Twombly, Iqbal, Congress, and The End of Plausibility Pleading

20090501_souter_33Being in law school makes law-related news (particularly, that of the non-constitutional variety) more relevant and, therefore, more interesting to me than it previously did.  Nonetheless, I have had the sense not to post on law-related topics that have little relevance to most of our readers. But a loyal NPI friend recently shared a piece of legal news with me that is quite a big deal.

To understand the significance of this news, some background information is necessary:

In Bell Atlantic Corp v. Twombly (2007), the Supreme Court established a new, more stringent standard for upholding a plaintiff’s pleading claim when faced with a defendant’s motion to dismiss that claim. Put in plain English, when a plaintiff initiates a civil suit, they have to make a claim to explain what they are suing for. There are rules in the Federal Rules of Civil Procedure (FRCP)* one of which guides what needs to be stated in a plaintiff’s initial claim, namely that the claim must be “a short and plain statement of the claim showing that the pleader is entitled to relief.” “Short and plain” is purposely in there to indicate that a simple allegation is enough; there just should be enough so the defendant is notified of why he is being accused by the plaintiff. That’s why this is often referred to as “notice pleading”. This simplified pleading system was partially a reaction against “code pleading”, which required fairly significant factual detail for each element of a claim being made. This was heavily criticized because plaintiff often did not have all of the resources and information to have sufficient facts when first making an allegation.

*The FRCP was established in 1938. The Rules Enabling Act, passed by Congress in 1934, gave the judicial branch the power to develop a simplified system of rules governing civil procedure in federal courts. To amend the FRCP, there is a formal process that requires the approval of advisory committees and the Supreme Court.

Yet, without going through the FRCP amendment process, the Court essentially shifted away from notice pleading in Twombly, holding that the plaintiff’s claim MUST have plausible inferences connecting the relevant facts to the relevant legal conclusion that the plaintiff is reasoning. So, in Twombly, where local telephone companies were accused of conspiracy, the case was dismissed at the very first stage (the defendants didn’t even have to deny the claims!) because, although the plaintiffs pointed out behaviors common in conspiracies (e.g. parallel conduct by each of the phone companies), the Court didn’t find the inference connecting these behaviors to conspiracy sufficiently plausible. There was no opportunity for discovery, where the plaintiffs might actually be able to find more factual information that could justify their claims.

This plausibility standard was once again used and definitively expanded (in the sense that it was said to cover all cases, not simply antitrust or complicated cases) in Ashcroft v. Iqbal (2009). In this case, the Supreme Court upheld a dismissal of a racial discrimination suit on plausibility against U.S. governmental officials from a Pakistani Muslim who was arrested after 9/11. Justice Souter, who wrote the majority opinion in Twombly, wrote the dissenting opinion in Iqbal. Michael C. Dorf explains the background of the case:

[I]n Ashcroft v. Iqbal, the U.S. Supreme Court upheld a federal district court’s dismissal of a lawsuit by a Pakistani man who alleged that, while he was in federal custody on immigration charges in the aftermath of 9/11, his jailors “kicked him in the stomach, punched him in the face, and dragged him across” his cell; gratuitously strip-searched him; and denied him the opportunity to pray–and that all of this was done to him pursuant to a policy of discrimination on the basis of race, religion, and national origin.

Iqbal eventually pleaded guilty to the immigration offenses and was deported, although he was never charged with any connection to terrorism or terrorists. The Supreme Court acknowledged that Iqbal could have a valid claim for damages against the particular jailors who attacked him, but held that his complaint did not provide sufficient detail in its allegations to enable him to proceed against former Attorney General John Ashcroft or former FBI Director Robert Mueller.

More specifically, the Supreme Court applied the Twombly plausibility standard to dismiss the suit on the grounds that while it was possible that the facts alleged by Iqbal gave rise to a conclusion that Ashcroft and Mueller authorized abuse due to racial discrimination, this was not a plausible inference to make. So, Ashcroft and Muller did not even have to provided an answer to the claim.

This new plausibility standard (first set forth in Twombly and reaffirmed in Iqbal) is a bad development on multiple counts. First, it increases power and information asymmetries. It is more difficult to establish plausible inferences when a plaintiff has access to less factual information about the defendant and their behavior. Powerful entities like the federal government and telephone companies (the antagonists of Twombly and Iqbal) fall into this category. Such a take on pleading is a socially detrimental bastardization of the FRCP, which was simply intended to give defendant’s notice of what they were being accused of.  It is very clear, for example, that Iqbal’s allegation of overt discrimination gave Mueller and Ashcroft sufficient notice to prepare a defense. Whether this is a plausible inference from the facts finds no justification in the FRCP.

The second problem I have with the change is that it’s a disturbing power grab by the Supreme Court. While Hamilton is correct that the judiciary is “the least dangerous branch,” this doesn’t mean that it can’t still, on occasion, be dangerous. This ruling, reached without any conference with the relevant FRCP committees, effectively amends the FRCP by fiat. The result is that across the country, federal courts are enabled to lazily dismiss suits that may fall just below plausibility for a variety of reasons, including cost concerns. As of March 2008, less than a year after Twombly, it had already been cited over 9400 times.

So, I’m thrilled to see that Congress is now rightly moving to overrule this new plausibility standard and move back to the more liberal notice pleading standard established in the FRCP and fairly interpreted in Conley v. Gibson (1957). Telephone companies raise slightly less ire than Bush administration officials among Democratic Congressmen, which explains why this is now gaining traction with Iqbal and not two years ago with Twombly.

This is a rare instance in which I am supportive of the legislative branch overriding the judicial branch. Generally, it doesn’t turn out so well. I’m sympathetic to the public choice critique, which realistically analyzes the legislature’s not-so-noble motivations. Nonetheless, Congress, regardless of its motivation (likely a combination of disdain for the Bush administration combined with a concern for justice), is making the right move here. If such a revision is passed and signed into law by Obama, it will be the most significant judicial legislation passed during his presidency. And, that’s a good thing.

Advertisements

One response to this post.

  1. Posted by rapmarketing on January 19, 2011 at 6:37 PM

    I have discovered a Mathematical Formula for Civil Pleadings – This formula will help litigants test their pleadings. Unfortunately, I do not believe that the Supreme Court will overrule Iqbal – they will just tweak it.

    Plausibility = NonNegligible Probabilty found in IN RE: TEXT MESSAGING ANTITRUST LITIGATION. IN RE: TEXT MESSAGING ANTITRUST LITIGATION. Appeal of: Verizon Wireless, et al., Defendants. No. 10-8037.

    Plausibility Transactions Probability > Conclusory statement Probability this exist when
    (Facts,Events,Comments related to claim give a weight to Plausibility) > (Conclusory Facts weighted as Zero or assigned Negative Weights give a weight to NonNegligible Probability). Twombly -“formulaic recitation[s] of the elements” of the plaintiff’s legal claim, and urged district courts to discard those allegations as conclusory.

    This of course applies and should apply to Affirmative Defenses.

    My blog is http://www.iqbaldecoded.wordpress.com

    Reply

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: