Plausible Denial: Should Congress Overrule Twombly and Iqbal?
In Bell Atlantic Corp. v. Twombly and Ashcroft v. Iqbal, the United States Supreme Court reinterpreted Rule 8 of the Federal Rules of Civil Procedure and announced a new standard by which pleadings for civil suits in federal district courts should be judged. The Court explicitly rejected the notion expressed fifty years earlier in 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” and imposed a “plausibility” standard that every federal pleading must meet.
In Plausible Denial, Mark Herrmann and James Beck debate with Professor Stephen Burbank whether this plausibility standard is a proper “recalibration” of the pleading rules or an illegitimate “innovation” and whether Congress would be wise to overrule it. In their Opening Statement, Herrmann and Beck argue that the drafters of the Federal Rules intentionally left Rule 8 ambiguous. The creation of new federal rights, liberalization of class action rules, and massive escalation of discovery costs warranted the retirement of the “no set of facts” language from the Court’s earlier interpretation of Rule 8. In their view, the new course set by the Supreme Court is the proper one.
In Rebuttal, Burbank asserts that the pleading standard imposed by Twombly and Iqbal finds no support in the views of the drafters of the Federal Rules. Moreover, because it circumvented the rulemaking procedures established by the Rules Enabling Act, the Court was not well positioned institutionally to evaluate the procedural costs and benefits of the new plausibility standard. Legislation to restore the status quo, he argues, is necessary to provide sufficient time to consider change in a thoughtful and deliberate way through the democratic processes of rulemaking and legislation.
Pleading Standards After Iqbal
The Supreme Court recently clarified the standards for courts to assess complaints upon motions to dismiss. The Court recalibrated a pendulum that has been swinging for 100 years—and the new course is the proper one. The Supreme Court got this one right, and Congress should not trump the Court’s decision.
When the Federal Rules of Civil Procedure were adopted in 1938, they changed existing rules for pleading claims. Beginning in 1915, the Federal Rules of Equity had required a complaint to give “a short and simple statement of the ultimate facts upon which the plaintiff asks relief.” Fed. R. Eq. 25 (1912) (repealed 1937), reprinted in James Love Hopkins, The New Federal Equity Rules 158 (1912). So-called “Code pleading,” adopted in many states, required only a “statement of facts” to support a plaintiff’s claim.
These standards gave rise to Federal Rule of Civil Procedure 8 in 1938. The Federal Rules unified law and equity. They also removed distinctions between “evidentiary” facts, “ultimate” facts, and “legal conclusions” in complaints. New Rule 8(a)(2) required plaintiffs to provide “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). It still does.
But what does that mean? Are those words inconsistent with the holdings in Twombly and Iqbal that Rule 8 requires sufficient factual allegations that, if accepted as true, “state a claim to relief that is plausible on its face”? Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007); Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009).
The obvious answer is “no.” Rule 8 was intentionally ambiguous. The primary draftsman of the 1938 Rules, Charles Clark, explained that “we made a generalized statement in the rules” and “to one judge” a short and plain statement of the claim “may require much more than it does to others.” Am. Bar Ass’n, Rules of Civil Procedure for the District Courts of the United States 220 (William W. Dawson ed. 1938). That generalized statement worked as expected. Some courts required more detailed pleadings than others. Compare, e.g., Patten v. Dennis, 134 F.2d 137, 138 (9th Cir. 1943) (holding that Rule 8 requires “a statement of facts showing (1) the jurisdiction of the court; (2) ownership of a right by plaintiff; (3) violation of that right by defendant; [and] (4) injury resulting to plaintiff by such violation”), with Chicago & Nw. Ry. v. First Nat’l Bank of Waukegan, 200 F.2d 383, 384 (7th Cir. 1952) (employing language later used in Conley v. Gibson, 355 U.S. 41 (1957)).
