Opinion
January 1, 2007
In theory, pleading under Federal Rule of Civil Procedure 8 plays a minor part in the litigation process. The complaint opens the door to that process by crossing a relatively low bar and thereafter plays but a minimal role in the ultimate resolution of the controversy. But anyone who practices in federal court knows that the reality is somewhat different. Federal pleadings are typically thick with facts and consequential battles are often fought over the adequacy of a pleading. So too, lower federal courts more than occasionally inhale the mantra of simplified pleading and exhale a heightened pleading standard. Those of us who teach civil procedure or federal practice are, therefore, confronted with the task of accommodating theory with reality, and in the process of doing so our lyrical odes to simplified pleading often end up tangled in a garden of verbal weeds. If we are lucky enough to arrive at a rough accommodation of theory and practice, the judicial gardeners rattle the pleading tree to see what shakes loose. And, oh, they've done it again.
In late May and early June of 2007, the Supreme Court decided two cases construing and applying Federal Rule of Civil Procedure 8(a)(2): Bell Atlantic Corp. v. Twombly and Erickson v. Pardus. Bell Atlantic involved the adequacy of a complaint filed under § 1 of the Sherman Act (conspiracy in restraint of trade). In that case, the Court ruled that the complaint failed to state a claim on which relief could be granted due to the absence of factual allegations supportive of the charged conspiracy. The dissent accused the majority of adopting a heightened pleading standard; the majority denied that this was the case. Confusion over the import of the decision quickly surfaced in lower court opinions and on the blogosphere. In the words of the Second Circuit, "Considerable uncertainty concerning the standard for assessing the adequacy of pleadings has recently been created by the Supreme Court's decision in Bell Atlantic v. Twombly."
127 S.Ct. 1955, 167 L.Ed.2d 929 (2007).
127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007).
Iqbal v. Hasty, 490 F.3d 143 (2d Cir. 2007) (adopting and applying the Bell Atlantic "plausibility" standard to non-Sherman Act claims when facts alleged suggest implausibility); Weisbarth v. Geauga Park Dist., ___ F.3d ___, ___ 2007 WL 2403659 (6th Cir. 2007) (noting but not resolving conflicting lower court decisions in the Sixth Circuit as to whether Bell Atlantic applies beyond the antitrust-conspiracy context); E.E.O.C. v. Concentra Health Services, Inc., ___ F.3d ___, ___, 2007 WL 2215764 (7th Cir. 2007) (Flaum, J., concurring) ( Bell Atlantic imposed new fact-based pleading requirement); Watts v. Florida Int'l Univ., ___ F.3d ___, ___, 2007 WL 2331029 (11th Cir. 2007) (under Bell Atlantic "pleading specificity standard" measured by plausibility).
Howe, Amy, More on Yesterday's Decision in No. 06-7317, Erickson v. Pardus, Scotusblog, www.scotusblog.com, June 5, 2007 (summarizing the various conflicting interpretations of Bell Atlantic) (hereafter Howe).
Iqbal v. Hasty, 490 F.3d 143, 155 (2d Cir. 2007).
In Erickson, the Court rejected the judicial imposition of a heightened pleading requirement in a pro se prisoner case. At least at a surface level, Bell Atlantic and Erickson appear to be in tension with one another, each pulling in opposite directions on what might be perceived as the pleading continuum between notice/simplified and heightened pleading standards. On the other hand, one could read Erickson as an assurance that Bell Atlantic did not alter the pleading playing field and that it represents nothing more than a straightforward application of the standard pleading model applied in a particular context. Or something in between.
Part of the difficulty in assessing these new opinions arises from the fact that Rule 8(a)(2) pleading problems are all too often lumped together under a single rubric such as "notice pleading" or as involving a bright line distinction between a liberal standard of "fair notice" and a stricter standard of "heightened pleading," when, in reality, there are a range of pleading issues that do not fit comfortably within such narrow compartments or comparisons. In addition, the jurisprudence of pleading under Rule 8(a)(2) has been complicated by overgeneralizations of what is permitted or not permitted under the rule. Assertions that the rule does not require the pleading of facts or its converse that the rule does not countenance the pleading of conclusions are both oft stated and both demonstrably false, at least in terms of the underlying principles of Rule 8(a)(2). Unfortunately, those pleading principles are as often ignored as they are honored.
As a partial remedy to the increasingly opaque waters of pleading practice, Part I of this article introduces a pleading template that is designed to differentiate among three related but distinct pleading principles. The first principle operates as more of an umbrella for the other two, although it does have some independent utility. Roughly stated, it requires that a complaint (or other claim-asserting pleading) be premised, at the very least, on a minimal factual narrative. In other words, it provides that a complaint must represent something more than an abstract invocation of the law. The second and third principles, which can be succinctly described as fair notice and substantive sufficiency, address two distinct problems that must be resolved independently of one another in order to validate the sufficiency of a pleading. The factual narrative provides the grist from which to make these separate determinations, but that grist operates differently as to each of these principles, such that the satisfaction of one will not necessarily satisfy the other. This operative and theoretical independence between fair notice and substantive sufficiency is the critical point of the template and an essential theme of the article.
Part II of the article applies the template to Swierkiewicz v. Sorema N.A. The purpose of this discussion is to examine the template in action and to provide a judicial measure against which to assess Bell Atlantic and Erickson. Part III presents a template-driven discussion and critique of Bell Atlantic. Part IV presents a similar discussion and critique of Erickson as well as a comparison between that case and Bell Atlantic. Part V offers some parting observations on modern pleading practice.
534 U.S. 506, 122 S.Ct. 992, 152 L.Ed.2d 1 (2002).
As a preview of what is to come, this article defends Swierkiewicz and Erickson as correctly decided and as easily defensible in terms of the proposed pleading template and longstanding pleading principles. Bell Atlantic, on the other hand, is not so easily defended. The opinion is poorly crafted and includes an abundance of contradictory dicta. Consistent with the foregoing, within three months of the decision, 808 lower federal courts opinions had cited the case, often taking divergent views of what it meant. Nonetheless, I conclude that the decision was correctly decided, albeit with some reservations and caveats. Of course, my conclusion relies on a particular interpretation of the Court's opinion and I have no doubt that reasonable and intelligent minds can and will arrive at different interpretations, and this especially so given the opinion's lack of craftsmanship. I do not, therefore, argue that my interpretation of Bell Atlantic-one that focuses on the holding and attempts to cabin the unfortunate dicta-is the only rational interpretation. Rather, I argue that it is the preferred interpretation as a matter of commonsense and damage control. I also believe it is the interpretation most consonant with what the Court thought it was doing.
See footnote 3, supra. A full survey of the cases construing and applying Bell Atlantic, and to a lesser extent Erickson, is well beyond the scope of this article, but even a brief perusal of those decisions demonstrates that the Supreme Court will soon need to revisit the question of federal pleading practice.
I should confess that my initial reaction to the Bell Atlantic decision was completely negative. In fact, I joined an amicus brief filed in Bell Atlantic in which the signatories argued quite persuasively for the opposite result. Brief of Amici Curiae Legal Scholars, No. 05-1126 (October 13, 2006). My qualified endorsement of Bell Atlantic should not, however, be interpreted as the product of an "I've-seen-the-light" conversion. Rather, it flows from an effort to face Bell Atlantic realistically and on its own terms. That face-off was, in part, motivated by my usual respect for Justice David Souter, the author of the majority opinion.
I. Federal Pleading Template: Transactional Sufficiency, Procedural Sufficiency Substantive Sufficiency
Federal Rule of Civil Procedure 8(a)(2) requires that a complaint contain "a short and plain statement of the claim showing that the pleader is entitled to relief." This pleading standard imposes a relatively slight burden on a plaintiff, but the burden that it does impose is real and enforceable. Thus, consistent with Rule 8(a)(2), a pleading asserting a claim for relief:
• Must be premised on a factual transaction and not simply on an abstract invocation of the law ("Transactional Sufficiency");
• Must describe the factual transaction with sufficient clarity to give the opposing party "fair notice" of the underlying event and of the nature of the claim arising out of that event ("Procedural Sufficiency"); and,
• Must allege facts sufficient to show that the pleader is entitled to relief, which is to say that the pleading must state a claim on which relief can be granted ("Substantive Sufficiency").
What follows is a brief discussion of these standards and the respective role that each plays (or ought to play) within the federal pleading system. During that discussion, I will use the following hypothetical (and variations on it) as an explanatory tool:
Bob was denied admission to the eponymous All Girls High School (AGHS), a private institution that receives no state or federal funding. He sued AGHS in a federal court, claiming that the school had discriminated against him on the basis of gender in violation of the Equal Protection Clause of the Fourteenth Amendment. In his complaint, Bob alleged that he applied for admission to AGHS in a timely fashion for the 2007-2008 academic year, that he was otherwise eligible for admission, but that due solely to his gender AGHS denied him admission. His complaint alleged that although AGHS is a private school, it performs a public function by providing students with a secondary education. As a consequence of this public function, Bob specifically alleged that AGHS should be treated as a state actor subject to the restraints of the Fourteenth Amendment.
A. Transactional Sufficiency (Factual Pleading)
Transactional Sufficiency requires that the pleading contain a factual narrative sufficient to move the underlying claim from the abstract assertion of a right to an assertion that is premised on an actual, identifiable event. For example, the classically minimalist, but nonetheless adequate pleading in Dioguardi v. Durning provided at least a crude outline of the narrative on which the plaintiff sought relief.
139 F.2d 774, 775 (2d Cir. 1944) ("We think that, however inartistically they may be stated, the plaintiff has disclosed his claims. . . .").
The requirement of a factual narrative flows directly from the text of Rule 8(a)(2), which mandates a short and plain statement " showing that the pleader is entitled to relief." (Emphasis added) Without a factual premise for an asserted claim, such a "showing" is simply impossible. Each of the form complaints included in the Appendix to the Federal Rules of Civil Procedure recognizes this principle, for each is dependent on some identifiable set of facts. Transactional Sufficiency can also be seen as a product of Article III's case or controversy requirement, i.e., as a means to ensure that the claim presents an actual, real-world conflict between adverse parties.
See Forms 3-18, Federal Rules of Civil Procedure, Appendix of Forms.
Consistent with the foregoing, a complaint that does no more than describe the legal basis for an asserted claim does not satisfy the requirements of Rule 8(a)(2). It is not enough, in other words, to recite the elements of a right of action or to allege no more than that the defendant negligently harmed the plaintiff or that the defendant breached a contract. Instead, the complaint must place the claims asserted within the setting of a factual narrative. A failure to do so stops the complaint dead in its tracks. Thus, the notion, often repeated, that federal pleadings are not dependent on facts is belied by the reality of actual practice, the text of Rule 8(a)(2) and by judicial enforcement of the Transactional Sufficiency principle. As stated by one commentator, "the rules do contemplate a statement of circumstances, occurrences, and events in support of the claim being presented."
5 Wright, Charles Alan Arthur R. Miller, Federal Practice and Procedure § 1216, at 236 (3d ed. 2004) (hereafter "Wright") ("[P]leading must contain something more by way of a claim for relief than a bare averment that the pleader wants compensation and is entitled to it.").
Id. at 194.
The complaint filed in the AGHS hypothetical, whatever other defects it may have, easily satisfies Transactional Sufficiency for the simple reason that it identifies the events giving rise to claim. There is, in other words, a factual narrative sufficient to place the complaint outside the realm of the abstract.
