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Re-reading Iqbal (a new take on the 12(b)(6) wars)

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12 Responses

  1. ohwilleke says:

    Certainly, there are a large class of cases for which Iqbal is irrelevant: (1) collection cases where one alleges the existence of a contract and a failure to perform that the plaintiff would have personal knowledge of; (2) automobile torts where a time and place of an accident and allegations of injury are per se sufficient under Form 11 (not a trivial matter, 60% of all tort cases are automobile accidents; the percentage is smaller in federal court, but still a large percentage), (3) slip and fall cases are equally straight forward to describe with a date and place and simple statement of condition and allegation of harm suffered, and (4) product liability cases which have elements that are relatively objectively determminable without inside information (defective product, failure to warn, design defect).

    The Twombley/Iqbal cases are those in which a key element of a claim (like a conspiracy to fix prices, or to adopt a policy to violate civil rights) takes place in private at a time and place unknown to the Plaintiff absent inside information, and the information known to the Plaintiff can be explained by illegal conduct, but also by legal conduct. Plausibility comes into play in these cases to determine how strong the inferences based upon what is know are under the circumstances. (For example, copyright only covers new works derived from old works, not independent creations of identical works — a short phrase might be plausibly created legally, a long direct quotation of creative work is unlikely to have this source; direct proof of the derivative sourcing of a work is often impossible; plausibility is the standard by which the line of permissible inference is drawn). This isn’t a large percentage of the entire docket, but it is a big percentage of certain important types of cases, particularly those involving civil rights or business torts.

    While Twombly and Iqbal are official transsubstantive (i.e. apply to all civil actions), the elements of a cause of action differ a great deal. Some claims involve elements that are routinely within the direct knowledge of a Plaintiff; some claims in contrast involve elements that are rarely within the direct knowledge of a Plaintiff.

    Absent court ordered discovery, a public admission, or a spy, the Plaintiff has no way to prove his or her case. Twombly/Iqbal rule out that first option. Unlike many governmental plaintiffs, private individuals don’t have the power to issue pre-litigation subpeonas or search warrants to involuntarily gain the information desired. Since Twombley/Iqbal come into play at the Rule 12 motion stage, one can’t even compel the defendant to provide an Answer to the allegations as a crude form of discovery supported by good hunches or perhaps inside information whose source is too sensitive to disclose publicly in the necessary detail because it would reveal the source.

    In other words, Twombley and Iqbal basically say that you can’t file a Complaint in order to see if you have a case where you think that you might.

  2. don anon says:

    Well, so much for that fourth category of cases in which Twombley and Iqbal are “irrelevant.”

    http://druganddevicelaw.blogspot.com/2009/08/iqbal-saves-some-dough.html

    The Court has unleashed a lot of uncertainty and confusion in the apparent hope of achieving something (discovery control) indirectly that would be better tackled directly. Oh, well.

  3. Howard Wasserman says:

    I agree *Iqbal* creates a two-step process, but I am not sure that the first step may preempt the second. I read Iqbal to suggest that the court should excise from the complaint any conclusory statements, then look at whatever non-conclusory allegations remain (even if all the allegations are non-conclusory) and determine whether they plausibly state a claim–which includes the power in the court to find a better alternative explanation for the conduct pled in non-conclusory fashion. But if ¶ 96 had been drafted as you suggest (and, by the way, part of why it wasn’t was because intent had not previously been the standard for supervisory liability in the court of appeals), the Court still would have gone ahead and considered whether everything was plausible or whether there was some other interpretation.

  4. Adam Steinman says:

    Thanks for the comment, Howard. I wouldn’t characterize my reading of Iqbal as allowing step one to preempt step two. It’s just the necessary implication of the step two itself. Assume that the crucial issue is X, and the complaint contains a non-conclusory allegation that X happened. In that situation, step two asks: “Assuming X is true, is it plausible that X happened?” As a matter of logic, the answer to that question is always yes. It is more than just plausible that X happened; it is conclusively established that X happened, albeit by the assumption that step two itself requires.

