Monday, April 25, 2011

What's It All About Alfie?: Compiling All of the Data on the Effect of Twombly and Iqbal on 12(b)(6) Motions

What has been the effect of Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009), on motions to dismiss for failure to state a claim upon which relief can be granted under Federal Rule of Civil Procedure 12(b)(6)? It looks like there are at least 7 relevant sources of information about the topic, and most of them have been blogged about in one place or another on the internet. In this post, I thought I would post links to all of this information as well as brief summaries of what each found.

(1) Patricia Hatamyar, a professor at the St. Thomas University School of Law, took up this question in her piece (blogged about here), The Tao of Pleading: Do Twombly and Iqbal Matter Empirically?, 59 Am. U. L. Rev. 553 (2010), in which she "conclude[d], with some caution, that Twombly and Iqbal have significantly increased the rate at which 12(b)(6) motions have been granted by district courts, and suggest[ed] that this result, if desirable, should be accomplished by the normal rule amendment process rather than by a ruling of the Court."

(2) Last month, the Federal Judicial Center released its report, Motions to Dismiss for Failure to State a Claim After Iqbal, which concluded...well, it depends on your perspective. Adam blogged about it here, and Howard Wasserman blogged about it over at PrawfsBlawg, leading to a spirited back-and-forth in the comments section. The Executive Summary concluded that

•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 infrasection 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 infrasection 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).

(3)  William M. Janssen of the Charleston School of Law, recently published Iqbal “Plausibility” in Pharmaceutical and Medical Device Litigation, 71 La. L. Rev. 541 (2011).

This Article studied the actual effect of Iqbal on the cohort of more than 264 federal pharmaceutical and medical device cases of every type, released from the day of the decision in Iqbal through August 31, 2010. The results of that study of more than 15 months of case law suggest that Iqbal is not having a dramatic impact on this cohort, although its impact cannot be conclusively dismissed as inconsequential either. There have been aggressive applications of Iqbal on occasion. In the 21.2% of the time when Iqbal appears facially to be impactful, a closer examination reveals that this observed effect is, in large measure, decreasing in incidence, coupled with an ability for correction, and frequently avoidable through accessible sources of information. Moreover, this Article cannot rule out that even those perceived effects may be phantoms, because repeated, longstanding, and frequently cited federal precedent among the lower federal courts may well have led to functionally identical results even without Iqbal's emergence. Nevertheless, validly assessing the true impact of Iqbal on pharmaceutical and medical device litigation (or, for that matter, federal litigation generally) remains a risky business. The Iqbal opinion is still too new, the hard data surrounding its use too thin, the steadied nature of its application too uncertain, and the legislative efforts to unwork it too unknown.

(4) The Statistics Division of the Administrative Office of the United States Courts published a data set. According to Professor Janssen,

This data is amenable to a few observations. First, the raw totals of newly filed motions to dismiss jumped meaningfully in the four months following the Iqbal decision when compared to the filing activity in the four months immediately preceding theTwombly decision, but that growth in numbers has stopped and begun to ebb through the 13 months after Iqbal. Second, the volume of dismissal motions granted likewise jumped in the four months following Iqbal when compared to the four months preceding Twombly, but that growth, too, seems to have stalled and begun to recede. Third, when measured against new-motion filing activity, the percentage of motions to dismiss that were granted has remained essentially level. In fact, when the data for the full last 13 months is considered, the percentage of motions granted has actually fallen to a point lower now than it was during the pre-Twombly period. Fourth, the number of motions to dismiss that were denied also rose significantly in the period after Iqbal as compared to the period before Twombly, but that growth has likewise now ended and the numbers have begun to recede. Whether these figures represent actual trends, or mere anomalies influenced by the small volumes of data and the brief window of time, remains unclear.

(5) Andrea Kuperman prepared the Memorandum, Review of Case Law Applying Bell Atlantic Corp. v. Twombly and Ashcroft v. Iqbal for the United States Judicial Conference Standing Rules Committee and its Civil Rules Committee. The Memo summarized the holdings and reasoning of cases discussing and applying Iqbal through late July 2010. According to Professor Janssen,

In summarizing the decision law through this period, the study offered several observations on patterns and similarities in some of the studied opinions:

·Some courts reaffirm that the federal "notice" pleading regime "remains intact";

·Other courts commented that Twombly and Iqbal "have raised the bar for defeating a motion to dismiss based on failure to state a claim" (with one court suggesting that future plaintiffs may seek to avoid a federal forum);

·Some courts have dismissed pleadings after noting that the result would have been the same even before Twombly (although other courts have stated or implied the opposite);

·Many courts of appeals decisions focus on the "context-specific" nature of the Iqbal analysis, which, surmised the study's author, "may give courts some flexibility to apply the analysis more leniently in cases where pleading with more detail may be difficult."