Briscoe v. LaHue provides an example of the Transactional Sufficiency principle applied. In that case, a prisoner, who had been convicted of rape and armed robbery in a state criminal proceeding, filed a federal civil rights lawsuit charging that certain individuals had conspired to deprive him of his constitutional rights during that proceeding. He named as defendants the judge, the court reporters, the witnesses, the prosecutors and all of his defense attorneys, for a total of twelve defendants. His sole allegation of the alleged civil rights conspiracy was:
663 F.2d 713 (7th Cir. 1981), cited with approval in Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986).
That all defendants mentioned above and [their] agents, acted under color of state law and their private capacity, knowingly and wilfully, conspired together, with the malicious intent and purpose of depriving convicted accused and or Negro citizen and or convicted felon and or incarcerated client of Due process, Effective Assistance of [counsel], and Equal Protection of the Laws and Privileges of United States, to-wit without plaintiff's consent or knowledge.
Id. at 723.
The Seventh Circuit affirmed the lower court's dismissal of the complaint with the following explanation:
This recitation of legal conclusions is wholly devoid of facts upon which a claim for relief can be based. Since Talley's complaint does not set forth any facts suggesting a conspiracy between state officials and the private defendants, it fails to state a § 1983 claim. And since there are no allegations of specific facts suggesting a racial or other invidiously discriminatory animus behind the private defendants' alleged conspiracy, the complaint similarly fails to state a claim under § 1985(3).
Id
The flaw in the complaint was not the presence of "legal conclusions" among the allegations. Rather, the flaw was that the complaint, taken as a whole, operated as an abstract invocation of the law, i.e., it did no more than recite the elements of a civil rights claim and plug the defendants into the formula. In so doing, the complaint violated the principle of Transactional Sufficiency, for it lacked a sufficient factual narrative to move the claim from the abstract to the real.
One can expect that very few cases will violate the Transactional Sufficiency principle, the most likely candidates being pro se complaints filed by prisoners and even those must be provided an opportunity to cure the defect. Moreover, as we will see, a case that violates Transactional Sufficiency will also be likely to violate both Procedural and Substantive Sufficiency, albeit for very different reasons. Nonetheless recognition of the Transactional Sufficiency principle serves two important purposes. First, it provides a blunt reminder that the "short and plain statement" standard of Rule 8(a)(2) does not eliminate the need to plead some form of a factual narrative. Second, the required factual narrative provides the grist from which to begin an assessment of Procedural and Substantive Sufficiency.
B. Procedural Sufficiency (Notice Pleading)
Procedural Sufficiency under Rule 8(a)(2) requires that in addition to some minimal level of factual grounding a complaint "give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests." The purpose of this fair notice requirement is to enable the defendant to respond to the complaint and to otherwise prepare a defense. Hence, the complaint must provide enough comprehensible information to allow the defendant to identify both the nature of the claim asserted and the factual transaction out of which it arises. From the pleader's perspective, this obligation is not burdensome, but it is nonetheless an essential obligation, the sole measure of which is the adequacy of the notice for the above stated purposes.
Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957).
Kelly v. Schmidberger, 806 F.2d 44, 46 (2d Cir. 1986); see also Wynder v. McMahon, 360 F.3d 73, 79 (2d Cir. 2004) ("enable the adverse party to answer and prepare for trial"); Phelan v. City of Chicago, 347 F.3d 679, 682 (7th Cir. 2003) (provide the district court with sufficient information "to understand the gravamen of the plaintiff's complaint").
See, e.g., Kyle v. Morton High School, 144 F.3d 448, 454 (7th Cir. 1998) (failure to provide sufficient information to alert defendants and court of the nature of the claim).
Returning to the AGHS hypothetical, although the facts provided in Bob's complaint appear to be relatively spare they do provide sufficient comprehensible information to notify the defendant of the nature of Bob's claim-a gender-based equal protection claim in which state action is premised on the "public function" doctrine — and of the factual transaction on which that claim is premised-a gender-based denial of Bob's application for the 2007-2008 academic year. With this information, AGHS is fully capable of responding to the complaint and otherwise preparing a defense.
It is important to keep in mind that fair notice has nothing to do with whether the pleader's purported claim is one on which relief can be granted. To conclude otherwise would be to import the idea of notice and the concomitant ability to prepare a defense into a very different concept, namely, the requirement that a complaint assert a legally cognizable claim. In other words, such a conflation confuses the ability to prepare a defense with one of the potential defenses. Moreover, whether a claim is legally cognizable is, quite simply, not measured by the adequacy of the notice. Rather, that measure is found in a combination of the substantive law that defines the claim and the material allegations (or inferences) found in the complaint. We will explore this measure further in the discussion of Substantive Sufficiency. The point here is that the question of the substantive adequacy of the claim asserted has nothing to do with fair notice.
The AGHS hypothetical is again instructive. As perceptive readers have no doubt surmised, Bob's theory of his case contains a glaring substantive defect. Under current state-action jurisprudence, the public function doctrine will not embrace the activities of a private high school. As a consequence, Bob's purported equal protection claim is quite likely substantively inadequate, the essential state-action element being wanting. The claim would, therefore, be subject to a Rule 12(b)(6) motion to dismiss for failure to state a claim on which relief can be granted. This defect has nothing to do with any inadequacy in the notice provided to AGHS. In fact, the substantive defect is itself well-noticed. Instead of notice deficiency, the argument in support of the motion to dismiss would focus exclusively on the legal deficiency of the claim, i.e., on the vacuity of the state-action allegation.
See Ides, Allan Christopher N. May, Constitutional Law: Individual Rights 16-20 (4th ed. 2007) (public function doctrine).
One final point: The fair notice standard does not vary from one type of claim to another. But the circumstances to which it applies are as variable as human conduct, with the potential complexities of litigation limited only by the human imagination. Apropos of this non-standardized world, "What constitutes a short and plain statement must be determined in each case on the basis of the nature of the action, the relief sought, and the perspective positions of the parties in terms of the availability of information and a number of other pragmatic matters." Accordingly, what constitutes fair notice under one circumstance may not necessarily constitute fair notice under another. Thus, for example, in simple cases, such as the one reflected in the Form 9 negligence complaint, general allegations of negligence may well suffice. On the other hand, in less obvious circumstances, the fair notice standard might demand slightly more detail in those allegations. For example, in a tort case involving nonobvious or counterintuitive allegations of causation, fair notice might well require some further detail in order to permit the defendant to respond to the complaint. Of course, any demands imposed by this modest slide up the scale should be keyed to policy behind fair notice, namely, the defendant's ability to respond and defend.
5 Wright, supra note 11, at 240-241.
Form 9, Federal Rules of Civil Procedure, Appendix of Forms.
C. Substantive Sufficiency (Simplified Pleading)
The final pleading hurdle is Substantive Sufficiency, which involves yet another fact-bound inquiry, albeit one informed by the governing substantive law. Substantive Sufficiency requires that the facts alleged comprise a claim on which relief can be granted, i.e., the factual allegations must be sufficient to show "that the pleader is entitled to relief." No such "showing" can be made in the absence of factual allegations. Similarly, no such "showing" can be made if the factual allegations do not, at the very least, "outline or adumbrate" a claim on which relief can be granted. Transactional Sufficiency gives us the narrative; Procedural Sufficiency assures that the narrative provides notice sufficient to respond and defend; and Substantive Sufficiency ensures that the narrative supports a recognized claim for relief.
Brownlee v. Conine, 957 F.2d 353, 354 (7th Cir. 1992).
But what does it mean to "outline or adumbrate" a claim? Clearly, this phrase is meant to distinguish the liberal standards of pleading adopted by the federal rules from the more rigorous pleading requirements imposed under a regime of fact pleading. As has been well established, pleading under Rule 8(a)(2) does not depend on hyper-technicalities, such as the illusive distinction between what constitutes a fact and what constitutes a conclusion of law. But federal pleading standards are not completely forgiving. As one leading commentator on federal practice has put it, a complaint filed under Rule 8 "must contain either direct allegations on every material point necessary to sustain a recovery on any recognizable legal theory . . . or the pleading must contain allegations from which an inference fairly may be drawn by the district court that evidence on these material points will be available and introduced at trial." This description is certainly less strict than would be required under a traditional factpleading regime, but it is not so open-ended as to validate a complaint that provides no factual or inferential support for a material element of a claim.
5 Wright, supra note 11, at § 1216, at 208.
In the AGHS hypothetical, Bob's complaint does purport to outline a claim under the Equal Protection Clause. The problem, as has been noted, is that Bob's outline is incomplete. While Bob did not leave the state action allegation blank, by premising his assertion of state action on the public function doctrine he, in effect, erased that allegation. (This assumes that a federal court will not hold that private schools are state actors by virtue of the public function doctrine. Were a court to accept Bob's argument, the complaint would be good to go, i.e., Bob's outline of the claim would be deemed satisfactory.) Now the fact that the public function doctrine won't work for Bob, doesn't mean that proof of state action is beyond the realm of the possible. The problem, however, is that there is nothing else in Bob's complaint from which one could draw an inference of state action. The net result is that Bob is out of court as a consequence of his failure to outline a claim on which relief can be granted.
This brings us to an important little point. In the context of Substantive Sufficiency, the label "notice pleading" is inapt since the question of whether the complaint has stated a claim on which relief can be granted has nothing to do with whether the defendant has received fair notice of the purported claim. As explained in the discussion of Procedural Sufficiency, one can receive fair notice of something that does not constitute a claim on which relief can be granted. Hence, that the phrase "simplified pleading" more aptly describes the Substantive Sufficiency standard for it suggests an absence of pleading technicalities without at the same time confusing substantive adequacy with fair notice. This observation is not a mere quibble for, as will be noted below, the Supreme Court and lower federal courts have developed a habit of allowing the "fair notice" nomenclature to roam beyond its relevant context, sometimes leading to confusion as to what principle the court is enforcing through its judgment.
In terms of Substantive Sufficiency, there is sometimes a problem (or a perception of a problem) when a plaintiff substitutes what is characterized as a "conclusion of law," i.e., a finding that would result from the application of a rule of law to a particular set of facts, for an essential element of the asserted right of action. A good example would be an allegation that the defendant was negligent as a substitute for specific allegations pertaining to a breach of duty. Note, however, that the allegation of negligence is also an allegation of fact, albeit stated at a level of generality. There is nothing in Rule 8(a)(2) that prohibits this type of generalized allegation. Indeed, the "short and plain statement" requirement was designed in large part to eliminate the difficulties encountered in trying to distinguish among evidence, facts, ultimate facts and conclusions of law. Presumably, therefore, a short and plain statement may include a combination of all three types of allegations so long as Transactional Sufficiency, Procedural Sufficiency, and Substantive Sufficiency are otherwise satisfied. More to the point, a conclusion of law or a generalized allegation of fact may well play a role satisfying those standards.
5 Wright, supra note 11, § 1218, at 265-276.
Of course, if the complaint rests entirely on a conclusion of law in the sense that the plaintiff has done no more than recite the elements of a right of action, then the complaint will be dismissed under the principle of Transactional Sufficiency.
Form 9 found in the Appendix to the federal rules provides a useful example. The form complaint alleges, "On June 1, 1936, in a public highway called Boylston Street in Boston, Massachusetts, defendant negligently drove a motor vehicle against plaintiff who was then crossing said highway." There are no additional facts describing the nature of the negligence. As a consequence, the allegation of negligence can be fairly characterized as a conclusion of law, i.e., a finding that would result from the application of a rule of law to a particular set of facts. Of course, the allegation of negligence is also an assertion of fact, namely, that on the occasion of the accident defendant drove in a manner below the standard of due care. The problem, if there is one, is that the specific facts underlying the "conclusion" of negligence have not themselves been alleged. Yet, Rule 84 tells us that this complaint is sufficient. Why? Presumably because: 1) the complaint adequately identifies the factual transaction out of which the claim arises (Transactional Sufficiency); 2) the complaint provides sufficient information to permit the defendant to prepare for trial in this very simple case (Procedural Sufficiency); and 3) from the facts alleged, including the "conclusory" allegation of negligence, one can infer the types of facts the plaintiff will rely on to establish the asserted claim, albeit not the precise facts (Substantive Sufficiency). As to the third point, the negligence "conclusion of law" actually helps validate the Substantive Sufficiency of the claim by directing the reader toward the inferences necessary to state the claim.
