Civil Procedure & Federal Courts Blog

Thoughts on the Federal Judiciary Committee’s study of 12(b)(6) motions after Iqbal

            As most of you know, the FJC released its study comparing 12(b)(6) motions in 2006 and 2010 in March 2011.  Overall, the study takes the view that the empirical effect of Iqbal has been modest.  As I mentioned in a previous post, some are emphasizing the finding that the FJC found no increase in the rate of grants of motions without leave to amend. 

            I have an updated quantitative study coming out in the University of Richmond Law Review in the fall.  My study concludes that Iqbal has had a significant effect not only on the rate of granting 12(b)(6) motions with leave to amend (a finding shared by the FJC), but also without leave to amend.  Another finding of my updated study is that a case is 1.74 times more likely to be entirely dismissed upon the granting of a 12(b)(6) motion under Iqbal than under Conley.  The FJC reached a different result on a similar question.     

            Richmond accepted this article before the FJC results came out, and I am reworking it over the summer to incorporate a review of the FJC results and a comparison with my own.  The draft of the Richmond article on my SSRN page does not contain these revisions yet.  I welcome all comments!

            I wanted to limit the length of this post.  Please contact me for a fuller version of these preliminary remarks.             

            1.  Database inclusions and exclusions.  Here are the major differences between the FJC's database and the database for my updated study:

Table 1

FJC Study and Hatamyar Study Database Parameters

Database parameter	FJC	Hatamyar
Time period	Two separate six-month periods (January to June 2006 and January to June 2010)	A five-year continuous period (May 22, 2005 to May 18, 2010)
Number of cases	1,922	1,333
Number of U.S. district courts	23	86
Method of retrieval	CM/ECF codes in 23 district courts; translation of PDF documents to text; electronic search.	Electronic searches of Westlaw DCT database.
Pro se plaintiffs, including prisoner and non-prisoner	Not included	Included
12(c) motions	Not included	Included
12(b)(6) motions directed to counterclaims	Not included	Included
Motions decided under Rule 9(b) (fraud) or the PSLRA	Included	Not included
District court reviews of motions decided by magistrates	Not included	Included
MDL cases	Not included	Included

             

            II.  Results.  Table 2 compares the overall results of the two studies, removing all pro se plaintiffs from the calculations for my database so as to approximate the FJC's.

Table 2

Comparison of FJC and Hatamyar Overall Results, Represented Plaintiffs Only

Denied				Granted at least in part
FJC		Hatamyar		FJC		Hatamyar
2006	2010	2006	2010	2006	2010	2006	2010
34%	25%	34%	27%	66%	75%	66%	73%
(239)	(305)	(51)	(46)	(461)	(916)	(98)	(123)

Notes:  The FJC figures include only orders entered in 23 districts from January through June 2006 and January through June 2010.  The Hatamyar figures include orders entered in 86 districts in all of calendar year 2006 and from January through June 2010.   

            Overall, as shown in Table 2, the two studies are close in their overall percentages, when looking at represented plaintiffs only.  First, even when the plaintiff was represented, both studies found a significant increase, from 2006 to 2010, in the percentage of 12(b)(6) motions granted at least in part – from 66% to 75% in the FJC study, and from 66% to 73% in my study.  Second, both studies found that 12(b)(6) motions were denied in 34% of cases in 2006 in which the plaintiff was represented by counsel. 

            A comparison of these results may shed some light on the debate as to whether cases reported in Westlaw fairly represent the “universe” of cases.  My database included only cases reported in Westlaw, and the FJC’s database included cases gleaned as thoroughly as possible from the courts’ electronic filing records.  Yet both my study and the FJC’s found the same percentage – 34% -- of motions denied in 2006.  I think that these results may tend to disprove the hypothesis advanced by the FJC that published cases are more likely to report the grant of a 12(b)(6) motion to dismiss than unpublished cases.  Further, in 2010, the percentage of motions granted at least in part (in cases with represented plaintiffs) was actually higher in the FJC study (75%) than in my study (73%), which was based solely on cases reported in Westlaw.  This is the opposite of what one would predict if grants of 12(b)(6) motions were more likely to be published than denials.    

            The real divergence in the results of the two studies is seen when considering pro se plaintiffs, which the FJC omitted from its study.  This is shown in Table 3.

Table 3

Comparison of FJC and Hatamyar Results:

Both Represented and Pro Se Plaintiffs Included in Hatamyar Results

Denied				Granted at least in part
FJC		Hatamyar		FJC		Hatamyar
2006	2010	2006	2010	2006	2010	2006	2010
34%	25%	27%	20%	66%	75%	73%	80%
(239)	(305)	(58)	(48)	(461)	(916)	(157)	(189)

Notes:  The FJC figures include only orders entered in 23 districts from January through June 2006 and January through June 2010 and include only cases in which the plaintiff was represented by counsel.  The Hatamyar figures include orders entered in 86 districts in all of calendar year 2006 and from January through June 2010, and include both represented and pro se plaintiffs.  

            Finally, I ran some logistic regressions in an attempt to limit my database so as to more closely approximate that of the FJC.  The FJC reports the rulings as an initially binary choice (deny vs. grant at least in part), so I recoded the rulings in my database to either “denied” or “granted at least in part.”  In addition, I limited the database, as did the FJC, to cases in which the plaintiff was represented by counsel and that were decided by a district court judge. 

            First, I used all the cases in my database from 2005 to 2010, except as otherwise limited above.  The results indicate that even taking out the pro se cases, the odds of a court granting a 12(b)(6) motion, at least in part, as compared to denying the motion, were expected to be 1.79 times greater under Iqbal than under Conley (p = 0.002), all other variables held constant.

            Second, I used only the cases in my database from 2006 (Jan to Dec) and from 2010 (Jan to May 18), and otherwise limited as described above (no pro se, no magistrate judges).  Here, the results indicate that even leaving out the pro se cases, the odds of a court granting a 12(b)(6) motion, at least in part, as compared to denying the motion, were expected to be 1.92 times greater in 2010 than in 2006 (p = 0.013), all other variables held constant. 

