Twombly & Iqbal: The New Pleading Standards as Applied to Asbestos and Mass Tort Claims

David S. AlmeidaNathaniel Cade, Jr.Chris R. Parker

Michael Best & Friedrich LLP

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The Old Federal Pleading Standards

In Conley v. Gibson, 355 U.S. 41 (1957), which involved a discrimination claim, the U.S. Supreme Court held that

“all the Rules [of pleading under the Federal Rules] require is a ‘short and plain statement of the claim’ that will give the defendant notice of what the plaintiff’s claim is and the grounds upon which it rests.”

Conley, 355 U.S. at 47

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The Old Federal Pleading Standards (cont.)

The Conley court went on to state 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.

The Court also stated that discovery would provide the parties with an opportunity

“ to disclose more precisely the basis of both claim and defense and to define more narrowly the disputed facts and issues.”

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The Old Federal Pleading Standards (cont.)

After Conley, defendants had a hard time winning a motion to dismiss under 12(b)(6).

Plaintiffs cited to Federal Rule 8(a) and the “no set of facts” language to survive a MTD and move forward with discovery.

But now, discovery costs are HUGE, especially with electronic evidence.

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Bell Atlantic v. Twombly, 550 U.S. 544 (2007)

Twombly involved a putative antitrust class action “of at least 90 percent of all subscribers to local telephone or high speed Internet service in the continental United States.”

Under the 1996 Telecommunications Act, the “Baby Bells” were required to share their networks with “competitive local exchange carriers.”

Plaintiffs complained that the Baby Bells restrained trade by engaging in parallel conduct in their respective service areas to inhibit the growth of CLEC’s, and the Baby Bells entered into agreements to refrain from competing against one another.

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Bell Atlantic v. Twombly, 550 U.S. 544 (2007) (cont.)

The 2nd Circuit reversed the S.D.N.Y.’s dismissal of the case, by noting that an antitrust claim could proceed because a court could only dismiss on the pleadings only if that court:

“would have to conclude that there is no set of facts that would permit a plaintiff to demonstrate that the particular parallelism asserted was the product of collusion rather than coincidence.”

425 F. 3d 99, 114 (2d Cir 2005)

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Bell Atlantic v. Twombly, 550 U.S. 544 (2007) (cont.)

The Supreme Court emphasized that the complaint does not require “detailed factual allegations” to defeat a motion to dismiss. However, the plaintiff must use “more than [mere] labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.”

In essence, the “[f]actual allegations must be enough to raise a right to relief above the speculative level.”

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Bell Atlantic v. Twombly, 550 U.S. 544 (2007) (cont.) The Court also noted that discovery has become very

expensive (hence the reason for a higher level of pleading):

“Something beyond the mere possibility of causation must be alleged, lest a plaintiff with a largely groundless claim be allowed to take up the time of a number of other people.”

Consequently, “it is one thing to be cautious before dismissing an antitrust complaint in advance of discovery . . . But quite another to forget that proceeding to antitrust discovery can be expensive.”

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Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009)

This was a Bivens action against numerous federal officials, including former AG John Ashcroft and former FBI director Robert Mueller.

After 9/11, a number of immigration sweeps netted (mostly) Muslims who were in the country illegally.

Iqbal was arrested, detained, and then deported to his native Pakistan, where he filed his lawsuit.

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Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009)(cont.)

Iqbal’s lawsuit pertained to his treatment; and he claimed he was beaten, mistreated, and that there were other violations of his rights.

As to Ashcroft and Mueller, Iqbal alleged that they “each knew of, condoned, and willfully and maliciously agreed to subject” Iqbal to harsh conditions “as a matter of policy, solely on account of [his] religion, race, and/or national origin for not legitimate penological interest.”

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Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009) (cont.)

District court denied MTD based on Conley’s “no set of facts.”

Second circuit considered Twombly in deciding appeal, but ultimately affirmed under a “flexible plausibility standard.”

Supreme Court affirmed dismissal, but on different grounds.

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Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009) (cont.)

Court set forth a two-step process for courts to follow when determining whether to grant a motion to dismiss:

1. Review complaint to determine which assertions are factual allegations and which are mere conclusions.

2. Consider factual allegations only, assume they are true, and “determine whether they plausibly give rise to an entitlement to relief.”

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Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009) (cont.)

The Court again recognized the heavy cost of discovery:

“Litigation . . . exacts heavy costs in terms of efficiency and expenditure of valuable time and resources that might otherwise be directed to the proper execution of the work of the [organization].”

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Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009) (cont.)

