by Aaron S. Bartholomew
In 2009, the U.S. Supreme Court issued the second of two decisions that have radically altered interpretation of the general pleading requirements of the Federal Rules of Civil Procedure. Of great concern to counsel for both plaintiffs and defendants, as well as legal scholars, these decisions have had and continue to have tremendous effect in federal courts.
The Utah Bar Journal briefly addressed the Twombly case in a 2009 article, but the full import of the change in federal pleading standards has only recently been realized. See John H. Bogart, Living with Twombly, 22 Utah B.J. 23 (March/April 2009). This article explores the evolution of Rule 8 pleading requirements in federal court, the Rule 8 revolution hastened in by the Twombly and Iqbal line of cases, and the consequences and criticisms of the newly-required heightened pleading requirements over the last several years since their introduction.
The Evolution of Rule 8 of the Federal Rules of Civil Procedure
Rule 8 of the Federal Rules of Civil Procedure requires a pleading to include “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). In 1957, the U.S. Supreme Court interpreted this requirement in Conley v. Gibson, 355 U.S. 41 (1957), and held that a complaint should not be dismissed under Rule 12(b)(6) unless it is “beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Id. at 45-46.
The Conley standard has governed federal civil suits for more than fifty years. Under Conley, plaintiffs have had the luxury of crafting general, simple pleadings and with predictability and reliability have overcome most Rule 12 motions.
Then, in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), the U.S. Supreme Court abrogated Conley, saying that its “‘no set of facts’ language has been questioned, criticized, and explained away long enough.” Id. at 562. The Court then introduced a new “plausibility” standard:
While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff’s obligation to provide the “grounds” of his “entitle[ment] to relief” requires more than labels and conclusions, and a formulaic recitation of a cause of action’s elements will not do. Factual allegations must be enough to raise a right to relief above the speculative level on the assumption that all of the complaint’s allegations are true….
Asking for plausible grounds…does not impose a probability requirement at the pleading stage; it simply calls for enough fact to raise a reasonable expectation that discovery will reveal evidence of illegal agreement.…
The need at the pleading stage for allegations plausibly suggesting (not merely consistent with) agreement reflects the threshold requirement of Rule 8(a)(2) that the “plain statement” possess enough heft to “sho[w] that the pleader is entitled to relief.”
Id. at 555-56 (footnotes and citations omitted). In other words, plaintiffs must “nudge their claims across the line from conceivable to plausible” in order to survive. Id. at 570. A Rule 12(b)(6) motion to dismiss must therefore be granted unless the pleading reaches a level of “plausibility.” Id. at 556.
Initial reactions to Twombly were mixed, perhaps partly due to the Supreme Court’s express denial that it created a heightened pleading standard. See id. at 569 n.14 (“[W]e do not apply any ‘heightened’ pleading standard.”). For example, Keith Bradley, writing in the Northwestern University Law Review, suggested that “‘[p]lausibility’ is an element of a certain kind of antitrust conspiracy claim, not a standard for pleadings in general.” Keith Bradley, Pleading Standards Should Not Change After Bell Atlantic v. Twombly, 102 Nw. U.L. Rev. Colloquy 117, 122 (2007).
Within two short years, Mr. Bradley was proven to be mistaken. In May 2009, the Supreme Court in Ashcroft v. Iqbal, 556 U.S. 662 (2009), applied Twombly to all federal court pleading requirements.
In Iqbal, the Supreme Court noted that the lower court had relied on Conley’s “no-set-of-facts” analysis, which had subsequently been “retired” and replaced by Twombly’s “‘plausibility standard.’” Id. at 670 (citations omitted). The Court also expressly stated that “[its] decision in Twombly expounded the pleading standard for ‘all civil actions.’” Id. at 684.