 

Kochan On Iqbal And The Word "Conclusory"

Professor Donald Kochan (Chapman University) has posted on SSRN a draft of his article, While Effusive, 'Conclusory' is Still Quite Elusive: The Story of a Word, Iqbal, and a Perplexing Lexical Inquiry of Supreme Importance, which is forthcoming in the University of Pittsburgh Law Review.  Here’s the abstract:

The meaning of the word “conclusory” seems really, quite elusory. Conclusory is a widespread, common, and effusive word in the modern legal lexicon. Yet you would not necessarily know that by looking through many dictionaries. “Conclusory” has been a late comer to the pages of most dictionaries. Even today, not all dictionaries include the word “conclusory”, those that do have only recently adopted it, and the small number of available dictionary definitions seem to struggle to capture the word’s usage in the legal world. Yet the word “conclusory” has taken center stage in the procedural plays of civil litigation with the help of the 2009 U.S. Supreme Court decision in Ashcroft v. Iqbal. This Article attempts to explore this definitional perplexity. 

Available dictionary definitions at best give us a general idea of what “conclusory” means but can hardly resolve the perplexity of how the word is used to filter the acceptable from the unacceptable pleadings. The “conclusory” standard in Iqbal might turn out to be nothing more than a “I know it when I see it” standard. There is a sense in Iqbal that conclusory statements are like procedural pornography so profane and lacking in quality that they are not entitled to protection of otherwise liberal pleading standards. 

Part I documents the usage of the word “conclusory” and the upward trend in its use throughout the past century. Part II summarizes the use of the word “conclusory” in the pleadings standards established in Twombly and Iqbal. Part III then surveys the literature on Iqbal. Part IV concludes that the dictionary definitions are of little utility in understanding the meaning of “conclusory” in Iqbal and do not provide clear guidance to litigants or the courts in applying Iqbal’s pleadings standards in that regard. Such a conclusion should not be surprising, I contend, in light of the inherent limitations in dictionaries themselves. Part V presents two primary conclusions: (1) the Iqbal “conclusory” prong has a low degree of predictability in its application and is largely subject to judicial interpretation of pleadings on a highly individualized, judge-specific, and case-by-case basis; and (2) one of the only methods available to operate within this high degree of uncertainty is to base one’s understanding of the Iqbal test on the historical usages of the word within past court decisions. Appendix E provides a reference list of U.S. Supreme Court cases that have used the term “conclusory” with minor annotation to indicate some context of the usage. 

This Article will attempt to tell the history and story of one word – “conclusory”. At the end, the reader will still not know what exactly that one word means. But therein lies the point of the exercise upon which this Article embarks. It is a seat on the observation deck to the evolutionary spread of a word into our lexicon, a revelation about the fallibility of dictionaries, a recognition of the sometimes indeterminate use of language, a caution that a word’s meaning is seldom revealed in isolation, a lesson on the importance of contextual analysis, a debate about the utility of flexibility in standards, and a charge in the face of unavoidable confusion to make the best use of skill and analogy to operate within the constraints of a new judicially-demanded ante for entering the game of civil litigation.

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Noyes on Twombly/Iqbal and Judicial Experience

Professor Henry Noyes (Chapman University) has posted on SSRN a draft of his article, The Rise of the Common Law of Federal Pleading: Iqbal, Twombly and the Application of Judicial Experience, which is forthcoming in the Villanova Law Review.  Here’s the abstract:

With its decisions in Twombly and Iqbal, the Supreme Court established a new federal pleading standard: a complaint must state a plausible claim for relief. Many commentators have written about the meaning of plausibility. None has focused on the Court’s statement that “[d]etermining whether a complaint states a plausible claim for relief...will be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” In this article, I make and support several claims about the meaning and application of judicial experience. First, in order to understand and define the plausibility standard, one must understand the meaning and application of judicial experience. The requirement that district courts apply judicial experience to resolve a motion to dismiss is a new part of the federal pleading regime, just like the new plausibility standard. Second, the application of judicial experience – as intended by the Supreme Court – requires district courts to consider information and evidence beyond that alleged in the complaint when resolving a motion to dismiss. Third, and contrary to conventional wisdom, the Supreme Court does not intend the application of judicial experience to involve a subjective analysis of the plausibility of a claim. Instead, the Supreme Court intends district courts to consider a larger, objective body of experience – beyond the subjective experience of any particular district court – with similar factual scenarios. Fourth, the Supreme Court anticipates that the application of judicial experience will require district courts to develop a common law of pleading standards that will vary with the type of claim, the type of claimant, the type of defendant and the alleged factual scenario. The Court has expressly denied that plausibility “require[s] heightened fact pleading of specifics,” but what plausibility means is informed by judicial experience. Sometimes plausibility requires more convincing facts (not more specific facts). Finally, I argue that this new pleading regime that requires the application of judicial experience at the pleading stage – even where it is based on objective information – is inappropriate and inconsistent with the adversarial nature of litigation.

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Gidi on Twombly and Iqbal

Proficient in Italian? Now on SSRN is an article by Professor Antonio Gidi (University of Houston), Twombly e Iqbal: Il Ruolo Della Civil Procedure Nello Scontro Politico-Ideologico Della Società Statunitense (Twombly and Iqbal: The Role of Civil Procedure in the Political and Ideological Battle in American Society). It was recently published in Int’l Lis (Int’l Lis 104 (2010) (Italy)). Here’s the abstract:

L’autore indaga le sentenze “Twombly” (2007) e “Iqbal” (2009) della Suprema Corte federale degli Stati Uniti sotto un angolo visuale socio-politico, mettendo in evidenza il pericolo di una loro lettura strettamente tecnico-processuale e storico-comparata.

Con il conoscimento della struttura processual-giudiziaria e anche della sua complessità sociale e politica dell’ordinamento statunitense, si puó mettere in risalto da un lato, la prevedibilità delle due sentenze “Twombly” e “Iqbal” nel quadro politico attuale degli Stati Uniti e dall’altro, le significative e preoccupanti conseguenze del nuovo orientamento della suprema giurisprudenza federale statunitense sulla tutela, nel processo, delle parti meno abbienti e socialmente più deboli.

The author analyses the “Twombly” (2007) and “Iqbal” (2009) decisions from a socio-political perspective, highlighting the danger of a merely technical-procedural and historical-comparative analysis.

