The pleading problem.

Author:Steinman, Adam N.

INTRODUCTION I. FEDERAL PLEADING STANDARDS BEFORE AND AFTER TWOMBLY A. Before Twombly B. The Twombly Decision C. Initial Uncertainty Following Twombly D. The Iqbal Decision II. PLAUSIBILITY'S PROBLEMS III. AFTER IQBAL: FIRST PRINCIPLES A. Beyond Plausibility 1. Taking Iqbal's two steps seriously 2. The irony of the plausibility inquiry B. The Most Significant Pre-Twombly Authorities Remain Good Law C. Is Notice Pleading Dead, or Merely Recast? D. An Explanatory Theory of Twombly and Iqbal IV. TOWARD A NEW PARADIGM: PLAIN PLEADING A. Misreading Twombly and Iqbal: Allegations Do Not Require Evidentiary Support at the Pleadings Phase B. A Transactional Approach C. Rule 8 and the "Plain Statement" Requirement D. Some "Conclusory" Language Is Not Necessarily Fatal E. A Complaint Need Not Provide Extensive Details About the Underlying Events F. The Line-Drawing Challenge V. SITUATING PLEADING STANDARDS IN THE POST-IQBAL ERA A. The Purpose of Pleadings B. Pleading Standards and Discovery Costs CONCLUSION APPENDIX INTRODUCTION

Pleading standards are essential to the character of a civil justice system. If a plaintiff seeking judicial redress is unable to provide an adequate "statement of the claim" at the pleadings phase, (1) then that claim is effectively stillborn. There will be no court-supervised discovery, no ability to present evidence to a judge or jury, and no hope of obtaining any judicial remedy. The complaint will be dismissed, without even an obligation on the part of the defendant to admit or deny the plaintiff's allegations. (2) For all intents and purposes, that initial pleading is the key to the courthouse door. If pleading standards are too strict, the door becomes impenetrable. But if pleading standards are too lenient, concerns arise that opportunistic plaintiffs without meritorious claims will force innocent parties to endure the burdens of litigation and, perhaps, extract a nuisance settlement from a cost-conscious defendant who would rather pay to make the case go away.

For the first seventy years of the Federal Rules of Civil Procedure, pleading standards were widely viewed as "well established" and "relatively straightforward." (3) But today, federal pleading standards are in crisis, thanks to two recent Supreme Court decisions--Bell Atlantic Corp. v. Twombly (4) in 2007 and Ashcroft v. Iqbal (5) in 2009. Before these decisions, federal courts followed an approach known as notice pleading, because the plaintiff's complaint must merely "give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests." (6) In Twombly, however, the Supreme Court appeared to endorse a new paradigm--plausibility pleading (7)--that would impose higher burdens on plaintiffs at the pleadings phase. Twombly involved a massive antitrust class action that hinged on whether the defendants had agreed amongst themselves to restrain competition. The Court dismissed the claim because the complaint lacked allegations "plausibly suggesting" that such an agreement had occurred. (8)

Twombly has been so influential that it is already among the most frequently cited Supreme Court decisions of all time. (9) It has garnered considerable scholarly attention as well. (10) The debate over pleading standards that Twombly inspired has only intensified after last Term's five-to-four decision in Ashcroft v. Iqbal. Relying heavily on Twombly, the Iqbal majority dismissed a civil rights complaint filed against former Attorney General John Ashcroft and FBI Director Robert Mueller by a Pakistani man who had been detained during the weeks following the September 11th attacks. Iqbal held that discriminatory animus on the part of Ashcroft and Mueller was "not a plausible conclusion" in light of the complaint's allegations, emphasizing that the inquiry into plausibility is "a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." (11)

Twombly's approach to pleading has been widely criticized as inconsistent with prior Supreme Court decisions, contrary to the text of the Federal Rules of Civil Procedure, and having destructive policy consequences in terms of litigants' access to the federal courts. Concerns about Twombly have been exacerbated by Iqbal, which eliminated any hope that Twombly might be narrowly confined to complex antitrust cases. (12) The current discourse, however, threatens to make Iqbal's (and Twombly's) effect on pleading standards a self-fulfilling prophecy, Iqbal's critics excoriate the Court for discarding the lenient, pre-Twombly approach. Iqbal's supporters praise the Court for doing precisely that. (13) But little attention is given to whether this is, in fact, the correct way to read these cases. (14)