5 Wright, supra note 11, § 1218, at 267 ("It should be clear from an examination of the Official Forms that the federal rules do not prohibit the pleading of facts or legal conclusions as long as fair notice is given to the parties.")
The foregoing paragraph should not be read as suggesting that the allegation of a conclusion of law is never problematical. Certainly if the conclusion of law is substituted for the entire claim, we would face a significant Transactional Sufficiency problem as in the case of the complaint filed in Briscoe, supra. Conclusory allegations may also fail to provide the defendant with fair notice of the claim and this is particularly true when the claim is either factually, conceptually or legally complicated. In addition, in the specific context of Substantive Sufficiency, a plaintiff's reliance on a conclusion of law may present special concerns when the asserted claim is novel. Under such circumstances, the absence of foundational facts may induce a judicial hesitance to enter the uncharted realm. As Judge Posner pointed out under similar circumstances, "a claim that does not fit into an existing legal category requires more argument by the plaintiff to stave off dismissal, not less. . . ." One might say that such a claim also needs more facts.
Kirksey v. R.J. Reynolds Tobacco Co., 168 F.3d 1039, 1042 (7th Cir. 1999).
This appears to have been the case in Papasan v. Allain. There the plaintiffs claimed that a state's disparate funding of public schools violated the Equal Protection Clause of the Fourteenth Amendment. The plaintiffs sought to invoke strict scrutiny by alleging that the disparate funding had deprived children in lower-funded school districts of a "minimally adequate education," a phrase derived from a decision in which the Supreme Court left open the possibility that strict scrutiny might apply under such circumstances. The Papasan Court, however, refused to entertain the plaintiffs' strict scrutiny claim, explaining:
478 U.S. 265, 106 S.Ct. 2932 (1986).
San Antonio Independent Sch. Dist. v. Rodriguez, 411 U.S. 1, 36-37, 93 S.Ct. 1278, 36 L.Ed.2d 16 (1973); see also Plyer v. Doe, 457 U.S. 202, 223-224, 102 S.Ct. 2382, 72 L.Ed.2d 786 (1982).
Although for the purposes of this motion to dismiss we must take all the factual allegations in the complaint as true, we are not bound to accept as true a legal conclusion couched as a factual allegation. The petitioners' allegation that, by reason of the funding disparities relating to the Sixteenth Section lands, they have been deprived of a minimally adequate education is just such an allegation. The petitioners do not allege that schoolchildren in the Chickasaw Counties are not taught to read or write; they do not allege that they receive no instruction on even the educational basics; they allege no actual facts in support of their assertion that they have been deprived of a minimally adequate education. As we see it, we are not bound to credit and may disregard the allegation that the petitioners have been denied a minimally adequate education.
Papasan v. Allain, 478 U.S. at 286, 106 S.Ct. 2932.
While the use of the phrase "legal conclusion couched as a factual allegation" was unfortunate, the Court's reluctance to resolve a thorny, fact-driven constitutional issue was understandable. This is especially so given that the Court was clearly divided on this issue. Hence, without more specific factual allegations as to what might constitute a minimally adequate education, the Papasan complaint provided an exceedingly poor vehicle through which to resolve this open and controversial question of constitutional law.
The Supreme Court did not return to this phrase until the decision in Bell Atlantic v. Twombly, 127 S.Ct. at 1965. Interestingly, this specific aspect of Papasan did not even merit a headnote in the Supreme Court Reporter. Of course, it would have been better had the Court in Papasan simply said that any ruling on the controversial equal protection issue would have been premature.
Of course, what I have described in this subsection is an ideal. As Professor Fairman has amply demonstrated, lower court constructions (or deconstructions) of Rule 8 belie the reality of notice pleading in practice. There are numerous lower court decisions that premise dismissals of complaints based on the plaintiff having asserted a conclusion of law or having relied on a conclusory allegation. Some of these decisions can be justified as reflecting the standards of Transactional Sufficiency or Procedural Sufficiency. However, others appear to be premised on nothing more than the sense that regardless of what else might accompany them or shore them up, conclusory allegations are not allowed, either at all or in certain types of cases. But the notion that the Rule 8, as a per se matter, precludes a plaintiff from relying on conclusions of law or conclusory allegations is, quite simply, wrong, and suggestions to the contrary should be resisted.
Fairman, Christopher, The Myth of Notice Pleading, 45 Ariz. L. Rev. 987 (2003).
See, e.g., id. at 1011-1059; see also Marcus, Richard L., The Revival of Fact Pleading Under the Federal Rules of Civil Procedure , 86 Colum. L. Rev. 433 (1986); Marcus, Richard L., The Puzzling Persistence of Pleading Practice, 76 Tex. L. Rev. 1749 (1998).
II. Swierkiewicz v. Sorema N.A.: Prologue
The purpose of this section is twofold. The first is to apply the above pleading template to a relatively familiar decision, namely, Swierkiewicz v. Sorema N.A. Next, despite the familiarity of Swierkiewicz, a second purpose is to provide a detailed discussion of that case in order to contrast the Swierkiewicz decision with Bell Atlantic and, to a lesser extent, with Erickson.
534 U.S. 506, 122 S.Ct. 992 (2002).
The plaintiff in Swierkiewicz claimed that he had been discriminated against by his employer on account of national origin in violation of Title VII of the 1964 Civil Rights Act ("Title VII") and on account of age in violation of the Age Discrimination in Employment Act of 1967 ("ADEA"). The basic elements of both claims required that he prove that he was subjected to disparate treatment in employment "because of" a covered trait, in his case national origin and age. He also had the option of proving a prima facie case of discrimination by showing "(1) membership in a protected group; (2) qualification for the job in question; (3) an adverse employment action; and (4) circumstances that support an inference of discrimination." On proof of the prima facie case, a presumption of illicit discrimination would arise and the burden would shift to the defendant to provide a non-discriminatory justification for the action taken. In other words, under the prima facie case approach, the plaintiff would not necessarily have to prove the "because of" element of the claim.
42 U.S.C. § 2000e et seq.
29 U.S.C. § 621 et seq.
See McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973).
The complaint filed in Swierkiewicz contained the following factual allegations:
• Mr. Swierkiewicz [the plaintiff] is a native of Hungary. (¶ 11)
• SOREMA [the defendant] . . . is a reinsurance company principally owned and controlled by a French parent corporation. At all times relevant hereto, SOREMA's Chief Executive Officer has been François M. Chavel, a French national. (¶ 13)
• On April 17, 1989 Mr. Swierkiewicz began his employment with SOREMA in the position of Senior Vice President and Chief Underwriting Officer ("CUO"). (¶ 16)
• In all respects, Mr. Swierkiewicz performed his job in a satisfactory and exemplary manner. (¶ 17)
• Despite plaintiff's stellar performance, in February 1995 Mr. Chavel demoted him from his CUO position to a marketing and services position and transferred the bulk of his underwriting responsibilities to another French national, Nicholas Papadopoulo, who was 32 years old at the time (and 16 years younger than plaintiff). (¶ 18)
• Mr. Chavel demoted Mr. Swierkiewicz on account of his national origin (Hungarian) and his age (he was 49 at the time). (¶ 19)
• A year later, in or about February 1996, Mr. Chavel formally appointed Mr. Papadopoulo as SOREMA's CUO. (¶ 20)
• Mr. Papadopoulo was far less experienced and less qualified to be SOREMA's CUO than was Mr. Swierkiewicz. Indeed, Mr. Papadopoulo had just one year of underwriting experience prior to being appointed CUO by Mr. Chavel. By contrast, plaintiff had more than 26 years of broad based experience in the insurance and reinsurance industry. (¶ 21)
• At the time Mr. Papadopoulo assumed plaintiff's duties as CUO, Mr. Chavel stated that he wanted to "energize" the underwriting department — clearly implying that plaintiff was too old for the job. (¶ 22)
• In light of Mr. Papadopoulo's inexperience, Mr. Chavel brought in Daniel Peed from SOREMA's Houston, Texas office to support [Papadopoulo] in his CUO duties. (¶ 23)
Swierkiewicz v. Sorema, Joint Appendix, 2001 WL 34093952, at 5a-7a.
In addition to the above allegations, the complaint also alleged that "age and national origin" were factors on Mr. Swierkiewicz's eventual dismissal by Mr. Chavel. (¶ 36)
The District Court dismissed Mr. Swierkiewicz's complaint, reasoning that "he ha[d] not adequately alleged circumstances that support an inference of discrimination." In other words, the District Court insisted that Mr. Swierkiewicz's complaint contain allegations sufficient to support a prima facie case of discrimination. The Court of Appeals agreed, holding that Mr. Swierkiewicz's allegation that his demotion and firing was motivated by national origin and age was insufficient as a matter of law.
Swierkiewicz v. Sorema, N.A., 5 Fed. Appx. 63, 64-65 (2d Cir. 2001).
Id.
The precise question before the Supreme Court was "whether a complaint in an employment discrimination lawsuit must contain specific facts establishing a prima facie case of discrimination. . . . " The Court held that there was no such requirement. The prima-facie-case standard defined an alternate method of proof available to employment discrimination plaintiffs. It had no bearing on pleading practice. Significant to the Court was the fact that a plaintiff in an employment discrimination case was not required to proceed by way of proving a prima facie case. Instead, an employmentdiscrimination plaintiff was free to prove discrimination by direct evidence. "It thus seems incongruous to require a plaintiff, in order to survive a motion to dismiss, to plead more facts than he may ultimately need to prove to succeed on the merits if direct evidence of discrimination is discovered."
Id. at 510-511.
Id. at 511-512.
The Court then directly addressed and applied the short-and-plainstatement standard of Rule 8(a)(2):
Applying the relevant standard, petitioner's complaint easily satisfies the requirements of Rule 8(a) because it gives respondent fair notice of the basis for petitioner's claims. Petitioner alleged that he had been terminated on account of his national origin in violation of Title VII and on account of his age in violation of the ADEA. His complaint detailed the events leading to his termination, provided relevant dates, and included the ages and nationalities of at least some of the relevant persons involved with his termination. These allegations give respondent fair notice of what petitioner's claims are and the grounds upon which they rest. In addition, they state claims upon which relief could be granted under Title VII and the ADEA.
Id. at 514.
Notice that the Court separated the fair notice requirement from the question of whether the complaint stated claims on which relief could be granted ("In addition, they state claims. . . .")
If we examine the Swierkiewicz complaint against the principles of Transactional Sufficiency, Procedural Sufficiency and Substantive Sufficiency, we easily arrive at the same conclusion. First, the complaint was factually grounded. Some of the factual allegations were specific (e.g., the plaintiff's national origin and age, his replacement's national origin and age) and some were stated at a level of generality (e.g., the plaintiff's job performance, the defendant's discriminatory motivation), but even the general allegations found support in inferences that could be drawn from more specific allegations. For example, as to defendant's discriminatory motivation, the specific allegation that plaintiff's replacement was less experienced and less qualified, supported an inference of discrimination and especially so when coupled with other alleged facts pertaining to the national origin and age of the relevant parties. Certainly, plaintiff's complaint offered more than an abstract invocation of the law.
Second, in terms of Procedural Sufficiency, the Court's conclusion that the information provided was sufficient to notify defendant of the claims asserted against it is unassailable. The complaint identified the factual transactions out of which the claims arose with some detail and identified the legal basis for the relief sought. In addition, there was nothing particularly complicated about the case. Under such circumstances, it would strain credulity to argue that the defendant did not have sufficient notice to prepare for trial.