Only an in-depth knowledge of U. S. procedural and judiciary system as well as of its social and political complexity, highlights on the one hand, the foreseeability of the “Twombly” and “Iqbal” decisions in the present U. S. political situation and on the other hand, the meaningful and worrisome consequences of the U. S. Supreme Court’s new trend on the judicial protection of the poor and the weak.

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Benham on Twombly/Iqbal and Rule 60(b)

Professor Dustin Benham (Texas Tech) has posted on SSRN a draft of his article, Twombly and Iqbal Should (Finally!) Put the Distinction Between Intrinsic and Extrinsic Fraud Out of Its Misery, which is forthcoming in the SMU Law Review. Here’s the abstract:

The proliferation of digital evidence and discovery has raised serious questions about litigation fraud in recent years. Legal tabloids are often headlined with the latest example of discovery abuse that resulted in multi-million dollar sanctions. But what about the cases of serious discovery abuse or perjury that neither the opposing party nor the court ever catch? These abuses may very well lead to judgments that do not reflect a result based on the true merits of the case. If a party seeks relief based on fraud within one year from the entry of judgment, Federal Rule of Civil Procedure 60(b) gives the trial court plenary power to vacate the judgment. For fraud discovered outside of one year, however, the district court’s powers are more limited, and relief is often contingent upon whether the fraud is deemed intrinsic or extrinsic. Indeed, a majority of the circuits hold that after one year a party cannot obtain post-judgment relief based on perjury or discovery abuse because these frauds are intrinsic. This article contends that the distinction between intrinsic and extrinsic fraud should be abolished because Twombly and Iqbal have created an effective pleading-stage screening mechanism to prevent the meritless re-litigation of cases.

This article proceeds in five parts. Part II examines the origins and history of modern post-judgment relief before and after the adoption of Rule 60. Next, Part III explores the distinction between intrinsic and extrinsic fraud in the context of independent actions. Part IV of this article addresses the rise of plausibility pleading in Bell Atlantic Corp. v. Twombly and Ashcroft v. Iqbal. In these cases, the Supreme Court overruled Conley v. Gibson, announcing a new pleading paradigm that applies to all civil actions filed in federal court, including a judgment-relief action. In a move away from notice-pleading, the Court held that a civil complaint must plausibly allege a cause of action. Finally, Part V of this article contends that increased pleading scrutiny serves as a better screening mechanism for post-judgment fraud claims than the distinction between intrinsic and extrinsic fraud does. By screening fraud claims individually, a court can better assess whether the claim could have been raised in the original litigation. Screening cases for this trait results in a better balance between the often-competing values of judgments that reflect truth and judgments that are final.

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Sullivan on Iqbal and Employment Discrimination

Professor Charles Sullivan (Seton Hall) has published Plausibly Pleading Employment Discrimination, 52 William & Mary L. Rev. 1613 (2011). Here’s the abstract:

The Supreme Court’s unanimous 2002 decision in Swierkiewicz v. Sorema N.A., which took a very permissive approach to pleading discrimination claims, may or may not remain good law after Ashcroft v. Iqbal. As is well known, Iqbal took a restrictive approach to pleading generally under the Federal Rules of Civil Procedure, and its application to employment discrimination cases could pose serious problems for plaintiffs attempting to get into federal court. In addition, there is certainly a tension between Swierkiewicz and Iqbal. This is in part because the former is a strong reaffirmation of notice pleading as it has traditionally been understood whereas the latter makes clear that “plausible pleading” is something very different. But it is also because Iqbal was, after all, a discrimination case, albeit brought under the Constitution rather than a federal statute, and its finding that the discrimination alleged there was not plausibly pled could easily be applied to statutes such as Title VII, the Age Discrimination in Employment Act, and the Americans with Disabilities Act.

Numerous scholars have analyzed Iqbalgenerally and several have addressed the application of plausible pleading to claims under the antidiscrimination laws. A respectable view is that Swierkiewicz remains good law, although the commentators recognize legitimate questions about its continued vitality. This Article, while agreeing that readings of both Swierkiewicz and Iqbal would permit this result, nevertheless explores the contrary possibility: supposing Iqbal sub silentio overruled Swierkiewicz and applies plausible pleading to discrimination claims, what must a plaintiff plead to avoid dismissal for failure to state a claim?

The most obvious response is that the plaintiff should plead a prima facie case of discrimination under the traditional McDonnell Douglas Corp. v. Green standard. Although Swierkiewicz held that pleading a prima facie case was not necessary, in part because there are other ways of proving discrimination, it did not suggest that such pleading would be insufficient. There are, however, complications with pleading a traditional prima facie case that should be explored. Further, there are at least three alternatives for attorneys who cannot, consistent with Rule 11, allege such a prima facie case. First, the Article proposes that the plaintiff might survive a Rule 12(b)(6) motion by pleading “direct evidence” of discrimination. Although the term has a checkered history in discrimination jurisprudence, the pleading context suggests a new look at an old concept. Second, the Article addresses the possibility of pleading the existence of a “comparator” whose more favorable treatment than the plaintiff may make the claim of discrimination plausible.

Third, and perhaps most radically, the Article argues that plaintiffs should be able to take the Supreme Court at its word in Iqbal that, in deciding a motion to dismiss for failure to state a claim, a district court must take as true all facts, as opposed to legal conclusions, alleged in the complaint. The Article proposes that plaintiffs plead the existence of social science research showing the pervasiveness of discrimination. Taken as true, this body of literature may well nudge a particular claim across the border drawn by the Supreme Court between a “possible” claim and a “plausible” one.

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Commentary on Pleading and the Duke Lacrosse Litigation

Over at Prawfsblawg, Howard Wasserman has been examining the recent decisions by U.S. District Judge James Beaty in civil lawsuits brought by former members of the Duke lacrosse team against the City of Durham, District Attorney Michael Nifong, and numerous other defendants.

His most recent post (Pleading in the Duke lacrosse opinions) looks at what Judge Beaty's decisions have to say about pleading, including his application of Iqbal.