    (By considering hypothetical allegations that could be made in Iqbal, I’m not at all faulting the Iqbal attorneys for failing to anticipate what the Supreme Court ultimately did. I’m just trying to illustrate how the approach I’m proposing might be satisfied in a case like Iqbal.)

    Thanks again.

    Adam

  5. Richard Samp says:

    Your analysis is excellent. But you lose me when you propose the two alternatives to Paragrpah 96 that you deem sufficient. I have no doubt that on remand, the plaintiffs’ attorneys will be quite willing to make allegations along the lines you suggest, and it is hard to believe that the Supreme Court majority deemed the deficiencies in the Iqbal complaint so easily fixed.

    In order to be “plausible,” an allegation needs to have enough factual specificity to show that the plaintiff is not merely guessing. Thus, in Twombley, the plaintiffs explicitly alleged that the defendants had conspired to restrain trade, but the allegation did not meet the plausibility standard because the plaintiffs provided no details regarding when, where, and how the conspiracy took place and were merely guessing that there must have been a conspiracy given the defendants’ (allegedly) otherwise unexplainable conduct. Similarly, in your alternatives to Paragraph 96, you allege that Ashcroft and Mueller “ordered” or “adopted a policy” of intentional ethnic discrimination, but there is nothing in the allegation suggesting anything more than just guesswork. An allegation of that sort is “conclusory” because it provides nothing to suggest that there actually was such a policy — e.g., that the policy was adopted at a May 16 meeting at DOJ, or that the policy was memorialized in a memo signed by the defendants, or that Mueller told John Smith about the policy during a conversation some time in June. In contrast, Form 11 meets the Iqbal pleading standard because it provides the time and place of the defendant’s allegedly negligent driving. But it would not be sufficient for a plaintiff to allege that he was injured as a result of the defendant’s negligent actions without specifying what the alleged negligence consisted of (e.g., driving a car) and where and when it occurred.

  6. Howard Wasserman says:

    First, I agree with Richard that the alternative allegations you propose are as likely to get knocked out as conclusory, just because they are no more conclusory than what ¶ 96 actually contained or what was contained in Twombly. They are more specific in that they don’t plead alternatives (“knew of” or “condoned”). But pleading in the alternative is perfectly proper. The notion of conclusory, as applied to allegations of state of mind, potentially is all-consuming, applicable to everything. And is why even heightened pleading under 9(b) does not apply to allegations of state of mind.

    Second, part of the reason the plaintiffs initially pled as they did was because, prior to the Supreme Court’s decision, intent was not required; supervisory liability could be had on a showing (and pleading) that the supervisor knew of and acquiesced or condoned, with deliberate indifference, underlings’ unconstitutional conduct–which is basically what they pled in ¶ 96.

    Third, courts still are going to analyze plausibility in two respects. First, an allegation could be non-conclusory but logically far-fetched (“I was driving around LA with the Pope and Marilyn Manson, looking for a bratwurst”) and courts (even pre-Twombly) felt free to disregard it as implausible. Second, not only individual facts, but the entire claim must be plausible. So non-conclusory facts could combine to be neutral as to wrongdoing, as in Twombly, which is insufficient. Or, as in Iqbal, the Court might find an alternative (more plausible) explanation for those true facts.

    You are right that greater specificity will help at the first step two. But I don’t know that it will get around the court’s greater willingness to speculate as to alternative conclusions or explanation for the facts at alleged at step two. At least if the court is determined to get rid of the case–which may be the point.

