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Supreme Court Alters 12(b)(6) Standards
May 21, 2007 3:15 PM   Subscribe

The Supreme Court issued its opinion Bell Atlantic Corp. v. Twombly [pdf] today. Although superficially an antitrust case, the Court examined the standard of review under 12(b)(6) and concluded that the old "no set of facts" standard should be officially retired.
posted by monju_bosatsu (34 comments total) 2 users marked this as a favorite

 
Translation?
posted by chillmost at 3:19 PM on May 21, 2007


This makes it easier to dismiss complaints at the pleadings stage.
posted by amber_dale at 3:24 PM on May 21, 2007


I... I... I don't understand. Break it down for the illawterate.
posted by boo_radley at 3:54 PM on May 21, 2007


Outstanding. Thanks for posting this!
posted by The World Famous at 4:08 PM on May 21, 2007


Just for the sake of clarity, this is a different Twombly then Lance Twombly, the U.S. Army Ranger.
____

boo, in Federal Court, a defendant can challenge the pleadings of the Plaintiff under Federal Rule of Civil Procedure 12(b)(6) and argue that the Plaintiff has failed to state a claim upon which relief can be granted. Basically, if you want to sue someone, you have to properly invoke the jurisdiction of the Court in several ways, including suing for something that the Court has power to hear.

Basically, it's "You can't sue me for this." If you sue me because I hurt your feeling by not adding you as a contact, I could file a (Rule) 12(b)(6) motion arguing that you failed to state a claim upon which relief can be granted because a Court cannot grant you relief for such a claim. Or, more likely, say you wanted to sue me for fraud, but you couldn't show I ever made a false or misleading statement. Since a court could only grant relief for fraud if you show that I made a false or misleading statement--and you can not identify any--then the Court cannot grant relief and it can be thrown out in a 12(b)(6) motion.

There was an old Supreme Court case which had this language in it that a motion to dismiss under 12(b)(6) could be granted if and only if that the pleadings on their face show, beyond a doubt, that the plaintiff cannot prove any set of facts that would entitle it to relief on the claims in the petition. Some people have asserted this to mean that if Plaintiff could later come up with facts which would somehow show that the claim--as plainly written--could late be proved on those facts, then it cannot be granted. Most people have recognized the stupidity of that theory. The Court is basically saying you need to allege the facts in your petition that show your claim has merit. You can't rely on hypothetical facts for proof if those hypothetical facts are different than the one's alleged. You need facts consistent with what you plead to support the claim.

This is a major gloss on the subject, and there are nuances I ignored. But I was just trying to give a thrust of what this is all about for those unfamiliar with the topic.
posted by dios at 4:17 PM on May 21, 2007 [6 favorites]


I'm not really sure this is something that can be broken down for the general public! But I'll do my best (and humbly ask for corrections from the MeFi bar.)

To begin, one main rule of the game for plaintiffs in civil law cases is to see how quickly you can force your opponent to rack up litigation costs, incentivizing him to settle with you sooner rather than later. A defendant, on the other hand, wants to get a case dismissed as soon as possible so as to avoid paying for litigation costs.

There are two pre-trial stages where a case can be dismissed by the judge: a "Motion to Dismiss" (also called a "12(b)(6)") and a "Motion for Summary Judgment." This case is about The Motion to Dismiss usually comes at a much earlier stage in the litigation. This case is about Motions to Dismiss.

A Motion to Dismiss is *not* a determination of the facts, but rather says that plaintiff's intial complaint is legally defective. Because a Motion to Dismiss doesn't depend on finding any facts outside of the intial complaint, a defendant can avoid the biggest cost of litigation: gathering facts in the "discovery" process. Thus, winning a Motion to Dismiss is a big prize for defendants.

What Bell Atlantic v. Twombly seems to do is set a higher bar for plaintiffs for their initial complaints, making it easier for them to lose at this critical stage in the litigation. The Court has said, "Plaintiffs, you can't just expect us to infer illegal conduct from the story you give in your complaint. You have to include allegations of actual illegal conduct."
posted by footnote at 4:20 PM on May 21, 2007 [2 favorites]


Just to add on to what others have started (likewise, MeFi bar members please feel free to correct me on this):

There are two standards of pleading that courts generally use, which specify what needs to be set out in an initial pleading (i.e. a complaint).