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Federal Judicial Center Report on the Impact of Twombly/Iqbal

The Federal Judicial Center has released a Report to the Advisory Committee on Civil Rules entitled Motions to Dismiss for Failure to State a Claim After Iqbal, authored by Joe S. Cecil, George W. Cort, Margaret S. Williams & Jared J. Bataillon. Here’s the executive summary:

This report presents the findings of a Federal Judicial Center study on the filing and resolution of motions to dismiss for failure to state a claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure. The study was requested by the Judicial Conference Advisory Committee on Civil Rules. The study compared motion activity in 23 federal district courts in 2006 and 2010 and included an assessment of the outcome of motions in orders that do not appear in the computerized legal reference systems such as Westlaw. Statistical models were used to control for such factors as differences in levels of motion activity in individual federal district courts and types of cases.

After excluding cases filed by prisoners and pro se parties, and after controlling for differences in motion activity across federal district courts and across types of cases and for the presence of an amended complaint, we found the following:

• There was a general increase from 2006 to 2010 in the rate of filing of motions to dismiss for failure to state a claim (see infra section III.A).

• In general, there was no increase in the rate of grants of motions to dismiss without leave to amend. There was, in particular, no increase in the rate of grants of motions to dismiss without leave to amend in civil rights cases and employment discrimination cases (see infra section III.B.1).

• Only in cases challenging mortgage loans on both federal and state law grounds did we find an increase in the rate of grants of motions to dismiss without leave to amend. Many of these cases were removed from state to federal court. This category of cases tripled in number during the relevant period in response to events in the housing market (see infra section III.B.1). There is no reason to believe that the rate of dismissals without leave to amend would have been lower in 2006 had such cases existed then.

• There was no increase from 2006 to 2010 in the rate at which a grant of a motion to dismiss terminated the case (see infra section III.B.1).

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(Hat Tip: Lonny Hoffman)

Today's SCOTUS Decision in Matrixx Initiatives v. Siracusano: More on Pleading

Today the Supreme Court issued a unanimous opinion (per Justice Sotomayor) in Matrixx Initiatives, Inc. v. Siracusano (No. 09-1156), affirming the Ninth Circuit’s conclusion that the plaintiffs’ complaint adequately stated a claim for securities fraud. The Court rejects the arguments by the defendant Matrixx (manufacturer of the cold remedy Zicam) that “[plaintiffs’] complaint does not adequately allege that Matrixx made a material representation or omission or that it acted with scienter because the complaint does not allege that Matrixx knew of a statistically significant number of adverse events requiring disclosure.” [Slip Op. at 1.] Although the case involves securities-fraud claims in particular, the opinion contains several references to Twombly and Iqbal and may have a bearing on pleading standards more generally. Here's a quick summary:

The Court begins its discussion [Slip Op. at 3] by stating that the plaintiffs’ complaint “alleges the following facts, which the courts below properly assumed to be true. See Ashcroft v. Iqbal, 556 U. S. ___, ___ (2009).” It recounts over the next four pages events relevant to plaintiffs’ securities fraud claims.

Analyzing the issue of materiality, the Court states [Slip Op. at 17]: “Assuming the complaint’s allegations to be true, as we must, Matrixx received information that plausibly indicated a reliable causal link between Zicam and anosmia.” In footnote 12, the Court rejects Matrixx’s argument that certain studies relied on by the plaintiffs were unreliable with the following discussion:

Matrixx contends that Dr. Jafek and Linschoten’s study was not reliable because they did not sufficiently rule out the common cold as a cause for their patients’ anosmia. We note that the complaint alleges that, in one instance, a consumer who did not have a cold lost his sense of smell after using Zicam. More importantly, to survive a motion to dismiss, respondents need only allege “enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U. S. 544, 570 (2007).

Here’s the Court’s conclusion on whether the complaint adequately pleaded the materiality requirement [Slip Op. at 18]:

We believe that these allegations suffice to “raise a reasonable expectation that discovery will reveal evidence” satisfying the materiality requirement, Bell Atlantic Corp. v. Twombly, 550 U. S. 544, 556 (2007), and to “allo[w] the court to draw the reasonable inference that the defendant is liable for the misconduct alleged,” Iqbal, 556 U. S., at ___. The information provided to Matrixx by medical experts revealed a plausible causal relationship between Zicam Cold Remedy and anosmia. Consumers likely would have viewed the risk associated with Zicam (possible loss of smell) as substantially outweighing the benefit of using the product (alleviating cold symptoms), particularly in light of the existence of many alternative products on the market. Importantly, Zicam Cold Remedy allegedly accounted for 70 percent of Matrixx’s sales. Viewing the allegations of the complaint as a whole, the complaint alleges facts suggesting a significant risk to the commercial viability of Matrixx’s leading product.

As to whether the complaint adequately pleaded scienter, the Court uses the PSLRA’s heightened pleading standard, which requires a plaintiff to “state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind.” 15 U. S. C. § 78u–4(b)(2)(A). Citing Tellabs, the Court explains [Slip Op. at 20]:

This standard requires courts to take into account “plausible opposing inferences.” Tellabs, 551 U.S., at 323. A complaint adequately pleads scienter under the PSLRA “only if a reasonable person would deem the inference of scienter cogent and at least as compelling as any opposing inference one could draw from the facts alleged.” Id. at 324.

The Court holds [Slip Op. at 21] that “[t]he inference that Matrixx acted recklessly (or intentionally, for that matter) is at least as compelling, if not more compelling, than the inference that it simply thought the reports did not indicate anything meaningful about adverse reactions.” After summarizing the key allegations in the complaint, the Court concludes [Slip Op. at 22]:

These allegations, “taken collectively,” give rise to a “cogent and compelling” inference that Matrixx elected not to disclose the reports of adverse events not because it believed they were meaningless but because it understood their likely effect on the market. Tellabs, 551 U. S., at 323, 324. “[A] reasonable person” would deem the inference that Matrixx acted with deliberate recklessness (or even intent) “at least as compelling as any opposing inference one could draw from the facts alleged.” Id. at 324.