  7. Adam Steinman says:

    Thanks, Richard and Howard, for these comments. First off, it’s great that people are talking more concretely about what “conclusory” means. I still think that if we take the Iqbal test seriously, the plausibility inquiry that was the focus of Twombly and Iqbal can never justify disregarding a non-conclusory allegation. Yes, Twombly shows that (as Howard puts it) non-conclusory facts could combine to be neutral as to wrongdoing. But the Court could say that only because it disregarded the “bare assertion of conspiracy” as conclusory. In both Twombly and Iqbal, the Court turned to plausibility because crucial allegations necessary to state a claim were disregarded as conclusory. That’s why plausibility was dispositive in those cases. With no valid allegation of a conspiracy (in Twombly) or discriminatory motive (in Iqbal), each claim depended on whether those missing elements were plausibly suggested by the remaining, non-conclusory allegations. But neither case suggests that a free-standing inquiry into plausibility ever justifies disregarding a non-conclusory allegation.

    As for what conclusory means, it can’t mean “implausible,” because then there’d be no difference between Iqbal’s two distinct steps. And as a general matter, conclusory can’t sensibly be defined in what I call “evidentiary” terms, i.e., via any metric that would deem allegation X conclusory simply because the truth of X is not suggested by some other allegation (a plausibility test would be one example of this). I talk about this in more detail in the full article (http://ssrn.com/abstract=1442786), but here’s a quick summary. First, I don’t see how you can reconcile that approach with Form 11 or Swierkiewicz. Second, it’s conceptually unworkable. No matter how many details a complaint provides, it still consists purely of allegations–not the underlying evidence in support of each allegation. In this sense, every allegation in a complaint could be deemed conclusory for lack of supporting evidence, because by definition the complaint contains solely allegations. If a court were to take seriously the idea that allegations may be disregarded because the complaint does not also provide evidentiary support for them, then it must undertake a literally endless cascade of inquiry. Each new allegation offered to support an earlier allegation would itself require evidentiary support, and so on and so on. At some point, a court has to be able to accept the allegations in a complaint at face value, and leave the presence or lack of evidentiary support for later in the proceedings. Note that this problem would not necessarily arise with special pleading rules like the PSLRA, which requires only certain allegations to have additional support in the complaint. Requiring evidentiary support for every allegation in a complaint, however, is inherently unsustainable.

    If I had to choose, I think these two points outlined above are the most important: (1) non-conclusory allegations can’t be disregarded for lack of “plausibility” under Twombly/Iqbal; and (2) allegations are not conclusory simply because their truth is not suggested by some other allegation in the complaint. Additionally, I’d add that “conclusory” shouldn’t be defined to require details like the exact date Ashcroft and Mueller adopted a particular policy, or the process by which the policy was adopted. The FRCP Forms confirm this. Form 18’s complaint for patent infringement deems it sufficient to allege that “The defendant has infringed and is still infringing the Letters Patent by making, selling, and using electric motors that embody the patented invention.” No details are required about precisely when or where the making, selling and using occurred, or which of the defendant’s officers or employees were involved, or even why the defendant’s motors “embody the patented invention.” In Form 17’s complaint for breach of a contract to convey land, the breach is adequately pled by alleging that “the plaintiff tendered the purchase price and requested a conveyance of the land, but the defendant refused to accept the money or make a conveyance.” No details are required about precisely when or how these events transpired. Yes, Form 11 includes the date and time of the accident, but that can’t be read to require such precision for every allegation in every type of case given the other Forms I’ve mentioned. In any event, the Forms provide what “suffice[s] under these rules,” not what is “necessary under these rules.”

    To the extent courts have some authority to disregard ridiculous allegations (the “little green men” Souter mentions in his Iqbal dissent, or Howard’s Pope/Manson/Bratwurst hypo), I think that has to be viewed as a different issue altogether. I don’t think the majorities in either Twombly or Iqbal would equate the allegations in those complaints with ones about little green men. (As Justice Kennedy said in Iqbal, “we do not reject these bald allegations on the ground that they are unrealistic or nonsensical…. It is the conclusory nature of respondent’s allegations, rather than their extravagantly fanciful nature, that disentitles them to the presumption of truth.) In any event, equating the allegations in Twombly and Iqbal with little green men proves too much. Even the conventional reading of Twombly and Iqbal (as I understand it) would recognize that allegations can be made plausible if additional details are provided (e.g., Richard’s desire for the precise date any Ashcroft-Mueller meeting occurred). Assuming that Twombly and Iqbal are what give judges the power to disregard the little-green-men allegations, wouldn’t it follow that even such “extravagantly fanciful” allegations would have to be accepted as long as the plaintiff provides dates, times, and a more precise description of his or her extraterrestrial encounter?

