Three House Dems Heed Plaintiffs’ Pleading Pleas

Three Democrats in the House of Representatives are pushing to roll back heightened pleading standards adopted by the Supreme Court that have led to thousands of antitrust and other cases being dismissed at the pleading stage.

The legislators are taking aim at two recent Supreme Court decisions that make it more difficult for plaintiffs to have their civil cases heard in federal court.  In an antitrust case, the Court in Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007) held that to survive a motion to dismiss, a complaint must include “enough facts to state a claim to relief that is plausible on its face.”  The Court went one step further in Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009), by holding that Twombly’s “plausible” pleading standard applied to all civil cases.      

Congressmen Jerrold Nadler (D-NY), John Conyers (D-MI), and Henry Johnson (D-GA) are currently working on a bill that would override the Iqbal decision to make it easier for plaintiffs to survive a motion to dismiss by relaxing the “plausibility” standard.  They seek to restore the standard to the precedent followed by federal courts for 50 years after the Supreme Court’s decision in Conley v. Gibson, 355 U.S. 41 (1957).  The accepted rule under Conley was that “a complaint should not be dismissed for failure to state a claim unless it appears beyond a doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.”  355 U.S. at 45-46.    

The bill, expected to be introduced this month, is similar to the Notice Pleading Restoration Act of 2009 (S. 1504) that has already been introduced in the U.S. Senate by Arlen Specter (D-PA).  

The impact of the Iqbal decision has already become clear.  According to a press release from Congressman Nadler, “over 2,000 federal civil actions have cited Iqbal and were, likely as a result, thrown out .…”  Nadler also testified at a House Judiciary Subcommittee hearing on October 27, 2009 regarding Iqbal and the new bill.  He testified that the Iqbal decision “will effectively slam shut the courthouse door on legitimate plaintiffs based on the judge’s take on the plausibility of a claim, rather than on the actual evidence” and it “is another wholly invented new rule, overturning fifty years of precedent, designing to close the courthouse doors.”  

Subcommittee member Jim Sensenbrenner (R-WIS), an opponent of the bill, said the Twombly and Iqbal decisions merely clarify existing pleading standards and that “there is no justification for congressional intervention.”  Others have argued that the bill’s passage could increase litigation costs for defendant corporations because cases would be more likely to proceed to the discovery phase where electronic discovery alone can cost millions of dollars.