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.