Second Circuit revives Palin defamation suit

Decision here. I wrote about the case here.

The court of appeals correctly criticized the district court's weird use of an evidentiary procedure (testimony from the primary author of the challenged editorial) to evaluate the complaint. When a court considers information outside a complaint, it either must exclude the information and continue as a 12(b)(6) or convert to summary judgment; it cannot use the information and continue to treat the motion as a 12(b)(6). The Times argued that the testimony was background information that was "integral to" the material in the complaint; but that could not be right, because the information was obtained after the complaint was filed, as opposed to information the plaintiff could have relied on in drafting the complaint.

The problem with the decision was in holding that Palin's Amended Complaint (drafted with the assistance of that testimony) was plausible. This is bad for First Amendment purposes but procedurally interesting in two respects.

The court found that the district court had credited the editorial writer above the allegations in the complaint, which was improper. The district court had stated that the author's conduct was "much more plausibly consistent" with a mistake than with actual malice. But it "is not the district court’s province to dismiss a plausible complaint because it is not as plausible as the defendant’s theory. The test is whether the complaint is plausible, not whether it is less plausible than an alternative explanation." Twombly and Iqbal contain language that a complaint is implausible where there is a reasonable alternative explanation for the conduct (in Iqbal, the alternative was "protecting the nation after 9/11" rather than "invidious discrimination"). Lower courts have generally ignored that language; here, the Second Circuit flatly rejects that analysis, at least in this type of defamation action.

The court closed the opinion as follows:

We conclude by recognizing that First Amendment protections are essential to provide “breathing space” for freedom of expression. But, at this stage, our concern is with how district courts evaluate pleadings. Nothing in this opinion should therefore be construed to cast doubt on the First Amendment’s crucial constitutional protections. Indeed, this protection is precisely why Palin’s evidentiary burden at trial—to show by clear and convincing evidence that Bennet acted with actual malice—is high. At the pleading stage, however, Palin’s only obstacle is the plausibility standard of Twombly and Iqbal. She has cleared that hurdle.

But this raises an important point. The clear-and-convincing evidence standard has been incorporated into summary judgment, because whether a reasonable jury could find for the plaintiff must account for the standard. Should the same be true for 12(b)(6)--must it be plausible by clear-and-convincing evidence? This would twist pleading from its purposes, but Twombly and Iqbal did that in trying to make it a weed-out point. The question is whether we follow that to its logical conclusion.

The standard of proof may define how much of a problem this case will be for The Times and the First Amendment. The bulk of the analysis defines this as a case of competing factual inferences--Palin's facts show actual malice, the author says it was a mistake; if so, then this case cannot go away on summary judgment, because the court is equally prohibited from deciding witness credibility as would be required in this case--only a jury could resolve those questions.* That last paragraph of the opinion, emphasizing the standard of proof that will apply at trial and summary judgment, may have been a signal to the lower court about what should happen next.

[*] The court declined to treat the district court decision as one for summary judgment because, even as a summary judgment decision, the court impermissibly made credibility determinations.