Thursday, September 30, 2010

Not So Special Pleading

We like the stronger interpretation of Fed. R. Civ. P. 8(a) adopted by the United States Supreme Court in Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009), and Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007).  We like Twombly/Iqbal (also "TwIqbal") enough that we’ve got 57 posts (this will be #58) in our “pleadings” topic – including one that spotted Twombly as a potential game-changer only 10 days after it was decided.  We like Twombly/Iqbal enough that we’ve defended it against the predictably pro-plaintiff Greek chorus from academia.


So when our kindred spirits (on product liability, at least) over at the Washington Legal Foundation told us about a recent “Issue Brief” (“IB” for short) on TwIqbal released by the American Constitution Society, we were intrigued enough to take a look.  The ACS bills itself as:
a non-partisan, non-profit educational organization.  We do not, as an organization, lobby, litigate or take positions on specific issues, cases, legislation or nominations.  We do encourage our members to express their views and make their voices heard.

So we thought we’d find something that was at least reasonably nuanced.  Heck, it was the WLF that recommended the piece to us, so how bad could it be?

Who says the folks at WLF don't have a sense of humor?  Boy did they fool us.  ACS also bills itself as “progressive” – which must be some code word for “let anybody sue anybody over anything.”

The authors of the “Issue brief” aren’t law professors or legal scholars of some other sort, but rather a pair plaintiff-side civil rights lawyers.  We don’t do civil rights litigation (unless appellate amicus briefs for groups like the ACLU or the ADL on First Amendment issues count), nor do we discuss civil rights litigation on this blog.  Thus, if the ACS IB just advocated that “civil rights cases are different” and should be exempt from TwIqbal, we’d have let the whole thing go.

But that’s not what they do.  Instead they spout the maximalist plaintiff-side position – hook, line and sinker – that TwIqbal should rolled back as to all kinds of litigation.  But as we've said before, and will say again, product liability plaintiffs aren't dramatically disadvantaged, as the IB would have us believe that civil rights plaintiffs are.

Since they go after us – we’ll return the favor.  Come at us, bro.

The ACS IB asserts, right up front, that Twombly/Iqbal “suddenly and without clear necessity overturned well-settled law.”  IB at 1.  We don’t know what planet those guys are on.  The “clear necessity” for change is stated in both decisions in black and white – modern litigation, particularly discovery, has gotten out of hand and become so expensive and time-consuming that Court’s 1950s relaxed attitude towards initiating suit was badly outmoded.

In Twombly the Court rested its decision squarely on the discovery costs of litigation:

[I]t is one thing to be cautious before dismissing an antitrust complaint in advance of discovery, but quite another to forget that proceeding to antitrust discovery can be expensive. . . .  It is no answer to say that a claim just shy of a plausible entitlement to relief can, if groundless, be weeded out early in the discovery process through “careful case management,” given the common lament that the success of judicial supervision in checking discovery abuse has been on the modest side.  . . .[T]he threat of discovery expense will push cost-conscious defendants to settle even anemic cases before reaching those proceedings.  Probably, then, it is only by taking care to require allegations that reach the [plausibility] level . . . that we can hope to avoid the potentially enormous expense of discovery in cases with no reasonably founded hope that the [discovery] process will reveal relevant evidence.

550 U.S. at 558-59 (emphasis added).

In Iqbal the Court went beyond discovery expense (although that remained important) to recognize other aspects of the cost of modern litigation on society:

Respondent next implies that our construction of Rule 8 should be tempered where, as here, the Court of Appeals has “instructed the district court to cabin discovery in such a way as to preserve” petitioners' defense of qualified immunity “as much as possible in anticipation of a summary judgment motion”. . . .  Litigation, though necessary to ensure that officials comply with the law, exacts heavy costs in terms of efficiency and expenditure of valuable time and resources that might otherwise be directed to the proper execution of the work of the Government. . . .  It is no answer to these concerns to say that discovery for petitioners can be deferred while pretrial proceedings continue for other defendants.  It is quite likely that, when discovery as to the other parties proceeds, it would prove necessary for petitioners and their counsel to participate in the process to ensure the case does not develop in a misleading or slanted way that causes prejudice to their position.  Even if petitioners are not yet themselves subject to discovery orders, then, they would not be free from the burdens of discovery. . . . We decline respondent's invitation to relax the pleading requirements on the ground that the Court of Appeals promises petitioners minimally intrusive discovery. That promise provides especially cold comfort in this pleading context.