Iqbal had no facts to prove that Ashcroft or Mueller were involved in his poor treatment or that it was federal policy to treat all Arab men poorly, etc.

But Ashcroft and Mueller were not necessary parties. District Court allowed claims against others to proceed. Discovery could establish whether a federal policy exists, then

amend pleadings.

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Twombly + Iqbal= Twiqbal. So What Does This Mean?

Heightened pleading standard for plaintiffs (at least in federal court and some state courts).

In a number of contexts, the strategic use of Twiqbal may serve to eliminate most or all of a plaintiff’s claim.

Context matters. So does knowing your court/judge.

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Some Twiqbal Cases Worth A Closer Look: A Brief But Deeper Dive

Clearly, shake-out process continuing Impact in possibly unforeseen places. Be careful what you wish for Deciding what’s enough

Are we headed for a circuit split anytime soon?

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Twiqbal at work

In re Bausch & Lomb Inc.2008 WL 2308759 (D. S.C.)

“Regardless of how one views Twombly’s effect on notice pleading, some import must be ascribed to its requirement that the plaintiffs’ claims cannot depend on the existence of undisclosed facts.”

Economic loss claim fails without allegations that plaintiffs discarded rather than used allegedly defective product

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O’Neil v. Simplicity, 574 F.3d 501 (8th Cir. 2009)

Breach of warranty not properly alleged when plaintiffs could not identify a legally cognizable injury.

“It is not enough to allege that a product line contains a defect or that a product is at risk for manifesting this defect; rather, the plaintiffs must allege that their product actually exhibited the alleged defect. ”

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However, Not All Federal Courts Follow Twiqbal

Braden v. Tornier, Inc., 2009 WL 3188075 (W.D. Wash.) Complaint filed in state court and removed to federal court held to

Twiqbal standard.

Plaintiff may not be required to plead the theory of the defect to comply with Twiqbal.

“Plaintiffs properly point out that whether a product’s defect was due to its design or manufacture is the sort of information that is gained in discovery. To force plaintiffs to plead facts in support of the theory would shut the courthouse doors before Plaintiffs had an opportunity to meaningfully engage in the process.”

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In re Nuvaring, 2009 WL 2433468 (E.D. Mo.)

Class action re: female contraceptive device.

Defendants move to dismiss the MDL’s master complaint because it was deficient.

Court holds master complaint in MDL proceedings not appropriate to “pleadings challenges” and thus court will not hear MTD based on master complaint.

Defendants then filed individual motions to dismiss in all of the cases.

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In re Nuvaring, 2009 WL 2433468 (E.D. Mo.)(cont.)

The Court refused to entertain ANY of the individual motions to dismiss:

“I have reviewed dozens of individual complaints and, without ruling on the motions to dismiss, it appears to me that they state, at a bare minimum, plausible warning and design products liability claims under the Twombly and Iqbal standard.”

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What Are the States Doing?

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What Are the States Doing?

State courts that adopt or follow Twombly & Iqbal do so because their pleading standards follow the federal rules.

Those courts ignoring Twombly & Iqbal do so because (they believe) their pleading standards diverge from the Conley v. Gibson standard.

Most courts have yet to address the issue – either wait and see what state high court does, or not the right case.

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State Courts Adopting or Following Twiqbal

Connecticut Delaware Louisiana Maine Massachusetts Minnesota Montana Ohio South Dakota

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The Old World of Defense Pleading Before Twiqbal

Plaintiff’s claims are barred by the applicable statute of limitations.

Plaintiff has failed to mitigate her damages.

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The New World of Defense Pleading After Twiqbal

Plaintiff’s claims are barred by the applicable statute of limitations because she commenced her action more than three years after her cause of action for strict liability accrued and it is thus barred by Wis. Stats. §809.54.

Specificity is key. Must show on a MTD that there is no way for a plaintiff to prove their claims (i.e. Under Twombly, the claim is not plausible.”

