sureties raised specific performance, breach of indemnity agreement, common
law indemnity, quia timet causes of action. ECF Nos. 116; 118.
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decide the action.” Id. (citing Orix Credit Alliance, Inc. v. Wolfe, 212 F.3d 891, 895
(5th Cir. 2000)).
1. 	W&T’s declaratory judgment claim is justiciable.
A declaratory judgment action is justiciable where “the facts alleged, under
all the circumstances, show that there is a substantial controversy, between parties
having adverse legal interests, of sufficient immediacy and reality to warrant the
issuance of a declaratory judgment.” Total Gas & Power N. Am., Inc. v. FERC,
No. CV 4:16-1250, 2016 WL 3855865, at *2 (S.D. Tex. July 15, 2016), aff’d, 859
F.3d 325 (5th Cir. 2017), as revised (July 10, 2017), aff’d, 859 F.3d 325 (5th Cir.
2017), as revised (July 10, 2017) (quoting MedImmune, Inc. v. Genentech, Inc., 549
U.S. 118, 127 (2007)). The controversy must be a dispute that is “definite and
concrete, touching the legal relations of parties having adverse legal interests.”
Ocwen Loan Servicing, LLC v. McGuinn, No. A-14-CV-629 LY, 2014 WL
12586850, at *3 (W.D. Tex. Nov. 25, 2014), adopted, No. A-14-CV-629-LY, 2014
WL 12588334 (W.D. Tex. Dec. 29, 2014) (quoting MedImmune v. Genentech, Inc.,
549 U.S. 118, 127 (2007)). Also, “[t]he controversy must be such that it can presently
be litigated and decided and not hypothetical, conjectural, conditional or based upon
the possibility of a factual situation that may never develop.” Id. (quoting Val–Com
Acquisitions Trust v. Chase Home Fin., L.L.C., 434 F. App’x 395, 395–96 (5th Cir.
2011) (quoting Rowan Cos. v. Griffin, 876 F.2d 26, 28 (5th Cir. 1989))).
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The Sureties do not raise a legitimate argument that W&T’s declaratory
judgment claim is not justiciable—instead, their arguments, whether the declaratory
judgment claim is duplicative of defenses or issues central to the litigation, are more
appropriately 	addressed 	under 	the 	Court’s 	analysis 	of 	whether 	to 	exercise
jurisdiction over this claim.
Nonetheless, the Court finds that W&T’s request for declaratory judgment is
justiciable. 	The 	controversy 	can 	be 	presently 	litigated 	and 	is 	certainly 	not
hypothetical or based on the possibility of a factual situation that may never
develop—rather, the focus of W&T’s requested declaratory judgment relief, the
clarification of the parties’ contractual rights and responsibilities, is properly before
the Court. The Sureties’ cited cases do not address this issue as an issue of
justiciability. See Great Am. Ins. Co. v. Goin, No. 3:15-CV-75-L, 2017 WL
4238698, at *4 (N.D. Tex. Sept. 25, 2017) (“This court has previously declined in
its discretion to adjudicate declaratory judgment actions that are duplicative of other
claims in the same case.”); Texas v. West Publ’g Co., 882 F.2d 171, 175 (5th Cir.
1989) (finding no actual controversy where there was no concrete evidence of
discord between the parties); Xtria LLC v. Tracking Sys., Inc., No. 3:07-CV-0160-
D, 2007 WL 1791252, at *3 (N.D. Tex. June 21, 2007) (rejecting declaratory
judgment claim where issues were already central to existing litigation under the
Court’s discretion to decline jurisdiction); Landscape Design & Constr., Inc. v.
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Transport Leasing/Contract, Inc., No. 3:00-CV-0906-D, 2002 WL 257573, at *10
(N.D. Tex. Feb. 19, 2002) (in its discretion, declining declaratory judgment
jurisdiction where the claim merely restated defenses in an active lawsuit). The
motion to dismiss should be denied on this ground.
2. 	The Court should exercise jurisdiction over W&T’s declaratory
judgment claim.
“If the declaratory judgment dispute is justiciable, the Court has discretion
whether to exercise its jurisdiction over the action.” Total Gas & Power N. Am., Inc.,
2016 WL 3855865, at *3 (citing Wilton v. Seven Falls Co., 515 U.S. 277, 288
(1995)). “Courts have declined to exercise their discretion to decide declaratory
judgment actions where deciding that action would be redundant in light of the
affirmative causes of action before the Court.” Amerisure Ins. Co. v. Thermacor
Process, Inc., No. 4:20-CV-01089-P, 2021 WL 1056435, at *7 (N.D. Tex. Mar. 19,
2021) (collecting cases) (citing St. Paul Ins. Co. v. Trejo, 39 F.3d 585, 590–91 (5th
Cir. 1994) (considering “whether retaining the lawsuit would serve the purposes of
judicial economy” among seven nonexclusive factors to consider when deciding
whether to decide or dismiss a declaratory action)).
