Professor of Law and Robert Kent Professor in Civil Procedure, Boston University School of Law. I would like to thank workshop participants at The University of Texas School of Law and Boston University School of Law as well as colloquium participants at the University of Houston Law Center. Special thanks to Mitch Berman, Kris Collins, Ian Farrell, Lonny Hoffman, Keith Hylton, Alexi Lahav, David Marcus, David Rosenberg, Ken Simons, and Patrick Woolley, and to Anthony Dutra for his able research assistance. ç
Pleading rules are once again a hot topic in civil procedure circles. At the end of its 2007 Term, the Supreme Court decided three pleading cases,1and in June 2008, the Court granted certiorari in another case that raises pleading issues.2 In what is surely the most controversial of these decisions, Bell Atlantic Corp. v. Twombly, the Court held that to survive a motion to dismiss, antitrust class action plaintiffs must state facts in their complaint sufficient to support a "plausible" inference of conspiracy.3 Many judges and academic commentators read the decision as overturning fifty years of generous notice pleading practice, and critics attack it as a sharp departure from the "liberal ethos" of the Federal Rules, favoring decisions "on the merits, by jury trial, after full disclosure through discovery."4
This reaction is not surprising. In a society that relies heavily on the courts for rights vindication and social reform, the distribution of litigating power is vital to the distribution of social and political power.5 As a result, rules that regulate court access often trigger intense controversy, especially Page 876 when they make it more difficult for plaintiffs to sue.6 In civil procedure, for example, debates in the nineteenth century focused on the technical obstacles created by common law pleading, and in the early twentieth century on similar problems with code pleading.7 More recently, Rule 11 penalties and heightened pleading requirements have been the major targets of concern.8
This Article situates the Supreme Court's Twombly decision in this broader framework. It views Twombly not so much as a pleading decision but rather as a court access decision, one that addresses a general problem of institutional design: how best to prevent undesirable lawsuits from entering the court system. From this broader perspective, screening more aggressively at the front door by demanding more from the complaint is just one approach, with its own costs and benefits, and should be evaluated relative to other alternatives. It makes no sense, for example, to strengthen pleading requirements if the same result can be achieved much better by bolstering Rule 11 sanctions, placing stricter limits on discovery in complex cases, shifting fees, or allowing truncated summary judgment determinations based on targeted and phased discovery.
The Supreme Court is in a poor position to make these choices in individual cases. Even conceding broad latitude for interpretation, the Page 877 Justices cannot, for example, put teeth into Rule 11 at odds with its clear language or substantially alter the discovery rules. If these options are desirable, they must be implemented through the established process for making and amending the Federal Rules of Civil Procedure.9 Moreover, some alternatives, such as fee-shifting, might require congressional action because of the Rules Enabling Act's prohibition on Federal Rules that "abridge, enlarge or modify any substantive right."10
Given these limitations, the Court would be well advised to exercise restraint in adapting existing Federal Rules to screen cases more aggressively. And that is just what it has done. In fact, as I argue below, the Supreme Court's decision in Twombly does not alter pleading rules in as drastic a way as many of its critics, and even some of its few defenders, suppose.
This is a critical time to examine these issues. Twombly has already had a major impact. The case was cited a startling 4000 times during the first nine months after it was decided,11 and the Supreme Court's grant of certiorari in Ashcroft v. Iqbal sets the stage for a possible clarification of the plausibility standard.12 The Committee on Rules of Practice and Procedure discussed Twombly's impact at its January 2008 meeting,13 and scholarly commentary promises to continue for some time to come.14 Page 878
The remainder of this Article is divided into four Parts. Part II examines the Twombly decision with care. It argues that, contrary to much criticism of the case, the Court's plausibility standard marks only a modest departure from notice pleading. Properly interpreted, it requires no more than that the allegations describe a state of affairs that differs significantly from a baseline of normality and supports a probability of wrongdoing greater than the background probability for situations of the same general type.
Part III places Twombly in historical perspective. It describes the genesis of Rule 8(a), the federal pleading rule, and argues that Twombly's pleading standard neither signals a return to code fact pleading nor represents a sharp break from the vision of the 1938 Federal Rule drafters, as some critics have argued.15 The drafters were pragmatists, who assumed that procedural rules would be "continually changed and improved" as litigation conditions changed.16 Twombly reflects a similar pragmatism.
Part IV addresses the normative issues involved in designing optimal pleading and case-screening rules. In what is perhaps the most important part of the Twombly opinion, the Court concedes, in the clearest possible way, that trial judges are likely to have difficulty managing complex litigation on a case-specific basis given informational and strategic constraints. Part IV argues that the Twombly Court is correct to question the efficacy of case-specific discretion and that this calls for consideration of more rule-based approaches, such as strict pleading. Moreover, the shift from discretion to rule forces explicit attention to the normative issues involved in constructing an optimal system.
In analyzing these normative issues, Part IV begins, in Section A, by considering whether a thin version of Twombly's plausibility standard is required by a process-based principle of fairness as reason-giving. Section B then considers pleading rules that require more factual detail than thin plausibility, including the heightened level of specificity that critics of Twombly fear lower courts might require. These stricter rules must be justified, if at all, on outcome-based grounds as tools to screen undesirable lawsuits.
Section B also highlights four central points, often overlooked, that are crucial to an outcome-based analysis. First, any such analysis must choose between utilitarian and rights-based metrics for evaluating outcome quality. These two metrics weigh costs and benefits differently and have different implications for regulatory choices. Second, it is also important to define the case-screening goal clearly. In particular, there is a crucial difference between screening meritless suits and screening weak suits that nonetheless have merit. Third, it is important to identify the cause of undesirable filings Page 879 as precisely as possible. The Twombly Court and many commentators assume cost asymmetry is the principal cause, but informational asymmetry is likely to have a much stronger effect, and informational asymmetry requires a different response. Finally, it is important to consider all regulatory options, not just strict pleading, to compare the costs and benefits of each, and to choose the combination that best addresses the problem given its most likely cause.
Part V concludes by drawing the different strands together and highlighting two important general lessons. First, adjustments to pleading burdens require a global and systemic analysis that is possible only through the formal committee-based rulemaking process or through Congress, and not by common law adjudication or creative interpretation of the Federal Rules. Second, any approach to regulation of court access should be substance-specific so that it can take account of the different cost-benefit tradeoffs for different types of cases.
Bell Atlantic Corp. v. Twombly was a consumer antitrust class action brought against local telephone and telecommunications carriers, alleging a conspiracy in violation of section 1 of the Sherman Act.17 To understand the allegations, one must know something about the history of the telephone industry.18 In 1984, the American Telephone & Telegraph Company ("AT&T") was ordered to divest its local telephone business.19 The local business was taken over by regional monopolies, known as incumbent local exchange carriers ("ILECs").20 In 1996, Congress forced the ILECs to share their networks with competing companies seeking entry into the local markets. These competing companies are known as competitive local exchange carriers ("CLECs").21