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2015 and the Litigation Marketplace Scott oD dson UC Hastings College of the Law, [email protected]

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Recommended Citation Scott odD son, Pleading and the Litigation Marketplace, 99 Judicature 11 (2015). Available at: http://repository.uchastings.edu/faculty_scholarship/1462

This Article is brought to you for free and open access by UC Hastings Scholarship Repository. It has been accepted for inclusion in Faculty Scholarship by an authorized administrator of UC Hastings Scholarship Repository. JUDICATURE

ACLOSER LOOK at NEW PLEADING n the LITIGATION MARKETPLACE

By Scott Dodson

COURTS AND PARTIES UNDOUBTEDLY ARE AFFECTED BY THE NEW PLEADING REGIME OF TWOMBLYAND IOBAL. BUT, AS RATIONAL ACTORS, THEY ALSO ARE RESPONSIVE TO IT. THEIR RESPONSIVE BEHAVIORS BOTH MITIGATE THE EXPECTED EFFECTS OF NEW PLEADING AND CAUSE UNINTENDED EFFECTS. ASSESSING NEW PLEADING THUS REQUIRES UNDERSTANDING AND CONSIDERATION OF THESE MARKET FORCES AND REACTIVE IMPLICATIONS.

We are now more than five years out are rational actors. They respond to ing standards in the is from the momentous shift in federal changes in doctrine and practice with available elsewhere' and need not be civil pleading standards from the old their own changes.5 These secondary repeated here. But I do want to reiter- " pleading" regime of Conley v. responses may temper or exacerbate ate briefly some basics to set the stage Gibson, to the "New Pleading"2 regime the observable effects of New Pleading, for considering the impact of what has of Bell Atlantic Corp. v. Twombly, and and they may cause unintended effects. changed. Ashcroft v. Iqba1.4 Although many This essay situates New Pleading in Rule 8(a)(2), which still reads as courts and commentators promptly the broader litigation marketplace it has since 1938, requires only "a weighed in on the import of this shift, and argues that evaluating its effects short and plain statement of the claim distance can be useful; time often tells is both more complex than initially showing that the pleader is entitled to whether developments are net positive supposed and likely to continue to be relief.", This standard is quite different or negative. hard to assess. from - deliberately so - the plead- But part of the problem of assess- ing standards in America's past and in ing New Pleading, even with time, is OLD PLEADING, NEW PLEADING most of the present world., The draft- that legal changes do not have static Historical, doctrinal, and social detail ers intentionally omitted any reference effects. Judges, parties, and lawyers about the evolution of federal plead- to facts., Their goal was to reduce the VOL. 99 NO. 2

gatekeeping function of - tiffs with meritless claims through and assess the for open the doors wider - and require the pleading stage) in exchange for plausibility. only fair notice of the claim sufficient the benefits of broad court access and How meaningful is New Pleading? to enable a to respond. "' avoidance of false negatives (shutting That is the $65 million question. In this Provide notice, and as long as you out some plaintiffs with meritorious essay, I hope to show that although we don't sue for a that the claims). 14 The Conley standard for know some things about the effects of law does not recognize, you generally dismissing a complaint under Rule New Pleading, assessing New Pleading survive a to dismiss. 12(b)(6) was whether it was "beyond is, in general, a highly complicated Of course, fair notice requires some doubt" that the could prove endeavor. Understanding that complex- 5 facts; otherwise, the defendant would "no set of facts" to establish relief.1 ity should give pause to reflect upon not know how to respond. But the Such was the state of federal plead- how best to approach our assessments remedy for a defect in notice stemming ing law for 50 years, and Conley held of New Pleading and how best to move from factual insufficiency is a motion a place of prominence in all of the forward from it. for a more definitive statement, not a major procedure casebooks in U.S. law motion to dismiss., That remedy alone schools. Although a few subsequent THE EFFECTS OF THE LITIGATION suffices to ensure that troublesomely opinions seemed to create some tension MARKETPLACE bare will not go forward with Conley, the major pleadings deci- If the pleading standard has become without more detail. sions by the Supreme Court after Conley more difficult for claimants, one The Supreme Court opinion in tended to reaffirm it and its liberal might expect to see a higher dismissal Conley v. Gibson2 confirmed all this standard emphatically."