Thursday, July 30, 2009

Pleading Standard in Federal Civil Procedure

"Congress is preparing to wade into the growing debate over the pleading standard for civil lawsuits after two recent Supreme Court decisions effectively upended long-standing precedent," a National Law Journal article said last week.

The article continued by saying that, "United States Senator Arlen Specter, had introduced a bill designed to return that standard to what it was prior to 2007, when the Court handed down its ruling in Bell Atlantic Corp. v. Twombly. That case, and another -- Ashcroft v. Iqbal, from the most recent term -- have raised the standard that pleaders must meet to avoid having their cases quickly thrown out of court." Senator Specter's bill would specifically direct federal courts to interpret pertinent rules as the Supreme Court did in a much earlier decision, Conley v. Gibson, in 1957.

The Supreme Court was authorized to make general rules of civil procedure for district courts in 1934. The original rules were adopted in 1937 and became effective in 1938. At issue now is how specific a pleading must be under the Federal Rules of Civil Procedure. Rule 8 requires that a complaint include "a short and plain statement of the claim showing that the pleader is entitled to relief," while Rule 12 allows for the dismissal of complaints that are "vague or fail to state a claim". Under the Court's decision in Iqbal, many courts are now requiring more specific facts that, plaintiffs lawyers say, aren't often available until discovery.

Michael Dorf in a FindLaw commentary yesterday, sought to answer the question, "Should Congress Change the Standard for Dismissing a Federal Lawsuit?," observing that "the goal of the Rules is adjudication on the merits, and so each of the pleadings—the plaintiff's complaint and the defendant's answer—need only put the court and the other side 'on notice' of what claims or defenses are at issue."

Dorf posits that the bill should be rewritten in that if it were concluded that the more liberal notice pleading regime of Conley v. Gibson should be restored, the Specter bill would still be problematic. Rather than specifying a standard for dismissing lawsuits, the Specter bill simply incorporates the Conley standard by reference.

"It's possible," he writes, "that even with the enactment of Senator Specter's proposed Notice Pleading Restoration Act, courts would still require 'plausible' pleadings per Twombly and Iqbal. They would be able to say that Twombly and Iqbal merely clarified, rather than overruled, Conley, and that by following Twombly and Iqbal, they are thereby also following Conley. True, such a move would not be consistent with Senator Specter's intent, but the courts often follow what they take to be the meaning of the words of a statute, rather than the intent of its sponsor.

Dorf also foresees Senator Specter's proposed legislation raising two other, more technical, difficulties as well. "First, the bill would make Conley the standard for dismissal of a plaintiff's complaint, but would do nothing with respect to the standard for judging a defendant's answer…

"The second difficulty is even more, well, technical. Even in the days of Conley, there were select circumstances in which pleaders were required to set forth specific facts, rather than general allegations. Rule 9(b) states that a party alleging fraud or mistake 'must state with particularity the circumstances constituting fraud or mistake.' By forbidding the dismissal of a complaint except under the Conley standard, the Specter bill would arguably eliminate the heightened specificity requirement for fraud or mistake—but again, only for plaintiffs.

"There is something to be said for repealing Rule 9(b). It has always been a bit of a mystery why just fraud and mistake, but not other easy-to-allege-but-difficult-to-prove facts, are covered by the Rule. Yet, if Rule 9(b) is to be repealed, it should be repealed expressly, and for defendants as well as plaintiffs."

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