1955, the Advisory Committee rejected an amendment to Rule 8(a)(2) that
would have required plaintiffs to state “facts constituting a cause
of action.”See Robert G. Bone, Twombly, Pleading
Rules, and the Regulation of Court Access, 94 Iowa L. Rev. 873,
893 n.109 (2009). It did so not to endorse fact-free pleading,
but rather because the Committee already viewed existing Rule 8(a)(2)
as requiring “the pleader to disclose adequate information as the
basis of his claim for relief as distinguished from a bare averment
that he wants relief and is entitled to it.” Advisory Comm. on Rules
for Civil Procedure, Report of Proposed Amendments to the Rules of Civil
Procedure for the United States District Courts 18-19 (1955), available
In 1957, the Supreme Court weighed in, offering in Conley v. Gibson, 355 U.S. 41 (1957), an extremely liberal interpretation of Rule 8. Conley contained dictum that a complaint should not be dismissed “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.” Id. at 45-46. This phrasing invited abuse, since hypothetical “set[s] of facts” not even pleaded could prevent dismissal. Taken literally, the Conley dictum could make it impossible for a defendant to win a motion to dismiss, thus rendering Federal Rule of Civil Procedure 12 a nullity.
Some courts declined to read Conley literally and continued to hold “that legal conclusions need not be accepted as true on 12(b)(6) motions” and “that pleaders are not entitled to unreasonable factual inferences.” Edward A. Hartnett, Taming Twombly, 158 U. Pa. L. Rev. (forthcoming 2010) (manuscript at 16), available at http://ssrn.com/abstract=1452875. They continued to dismiss complaints that plainly lacked merit.
Meanwhile, times continued to change. After 1957, Congress created many new statutory rights, see, e.g, Civil Rights Act of 1964, Pub. L. No. 88-352, 78 Stat. 241 (codified as 42 U.S.C. §2000 (2006)); Age Discrimination in Employment Act of 1967, Pub. L. No. 90-202, 81 Stat. 602 (codified as 29 U.S.C. §621–34 (2006)), and the Supreme Court recognized others of constitutional dimension, see, e.g., Bivens v. Six Unknown Named Agents of Fed. Bureau of Narcotics, 403 U.S. 388 (1971). The Federal Rules also evolved. In 1966, Rule 23 was liberalized, hugely expanding class action litigation. See, e.g., 1 Albe Conte & Herbert Newberg, Newberg on Class Actions §1:1 (4th ed. 2002) (documenting the “explosion” in mass tort and class action litigation in last two decades). In 1970, “substantial changes” were made to the discovery rules that broadened discovery beyond anything that existed when Conley was decided—e.g., the “good cause” prerequisite to document production was eliminated. See Proposed Amendments to the Federal Rules of Civil Procedure Relating to Discovery, 48 F.R.D. 487, 487 (1970). The Conley Court could not have foreseen these changes nor possibly have contemplated electronic discovery and its deployment as a weapon of mass expense. See The Sedona Conference, The Sedona Principles: Best Practices Recommendations & Principles For Addressing Electronic Document Production 17 (2d ed. 2007) (stating that unrestrained “transaction costs due to electronic discovery will overwhelm the ability to resolve disputes fairly in litigation”).
An example from our own prior litigation experience is illustrative. In the 1990s, companies in the orthopedic bone-screw industry competed fiercely in the marketplace and regularly took each other to court over intellectual property issues. The industry’s products were used by physicians in standard-of-care spinal surgery.
When organized plaintiffs chose to attack this industry (and its physician customers), they tried to undercut the existing standard of care for surgery. They filed hundreds of complaints alleging: (1) that the entire industry joined a conspiracy to defraud physicians and (2) that the industry, all of the leading medical societies, and certain physicians conspired to defraud other physicians, thus misleading the entire medical profession.
Confronted with one such complaint—naming more than 100 defendants, including many individual physicians—Judge Milton Shadur dismissed it sua sponte. Jarmasek v. AcroMed Corp., No. 95-7095, 1995 WL 733466, at *2 (N.D. Ill. Dec. 8, 1995). In his words, some allegations would “seem very likely to be demonstrably false” and the inclusion of certain defendants—“particularly, though not exclusively, the individual defendants”—“would seem highly problematic.” Id.