    Finally, I think Howard makes a great point about the possibility that in some instances, a judge might just be determined to get rid of a case. But even pre-Twombly, when the Supreme Court’s instructions on pleading standards could hardly have been clearer, lower courts still tried to find ways to dismiss cases. And they often succeeded. For every plaintiff like Swierkiewicz and Leatherman where the Supreme Court stepped in to reverse an improvident dismissal, there were many, many unluckier plaintiffs (as Chris Fairman and others have noted) for whom the liberal, notice-pleading paradigm was merely a myth. There’s no doubt that Twombly and Iqbal make it easier for a judge to get rid of a case if he or she is inclined to do so. That’s exactly why it’s so important to examine closely what these cases really stand for.

    Thanks again for the comments. They’re very helpful, and I appreciate you all taking the time to share your thoughts.

    Adam

  8. ohwilleke says:

    Don anon: Product liability cases certain can be dismissed under Iqbal, on the grounds that the Plaintiff doesn’t actually know of any product defect, failure to warn, or design defect that provides a basis for the claim, and those dismissals aren’t very troubling.

    The requirement that key allegations be more than mere conclusions of law in order to “count” does pre-date Twombly and Iqbal. If all those cases had done was to put some teeth into the non-conclusory allegation rule in cases like the product liability case cited in the link, that doesn’t actually identify anything particular that is defective with a product, and instead merely says that there is a defect with the product, when that defect is the heart of the claim. (Incidentally, good pleading routinely includes matters such as formal legal descriptions of the legal theory asserted including references to statutes that aren’t necessary to state a claim, but help the reader understand what is going on, a bit like headings in a legal brief or headlines in a newspaper. Conclusory allegations aren’t bad practice to include, they are just bad and now legally insufficient practice to rely exclusively upon.)

    This is within the scope of even less lenient notions of the idea that pleadings must provide notice.

    But, as a general rule, when a defective product causes an injury due to a genuine product defect, failure to warn, or design defect, it is theoretically possible, at least, to identify what was wrong with the product without resort to insider information.

    One might need to retain an expert witness prior to bringing suit to examine the evidence (in the case of a defective product suit) or to examine and test another of the producers products before bringing the suit (in the case of a failure to warn or defective design), but one does not have to establish intent or that two or more people had a communication regarding something that took place outside your presence, to state a cause of action. Indeed, one does not even need to know who is in the chain of privity between the person injured and the person against whom the suit is commenced.

    (Indeed, in Iqbal, factual allegations regarding intent weren’t made in part because intent wasn’t believed to be a part of the cause of action for supervisory liability prior to the U.S. Supreme Court’s ruling; the Iqbal Plaintiffs themselves will very likely be able to amend their claims to state a cause of action under the Iqbal standard, in part due to information obtained in discovery in that and other cases after the suit was filed.)

    Thus, even if there is a practical effect on product liability cases, it really is fundamentally procedural. It doesn’t rule out the possibility that legitimate claims can be brought in virtually all situations where they exist, with enough work up front.

    But, there are whole classes of case where that is not going to be the case. After Twombly it is almost impossible to establish a private cause of action under the Sherman Act based upon a conspiracy to restrain trade without a whistleblower or a leak of information.

    In causes of action that were established and had private causes of action before the FRCP was amended in the 1930s to allow notice pleading and broad discovery (could widespread unemployment in the legal profession at the time have tipped the balance in rulemaking?), this information inequity at the pleading stage was often addressed by limiting the prima facie case to matters that would be within the knowledge of the Plaintiff (when there was no government regulator with subpeona power), while treating matters that would be exclusively within the control of the Defendant as affirmative defenses.