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Decision of Interest: Twombly/Iqbal and Affirmative Defenses

Last week Judge Jerome B. Simandle (U.S. District Court for the District of New Jersey) issued an opinion addressing whether the approach to pleading articulated by the Supreme Court in Twombly and Iqbal applies to the pleading of affirmative defenses. He concludes:

“This Court joins the two other Districts in this Circuit that have addressed this issue by holding that the heightened pleading standard of Twombly and Iqbal does not apply to affirmative defenses.”

The case is FTC v. Hope Now Modifications (No. 09-cv-1204), and the full opinion can be found on Justia and Pacer.

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More on SCOTUS Discussion of Pleading Standards in Last Week's Skinner Decision

We covered earlier the Supreme Court's discussion of federal pleading standards in its Skinner v. Switzer opinion, issued last week. Howard Wasserman has some additional commentary over at PrawfsBlawg in a post entitled "Some hints (or further confusion) about the state of pleading?"

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Discussion of Pleading Standards in Today's SCOTUS Decision (Skinner v. Switzer)

Readers following federal pleading standards after Twombly and Iqbal may be interested in a snippet from today's Supreme Court opinion in Skinner v. Switzer. The opinion cites neither Twombly nor Iqbal but does cite the Court’s pre-Twombly pleading decisions Scheuer and Swierkiewicz. Here’s the relevant paragraph:

Because this case was resolved on a motion to dismiss for failure to state a claim, the question below was “not whether [Skinner] will ultimately prevail” on his procedural due process claim, see Scheuer v. Rhodes, 416 U. S. 232, 236 (1974), but whether his complaint was sufficient to cross the federal court’s threshold, see Swierkiewicz v. Sorema N. A., 534 U. S. 506, 514 (2002). Skinner’s complaint is not a model of the careful drafter’s art, but under the Federal Rules of Civil Procedure, a complaint need not pin plaintiff’s claim for relief to a precise legal theory. Rule 8(a)(2) of the Federal Rules of Civil Procedure generally requires only a plausible “short and plain” statement of the plaintiff’s claim, not an exposition of his legal argument. See 5 C. Wright & A. Miller, Federal Practice & Procedure §1219, pp. 277–278 (3d ed. 2004 and Supp. 2010).

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Decision of Interest: Seventh Circuit on Twombly/Iqbal & 1292(b) Appeals

Last month, the Seventh Circuit decided an appeal of a district court’s refusal to grant a defendant’s motion to dismiss an antitrust complaint. The case is In re Text Messaging Antitrust Litigation (No. 10-8037), ___ F.3d ___, 2010 WL 5367383, 2010 U.S. App. LEXIS 26299 (Dec. 29, 2010), and Judge Posner’s opinion addresses both pleading standards under Twombly/Iqbal, and whether 28 U.S.C. § 1292(b) allows an immediate appeal of a district court’s denial of a Twombly/Iqbal-based motion to dismiss. The court concludes that 1292(b) is a proper means for appellate review, and then affirms the district court’s conclusion that the complaint passed muster. Detailed excerpts from the opinion (which include a reference to Paradise Lost, a discussion of child-run lemonade stands, and a recognition that "pleading standards in federal litigation are in ferment after Twombly and Iqbal") follow after the jump.

On the 1292(b) issue, Judge Posner writes:

Section 1292(b) requires our permission to appeal as well as the district court’s. The defendants have asked our permission and the plaintiffs urge us to turn them down. They argue that the proposed appeal does not present a “controlling question of law,” as the statute requires. The question presented is whether the second amended complaint states a claim under the standard for pleading set forth in Twombly. It is a controlling question, because if the second amended complaint does not state a claim, the case is likely (though, as the district judge said, not certain) to be over; the plaintiffs are unlikely without discovery to be able to allege additional facts that would persuade the district court to allow them to file a third amended complaint if we held that the second should have been dismissed.

But is it a controlling question of law? It is not an abstract legal question such as whether the Sherman Act forbids price fixing; it is a question whether a particular complaint satisfies the pleading standard of Twombly. Yet the question’s narrowness should not disqualify it, at least in the rather special circumstances presented by the appeal. … [The defendants] are asking us to apply a legal standard—the pleading standard set forth in Twombly—to a set of factual allegations taken as true for purposes of the appeal.

A challenge to a trial court’s application of a legal standard to a set of facts is often described as presenting a “mixed question of fact and law” or an “ultimate question of fact,” but these are not helpful labels. The appellate court’s task in such a case is to determine the legal significance of a set of facts. . . . The main task of an appellate court, which is to maintain the coherence, uniformity, and predictability of the law, is not engaged by review of the application of a legal standard to a unique, nonrecurring set of particular facts. No matter; in this case we have neither factfindings nor the application of a legal standard to factfindings; the question presented by the appeal is the sufficiency of the allegations of a complaint; and, most important, that question requires the interpretation, and not merely the application, of a legal standard—that of Twombly.

Furthermore, when the question presented by an appeal is whether Twombly requires dismissal of a complaint, the concerns underlying that decision argue for empowering the district court and the court of appeals to authorize an interlocutory appeal. Twombly, even more clearly than its successor, Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009), is designed to spare defendants the expense of responding to bulky, burdensome discovery unless the complaint provides enough information to enable an inference that the suit has sufficient merit to warrant putting the defendant to the burden of responding to at least a limited discovery demand. When a district court by misapplying the Twombly standard allows a complex case of extremely dubious merit to proceed, it bids fair to immerse the parties in the discovery swamp—“that Serbonian bog . . . where armies whole have sunk” (Paradise Lost ix 592-94)—and by doing so create irrevocable as well as unjustifiable harm to the defendant that only an immediate appeal can avert. Such appeals should not be routine, and won’t be, because as we said both district court and court of appeals must agree to allow an appeal under section 1292(b); but they should not be precluded altogether by a narrow interpretation of “question of law.” …

Twombly is a recent decision, and its scope unsettled (especially in light of its successor, Iqbal—from which the author of the majority opinion in Twombly dissented; and two of the Justices who participated in those cases have since retired). … Pleading standards in federal litigation are in ferment after Twombly and Iqbal, and therefore an appeal seeking a clarifying decision that might head off protracted litigation is within the scope of section 1292(b). The previous cases do not address the relation of Twombly to the standards for interlocutory appeals under that section, and that is a further novelty that justifies the conclusion that the appeal presents a genuine question of law.

