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Wednesday, March 18, 2015

Has Conley v. Gibson really been overruled? (And did the Fourth Circuit just tee up the next big SCOTUS case on pleading?)

I was glad to see Dave get the Twombly/Iqbal train rolling this month. Whatever the debate surrounding the empirical impact of Twombly and Iqbal, federal courts are continuing to struggle with what those decisions mean for how judges should decide Rule 12(b)(6) motions. A particularly difficult question has been the vitality of pre-Twombly Supreme Court precedents like Conley v. Gibson and Swierkiewicz v. Sorema.

These issues were on display last Friday (the 13th, by the way) as a divided Fourth Circuit panel affirmed the dismissal of an employment discrimination claim in McCleary-Evans v. Maryland Department of Transportation (No. 13-2488). The majority opinion by Judge Niemeyer rejected the plaintiff’s reliance on Swierkiewicz, emphasizing that the Supreme Court in Swierkiewicz had “applied a pleading standard more relaxed than the plausible-claim standard required by Iqbal and Twombly.” In dissent, Judge Wynn argued that the majority had improperly “ignore[d] the factual underpinnings of the Swierkiewicz holding, looking solely to the Supreme Court’s 2009 decision in Iqbal to guide its decision,” and noted that lower federal courts “have no authority to overrule a Supreme Court decision no matter how out of touch with the Supreme Court’s current thinking the decision seems.”

Twombly and Iqbal are problematic decisions in many respects, and diagnosing their flaws is important. Even more important, though, is the question of how courts should be applying Twombly and Iqbal, especially in relation to pre-Twombly Supreme Court case law. Properly understood, Twombly and Iqbal can and should be read to preserve the notice-pleading approach that the Supreme Court repeatedly employed during the half-century before Twombly. I’ve laid out this argument here and here, and explained how the basic framework Iqbal articulated can be applied in a way that is consistent with notice pleading and pre-Twombly precedent. This understanding of Twombly and Iqbal is confirmed by more recent Supreme Court pleading decisions—especially the 2014 decision in Johnson v. City of Shelby—which cast doubt on the presumption that the Court’s pre-Twombly case law even is “out of touch with the Supreme Court’s current thinking.”

I may have more posts on pleading as March marches on, but for now I wanted to address the one—and only—instance where the Twombly and Iqbal opinions directly call into question any aspect of pre-Twombly case law. That, of course, was Twombly’s “retirement” of Conley’s statement 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.”

Twombly overruled Conley” is a great sound bite if you prefer the maximalist reading of Twombly and Iqbal that one sees in Judge Niemeyer’s McCleary-Evans opinion. But it’s a huge oversimplification, especially when Twombly explicitly quoted and embraced the language from Conley that enshrined notice pleading into federal practice: “All the Rules require is a short and plain statement of the claim that will give the defendant fair notice of what the plaintiff’s claim is and the grounds upon which it rests.”

As for the decision to “retire” the “no set of facts” language itself, it’s important to pay attention to Twombly’s actual reasoning on this point. Justice Souter’s concern was that a “focused and literal reading” of that phrase would preclude dismissal “whenever the pleadings left open the possibility that a plaintiff might later establish some set of undisclosed facts to support recovery.” OK, let’s pretend that courts actually applied this “focused and literal reading” of Conley. And suppose I file a complaint that alleges:

1. [Jurisdictional statement]
2. The Earth is round.
Therefore, I demand judgment against one or both defendants for $ <_____>, plus costs.

One can imagine any number of facts that are consistent with both (1) the Earth being round, and (2) me having a claim for relief against the defendants. Thus, this complaint would “le[ave] open the possibility” that I “might later establish some set of undisclosed facts to support recovery.” Under the reading of Conley that Twombly retired, my complaint should pass muster.

Obviously this is not at all what Justice Black meant when he penned the “no set of facts” sentence in Conley. Nor was that nonsensical reading of Conley ever the foundation for classic notice-pleading precedents like Scheuer, Leatherman, or Swierkiewicz. But it was only this straw-man reading of Conley that Twombly “retired.”

Once Twombly’s handling of Conley is clarified, this reality remains: there is not a single meaningful aspect of pre-Twombly case law that is explicitly rejected by Twombly or Iqbal. From the standpoint of the lower federal courts, at least, any approach to pleading that would defy pre-Twombly Supreme Court precedent is highly suspect.

