SCOTUS Addresses Motion to Dismiss Standard

Ashcroft  v. Iqbal is a 2009 decision of the United States Supreme Court (SCOTUS) that may have an impact on the standard applied to motions to dismiss in state courts with rules that are modeled on the federal rules.

The Delaware Court of Chancery Rules and other Rules of Civil Procedure for other Delaware trial courts are based on the Federal Rules of Civil Procedure. Thus, when the U.S. Supreme Court renders a decision on the motion to dismiss standard under the federal rules, students of Delaware take note and wonder if the Delaware courts will follow suit. Though we cannot offer any authoritative opinion to those "watchers", we can provide a review of the SCOTUS decision involved.

Maura Burke, an associate in our Delaware office, prepared the following review and commentary on the recent Iqbal decision.

The Iqbal Pleading Standard

In Ashcroft v. Iqbal, 129 S. Ct. 1937 (May 2009), the U.S. Supreme Court affirmed the heightened pleading standard set forth in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007).

Some commentators believe that Iqbal has broadened the scope of the Twombly so that the heightened pleading standard now applies to all federal civil actions, while others argue that Iqbal is a narrow decision and the Twombly standard is applicable to only certain types of civil cases.

FED. R. CIV. P. 8(a)(2) provides for notice pleading, requiring merely “a short and plain statement of the claim showing that the pleader is entitled to relief.”

In Twombly, the Supreme Court interpreted Rule 8(a)(2) as requiring complaints to contain sufficient factual allegations to permit a district court to find that the claim is facially plausible. See 550 U.S. at 556. A complaint that merely sets forth a legal theory, conclusory allegations and recitation of the elements of a cause of action does not sufficiently state a plausible claim for relief. Id. at 555. The Twombly standard effectively heightened the standard for notice pleading by requiring a showing of “plausibility.” In Iqbal, the plaintiff filed a complaint against former federal officials, including FBI Director Robert Mueller and former U. S. Attorney General John Ashcroft, alleging that they engaged in a discriminatory policy by targeting him as a person “of high interest” in the investigation of the September 11 terrorist attacks solely because of his race, religion, and/or national origin. Mueller and Ashcroft moved to dismiss the claim and both the district court and Second Circuit found that the allegations of the complaint, taken as true, states a valid cause of action against them. Mueller and Ashcroft petitioned for certiorari and the Supreme Court reversed.

The Iqbal Court reaffirmed the heightened pleading standard set forth in Twombly. See 129 S.Ct. at 1955. The majority explained that when reviewing a complaint pursuant to a motion to dismiss, a court must consider a “two-pronged approach.” Id. at 1950. First, the court must accept as true all the specific factual allegations, but need not accept as true conclusory allegations. See id. at 1949. Second, the court must determine whether those factual allegations give rise to a plausible claim, such that the court may reasonably infer that the defendant is liable. Id. at 1950 (“Only a complaint that states a plausible claim for relief survives a motion to dismiss”).

“Plausibility” requires more than the “mere possibility of misconduct.” Id. (“whether a complaint states a plausible claim for relief will . . . be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense”). The Court explained that a complaint will be insufficient and a motion to dismiss will be granted if the facts in the complaint are “not only compatible with, but indeed … more likely explained by lawful … behavior.” Id.

Applying this first prong to the complaint at issue, the majority determined that the plaintiff’s allegations that Ashcroft and Mueller—“‘each knew of, condoned, and willfully and maliciously agreed to subject’ respondent to harsh conditions of confinement ‘as a matter of policy, solely on account of [plaintiff’s] religion, race, and/or national origin and for no legitimate penological interest”—were too conclusory to be entitled to a presumption of truth.” Id. at 1951.

Examining the “plausibility” prong, the Court held that the allegations in the plaintiff’s complaint “[did] not plausibly establish [a discriminatory] purpose” because a “more likely explanation” existed than the one alleged by plaintiff in a conclusory manner. Id. at 1951. Specifically, the Court, relying on its “experience and common sense,” determined that Arab Muslims were detained after the September 11 terrorist attacks, not because of their race, religion or national origin, but because the terrorist attacks were carried out by Arab Muslims. See id.

Commentary

Some commentators believe that Iqbal has broadened the scope of the heightened pleading standard set forth in Twombly to apply to all federal civil actions, thus making it much easier for judges to dismiss civil lawsuits right after they are filed and before discovery takes place. See Adam Liptak, 9/11 Case Could Bring Broad Shift on Civil Suits, N.Y. TIMES, July 20, 2009, at A10. Notably, within the first two months after Iqbal was decided, it was cited more than 500 times for this proposition. See id.