“A declaratory judgment action is redundant . . . if resolution of the affirmative
claims and counterclaims before the Court would resolve all questions that the
declaratory judgment action raises.” Id. (citing Centex, 2014 WL 1225501, at *14;
Redwood Resort Props., LLC v. Homes Co. Ltd., No. 3:06-cv-1022-D, 2007 WL
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38
1266060, at *4–5 (N.D. Tex. April 30, 2007)). “[T]he Court should consider
‘potential qualitative differences between merely prevailing in [the] lawsuit, and
receiving an affirmative declaration of rights to a declaratory judgment.’” Id.
(quoting Centex, 2014 WL 1225501, at *14 (quoting Blackmer v. Shadow Creek
Ranch Development Co. Ltd. P’ship, No. H-07-681, 2007 WL 7239968, at *1 (S.D.
Tex. June 26, 2007)); citing Klein, 2014 WL 4476556, at *9; Evanston Ins. Co. v.
Graves, No. 3:13-CV-959-D, 2013 WL 4505181, at *1 (N.D. Tex. Aug. 23, 2013)).
The Sureties oversimplify W&T’s declaratory judgment request. See ECF
No. 63. Rather than only insulate themselves from contractual liability in the instant
case, W&T seeks clarification of the contractual terms that will continue to bind both
them and the Sureties—in other words, W&T requests clear delineations of each
party to the indemnity agreement’s rights and responsibilities moving forward, not
merely their own past liability under the agreement. See ECF No. 36 ¶ 137. The
parties’ current contractual claims, when decided, will resolve whether W&T or the
Sureties breached the contract through past (in)actions. See ECF No. 36. But there
will still be questions as to how, or if, the Sureties may enforce their agreements in
the future—for example, W&T seeks a declaration that the Sureties may not enforce
their indemnity agreements in such a way that unreasonably demands collateral or
rejects W&T’s reasonable collateral. See ECF No. 36 ¶ 137; Amerisure Ins. Co.,
2021 WL 1056435, at *7; see also Wells Fargo Bank Minnesota v. Wachovia Bank,
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No. CIV.A. 3:02-CV-1945, 2004 WL 2826773, at *4 (N.D. Tex. Dec. 9, 2004) (“The
Court is not inclined to leave lingering questions about Wachovia’s responsibilities
that could be the impetus for further litigation. The Court finds that a declaratory
judgment defining Wachovia’s responsibilities under the PSA and MLPA will serve
a useful purpose and therefore, the Court will exercise its discretion to determine
this declaratory judgment action.”). In its discretion, the Court finds that W&T’s
declaratory judgment claims would serve a useful purpose and relieve uncertainty,
insecurity, and controversy in this case. The Court should decide to exercise its
jurisdiction over this matter and deny the Sureties’ motion to dismiss on this basis.
C. 	W&T Waived Their Texas Insurance Code Claims.
The Sureties argue that W&T’s claims under the Texas Insurance Code should
be dismissed because Chapter 541 does not apply to commercial sureties and the
Sureties did not issue insurance policies to W&T. ECF No. 63 at 27. W&T does not
address these arguments at all in its response. See ECF No. 76. “A party’s failure to
defend a claim in response to a motion to dismiss constitutes abandonment.” Guliyev
v. United States Citizenship & Immigration Services, No. 3:24-CV-2418-K, 2025
WL 1898670, at *5 (N.D. Tex. July 9, 2025) (quoting Barrios v. Target Corp., No.
3:23-CV-00033-E, 2023 WL 4768191, at *2 (N.D. Tex. July 26, 2023) (citing
Matter of Dallas Roadster, Ltd., 846 F.3d 112, 126 (5th Cir. 2017) (failure to respond
to argument in motion to dismiss constituted abandonment)); see also Black v. N.
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Panola School Dist., 461 F.3d 584, 588 n.1 (5th Cir. 2006) (claim abandoned when
failed to assert in a response to motion to dismiss)). The motion to dismiss these
claims should be granted and W&T’s claims under the Texas Insurance Code
dismissed.