    But, courts and legislatures have spend seven decades being sloppy about distinctions between elements of the prima facie case and affirmative defenses because they haven’t mattered all that much in practice.

    Short of Senator Spectre’s proposed legislation to override Twombly and Iqbal wholesale, one can imagine that there may be a fair amount of legislative action to turn these kind of claim elements into affirmative defenses rather than elements of a claim.

    In employment discrimination law, the rather elaborate multistage tennis match of shifting burdens of production and presumption show how that kind of regime might play out in other areas, if Twombly and Iqbal survive with the bite that they are widely assumed to have.

  9. Bruce Boyden says:

    Here’s my reading of “conclusory,” and I think it gets around your objection, Adam (whether it’s correct is a different matter). Some allegations, while more probable than Martian invaders, are nevertheless contrary to the judge’s expectation of how the world works. Traffic accidents in which drivers run negligently against the plaintiff happen every day. So does patent infringement, and breach of contract. But the nation’s most respected telephone companies don’t conspire to reduce competition, and the nation’s top law enforcement officers don’t conspire to violate people’s civil rights (so saith the Court). THOSE allegations are “conclusory,” unless they are further buttressed by something else in the complaint.

    So the set of all conclusory allegations is a subset of all unsupported allegations — the subset that the judge finds intuitively unlikely. And I think Judge Posner is onto something when he suggests that the subset is further defined by the cost of discovery.

  10. Adam Steinman says:

    Thanks for the comment, Bruce. One reaction I have is that reading the cases that way would conflate the conclusory inquiry (step one) with the plausibility inquiry (step two). Whether a particular event comports with the judge’s expectation of how the world works might make sense at the plausibility phase, where a judge is asking whether an event that is NOT properly alleged is nonetheless suggested by the other allegations in the complaint. But I don’t see how that can determine whether an allegation is conclusory in the first instance. Swierkiewicz could not have been clearer that there is no general authority to dismiss a complaint simply because it appears unlikely (“Rule 8(a) establishes a pleading standard without regard to whether a claim will succeed on the merits. Indeed it may appear on the face of the pleadings that a recovery is very remote and unlikely but that is not the test.”) Twombly even cites language to this effect. The only way to make sense of this, in my mind, is to carefully delineate the two prongs of the Iqbal test.

    Furthermore, if judges had the authority to disregard allegations solely because they were intuitively unlikely, I wonder whether providing additional buttressing details (e.g., dates, locations, meeting times) could ever overcome that intuition. One argument I make in the article is that searching for supporting “heft” or “enhancement” at step-one (the “conclusory” phase) is inherently unworkable, because every allegation offered to buttress another allegation would itself need to be buttressed, and so on and so on. The upshot of such a framework would be, essentially, judges making factual findings at the pleadings phase based on solely on their intuition or, as Iqbal puts it, their “judicial experience and common sense.” That may have a proper place at Iqbal step-two, but it can’t possibly work at Iqbal step-one.

    Finally, I think you (and Judge Posner) are right that the costs of discovery play a role in all this. But as I read Twombly and Iqbal, their concern about discovery costs go to the importance of assessing the plausibility of a claim (Iqbal step-two) AFTER some crucial allegation is disregarded as conclusory, not whether an allegation is conclusory in the first instance.

    Thanks again.

    Adam

  11. Eric says:

    Unfortunately, the years have shown that this following assertion in the article of
    QUOTE
    “It follows that when a complaint contains non-conclusory allegations on every element of a claim for relief, the plausibility issue vanishes completely.”
    END QUOTE
    is not the reality as “a formulaic recitation of the elements of a case of action will not do”

    And factual(non-conclusory) allegations of intent are rarely available without discovery.
    And proceeding to discovery is now barred without those facts (a catch 22).

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