This new “Twombly/Iqbal” pleading standard is not a model of clarity:
[A] pleading must contain a “short and plain statement of the claim showing that the pleader is entitled to relief….” [T]he pleading standard Rule 8 announces does not require “detailed factual allegations,” but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation. A pleading that offers “labels and conclusions” or “a formulaic recitation of the elements of a cause of action will not do.” Nor does a complaint suffice if it tenders “naked assertion[s]” devoid of “further factual enhancement.”
To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to “state a claim to relief that is plausible on its face.” A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. 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. Where a complaint pleads facts that are “merely consistent with” a defendant’s liability, it “stops short of the line between possibility and plausibility of ‘entitlement to relief.’”
Two working principles underlie our decision in Twombly. First, the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice. Although for the purposes of a motion to dismiss we must take all of the factual allegations in the complaint as true, we “are not bound to accept as true a legal conclusion couched as a factual allegation.” Rule 8 marks a notable and generous departure from the hyper-technical, code-pleading regime of a prior era, but it does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions. Second, only a complaint that states a plausible claim for relief survives a motion to dismiss. Determining 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. But where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged – but it has not “show[n]” – “that the pleader is entitled to relief.”
In keeping with these principles a court considering a motion to dismiss can choose to begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth. While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations. When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.
Id. at 677-79 (citations omitted). This two-prong analysis deserves further scrutiny.
New Rule 8 Pleading Requirements:
First Prong: A Complaint Must Contain More Than “Unadorned,” But Less Than “Detailed,” Factual Allegations. Plus “Factual Allegations” v. “Conclusions of Law.”
To satisfy the first prong of the new Twombly/Iqbal analysis, a complaint need not contain “detailed factual allegations,” but it must include more than “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements.” Id. at 678. Practitioners should therefore take heed to augment recitation of the elements of a cause of action with factual allegations. They must also eschew confusing “facts” with “mere conclusory statements,” because while factual allegations are accepted as true, legal conclusions are not. Id.
Unfortunately, the distinction between “questions of law” and “questions of fact” is unclear. The U.S. Supreme Court has noted that “the appropriate methodology for distinguishing questions of fact from questions of law has been, to say the least, elusive,” and that it has “yet to arrive at a rule or principle that will unerringly distinguish a factual finding from a legal conclusion.” Miller v. Fenton, 474 U.S. 104, 113 (1985) (internal quotation marks omitted).1 The Supreme Court has also noted that
the decision to label an issue a “question of law,” a “question of fact,” or a “mixed question of law and fact” is sometimes as much a matter of allocation as it is of analysis.
At least in those instances in which Congress has not spoken and in which the issue falls somewhere between a pristine legal standard and a simple historical fact, the fact/law distinction at times has turned on a determination that, as a matter of the sound administration of justice, one judicial actor is better positioned than another to decide the issue in question.
Id. at 113-14 (citation omitted).2 The Court went on to take unto itself the duty to make the “fact/law distinction” in some instances (such as First Amendment libel cases requiring proof of actual malice, or where the trier of fact has “perceived shortcomings…by way of bias or some other factor….”), while in other circumstances leaving that duty to the trial court (such as credibility of witnesses and juror bias). Id. at 114 (citations and internal quotation marks omitted).
How federal district and circuit courts are supposed to sort all this out is indeed “elusive.” See id. at 113. Some have simply thrown in the proverbial towel. See, e.g., Florida Progress Corp. & Subsidiaries v. Comm’r, 348 F.3d 954, 960 (11th Cir. 2003) (“[W]e too are unable to articulate a guiding principle that will ‘unerringly distinguish a factual finding from a legal conclusion….’” (citation omitted)). Others have concluded that “[s]ince a judge looks in vain for any guidance on this question in the summary judgment cases, it would appear that he is unfettered in approaching the issue analytically and pragmatically.” Cnty. Photo Compositing Corp. v. Pawlick, 1984 Mass. App. Div. 183 (Mass. App. Div. 1984) (citing United States v. J.B. Williams Co., Inc., 498 F.2d 414, 430-31 (2nd Cir. 1974)); see also Nunez v. Superior Oil Co., 572 F.2d 1119, 1126 (5th Cir. 1978).
