Plaintiffs’ Interests Prepare to Fight Supreme Court Rulings Heightening Pleading Standard; Defense Attorneys Armed With Weapon to Combat Frivolous Complaints

Plaintiffs’ interest groups like the American Association for Justice are focused on changing the heightened pleading standard that has come out of two recent United States Supreme Court decisions because of the effect the standard has had on civil litigation. Among other things, these groups are advocating on Capitol Hill in favor of a bill recently introduced by Sen. Arlen Specter (D-Pa.) that would return the civil pleading standard to what it was interpreted to be prior to 2007.

Given the current political climate in Washington and the Obama administration’s current emphasis on healthcare reform, it is unclear whether and to what extent these efforts will bear fruit. Regardless of the momentum that the measure gains in the near term, it is an issue that bears monitoring in the future.

The Federal Rules of Civil Procedure require that a complaint contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. of Civ. P. 8(a)(2). Since 1957, this rule has been interpreted rather liberally, allowing plaintiffs to dodge a dismissal of complaints prior to the discovery “unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Conley v. Gibson, 355 U.S. 41, 45-46 (1957). This liberal pleading standard made it difficult for defendants to get frivolous claims dismissed before being subjected to expensive and intrusive discovery.

Fifty years later, the Supreme Court added some teeth to the Federal Rules of Civil Procedure pleading requirements. In Bell Atlantic v. Twombly, 550 U.S. 544 (2007), an antitrust case, the Supreme Court articulated a more rigorous standard against which complaints should be judged, requiring “factual enhancement” of conclusory legal allegations. The Court noted that “a plaintiff's obligation to provide the '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.” Id. at 555 (citations omitted). The “[f]actual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true.” Id.

The extent of the Court's Twombly holding was not immediately clear, and many argued that this new heightened pleading standard was limited only to the antitrust arena. Others argued that federal courts had entered a new era, one which required that the plaintiff show heightened grounds for relief.

On May 18, 2009, in Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009), the Supreme Court, in a 5-4 decision, expressly rejected the argument that the Twombly standard is limited only to antitrust cases. The Court clarified that the heightened pleading standard applies to "all civil actions and proceedings in the United States district courts." Id. at 1953. Even the dissent implicitly recognized that the Twombly pleading standard extends beyond antitrust actions, but would have reached a different conclusion in applying Twombly to the alleged facts in Iqbal. Id. at 1959-60.

It is now clear that Federal Judges ruling upon Rule 12 motions to dismiss must carefully and thoroughly apply the two-pronged Twombly test no matter what causes of action are alleged. Id. at 1953. Under the first Twombly prong, legal conclusions asserting threadbare elements of a cause of action do not suffice as a proper pleading under Rule 8. And under the second prong, a complaint that merely states an inference also does not suffice. Instead, the facts alleged in the complaint must “nudge” the claims “across the line from conceivable to plausible.” Id. at 1951-52.

Only July 22, 2009, Senator Arlen Spectator began the process attempting to legislatively overrule the Supreme Court’s decision in Iqbal and Twombly by introducing The Notice Pleading Restoration Act of 2009. S. 1504, 111th Cong. (2009). The Bill expressly seeks compel the Federal Judiciary to interpret Rule 12 as expressed in Conley v. Gibson, 355 U.S. 41 (1957). It was referred to the Senate Judiciary Committee, and while committee hearings on the bill are said to be on the horizon, none have been scheduled as this is written.

The importance of Twombly and Iqbal for defense lawyers and their clients cannot be overstated. Unlike many other decisions of the Supreme Court, which only apply to certain areas of the law or sets of facts, this decision should affect a defense attorney's initial analysis of every single federal court complaint. Together, Iqbal and Twombly provide defense counsel with a powerful tool to attempt to put an end to frivolous claims and poorly pled complaints before their clients are forced to comply with intrusive and expensive discovery requests. Defense attorneys would therefore do well to monitor developments with respect to this legislation and other efforts by plaintiffs’ interest groups to change this standard of pleading.

Chris Johnson and Justin Fowles are associates with Frost Brown Todd LLC, practicing in Louisville, Kentucky.

Posted by: Justin S. Fowles

Categories: Kentucky, Legislation & Regulation