D. 	W&T’s Tortious Interference Claims Should Remain.
The Sureties also argue that W&T’s tortious interference claims should be
dismissed because W&T fails to identify a contract or specific, prospective business
relationship that the Sureties interfered with, the Sureties’ interfering actions, or
whether 	the 	Sureties 	held 	a 	conscious 	desire 	to 	harm 	prospective 	business
relationships. ECF Nos. 57 at 28–29; 63 at 28. 17 The Sureties argue that W&T cannot
raise a claim for tortious interference alleging the Sureties interfered with the
indemnity agreements because tortious interference claims can only be brought
against third parties, not contracting parties. ECF No. 63 at 28.
W&T responds that the operative complaint alleges that the Sureties interfered
with W&T’s contracts because each Surety interfered with W&T’s contracts with
W&T’s other sureties. ECF No. 76 at 31. W&T continues that it alleged that the
Sureties interfered with W&T’s prospective business relationships with other
sureties by “encourag[ing] and enlist[ing] the support of other Sureties, in rapid
17 The Sureties also argue that W&T fails to state a claim for tortious interference because these
claims hinge on W&T’s antitrust claims. ECF No. 63 at 27–28. The Court found that W&T’s
antitrust claims should survive the motion to dismiss, so for the same reasons explained above, the
Court is unconvinced that W&T’s tortious interference claims should be dismissed.
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succession to demand additional collateral” and using their market power to
economically harm W&T’s business by inducing W&T’ “sureties, creditors, and
other financial partners to reduce or negatively alter their relationship with [W&T].”
ECF Nos. 76 at 31–32; 78 at 32 (quoting ECF No. 36 ¶¶ 86, 165).
Under Texas law, “[t]he elements of tortious interference with contract are
(1) a contract subject to interference; (2) a willful and intentional act of interference
(3) that was a proximate cause of the plaintiff’s damages; and (4) actual damage.”
R.P. Small Corp. v. Land Dep’t, Inc., 505 F. Supp. 3d 681, 703 (S.D. Tex. 2020)
(quoting Cuba v. Pylant, 814 F.3d 701, 717 (5th Cir. 2016) (citing Tex. Beef Cattle
Co. v. Green, 921 S.W.2d 203, 210 (Tex. 1996))); see also ProTradeNet, LLC v.
Predictive Profiles, Inc., 369 F. Supp. 3d 788, 791 (W.D. Tex. 2019) (cited by the
Sureties) (collecting Texas cases). W&T must show that “‘the defendant knowingly
induced one of the contracting parties to breach its obligations under the contract.’”
R.P. Small Corp., 505 F. Supp. 3d at 703–04 (quoting Pylant, 814 F.3d at 717
(quoting All Am. Tel., Inc. v. USLD Commc’ns, Inc., 291 S.W.3d 518, 532 (Tex.
App. 2009))). “[A] person must be a stranger to a contract to tortiously interfere with
it.” Id. at 704 (quoting Morgan Stanley & Co., Inc. v. Tex. Oil Co., 958 S.W.2d 178,
179 (Tex. 1997)).
W&T alleged that “[t]he Sureties . . . have induced, or attempted to induce,
W&T’s sureties, creditors, and other financial partners to reduce or negatively alter
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their business relationship with W&T.” ECF No. 36 ¶ 165. The Sureties’ argument
that W&T did not identify any interfered-with contracts or contracts that the Sureties
are not strangers to is unfounded. 18 The Sureties have not provided authority that the
above allegations are insufficient to plead a tortious interference claim. See ECF
No. 63. Here, W&T alleges that the Sureties interfered with W&T’s agreements with
the other sureties by encouraging them to increase premiums and make collateral
demands. ECF No. 36 ¶¶ 89, 90, 171. The motion to dismiss should be denied on
this ground.
The Sureties also argue that W&T’s tortious interference claims based on
prospective business relationships 19 should be dismissed because W&T’s November
2024 10-Q statement contradicts W&T’s allegation that the Sureties interfered with
W&T’ prospective business relationships. ECF No. 63 at 28. “The general rule is
that courts should consider a motion to dismiss based on the four-corners of the
plaintiff’s pleadings, not the evidence that Defendants may seek to introduce in
18 The Sureties do not address these arguments in their reply. See ECF No. 82.
19 “Texas law protects prospective contracts and business relations from tortious interference.”
Forum Energy Techs., Inc. v. Jason Oil & Gas Equip., LLC, No. CV H-20-3768, 2022 WL
1103078, at *3 (S.D. Tex. Apr. 13, 2022) (quoting Coinmach Corp. v. Aspenwood Apartment
Corp., 417 S.W.3d 909, 923 (Tex. 2013). “To prevail on a claim for tortious interference with
prospective business relations, the plaintiff must establish that (1) there was a reasonable
probability that the plaintiff would have entered into a business relationship with a third party;
(2) the defendant either acted with a conscious desire to prevent the relationship from occurring or
knew the interference was certain or substantially certain to occur as a result of the conduct; (3) the
defendant’s conduct was independently tortious or unlawful; (4) the interference proximately
caused the plaintiff injury; and (5) the plaintiff suffered actual damage or loss as a result.” Id.
(quoting Coinmach Corp., 417 S.W.3d at 923).
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response.” Moore v. City of Houston, No. 4:23-CV-3048, 2024 WL 4351346, at *2,
n.4 (S.D. Tex. Aug. 28, 2024), adopted, No. CV H-23-3048, 2024 WL 4357565
(S.D. Tex. Sept. 26, 2024) (quoting Ramos v. Taylor, 646 F. Supp. 3d 807, 814 (W.D.
Tex. 2022). “The Fifth Circuit has recognized ‘one limited exception’ to the rule that
when considering a motion to dismiss a court is generally limited in its review to the
‘four corners of the complaint.’” Moskovits v. Mercedes-Benz Fin. Services USA,
LLC, No. 4:21-CV-2260, 2022 WL 3969547, at *2 (S.D. Tex. July 18, 2022),
adopted, No. 4:21-CV-02260, 2022 WL 3998507 (S.D. Tex. Aug. 31, 2022), aff’d
sub nom. Moskovits v. Mercedes-Benz Fin. Services USA, L.L.C., No. 22-20522,
2023 WL 6972986 (5th Cir. Oct. 23, 2023) (quoting Scanlan v. Texas A&M Univ.,
343 F.3d 533, 536 (5th Cir. 2003)). “Under this exception, a court may incorporate
a document attached to a motion to dismiss into the pleadings if: (1) the document
is attached to a defendant’s motion to dismiss; (2) the document is referred to in the
plaintiff’s complaint; and (3) the document is central to the plaintiff’s claims.” Id.
(citing Peacock v. AARP, Inc., 181 F. Supp. 3d 430, 434 (S.D. Tex. 2016)). A
document is central to a plaintiff’s claims when it is “necessary to establish an
element of one of the plaintiff’s claims.” Id. (quoting Kaye v. Lone Star Fund V
(U.S.), L.P., 453 B.R. 645, 662 (N.D. Tex. 2011)).
The Sureties have not made any efforts to establish any of the elements to the
limited exception to the four-corner’s rule. See ECF No. 63. This 10-Q statement is
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not referred to in the complaint. See ECF No. 36. 20 The motion to dismiss should be
denied on this ground.
E. 	W&T’s Civil Conspiracy Claims Should Remain.
The Sureties argue that W&T fails to allege a meeting of the minds on an
object or course of action; specifically, when the Sureties conspired, how they
reached an agreement, and what they agreed to. ECF No. 63 at 29–30. The Sureties
argue that the alleged conspiratorial acts “align[] entirely with unilateral business
decisions that reflect the Sureties’ independent assessments of financial risk.” ECF
No. 63 at 30. W&T responds that they properly pleaded a civil conspiracy claim, as
demonstrated through their antitrust claims. ECF Nos. 76 at 32. 21
The elements of civil conspiracy are: “(1) two or more persons; (2) an object
to be accomplished; (3) a meeting of minds on the object or course of action; (4) one
or more unlawful, overt acts; and (5) damages as the proximate result.” Su v. Gaya
Won, LLC, No. CIVIL ACTION H-23-3215, 2024 WL 5301787, at *10 (S.D. Tex.
Dec. 23, 2024), adopted, No. CIVIL ACTION H-23-3215, 2025 WL 50261 (S.D.
Tex. Jan. 7, 2025) (quoting Agar Corp., Inc. v. Electro Circuits Int’l, LLC, 580
20 Contradictory evidence to the allegations in the complaint is better addressed at the summary
judgment stage. See Fed. R. Civ. P. 56(a) (“The court shall grant summary judgment if the movant
shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment
as a matter of law.”).
21 The Sureties argue that W&T’s civil conspiracy claims fail because they are derivative of
W&T’s other failed claims. For the same reasons explained above, the Court finds that the
Sureties’ motion to dismiss should be denied on this ground.