[Cross-posted at the Civil Procedure & Federal Courts Blog

Posted by Adam Steinman on March 18, 2015 at 09:46 AM in Civil Procedure | Permalink


Thanks, Bruce. I think there are more similarities than might appear at first glance. An allegation that would be necessary to establish a claim for relief is either missing entirely (in the "Earth is round" example) or is disregarded because it merely states a legal conclusion (as with the P.51 conspiracy allegation in Twombly). In both scenarios, though, the complaint would still be sufficient under the "focused and literal reading" of the no-set-of-facts language that Twombly retired, because the remaining allegations leave open the possibility that a valid claim might later be established.

This confirms that the real action—and the real potential for danger with T/I—is in when, exactly, a court can refuse to accept an allegation as true. After T/I, the court can do so only with respect to allegations that are mere legal conclusions. As to the key allegation in Twombly, Souter doesn't give much guidance. He does suggest that there's a difference between an allegation of an agreement that "rests on parallel conduct" and one that is an "independent allegation of actual agreement," but I'm not sure he had a clear theory about where this line is. Maybe it's a simple as the fact that paragraph 51 alleged that the agreement was "in light of" the parallel conduct rather than the other way around. As long as there's uncertainty about this, though, the rule that lower courts can't treat SCOTUS cases as implicitly overruled means they shouldn't infer an approach to this issue that would render Conley, Swierkiewicz, etc. dead letter.

So in my mind, the space where courts can continue to follow Conley, Swierkiewicz, etc. is in the recognition that any non-conclusory allegation must be accepted as true. That is, the crucial allegations in Conley, Swierkiewicz, Johnson, and others were not mere legal conclusions and, therefore, must be accepted as true without any separate inquiry into their plausibility. And as I explain more in the papers, an allegation should not automatically become a legal conclusion simply because it alleges generally that a defendant acted with a particular state of mind. (This is one of many areas of confusion and disagreement in the lower courts, though.)

Posted by: Adam | Mar 19, 2015 3:56:08 PM

Thanks Adam for your response. I'm not sure I follow though, even after looking at the pages of your article you cite. Even under Souter's view, the allegations of parallel conduct (and non-competition? that one's always been a bit unclear) are at least *germane* to a well-pled complaint. If the parallel conduct comes about by agreement, then it's a violation. It's just that Souter doesn't believe parallel conduct by itself is enough to show agreement. But that's not the situation with the Earth-is-round complaint. The problem with that complaint is the complete lack of any germane allegations that even provide notice of the claim, so obviously it's beyond the legitimate scope of Conley even if literally within the test. Souter's view is not that the Twombly plaintiffs didn't provide notice of the claim, it's that they didn't show that they have reason to believe their claim exists in fact. That's reacting to more than just a hyper-literal reading of Conley, one that the Conley court itself would not have agreed with. It's saying the complaint must do a bit more than merely provide notice of what the claim is, which is far different from what Conley was saying. Conley upheld a complaint that alleged, after several allegations about the union's failure to defend black members, that that failure "constituted a planned course of conduct designed to discriminate against them because of their race or color," and that was it for the intent and conspiracy allegations. What you are calling an "independent allegation of intent" seems to me to be saying that intent cannot be alleged generally any more, unlike in Conley, and it must now be demonstrated with specific factual allegations, at least where it seems questionable. It seems to me that if Paragraph 51 of the Twombly complaint had simply omitted the basis of the plaintiffs' "information and belief" and simply asserted the agreement to exist (on information and belief), they would not have had any better luck.

Posted by: Bruce Boyden | Mar 18, 2015 4:42:53 PM

Thanks, Comment2. I called Niemeyer's approach maximalist because it insists that T/I imposed a stricter standard than Swierkiewicz did, whereas Wynn recognizes that it's improper for lower courts to read the Supreme Court as having implicitly overruled prior Supreme Court decisions. As I explain in the post, Twombly's treatment of Conley shouldn't be read to change anything, because Twombly only "retired" a hyper-literal reading of that phrase that was never the basis for the pre-Twombly approach.

