South Carolina BAR Journal
SC Lawyer, November 2011, #4.
Federal Pleading After Twombly and Iqbal
South Carolina LawyerNovember 2011Federal Pleading After Twombly and IqbalBy Thomas P. Gressette Jr., Melanie Hirsch and Claire PrestelThe Supreme Court's recent decisions in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009), reformulated the test for deciding motions to dismiss under the Federal Rules of Civil Procedure. Instead of applying the well known standard from Conley v. Gibson, 355 U.S. 41, 45-46 (1957), which held that a motion to dismiss should not be granted "unless it appears beyond doubt that the plaintiff can prove no set of facts ... which would entitle him to relief," federal courts must now apply Twombly and Iqbal to determine whether a complaint states a claim that is "plausible on its face." Twombly, 550 U.S. at 570. The meaning and significance of this plausibility requirement has become one of the hottest topics in federal litigation.
To help South Carolina practitioners understand and apply Twombly and Iqbal,this article summarizes the Supreme Court's opinions and thenexplores two important questions that have arisen in their aftermath: (1) what exactly does it mean for a claim to be "plausible" and (2) do Twombly and Iqbal apply to the pleading of affirmative defenses.
Bell Atlantic Corp. v. Twombly
In Bell Atlantic Corp. v. Twombly, the Court considered a putative class-action complaint alleging that the regional operating companies created by the 1984 dissolution of ATandT (the "Baby Bells") had conspired to exclude competitors from the markets for local phone and high-speed Internet service. See 550 U.S. at 550-51. The putative class in Twombly included all local telephone or high-speed Internet consumers from 1996 to the present. Id. at 550. In an opinion written by Justice Souter, the Supreme Court held, 7-2, that the complaint's bare allegations of a conspiracy were "legal conclusions" and were therefore insufficient to survive a motion to dismiss. Id. at 564. The Court also held that under Federal Rule of Civil Procedure 8, the plaintiffs' complaint did not include enough "factual matter" to "suggest" an agreement among the defendants. Id. at 556. The Court ruled that the complaint's allegations of the defendants' parallel conduct (i.e., similar conduct that is alleged by an anti-trust plaintiff to attempt to demonstrate an agreement to exclude competitors) failed this test because, in light of the unique history of the telecommunications industry, the alleged conduct could "natural[ly]" and "obvious[ly]" be explained by legal, self-interested behavior on the part of the Baby Bells. Id. at 566. In the course of reaching these conclusions, the Court held that Conley's "no set of facts" language had often been misinterpreted and had "earned its retirement." Id. at 561-63.
At the same time, however, Twombly also reaffirmed a key aspect of the original Conley decision-that the principal purpose of a complaint is to do nothing more than "give the defendant fair notice of what the ... claim is and the grounds upon which it rests." Id. at 555 (quoting Conley, 355 U.S. at 47); see also, e.g., Maty v. Grasselli Chem. Co., 303 U.S. 197, 200 (1938) ("Pleadings are intended to serve as a means of arriving at fair and just settlements of controversies between litigants. They should not raise barriers which prevent the achievement of that end."). The Court also explicitly rejected the notion that it was applying a "'heightened' pleading standard" or requiring "heightened fact pleading of specifics." Twombly, 550 U.S. at 569 n.14, 570. Additionally, the Court affirmed the continuing validity of the model complaints found at the end of the Federal Rules. See id. at 565 n.10. According to Federal Rule of Civil Procedure 84, those form complaints state claims in a simple and straightforward fashion that "suffice under the rules" and they function to "illustrate the simplicity and brevity that [the] rules contemplate." Fed. R. Civ. P. 84.
Immediately following the decision in Twombly, scholars and commentators questioned whether its analysis was meant to apply to all civil cases or only to antitrust disputes. See Thomas P. Gressette Jr., The Heightened Pleading Standard of Bell Atlantic Corp. v. Twomblyand Ashcroft v. Iqbal: A New Phase In American Legal History Begins, 58 Drake L. Rev. 401, 424-26 (2010). Then, almost exactly two years after issuing its opinion in Twombly, the Supreme Court again addressed the question of pleading standards in its 2009 opinion in Ashcroft v.Iqbal.
Ashcroft v. Iqbal
The plaintiff in Iqbal was a Pakistani...