Posted on March 19, 2010 by Max Kennerly, Esq.

Fixing The Injustice of Ashcroft v. Iqbal

Last week, Prof. Edward A. Hartnett (of Seton Hall University School of Law) posted Responding to Twombly and Iqbal: Where Do We Go from Here?

Hartnett’s idea was eminently reasonable:

I also offer my own proposal, which focuses on the core issue at stake in debates about Twombly and Iqbal: should a plaintiff be able to obtain discovery in an effort to uncover evidence without which he or she cannot prevail?

Hartnett proposes amending Rule 12 of the Federal Rules of Civil Procedure to include:

Rule 12(j): Allegations Likely To Have Evidentiary Support After a Reasonable Opportunity for Discovery

If, on a motion under Rule 12(b)(6) or 12(c) that has not been deferred until trial, the claim sought to be dismissed includes an allegation specifically identified as provided in Rule 11(b)(3) as likely to have evidentiary support after a reasonable opportunity for discovery, the court must either (1) assume the truth of the allegation, or (2) decide whether the allegation is likely to have evidentiary support after a reasonable opportunity for discovery. In deciding whether an allegation is likely to have evidentiary support after a reasonable opportunity for discovery, the court must consider the parties‘ access to evidence in the absence of discovery and state on the record the reason for its decision.

If the court decides that the allegation is likely to have evidentiary support after a reasonable opportunity for discovery, it must allow for that discovery, under the standards of Rule 26, and deny the motion to dismiss. If the court decides that the allegation is not likely to have evidentiary support after a reasonable opportunity for discovery, the court must treat the motion as one for summary judgment under Rule 56, and provide all parties a reasonable opportunity to present all the material that is pertinent to the motion.

Again, eminently reasonable. Such an addition would immediately focus litigation on the real issues, thereby (1) enabling plaintiffs to conduct discovery into the most important areas while also (2) empowering defendants to have cases dismissed—prior to full discovery—if the plaintiff won’t be able to prove an essential element of their case.

How could anyone think that was unfair?

The defense bar champions at Drug and Device Law tried to manufacturer an objection, but the argument degenerated into blather and insults. They barely even mention the details of Hartnett’s proposal. Instead, they summarily dismissed him with:

Most of these proposals (except Professor Burbank’s) actually go far beyond Twombly/Iqbal and would overrule all or most of the prior precedent we cited above. That strikes us as facially overkill and indicative of unexpressed (and in some cases, ulterior) motives at work.

…

We understand that a lot of academics feel that they have to help their students get jobs, or else eventually they won’t have jobs either.  Thus, they tend to support anything and everything that results in more, rather than less, litigation.

Oh, snap.

Then again, an accusation of "ulterior motives" probably would have meant more if it didn’t come from someone paid by the hour to ensure corporations pay as little as possible to the people and families they hurt.

Frankly, reading through the post, I can’t help but wonder if Beck et al. indeed have some "ulterior motive" in misrepresenting how defense lawyers use Ashcroft v. Iqbal in their practice:

So when we get a complaint, we look to see whether, there’s at least one actual fact pleaded that supports each essential element of a cause of action.  A plaintiff can plead more if s/he so pleases, but there has to be at least one – otherwise we’ll probably file a Twombly/Iqbal motion.

The implied concession there—that they won’t file a motion to dismiss if "there’s at least one actual fact pleaded that supports each essential element of a cause of action"—is rubbish. They don’t run a charity over there at Dechert: if you file a case against one of their clients, they will come up with any argument they can to get it dismissed.

And that’s where the problem with Twombly / Iqbal—really, just Iqbal—comes in. Every time a case is filed today, the defendant inevitably files a motion to dismiss claiming that the "actual facts" plead aren’t "facts" at all, they’re "conclusions," and so are not, under Iqbal, entitled to an assumption of truth.

What’s the difference between a "fact" and a "conclusion?" Merriam-Webster says:

fact: an actual occurrence

conclusion: a reasoned judgment

Let me ask you, Dear Reader: who really won more votes in Florida in 2000, Bush or Gore?

Is your answer a "fact" or a "conclusion?" Do you know it as an actual occurrence, or did you make a reasoned judgment?

The problem with Iqbal is that it instructs courts—at the very beginning of the lawsuit, when they have nothing in front of them but a "short and plain" complaint—to perform a wildly subjective analysis about which allegations are merely "conclusions" and which of the non-conclusory allegations are "plausible." 

There’s nothing new about that problem. It’s the same problem that prompted Rule 8—the Rule supposedly interpreted by Iqbal—to be enacted in the first place:

You used to have the requirement that a complaint must allege the “facts” constituting the “cause of action.” I can show you thousands of cases that have gone wrong on dialectical, psychological, and technical argument as to whether a pleading contained a “cause of action”; and of whether certain allegations were allegations of “fact” or were “conclusions of law” or were merely “evidentiary” as distinguished from “ultimate” facts. In these rules there is no requirement that the pleader must plead a technically perfect “cause of action” or that he must allege “facts” or “ultimate facts.”

Rules of Civil Procedure for the District Courts of the United States: Hearings Before the H. Comm. on the Judiciary, 75th Cong. 94 (1938) (statement of Edgar B. Tolman, Secretary of the Advisory Committee on Rules for Civil Procedure Appointed by the Supreme Court); quoted by p.4 of Professor Stephen Burbank’s testimony before the Senate.

The whole point of Rule 8 was to ensure that the right to civil justice didn’t turn on metaphysical word games.