° rate after Iqbal. Indeed, the available in 1957, and it put an end to what Then, in 2007 and 2009, the empirical evidence suggests that New some have called the Third Pleading Supreme Court decided a pair of cases Pleading is having some impact on 13 War. After Conley, it was clear that that altered Conley's pleading regime. dismissal rates in federal court. The the pleading rules accepted the costs These cases - Twombly and Iqbal- studies to date consistently reveal of false positives (letting some plain- did not change Conley's screen for legal single-digit increases in the dismissal sufficiency. They left untouched the rate after lqbal, though not all of the requirements that a complaint provide increases are statistically significant." notice and that the complaint state a And a single-digit increase in the legally recognized claim for relief. But dismissal rate seems quite modest they added a new factual-sufficiency compared to the cataclysm some requirement of "plausibility."" predicted.20 The question then is why. This "New Pleading" standard One is that New Pleading requires the complaint to survive a really isn't that different from Old two-step test. First, the court must Pleading. In other words, it just isn't disregard all conclusory allegations in a big deal. That answer is certainly the complaint. Second, the court must a possibility," but it ignores the determine, using "judicial experience anecdotal evidence. Lower courts and common sense," whether the almost universally hail the decisions remaining allegations state a "plausi- as, together, creating a sea change in ble" claim for relief.18 pleading standards.2 Judge Sidney H. Naturally, what is "conclusory" and Stein, of the Southern District of New what is "plausible" are still somewhat York, for example, recently pronounced unclear. And how judges will use their that Twiqbal represents "a major shift "judicial experience and common in how I have to approach motions to sense" is hard to predict. But what is dismiss." 23 Another judge confessed, clear is that New Pleading is a trans- "We district court judges suddenly and substantive change that imposes a new unexpectedly find ourselves puzzled and more difficult pleading require- over something we thought we knew ment. Now, in addition to the notice how to do with our eyes closed: dispose and legal-sufficiency requirements that of a motion to dismiss a case for failure always existed, plaintiffs must over- to state a claim."'24 One prominent come a factual-sufficiency hurdle that practitioner called Iqbal "the most requires judges to disregard conclusory significant Supreme Court decision in a JUDICATURE

decade for day-to-day litigation in the presuit .29 If a federal courts."2 The rampant belief plaintiff could obtain among judges, practitioners, and schol- presuit discovery from the ars is that New Pleading is something defendant in one of these quite different. states, then the plaintiff The more likely explanation for the could potentially get lack of observable dismissal-rate changes the information needed tl is that rational actors, confronted with to file a complaint that a meaningfully new standard, are would survive a Twiqbal T changing their conduct in ways that motion in federal court. end up masking, or mitigating, some of Plaintiffs who cannot the otherwise expected effects of New obtain the additional infor- 2 Pleading. 1In addition, these responses mation needed potentially have may be causing ancillary effects that some options. One option is to ought to be considered in assessing file suit in a state court that follows a New Pleading. In other words, rational more liberal pleading rule than New actors in the litigation marketplace can Pleading. State courts are free to adopt complicate assessments of be expected to react to the anticipated their own pleading rules. And even if New Pleading in two ways. implications of New Pleading, and the language of a state rule tracks Rule The first is that the filing of those reactions might cycle back to then 8, the state is free to interpret its rule fewer claims in federal court both affect the observable dismissal rate as it wishes. So, perhaps a complaint ought to reduce the dismissal rate and cause unintended effects. This part that would be screened out of federal if those that are selected out at explores some of those complexities. court by New Pleading could survive filing also would have been dismissed in state court. on motion. If so, then the observed Plaintiffs Several difficulties complicate this dismissal rate would understate the total The threat of facing a motion under option. The first difficulty is that as screening effect of New Pleading. The New Pleading appears to be induc- of January 2015 only eight states - second is that New Pleading induces ing plaintiffs to conduct more factual Arizona, Iowa, Minnesota, Montana, most plaintiffs to obtain additional investigation - even retaining Tennessee, Vermont, Washington, and information before filing and to experts - prior to filing a claim. West Virginia - have maintained include that additional information in Plaintiffs who choose to file are putting their liberal pleading standard in the their complaints, making even those more factual information into their wake of Twomby. 