The majority of courts follow what is called "notice pleading." Notice pleading is the lower of the two standards, requiring, essentially, only that the plaintiff set forth enough facts/allegations to put the defendant(s) on notice of the claims being asserted. I believe all federal courts and most states follow the notice pleading standard.

"Fact pleading" is the other standard. It is generally disfavored in American law, followed by only a small minority of states (including my new state, Oregon). Fact pleading requires a more detailed recitation of facts in order to have a sufficient pleading. Any claim that is recognized by the court will generally have certain elements that must be met in order to prevail. Fact pleading requires that a plaintiff, at a minimum, set forth some allegation that would satisfy each element of the claim. (Doesn't matter if the fact is ultimately proven false, so long as it was alleged in good faith.)

This opinion, to the extent I've glanced at it, seems to be making it just a little bit tougher to satisfy the notice pleading requirement. On balance, I don't think it matters too much. As a defendant's attorney, I frequently see complaints that are poorly pled in the extreme -- so much so that it's often hard to figure out what claims are being asserted. While these are often ripe for motions to dismiss, it's usually a pointless and expensive gesture, because even if you were to prevail on getting it dismissed, it would be dismissed without prejudice, which means the plaintiff could just re-write the complaint to meet the pleading standard and re-file. Hopefully this opinion will have some effect on attorneys doing a better job of drafting complaints, but I'll believe it when I see it.
posted by saladpants at 4:44 PM on May 21, 2007


But isn't there always some possible or desired relief available? I don't see how there isn't. There's no reason to go to court at all unless it's to get justice/redress/relief/payment for damages/etc.
posted by amberglow at 4:53 PM on May 21, 2007


The Court has said, "Plaintiffs, you can't just expect us to infer illegal conduct from the story you give in your complaint. You have to include allegations of actual illegal conduct."

Are there actually court cases that don't do this? (include allegations, i mean)
posted by amberglow at 4:55 PM on May 21, 2007


Scotusblog: The Supreme Court, in the first of five final decisions, ruled on Monday that claims of parallel business conduct are not sufficient to prove an antitrust conspiracy under Section 1 of the Sherman Act. The 7-2 decision came in the case of Bell Atlantic v. Twombly (05-1126).

Is "parallel business conduct" illegal or improper? (what does that even mean?) Does this apply to all court cases about anything or just antitrust cases?
posted by amberglow at 4:59 PM on May 21, 2007


The examples given are somewhat simplified, amberglow, but yes, it happens all the time. Or at least, it happens enough that--among lawyers and law students--12(b)(6) is the most well known subclause in all of the Federal Rules of Civil Procedure.
posted by Partial Law at 5:03 PM on May 21, 2007


Amber, in this case "parallel business conduct" means several businesses doing the same suspicious thing. Here, the "Baby Bells" were allowed to compete in each other's markets, but none of them did. The Plaintiffs alleged that this parallel conduct amounted to a conspiracy that would violate anti-trust laws. The lower court said this was sufficient to overcome a 12(b)(6) motion.
posted by Bulgaroktonos at 5:04 PM on May 21, 2007


ahhh

this Reuters article makes it clearer--the plaintiffs didn't submit any specific evidence of price fixing or direct action with or against competitors, etc, i guess. (that's weird tho--aren't class-action suits usually full of real evidence?)
posted by amberglow at 5:08 PM on May 21, 2007


Amberglow- sure there is. To bankrupt your opponents and force a settlement even if you know you can't win at trial, or hold them up in court long enough to accomplish some other real world goal- like releasing a movie while holding off obscenity suits.

saladpants- Prof. Scott Dodson of the University of Arkansas has this to say:

The Supreme Court, per Justice Souter (joined by the Chief Justice and Justices Alito, Breyer, Kennedy, Scalia, and Thomas), reversed the Second Circuit. The Court first explained that Conley’s requirement that the “grounds” of the claim be set forth is critical. It “requires more than labels and conclusions, and a formulaic recitation of the elements of a case of action will not do.” In short, some factual allegations must accompany the elements of a claim. ....
If the Court is saying that Rule 8 requires “notice-plus” pleading, then I think we shall see a sharp increase in Rule 12(b)(6) litigation on the sufficiency of fact pleading (which we may see anyway) and many more plaintiffs thrown out of court. If, on the other hand, the Court is saying that the combination of the § 1 requirements and the burdens on the defendant in this case justify requiring “notice-plus” pleading, then it is a troubling slippery slope that the Court heads down. Many other kinds of cases are “sprawling, costly, and hugely time-consuming,” as the Court describes this one. Mass torts, discrimination class actions, and a host of other causes of action require involved showings of proof (yet fall under Rule 8 rather than Rule 9) and have the potential to impose enormous costs on a defendant. The Court does not justify adequately, in my view, why the line is drawn at this case and not others.


It seems to me like the Court moved a lot closer to a fact standard. Souter stopped short of expressly requiring factual allegations to meet each element of a claim; but I feel the decision could be interpreted to require that standard, as the Court did not clearly state the new standard they are applying. I'm also not sure that a "notice-plus" standard is much different in practice than a fact standard. Souter only says the pleadings require "more than labels and conclusions," I read that to mean some most basic allegation of factual basis, even if later proved false. I don't see how a "notice-plus" or "something more" standard is much different from a "fact standard" that itself only requires a basic allegation of fact for each element, unless the difference is limited to a factual allegation "for each element" as opposed to an allegation as "grounds" for the whole claim.

They also did not categorically state that this new standard (whatever it is) applies outside of the antitrust context. I'm going to agree with the Professor that this decision should see an increase of 12(b)(6) claims arguing just that.

Also: IANAL (yet).
posted by T.D. Strange at 5:13 PM on May 21, 2007 [2 favorites]


What's the deal with class-action settlements? Some companies settle before, and some after they lose a court case, no?
posted by amberglow at 5:17 PM on May 21, 2007


Well, I just wrote a section in a reply brief I'm working on arguing that Plaintiffs failed to meet the requirements laid out by the Supreme Court in Twombly. I expect we should start seeing the impact of this decision shortly.
posted by monju_bosatsu at 6:07 PM on May 21, 2007


SOUTER, J., delivered the opinion of the Court, in which ROBERTS,
C. J., and SCALIA, KENNEDY, THOMAS, BREYER, and ALITO, JJ., joined. STEVENS, J., filed a dissenting opinion, in which GINSBURG, J., joined, except as to Part IV.


That PDF looks all old-timey, too.
posted by chlorus at 6:42 PM on May 21, 2007


If you told me [...] what a Twombly was, explained how they were related to one another, and explained why I should care about any of them, it might have been a decent post.

Basically, the ruling raises the bar yet higher for the party suing a corporation or other powerful entity when they are doing something wrong.
posted by Blazecock Pileon at 6:47 PM on May 21, 2007


Basically, the ruling raises the bar yet higher for the party suing a corporation or other powerful entity when they are doing something wrong.

Mwuhahahahaaa!
posted by monju_bosatsu at 6:52 PM on May 21, 2007


Amberglow: The Rule 12(b)(6) standard requires the Court to assume that all of the facts set forth in the plaintiff's complaint are true and then determine, assuming the truth of those allegations, whether the complaint states a legal claim on which relief can be based.

Let's say that I filed a complaint accusing you of having disagreed with me on Metafilter, with the intent of causing me emotional distress, and then following me around to different threads, disrupting my otherwise pleasant discussions with others. Even assuming that all of those facts are true, a court would likely rule that I had no legal redress against you -- i.e., my complaint had failed to state a claim (for intentional infliction of emotional distress, etc.).

The idea is that even on the facts as stated, some necessary legal element is missing from the case, or the case cannot proceed for some other fundmental legal defect.
posted by Slap Factory at 7:05 PM on May 21, 2007 [1 favorite]


Amberglow: The deal with class action is settlements is this:

(1) sometimes defendants have committed wrongs to a large number of similarly situated persons and offer them payment that is probably less than the plaintiffs would receive if they ultimately prevail at trial in exchange for dismissal of their claims;

(2) sometimes defendants have not committed wrongs to a large number of similarly situated persons but offer them a payment anyway in order to avoid the cost (attorneys fees, inconvenient discovery requests, negative publicity) and the risk (crushing liability of damages payments times the number of plaintiffs of taking a class action to trial; and

(3) sometimes defendants make a payment that is ostensibly to a class of similarly situated persons whom may or may not have been wronged by the defendants but is actually a payment that primarily benefits enterprising attorneys in order to secure dismissal of claims.