Having assured itself that the appeal was proper, the Seventh Circuit found that the complaint was adequate. The court’s analysis is particularly interesting because the Text Messaging plaintiffs were pursuing the same kind of claim the Supreme Court considered (and rejected) in Twombly: a claim under section 1 of the Sherman Act, which requires an agreement or conspiracy among the defendants to engage in anticompetitive behavior. The Seventh Circuit reasoned:

The second amended complaint alleges a mixture of parallel behaviors, details of industry structure, and industry practices, that facilitate collusion. There is nothing incongruous about such a mixture. If parties agree to fix prices, one expects that as a result they will not compete in price—that’s the purpose of price fixing. Parallel behavior of a sort anomalous in a competitive market is thus a symptom of price fixing, though standing alone it is not proof of it; and an industry structure that facilitates collusion constitutes supporting evidence of collusion. An accusation that the thousands of children who set up makeshift lemonade stands all over the country on hot summer days were fixing prices would be laughed out of court because the retail sale of lemonade from lemonade stands constitutes so dispersed and heterogeneous and uncommercial a market as to make a nationwide conspiracy of the sellers utterly implausible. But the complaint in this case alleges that the four defendants sell 90 percent of U.S. text messaging services, and it would not be difficult for such a small group to agree on prices and to be able to detect “cheating” (underselling the agreed price by a member of the group) without having to create elaborate mechanisms, such as an exclusive sales agency, that could not escape discovery by the antitrust authorities.

Of note is the allegation in the complaint that the defendants belonged to a trade association and exchanged price information directly at association meetings. This allegation identifies a practice, not illegal in itself, that facilitates price fixing that would be difficult for the authorities to detect. The complaint further alleges  that the defendants, along with two other large sellers of text messaging services, constituted and met with each other in an elite “leadership council” within the association—and the leadership council’s stated mission was to urge its members to substitute “co-opetition” for competition.

The complaint also alleges that in the face of steeply falling costs, the defendants increased their prices. This is anomalous behavior because falling costs increase a seller’s profit margin at the existing price, motivating him, in the absence of agreement, to reduce his price slightly in order to take business from his competitors, and certainly not to increase his price. And there is more: there is an allegation that all at once the defendants changed their pricing structures, which were  heterogeneous and complex, to a uniform pricing structure, and then simultaneously jacked up their prices by a third. The change in the industry’s pricing structure was so rapid, the complaint suggests, that it could not have been accomplished without agreement on the details of the new structure, the timing of its adoption, and the specific uniform price increase that would ensue on its adoption. …

What is missing, as the defendants point out, is the smoking gun in a price-fixing case: direct evidence, which would usually take the form of an admission by an employee of one of the conspirators, that officials of the defendants had met and agreed explicitly on the terms of a conspiracy to raise price. . . . Direct evidence of conspiracy is not a sine qua non, however. Circumstantial evidence can establish an antitrust conspiracy. We need not decide whether the circumstantial evidence that we have summarized is sufficient to compel an inference of conspiracy; the case is just at the complaint stage and the test for whether to dismiss a case at that stage turns on the complaint’s “plausibility.”

The Court said in Iqbal that the “plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.” 129 S. Ct. at 1949. This is a little unclear because plausibility, probability, and possibility overlap. Probability runs the gamut from a zero likelihood to a certainty. What is impossible has a zero likelihood of occurring and what is plausible has a moderately high likelihood of occurring. The fact that the allegations undergirding a claim could be true is no longer enough to save a complaint from being dismissed; the complaint must establish a nonnegligible probability that the claim is valid; but the probability need not be as great as such terms as “preponderance of the evidence” connote.

The plaintiffs have conducted no discovery. Discovery may reveal the smoking gun or bring to light additional circumstantial evidence that further tilts the balance in favor of liability. All that we conclude at this early stage in the litigation is that the district judge was right to rule that the second amended complaint provides a sufficiently plausible case of price fixing to warrant allowing the plaintiffs to proceed to discovery.

There’s additional coverage at BNA’s US Law Week (79 U.S.L.W. 1893)

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(Hat Tip: Brooke Coleman)

Seiner on Twombly/Iqbal and Affirmative Defenses

Prof. Joseph Seiner (South Carolina) has posted on SSRN a draft of his article, Twombly, Iqbal, and the Affirmative Defense. Here’s the abstract:

In Twombly v. Bell Atlantic Corp., 550 U.S. 644 (2007), and Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009), the Supreme Court announced a new plausibility standard for a plaintiff’s allegations. The decisions may have even broader implications, however, as many federal district courts have already applied this pleading standard to a defendant’s affirmative defenses. This Article attempts – for the first time in the legal literature – to make sense of Twombly and Iqbal in the context of the affirmative defense.

This Article addresses the two possible readings of Twombly and Iqbal for a defendant’s responsive pleadings. The first reading is a narrow case-specific approach, and concludes that the decisions are inapplicable to defendants and must be limited to a plaintiff’s civil complaint. The second approach is much broader, and concludes that a defendant must comply with the Supreme Court’s plausibility standard by pleading enough facts to sufficiently state an affirmative defense. This Article explains why a close textual review of the Federal Rules of Civil Procedure, combined with numerous policy and practical considerations, support the broader second reading of Twombly and Iqbal for affirmative defenses.

What it actually means to plausibly plead a defense is a much more complicated question. This paper closely examines this issue through the lens of one of the most complex and important defenses in all civil case law – the affirmative defense to a claim of sexual harassment. By way of this example, this Article explains how the plausibility standard would apply more broadly to defendants in all civil cases. This Article does not attempt to answer the normative question of whether the plausibility standard was properly established by the Supreme Court. Instead, this Article assumes the validity of the Court’s approach, and describes what this standard would look like if applied to the affirmative defense. The question of whether the plausibility standard should apply to defendants – and if so how it should apply – is likely to create significant controversy in the coming years. This paper establishes a foundation for that debate, and fills the current void in the academic scholarship on this issue.