1 Thus, only a cases that survive New Pleading more complaints in an effort to comply filed in one of these eight states could expensive and burdensome for plain- 27 with the strictures of New Pleading. be assured of avoiding a fact-based tiffs to file. Plaintiffs always have generally tended pleading standard. to put more information in their And filing in one of these state complaints than necessary, even before courts may have its own disadvan- Defendants also can be expected to Twombly, but New Pleading imposes tages. For example, the peculiarities of respond rationally to New Pleading. a legal standard that requires qualita- state practice may be detrimental to Most obviously, with New Pleading tively important facts that seem to be certain plaintiffs. In addition, personal adding a new weapon to their arsenal, of a different and more specific ilk than limitations may prevent defendants will file motions to dismiss 2 prior practice focused on. a litigant from filing in one of these in more cases. New Pleading allows Rational plaintiffs who cannot states.32 Finally, savvy defendants new challenges to assertions as conclu- obtain through additional investi- may remove eligible cases from state sory and new challenges to claims gation the facts needed to survive a court to federal court, where the New as factually implausible. Rational Twiqba motion might choose other Pleading standard will apply.3 -lawyer behavior should lead to alternatives. A small number might For these reasons, some plaintiffs more motions filed. attempt to get that information rationally will not file at all,3 4 or at The anecdotal evidence suggests a through state-court discovery mech- least will file fewer claims. Perhaps significant uptick in the filing rates of anisms. A few state systems (namely, some will try alternative dispute reso- motions to dismiss after Iqbal. Survey Alabama, Connecticut, New York, lution mechanisms; others may forgo evidence reveals a dramatic increase Ohio, Pennsylvania, and Texas) allow the claims altogether.35 in motions,36 and prominent defense what the federal system does not: Plaintiff-selection effects thus lawyers have said publicly that they now VOL. 99 NO. 2 file dismissal motions in nearly every the remaining nonconclusory allega- tively affect plaintiffs, for far more 3 case. 1 Some have even opined that the tions establish a plausible entitlement cases that never would have faced a failure to file a motion to dismiss could to relief, and what other information motion to dismiss pre-Twombly will now constitute legal malpractice.3" might inform the judge's "judicial face one post-Iqbal, and at least some Available empirical evidence experience and common sense." of those motions will be granted. In supports these anecdotes. In a study The result is a far more compli- the best study to date of this defense- of Rule 1 2(b)(6) motions, the Federal cated, and more fact-intensive, motion side selection effect of increased Judicial Center found a statisti- process. Although empirical evidence motions, Jonah Gelbach has concluded cally significant (to the 99 percent on the quality of motions is not yet that the minimum negative effect on confidence interval) increase in the available, theoretical commentary plaintiffs is 15 percent. In other words, motion-filing rate of more than 50 suggests that dismissal motions are at least 15 percent of cases dismissed percent.39 It seems clear that one effect starting to resemble more substantial under New Pleading would not have of New Pleading is the increase in the summary- motions, with been dismissed under Old Pleading.41 filing of motions to dismiss. their heavy emphasis on evidentiary His study supports the conclusion 4 In addition to affecting the inci- materials outside of the complaint. that this defense-side selection effect dence of motions, New Pleading likely As discussed above, complaints that exacerbates New Pleading's negative also causes motions to be bigger and are fortunate to survive this intense scru- effect on plaintiffs. more complicated. Prior to Twombly, tiny are likely to be far longer and more The second effect is a cost effect. The motions might justifiably focus factually detailed than pre-Twombly increases in the motion-filing rate and entirely upon the plaintiff's allegations complaints. Because answers must in the complexity of both motions and 41 in the complaint and the scope of the respond to each specifically, answers will cause defense-side costs of law. Now, in addition to those argu- defendants forced to answer these litigation to increase, even in cases that ments based on legal sufficiency, complaints must file answers that are do not result in a dismissal. They also defendants can argue for factual likely to be longer, more difficult, and will cause plaintiff-side costs of litiga- insufficiency. That additional more expensive to draft. tion to increase, as plaintiffs respond to argument may include sub-ar- Thus, defense-side responses have the more complex motions with their guments about what alle- two primary effects on any assessment own more complex opposition briefs. gations in the complaint of New Pleading. The first effect is are conclusory, whether that, despite any plaintiff-side filing Federal Courts screen imposed by New Pleading, A third set of rational actors includes defense-side motions appear to federal judges wrestling with New have increased after Iqbal. Pleading. There