This Article challenges the conventional wisdom that Iqbal and Twombly run roughshod over a half-century's worth of accumulated wisdom on pleading standards. When one reads Iqbal and Twombly in tandem with their textual and precedential context, two principles emerge. First, the most significant pre-Twombly authorities are still good law. The only aspect of prior case law that Twombly and Iqbal set aside was a misunderstood fifty-year-old phrase whose real meaning was never called into question. (15) Second, the primary inquiry at the pleadings phase is not a claim's "plausibility," but rather whether a necessary element of a plaintiff's claim is alleged in the form of a "mere legal conclusion." Indeed, the plausibility inquiry can be avoided entirely. As long as a complaint contains nonconclusory allegations for every element of a claim for relief, it passes muster regardless of whether the judge might label the allegations implausible. Plausibility comes into play only when an allegation necessary to the plaintiff's claim is disregarded as conclusory (or is missing entirely). The inquiry then becomes whether the remaining, nonconclusory allegations make it plausible that an actionable claim exists. (16)

In short, only conclusoriness is a basis for refusing to accept the truth of an allegation; implausibility is not. The key question going forward, therefore, is how to assess whether an allegation may be disregarded as conclusory under the Iqbal framework. One answer is to define conclusory in transactional terms: an allegation is conclusory only when it fails to identify adequately the acts or events that entitle the plaintiff to relief from the defendant. What made the crucial allegations in Iqbal and Twombly impermissibly "conclusory" were legitimate (though certainly debatable) questions about whether those allegations were grounded in a series of real-world events. An allegation cannot, however, be deemed conclusory merely because the truth of that allegation is not suggested by some other allegation in the complaint. Such an approach would essentially require pleadings to contain evidentiary support for the allegations contained therein, which would be flatly inconsistent with pre-Twombly precedent and the text and structure of the Federal Rules. It would also be conceptually unworkable, because each new allegation offered to support an earlier allegation would itself require support; if taken to its logical extent, an evidentiary approach imposes on courts an endless cascade of inquiry that can never be satisfied. A transactional-narrative approach, on the other hand, explains why the familiar exemplars of the notice pleading era are permissible, (17) but the complaints in Iqbal and Twombly arguably fall short. (18) It is therefore able to maintain consistency with both the text of the Federal Rules and the Supreme Court's pre-Twombly pleading decisions, while avoiding the unfortunate policy consequences that many critics of Twombly and Iqbal fear.

These arguments should not be read as praise for the Court's decisions in Twombly and Iqbal. At best, Twombly and Iqbal appear to be result-oriented decisions designed to terminate at the earliest possible stage lawsuits that struck the majorities as undesirable. (19) And it was irresponsible for the Court to invite the controversial "plausibility" concept into pleading doctrine in a way that has led to such widespread confusion. Courts should not, however, compound these problems by misreading Twombly and Iqbal to drastically change federal pleading standards going forward.

Part I of this Article describes federal pleading standards before Twombly, and then summarizes the Supreme Court's reasoning in both Twombly and Iqbal. Part II describes the conventional understanding that Twombly and Iqbal make "plausibility" the principal inquiry at the pleadings phase, and argues that such an approach would indeed be problematic. Part III argues that properly understood, the post-Iqbal pleading framework is not fundamentally in conflict with notice pleading, because the most significant pre-Twombly authorities on federal pleading remain good law and because the troublesome plausibility standard is rendered irrelevant when a plaintiff provides nonconclusory allegations for each element of a claim. Part IV focuses on Iqbal's most pressing doctrinal question--how to determine whether a particular allegation may be disregarded as "conclusory," i.e., a mere legal conclusion. It argues that defining conclusory in transactional terms would reconcile Twombly and Iqbal with binding pre-Twombly authority, and rejects the idea that allegations are conclusory just because they lack evidentiary support at the pleadings phase. It then proposes a new paradigm--plain pleading--that provides a textual foundation for this approach. While line-drawing challenges will inevitably remain, these challenges would persist even under a traditional notice-pleading framework. Part V develops a deeper theory of the role pleadings ought to play in civil adjudication, and confronts the relationship between pleading standards and discovery costs that drives so much of the contemporary debate.

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