Highlighting a recurring challenge present in any post-Iqbal analysis, the study noted:

While it seems likely that Twombly and Iqbal have resulted in screening out some claims that might have survived before those cases, it is difficult to determine from the case law whether meritorious claims are being screened under the Iqbal framework or whether the new framework is effectively working to sift out only those claims that lack merit earlier in the proceedings.

(6) Senior Federal Judicial Center researchers Emery G. Lee III and Thomas E. Willging published Attorney Satisfaction with the Federal Rules of Civil Procedure: Report to the Judicial Conference Advisory Committee on Civil Rules. As noted by Professor Janssen, this paper

summarized the comments received during a survey conducted by the National Employment Lawyers Association, which sought to assess the impact of "plausibility" pleading on the law practices of employment attorneys. More than 70% of those responding agreed that Iqbal and/or Twombly had "affected how [they] structure complaints in employment discrimination cases." When asked about the nature of that effect, the responders replied that they "include more factual allegations in the complaint than...prior to Twombly/Iqbal" (94.2% agreeing) and that they "have to respond to motions to dismiss that might not have been filed prior to Twombly/Iqbal" (74.6%). Fewer than 15% of responders agreed that they "conduct more factual investigation" after Twombly/Iqbal, that they "screen cases more carefully" after Twombly/Iqbal, or that they "raise different claims" after Twombly/Iqbal. Of those who had actually filed an employment discrimination case since the Twombly decision was released, only 7.2% agreed that a case had been dismissed "for failure to state a claim under the standard announced inTwombly/Iqbal."

(7) Lee and Willging also published In Their Words: Attorney Views About Costs and Procedures in Federal Civil Litigation. As noted by Professor Janssen, this paper

reported on individual telephone interviews with 35 attorneys concerning their personal federal litigation experiences. The interviewees were comprised of 16 who primarily represented plaintiffs, 12 who primarily represented defendants, and 7 who represented both about equally. Most agreed they had not "seen any impact" and "reported no effect" from Twombly/Iqbal in their practices, and "none of the attorneys identified an increase in the likelihood that [a Rule 12(b)(6)] motion would be granted." Many interviewees did, however, note an increase in litigation costs occasioned by "the increased frequency of litigating 12(b)(6) motions." Most interviewees reported that "notice" pleading was already "rare" and often intentionally so based on "longstanding personal practice of pleading specific facts." Among the quoted comments were: "My complaints are detailed, for tactical reasons....I want the reader, including the judge or more likely his clerk, to say to himself 'Well, if he can prove this, he wins'"; "it is a good idea to put as much detail as possible into a complaint so as to make a good first impression on the judge"; "always included more than is necessary for notice pleadings, and we are generally very specific about the facts"; "never did notice pleading, always much more"; "I plead to influence the court"; and "I have a tendency to do fact pleading."

As you can see, I have taken these brief summaries from Professor Janssen's article, and I think (a) that it does a really nice job of explaining the research done on Twombly/Iqbal to this point; and (b) that it nicely anchors that research by focusing upon a discrete set of cases -- pharmaceutical and medical device cases -- and seeing the effect on that subset of cases. Part of the reason that I find this anchoring so useful is that, as the authors of the recently released FJC report acknowledged, the monkey wrench of a significant increase in financial-instrument cases (in the wake of the mortgage crisis) complicates the before-and-after analysis (Indeed, as Scott Dodson noted in the comments section of Howard Wasserman's post at PrawfsBlawg, maybe we should remove these cases from the numbers to get a more accurate picture).

So, What's It All About Alfie? Well, I don't think that question can be answered quite yet. The recently released FJC did not report data on what happens after dismissals with leave to amend in the wake of Twombly/Iqbal, and the authors note that they will report that data in future reports. This data seems to be the missing piece of the puzzle in reaching final conclusions. But based upon these above 7 sources of information, I think that the picture is starting to come into focus.

-Colin Miller

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