was some hope by The increase in the commentators in the immediate motion- aftermath of New Pleading that judges e filing rate could might offer more lenient interpre- affect the tations of New Pleading, perhaps in the dismissal rate playing off uncertainties remaining in ons and (as a function the doctrine and the low probability of motions of reversal. For example, Ben Spencer -side costs filed) either proposed that courts could suspend ?n in cases positively or New Pleading strictures for plaintiffs negatively, who could not be expected to marshal issal. They depending the necessary facts because those facts D Costs of upon the were in the hands of the defendants., kinds of Others proposed that New Pleading )Iaintiffs cases in the could be limited to certain kinds of , xsubset • facing cases of the same ilk as those at issue motions. In in the specific cases in Twombly and 4 more absolute terms, Iqbal.1 For the most part, however, ries. however, the courts have rejected these options, iets. dramatic increase instead interpreting New Pleading to in the motion filing apply to all cases and regardless of any rate ought to nega- information asymmetry confronting JUDICATURE

45 unfortunate plaintiffs . factually insufficient complaints on the " The quality and quantity of motions Other commentators have argued hope that a judge will permit discov- filed by defendants. that the discovery rules permit formal ery of the needed facts. Some judges " The standards applied by federal discovery while a motion to dismiss is will, and others won't, so presumably judges assessing complaints under pending. 46 Rule 26 (c) allows a court some plaintiffs will get the informa- the New Pleading standard. to stay discovery only upon a showing tion needed to survive the motion and " The quality and scope (if any) of of "good cause," and there is at least others won't. How many fall into each pre-dismissal discovery opportuni- an argument that the mere pendency category is an unanswered question ties federal courts afford plaintiffs. of a motion to dismiss is not "good that nevertheless affects the assess- " The rate and efficacy of amendments 4 cause. "4 The idea is that a plaintiff ment of what impact New Pleading is to complaints. faced with a motion to dismiss based having overall. on New Pleading could seek discovery These lacunae in our knowledge of the necessary facts while the motion OBSERVATIONS AND WAYS base demonstrate that we still don't was pending, and a judge could delay FORWARD really know with confidence what the deciding the motion until the discov- What do these marketplace effects tell dismissal-rate effect of New Pleading ery was complete. us about the impact of New Pleading? is. The dynamics of the litigation The main problem with this line This part explores that question and marketplace make that a much more of argument is that the language the offers some thoughts for next steps. difficult inquiry. Supreme Court used in its Twombly Yet even getting a more confident and Iqba/ opinions suggests that it The More We Know, the Less grasp of the dismissal-rate effect is only views discovery as unavailable if the We Know one piece of the puzzle. New Pleading's complaint cannot survive a motion to Although initial New Pleading assess- screening effect at the filing stage, for dismiss. Twombly states that "it is only ments focused on dismissal rates, things example, in addition to influencing the by taking care to require allegations are clearly more complicated. Dismissal- observed dismissal-rate effect, is inde- that reach the level [of plausibility] rate studies no doubt are an important pendently important. In fact, it is a that we can hope to avoid the poten- piece of the puzzle. But they are influ- necessary component of understanding 4 tially enormous expense of discovery" enced in ways that are not fully under- New Pleading's total screening effect. and concludes that "before proceeding stood or studied. Rational responses in Ideally, if New Pleading functions to discovery, a complaint must allege the litigation marketplace may temper as intended, plaintiffs with implau- ' 49 facts suggestive of illegal conduct." or exacerbate otherwise expected or sible claims will not even file in the Iqbal asserts that "Rule 8 ... does not observed effects. As Gelbach's study first place, thereby sparing innocent unlock the doors of discovery for a suggests, for example, the increase in defendants even of the costs of filing a plaintiff armed with nothing more than motions filed indicates that dismissal- motion to dismiss.5s conclusions"5 and concludes that "[b rate studies likely understate New New Pleading's total screening ecause respondent's complaint is defi- Pleading's effect. Similarly, we simply effect is not the final answer, however, cient under Rule 8, he is not entitled to do not know how many cases plaintiffs for we do not know the quality discovery, cabined or otherwise."" siphon to other forums - such as state of the cases being screened. If all Thus, a plaintiff seeking to take courts - or decline to pursue at all; the screened cases are meritless, then New advantage