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NY Times Story on Lack of Clarity in SCOTUS Opinions (See, e.g., Iqbal; Twombly)

This week’s New York Times contains an article by Adam Liptak titled Justices Are Long on Words but Short on Guidance. From the article:

The Supreme Court under the leadership of Chief Justice John G. Roberts Jr. is often criticized for issuing sweeping and politically polarized decisions. But there is an emerging parallel critique as well, this one concerned with the quality of the court’s judicial craftsmanship. In decisions on questions great and small, the court often provides only limited or ambiguous guidance to lower courts. And it increasingly does so at enormous length.

Among the examples provided are Twombly and Iqbal:

In a pair of civil procedure decisions in 2007 and 2009 that have been cited many thousands of times, the court gave trial judges more authority to throw out cases early based on, in the words of the later decision, their “experience and common sense.” That standard, Arthur R. Miller wrote last month in The Duke Law Journal, is “shadowy at best” and has caused “confusion and disarray among judges and lawyers.”

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Sherry on Doctrinal Change

Prof. Suzanna Sherry (Vanderbilt) has posted on SSRN a draft of her forthcoming article, Foundational Facts and Doctrinal Change, to be published in the University of Illinois Law Review (January 2011). Here’s the abstract:

Doctrine is at the center of law and legal analysis. This Article argues that we have fundamentally misunderstood its nature. The conventional approach to legal doctrine focuses on theory and applications. What is the doctrine designed to do and how does it function? But many doctrines cannot be adequately understood or evaluated under the conventional model because they contain an additional, hidden element. They are built on foundational facts: potentially contested factual assumptions embedded in the doctrinal structure itself. Foundational facts are judges' generalized and invisible intuitions about how the world works. Whether a defendant acted in a particular way out of a particular motive are decisional, rather than foundational, facts. But the likelihood of actors in defendant's position acting that way or having that motive are foundational facts, and doctrinal rules - including burdens of proof and standards of review - will be structured differently depending on whether judges assume a high or low likelihood. Foundational facts thus drive doctrine. Without an understanding of a doctrine's foundational facts, we cannot adequately understand the doctrine and its changes over time. Foundational facts only come to light when doctrine shifts, seemingly inexplicably and often without judicial acknowledgment that anything has changed. That doctrinal shift serves as a cue to look for changed foundational assumptions that might be driving the doctrinal change. Identifying those foundational facts, in turn, allows us to better understand and evaluate both the doctrine and its underlying assumptions.

Our readers may be particularly interested in Professor Sherry’s discussion of changes in summary-judgment doctrine (the 1986 trilogy) and pleading doctrine (Twombly/Iqbal).

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Decision of Interest: Twombly/Iqbal in the Eleventh Circuit

Last week the U.S. Court of Appeals for the 11th Circuit issued a significant opinion on federal pleading standards in the wake of the Supreme Court’s decisions in Twombly and Iqbal. The case is Speaker v. U.S. Dept of Health & Human Servs. Centers for Disease Control (“CDC”), No. 09-16154, 2010 WL 4136634 (11th Cir. Oct. 22, 2010). If that caption rings a bell, it’s because the plaintiff is Andrew Speaker, whose quarantine by the CDC in 2007 garnered considerable media attention. Relying on Twombly and Iqbal, the district court dismissed Speaker’s complaint. The 11th Circuit reversed, concluding that Speaker had adequately alleged a violation of the Privacy Act (5 U.S.C. § 552a).

One element of Speaker’s claim was that the CDC, by disclosing Speaker’s medical information, failed to fulfill its record keeping obligation under the Privacy Act. As to this element, the 11th Circuit reasoned (emphasis in original):

Plaintiff Speaker has pleaded enough factual content to “nudge[] [his] claims across the line from conceivable to plausible.” Twombly, 550 U.S. at 570, 127 S. Ct. at 1974. Importantly, Speaker’s allegations are not barren recitals of the statutory elements, shorn of factual specificity. See id. at 555, 127 S. Ct. at 1964-65 (stating that “a plaintiff’s obligation to provide grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do” (quotation marks and brackets omitted)).

Rather, Speaker alleges what the CDC disclosed; namely, “personally identifiable information,” including information relating to his “medical history and his testing and treatment for tuberculosis.” Am. Compl. 13 ¶ 81. Moreover, he alleges when the CDC disclosed this information: namely, “during the time frame of said public press conferences.” Am. Compl. ¶ 83. Speaker’s Amended Complaint narrows the time frame of the CDC’s initial disclosures to a short period in late May 2007. Speaker also expressly identifies one news organization to whom disclosure was made; namely, the Associated Press, which he claims received the leaked information between May 29 and May 31. Id.14 Importantly, Speaker has also alleged with factual specificity how the CDC came into possession of this information. Even the CDC does not dispute that it had the information that Speaker alleges was impermissibly disclosed. And there is no doubt that some entity, or its employees, disclosed Speaker’s identity, since not even the CDC contends that Speaker himself revealed this information before the AP’s May 31 article.

Another element of Speaker’s claim was that the CDC intentionally disclosed his information. The 11th Circuit found that Speaker’s allegations on this element were sufficient because:

Speaker expressly alleges that the CDC’s “unauthorized disclosure” was “intentional” Am. Compl. ¶ 1; see also id. ¶ 82 (stating that improper disclosures were “a result of the deliberate actions of the CDC and its employers or agents”); id. ¶ 83 (alleging that CDC’s disclosures were “part of a media campaign directed toward Mr. Speaker”); id. ¶ 111 (stating that “[a]t all times relevant herein, the CDC acted wilfully and intentionally in connection with the aforementioned disclosures”); id. ¶ 112 (referring to CDC’s unauthorized disclosure as “intentional”).

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(Hat Tip: Marjorie Silver)

Sullivan on Iqbal and Employment Discrimination Claims

Prof. Charles Sullivan (Seton Hall) has posted on SSRN a draft of his article, Plausibly Pleading Employment Discrimination, which is forthcoming in the William & Mary Law Review. Here’s the abstract:

The Supreme Court’s unanimous 2002 decision in Swierkiewicz v. Sorema N.A., which took a very permissive approach to pleading discrimination claims, may or may not remain good law after Ashcroft v. Iqbal. As is well known, Iqbal took a restrictive approach to pleading generally under the Federal Rules, and its application to employment discrimination cases could pose serious problems for plaintiffs attempting to get into federal court. Further, there is certainly a tension between Swierkiewicz and Iqbal. This is in part because the former is a strong reaffirmation of notice pleading as it has traditionally been understood while the latter makes clear that “plausible pleading” is something very different. But it also because Iqbal was, after all, a discrimination case (albeit brought under the Constitution rather than a federal statute), and its finding that the discrimination alleged there was not plausibly pled could easily be applied to Title VII, the Age Discrimination in Employment Act, and the Americans with Disabilities Act.