But another judge, overseeing multidistrict litigation, first permitted the complaints to be amended and then allowed much of the amended complaints to survive motions to dismiss. In re Orthopedic Bone Screw Prods. Liab. Litig., No. MDL 1014, 1997 WL 186325, at *17 (E.D. Pa. Apr. 16, 1997). Although the manufacturers and medical societies (e.g., the American Academy of Orthopedic Surgeons) argued that physicians’ lectures at medical conferences constitute scientific speech fully protected by the First Amendment, the court found them to be only “commercial speech” because plaintiffs “characterize the seminars as ‘Tupperware parties’ and ‘sales events.’” Id. at *16.
ruling inflicted significant collateral damage. Hundreds of pending
lawsuits jeopardized some physicians’credit and ability to obtain
mortgages. One physician defendant died, and his widow and young
children had to fight to obtain their inheritance out of probate.
And, of course, all the defendants suffered the financial and practical
burdens inflicted by massive discovery arising from these fanciful allegations.
Needless to say, none of those complaints ever came close to trial,
and they were eventually dismissed on summary judgment. See
James M. Beck & John A. Valentine, Challenging
the Viability of FDCA-Based Causes
of Action in the Tort Context: The Orthopedic Bone Screw Experience,
55 Food & Drug L.J. 389, 410-11 (2000). But these allegations
of nearly universal conspiracy—without any facts supporting the core
conspiracy allegations—created millions of dollars of unnecessary
This type of out-of-control litigation prompted the Supreme Court in Twombly to adjust the threshold pleading requirements for unleashing the legal process. See 550 U.S. at 558 (“A district court must insist upon some specificity in pleading before allowing a potentially massive factual controversy to proceed.” (internal quotation marks omitted)). The Court reminded the judiciary that Rule 8(a) “requires a ‘showing,’ rather than a blanket assertion, of entitlement to relief.” Id. at 555 n.3. Under Twombly, a complaint must contain the following:
- “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do,” id. at 555;
- “[f]actual allegations... enough to raise a right to relief above the speculative level,” id.;
- “enough fact to raise a reasonable expectation that discovery will reveal evidence of [liability],” id. at 556;
- “allegations plausibly suggesting (not merely consistent with) [liability],” id. at 557;
- “either direct or inferential allegations respecting all the material elements necessary to sustain recovery under some viable legal theory,” id. at 562 (internal quotation marks omitted); and
- “enough facts to state a claim to relief that is plausible on its face,” id. at 570.
The liberal Conley “no set of facts” dictum had “earned its retirement” because too many courts had allowed “wholly conclusory statement[s] of claim” to survive “whenever the pleadings left open the possibility that a plaintiff might later establish some ‘set of [undisclosed] facts’ to support recovery.” Id. at 561-63 (second alteration in original).
Two years later, in Iqbal, the Court made clear that the adjusted pleadings standard applied to all complaints, not just to the antitrust claims involved in Twombly. In any context, “conclusory” allegations are “disentitle[d]... to the presumption of truth.” 129 S. Ct. at 1951.
We applaud this development.
First, Twombly and Iqbal are proper exercises of judicial power. One of the Supreme Court’s jobs is to interpret the Federal Rules. It is a reasonable choice to emphasize less that a complaint should be “short” and more that it must include a “showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2).
Second, Twombly and Iqbal are right on the law. The rules should require “plausible” allegations. Why should implausible litigation be allowed? Likewise, claims should have to pass a “more than speculative” test. Anything less simply invites expensive fishing expeditions. As for “labels,” “conclusions,” and “formulaic recitations”—the better-reasoned decisions did not credit them even under Conley. The rules are not designed to reward lazy lawyers whose primary litigation tool is the word processor. In short, there is nothing unreasonable about the pleading requirements that the Court articulated. We should celebrate that the Supreme Court has settled on a standard that permits only “plausible,” non-“speculative” claims with a “reasonable expectation” of success to inflict on defendants the enormous cost of discovery and the other collateral damages of litigation.