of discovery before surviving quality and quantity of those cases may Pleading's screen may be normatively a motion to dismiss would have to file influence the observed dismissal rate. desirable. But if meritorious cases are an admittedly deficient complaint and The following list identifies just some being screened out when they other- hope that a district judge would allow of the unknowns that may bear on an wise would have proceeded to favorable discovery pending the motion despite accurate assessment of New Pleading's judgment or , then New the Supreme Court's admonitions to the dismissal-rate effect: Pleading incurs a significant justice contrary. The lower courts appear, in the problem, especially if meritorious main, to have followed that admonition " The quality and quantity of cases plaintiffs have been denied a reasonable and refused to allow discovery pending plaintiffs pursue in other forums, opportunity for discovery to bear that a motion to dismiss.5 2 such as state courts. merit out.6 Still, it appears that at least some " The quality and quantity of cases There is some evidence that New judges are allowing discovery pending plaintiffs decline to pursue in any Pleading does screen out meritorious a motion to dismiss." If that practice forum. cases, perhaps significantly so. In 2011, becomes widespread enough, then " The quality and size of complaints Prof. Alexander Reinert published a plaintiffs might be emboldened to file filed in federal court. study finding that, of the studied cases VOL. 99 NO. 2 that survived under Old Pleading but by screening those meritless cases. It is that New Pleading seems likely, "at would have been dismissed under New entirely possible that the cost savings least in the short run, to increase Pleading, more than 5 5 percent were are quite low, especially if the kinds of [rather] than decrease the costs of litiga- meritorious. 57 This merit-based percent- meritless cases screened are predom- tion in the broad spectrum of cases. 64 age was statistically insignificant from a inantly low-cost prisoner civil-rights How could that be? The answer is control group that would have survived claims." And, any cost savings must be that New Pleading increases costs at New Pleading. Thus, Reinert concluded compared to alternative cost-savings the pleading and motions stage. As that New Pleading's dismissal screen has mechanisms that judges could employ discussed above, plaintiffs are likely to almost nothing to do with the meritori- indiscovery to protect defendants conduct more pre-filing investigation 5 ous nature of the case. 1 In a draft study, from excessive litigation costs. In other and spend more attorney time drafting Gelbach finds that summary-judgment words, only the marginalcost savings bigger and more detailed complaints. rates have not changed, leading him to can be credited as a benefit of New Defendants are filing more - perhaps question the merits-screening efficacy of Pleading. We know next to zero about 50 percent more - motions to New Pleading." all of this. dismiss.65 Dismissals are usually with In addition to the merit of screened On the whole, then, we know very leave to amend, which plaintiffs take cases, the kind of meritorious case little about the pros and cons of New advantage of, sometimes successfully, being screened could matter as well. Pleading as it applies in practice. The though they may face a second motion Screening meritorious claims of a litigation marketplace, with its tangle to dismiss. Defendants who ultimately purely private nature - like, for of dynamic responses and feedback must file an answer must respond to example, breach-of-contract actions - loops, complicates matters considerably. bloated complaints with their own presents an individual-justice prob- Without knowing more, it is impossible bloated answers. These cost increases in lem for the uncompensated litigant. to formulate an accurate assessment of the pre-discovery phase could be even But such cases are, theoretically, less New Pleading's intended effects. greater than any cost savings in the likely to be screened than meritori- discovery phase. ous cases of a public or quasi-public ANCILLARY EFFECTS To illustrate, consider the following nature. Screening meritorious claims New Pleading is having unintended rough figures. Say 100 identical cases of a public or quasi-public nature - effects, too, and any assessment must are filed pre-Twombly and post-Iqbal. such as environmental, civil-rights, consider those unintended effects along Of these, around 13 face motions to antitrust, RICO, securities, mass-tort, with the intended ones. Discussions of dismiss under either regime,66 and an consumer, and discrimination claims, two unintended effects follow. additional seven (a 50 percent increase) just to name a few - presents both face motions to dismiss under New individual- justice concerns and broader Costs Pleading. One might be tempted to stop regulatory-deterrence concerns.60 To The opinions in Twombly and Iqbal here and conclude that the increased fully understand the impact of New were grounded in minimizing the costs amount to the