In any class action, so long as court finds that the plaintiffs who bring a lawsuit on behalf of the group of similarly situated individuals fairly and adequately represents the class, and that proper notice is given to absent class members, the settlement of the case, once approved by the court, is binding even on absent class members.

That's it in a nutshell.
posted by Slap Factory at 7:16 PM on May 21, 2007 [1 favorite]


that's weird tho--aren't class-action suits usually full of real evidence?

No. An enormous portion of class actions are frivolous. And I say this as someone who is by nature more inclined to favor plaintiffs.
posted by brain_drain at 7:19 PM on May 21, 2007


From the dissent:
"a summary reversal citing Theatre Enterprises, Inc. v. Paramount Film Distributing Corp., 346 U. S. 537 (1954), would adequately resolve this case. As Theatre Enterprises held, parallel conduct is circumstantial evidence admissible on the issue of conspiracy, but it is not itself illegal. Id., at 540–542.

Thus, this is a case in which there is no dispute about the substantive law. If the defendants acted independently, their conduct was perfectly lawful. If, however, that conduct is the product of a horizontal agreement among potential competitors, it was unlawful. Plaintiffs have alleged such an agreement and, because the complaint was dismissed in advance of answer, the allegation has not even been denied. Why, then, does the case not proceed? Does a judicial opinion that the charge is not “plausible” provide a legally acceptable reason for dismissing the complaint? I think not."


The only way it makes sense for the ILEC's to not compete in each others territories is if the playing field is stacked against them (which it probably is), or if they have an agreement not to (which may be implicit rather than overt). I'm happy enough with the SCOTUS decision, but I think the telecommunications and cable industries exemplify a failure in government policy. The should have only granted regional monopolies for managing the wiring infrastructure, and required separate companies to provide services over said infrastructure.
posted by BrotherCaine at 7:42 PM on May 21, 2007


Ooh, New Century Schoolbook is the Official Typeface of the Supreme Court! I feel like Nina Totenberg!
posted by infinitewindow at 8:37 PM on May 21, 2007


ahhh--thanks all!
posted by amberglow at 8:41 PM on May 21, 2007


Ahhh... the memories of Civ Pro are all rushing back to me now.
posted by pril at 9:11 PM on May 21, 2007


I'm a little too sleepy to cite to this assertion, but it's fairly common knowledge that the Rehnquist court had been cutting off access to federal courts. I'm most familiar with habeas corpus and the ability of federal courts to review state court criminal convictions for violations of the defendant's constitutional rights. (e.g., you can be barred from asserting that the state violated your constitutional rights if you didn't properly present that claim to the state courts first - in other words, state procedure trumps your constitutional right to effective assistance of counsel).

Point being: you can have all of the rights you want, but without access to courts willing to enforce them you're SOL. It seems that the Roberts court is in the same posture. Then again, it could have been a shitty petition.
posted by Taargus Taargus at 9:18 PM on May 21, 2007


it's fairly common knowledge that the Rehnquist court had been cutting off access to federal courts. I'm most familiar with habeas corpus and the ability of federal courts to review state court criminal convictions for violations of the defendant's constitutional rights.

Not true. Limitations on habeas corpus are from a law passed by Congress and signed by Clinton, not the Rehnquist administration, and reflect a problem of abuse of the writ of habeas corpus from dozens of levels of appeals (a problem that still persists in some courts that refuse to apply the AEDPA).