Third, Twombly and Iqbal are the right policy. All fair observers acknowledge the skyrocketing cost of discovery. Some argue that the nature of the judicial process guarantees that judges cannot control discovery costs once litigation has commenced. See, e.g., Frank H. Easterbrook, Discovery as Abuse, 69 B.U. L. Rev. 635, 638-39 (1989) (“A magistrate supervising discovery does not—cannot—know the expected productivity of a given request, because the nature of the requester’s claim and the contents of the files (or head) of the adverse party are unknown.”). Every incentive exists for plaintiffs to abuse discovery because many defendants choose settlement when faced with its high cost. It is entirely proper to prevent plaintiffs who cannot state even “plausible” claims from inflicting massive discovery costs on defendants—and on society.
Fourth, courts have no legitimate basis for favoring plaintiffs when interpreting pleading standards. A just system does not pick sides in advance, but instead establishes neutral rules. We reject the normative view that it is somehow “better” to let unmeritorious cases proceed than to risk that meritorious cases will be dismissed. Either way represents error, and neither error is inherently better than the other. Indeed, given the enormous transaction costs that litigation entails, Type II errors (false negatives) are probably preferable to Type I errors (false positives) from a purely economic perspective.
Finally, we are heartened by the recent statement of three justices:
[T]here is considerable force to the argument that a hearing in which the trial court [imposes the cost of class notice on a defendant, but] does not consider the underlying merits of the class-action suit is not consistent with due process because it is not sufficient, or appropriate, to protect the property interest at stake.
DTD Enters., Inc. v. Wells, No. 08-1407, 2009 WL 3255157, at *1 (U.S. Oct. 13, 2009) (Kennedy, J., concurring in denial of certiorari). The same reasoning equally applies to all litigation costs.
Potentially meritorious claims by plaintiffs should not lightly be dismissed. But implausible claims, unsupported by facts, should be screened out to avoid inflicting massive costs on innocent parties with essentially no procedural protection at all.
Congress should endorse the recent decisions in Twombly and Iqbal; it should not undo them.
The Supreme Court did not “clarify the standards for courts to assess complaints upon motions to dismiss” in its recent pleading decisions. It changed them. It did so, moreover, through a process that was illegitimate and inadequate given the statutory requirements of the Rules Enabling Act, 28 U.S.C. §2072 (2006), the stakes, and the Court’s woeful lack of both information and experience regarding the important issues of public policy implicated. Those issues include, in addition to the costs of meritless litigation that Mr. Herrmann and Mr. Beck emphasize, access to court, the right to a jury trial, whether our society remains committed to private litigation as a means of securing compensation for injury and enforcing important social norms, and whether, if we retreated from that commitment, we would provide alternatives.
The drafters of the Federal Rules objected to fact pleading because it led to wasteful disputes about distinctions that they thought were arbitrary or metaphysical, too often cutting off adjudication on the merits. As Edgar Tolman, who bore major responsibility for explaining the proposed Federal Rules to Congress, put it, “In these rules there is no requirement that the pleader must plead a technically perfect ‘cause of action’ or that he must allege ‘facts’ or ‘ultimate facts.’” Rules of Civil Procedure for the District Courts of the United States: Hearings on H.R. 8892 Before the H. Comm. on the Judiciary, 75th Cong. 94 (1938) [hereinafter Hearings]. They also believed that pleading was a poor means to expose the facts underlying a legal dispute, a role that could better be played by discovery. See id. at 98.
Notice pleading was an important architectural element of a private enforcement regime that was created by the federal judiciary pursuant to congressional delegation. Once entrenched through Conley v. Gibson, 355 U.S. 41 (1957), it became part of the background against which Congress legislated, creating many of the new statutory rights mentioned by Mr. Herrmann and Mr. Beck. What they do not mention is the significance that Congress may have accorded notice pleading—and the easy access it affords—when enacting statutes with pro-plaintiff fee-shifting provisions or multiple damages provisions, which are clear signals of congressional purpose to use private civil litigation as a means of enforcement.