However, a few analytical frameworks for the “fact/law distinction” have been proposed. For example, the Third Circuit has suggested the following:
The Supreme Court has written that “we [do not] yet know of any…rule or principle that will unerringly distinguish a factual finding from a legal conclusion.” However, a practical test…for determining whether a question is of fact, of law, or of both fact and law, is as follows. A question of fact can be answered solely by determining the facts of a case (without any need to know the law relevant to the case). A question of law can be answered solely by determining what relevant law means (without any need to determine the facts of a case). A mixed question of fact and law can only be answered by both determining the facts of a case and determining what the relevant law means.
For example, imagine that a man is appealing his conviction under a law that states “it is a crime to be tall.” What kind of question is: “Was the trial court correct to find the man ‘tall’?” Can we answer it solely by determining the facts of the case? No, because even if we know the fact that the man is five feet ten inches, we do not know if he is “tall” in the sense that Congress intended the word “tall” to mean. Can we answer it solely by determining what the relevant law means without knowing the man’s height? No, because even if we know that the statute defines “tall” as “six feet or taller,” we do not know how tall the man is. Thus, we have a mixed question of fact and law. Once we know the facts of the case (that the man is five feet ten inches tall), and what the relevant law means (it is a crime to be six feet tall or taller), we can answer “no” to the question “Was the trial court correct to find the man ‘tall’?”
Interfaith Cmty. Org. v. Honeywell Int’l, Inc., 399 F.3d 248, 269 (3d Cir. 2005) (first alteration in original) (citation omitted). Elsewhere, the Eighth Circuit has promulgated an analysis “focused on whether the question at issue required the application of a technical, legally oriented standard or whether it required the application of a non-technical, factually oriented standard.” Nodaway Valley Bank v. Cont’l Cas. Co., 916 F.2d 1362, 1364-65 (8th Cir. 1990).
The First Circuit has also suggested some broad parameters:
We are cognizant that the line between “facts” and “conclusions” is often blurred. But, there are some general parameters. Most often, facts are susceptible to objective verification. Conclusions, on the other hand, are empirically unverifiable in the usual case. They represent the pleader’s reactions to, sometimes called “inferences from,” the underlying facts. It is only when such conclusions are logically compelled, or at least supported, by the stated facts, that is, when the suggested inference rises to what experience indicates is an acceptable level of probability, that “conclusions” become “facts” for pleading purposes.
Dartmouth Review v. Dartmouth Coll., 889 F.2d 13, 16 (1st Cir. 1989), (overruled by Educadores Puertorriquenos en Accion v. Hernandez, 367 F.3d 61 (1st Cir. 2004). These various ideas will likely experience renewed scrutiny now that the Supreme Court has based part of the Twombly/Iqbal analysis on a “fact/law distinction” that, at present, lacks any coherent guidelines.
Second Prong: Assessing “Plausibility” Based on “Judicial Experience and Common Sense.”
The second prong in the Twombly/Iqbal analysis requires a complaint to state “a plausible claim for relief” in order to survive a motion to dismiss under Rule 12(b)(6). See Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009) “[F]acial plausibility” is shown “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. at 678.
Here the Supreme Court describes a spectrum in which legal claims may come to rest on factual “possibility,” “plausibility,” or “probability.” In order to survive a motion to dismiss, a claim must move “across the line” from mere “possibility” (or “conceivability”) to “plausib[ility].” Id. at 683 (internal quotation marks omitted). A claim need not go beyond this area of the spectrum (into the “probability” area) in order to defeat a motion to dismiss.
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. Where a complaint pleads facts that are “merely consistent with” a defendant’s liability, it ‘stops short of the line between possibility and plausibility of “entitlement to relief.’”
Id. (citations omitted).