Others disagree. One commentator argues that Iqbal is a narrow opinion that addresses the very specific issue of how “qualified immunity” applies to high-ranking officials in suits against the federal government for deprivations of constitutional rights. See Maxwell S. Kennerly, Ashcroft v. Iqbal: Not Nearly As Important As You Think, Litigation & Trial blog. (1)  Although Iqbal has been cited numerous times, he argues, “the standard is not any different from what courts have been practically applying for years, except to add the word ‘plausible.’” See id. Similarly other legal bloggers have opined that there is “nothing radical” about either Twombly or Iqbal, both require plaintiffs to support a prima facie case with sufficient facts, a general requirement for any type of lawsuit. See James M. Beck, A Twombly Of Scholarship, Drug and Device Law blog.(2)  In addition, Judge Posner, in a recent Seventh Circuit opinion, suggested that Twombly and Iqbal may only be applicable to complex or potentially expensive litigation. See Smith v. Duffey, 576 F.3d 336, 340 (7th Cir. 2009). (3)

Nevertheless, believing that Iqbal is in fact helpful to the defense and foreseeing its broad impact, the plaintiff’s bar reacted quickly, supporting the proposed legislation seeking to reinstate the notice pleading standards established before Twombley and Iqbal. Consequently, Senator Arlen Specter (D-Pa) sponsored the Notice Pleading Restoration Act of 2009 (S. 1504, introduced on July 22, 2009) which provides that federal courts shall not dismiss a complaint except under the notice pleading standards applicable under Conley v. Gibson, 355 U.S. 41 (1957), the Supreme Court precedent prior to Twombley. A similar bill, Open Access to Courts Act of 2009 (H.R. 4115), was introduced into the House by Representatives John Conyers (D-Mich) and Henry Johnson (D-Ga).

 Iqbal may also have ramifications in state proceedings as well. Many state courts, including those in Delaware, base their rules of civil procedure on the federal rules and rely on federal court analyses when interpreting the state rules. Eight state courts have cited Iqbal. Six of which cited the case for its procedural holding.(4) See Barry Miller and Casey Stansbury, Iqbal Energizes Motion to Dismiss Practice (March 10, 2010) (discussing Iqbal’s influence in state court matters).(5)

In Siemens Financial Services, Inc. v. Stonebridge Equipment Leasing, a Rhode Island court declined to apply the heightened pleading standard despite finding the Iqbal standard was consistent with the state’s standard for a motion to dismiss. The court, mimicking Judge Posner’s position, reasoned that Twombly mandated a heightened level of pleading only in complex cases. Accordingly, the court held that application of the heightened pleading standard was inappropriate because the matter before the court was not complex. See 2009 R.I. Super. LEXIS 14, *4-5 (“Consistent with this Court’s previous holding concerning the Twombly standard, the claims in this matter do not rise to the level of complexity contemplated by the Twombly Court that would require a heightened level of pleading beyond that which is generally required to survive a motion to dismiss”).

Although the Siemens Court held that the heightened pleading standard was only applicable to complex cases, not all state courts may agree with this restricted application of Iqbal. State courts may instead choose to employ a more expansive approach, applying the standard to all civil matters.

Iqbal has definitely made an impact. The extent of that impact, however, is still yet to be determined as the proposed litigation still pending, and more and more courts are interpreting the scope and applicability of the Iqbal standard.

 Footnotes: 

 [1] Available at: http://www.litigationandtrial.com/2009/06/articles/the-law/for-lawyers/ashcroft-v-iqbal-not-nearly-as-important-as-you-think/. See generally Professor Larry Ribstein’s comments at: http://busmovie.typepad.com/ideoblog/2010/03/contracting-for-pleading-standards.html

 [2] Available at: http://druganddevicelaw.blogspot.com/2009/10/twombly-of-scholarship.html  (“It’s about time . . . that the courts adopt a construction of the Rules that favors reduced, rather than expanded, litigation”).

[3] In Smith, Judge Posner states:

            “… The Court held that in complex litigation (the case itself was an antitrust suit) the defendant is not to be put to the cost of pretrial discovery-a cost that in complex litigation can be so steep as to coerce a settlement on terms favorable to the plaintiff even when his claim is very weak-unless the complaint says enough about the case to permit an inference that it may well have real merit. The present case, however, is not complex. Were this suit to survive dismissal and proceed to the summary judgment stage, it would be unlikely to place on the defendants a heavy burden of compliance with demands for pretrial discovery. The parties did not negotiate face to face over the termination agreement, and though some of the negotiations were over the telephone rather than in letters or emails, Smith recorded those and the transcripts are attached to his complaint. So almost all the potentially relevant evidence is already in the record.

 Yet Iqbal is special in its own way, because the defendants had pleaded a defense of official immunity and the Court said that the promise of minimally intrusive discovery “provides especially cold comfort in this pleading context, where we are impelled to give real content to the concept of qualified immunity for high-level officials who must be neither deterred nor detracted from the vigorous performance of their duties.” Id. (emphasis added).”  576 F.3d 336, 339-40 (7th Cir. 2009).

 

[4] See e.g., Morris v. Grusin, 2009 Tenn. App. LEXIS 874 (Dec. 22, 2009) (declining to adopt Iqbal in a state tort matter because it is the responsibility of the state Supreme Court to adopt the standard in all state civil matters); Siemens Financial Services, Inc. v. Stonebridge Equipment Leasing, LLC, 2009 R.I. Super. LEXIS 14 (Nov. 24, 2009).  See also McKinnon v. Wester Sugar Coop. Corp., 201 Mont. LEXIS 21 (Feb. 5, 2010); Duncan v. State, 2009 Mich.App. LEXIS 1380 (June 11, 2009); Smith v. Wrigley, 908 N.E.3d 354, 359 (Ind. App. 2009).

 

[5] Available at:  http://74.125.47.132/search?q=cache:8O4bYNxoqBoJ:www.primerus.com/news/resources_business/iqbal-energizes-motion-to-dismiss-practice/+iqbal+applied+to+state+cases&cd=1&hl=en&ct=clnk&gl=us