Eight Months of Iqbal

It’s hard to imagine a topic in civil procedure that has garnered more attention recently than pleading standards. The Supreme Court’s decision last Term in Ashcroft v. Iqbal (which embraced its controversial 2007 decision in Bell Atlantic v. Twombly) prompted an onslaught of commentary and critiques (including a couple of excellent Concurring Opinions posts by Jon Siegel here and here). Particularly troubling about these decisions is the idea that judges should subjectively determine — without hearing any evidence or testimony — whether the plaintiff’s claim is a “plausible” one. The Iqbal decision hit its 8-month anniversary this week, so I figured I’d take this opportunity to share a few thoughts on federal pleading standards in the post-Iqbal era. I’m hoping to follow up with posts about how the lower courts have been handling Twombly and Iqbal, and on the proposed legislation now pending in the House and Senate to overturn these decisions.

First off, I agree with many of Twombly‘s and Iqbal‘s critics. At best, these rulings appear to be result-oriented decisions designed to terminate at the earliest possible stage lawsuits that struck the majorities as undesirable. And inviting the “plausibility” concept into pleading doctrine was extremely problematic. It would be doubly unfortunate, however, if courts compound these troubling decisions by misreading them to drastically change federal pleading standards going forward. As I argue in my article The Pleading Problem, 62 Stanford L. Rev. ___ (forthcoming May 2010), a careful reading of these cases reveals an approach that is not necessarily inconsistent with the notice-pleading framework that most attorneys, judges, and professors alive today learned when they were in law school.

How is this possible? For starters, the majorities in Twombly and Iqbal left the core principles of the notice-pleading era in place. Twombly, in fact, explicitly endorsed Conley v. Gibson‘s command that the complaint must merely “give the defendant fair notice of what the plaintiff’s claim is and the grounds upon which it rests.” Although Twombly abrogated one phrase from Conley (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”) this phrase was never taken as literally as the straw man that Twombly struck down. The true meaning of this phrase was simply that speculation about the provability of a claim is not a proper inquiry at the pleadings phase; provability is relevant only when it appears “beyond doubt” that the plaintiff cannot prove her claim. As to this point, Twombly is completely on board; Justice Souter wrote that “a well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those facts is improbable, and that a recovery is very remote and unlikely.”

Admittedly, Twombly/Iqbal‘s “plausibility” inquiry is a concept that was absent from the pre-Twombly pleading framework. But under Twombly and Iqbal, plausibility is not a basis for disregarding allegations in a complaint. Rather, plausibility is the second step in a two-part framework that, actually, makes the framework more lenient than it would be without it. Here are the two steps:

(1) Identify allegations that are mere legal conclusions, and disregard them for purposes of determining whether the complaint states a claim for relief.
(2) Determine whether the remaining non-conclusory allegations, accepted as true, plausibly suggest an entitlement to relief.

By its own terms, only conclusoriness is grounds for refusing to accept an allegation as true (step one). All non-conclusory allegations must be accepted as true. Period. The plausibility inquiry is not destructive, but generative. It allows a plaintiff to overcome the fact that a key element was alleged in a merely conclusory manner, if the entitlement to relief is plausibly suggested by the valid, non-conclusory allegations.

There is a profound irony in all this. Properly understood, the plausibility prong of the post-Iqbal framework makes the pleading standard more forgiving, not less. Imagine if the Court had just said: mere legal conclusions need not be accepted at the pleadings phase; if that eliminates a crucial element of the claim, then the complaint must be dismissed. By definition, this approach would be stricter than one without the plausibility inquiry, because it would remove entirely the possibility that “plausibility” could salvage complaints that otherwise rested on mere legal conclusions.

What all this means is that if Twombly and Iqbal are read correctly, their true impact will depend on how courts decide what allegations are “mere legal conclusions” that can be disregarded at step one of the new framework. But the power to disregard conclusory allegations is not itself revolutionary. An allegation that “the defendant violated the plaintiff’s legal rights in a way that entitles the plaintiff to relief” would not have to be accepted as true under a notice-pleading framework. To be sure, one could question the Supreme Court’s conclusions that the key allegations in Twombly and Iqbal were, in fact, impermissibly conclusory. But Twombly and Iqbal (in part because their reasoning on the “conclusory” issue is so spotty) leave lower courts considerable room to define conclusory in a way that reconciles Twombly and Iqbal with the pre-Twombly approach. I propose one way to do that in my forthcoming article, but there may be other ways as well. If courts confront this question with the recognition that Twombly and Iqbal left in place and even embraced notice pleading’s core principles and precedents, the end result need not be far off from the lenient, pre-Twombly standard.