A trial court’s assessment of a claim’s plausibility is
a context-specific task that requires the reviewing court to draw on its judicial experience and common sense. But where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged – but it has not “show[n]” – “that the pleader is entitled to relief.”
Id. at 679 (citations omitted).
Criticisms and Conclusions
In sum, federal courts will now be called upon to read a complaint and decide if its “factual content” triggers a “reasonable inference” of liability sufficient to defeat a motion to dismiss, or whether it only has “well-pleaded facts” that trigger an inference of “[no] more than the mere possibility of misconduct,” which is not sufficient. See id. At present, the Utah Supreme Court has declined to adopt this heightened standard and has instead retained the “short and plain statement” first promulgated in Conley. See Peak Alarm Co. v. Salt Lake City Corp., 2010 UT 22, ¶ 70 n.13, 243 P.3d 1221.
The aggregate impact of this new pleading standard is proving to be significant. In a Yale Law Journal note by Jonah Gelbach, a law student at Yale Law School and former economics professor at the University of Maryland, Mr. Gelbach describes a study by the Federal Judicial Center which suggests that defendants are more than fifty percent more likely to file a motion to dismiss now than they were before Twombly and Iqbal. See Jonah B. Gelbach, Locking the Doors to Discovery? Assessing the Effects of Twombly and Iqbal on Access to Discovery, 121 Yale L.J. 2270, 2273 (2012). Mr. Gelbach goes on to suggest that a higher percentage of cases is subject to dismissal before reaching discovery, and that twenty percent more cases fail to reach discovery under the heightened pleading standards imposed by Twombly and Iqbal. See id. at 2277; Allison Frankel, “Twombly, Iqbal rulings have ‘substantial impact’: study,” available online at http://newsandinsight.thomsonreuters.com/Legal/News/ViewNews.aspx?id=33303 (last visited May 25, 2012).
Questions also abound as to whether the Twombly/Iqbal standard violates the Seventh Amendment right to jury trial,3 whether it screens out “weak” claims along with “meritless” ones,4 whether trial courts will be able to consistently, meaningfully and fairly apply this new standard, whether it will have a disproportionately harmful effect on inherently “information poor” cases such as civil rights and employment discrimination disputes, and so forth.
Regardless of how these questions turn out, practitioners in federal court should acclimate themselves to the heightened initial scrutiny required by Twombly and Iqbal, and should invest more time and resources in pre-litigation investigation of claims before proceeding to the pleading stage.
1. The U.S. Supreme Court did, however, describe two “well established principles” on this point: “For example, that an issue involves an inquiry into state of mind is not at all inconsistent with treating it as a question of fact. Equally clearly, an issue does not lose its factual character merely because its resolution is dispositive of the ultimate constitutional question.” Miller v. Fenton, 474 U.S. 104, 113 (1985) (citations omitted).
2. The Supreme Court has ostensibly described a mixed question of law and fact as “questions in which the historical facts are admitted or established, the rule of law is undisputed, and the issue is whether the facts satisfy the statutory standard, or to put it another way, whether the rule of law as applied to the established facts is or is not violated.” Pullman-Standard v. Swint, 456 U.S. 273, 289 n.19 (1982).
3. See “How the Supreme Court Pulled a Fast One, and America Didn’t Notice,” http://rollback.typepad.com/campaign/2009/08/how-the-supreme-court-pulled-a-fast-one-and-america-didnt-notice.html (last visited May 25, 2012) (“[L]itigators at least should be worried over whether or not that violates the Seventh Amendment right to a jury trial, because the Seventh Amendment says that juries are to determine facts, not judges….”).
4. See Robert G. Bone, Plausibility Pleading Revisited and Revised: A Comment on Ashcroft v. Iqbal, 85 Notre Dame L. Rev. 849, 852 (2010) (“Iqbal applies a thick screening model that aims to screen weak as well as meritless suits, whereas Twombly applies a thin screening model that aims to screen only truly meritless suits. The thick screening model is highly problematic on policy grounds….”).