Finally, in terms of Substantive Sufficiency the facts alleged covered both of the necessary elements of in each of plaintiff's employment discrimination claims-1) disparate treatment in employment; 2) because of a covered trait (national origin or age). Paragraphs 18, 20-23 and 34 alleged specific facts showing that the plaintiff had been subjected to disparate treatment in employment-that despite a "stellar" job performance and significant jobrelated experience, he was demoted, replaced by a less experienced and less capable employee, and eventually fired. Paragraphs 19 and 36 allege that this disparate treatment was "because of" or "motivated by" the plaintiff's national origin and age. In short, the complaint stated claims on which relief could be granted under Title VII and the ADEA, and supported each claim by allegations of fact that pertained to the essential elements of each of right of action asserted.
There is one potential problem that must be considered. Mr. Swierkiewicz's allegations in support of the second element of his employment discrimination claims-disparate treatment imposed "because of" a covered trait-describe only the ultimate fact of the defendant's motivation, namely, that the defendant acted "on account of" Mr. Swierkiewicz's national origin and age (or was "motivated by" those factors). In one sense, these allegations can be seen as wholly factual. That which motivates a person is a fact. But in another sense, an employer's motivation in the context of an employment discrimination lawsuit has an independent legal significance as an essential element of the plaintiff's claim. Such an allegation can, therefore, be characterized as a conclusion of law. If so, would it violate the principle of Substantive Sufficiency to allow Mr. Swierkiewicz to support a material element of his claim with such a conclusory assertion? The Supreme Court implicitly held that it would not when it concluded that the complaint stated a claim on which relief could be granted. This, of course, was contrary to the Court of Appeals conclusion that the subject allegation was insufficient as a matter of law.
For three reasons, I think the Supreme Court was correct. First, even if one construes the "on account of" allegation as stating an ultimate fact or a conclusion of law, as noted above, nothing in Rule 8(a)(2) precludes the use of such allegations. The "on account of" allegation is neither more nor less objectionable than the "negligence" allegation deemed acceptable in Form 9. Both operate within the context of other factual allegations and inferences drawn from those allegations and both provide additional factual information and support additional inferences indicative of the respective claim's Substantive Sufficiency. In other words, in each complaint the total information provided, including the express and implicit information in the "conclusory" allegation, was more than adequate to outline or adumbrate a claim on which relief could be granted.
Second, unlike the situation facing the Supreme Court in Papasan v. Allain, there was nothing novel in the claim asserted by Mr. Swierkiewicz. He was not asking for an alteration or extension of the law. Instead, his complaint presented standard employment discrimination claims under Title VII and the ADEA. Hence, a court would have no need for a greater specification of facts in order to assay whether to venture into an uncharted legal realm.
Finally, and perhaps redundantly of the first point, a requirement that Mr. Swierkiewicz plead his evidence or plead his facts with more specificity would have marked a return to fact-pleading standards.
III. Bell Atlantic Corp. v. Twombly: The Narrative
A. The Complaint and the Motion to Dismiss
The breakup of the American Telephone Telegraph Company in 1984 led to the creation of a system of regional telecommunications service providers, the so-called "Baby Bells," each with monopolistic power over local telecommunications within a specified geographic region. In 1996, Congress sought to introduce competition into these regional markets by requiring, among other things, that each of the four remaining Baby Bells share its respective regional network and infrastructure with start-up competitors. The Baby Bells resisted these efforts and one of the responses to that resistance was the consumer class action filed in Bell Atlantic Corporation v. Twombly.
The Telecommunications Act of 1996.
The Bell Atlantic complaint, which consisted of 96 numbered paragraphs, alleged that the named defendants, each a regional telecommunications service provider, i.e., a Baby Bell, entered into a conspiracy designed to thwart the de-monopolization of their respective regional markets. The conspiracy was said to violate § 1 of the Sherman Act. That section provides: "Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal." This language has been interpreted as comprised of three elements:
Bell Atlantic v. Twombly, Joint Appendix, 2006 WL 2472651, at 10 (hereafter " Bell Atlantic Complaint").
• Concerted action
• That unreasonably restrains trade or competition and
• That has an effect on interstate commerce.
The concerted action ("agreement") is the key to the statutory proscription. It is not, in other words, sufficient to show that a defendant or defendants restrained trade or engaged in anticompetitive practices. They must have agreed among themselves to do so.
Holmes, William C., Antitrust Handbook § 2:2 (Westlaw 2006).
The pleading controversy in Bell Atlantic centered directly on the adequacy of plaintiffs' allegations of concerted action among the defendants. The relevant allegations were stated in paragraphs 37 through 51 of the complaint. Those paragraphs detailed two patterns of anticompetitive "parallel conduct," i.e., similar conduct engaged in by each of the defendants. The first pattern involved similar actions undertaken by each defendant to prevent competitors from entering its respective market or service area ("territory-protection pattern"); the second pattern involved the failure of any defendant to attempt to compete within the market or service area of another defendant ("non-competition pattern"). Paragraph 51 then offered the following conclusion:
In the absence of any meaningful competition between the [defendants] in one another's markets [the non-competition pattern], and in light of the parallel course of conduct that each engaged in to prevent competition from [potential market entrants] within their respective local telephone and/or high speed internet services markets [the territory-protection pattern] and other facts and market circumstances alleged above, Plaintiffs allege upon information and belief that Defendants have entered into a contract, combination or conspiracy to prevent competitive entry in their respective local telephone and/or high speed internet services markets and have agreed not to compete with one another and otherwise allocated customers and markets to one another.
Bell Atlantic Complaint, supra note 48.
In terms of antitrust law, there was nothing novel in plaintiffs' reliance on parallel conduct as a means of establishing an agreement among the defendants. A plaintiff asserting a § 1 claim can prove the existence of the requisite agreement through direct or circumstantial evidence, and evidence of parallel conduct is the usual form of the latter. There is a major caveat. An economic actor is presumed to be a rational maximizer of its selfinterest. Furthermore, when economic actors operate under similar market conditions and with similar information, they are expected to respond in a like manner, i.e., they are expected to maximize rationally in a similar fashion. At least it is no surprise when they do. Parallel conduct by similarly situated economic actors is, therefore, an expected consequence of rational market forces. At least antitrust law presumes this to be the case.
As a result of the foregoing presumption, parallel conduct, without more, cannot support an inference of an agreement to restrain trade. Before any such inference can be drawn, the plaintiff must introduce evidence plausibly rebutting the presumption. A plaintiff might show, for example, that the conduct at issue would have been against each defendant's economic selfinterest in the absence of concerted action or that the collective defendants had a common motive that altered the choices that would have been made based solely on motivations of individual self-interest. This additional evidence is sometimes referred to as a "plus factor," and without it a plaintiff seeking to establish an agreement in restraint of trade solely by means of parallel conduct cannot prevail.
Brooke Group Ltd. v. Brown Williamson Tobacco Corp., 509 U.S. 209, 227, 113 S.Ct. 2578, 125 L.Ed.2d 168 (1993).
See 6 Areeda, Philip Herbert Hovencamp, Antitrust Law ¶ 1433a, at 236 (2d ed. 2003).
The substantive law of the Sherman Act played an integral role in the defendants' Rule 12(b)(6) motion to dismiss. The essence of that motion was that the patterns of parallel conduct alleged by defendants were fully explicable as independent economic choices made by each defendant, i.e., that they were consistent with the usual presumption of individualistic maximization of wealth. Since, in the defendants' view, the plaintiffs had failed to plead any "plus factors," no legally recognized claim had been alleged. Rather, the plaintiffs' allegations did no more than describe the presumptively legal and rational economic behavior engaged in by each of the defendants. As a consequence, and given that there were no other plausible allegations of an agreement in restraint of trade, the complaint, according to the defendants, failed to state a claim on which relief could be granted. The issue, therefore, was one of Substantive Sufficiency. There was no mention of Rule 8 in the defendants' motion.
Memorandum of Law in Support of Defendants' Motion to Dismiss 4 (May 12, 2003) (on file with author).
Rule 8 did, however, play a part in plaintiffs' response. The plaintiffs argued that the pleading rule implicitly endorsed in the defendants' motion to dismiss was inconsistent with "the notice pleading standard" imposed by that rule. That standard was trans-substantive and did not countenance the imposition of a heightened pleading standard in antitrust cases. As to the question of notice, in the plaintiffs' words, "There is nothing Defendants need to know of which they have not been given notice . . . in the Complaint."
Plaintiffs' Memorandum in Opposition to Defendants' Joint Motion to Dismiss (June 20, 2003) (on file with author).
Id.
The key case, from the plaintiffs' perspective, was Swierkiewicz v. Sorema N.A., supra, in which the Court declined to apply a heightened pleading standard in a Title VII employment discrimination case. The essential rule to be derived from that decision, according to plaintiffs, was that federal courts were not free to impose heightened pleading standards in the absence of a statute or formal federal rule allowing them to do so. There being no such statute or formal rule pertaining to antitrust cases, to require the plaintiffs to plead facts in support of a plus factor would be to violate the very principles on which Swierkiewicz was decided and under which Rule 8 was formulated.
534 U.S. 506, 122 S.Ct. 992 (2002).
The plaintiffs also challenged the defendants' proposition that the complaint failed to state a claim on which relief could be granted. According to the plaintiffs, they had alleged the necessary plus factors with respect to each of the patterns of parallel conduct. As to the territory-protection pattern, the complaint alleged that the defendants had a common motive of discouraging the successful entry of a non-Baby Bell competitor into any regional market for two reasons. First, a successful entrant into one regional market would be emboldened to enter other regional markets. Second, the fact of a successful entry into one market would encourage other potential market entrants to pursue similar attempts in other regions. As to the non-competition pattern, the complaint alleged that it was in the economic interest of each Baby Bell to enter the territory of other Baby Bells as a competitor in order to reap the economic benefits available in those other markets. The collective failure to attempt any such entry supported an inference of an agreement not to compete with one another.
B. The District Court Opinion
The District Court opinion began with a recitation of standard pleading principles, all of which underscored the deference due to the plaintiff in a Rule 12(b)(6) motion to dismiss. The court then filtered that recitation through the substantive standards imposed by § 1 of the Sherman Act, specifically, those standards pertaining to the proof of an agreement in restraint of trade through parallel conduct and plus factor evidence. This filtration led the court to conclude that when a § 1 complaint alleges an anti-competitive agreement based solely parallel conduct, the complaint must also include factual allegations supportive of a plus factor in order to survive a Rule 12(b)(6) motion to dismiss ("plus-factor pleading rule").
Twombly v. Bell Atlantic Corp., 313 F.Supp.2d 174, 179 (S.D.N.Y. 2003).
The court offered three rationales for adopting the plus-factor pleading rule. The first pertained to Substantive Sufficiency; the second two rationales pertained to Procedural Sufficiency. Only the first rationale played a role in the District Court's application of the plus-factor pleading rule, hence only that rationale will be described in the text; the other rationales are, however, presented in the margin. As to the substantive rationale, the court explained that the plus-factor pleading rule was necessary "to ensure that plaintiffs actually state a claim on which relief can be granted, by separating complaints that allege simple parallel action that does not suggest a conspiracy and is therefore not actionable under § 1, from complaints that allege parallel action that could be the result of a conspiracy."