129 S. Ct. at 1953-54 (emphasis added).

Nine and even ten-figure litigation charges have become all too common on corporate balance sheets, as have settlements of the same range in mass torts litigation even where plaintiffs have lost most of the trials and/or dispositive motions.  In mass torts, even gigantic payouts have been characterized as “nuisance settlements.”  See Frank, “Riverboat Poker & Paradoxes:  The Vioxx Mass-Tort Settlement,” 12 Andrews Drug Recall Litig. Rep. 2 (May 2008) (asserting that $4.85 billion Vioxx settlement was for “nuisance” value"); In re Agent Orange Products Liability Litigation, 818 F.2d 145, 171 (2d Cir. 1987) (finding “good reason to view” $180 million Agent Orange settlement as for “nuisance value”). Given what modern litigation has become, we’d have to say that TwIqbal easily surpasses any “clear necessity” test – assuming any such test exists (which it doesn’t).

It’s not just us, either. One of us (Bexis) edits the ABA Mass Torts Newsletter. One of the (few) perks of that position is a free subscription to all of the newsletters published by the ABA’s Litigation Section.  The most recent two of these newsletters to cross Bexis’ desk are the “Minority Trial Lawyer” (Summer 2010) (“MTL”) and the “In-House Litigator” (Summer 2010) (ABA membership required) (“IHL”) – neither having anything in particular to do with mass torts.  Just leafing through these two, randomly selected (by time) publications, we see similar statements about the high cost of modern litigation.
  • From an IHL article on third-party financing of litigation – “[D]efendants with financing do not have to succumb to a plaintiff’s settlement demands out of fear that they cannot afford to continue the case through trial.”
  • From a MTL article on arbitration – “[A] defendant who does not want to be forced into an unfair settlement by economics just because the plaintiff is making the litigation too expensive to continue.”
  • From the same MTL article – “[D]iscovery is currently one of the largest expenses of time, effort, and money in litigation.”

So it’s not just us (as we freely admit to being just as biased as the ACS IB authors in fact are) – although we went over the same issues in more detail in our Pennumbra piece last year.   The expense of litigating today’s lawsuits seems to be on everybody’s mind.

Nothing in the IB changes our minds one iota about the strength of the Supreme Court's practical justifications for emphasizing “short and plain” a little less, and “statement of the claim” a little more, in construing the language of Rule 8(a).

In part II, the IB claims that a “liberal” pleading standard (that is to say, the essentially non-existent Conley v. Gibson, 355 U.S. 41 (1957), standard from 50 years ago) is of “critical importance.”   But other than dropping a few names and emphasizing that Conley was a civil rights case, it doesn’t offer anything to back up the closing assertion that “[i]t is not an overstatement to say that the key successes of civil rights litigation in the last half century were due, in part, to the liberal pleading standard.”  IB at 3.

Oh really?  We’d have thought that the Civil Rights Act of 1964, the Voting Rights Act of 1965, and the Equal Housing Act of 1968 might have at least warranted mention.  LBJ must be spinning in his grave right about now.  But that's all right, everybody's evidently forgotten about him.

Anyway, if the authors were only arguing that civil rights litigation was some sort of special case, we wouldn’t be writing this post.  But there’s a disconnect between their arguments and their conclusions.  They support legislation (ironically holding civil rights litigation hostage to mass tort and other large litigation) that would revert to the Conley non-standard for pleading in all cases.  So we proceed.

Part III of the IB takes the Court to task for overruling “Well-Established Precedent” (that is, Conley) that – they state repeatedly – had been on the books for “five decades.”  There’s no small irony here, in that the same criticism could be leveled at a number of monuments of Supreme Court jurisprudence – Erie v. Tompkins for one, Baker v. Carr, for another, or even Brown v. Board of Education. All three cases overturned several decades of “established precedent.”

Age does not equate to wisdom.

Moving on, the IB describes Twombly as “promulgat[ing] a new and stricter “plausibility” standard, ruling that a plaintiff . . . will survive a motion to dismiss only if he or she pleads enough facts to state a claim to relief that is plausible on its face.”  IB at 3-4.  We don’t disagree.  But to us, that description raises a question that TwIqbal’s critics have never answered:

Why should the legal system tolerate the filing of implausible complaints?

Maybe back in the 1950s, when litigation was smaller, cheaper, and less prevalent (the modern discovery rules were still a decade in the future), the system could afford to be so indulgent, but not any longer.  The litigation system has grown up.  It's time to put away childish things, such as allowing implausible pleadings to trigger costly discovery.

Moving on, we hack our way through a bunch of citation-free rhetoric – like how TwIqbal somehow “is fundamentally at odds with Congress’s intent to provide effective enforcement of our nation’s civil rights laws.”  IB at 5.  While that might support special pleading for civil rights plaintiffs, that’s not what the IB is about.

