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Ashcroft v. Iqbal: New Pleading Standards and Motions to Dismiss

By Edward D. Johnson

More than two years ago, in Bell Atlantic Corp. v. Twombly,[1] the U.S. Supreme Court considered what a complaint must contain to survive a motion to dismiss for failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(6). In doing so, Twombly construed the standard set more than 50 years earlier in Conley v. Gibson that such a motion to dismiss should be denied unless it appears “beyond doubt” that the plaintiff could “prove no set of facts in support of” the claim that would entitle the plaintiff to relief.[2] Twombly appeared to adopt a more movant-friendly standard, requiring a complaint to allege facts that, if proven, would support the relief requested and to show that the alleged facts were “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).”[3]


The impact of Twombly was unclear. As noted by Justice Stevens’s dissent in Twombly, the ultimate impact of the decision—including the breadth of its application—“is a question that [only] the future will answer.”[4]


Earlier this year, in Ashcroft v. Iqbal,[5] the U.S. Supreme Court appears to have answered many of the unresolved issues raised by Twombly.


Twombly
Twombly involved an alleged violation of section 1 of the Sherman Act. Plaintiff Twombly alleged that defendant Bell Atlantic and other telecommunication companies violated the Sherman Act by allocating geographic markets (even though it was economically feasible for them to compete in these areas) and by passing up attractive opportunities in contiguous markets. Twombly asked the court to infer that because the companies did not enter into other markets, they had an agreement that violated the Sherman Act.


The district court granted Bell Atlantic’s motion to dismiss for failure to “allege sufficient facts from which a conspiracy can be inferred.” The court introduced a “plus factor,” which required the plaintiff show that the defendants’ actions would be against economic self-interest, meaning that there was a conspiracy between the companies. The court found that the plaintiff failed to show this “plus factor” and that the defendant’s actions could have been motivated by something other than a conspiracy.[6]


Twombly appealed to the Second Circuit Court of Appeals, which reversed the district court. The Second Circuit held that the defendant failed to show that the plaintiff could prove no set of facts demonstrating that the conduct alleged was the product of collusion, rather than coincidence. Accordingly, and applying the Conley v. Gibson standard, the court vacated the dismissal.


The U.S. Supreme Court, in a 7–2 decision, reversed the Second Circuit and affirmed the district court’s grant of the motion to dismiss for failure to state a claim. The Court asserted it was not requiring “heightened fact pleading of specifics,” but did require enough facts “to state a claim to relief that is plausible on its face.” The Court concluded that Twombly had not “nudged their claims across the line from conceivable to plausible,” meaning the complaint had to be dismissed.


Before the district court, Twombly had alleged that telecommunication companies were in neighboring communities but still did not compete and relied on a chief executive’s statement that moving into a competing company’s market “might be a good way to turn a quick dollar but that doesn’t make it right.” Twombly relied on these incidents to show that it was possible for the companies to compete in the communities and the reason the companies were not competing was due to a conspiracy in violation of section 1 of the Sherman Act.


The Supreme Court first stated that, to show a section 1 claim, a plausibility standard applied: A plaintiff cannot rely solely on parallel conduct, which is circumstantial evidence. Instead, the plaintiff needs to allege facts, even if later proved to be false, to show some type of illegal agreement. A complaint that alleged parallel conduct (without more) is much “like a naked assertion of conspiracy” and, as such, subject to dismissal for failure to state a claim. Although a complaint need not contain detailed factual allegations, the plaintiff does have the obligation to provide the “grounds” of its “entitle[ment] to relief,” which is more than mere labels and conclusions.


The Supreme Court reiterated that a motion to dismiss for failure to state a claim cannot be granted merely because the factual allegations are not believed. Instead, the factual allegations must be taken as true when evaluating a motion to dismiss. More pointedly, a plaintiff that has a “well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of the facts alleged is improbable, and ‘that recovery is very remote and unlikely.’” That said, and although embracing Conley’s “no set of facts” standard, Twombly found that it is not up to the judge to turn a frivolous claim into a substantial one by imagining facts that are not present in the complaint.


In dissent, Justice Stevens adhered to the traditional view that the Federal Rules of Civil Procedure do “not require or even invite the pleading of facts.” Citing Conley, Justice Stevens repeated that a “complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.”


The immediate impact of the Twombly decision was unclear. It was uncertain whether the Twombly standard only applied to antitrust cases or to all motions to dismiss for failure to state a claim and whether Twombly set forth a new pleading standard.[7] Moreover, the Supreme Court’s per curiam decision just two weeks later in Erickson v. Pardus[8]—which reversed the granting of a motion to dismiss for failure to state a claim in a pro se plaintiff case using a standard similar to the Conley standard—raised further uncertainty about the scope of Twombly.[9] Iqbal, a May 2009 Supreme Court decision, provides a great deal of guidance in resolving these issues raised by Twombly.