The District Court's second rationale pertained to the adequacy of notice in the absence of plus-factor allegations. In the District Court's words, "a plaintiff's factual and economic theory of a conspiracy is not evident from a conclusory allegation of conspiracy, and there is simply no way to defend against such a claim without having some idea of how and why the defendants are alleged to have conspired. The plus factors are therefore intended to give defendants notice of plaintiffs' legal theory, and of the 'conduct which is alleged to be conspiratorial.'" Twombly v. Bell Atlantic Corp., 313 F.Supp.2d 174, 180 (S.D.N.Y. 2003) (quoting Levitch v. Columbia Broadcasting System, Inc., 495 F.Supp. 649, 675 (S.D.N.Y. 1980)). The court further explained that Swierkiewicz was distinguishable on this basis since, as a general matter, an allegation of illicit motive under Title VII is relatively simple as compared to a conspiracy allegation under the Sherman Act. This rationale operates directly on the principles underlying Procedural Sufficiency i.e., the adequacy of notice, though the suggestion of a per se rule may range beyond the individualized fair notice that is demanded by Rule 8(a)(2). It should be noted also that the defendants had not raised "fair notice" as an objection to the complaint. The District Court also did not rely on a "notice" rationale in dismissing the complaint.
The third rationale was unconvincing. Here the District Court reasoned that to allow unadorned allegations of parallel conduct to suffice for pleading purposes would run afoul of a Second Circuit rule that required a plaintiff asserting a claim under § 1 of the Sherman Act to allege specific facts supportive the alleged conspiracy. Id. In the District Court's view, allegations of parallel conduct shorn of plus factor allegations were the equivalent of having made no factual allegations of a conspiracy whatsoever, thus violating this heightened pleading rule. Here's where the reasoning takes a dip. The District Court believed that the circuit's heightened pleading rule survived Swierkiewicz on the theory that Swierkiewicz did not change the law of pleading when it rejected a similar Second Circuit heightened pleading rule in a Title VII case. Id. at 181. Rather, in the court's view, Swierkiewicz had simply applied longstanding pleading principles in rejecting the heightened pleading standard at issue in that case. Left completely unexplained, is why those same longstanding principles did not require rejection of this very similar Second Circuit antitrust pleading rule, unless, of course, one returns to the notice rationale described in the previous paragraph.
313 F.Supp at 180.
The District Court then applied the plus-factor pleading rule to the plaintiffs' complaint. Turning to the two patterns of parallel conduct alleged in the complaint, the District Court concluded that both were fully explicable as rational economic choices made independently by each defendant. In other words, both were consistent with the usual presumption of individualistic self-interest. As to the territory-protection pattern, it was, in the court's view, in each defendant's self-interest to keep competitors out of its own territory regardless of what occurred in other regions. Plaintiff had not argued to the contrary; nor had plaintiff alleged any facts that would alter this almost self-evident conclusion. Moreover, the common motives cited by the plaintiff-potential plus factors-did not alter the court's conclusion, for they did not provide any reason to think that the defendants' conduct would have been other than what it was in the absence of an agreement. In the court's words, "Thus, the motives that plaintiffs have proffered do not provide any basis to infer that defendants' conduct was the result of anything but their individual economic interests."
Id. at 184 (emphasis added).
The court also concluded that no inference of an agreement could be drawn from the non-competition pattern. The fact of non-competition could be explained as a product of a variety of rational choices, including the difference between being an independent service provider within a region and being a competitor in another Baby Bell's region. Most importantly, the court noted that plaintiffs' complaint alleged that the defendants had made it virtually impossible for any new competitor to enter a regional market occupied by a Baby Bell; that being the case, each defendant would be well aware of the economic obstacles facing anyone attempting to do so. Thus, each Baby Bell had a strong incentive not to compete within another Baby Bell's region, namely, the recognition that successful entry into such a market was unlikely.
Id. at 187.
Given that the plaintiffs' claim of conspiracy was premised solely on allegations of parallel conduct, shorn of any plausible plus factors, and given that the inferences drawn from those allegations did not support a claim of conspiracy, the court concluded that the complaint was wanting. As the court put it, "The complaint therefore alleges nothing more than parallel conduct that appears to accord with the individual economic interests of the alleged conspirators. Accordingly, plaintiffs have not adequately alleged that defendants violated § 1 of the Sherman Act."
Id. at 189.
C. The Court of Appeals Opinion
The Court of Appeals began its examination of the pleading issue with a brief discussion of notice pleading, heightened pleading and the operation of those concepts within the particular context of antitrust litigation. The discussion can be reduced to a few essential points:
Twombly v. Bell Atlantic Corp., 425 F.3d 99, 106-113 (2d Cir. 2005).
• Under notice pleading standards, the measure of a pleading's adequacy is "fair notice" of the claim asserted.
• In applying this standard, simplicity is favored over specificity.
• The standard is satisfied so long as the pleading provides information sufficient to allow the opposing party to prepare for trial.
• In an antitrust case, the factual predicate that is pleaded must include conspiracy among the realm of plausible possibilities.
• Heightened pleading requires more particularity and specificity than notice pleading.
• Heightened pleading applies only when either Congress, through a statute, or the Supreme Court, through the Federal Rules of Civil Procedure, mandates the application of that standard.
• There is neither a statute nor a federal rule that mandates the application of a heightened pleading standard in antitrust cases.
• Antitrust cases are, therefore, subject to the notice pleading standards of Rule 8 and nothing further.
Id. at 106-107.
Id. at 111.
Id.
Id. at 109, 113.
Id. at 107-108.
Id.
Id. at 108-113.
Id. at 113.
Reduced to their core, the foregoing principles establish that a plaintiff in a § 1 antitrust case must plead a factual predicate for conspiracy sufficient to provide fair notice, but need not plead that factual predicate with particularity or specificity. Note that the Court of Appeals framed its standard in terms of Procedural Sufficiency, i.e., fair notice versus heightened pleading, and not in terms of Substantive Sufficiency, i.e., adequacy to state a claim on which relief can be granted. The issue before the Court of Appeals, however, was Substantive Sufficiency.
The Court of Appeals then turned its attention to the "plus factors" and to the District Court's ruling that the plaintiffs were required to allege some facts supportive of at least one plausible plus factor. The Court of Appeals began its analysis of this point by noting its agreement with the District Court as to the essential role played by plus factor evidence in parallel conduct cases under § 1 of the Sherman Act:
In a case brought under Section 1 of the Sherman Act . . . "the range of permissible inferences from ambiguous evidence" is limited, because antitrust laws prohibit only contracts, combinations, or conspiracies- and not independent parallel conduct-that operate unreasonably to restrain trade. . . . Accordingly, in a Section 1 case where there is no "direct, 'smoking gun' evidence," conduct as consistent with permissible competition as with illegal conspiracy does not, standing alone, support an inference of antitrust conspiracy. To survive a motion for summary judgment or for a directed verdict, a plaintiff seeking damages for a violation of § 1 must present evidence "that tends to exclude the possibility" that the alleged conspirators acted independently.
Id. at 113-114 (emphasis in original-internal citations omitted).
We now arrive at the critical question. Given that parallel conduct is not in itself actionable under § 1 of the Sherman Act, must a plaintiff relying on a theory of parallel conduct allege facts supportive of an economically plausible plus factor? No, says the appellate court. So long as "conspiracy" is one plausible reading of the facts alleged, no allegation of a plus factor is required.
[T]o rule that allegations of parallel anticompetitive conduct fail to support a plausible conspiracy claim, a court would have to conclude that there is no set of facts that would permit a plaintiff to demonstrate that the particular parallelism asserted was the product of collusion rather than coincidence. Of course, if a plaintiff can plead facts in addition to parallelism to support an inference of collusion-what we have referred to above as "plus factors" at the summary judgment stage-that only strengthens the plausibility of the conspiracy pleading. But plus factors are not required to be pleaded to permit an antitrust claim based on parallel conduct to survive dismissal. Of course, as we have explained in the previous section of this opinion, after discovery, a plaintiff confronting a summary judgment motion is required to adduce admissible evidence of "plus factors" if it seeks to have the trier of fact infer an unlawful conspiracy in restraint of trade from consciously parallel conduct.
Id. at 114.
This explanation has a surface plausibility. If a plaintiff pleads facts sufficient to outline a claim on which relief can be granted, on a motion to dismiss all inferences from those facts must be drawn in plaintiff's favor. That is the usual rule. It would seem to follow that if a plaintiff alleges parallel conduct as a premise for a conspiracy claim under § 1 of the Sherman Act, all inferences from the allegations of parallel conduct must be drawn in favor of the plaintiff, including the inference of conspiracy. Under this scenario, there should be no need to plead facts supportive of a plausible plus factor.
There is, however, something not wholly satisfactory with this conclusion. The "pleader's inference" principle relied on by the Court of Appeals applies in the usual case where two or more conflicting inferences can be drawn from the same allegations. In a motion to dismiss, the pleader's inference prevails even if it is not the most plausible. But, as a consequence of the underlying substantive law of the Sherman Act, § 1 cases do not present the usual case. As the Court of Appeals explained, in a § 1 case the permissible inferences to be derived from parallel conduct are "limited." Parallel "conduct as consistent with permissible competition as with illegal conspiracy does not, standing alone, support an inference of antitrust conspiracy." Thus, even if one could say that it is plausible that a particular pattern of parallel conduct was the product of a conspiracy, that plausibility cannot be entertained in the absence of a plus factor supporting the inference of conspiracy. We know this is the rule at the summary judgment stage. Why it should not also be the rule at the pleading stage is certainly not self-evident, and the Court of Appeals provides no reason for its contrary view, other than that general pleading principles require this outcome. But if factual allegations and the inferences legitimately drawn from them form the basis for determining whether a complaint states a claim on which relief can be granted, it would seem that the Court of Appeals has created a situation in which the legitimacy of the claim is premised on inferences not permitted as a matter of law.
Id. at 113.
The Court of Appeals applied its rule to the plaintiffs' complaint and concluded that the allegations of parallel conduct were adequate to support the otherwise bare bones allegation of conspiracy and to survive a motion to dismiss. In other words, under some set facts (not alleged) it could well be that the alleged parallel conduct was the product of a conspiracy.
Id. at 117-119.
D. The Supreme Court Opinion
In an opinion authored by Justice David Souter, the Supreme Court reversed the Court of Appeals by a 7 to 2 vote. The question presented, according to the Court, was "whether a § 1 complaint can survive a motion to dismiss when it alleges that major telecommunications providers engaged in certain parallel conduct unfavorable to competition, absent some factual context suggesting agreement, as distinct from identical, independent action?" The answer was no. The Court's rationale for that answer was premised in the principle of Substantive Sufficiency. The explication of that rationale proceeds through three interrelated steps. The first examines and describes the governing substantive law, namely, the law imposed by § 1 of the Sherman Act; the second melds that substantive law with relevant pleading principles and announces a substance-specific rule premised on that melding; and the third applies that substance-specific rule to the Bell Atlantic complaint.
127 S.Ct. 1955 (2007).
Id. at 1961.
1. The Governing Substantive Law
Part II A of the Court's opinion describes the substantive legal standards imposed by § 1 if the Sherman Act. The proffered description is essentially identical to that presented in both lower court opinions and described earlier in the text of this article. In summary fashion: The Sherman Act prohibits only those unreasonable restraints of trade that stem from an agreement to engage in anticompetitive conduct. Such an agreement can be established by parallel conduct, but parallel conduct, standing alone, even "conscious parallelism," cannot support an inference of agreed-to concerted action. In the Court's words, "[W]e have previously hedged against false inferences from identical behavior at a number of points in the trial sequence." And that hedge was reflected in the requirement that a plaintiff relying on parallel conduct provide evidence of a plus factor that plausibly rebuts the presumption of rational behavior "unilaterally prompted by common perceptions of the market."
Id. at 1964.
See infra, at notes 50-53, and accompanying text.
Id. at 1964.
Id.
From a proceduralist perspective, there is no controversy with respect to the content of the Sherman Act. Essentially, the law of the Sherman Act is what the Court says it is. In other words, the identified substantive content operates as a given from the perspective of pleading principles. We move now to the question of the extent to which pleading principles must reflect or absorb that substantive content.