Okay, what about Rule 1?  It expresses both congressional (Congress approved the rules) and Supreme Court (who promulgated them) intent that the Rules – including Rule 8 – “should be construed and administered to secure the just, speedy, and inexpensive determination” of litigation.  Fifty years of Conley conclusively demonstrated that lax pleading standards, particularly combined with other litigation sea changes (from broad discovery as of right, to First Amendment protection of attorney solicitation), are inimical to “just, speedy, and inexpensive” litigation.  Rule 1, it can be argued, obligated the Court to retire Conley and to adopt a construction more in keeping with the way litigation is conducted in the Twenty-First Century.

As for TwIqbal’s supposedly “complex, two-pronged inquiry,” IB at 5, we have to ask, “Complex,” as compared to what?  Sure it’s more "complex" than waving through anything with the word “complaint” at the top.  But there’s nothing “complex” about TwIqbal that one semester of first-year civil procedure can’t teach.  The two steps are:  go through the complaint and (1) disregard all pure conclusions of law (such as “the product was defective” without saying how) and then (2) compare the remaining factually supported allegations to the elements of the claim and see if a “plausible” claim is pleaded.

That criticism reminds us of the mugging scene from Crocodile Dundee. Complex?  TwIqbal’s not complex – not for lawyers and judges.  You want complex?   Go read our posts under the Daubert topic heading.  Now that’s complex.

Next, there’s the criticism that TwIqbal requires a “judicially-mandated appraisal of the facts at the pleading stage.”  IB at 5.   But don’t judges “appraise” everything that comes before them?  That’s not a criticism of TwIqbal, but rather of the very concept of judicial decision making.  It’s an attack on the idea of “not forgetting as judges what we know as [the phrase is hoary enough to be sexist] men.”  E.g., U.S. v. Blackburn, 461 F.3d 259, 264 (2d Cir. 2006), and a bunch of other cases going back to Legions v. Commonwealth, 23 S.E.2d 764, 765 (Va. 1943) (a significant civil rights case of the time, it turns out).  Judges used their discretion under Conley as well, and until we replace judges with computers, will continue to exercise discretion on any number of litigation-related questions.

We next find the familiar complaint (that can be made about any procedure throwing out a case before a verdict) that “strict pleading will screen [out] some meritorious suits.”  IB at 5.  Twombly, of course, said "no" to this, but that argument's subtext – unspoken but real – is that such a result is somehow worse than allowing hordes of meritless, or in TwIqbalspeak “implausible,” suits to proceed and tie up the parties and the court until the next hurdle is reached.  We dealt with this argument in our Pennumbra piece, so we’ll be lazy and rely on that response:
[C]ourts have no legitimate basis for favoring plaintiffs when interpreting pleading standards.  A just system does not pick sides in advance, but instead establishes neutral rules.  We reject the normative view that it is somehow “better” to let unmeritorious cases proceed than to risk that meritorious cases will be dismissed.  Either way represents error, and neither error is inherently better than the other.  Indeed, given the enormous transaction costs that litigation entails, Type II errors (false negatives) are probably preferable to Type I errors (false positives) from a purely economic perspective.


 
There follows a great deal of civil-right-specific factual arguments (“especially onerous for civil rights plaintiffs,” IB at 5) that, if made to support an exemption for such cases, might be appealing.  Id. at 5-8. Maybe they’re right about that, maybe not; but as we’ve said over and over again, that some classes of plaintiffs might have legitimate beefs is no excuse for letting other types of plaintiffs (such as the other side in our cases) get away with implausible pleadings.

Finally we get to the numbers.  We don’t have time to screw around with statistical validity or methodology issues.  IB at 9-10.  That would be Daubert-level “complex” and take too long.  So we’re taking the numbers offered by the ACS Issue Brief at face value.  The first number is that, under TwIqbal, motions to dismiss were between 1.8 and 4 times more likely than under the old Conley standard.  IB at 9.  That may well be accurate.  We wouldn’t maintain a TwIqbal cheat sheet if we didn’t think it would help defendants win product liability cases.

The next number, though, raises our eyebrows.  Even under the supine pleading standards of Conley, some 50% of all civil rights cases were dismissed on the pleadings.  IB at 9 (“[i]n the two years prior to Twombly, the rate at which motions to dismiss were granted in [civil rights] cases was an already high 50%”).  Really?  We’re jealous. If we could get 50% of our clients’ product liability cases dismissed on the pleadings, even after TwIqbal, we’d be ecstatic (as would our clients).

From that number, we have to say that the real problem seems to be that a lot of civil rights cases are simply really bad cases.  A 50% dismissal rate under Conley maintained for two years is too high to be anything else.