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S.W.3d 136, 141 (Tex. 2019) (quoting Massey v. Armco Steel Co., 652 S.W.2d 932,
934 (Tex. 1983))). “Civil conspiracy is a derivative tort that ‘depends on some
underlying tort or other illegal act.’” Id. (quoting Agar Corp. v. Electro Circs. Int’l,
LLC, 580 S.W.3d 136, 140–41 (Tex. 2019)).
“At the pleading stage, a plaintiff alleging a conspiracy need only state enough
facts ‘to raise a reasonable expectation that discovery will reveal evidence of’ an
illegal agreement.” In re Black Elk Energy Offshore Operations, LLC, No. 15-34287,
2022 WL 1589190, at *14 (Bankr. S.D. Tex. May 19, 2022) (quoting Twombly, 550
U.S. at 556). “[A] well-pleaded complaint may proceed even if it strikes a savvy
judge that actual proof of those facts is improbable, and ‘that a recovery is very
remote and unlikely.’” Id. (quoting Twombly, 550 U.S. at 556) (quoting Scheuer v.
Rhodes, 416 U.S. 232, 236 (1974))). Conspiracies are “rarely evidenced by explicit
agreements, but nearly always must be proven through ‘inferences that may fairly
be drawn from the behavior of the alleged conspirators.’” Id. (quoting Anderson
News, L.L.C. v. Am. Media, Inc., 680 F.3d 162, 183 (2d Cir. 2012) (quoting
Michelman v. Clark-Schwebel Fiber Glass Corp., 534 F.2d 1036, 1043 (2d Cir.
1976))). “Civil conspiracy may be proven entirely by circumstantial evidence.” Id.
(quoting Farouk Sys., Inc. v. Chi Herbal Infusions, Inc., 2009 WL 10676778, *3
(E.D. Tex. Sept. 2, 2009)).
“Conspiracy pleadings are sufficient ‘if they set forth facts from which an
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inference of unlawful agreement can be drawn’ because ‘[p]laintiffs cannot be
required to plead with specificity the very facts which can only be proven by
circumstantial evidence.’” Id. at *15 (quoting Brett v. First Fed. Sav. & Loan, 461
F.2d 1155, 1158 (5th Cir. 1972) (“Actual agreements are seldom capable of proof
by direct testimony and thus circumstantial evidence may be allowed to establish an
alleged conspiracy.”); citing Jernigan v. Wainer, 12 Tex. 189, 193 (1854) (“When
men enter into conspiracies, they are not likely to call in a witness. They resolve
their schemes clandestinely and in secret.”)). “Consequently, the element that a
meeting of the minds has occurred may be established by ‘proof showing concert of
action or other facts and circumstances from which the natural inference arises that
the unlawful, overt acts were committed in furtherance of common design, intention,
or purpose of the alleged conspirators.’” Id. (quoting Int’l Bankers Life Ins. Co. v.
Holloway, 368 S.W.2d 567, 581 (Tex. 1963)). “It is not required that each and every
act of a conspirator be shown to have been in concert with the others or that it be
established by direct evidence. . . .” Id. (quoting Holloway, 368 S.W.2d at 582).
As discussed more in depth above, W&T has plausibly alleged that over the
course of several meetings that took place from February 2024 through November
2024 at several trade associations, the Sureties agreed with other sureties, including
the Sompo Sureties, to collectively increase premiums and make $250 million in
collateral demands in violation of antitrust law to harm W&T. ECF No. 36 ¶¶ 173,
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47
175. At this stage and taking W&T’s allegations as true, these allegations sufficiently
allege the objected-to elements of civil conspiracy: a meeting of the minds, when,
how, and what was agreed to. See In re Black Elk Energy Offshore Operations, LLC,
2022 WL 1589190, at *14–15. The motion to dismiss should be denied on this
ground.
IV. 	CONCLUSION
Therefore, the Court RECOMMENDS that the Sureties’ motions to dismiss,
ECF No. 63, be GRANTED as to W&T’s claims under the Texas Insurance Code
and DENIED in all other respects.
The 	Parties 	have 	fourteen 	days 	from 	service 	of 	this 	Report 	and
Recommendation to file written objections. 28 U.S.C. § 636(b)(1)(C); F ED. R.
C IV . P. 72(b). Failure to file timely objections will preclude review of factual
findings or legal conclusions, except for plain error. Quinn v. Guerrero, 863 F.3d
353, 358 (5th Cir. 2017).
Signed at Houston, Texas, on April 9, 2026.
______________________________
Dena Hanovice Palermo
United States Magistrate Judge
26.
_____	____	________	__	___________________
Dena Hanovice Palermo
United States Magistrate Judge
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