2. Substance Informs Pleading
Part II B of the Court's opinion begins with an outline of the relevant pleading terrain:
Federal Rule of Civil Procedure 8(a)(2) requires only "a short and plain statement of the claim showing that the pleader is entitled to relief," in order to "give the defendant fair notice of what the . . . claim is and the grounds upon which it rests," . . . While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations . . . a plaintiff's obligation to provide the "grounds" of his "entitle[ment] to relief" requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. . . . Factual allegations must be enough to raise a right to relief above the speculative level . . . on the assumption that all the allegations in the complaint are true (even if doubtful in fact).
Id. at 1964-1965 (citations omitted).
In a footnote appended to the foregoing statement, the Court specifically rejects as overly simplistic the notion that Rule 8(a)(2) has "dispensed with the pleading of facts altogether." Instead, in the Court's view, "Without some factual allegation in the complaint, it is hard to see how a claimant could satisfy the requirement of providing not only 'fair notice' of the nature of the claim, but also 'grounds' on which the claim rests."
Id. at 1965 n. 3. The footnote ends with a supportive reference: "See 5 Wright Miller § 1202, at 94, 95 (Rule 8(a) "contemplate[s] the statement of circumstances, occurrences, and events in support of the claim presented" and does not authorize a pleader's "bare averment that he wants relief and is entitled to it")."
Id.
At a general level, the Court's succinct summary of pleading principles is unremarkable (other than it that begins its discussion of Substantive Sufficiency with a reference to irrelevant fair notice standards). The formula boils down to this: A complaint need not contain "detailed" factual information, but it must contain enough factual allegations to transcend a "formulaic recitation" of the legal elements of a claim, enough factual allegations to provide fair notice of the claim and the grounds on which it is asserted, and enough factual allegations to provide a basis from which to determine whether the purported claim is one on which relief can be granted. In short, the complaint must provide a factual narrative sufficient to establish Transactional, Procedural and Substantive Sufficiency.
The opinion then moves immediately to a melding of these general pleading standards with the substantive standards of § 1 of the Sherman Act. Apropos of this move, the Court states: "In applying these general standards [of pleading] to a § 1 claim, we hold that stating such a claim requires a complaint with enough factual matter (taken as true) to suggest that an agreement was made." The Court's defense of its holding is quite simple. In the absence of factual matter plausibly suggestive of an agreement, the complaint cannot "show that the pleader is entitled to relief." Setting aside for the moment the question of what constitutes "factual matter," the Court's holding reflects the basic and long-accepted principle of Substantive Sufficiency, namely, that a complaint must contain sufficient information to outline or adumbrate a claim on which relief can be granted. This outline or adumbration requires direct or inferential allegations of each material element of the asserted claim. An "agreement" is a material element of a § 1 claim. Therefore, a sufficient outline or adumbration of a § 1 claim must include allegations supportive of that material element.
Id. at 1966.
Id.
Now we arrive at a special problem created by the law of the Sherman Act when unadorned parallel conduct, i.e., parallel conduct unsupported by plus-factor evidence, is used as the sole basis for establishing the existence of an anti-competitive agreement. Are such allegations sufficient to survive a Rule 12(b)(6) motion? The Court says no. The reason is straightforward. In accord with the Sherman Act, no inference of an agreement can be drawn from allegations of unadorned parallel conduct. Hence, in the absence of plus factor allegations, an unadorned allegation of parallel conduct is the equivalent of no allegation of an agreement whatsoever. A complaint resting entirely on parallel conduct allegations, therefore, fails to provide any support for a material element of the claim. Instead, such a complaint alleges only that the defendants have engaged in the entirely legal and rational maximization of their own self-interest from which no inference of an agreement can be drawn and out of which no claim arises.
Id.
In short, the inferences allowed at the pleading stage must be the same as the inferences available at the "proof" stage. To conclude otherwise would be to permit a complaint that was materially deficient as a matter of law-no allegations or inferences of an agreement-to survive a Rule 12(b)(6) motion to dismiss. Accordingly, under the standard employed by the Court, a complaint charging a violation of § 1 of the Sherman Act, and relying exclusively on parallel conduct to establish the requisite agreement, must include allegations of a plus factor plausibly suggestive of the existence of an anti-competitive agreement.
This must be correct. To conclude otherwise would be to say that allegations of a material element of a claim might be deemed adequate even when no inference of the material element can be drawn from the asserted allegations. It is true that a person untrained in the Sherman Act might well deem unadorned parallel conduct as indicative of a conspiracy, thus making the inference of conspiracy seem plausible. But the controlling law of the Sherman Act is contrary to that untrained instinct. In a sense, we could say that the Substantive Sufficiency of a Sherman Act claim is "trained" in the Sherman Act in order to ensure that a legally recognized claim has, in fact, been stated. This may be a peculiarity given untrained perceptions, but it is not a peculiarity of pleading; it is a peculiarity of the governing substantive law. Most importantly, this substance-specific rule does not impose a heightened pleading requirement for § 1 cases. The rule imposed does not require specificity or particularity; rather, it simply requires that the complaint outline or adumbrate the material elements of the claim that the plaintiff seeks to assert (or that the complaint invokes).
There was one little hurdle that the Court had to surmount in order to sustain the approach it had endorsed, namely, the "no set of facts" language of Conley v. Gibson ("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"). That language would seem to suggest that allegations of parallel conduct should suffice to survive a Rule 12(b)(6) motion despite the missing inference since at trial "some set of facts" might establish a necessary plus factor. The Bell Atlantic Court did not leap over the Conley hurdle; it took it down.
355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957).
The Court agreed that the Conley language could be interpreted as saying that a complaint cannot be dismissed unless factual impossibility is shown on the face of the pleadings-no set of facts. With that interpretation, one could say that a factually implausible allegation (i.e., unadorned parallel conduct as establishing an agreement) is not a factually impossible allegation, for the plaintiff might, at trial, be able to present as yet undisclosed evidence to support the allegation (i.e., plus factor evidence). Under this approach, Substantive Sufficiency would be measured not by the complaint, but by the realm of unalleged factual possibilities.
The Bell Atlantic Court rejected the factual-impossibility interpretation of Conley as unwarranted by the actual holding in Conley and as inconsistent with long-accepted standards of pleading practice. As to the latter, the Court reasoned that such a broadly stated principle would, in effect, sustain a "wholly conclusory statement of claim" whenever there was a possibility that the plaintiff could later come up with some set of facts to prove that claim. This would almost always be true. In essence, the factual-impossibility interpretation of Conley would eliminate the need for a factual narrative as well as the need to provide factual or inferential support of any of the material elements of a claim. Moreover, the Court noted that courts and commentators had long resisted the factual-impossibility reading of Conley. The Bell Atlantic Court then offered this alternative reading of (or eulogy for) Conley:
The phrase is best forgotten as an incomplete, negative gloss on an accepted pleading standard: once a claim has been stated adequately, it may be supported by showing any set of facts consistent with the allegations in the complaint. . . . Conley, then described the breadth of the opportunity to prove what an adequate complaint claims, not the minimum standard of adequate pleading to govern a complaint's survival.
This returns us to a basic principle of Substantive Sufficiency. To survive a Rule 12(b)(6) motion, a complaint must contain direct or inferential allegations pertaining to each of the material elements of the asserted claim. Consistent with the Bell Atlantic Court's interpretation of Conley, if the complaint survives the motion to dismiss, the plaintiff may, under the more modest no-set-of-facts standard, rely on facts consistent with the asserted allegations but which were not themselves included in the complaint. Hurdle down.
In summary fashion, Part II B of the Court's opinion holds that as a matter of Substantive Sufficiency a complaint asserting a § 1 Sherman Act claim must include "factual matter" plausibly suggestive of an agreement in restraint of trade. Furthermore, since unadorned parallel conduct is not, as a matter of law, suggestive of such an agreement, allegations of unadorned parallel conduct are not, in themselves, sufficient to satisfy this requirement. To survive a Rule 12(b)(6) motion to dismiss, therefore, a § 1 complaint relying on parallel conduct must also include plus-factor allegations sufficient to move the alleged parallel conduct out of "neutral territory" and into a territory plausibly suggestive of an agreement.
To this point, other than the sensible "revision" of Conley, the Court's treatment of pleading appears consistent with long-recognized pleading standards. And the revision of Conley was itself consistent with those principles and with a substantial body of decisions and commentary.
3. The Substance-Specific Rule Applied
The Bell Atlantic Court applied its substance-specific rule-the requirement that § 1 complaint alleging parallel conduct include allegations of a plus factor-in Part III of its opinion. There the Court examined and interpreted the plaintiffs' complaint to see if the allegations contained therein provided sufficient information to state a claim under the previously identified Sherman Act standards. This examination had two interpretive components. First, the Court read the complaint as alleging an agreement in restraint of trade based solely on the subsidiary allegations of parallel conduct. Second, the Court interpreted the allegations of parallel conduct as being insufficient to support an inference of an agreement. These combined interpretations compelled the Court's ultimate conclusion that the complaint failed to state a claim on which relief could be granted.
As to the first interpretive component, the Court offered the following judgment: "To begin with, the complaint leaves no doubt that plaintiffs rest their § 1 claims on descriptions of parallel conduct and not on any independent allegation of actual agreement among the [defendants]." In arriving at this conclusion, the Court relied on the structure and content of the complaint. The allegations pertaining to a Sherman Act violation are contained in paragraphs 37 through 51 of the complaint. Paragraphs 37 through 50 describe the two relevant patterns of parallel conduct and suggest some potential plus factors. Paragraph 51, quoted previously but worth a second look, wraps those assertions into a conclusion:
In the absence of any meaningful competition between the [defendants] in one another's markets [the non-competition pattern], and in light of the parallel course of conduct that each engaged in to prevent competition from [potential market entrants] within their respective local telephone and/or high speed internet services markets [the territory-protection pattern] and other facts and market circumstances alleged above, Plaintiffs allege upon information and belief that Defendants have entered into a contract, combination or conspiracy to prevent competitive entry in their respective local telephone and/or high speed internet services markets and have agreed not to compete with one another and otherwise allocated customers and markets to one another.
Bell Atlantic Complaint, supra note 48.
In essence, the Court concluded that the logical thrust of the complaint was that the inference of an agreement could be drawn from the allegations pertaining to parallel conduct and potential plus factors. There was no other "independent" allegation of an actual agreement.
The dissent disputed the majority's characterization of the complaint by noting without further elaboration that allegations of an agreement could be found in two paragraphs other than paragraph 51, namely, paragraphs 4 64. Paragraph 4, which does include a "raw" allegation of an illegal agreement is found in an introductory section of the complaint entitled "Nature of the Action." That section provides a cryptic description of the proceeding without reference to the underlying factual narrative; it essentially tells the reader that the class-action plaintiffs are going to allege an antitrust conspiracy in the context of the telecommunications industry. One could pretend that the allegations of an agreement included in this section were "independent" of the detailed allegations of parallel conduct in paragraphs 37-50, but that would require more than generous reading of the complaint. It would require an assumption that the "Nature of the Action" section of the complaint was drafted without reference to the plaintiffs' actual theory of the case. While one might be disposed to engage in such a generous interpretation with a pro se litigant, the Bell Atlantic plaintiffs were represented by experience class-action counsel. In such circumstances, generosity need not trump simple logic.
127 S.Ct. at 1984 (Stevens, J., dissenting).
Plaintiffs were represented by the well-known (infamous?) and experienced plaintiff-classaction firm of Milberg Weiss Bershad Schulman.