The attempt to defend Twombly from criticism by arguing that one judicial interpretation merely replaced another is not persuasive. First, it is difficult to find Twombly’s (let alone Iqbal’s) standards in the relevant work of Charles Clark, the chief architect of the pleading rules, and it is difficult to separate his views from those of the Advisory Committee on which he served as Reporter. Second, as Tolman testified, the original Advisory Committee found “thousands of cases that have gone wrong on dialectical, psychological and technical argument as to whether... certain allegations were allegations of ‘fact’ or were ‘conclusions of law.’” Hearings, supra, at 94. Third, a generally applicable requirement of “plausibility” is unquestionably an innovation. Fourth, the Court has told us that “we are bound to follow [a Federal Rule] as we understood it upon its adoption, and... we are not free to alter it except through the process prescribed by Congress in the Rules Enabling Act.” Ortiz v. Fibreboard Corp., 527 U.S. 815, 861 (1999). Clark’s pertinent statements about Rules 8 and 12 aside, if one insists on better evidence of the Court’s original understanding than Conley, there are (1) Hickman v. Taylor, 329 U.S. 495, 501 (1947) (“The new rules, however, restrict the pleadings to the task of... notice-giving....”); (2) Tolman’s 1938 testimony to Congress; and (3) explanations of the new Federal Rules by members of the Advisory Committee at educational events that were held for the practicing bar in 1938. See, e.g., Am. Bar Ass’n, Federal Rules of Civil Procedure: Proceedings of the Institute at Washington, D.C. and of the Symposium at New York City 241, 308 (Edward H. Hammond ed., 1938).
Comparing the role that the drafters of the Federal Rules envisioned for pleading, and what they thought could fairly be demanded of plaintiffs filing complaints, with the new world celebrated by Mr. Herrmann and Mr. Beck leaves no doubt that the Court in Twombly and Iqbal ignored previous acknowledgments that it has “no power to rewrite the Rules by judicial interpretation.” Harris v. Nelson, 394 U.S. 286, 298 (1969). Nor should there be any mystery why the Court proceeded as it did.
Notwithstanding the Court’s embrace of notice pleading in Hickman and Conley, some lower federal courts determined that certain types of cases should be subject to heightened pleading requirements. In two decisions that Mr. Herrmann and Mr. Beck do not mention, the Supreme Court rejected such judge-made rules as inconsistent with the Federal Rules and with the principle that the Federal Rules can be changed only through the Enabling Act process or by statute. See Swierkiewicz v. Sorema N.A., 534 U.S. 506, 515 (2002); Leatherman v. Tarrant County Narcotics Intelligence and Coordination Unit, 507 U.S. 163, 168 (1993). Yet, the technique persisted even after Swierkiewicz, and by this time it bordered on lawlessness.
the same period efforts were made again (as they were prior to Conley)
to secure amendments to the Federal Rules that would implement some
form of fact pleading. Because such amendments would obviously
and directly implicate access to court and the enforcement of substantive
rights and rulemaking in the area would attract intense interest group
activity (on both sides) and lead to intense controversy in Congress,
the Advisory Committee (on a number of occasions) quickly determined
not to proceed. See, e.g., Civil Rules Advisory Comm., Minutes:
September 7-8, 2006, at 22-24, http://www.uscourts.gov/
In initiating change through its power to decide cases and controversies, however, the Court lacked the information and diverse perspectives that the rulemaking process affords. As a result, the Court was not well positioned institutionally to evaluate the procedural costs and benefits of tightening the pleading screws on plaintiffs in the isolated substantive law contexts involved in those cases. Acting under Article III, it was even less well positioned to estimate the procedural costs and benefits of a general rule of plausible pleading, let alone the broader social costs and benefits of such a rule.
Numerous policy questions presented by Twombly and Iqbal would have benefited from the fruits of empirical research. Consider as an example the Twombly Court’s discussion of the costs of discovery. Eschewing any reference to systematic as opposed to anecdotal data, the majority relied to a great extent on an article by Judge Easterbrook that is heavy on theory and light on facts. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 559 (2007) (citing Frank Easterbrook, Discovery as Abuse, 69 B.U. L. Rev. 635 (1989)). Not only was that article’s analysis predicated on a law and economics model of “impositional discovery,” it was published in 1989, before substantial changes to the discovery rules in 1993, 2000, and 2006 that the Twombly Court did not mention. Moreover, empirical research aside, many of the policy questions implicated in Twombly and Iqbal would have benefited from a base of experience with federal trial court litigation broader than that possessed by the members of the Supreme Court, almost all of which predated Justice Stevens’s appointment in 1975.