Numerous scholars have analyzed Iqbal generally and several have addressed the application of plausible pleading to claims under the antidiscrimination laws. A respectable view is that Swierkiewicz remains good law although the commentators recognize legitimate questions about its continued vitality. This Article, while agreeing that there are readings of both Swierkiewicz and Iqbal that would permit this result, nevertheless explores the contrary possibility: supposing Iqbal sub silentio overrules Swierkiewicz and applies plausible pleading to discrimination claims, what must a plaintiff plead to avoid dismissal for failure to state a claim?

The most obvious response is that plaintiff should plead a prima facie case of discrimination under the traditional McDonnell Douglas Corp. v. Green standard. Although Swierkiewicz held that this was not necessary (in part because there are other ways of proving discrimination), it did not suggest that such pleading would not be sufficient. There are, however, complications with this approach that should be explored. Further, there are at least three alternatives for attorneys who cannot, consistent with Rule 11, allege such a prima facie case. First, the plaintiff might survive a 12(b)(6) motion by pleading “direct evidence” of discrimination. While the term has a checkered history in discrimination jurisprudence, the pleading context suggests a new look at an old concept. Second, the article addresses the possibility of pleading the existence of a “comparator” whose more favorable treatment than plaintiff may make the claim of discrimination plausible.

Third, and perhaps most radically, the article argues that plaintiffs should be able to take the Supreme Court at its word in Iqbal that, in deciding a motion to dismiss for failure to state a claim, a district court must take as true all facts (as opposed to legal conclusions) alleged in the complaint. It proposes that plaintiffs plead the existence of social science research showing the pervasiveness of discrimination. Taken as true, this body of literature may well nudge a particular claim across the border drawn by the Supreme Court between a “possible” claim and a “plausible” one.

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SCOTUS Cert Grant of Interest: Ashcroft v. Al-Kidd

The Supreme Court granted certiorari today in Ashcroft v. Al-Kidd (10-98), limited to questions 1 and 2:

(1) Whether a former government official is entitled to absolute immunity from a claim that he used the material witness statute as a “pretext” to preventatively detain terrorism suspects;

(2) Whether the former government official is entitled to qualified immunity from the pretext claim based on the conclusions that (a) the Fourth Amendment prohibits an officer from executing a valid material witness warrant with the subjective intent of conducting further investigation or preventively detaining the subject; and (b) this Fourth Amendment rule was clearly established at the time of the respondent’s arrest.

The Ninth Circuit’s decision below was one of the first appellate opinions to apply the Supreme Court’s pleading decision in Ashcroft v. Iqbal, and it garnered considerable attention at the time for that reason (see, e.g., here and here). It’s not clear how much of a role pleading standards will play in the questions the Court will decide in Al-Kidd.

SCOTUSblog’s case file is available here, which contains links to the lower court opinion and the cert-stage briefs.

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Two New Twombly/Iqbal Articles

Alex Reinert (Cardozo School of Law) has posted The Costs of Heightened Pleading to SSRN.

Abstract:     
In Conley v. Gibson, 355 U. S. 41 (1957), the Supreme Court announced its commitment to a liberal pleading regime in federal civil cases, and for decades thereafter was steadfast in resisting ad hoc heightened pleading rules adopted by lower courts. Thus, from 1957 until a few years ago, most litigants could count on surviving a motion to dismiss a complaint for failure to state a claim so long as their pleading provided some minimal notice to the defendant of the nature of their claim. Enter Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009) and Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007). Iqbal and Twombly, on many accounts, two-stepped the Court from notice to heightened “plausibility” pleading for all civil cases. And it garnered applause and withering criticism. No one seems willing to defend the process that the Court used to abandon fifty years of pleading law — shorn as it was of any attention to the procedures contemplated by the Rules Enabling Act — but as a substantive matter, heightened pleading has many adherents. For heightened pleading advocates, it promises to reduce crowded dockets, make discovery available only to worthy litigants, and generally improve the quality of litigation to which attorneys and federal courts devote their attention. And at the bottom of it all lies a fundamental assumption — notice pleading lets in too many worthless cases and heightened pleading will keep them out. Despite this assumption, however, there has been almost no empirical analysis of the connection between merit and pleading.

This Article critically intervenes in this discussion by providing empirical data to question the widespread assumption about the benefits and costs of heightened pleading. The data reported here show that pleadings that would get by under a notice pleading standard but not a heightened pleading standard — what I refer to as “thin” pleadings — are just as likely to be successful as those cases that would survive heightened pleading. Indeed, the research summarized in this Article, gathered through a novel retrospective analysis of appellate and trial court decisions from 1990-1999, suggest that there is no correlation between the heft of a pleading and the ultimate success of a case.

This Article certainly does not end the debate, but it is better to begin on solid empirical footing than on supposition alone. Although there are limitations to the data reported here, they are more than we have had before, and they call attention to the costs of heightened pleading even as they suggest avenues for further research. As Congress, the judiciary, and the academy are engaged in a critical discussion as to how to respond to the Supreme Court’s most recent alteration of pleading jurisprudence, relevant empirical data should be part of the conversation.

 Hillel Y. Levin (University of Georgia School of Law) has posted Iqbal, Twombly and the Lessons of the Celotex Trilogy to SSRN.

Abstract:     
This Essay compares the Twombly/Iqbal line of cases to the Celotex trilogy and suggests that developments since the latter offer lessons for the former. Some of the comparisons are obvious: decreased access and increased judicial discretion. However, one important similarity has not been well understood: that the driving force in both contexts has been the lower courts rather than the Supreme Court. Further, while we can expect additional access barriers to be erected in the future, our focus should be on lower courts, rather than other institutional players, as the likely source of those barriers.

RJE