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6 Responses

  1. toots says:

    “There is a profound irony in all this. Properly understood, the plausibility prong of the post-Iqbal framework makes the pleading standard more forgiving, not less. Imagine if the Court had just said: mere legal conclusions need not be accepted at the pleadings phase; if that eliminates a crucial element of the claim, then the complaint must be dismissed. By definition, this approach would be stricter than one without the plausibility inquiry, because it would remove entirely the possibility that “plausibility” could salvage complaints that otherwise rested on mere legal conclusions.”

    I’m not sure I follow. *If* the court had just eliminated mere legal conclusions, that would be stricter than what it actually did, which was state a plausibility standard. But that’s not what the court did.

    I understand how the new standard is “generative”–but it nevertheless requires the plaintiff to allege *some* fact(s), which they didn’t have to do before Iqbal. As far as I can tell, judges correctly dismiss complaints–which would not have been dismissed before–because they merely state legal conclusions (i.e., fail to allege any facts). In other words, the plausibility requirement makes the pleading stricter than pre-Iqbal/Twombly standards, but more forgiving than your hypothetical.

  2. Bruce Boyden says:

    I agree that there is likely to be bureaucratic resistance here from the lower courts. I expect the lower courts will resist a massive change in actual pleading practice, and push the edge of the envelope toward allowing complaints in the exact reverse way under the old regime they were continually pushing toward dismissing complaints. I did a quick survey of Courts of Appeals decisions under Twombly that seemed to be mostly limiting its scope, but haven’t repeated it post-Iqbal.

    Still, I’m less hopeful about the effect of the plausibility standard. As I see it the battle is all about what inferences are permitted from the facts to the legal conclusions in the complaint. You’re right that if legal conclusions were thrown out, and *no inferences at all* were permitted from the remaining factual allegations, then that would be a tougher standard to meet. In fact, it would be an impossible standard: no complaint could meet it. Even a standard negligence complaint has some inferences, as I showed my students a couple of days ago using Form 11. How do we know the driver acted negligently? Once you throw out the word “negligently”–a legal conclusion–there’s nothing expressly saying she was negligent. (Using an inverse Conley standard, we could say with confidence that there exists some set of facts under which she is *not* negligent.) The issue is, which inferences are permissible?

    Conley on its face stated a “logically possible” standard. That’s now moved to “plausible,” which after Twombly could possibly have been read as merely saying the inference must pass the laugh test–must not be ridiculous. That’s now Souter’s view, as indicated by the “little green men” example in his Iqbal dissent, but unless he thinks it’s just silly to think that large telecommunications companies might enter into an antitrust conspiracy, I think he’s engaged in a revisionist interpretation of his own opinion.

    And I think Iqbal rules such a limited reading out. It seems the threshold probability for a permissible inference is somewhere north of “not ludicrous.” Iqbal talks about the existence of “more likely explanations,” or an “obvious alternative explanation,” defeating plausibility. That suggests that the judge is to weigh the competing potential explanations, innocent and liability-generating, for the pleaded facts, and do some sort of balancing between the two using “judicial experience and common sense”. If the probability of the innocent explanations far outweighs the liability inducing ones — 80-20 maybe? — the complaint gets dismissed. The court also gets to make the inquiry “context-specific,” which perhaps is the route to consider discovery costs, so maybe it’s a sliding scale.

    I taught Iqbal for the first time on Tuesday, which is always helpful, and I’m coming around to the view that it was actually the method by which the allegations were generated, rather than the actual level of probability, that may have been driving the court. (Students: don’t quote me!) It seems to me that the court’s concern in both cases was that the plaintiffs were just guessing, and taking shots in the dark, where the costs of proceeding were likely to be large. But I don’t think the actual words of the opinions line up well with that (possible) motivation.