I disagree with saladpants' assessment; this opinion is significant because more meritless complaints will be dismissed with, rather than without, prejudice. Under the old standard, a plaintiff was allowed to go on an expensive fishing expedition to find wrongdoing even if there was no evidence of it so long as it was not impossible for that evidence to exist; since the plaintiffs' attorneys were just interested in extorting a quick buck, and had no intention of trying the case, defendants found it cheaper to settle than turn over every piece of paper for document discovery and every executive for deposition. Now plaintiffs can't bring a case unless there's some plausibility to it. It doesn't hurt any plaintiffs who have legitimate cases, just the extortion artists. This was long overdue.
posted by commander_cool at 12:27 AM on May 22, 2007


In general, I find it pretty hard to apply the 12b6 standard to real-life complaints, because each one is so different. The various verbal formulations given (including this new one) really only provide clear guidance for the specific claims in that case. Now I know that asserting parallel legal business conduct is insufficient as a matter of law for an anti-trust case, but I don't really know how that principle applies to other cases. The end result of Twombly is, I think, just that you have to look a little more skeptically at complaints and be a little less deferential to plaintiffs. It's more a feeling than a standard.

"Fact pleading" is the other standard. It is generally disfavored in American law, followed by only a small minority of states (including my new state, Oregon).
posted by saladpants at 7:44 PM on May 21 [+]

I didn't know some states had fact pleading, saladpants. How interesting. PS: I love your username.
posted by footnote at 6:21 AM on May 22, 2007


Now plaintiffs can't bring a case unless there's some plausibility to it. It doesn't hurt any plaintiffs who have legitimate cases, just the extortion artists. This was long overdue.
posted by commander_cool at 3:27 AM on May 22 [+]


Well, I'd like to hear from an anti-trust plaintiffs' attorney before I agree with you. This case is about the kinds of evidence that the Court considers legally plausible -- which, of course, is not the same thing as the kinds of evidence that actually is plausible. When you're dealing with very sophisticated businesses like telecom, they're not likely to leave smoking guns lying around for the plaintiffs to use in their complaints, so by necessity plaintiffs have to draw on indirect evidence like parallel business conduct. In the real world, parallel business conduct might be a very good basis from which to infer illegal agreements. But now in the legal world, it's not.
posted by footnote at 6:47 AM on May 22, 2007


Well, I'd like to hear from an anti-trust plaintiffs' attorney before I agree with you.

Well, I do antitrust work on both sides of the aisle, and I agree with commander_cool that plaintiffs with a legitimate case shouldn't have any trouble alleging a "plausible" claim. I worked on the plaintiff's side on a major telecom antitrust case a few years ago, and frankly, we had no trouble alleging sufficient facts to get past the dismissal stage, under either standard.

Of course, the case I was involved in was a monopolization case, not a conspiracy case. When the two half of Twombly are considered together, conspiracy plaintiffs are going to face significant difficulties. Not only has the Court reformulated the general pleading standard under 12(b)(6), it has also reconfirmed that mere "conscious parallelism," while admissible circumstantial evidence, is not enough to allege a Section 1 claim. In other words, a plaintiff has to allege more than just that competitors in a relevant market engaged in suspiciously similar parallel conduct. Instead, it appears plaintiffs need to allege at least some facts which would support an inference that defendants actually engaged in a conspiracy. The problem with this, of course, is that the evidence of conspiracy is typically in the hands of the defendants, and so plaintiffs, without discovery, don't know exactly what the facts are, and therefore can't plead them.
posted by monju_bosatsu at 7:14 AM on May 22, 2007


Thanks monju. So how does this interact with criminal antitrust conspiracy cases? Would parallel conduct be enough for an indictment?
posted by footnote at 7:32 AM on May 22, 2007


That's a good question. I don't think Twombly has much to say about the requirements to obtain a criminal indictment; both issues in Twombly dealt solely with civil pleading requirements. Parallel conduct is still admissible evidence, and so can be put before a grand jury. Here's a DOJ discussion on the sufficiency of an indictment.
posted by monju_bosatsu at 8:20 AM on May 22, 2007


this opinion is significant because more meritless complaints will be dismissed with, rather than without, prejudice.

If that's true, commander_cool, I'd totally agree. I'll file this under the "remains to be seen" category. It may certainly end up being the case.

I didn't know some states had fact pleading, saladpants. How interesting. PS: I love your username.
posted by footnote at 6:21 AM on May 22


Yeah. I moved to Oregon about a year ago and took the February bar here. I guess in the back of my mind I knew some states still had it, but I have to admit being surprised when I learned about the fact pleading standard here. Also interesting in Oregon: No interrogatories!!!

Glad you like the name.
posted by saladpants at 9:36 AM on May 22, 2007


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