The dissent's reference to paragraph 64, which could have included paragraph 63 as well, is similarly flawed. Those paragraphs are included in the six-paragraph section titled, "Count 1: Violation of Sherman Act § 1." That section contains no information that is not included in paragraphs 37 through 51 and does not purport to offer an alternative account of the agreement. Rather, like paragraph 51, it appears designed to encapsulate the parallel conduct and plus factor allegations within the wrapping of a succinctly stated conclusion.
The complaint does repeat the "agreement" allegations in Count II, which is premised on state law grounds. See id., paragraphs 69-71. But again these paragraphs appear to state nothing more than the conclusion derived from the more specific allegations of parallel conduct.
I find the majority's reading of the complaint persuasive. It is wholly consistent with the text and organizational structure of the complaint. The additional paragraphs neither add to nor detract from that thrust. The plaintiffs seem to have agreed. In their brief submitted to the Supreme Court, they did not suggest an alternative interpretation of their complaint. Rather, they defended the complaint's allegations of parallel conduct and plus factors as sufficient to state a claim on which relief could be granted.
Bell v. Atlantic, Brief for Respondents, at 39-49.
Having established the contours of plaintiffs' claim, the question is whether the complaint's allegations of parallel conduct were plausibly suggestive of an anticompetitive agreement. If they were, the complaint stated a claim on which relief could be granted. If they were not, no such claim had been stated since the pleading was otherwise devoid of allegations pertaining to a material element of the claim, namely, an anticompetitive agreement. There would be, in other words, a critical substantive gap in plaintiffs' claim.
The Court concluded that the allegations of parallel conduct contained in the Bell Atlantic complaint did not meet the "plausibility" standard, i.e., they did not support the inference of an agreement: "We think that nothing contained in the complaint invests either the action or inaction alleged [i.e., the parallel conduct] with a plausible suggestion of conspiracy." The Court's explanation of this conclusion, which runs for several paragraphs, is not premised on the law of pleading, but on the law of antitrust. Essentially, the Court found that as a matter of antitrust law, nothing in the plaintiffs' allegations plausibly rebutted the presumption that each defendant had simply acted pursuant to individualistic self-interest. While one might disagree with the Court's conclusion, that disagreement has nothing to do with pleading and everything to do with the Sherman Act.
Id. at 1972-1973.
In light of the foregoing, the problem confronting the Bell Atlantic plaintiffs was a self-inflicted wound. In essence, they pled themselves out of court by filing a complaint that alleged a claim unrecognized by the Sherman Act, namely, a claim of anticompetitive parallel conduct. True, the complaint labeled this parallel conduct as constituting an agreement, but that label cannot alter the reality of that which was actually alleged. That reality revealed that the label did not describe the product being offered. In other words, the face of the complaint exposed the inadequacy of the claim.
The Bell Atlantic Court concluded Part III of its opinion (and the opinion generally) by emphasizing that it had not imposed a heightened pleading requirement on § 1 plaintiffs. "[W]e do not require heightened fact pleading of specifics, but only enough facts to state a claim to relief that is plausible on its face," and it distinguished Swierkiewicz v. Sorema on these precise grounds. That case, the Bell Atlantic Court explained, reversed a lower court decision that required the plaintiff to "allege 'specific facts' beyond those necessary to state his claim and the grounds showing entitlement to relief." By way of contrast, the Bell Atlantic plaintiffs failed to plead facts necessary to state a claim on which relief could be granted.
Id. at 1974.
Id.
It should be evident from the foregoing discussion, that the decision in Bell Atlantic was narrow. From a pleading perspective, one could say that the general rules of simplified pleading as envisioned by Substantive Sufficiency were applied to the specific context of a § 1 Sherman Act claim premised on parallel conduct. From a pleading perspective, the precedent established (or reaffirmed) might be stated as follows:
Under Rule 8(a)(2), the governing substantive law determines what must be pled in order to state a claim on which relief can be granted. Taking that governing substantive law into account, if proof of the allegations in a complaint, including plausible inferences derived from those allegations, would not be sufficient to sustain the claim at trial, those allegations and inferences are not sufficient to withstand a Rule 12(b)(6) motion to dismiss. The particularity or specificity of the allegations is irrelevant to this particular consideration.
4. Untidy Aspects of the Bell Atlantic Text
There are some discomfiting aspects of the Bell Atlantic opinion. A slight sense of a foreboding seeps in with the Court's observation, quoted earlier, that a complaint "requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." This language can be read as saying that a complaint that consists wholly of labels and conclusions or that rests wholly on a formulaic recitation of the elements of a cause of action violates the factual narrative requirement of Transactional Sufficiency, for such a complaint would operate as nothing more than an abstract invocation of the law. Fine. This is the interpretation reflected and accepted in the previous discussion. But that is not the only possible reading of the text. The quoted language can also be read as condemning the use of labels and conclusions or formulaic recitations with respect to any of the material elements of a claim. That version, if it is meant to state a general rule, would operate as a drastic revision of Rule 8(a)(2) principles.
That the Court may have intended this broader reading gains credence in the Court's follow-up statement that "a conclusory allegation of agreement at some unidentified point does not supply facts adequate to show illegality." And again when the Court observes, "An allegation of parallel conduct is thus much like a naked assertion of conspiracy in a § 1 complaint: it gets the complaint close to stating a claim, but without some further factual enhancement it stops short of the line between possibility and plausibility of entitlement to relief." After this latter statement, the Court drops a footnote in which it seems to endorse as pleading-relevant a yet-to-be-defined distinction "between the conclusory and the factual." That potential endorsement makes one wonder what the Court meant when it referred to the necessity of sufficient "factual matter." Is factual matter to be distinguished from conclusory matter? If so, how and under what circumstances? Finally, by citing with seeming approval the pre-Swierkiewicz First Circuit decision in DM Research, Inc. v. College of Am. Pathologists, a case in which the lower court endorsed the view that district court judges retained discretion to impose heightened pleading standards, the Court could well be seen as applauding that principle.
Id.
Id. at 1966 n. 5.
170 F.3d 53 (1st Cir. 1999)
Id. at 56 n. 1.
127 S.Ct. at 1966 n. 5.
This second possible interpretation of the Court's brief foray into general pleading standards would return pleading to a pre-FRCP regime in which courts were required to distinguish among facts and conclusions of law, and in which conclusory allegations were suspect and often inadequate as a matter of law. It also takes us into the uncharted territory of a federal common law of heightened pleading standards, for if a "conclusory" or "naked" allegation of a conspiracy or agreement (or any other element of a claim) is always per se inadequate, it follows that a more particularized or specific allegation is required. After all, a "naked" allegation of a conspiracy is an allegation of fact, namely, the fact of the agreement, albeit stated at a very general level. Thus, a court's insistence on a less generalized assertion of this fact would, by definition, involve the imposition of a heightened pleading standard.
With the foregoing interpretation of the Bell Atlantic opinion, perplexity becomes a permanent state of being for anyone interested in understanding or complying with federal pleading principles. In terms of Substantive Sufficiency, it is difficult if not impossible to distinguish between the supposedly sufficient "negligently drove" allegation in Form 9, where no specific facts of negligence are alleged, and the supposedly inadequate, "fact-deficient" allegation of an antitrust conspiracy (or any other type of conspiracy) other than on grounds of the relative complexity of the respective claims. But to rest on that distinction is simply to reaffirm the suspicion that a heightened pleading standard has been imposed for socalled "complex" cases. Similarly, a "naked" allegation of conspiracy would appear to be on the same footing as the "naked" allegation of illicit motive as in Swierkiewicz. Indeed, the Swierkiewicz comparison is particularly striking since the Court in that case rejected the view that the plaintiff needed to plead facts sufficient to support an inference of illicit motive. Rather, the general allegation of illicit motive was sufficient to state a claim. Of course, Swierkiewicz could also be distinguished on grounds of relative complexity or on the potential expense of discovery, but these possible distinctions simply reaffirm the suspicion that a heightened standard has been imposed in certain complex or expensive cases.
5 Wright, supra note 11, § 1233, at 374 ("A few cases also reflect a view that 'a bare bones statement of conspiracy' without facts is not sufficient, although it is difficult to distinguish this form of pleading conclusions from other forms of pleading conclusions, such as those illustrated in the Official Forms, which are thought to be consistent with Rule 8(a).")
It is important to emphasize that we are talking about Substantive Sufficiency here and not about either Transactional Sufficiency (factual narrative) or Procedural Sufficiency (fair notice). Certainly, if a complaint consists of nothing more than (or virtually nothing more than) a series of legal conclusions parading as facts, the principle of Transactional Sufficiency will be violated due to the absence of a sufficient factual narrative. Similarly, and most importantly, allegations stated at a high level of generality may well violate Procedural Sufficiency by failing to afford the defendant fair notice of the claim or of some crucial aspect of the claim. As I have noted, the degree of detail required by fair notice will vary from case to case depending on the circumstances of each case. But fair notice is not the test for Substantive Sufficiency. Substantive Sufficiency is measured simply by the effectiveness, from a non-technical perspective, with which the complaint outlines or adumbrates a claim on which relief can be granted. As we've seen with Form 9, a complaint that includes a conclusory allegation of negligence can nonetheless be said to outline or adumbrate a substantively sufficient claim on which relief can be granted. Similarly, a claim that alleges that the defendants entered into a conspiracy to restrain trade and then alleges exactly what the defendants did to advance that conspiracy, outlines or adumbrates a claim on which relief can be granted. To the assertion that this model runs the risk of plaintiffs alleging a conspiracy with no evidence that is ultimately supportive of the proposition, the best answer is Rule 11, invoked by the defendant after plaintiff's complaint has been dismissed virtue of a summary judgment or judgment as a matter of law due to factual insufficiency.
Happily, the "heightened pleading" interpretation of Bell Atlantic is not a necessary interpretation. Moreover, there are least five grounds on which that interpretation can and ought to be resisted, i.e., aside from the fact that it is just plain wrong. Three of those grounds are internal to the Bell Atlantic opinion and two of them are external to that opinion.
As to the internal grounds: First, the Bell Atlantic Court goes out of its way to deny that it is imposing a heightened pleading requirement. Its discussion of the pleading standards begins with an assurance that "detailed" factual allegations are not required and the opinion ends with a denial that the Court has imposed a heightened pleading standard. While the Court's perception of what it has done is not dispositive, that perception is entitled to some weight. At the very least, one ought to be circumspect in asserting to the contrary. On this point, what the Court did might be more important than what the Court said. And, as previously discussed, what the Court did seems to have been correct under the governing substantive law.
That leads to the second internal point. The holding in Bell Atlantic had nothing to do with the level of specificity at which the conspiratorial agreement was alleged. That holding did not in any manner depend on the plaintiffs having stated a "naked" allegation of conspiracy. Rather, the holding was premised solely on the plaintiffs having pled themselves out of court by staking their claim of a conspiratorial agreement on substantively inadequate allegations of parallel conduct. Indeed, the Court goes out of its way to explain that no general allegation of conspiracy was contained in the complaint. In short, skip the dicta and let the holding define the scope of the Court's judgment.
Third, and in some ways most importantly, at one point the Court muses over what it would have done had the complaint included only a "naked" allegation of conspiracy along with the restraint of trade allegations. The Court's conclusion is quite consistent with the distinction between Procedural Sufficiency and Substantive Sufficiency described four paragraphs above. Such an allegation, according to the Court, would violate the principle of fair notice. In the Court's words, "[A] defendant seeking to respond to plaintiffs' conclusory allegations in the § 1 context would have little idea where to begin." This explanation is premised on the variability of outcomes that might occur under the fair notice standard. It has no bearing, however, on the sufficiency of allegations, including the level of generality at which those allegations are stated, for purposes of Substantive Sufficiency.
