Dismissals of Lawsuits by Consumers, Employees and for Civil Rights Violations Disparately Impacted by Twombly Iqbal

By Beth:

Those attorneys who represent consumers or individuals against corporations will be in the “tell me something I don’t know” category regarding the way the district courts treat the 12(b)(6) motion as the new summary judgment motion.  In other words, post-Iqbal and Twombly, the pleading standards are being used to dismiss the cases of those with the least access to pre-suit discovery from high-powered Goliaths, with sole custody and control of discovery.  Those of us who litigated for years prior to Iqbal and Twombly have lamented the sea change in long-established fundamental pleading standards.

The district courts have gone beyond what was envisioned by Twombly (a complex anti-trust case) (read Justice Souter’s important caveats) and Iqbal (a case against the US Attorney General, with important immunity issues not at issue in your typical consumer litigation).  Many questioned whether the concerns of discovery costs for a defendant were sufficient reasons to change the established pleading tradition of the Federal Rules “notice pleading” and Conley v. Gibson in the first place.  The perversion of these standards to allow judges to decide what is “plausible” by the facts which are supposed to be “taken as true” unless they are of the “little green man on the moon” variety (again, see Souter) has been one of the most radical, creeping changes in modern civil jurisprudence.  We have been referring to it as “12(b)(6) abuse for awhile now.

As reported this week in the Consumer Law and Policy Blog, full article at the link:

A study to be published in a forthcoming edition of the Virginia Law Review examines the effect of the Court’s Iqbal and Twombly decisions and concludes that its effect has been significant. The article’s abstract summarizes its findings:

First, this Article provides data showing that dismissals of employment discrimination and civil rights cases have risen significantly in the wake of Iqbal. These results remained significant even after controlling for potential confounding factors. Second, the data also suggest that certain factors interact with the plausibility standard to influence the resolution of a motion to dismiss, including perhaps most importantly the institutional status of the plaintiff and defendant. Individuals have fared poorly under the plausibility regime, at least when compared to corporate and governmental agents and entities. These effects remained significant even after controlling for several potentially confounding variables. Finally, by analyzing data on the progress of cases after a motion to dismiss has been adjudicated, this Article shows that the advent of heightened pleading has not resulted in higher quality claims.

The study found that cases brought by individuals represented by lawyers were dismissed 42 percent of the time before Iqbal and 59 percent after. For corporate plaintiffs, the dismissal rate was almost unchanged, moving from 37 up to 38 percent.

Further, the data show that dismissals of employment discrimination and civil rights cases have risen significantly in the wake of Iqbal.

See Reinert, Alex, Measuring the Impact of Plausibility Pleading (May 6, 2015). __ Virginia Law Review __ (2015 Forthcoming); Cardozo Legal Studies Research Paper No. 455. Available at SSRN:http://ssrn.com/abstract=2603273

Abstract:

In the United States, modern civil procedure began in 1938 with the promulgation of the Federal Rules of Civil Procedure. From then, until very recently, the notice pleading standard – emphasizing simplicity and brevity in pleadings over technicality – was held up as an example of the Rule’s commitment to adjudicating the merits of every claim and avoiding premature and wasteful disputes that often had little to do with merits. In Bell Atlantic v. Twombly and Ashcroft v. Iqbal, announced in 2007 and 2009, the United States Supreme Court revisited the notice pleading standard, announcing that “plausibility pleading” must now be the standard for assessing whether a complaint’s allegations are sufficient to justify moving to discovery and merits adjudication. This Article offers a comprehensive analysis of the impact of the plausibility pleading standard on resolutions of motions to dismiss in almost 4200 cases from 15 different judicial districts, representing all 12 general jurisdiction circuit courts of appeal. Relying on data obtained from all published and unpublished opinions in these districts for the years 2006 and 2010, this study provides the most detailed analysis to date of the impact that plausibility pleading and other variables have had on the resolutions of motions to dismiss in civil cases.The data reported here suggest that many prior studies have failed adequately to capture the full impact of Iqbal and Twombly on the resolution of motions to dismiss in federal court. First, this Article provides data showing that dismissals of employment discrimination and civil rights cases have risen significantly in the wake of Iqbal. These results remained significant even after controlling for potential confounding factors. Second, the data also suggest that certain factors interact with the plausibility standard to influence the resolution of a motion to dismiss, including perhaps most importantly the institutional status of the plaintiff and defendant. Individuals have fared poorly under the plausibility regime, at least when compared to corporate and governmental agents and entities. These effects remained significant even after controlling for several potentially confounding variables. Finally, by analyzing data on the progress of cases after a motion to dismiss has been adjudicated, this Article shows that the advent of heightened pleading has not resulted in higher quality claims.

Along with providing an important descriptive account of the impact that plausibility pleading has had on the course of federal litigation, this Article suggests two heretofore unexplored bases for questioning the wisdom of the transition initiated by Twombly and solidified by Iqbal. First, while one should not be shocked by the observation that civil rights and employment discrimination claims suffer under the plausibility pleading regime, one should still be troubled by it given the historical role that federal courts have played in such cases. Second, to the extent that the plausibility regime has exacerbated inequality in the courts between individual litigants on one hand and corporate and governmental entities on the other, without increasing overall case quality, there should be wider agreement that such a change is to be lamented.

The New York Times reported yesterday, link here, excerpt below:

Six years ago this week, the Supreme Court transformed civil litigation in the federal courts, making it much easier for judges to dismiss cases soon after they are filed.

The decision, Ashcroft v. Iqbal, may be the most consequential ruling in Chief Justice John G. Roberts Jr.’s 10-year tenure.

It has been cited in more than 85,000 lower-court decisions. But lawyers and law professors continue to differ about its practical effects, which are harder to measure than one may think. The latest and probably most thorough in a long series of studies, to be published in the Virginia Law Review, concluded that the decision had hit the powerless the hardest.

Before Iqbal, cases brought by individuals represented by lawyers were dismissed 42 percent of the time. After Iqbal, the rate was 59 percent. For corporate plaintiffs, the rates of dismissal stayed basically flat, edging up to 38 percent from 37 percent.

. . .

The new standard is sometimes called “plausibility pleading.” Soon after it was announced, Justice Ruth Bader Ginsburg, who had dissented, told a group of judges that it had “messed up the federal rules” governing civil litigation.

A couple of years later, a federal appeals court judge said the new standard might have required dismissal of the terse complaint in Brown v. Board of Education, the one that led to the Supreme Court’s landmark 1954 school desegregation decision.

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