  3. Max Kennerly says:

    The devil is in the details. The distressing part to me, as a litigator who represents plaintiffs, is how the complaints in both Twombly and Iqbal were actually very plausible. Twombly, in particular, went to great lengths to explain precisely why the the most probable explanation for the defendants’ behavior was an illegal agreement to restrain trade. The Supreme Court simply disagreed.

    No matter how hard anyone tries, there is no “principled” way to retroactively justify that holding. The Supreme Court saw a lawsuit it did not like as a policy matter and so invented a way to get rid of it.

    Although district courts have long applied their own form of the plausibility test to complaints — a point I made right after Iqbal was decided — the law of unintended consequences suggests that the biggest problem is not necessarily a change in the law but rather an encouragement that district courts dismiss cases they don’t like even where a good number of other judges or lawyers genuinely believe that the claim asserted is “plausible.”

  4. Adam Steinman says:

    Regarding comment #1, I’m not sure it’s correct to say that plaintiffs did not have to allege any “facts” prior to Iqbal. A plaintiff could not have gotten away with alleging merely “The defendant violated my rights in a way that entitles me to relief” or “The defendant violated Title VII.”

    Let me be clear, though. To say that some “facts” are required is not to say that “fact pleading” is required. A great example is Form 11. Form 11 would fail under a true “fact pleading” regime because it does not provide facts to support the allegation that the defendant was indeed driving negligently. But Form 11 clearly provides some facts. It alleges that the defendant drove a vehicle against the plaintiff, at a particular time and place. I argue in my forthcoming article [http://ssrn.com/abstract=1442786] that by identifying the underlying liability-generating events (and the defendant’s role in those events), Form 11 provides more than a “mere legal conclusion.” It therefore needs to be accepted as true at the pleadings phase, even though an aspect of the crucial event (i.e., that the defendant was driving “negligently”) is described with what, in isolation, might be called “conclusory” language.

  5. Adam Steinman says:

    Thanks, Bruce, for your comments (and for your earlier feedback on this project). I’m really glad you brought up the “little green men” example Souter uses in his Iqbal dissent. He definitely did himself a disservice if he meant that hypo as illustrating the “plausibility” standard he used in Twombly. But I don’t think that’s what he meant. Souter’s not saying that allegations can be disregarded ONLY if they’re of the little-green-men variety. He’s saying that “factual allegations”, i.e., NON-conclusory allegations, can be disregarded only if they’re of the little-green-men variety. Souter’s point is that the crucial allegations in Iqbal were NON-conclusory and should have been accepted as true (UNLESS they were of the little-green-men variety, which they weren’t).

    Souter’s take on the Iqbal complaint illustrates nicely the relationship between the conclusory and plausibility prongs of the two-part test. He writes that Iqbal’s allegations were not “confined to naked legal conclusions.” As he puts it:

    “The complaint alleges that FBI officials discriminated against Iqbal solely on account of his race, religion, and national origin, and it alleges the knowledge and deliberate indifference that, by Ashcroft and Mueller’s own admission, are sufficient to make them liable for the illegal action. Iqbal’s complaint therefore contains ‘enough facts to state a claim to relief that is plausible on its face.'”

    So according to Souter, where the non-conclusory allegations “are sufficient to make [defendants] liable for the illegal action,” they “therefore contain[] ‘enough facts to state a claim for relief that is plausible on its face.” No secondary inquiry into the plausibility of those non-conclusory allegations is required. And Kennedy’s majority opinion doesn’t suggest otherwise. The difference is that Kennedy thought the crucial allegations were conclusory and, hence, had to turn to the plausibility inquiry to see whether the claim could nonetheless proceed.

    Frankly I’m inclined to agree with Souter that the allegations in Iqbal should not have been deemed conclusory. But I suggest in my forthcoming article that there are legitimate (though debatable) questions about the allegations in Iqbal that can support the majority’s conclusion without calling into question other pillars of the notice-pleading era (e.g., Swierkiewicz, Form 11, Form 18).

    As to your point about Form 11, I think Form 11 passes muster without any need to inquire whether the negligence allegation is “plausible” or supported by inferences from other allegations. As I state in Comment #5, Form 11 sufficiently identifies the underlying liability-generating event (and the defendant’s role in that event) such that it is more than a mere legal conclusion, even if one characteristic of that event (the defendant’s negligence) is alleged with what one might call conclusory language. Again, I get into lots more detail on this in my article [http://ssrn.com/abstract=1442786].