127 S.Ct. at 1971 n. 10.
The two external reasons for rejecting the heightened-pleading interpretation pertain to the inconsistency of the heightened-pleading interpretation with Swierkiewicz (and the precedent on which that case was premised) and with Erickson, the post- Bell Atlantic decision to which we will soon turn. As to Swierkiewicz, it should be clear that the Court in that case rejected the judicial imposition of heightened pleading standards as inconsistent with Rule 8(a)(2). Moreover, as noted above, the allegation of illicit motive deemed adequate as a matter of Substantive Sufficiency in Swierkiewicz is neither more nor less conclusory than a naked allegation of conspiracy referred to by the Court in Bell Atlantic. The heightened-pleading interpretation of Bell Atlantic, therefore, can be sustained only if Swierkiewicz is to be ignored. And if we are to ignore Swierkiewicz, we must ignore the body of cases on which the Swierkiewicz opinion relied. Of course, the Court is free to overrule any line of cases, but in the absence of an express overruling one should at least be circumspect in concluding that the execution has occurred.
I will address the Erickson comparison and the inference to be drawn from that comparison in the section immediately below.
In summation, the "better" reading of Bell Atlantic is that it did not change the law of pleading, but that it simply applied long-accepted pleading standards to a unique body of law under which the plaintiffs' complaint failed to include any facts or plausible inferences supportive of a material element of the claim specifically asserted by the plaintiffs. In essence, the plaintiffs pled themselves out of court.
This is similar to the reading given to Bell Atlantic by a panel of the Second Circuit in Iqbal v. Hasty, 490 F.3d 143, 157-158 (2d Cir. 2007) ("After careful consideration of the Court's opinion and the conflicting signals from it that we have identified, we believe the Court is not requiring a universal standard of heightened fact pleading, but is instead requiring a flexible "plausibility standard," which obliges a pleader to amplify a claim with some factual allegations in those contexts where such amplification is needed to render the claim plausible.")
IV. Erickson v. Pardus: Epilogue
William Erickson was incarcerated in a state prison in Colorado. He filed a suit against prison officials claiming that they had violated his Eighth and Fourteenth Amendment rights by demonstrating deliberate indifference to his serious medical needs. In his complaint and other supplemental filings, all of which were prepared pro se, Erickson alleged that prison officials had diagnosed him as requiring treatment for hepatitis C; that he had been placed in an appropriate treatment program; that shortly after the program commenced the prison's doctor removed him from the program in violation of the applicable protocol; that prison officials refused to recommence his treatment despite his eligibility; and that, in the meantime, he was suffering irreversible damage to his liver and risking possible death.
Complaint in Erickson v. Pardus, No. 05-405, 2005 WL 5543460 (D.Colo. March 3, 2005), on file with author. See 127 S.Ct. 2197, 2198-2199 (2007).
The District Court, relying on the report and recommendation of a magistrate judge, granted the defendants' motion to dismiss, concluding that Erickson had failed to allege facts sufficient to support the "deliberate indifference" element of his Eighth Amendment claim. More specifically, the District Court concluded that in order to establish deliberate indifference, Erickson would have to demonstrate that the doctor's action caused him "substantial harm." Applying this standard, and adopting a "close reading" of Erickson's complaint, the lower court concluded that Erickson appeared to be alleging that only Hepatitis C was causing him harm and not that the doctor's discontinuance of the treatment was itself causing him harm. As a consequence, a material element of Erickson's Eighth Amendment claim was unsupported by factual allegations (or inferences) and his complaint was dismissed for failure to state a claim on which relief could be granted. In other words, the complaint failed to satisfy the principle of Substantive Sufficiency.
Erickson v. Pardus, 198 Fed. Appx. 694, 698 (10th Cir. 2006).
Id.
The Court of Appeals, in a detailed, but unpublished opinion, affirmed. The appellate court began its opinion by describing the liberality of the pleading standard as well as the special deference due a pro se plaintiff's allegations. It then turned those standards inside out, observing that "conclusory allegations without supporting factual averments are insufficient to state a claim on which relief can be granted." Applying that more rigorous standard, the court explained that Erickson "had made 'only conclusory allegations to the effect that he has suffered a cognizable independent harm as a result of his removal from the [hepatitis C] treatment program.'" As a consequence, the Court of Appeals held that Erickson had failed to state a claim on which relief could be granted.
Erickson v. Pardus, 198 Fed. Appx. 694 (10th Cir. 2006).
Id. at 696-697.
Id. at 698.
Id.
The Supreme Court reversed in a per curiam opinion, stating pointedly that "It was error for the Court of Appeals to conclude that the allegations in question, concerning harm caused [Erickson] by the termination of his medication, were too conclusory to establish for pleading purposes that petitioner had suffered a 'cognizable independent harm' as a result of his removal from the hepatitis C treatment program." Under Rule 8(a)(2), "[s]pecific facts are not necessary; the statement need only 'give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.'" In the Court's view, Erickson's complaint easily satisfied this standard:
Id. (citing Bell Atlantic Corp. v. Twombly).
The complaint stated that Dr. Bloor's decision to remove petitioner from his prescribed hepatitis C medication was "endangering [his] life." Petitioner's Complaint 2. It alleged this medication was withheld "shortly after" petitioner had commenced a treatment program that would take one year, that he was "still in need of treatment for this disease," and that the prison officials were in the meantime refusing to provide treatment. Id., at 3, 4. This alone was enough to satisfy Rule 8(a)(2).
Id.
The Court's conclusion is inarguably correct. In terms of the template, the Erickson complaint satisfied Transactional Sufficiency by providing a factual narrative of the circumstances giving rise to the claim. Next, the complaint provided defendants with fair notice by identifying the material facts and the legal basis for the claim asserted. This information was more than adequate to allow them to prepare for trial. Hence, the complaint satisfied Procedural Sufficiency. Turning to Substantive Sufficiency, the facts alleged were more than adequate to outline or adumbrate a claim of deliberate indifference to serious medical needs under the Eighth Amendment. As the preceding block quote demonstrates, there were facts and inferences adequate to support each of the material elements. Finally, the Court's conclusion was completely consistent with the rejection of heightened pleading in Swierkiewicz. Given all of the foregoing, the most surprising thing about Erickson is that the Court of Appeals made such an obvious error, though admittedly the case reports teem with similar errors despite numerous Supreme Court opinions admonishing lower courts to the contrary.
There is, however, a slight problem with rationale offered by the Erickson Court. The question presented was not one of fair notice, i.e., Procedural Sufficiency, as the opinion seems to suggest ("the statement need only give the defendant fair notice"), but one of Substantive Sufficiency. Both of the lower courts had rested their rulings on the absence of sufficient allegations to support the asserted claim. Implicitly and correctly, the Supreme Court held that the allegations at issue were adequate to support the Substantive Sufficiency of Erickson's claim (at least as to this particular element). In other words, in the Court's view there were sufficient factual allegations and available inferences to support the deliberate indifference element of the claim. The case for this conclusion is, in fact, stronger than the case for the very general, but nonetheless acceptable allegation of negligence endorsed in Form 9 and the equally generalized allegation of illicit motive upheld in Swierkiewicz. But this conclusion does not derive from or reflect an application of the fair notice standard; rather, it is a conclusion that flows from a simplified pleading standard that requires allegations sufficient to outline or adumbrate a claim.
This conceptual error aside, the Erickson opinion broke no new ground. The doctrinal lineage implicit in the Erickson Court's opinion is traceable directly to the very generous approach to pleading adopted by the Second Circuit in Dioguardi v. Durning, Judge Charles E. Clark's well-known paean to liberal pleading standards, an approach that was later endorsed by the Federal Rules Advisory Committee. The opinion also finds sustenance in the Supreme Court's relatively recent decisions in Swierkiewicz and Leatherman v. Tarrant County Narcotics Intelligence and Coordination Unit, both of which declined to import heightened pleading standards into Rule 8(a)(2).
139 F.2d 774 (2d Cir. 1944).
Advisory Committee Report of October 1955 on Rule 8(a)(2).
507 U.S. 163, 113 S.Ct. 1160, 122 L.Ed.2d 517 (1993).
I think it safe to say that if Erickson had been the only pleading case decided by the Court during the October 2006 Term it would have gone almost unnoticed, as it offers little more than a standard application of well settled simplified pleading principles. Indeed, as a stand-alone case, it probably would not have been granted, despite the obviousness of the Court of Appeals' blunder. (Could this really have been one of the 75 or so most important cases brought to the Court's attention during the October 2006 Term?) Erickson provided a textbook example of a lower court's overly fastidious and inappropriate insistence on the pleading of "non-conclusory" facts pertaining to the Substantive Sufficiency of a complaint. Erickson is, however, a significant decision. That significance arises out its relationship to Bell Atlantic, a decision that preceded Erickson by exactly two weeks. In fact, from the available records, it appears that Erickson was "held" pending the decision in Bell Atlantic. One gets the sense, given Erickson's relative lack of "certworthiness," that the rapidly prepared and issued Erickson opinion was written as a reassurance that the Bell Atlantic decision had not altered Rule 8(a)(2) pleading principles. To this end, the Erickson Court cited Bell Atlantic twice: once for the proposition that "[s]pecific facts are not necessary" and once for the proposition that "judge must accept as true all of the factual allegations contained in the complaint." Neither of the Bell Atlantic dissenters, Justices Stevens and Ginsburg, objected to this use of the Bell Atlantic decision. The explicit and implicit message, therefore, would seem to be that Bell Atlantic should not be interpreted as having imposed a heightened pleading requirement.
See Brownlee v. Conine, 957 F.2d 353, 354 (7th Cir. 1992) (Judge Posner describing such fastidiousness as "not a very happy formula" under the federal rules).
As Amy Howe explained it on Scotusblog, "Erickson was first distributed for conference at the beginning of January, but the Court's consideration of the petition was delayed for several months after the Court called for a response from the respondent prison officials and then called for the record. The docket does not reflect any action on the case for two months after the record was received on March 7; the case was then distributed for the May 10 conference, after which it was relisted three times. The opinion was finally released two weeks after the Court's opinion in Twombly. It seems likely that the Court initially identified Erickson as a case that should be held and potentially remanded in light of Twombly. Then, in early May (after the Twombly opinion was in circulation), it decided to summarily reverse in Erickson, likely in order to counteract any impression that could arise that Twombly was intended to set a particularly high pleading standard." Howe, supra note 4.
Id.
There is one last comparison to draw between Erickson and Bell Atlantic. The Erickson opinion is brief and to the point. Its discussion and application of pleading standards is accomplished in less than a page in the Supreme Court Reporter. The approach is direct and to the point. One leaves the opinion with a sense of clarity. By way of contrast, the pleading discussion in Bell Atlantic meanders through ten pages of the Supreme Court Reporter. The discussion is anything but pellucid. In part, the length is attributable to the special problems presented by the Sherman Act, but in larger part the length is the product of an unnecessarily convoluted windup to what could have been a straight pitch. If it requires a judge to fell several trees in explaining why a pleading does or does not satisfy simplified pleading standards something has gone awry.
V. Conclusion
Pleading practice (and jurisprudence) would be improved enormously if the legal profession (and particularly the Supreme Court) recognized that the law of pleading can not be reduced to a single all-purpose principle or to a simple all-encompassing phrase; that the distinction between liberal pleading standards and heightened pleading standards does not capture the full range of pleading possibilities and concerns; and that the careless use of language in describing pleading standards tends to layer complexity upon complexity in a manner that bodes ill for the promise of a "just, speedy, and inexpensive determination of every action."
I do not claim that the pleading template offered in this article will cure all of those ills or even that it will set us on the road to pleading salvation; it might, however, provide a handy compass for navigating this increasingly murky terrain. At the very least, it should help those who must assess the adequacy of a pleading ask and answer the right questions and perhaps to do so in the simplest and most direct terms possible.