But back to the numbers. The IB states that after Twombly, the dismissal rate for civil rights cases went up to 55%, and after Iqbal, the rate increased to 60%.  IB at 9.  Looking at the same issue another way, the IB states that dismissal percentages increased from 27.8% to 35.2% in “employment” cases and from 25.9% to 36.9% in “other civil rights cases.”  Id.

Umm … we’re confused.  First, the second set of percentages doesn’t square with the first set.  Either the overall dismissal rate is in the range of one in two, or in the range of one in three.  It can’t be both, and the differences between the two sets of statistics is quite large – a spread exceeding 20 percentage points.  The discrepancy is unexplained.

The authors should be glad this isn’t a Daubert post.

Second, those numbers don’t show that civil rights cases are disproportionately affected by TwIqbal – rather they demonstrate the opposite.

Accepting the overall 1.8 to 4 times more likely dismissal statistic as true (it accords with our anecdotal experience), then civil rights cases have been TwIqballed less often, relatively speaking, than other types of cases.  We did the math.  1.8 times 50% equals 90% (not 60%).  1.8 times 27.8% equals a little over 50%. 1.8 times 25.9% equals 46.6%.  All of those numbers are way higher than the dismissal rates stated in the IB.

The 4 times more likely number causes some conceptual problems (another Daubert-type issue) if we crunched the numbers the same simple way.  There can't be dismissal rates exceeding 100%, so we used the percentage non-dismissal rate, and then reduced that by 75% (or three out of four).  50% non dismissal divided by four equals 12.5%, so the theoretical "four times higher" dismissal rate would be 87.5% .  For a 72.2% non-dismissal rate, the corresponding figure would be about an 81% dismissal rate post TwiIqbal.  Finally, for a 74.1% non-dismissal rate, the same 4-times-more-likely calculation generates a dismissal rate of 81.5%.

We don’t know whether the IB’s numbers are statistically valid or not, but assuming they are, they show that, contrary to the thesis of the paper, the rate of increase in civil rights dismissals after TwIqbal is smaller than the increase in dismissal rates for litigation as a whole.  The raw numbers look bad only because the pre-TwIqbal civil rights dismissal rate was so large – meaning that a lot of meritless cases were being filed, even before TwIqbal.

That takes us back to our main thesis – what virtue is there, given the significant increase in litigation costs over the last 50 years, in letting all these meritless, or should we say “implausible,” cases persist in our legal system?

We see none. The more quickly we can cull the wheat from the chaff, the better off everyone will be (including other plaintiffs competing for scarce judicial resources), except for the implausible litigants themselves – and, of course their lawyers (such as the authors of the IB).

Sometimes, doing the math can be very revealing.

Given our oft-expressed views about the invalidity of anecdotal evidence, particularly when cherry-picked from a much larger data set, we’re not going to get into the IB’s case reports (see pp. 10-13).  They involve elements such as knowledge, causation, repetition, pattern and practice, and cognizable injury under various civil rights statutes.  Those elements sound different from the kind of issues we’re used to addressing, so we’ll stay away from what we can’t discuss intelligently.  Our general reaction, though, is that the problems (assuming there are any) are not with TwIqbal, but rather with the substantive elements of the various causes of action.  We presume that, if Congress included relatively difficult-to-prove elements in the civil rights laws, it did so for a reason – it didn’t want cases being brought that lacked such elements.  If injustices are occurring, then Congress can amend the law and remove or reduce those elements, as it did in the Lilly Ledbetter case.

What we don’t want is the litigation lobby using civil rights (or some other irrelevant type of litigation) as smokescreen for sending product liability pleading back to the Conley dark ages – which is precisely what the IB advocates:
[T]hese are not the only types of cases in danger of unwarranted dismissal under the heightened pleading standard. Iqbal’s expansion of Twombly to all civil cases places in jeopardy innumerable personal injury and consumer cases, most of which require full development of the facts before facing a dispositive motion.

IB at 12.

That’s simply garbage.

We’re product liability defense lawyers, so now we’re getting to stuff we know about.  In product liability, the plaintiff has possession of the product, not the defendant.  Thus, the plaintiff should be able to plead who the manufacturer is.  The plaintiff can have an expert examine the product (or an exemplar, if the actual product’s been consumed or otherwise lost) and therefore should be able to plead what the defect (or at least the malfunction) is. The plaintiff can talk to his/her own doctors.  Thus the plaintiff is able to plead causation.  Finally, the plaintiff is uniquely knowledgeable about the nature of his/her injuries and can thus plead damages. There’s no legitimate excuse for not pleading a TwIqbal-compliant, factually supported product liability complaint.

