Taming Twombly, even after Iqbal.

• Author: Hartnett, Edward A.
• Position: Antitrust complaint

INTRODUCTION I. THE TWOMBLY DECISION AND ITS CRITICS II. PLAUSIBILITY, SPECIFICITY, AND REASONABLENESS III. DISCOVERY PRIOR TO DECISION ON 12 (B) (6) MOTION CONCLUSION INTRODUCTION

In Bell Atlantic Corp. v. Twombly, the Supreme Court held that an antitrust complaint alleging that major telecommunication providers engaged in parallel conduct unfavorable to competition could not survive a 12(b)(6) motion to dismiss, even though the complaint expressly alleged a conspiracy. (1) The Court insisted that a complaint contain "enough facts to state a claim to relief that is plausible on its face," (2) and concluded that a conspiracy, while "conceivable," was not "plausible." (3) In addition, the Court retired the famous language from Conley v. Gibson that "a complaint should not be dismissed for failure to state a claim 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." (4)

Scholarly reaction to Twombly has been largely critical, with most complaining that the Court imposed a heightened specificity standard of pleading and that plaintiffs will lack the evidence to plead these specifics prior to discovery. Scholars have criticized the Court for abandoning decades of precedent and rejecting ideas central to the Federal Rules of Civil Procedure.

Some have suggested that Twombly's requirement of plausibility should be understood as an aspect of substantive antitrust law, thereby limiting the impact of the decision largely to antitrust cases. Others have suggested that Twombly should be limited to large, complex, sprawling cases, given the Court's evident concern with the cost of discovery in such cases. These hopes of limiting Twombly were dashed by the Supreme Court's decision in Ashcroft v. Iqbal, which held that the Twombly framework applies to all civil actions. (5)

Naturally, critics of Twombly voice the same criticisms of Iqbal but are no longer tempered by the hope that its range might be limited. (6) Faced with the failure of the attempt to limit Twombly, some have called for a legislative restoration of Conley v. Gibson. (7)

This Article takes a different tack. Rather than decrying Twombly as a radical departure and seeking to overturn it, this Article instead emphasizes Twombly's connection to prior law and suggests ways in which it can be tamed. First, the plausibility standard of Twombly can be understood as equivalent to the traditional insistence that a factual inference be reasonable. Second, the Twombly framework can be treated as an invitation to present information and argument designed to dislodge a judge's baseline assumptions about what is natural. Third, despite a widespread assumption to the contrary, discovery can proceed during the pendency of a Twombly motion. This Article also suggests that the traditional practice of pleading "on information and belief" be retired, and connects a tamed Twombly to broader trends toward managerial and discretionary judging.

1. THE TWOMBLY DECISION AND ITS CRITICS

   In Bell Atlantic Corp. v. Twombly, the Supreme Court held by a vote of seven to two that an antitrust complaint alleging that major telecommunications providers engaged in parallel conduct unfavorable to competition could not survive a 12(b) (6) motion to dismiss. (8)

   Stated this way, the outcome of the case is hardly surprising. Antitrust law has long insisted that parallel conduct is not itself a violation of section 1 of the Sherman Act, and if that were all that the complaint alleged, the decision would not warrant its headlining role here. However, there are three aspects of Twombly that are having a far broader impact on civil litigation in federal courts.

   First, the Court emphasized that while a complaint "does not need detailed factual allegations" to survive a 12(b)(6) motion, (9) Rule 8(a) does require that a complaint "show[] that the pleader is entitled to relief." (10) Thus a "formulaic recitation of the elements of a cause of action will not do." (11) Instead, in order to "show" entitlement to relief, some factual allegations are required, not merely to give fair notice but also to provide the "grounds" on which the complaint rests. (12)

   Second, the Court concluded that the famous language from Conley v. Gibson--"a complaint should not be dismissed for failure to state a claim 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" (13)--has "earned its retirement." (14) The Court concluded that this language "has been questioned, criticized, and explained away long enough." (15) Indeed, it stated that this phrase is "best forgotten." (16)

   Third, the Court insisted that the complaint allege "enough facts to state a claim to relief that is plausible on its face," (17) and ruled that because the plaintiffs did not "nudge[] their claims across the line from conceivable to plausible, their complaint must be dismissed." (18)