T/I do develop a new framework for evaluating a complaint: first disregard allegations that are mere legal conclusions, and then ask whether the remaining allegations plausibly suggest an entitlement to relief. But as I talk about more in my papers, that framework is not fundamentally inconsistent with notice pleading (the 2014 Johnson case I mention confirms this). It would be a mistake, therefore, to read T/I as implicitly overturning cases like Swierkiewicz—especially when the Court has continued to cite such prior cases approvingly.

Posted by: Adam | Mar 18, 2015 3:23:22 PM

Thanks for your comments, Scott & Bruce.

I might be missing Scott's point, but I don't think I agree that a 12(e) motion would be the only way to challenge the "Earth is round" complaint under Conley. Even in connection with the "fair notice" language, Black seems to be talking about whether dismissal is proper.

In my view, Black's point with the "no set of facts" sentence was that speculation about the provability of a claim is not typically grounds for dismissal. Provability is relevant only when it appears "beyond doubt" that the plaintiff cannot prove her claim. Twombly does not purport to retire this idea. In fact, Twombly endorses it: "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." That's also important with respect to Bruce's comment. Whatever Twombly did to Conley's "no set of facts" language, it did not authorize courts to second-guess a complaint's allegations based on their potential provability.

I also don't think we should infer that Twombly meant to retire anything more that the problematically "focused and literal reading" of Conley described above. Twombly confronted the "no set of facts" language because it had decided earlier in the opinion to disregard the allegation that the defendants had conspired with one another. On that point, Souter's reasoning was that the plaintiffs had "rested their § 1 claim on descriptions of parallel conduct and not on any independent allegation of actual agreement among the ILECs." In my opinion, Souter was wrong to read the Twombly complaint that way. But in any event, he indicated that "an independent allegation of actual agreement" would be sufficient. [I talk more about Souter's reasoning on this particular issue in my article (available at http://ssrn.com/abstract=1442786), especially at pp.1337-39.]

Posted by: Adam | Mar 18, 2015 2:59:42 PM

I don't understand why Judge Niemeyer's opinion deserves characterization as a "maximalist reading of Twombly and Iqbal". The opinion says Twombly/Iqbal affected Conley in two (closely related) ways: (1) by explicitly overruling the "beyond doubt"/"no set of facts" standard and (2) by replacing its associated "possibility" threshold with one of "plausibility". That's all that Judge Niemeyer says Twombly/Iqbal did to Conley. (Presumably, he would say that Twombly/Iqbal accord with Conley that all that's required is a short and plain statement that gives fair notice of the claim and its grounds: Twombly/Iqbal just provide a new test for how those requirements are or are not met.) Why is that "maximalist"? Re (1): that seems to be exactly your interpretation of Twombly/Iqbal's relationship to Conley. Re (2): that doesn't seem to go much beyond what you've already said, and it seems plainly correct in any event. Are you disagreeing with it as an understanding of Twombly/Iqbal? Or are you saying that McCleary-Evans reflects a more expansive reading of Twombly/Iqbal (for which I just don't see a basis in the opinion)?

Posted by: Comment2 | Mar 18, 2015 1:58:37 PM

"But it was *only* this straw-man reading of Conley that Twombly 'retired.'"

I don't think that can be right. The context of the retirement was that the Conley language was, according to Justice Souter, the only support for upholding the validity of the Twombly complaint. And the key allegation there was germane, unlike your "Earth is round" hypo, but formulaic: that based on allegations of non-competition and parallel stomping on CLECs, the seven Baby Bells entered into a contract, combination, or conspiracy to restrain trade. I think that's meaningful; it means at the least that you can't really plead intent or states of mind generally any more, at least where they are questionable, despite Rule 9(b).

Posted by: Bruce Boyden | Mar 18, 2015 1:06:10 PM

I'm not sure it's right that "this is not at all what Justice Black meant when he penned the 'no set of facts' sentence in Conley." Just because 12(b)(6) is not available does not mean 8(a)(2) is satisfied or the defendant is without remedy. The complaint in your hypo does not provide adequate notice. Therefore, it is susceptible to a 12(e) motion for a more definite statement. Black was right that 12(b)(6) is not available, but that does not mean that the "complaint should pass muster." In Conley, Black still required the complaint to provide "fair notice."

Posted by: Scott Dodson | Mar 18, 2015 11:52:00 AM

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