Granted, there might be some exotic theory that can’t be pleaded without discovery, although we’re hard pressed to think of one.  (Is there a regulatory violation?  The FDA’s website posts warning letters.)  But that kind of theory is what Rule 15 (and its relation back provisions) are for. Complaints can be amended, after all.

Our experience with Conley is that it permitted product liability plaintiffs to file complaints that often fail to specify which defendant is the manufacturer, what's the supposed defect, what law/regulation the defendant supposedly violated, how the defect/violation could have injured the plaintiff, and so on and so forth.  One of us just got done with a product liability/negligence complaint that asserted the same 20 or so boilerplate allegations of tortious conduct against ten different defendants from a product manufacturer to a premises liability defendant without ever specifying who was who.  We think that’s completely improper and unnecessary.  And for specific examples of such broad and vague pleadings in the prescription medical product context, see the 53 prescription medical product liability litigation decisions (since 2007) currently in our TwIqbal Cheat Sheet.

After that, the IB delves into a little more civil rights “inside baseball” – whether TwIqbal overruled sub silentio (that means “without saying so”) a case called Swierkiewicz.  IB at 13-14.  We dealt with that in our Pennumbra piece, so we won’t go into any detail here.  Our conclusion was (and is) that, while some of the rationale of Swierkiewicz doesn’t survive TwIqbal, the end result would be the same.

Then the IB addresses affirmative defenses.  IB at 13-14.  We’re agnostic about that.  We don’t think, for example, that defendants should plead, say, the statute of limitations unless there are facts suggesting that the statute should apply.  On the other hand, the pleading of defenses is governed by Rule 12(b), not Rule 8(a).  Rule 12(b) doesn’t contain the same “short and plain statement of the claim” language that the Supreme Court interpreted in Twombly/Iqbal.  Thus, as a legal matter, we don’t think that affirmative defenses are, in fact, subject to being TwIqballed.

But if you’re looking for possible novel uses of TwIqbal, then check out our post where we discussed its application in the class action context to boilerplate recitations that the class satisfies the requirements of Rule 23.  That’s a pleading that's covered by Rule 8, and thus by TwIqbal.

The IB closes by endorsing legislation that would overturn Twombly/Iqbal.  IB at 16-18.  We’ve already discussed that, and we’re not inclined to further lengthen this post by going over it yet again.  Also, we think that would be beating a dead horse.  The chief sponsor of the bill in the Senate, Arlen Specter, was defeated for re-election, and we don’t see any indication that this bill’s going anywhere in the waning days of this congress. If the litigation lobby couldn’t move that bill in this congress, it’s not likely to be able to move it in the next one.

So we think we’re going to have TwIqbal around for quite some time.  Willingly or not, lawyers will get used to it, and it will become as much a part of the litigation landscape as Daubert or the broader summary judgment standards of Celotex Corp. v. Catrett, 477 U.S. 317, 322-26 (1986).  We expect that TwIqbal will have lasting effect on litigation practice, but probably not as much as we hope or the IB authors fear. In any event, we’ll be here doing what we can to keep hope alive.

3 comments:

Max Kennerly said...

Twombly and Iqbal both plead claims that were eminently "plausible." Twombly, for example, pointed out how the geographic distribution of the relevant telecommunications could not be explained through normal market forces. Iqbal described, in detail, the knowledge that high level officials like John Ashcroft knew about the conditions of confinement.

Then some justices, with no factual record before them, went "well, gosh, I just don't think so."
A "level" playing field at the pleading stage would involve permitting full discovery before the complaint is filed. Forcing plaintiffs to allege facts better known by -- and often intentionally concealed by -- the defendants isn't "level" or "fair."

Funny to hear you guys complain about the costs of discovery without considering that, if the defendant truly was at fault, then they have no one to blame but themselves for the corresponding costs of litigation.

Bexis said...

"Funny to hear you guys complain about the costs of discovery without considering that, if the defendant truly was at fault, then they have no one to blame but themselves for the corresponding costs of litigation."

That's a good argument for loser pays. We'd be delighted if such a system were instituted. The opposition to it doesn't come from this side, so we know who benefits from using litigation expense to create nuisance value.

CharleyCarp said...

On the question of high dismissal rate for civil rights cases, I'd imagine (but am not going to try to look up -- hey, this is the internet) that pro se prisoner cases, as well as pro se employment cases so weak no lawyer will take them on contingency probably make a pretty big difference.

It's a lot easier to imagine winning a civil right case pro so -- there aren't going to be a million documents, and you're not likely to need an expert etc -- than anything you guys are doing.