   Scholars have been largely critical of this decision. (19) The major criticism is that the Court imposed a heightened specificity standard of pleading and that plaintiffs will lack the evidence to plead these specifics prior to discovery. (20)

   Some scholars have focused less on criticism and more on limiting the range of the decision. One approach has been to argue that the requirement of plausibility is best understood as an aspect of substantive antitrust law. (21) Because parallel conduct is quite compatible with competitive behavior, at the trial stage, courts should not permit juries to infer conspiracies when such inferences are implausible; (22) at the summary judgment stage, a "plaintiff seeking damages for a violation of [section] 1 [of the Sherman Act] must present evidence that tends to exclude the possibility" that the defendants acted independently; (23) and now, at the pleading stage, a plaintiff must plead "some factual context suggesting agreement, as distinct from identical, independent action." (24)

   When the Court mentions a requirement of "plausibility" in the Twombly opinion, it is usually narrowly focused on the need to separate permissible parallel conduct from unlawful agreement. (25) Indeed, the Court notes that "[p]laintiffs do not, of course, dispute the requirement of plausibility and the need for something more than merely parallel behavior explained in [prior antitrust cases]." (26) Thus it was possible that the Supreme Court in the Iqbal case could have taken a page from an amicus brief by Professors Ides and Shapiro and given Twombly a "substantive law" interpretation. (27)

   A related approach has been to suggest that Twombly be limited to complex cases involving the likelihood of extremely expensive discovery. (28) It is true that the Twombly Court was plainly concerned with the cost of discovery. (29)

   But this attempt to limit the scope of Twombly has failed. Indeed, it did not attract a single vote on the Supreme Court in the Iqbal case. This is hardly surprising. Passages in the Twombly opinion speak broadly about a requirement that a complaint be plausible without the discussion being tightly tethered to antitrust law. (30) If the Twombly majority had been inclined to limit its decision to antitrust cases, it could have readily said so in response to Justice Stevens's dissent, which observed, "Whether the Court's actions will benefit only defendants in antitrust treble-damage cases, or whether its test for the sufficiency of a complaint will inure to the benefit of all civil defendants, is a question that the future will answer." (31)

   Indeed, when Matsushita was decided in 1986, it might have been read as simply an antitrust case that applied the plausibility requirement--already applicable at the trial stage--to the summary judgment stage. (32) But it soon became part of the summary judgment trilogy (with Liberty Lobby (33) and Celotex (34)) that constitutes a significant landmark in federal summary judgment practice.

   Moreover, lower courts around the country overwhelmingly refused to read the plausibility requirement of Twombly as limited to antitrust cases. Instead, they used the Twombly plausibility standard to test an enormous range of civil complaints. (35) In addition, reading Twombly as a civil procedure decision limited to complex litigation would put the decision in serious tension with the transsubstantive approach of the Federal Rules of Civil Procedure. (36)

   As Justice Kennedy put it in one brusque paragraph in Iqbal rejecting the contention that Twombly be limited to antitrust cases,

   This argument is not supported by Twombly and is incompatible with the Federal Rules of Civil Procedure. Though Twombly determined the sufficiency of a complaint sounding in antitrust, the decision was based on our interpretation and application of Rule 8. That Rule in turn governs the pleading standard "in all civil actions and proceedings in the United States district courts." Our decision in Twombly expounded the pleading standard for "all civil actions," and it applies to antitrust and discrimination suits alike. (37) The Iqbal case involved a Pakistani Muslim, Javaid Iqbal, who was arrested on criminal charges and detained after 9/11. After pleading guilty, serving his sentence, and being removed to Pakistan, Iqbal filed a Bivens action complaining of his treatment while in custody. (38) In addition to various claims against correctional officers and wardens, he also sued Attorney General John Ashcroft and FBI Director Robert Mueller, alleging that these two men adopted an unconstitutional policy that subjected him to harsh conditions of confinement because of his race, religion, or national origin. (39)

   Addressing solely the claims against Ashcroft and Mueller, the Supreme Court held that they could be found liable only if they themselves had engaged in purposeful discrimination against Iqbal on the basis of race, religion, or national origin. (40) Applying...