Federal pleading standards in employment class actions

August 10, 2010 by

In Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009), the Supreme Court issued a watershed decision on pleading standards under Fed. R. Civ. Pro. 8, making clear that the familiar notice pleading standard is no longer applicable.  In Iqbal, the Court clarified that its decision in Bell Atlantic Corp. v. Twombly, 550 U.S. 554 (2007) applied to “all civil actions,” and was not limited to pleading standards in antitrust cases.  Iqbal, 129 S. Ct. at 1953.  Under Iqbal and Twombly, a complaint must now “contain sufficient factual matter” to “‘state a claim to relief that is plausible on its face.’”  Id. at 1948 (quoting Twombly, 550 U.S. at 570).  While the new “plausibility” standard is not a “probability” standard, exactly what a plaintiff must allege in any particular context to “nudge[] [his] claims … across the line from the conceivable to the plausible” (Id. at 1951) remains unclear.  Further, it leaves significant room for subjective judicial determinations as to the merit of plaintiff’s allegations.

Also unclear is the extent to which the Court’s prior ruling in Swierkiewicz v. Sorema N.A., 534 U.S. 506, 508 (2002), in which the Court ruled that “a complaint in an employment discrimination lawsuit need not contain specific facts establishing a prima facie case of discrimination” remains viable.  Compare Fowler v. UMPC Shadyside, 578 F.3d 203 (3 rd. Cir. 2009) (finding that Swierkiewicz was repudiated by Twombly and Iqbal) with Swanson v. Citibank, N.A., —F.3d.—, 2010 WL 2977297 (stating that the Court explicitly reaffirmed the validity of Swierkiewicz in Twombly).

In light of the subjectivity in the new “plausibility” standard, courts may be more inclined to apply a stricter standard in class action cases where denying a motion to dismiss opens the door on a larger scope of discovery than in a typical individual action.  See Twombly, 550 U.S. at 558-59 (“[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. As we indicated over 20 years ago in Associated Gen. Contractors of Cal., Inc. v. Carpenters, 459 U.S. 519, 528, n. 17, 103 S. Ct. 897, 74 L.Ed.2d 723 (1983), ‘a district court must retain the power to insist upon some specificity in pleading before allowing a potentially massive factual controversy to proceed.’  … That potential expense is obvious enough in the present case: plaintiffs represent a putative class of at least 90 percent of all subscribers to local telephone or high-speed Internet service in the continental United States … .”) (internal citations omitted).

In light of the recent developments, a practitioner is well advised to include as many specific factual allegations as possible when filing an employment class action.  Under Iqbal, 129 S. Ct. at 1949, “recitals of the elements of a cause of action, supported by mere conclusory statements” are no longer sufficient.  Particularly in the employment context, however, where an employee may not have access to many relevant facts absent discovery, the new pleading standards are likely to create obstacles.

In order to aid plaintiffs attempting to avoid dismissal under Iqbal, The Public Justice Foundation has launched the Iqbal Project, which offers strategic and technical assistance in pending cases.  Others are attempting a legislative fix, and there are currently two bills that have been introduced that would reverse the impact of Iqbal and restore the pleading standard announced in Conley v. Gibson, 355 U.S. 41 (1957) (prohibiting dismissal “unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim …”).  See Notice Pleading Restoration Act of 2009, S. 1504, 111th Cong.; Open Access to Courts Act of 2009, H.R. 4115, 111th Cong.

In the meantime, plaintiffs who do not include a heightened degree of factual specificity in their complaints face a greater risk of dismissal in the post-Iqbal era.

Jen Wagner
As a trial lawyer who practices in the areas of complex business, securities, financial fraud, employment, and class action litigation, Jen regularly represents clients in state and federal court and in private arbitrations. Jen advocates for her clients with intelligence and integrity, and is particularly adept at navigating the unique strategic and procedural challenges of complex business and class action litigation. Her clients value her approachable and cool-headed manner in litigating and resolving contentious cases.

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