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Plaintiff Bar Reaction to Twiqbal

Plaintiffs Bar Largely Disfavors Twiqbal

Seek to repeal Iqbal and Twombly through legislation

Seek to limit the application of Iqbal and Twombly

Seek to apply Iqbal and Twombly to their advantage

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Defense Bar Reaction to Twiqbal

Defense Bar Largely Favors Twiqbal

Seek to rigorously apply Iqbal and Twombly

Seek to apply Iqbal and Twombly in new contexts

Seek to preclude legislation repealing Twiqbal

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Congress’ Reaction to Twiqbal

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Legislation in Response to Twiqbal

H.R. 4115 Open Access to Courts Act of 2009

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Legislation in Response to Twiqbal

S. 1504 Notice Pleading Restoration Act of 2009

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Congressional Hearings

United States House of Representatives Subcommittee on the Constitution, Civil Rights, and Civil Liberties Committee on

the Judiciary

Witness List October 27, 2009: Arthur R. Miller, University Professor, New York University School of Law Gregory Katsas, Former Assistant Attorney General, Civil Division, U.S. Department of Justice John Vail, Senior Litigation Counsel and Vice President Center for Constitutional Litigation Debo P. Adegbile, Associate Director of Litigation, NAACP Legal Defense and Educational Fund

Witness List December 2, 2009: Hon. Jerrold Nadler, U.S. House Representatives, 8th District, NY Eric Schnapper, Professor of Law, University of Washington, School of Law Gregory G. Katsas, Director of Financial Regulation Studies, Former Assistant Attorney

General, Civil Division, U.S. Department of Justice Jonathan L. Rubin, Patton Boggs, LLP Joshua P. Davis, Professor, Center for Law and Ethics

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Congressional Hearings Continued…

Statement of John Vail – Oct. 27, 2009 (Center for Constitutional Litigation, P.C.)

Iqbal improperly broad and additional power into the hands of judges Iqbal insulates persons with power from scrutiny Iqbal flouts the rulemaking process Congress created

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Congressional Hearings Continued…

United States Senate – Dec. 2, 2009 Committee on the Judiciary

Witness List December 2, 2009: John Payton, President and Director-Counsel, NAACP Legal Defense Fund Gregory G. Garre, Partner, Latham & Watkins, LLP Stephen B. Burbank, David Berger Professor for the Administration of Justice, University

of Pennsylvania Law School

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Congressional Hearings Continued…

Statement of Gregory G. Garre (Former Solicitor General)

Twombly & Iqbal were correctly decided/rooted in existing law Any necessary response should be addressed through the

statutorily-authorized judicial rulemaking process Legislative response is unnecessary and unsound

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Current Status of Legislation

Not on the horizon for 2010….

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Academia’s Reaction to Twiqbal

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Law Review Articles Referencing Twiqbal

Edward A. Hartnett, Responding to Twombly and Iqbal: Where Do We Go From Here?, 95 Iowa L. Rev. Bull. _ (2010)

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Law Review Articles Referencing Twiqbal Continued…

Scott Dodson, New Pleading, New Discovery, 109 MICH. L. REV. (forthcoming 2010)

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Law Review Articles Referencing Twiqbal Continued….

Robin J. Effron, The Plaintiff Neutrality Principle: Pleading Complex Litigation in the Era Of Twombly and Iqbal, 51 WM. & MARY L. REV. 1997 (2010)

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Judiciary’s Reaction to Twiqbal

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Judge Posner: Smith v. Duffey, 576 F. 3d 336, 339-40 (7th Cir. 2009).

In our initial thinking about the case, however, we were reluctant to endorse the district court's citation of the Supreme Court's decision in Bell Atlantic v. Twombly, 550 U.S. 544 (2007), fast becoming the citation du jour in Rule 12(b)(6) cases, as authority for the dismissal of this suit.

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.

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Judge Posner: Smith v. Duffey, 576 F. 3d 336, 339-40 (7th Cir. 2009).

But Bell Atlantic was extended, a week after we heard oral argument in the present case, in Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009) - over the dissent of Justice Souter, the author of the majority opinion in Bell Atlantic - to all cases, even a case (Iqbal itself) in which the court of appeals had ‘promise[d] petitioners minimally intrusive discovery.'

Yet Iqbal is special in its own way, because the defendants had pleaded a defense of official immunity and the Court said 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 vigorous performance of their duties.

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Judge Posner: Smith v. Duffey, 576 F. 3d 336, 339-40 (7th Cir. 2009).

So maybe neither Bell Atlantic nor Iqbal governs here. It doesn't matter. It is apparent from the complaint and the plaintiff's arguments, without reference to anything else, that his case has no merit.

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How to Win at Twiqbal

A motion to dismiss might make sense in some cases.

However, think about using a Rule 12(e) motion.

Most judges are reluctant to dismiss a case.

Rule 12(e) forces plaintiffs to put factual allegations on the table – if they don’t, a judge is more likely to grant MTD.

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So Now What?

Don’t be afraid to file motions. But do so where you have a better shot at winning.

Twiqbal is a tool. It can be overused.

Pick your cases carefully. Make “good law,” especially in state courts.

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QUESTIONS?