And yet we’re supposed to come full circle because, as Beck et al. continue,

Twombly/Iqbal are about reining in the cost of litigation; we might feel differently about Professor Hartnett’s proposal if it required payment of all a defendant’s costs of “appropriate” (the Article’s term) discovery – should designated allegations nonetheless turn out to be unfounded.  But under the proposal as offered, there’s no penalty for over-designation.  If it’s one thing that the fifty-year life span of Conley established, it’s that unrestrained pleading imposes huge discovery costs on defendants.  Even Professor Burbank (who really tried hard) was reduced to relying upon a single study of tiny cases in which even then 25% of the parties believed the process was too expensive.  The excessive cost of modern discovery is simply not a issue capable of dispute any longer.

At least Burbank actually cited something. Defense lawyers think they’re entitled to assert the cost of discovery—a cost due primarily to their own practice of relentlessly frustrating discovery at every turn—is "excessive" through sheer ipse dixit.

Sounds like a "conclusion" to me, not an "actual fact."

  • Manny Jacobowitz

    Hi, just happened across your blog and this post. I agree that Iqbal has problems, but with respect, I think you miss a few points.
    First, speaking as a former Biglaw defense litigator, we really don’t always file motions to dismiss. Yes, we’re more likely to do it in big-ticket cases, partly because of the cost-benefit ratio, partly because big cases tend to involve complex — and debatable — issues of pure law that are well suited to Rule 12(b)(6). But even in the big cases, it’s often a waste of time, money, and the judge’s patience. Very few issues reliably lead to dismissal under 12(b)(6), chiefly statute of limitation, lack of jurisdiction, and preemption. If you don’t have one of those issues, you think long and hard about whether to move under 12(b)(6).
    Second, the cost of discovery is not mostly due to motions practice. Maybe that is most of the cost to the average non-corporate plaintiff — but the corporate defense is the one who has to initially sift through literally millions of business records, hire experts in computer search strings, prepare a privilege log, and so on. Then too, there would be a lot less litigation over the scope of discovery if the plaintiffs’ bar were more willing to discuss reasonable discovery limits, stipulations, and confidentiality agreements, . Instead, we typically get 25-page discovery requests that amount to “give me all your records for the last 10 years” — a tall order for any business.
    Third, it’s not usually hard to figure out what is a fact and what is a conclusion. Generally, facts are events and transactions, the things lay witnesses testify to. A said X, B did Y. Conclusions are legal characterizations of the results of facts: By saying X, A defamed B; by doing Y, B breached the contract. It’s not asking a lot, to say that we plaintiffs should get to know what exactly we DID to defame, breach, or whatever. In fact, it’s what Rule 8 very clearly demands.
    Lastly, Professor Hartnett’s proposed rule creates an illusory choice: the judge finds there is a likelihood of evidence, in which case discovery proceeds, or he finds there isn’t, in which case we turn the motion into one under Rule 56, and plaintiff demands discovery under Rule 56(f), which leads to much the same result. Namely, that a plaintiff who feels strongly that something went wrong because he got hurt, get to riffle through corporate records until he finds (as he inevitably will) some technical flaw in corporate procedure that he can somehow relate by some long logic chain to his injury — even if he had no reason but res ipsa loquitur to think there was a problem in the first place.

  • http://www.litigationandtrial.com Max Kennerly

    Thanks for the comment. Let me address your points in reverse order.
    First, I agree with your last point: in many circumstances, the proposed rule does indeed create an illusory choice, since it, like Iqbal’s “plausibility” factor, asks the judge to engage in a wholly-subjective analysis of the complaint. Hence my preference that we return to the old standard. But — if we have to deal with this new world of “plausibility” and pleadings — that we should have some actual standards applied, even if they are sometimes illusory themselves. For the moment, there are virtually no standards at all, courts are just supposed to speculate about the “plausibility” of allegations and draw their own factual inferences (or lack thereof) based on nothing more than a “short and plain statement” of the claim, i.e. the complaint. That’s a problem.
    Second, following up on the above, I think your fourth point contradicts your third point. The reason the choice is “illusory” is because there is not a clear distinction between “facts” and “conclusions.” For example, at what point has an allegation of a conspiracy become a “fact” rather than a “conclusion?” Obviously, a single-sentence allegation of “the defendants conspired to harm plaintiff” is not enough, but how much detail need be provided? Do you have to attach e-mails or phone records of the conspiracy? Can you simply describe motive, means and opportunity? There’s no clear standard here, and that’s the problem.
    Third, I think we agree on the source of costs and discovery, but we’re discussing it differently. You’re entirely right that the bulk of these costs involve the defendants hiring attorneys to sift through millions of records to determine which are relevant and which are privileged; I described this as motion practice because, at core, the defendant is really spending money to preclude the plaintiff from prevailing on a motion to compel. If the defendant would simply give the documents over after a modest effort to search them for privileged and/or relevant information, and the process would not be nearly as expensive. Instead, defendants spend hundreds of thousands of dollars — sometimes millions — to ensure that not a single irrelevant or arguably privileged document slips out.
    Finally, I disagree with you about the frequency of motions to dismiss, particularly post-Iqbal. I have seen defendants answer complaints in comparatively low value contract cases, but if you have substantial damages, not to mention allegations claiming punitive damages or attorneys’ fees or the like, then you can bet your bottom dollar that you will get a motion to dismiss. To most defendants, the choice is obvious: why not file it? It might win, and otherwise we’re stuck paying the costs of litigation anyway.