Herrmann and Mr. Beck evidently have more federal litigation experience
than the members of the Court. Unfortunately, however, (1) they
use it as an excuse to pad their Opening Statement with anecdotes said
to be representative of the “type of out-of-control litigation [that]
prompted... Twombly,” and (2) they show no more interest in
systematic data than did the Court in Twombly. Indeed,
remarkably, they claim that “[a]ll fair observers acknowledge the
skyrocketing cost of discovery.” In fact, empirical research on discovery
conducted over thirty years has not demonstrated that it has been a
problem in more than a small slice of litigation. Moreover, an
October 2009 Federal Judicial Center survey of attorneys in recently
closed civil cases hardly supports the story of ubiquitous abuse or
“skyrocketing cost.” Emery G. Lee III & Thomas E. Willging,
Federal Judicial Center National, Case-Based Civil Rules Survey 40 (2009),
available at http://www.fjc.gov/
It has been said that although it may be easy to lie with statistics, it is easier to lie without them. The process of adjudication permitted the Court to avoid some inconvenient truths that the Enabling Act process would have revealed and thereby to realign itself with business and business lawyers, just as Professor Robert Gordon predicted:
Careful studies demonstrate that the “litigation explosion” and “liability crisis” are largely myths and that most lawyers’ efforts go into representing businesses, not individuals; unfortunately, those studies have had no restraining effect on this epidemic of lawyers’ open expression of disdain for law. It may be, however, that business lawyers’ identification with law and the courts may rise again with the recent revival of business-friendly jurisprudence in the Supreme Court.
Robert W. Gordon, The Citizen Lawyer—A Brief Informal History of a Myth with Some Basis in Reality, 50 Wm. & Mary L. Rev. 1169, 1199 (2009) (footnotes omitted).
The Court did not know nearly enough to remake federal pleading law through the process of adjudication, which is one reason why Mr. Herrmann and Mr. Beck’s blessing of the Court’s decisions cannot be taken seriously. At the end of the day, a normative assessment of these decisions and the problems that they address should depend on a careful identification and comparison of the costs and benefits of the litigation system to which notice pleading—accompanied by the opportunity for broad discovery—contributed and the proposed replacement, as well as consideration of alternative institutional avenues of change. One need not reach the former steps, however, in order to conclude that Twombly and Iqbal were serious mistakes. For, as I have demonstrated, there are many reasons to deplore the use of litigation as opposed to rulemaking or legislation as the vehicle for change, whether one is concerned about the process that should be used before important public policy decisions are made or about democratic accountability.
course, no one knows nearly enough about the impact of Twombly
and Iqbal to state with confidence that they have effected or
will effect a radical change. Yet, there already are many decisions
recognizing that complaints have been dismissed that would not have
been dismissed previously, and early empirical work suggests a disproportionately
adverse impact on the usual victims of “procedural” reform—civil
rights, including employment discrimination, plaintiffs. See
Has the Supreme Court Limited Americans’
Access to Courts? Hearing Before the S. Comm. on the Judiciary,
111th Cong. (2009) (testimony of Stephen B. Burbank, Professor, University
of Pennsylvania Law School), available at http://judiciary.senate.gov/
Because the Supreme Court’s recent pleading decisions are at odds with premises underlying the Federal Rules, with precedent, and with congressional expectations, and because those seeking access to the federal courts should not have to bear the risk of irreparable injury as a result of improvident Supreme Court decisions, legislation to restore the status quo is necessary and appropriate. Once such legislation is in place, it will be time to consider change in a thoughtful and deliberate way through the more democratic processes of rulemaking and legislation. As suggested, the focus of the inquiry should be discovery, not pleading.
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