Iqbal
Plaintiff Iqbal claimed constitutional violations by a federal actor pursuant to Bivens v. Six Unknown Federal Narcotics Agents[10] arising out of alleged actions by then–Attorney General John Ashcroft and the treatment of enemy combatants. Responding to Iqbal’s allegation of purposeful and unlawful discrimination, Ashcroft filed a motion to dismiss for failure to state a claim and on qualified immunity grounds. The district court denied in part the defendant’s motion to dismiss for failure to state a claim; the Second Circuit affirmed in part and reversed in part and the Supreme Court granted certiorari.[11]


After summarizing the procedural background, the Supreme Court found that Iqbal had to show that Ashcroft’s own actions violated the Constitution. Construing Bivens narrowly, Iqbal found that a claim for invidious discrimination in violation of the First and Fifth Amendments required the plaintiff to “plead and prove that the defendant acted with discriminatory purpose.” In addition, “purposeful discrimination requires more than ‘intent as volition or intent as awareness of consequences.’” To state a claim, Iqbal had to plead substantial factual matters to show that Ashcroft adopted and implemented the policies at issue, not for a neutral reason but for “the purpose of discriminating on account of race, religion, or national origin.”


Finding that the standards set forth in Twombly applied to Iqbal’s complaint, the court stated that two principles provide the basis for Twombly. First, the court must accept as true all well-pleaded factual allegations in the complaint (but need not accept the truthfulness of legal conclusions). Second, only a complaint that states a plausible claim for relief can survive a motion to dismiss. When the complaint contains well-pleaded facts, the “court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.”


Explaining Twombly, the court wrote that the Twombly’s complaint “flatly pleaded” that the defendants had entered into a conspiracy and as a result, the complaint set forth a “legal conclusion,” was “deficient,” and was not entitled to the assumption of truth. The court disregarded the “parallel conduct” claim in Twombly because, even if taken as true, parallel conduct did not plausibly suggest an unlawful agreement.


Applying this standard, Iqbal’s complaint did not nudge his claims of invidious discrimination “across the line from conceivable to plausible.” The allegations against Ashcroft, much like in Twombly, were nothing more than “formulaic recitation of the elements” of a constitutional discrimination claim. As such, the allegations were conclusions and are not entitled to be assumed to be true. It was not that the allegations were unrealistic or nonsensical, but as in Twombly, the allegations in Iqbal were conclusory in nature of respondent’s allegations.


Going further, Iqbal held that Twombly was not limited to antitrust disputes. Such a narrow reading, the Court reasoned, would go against the Federal Rules of Civil Procedure. Twombly turned on the construction of Fed R Civ. P. 8, and not the underlying substantive law. Accordingly, Iqbal made plain that the Twombly analysis applies “in all civil actions and proceedings in the United States district courts.”
In doing so, Iqbal makes it clear that Twombly applies to all cases governed by the Federal Rules of Civil Procedure. As such, Iqbal adds greatly needed clarity for addressing both pleading standards and the standards for a motion to dismiss for failure to state a claim in all civil cases in federal court.


Keywords: Ashcroft v. Iqbal, motion to dismiss, pleading standard, Supreme Court, Bell Atlantic Corp. v. Twombly, Conley v. Gibson


Edward D. Johnson is a recent graduate of the Phoenix School of Law in Phoenix, Arizona.


This article appears in the forthcoming Fall 2009 issue of PP&D.


 

Endnotes


  1. 550 U. S. 544 (2007).
  2. 355 U.S. 41, 45–46 (1957).
  3. 550 U.S. at 555.
  4. 550 U.S. at 570.
  5. 129 S. Ct. 1937 (2009).
  6. 550 U.S. at 552.
  7. Samuel A. Thumma, New Standards of Legal Sufficiency to Survive a Motion to Dismiss? PP&D (ABA), Summer 2007, at 1, reprinted in Appellate Practice Journal (ABA), Winter 2008, at 10.
  8. 127 S. Ct. 2197 (2007).
  9. Samuel A. Thumma, New Standards of Legal Sufficiency to Survive a Motion to Dismiss? PP&D (ABA), Summer 2007, at 1, reprinted in Appellate Practice Journal (ABA), Winter 2008, at 10.
  10. 403 U.S. 388 (1971).Martin v. Cooper Electric Supply Co., 940 F.2d 896, 908–09 (3rd Cir. 1991).
  11. 129 S. Ct. at 1945.

 

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