seven additional Pleading, both individual-justice expense of litigation, particularly in motions filed under New Pleading. concerns and regulatory-deterrence cases that had weak claims. Twombly It is true that the seven new concerns must be considered. worried that "the threat of discovery motions are additional costs of New The flip side of the normative expense will push cost-conscious defen- Pleading. But it is a mistake to stop question of New Pleading's desirability dants to settle even anemic cases," and there. The 13 cases that face motions is its benefits. Its primary intended concluded that "it is only by taking under either regime are likely to be benefit is the screening of meritless care to require allegations that reach bigger, more complicated, and more cases at an earlier stage than otherwise the level suggesting conspiracy that expensive motions post-Iqbal than would occur, thereby saving innocent we can hope to avoid the potentially pre-Twombly. Further, in far more of defendants some litigation costs. But, enormous expense of discovery."62' And the cases, perhaps all 100, plaintiffs are to date, there has been no study - Iqba/ made clear that New Pleading is likely to spend more time and effort in not one - of the cost savings of New a necessary hurdle to discovery.63 pre-filing investigation and in draft- Pleading. We simply do not know Screening more cases at the pleadings ing bigger, more factually detailed enough about the quantity or quality stage may, indeed, reduce discovery complaints. The takeaway is that even of meritless cases being screened. It is costs (though it is unclear exactly how for cases that face the same motion- reasonable to assume that some screened much). But that does not mean that filing result under both Old and New cases are meritless, but we do not know New Pleading will reduce litigation Pleading, costs may increase. the percentage. And we do not know costs as a whole. To the contrary, the Even the seven additional motions how much defense costs are reduced Federal Judicial Center has surmised entail more costs than just the inci- JUDICATURE dence of a motion. As with the other development of state procedural rules. Rules of - to have the 13, the motions are likely to be expen- Thus, state courts are well within same scope as that given by Twombly 7 sive. And, some of those additional their spheres of power to reject New and Iqbal. 6 motions (let's say two of the seven) will Pleading in state court. Unless some codified law directs be unsuccessful, meaning that these To be clear, some state following state courts to follow federal prece- two cases absorbed significant addi- raises little to no concern. If the state dents, state courts adopting federal tional cost for the same result as under court adopts the reasoning of a federal interpretations should do more than Old Pleading. court because that reasoning applies adopt them on the ground that they are Of the five successful motions, equally and persuasively to state law from the U.S. Supreme Court." That most dismissals will be with leave to and policy and is consistent with any should not be hard to do. For example, replead, and repleading is fruitful for controlling state-codified law, then the Supreme Judicial Court of Maine some, say two. Thus, two more cases state courts can be seen as using inde- adopted Twombly after noting that the absorbed very significant additional pendent judgment to reach the same federal and state rules were identical costs (increased expense drafting the conclusion as a separate court. and determining that the rationale complaint, a New Pleading motion, But the adoption of New Pleading of Twombly applied to the kind of and an amended complaint) for the by states that previously endorsed civil-perjury claims at issue, and that same successful result. Conley raises more concern. It is highly the Twombly standard was needed to Thus, in this hypothetical scenario, suspicious that, after 50 years of further the state policy of curbing the observable benefit of New Pleading adherence to Conley, these state courts abusive use of those claims.2 And the is an earlier dismissal in 3 percent of happened to conclude independently Supreme Court of Nebraska offered cases, though we have no estimate of - just after the Supreme Court did a defensible assessment of New the cost savings likely to result. This - that their pleading rules require Pleading and its desirability in 73 benefit must be contrasted with the New Pleading strictures, too. The Nebraska courts. potential injustice if some of the 3 suspicion could cause one to conclude Other states, however, percent are meritorious cases erro- that states have adopted New Pleading have not articulated suffi- neously screened. The benefit also simply because the U.S. Supreme cient justification for must be contrasted with the increased Court adopted it instead of exercising following Twombly and expense New Pleading potentially rigorous independent judgment in Iqbal. For example, the imposes on the vast majority of all accordance with state law and policy. Minnesota Supreme cases filed. It is entirely possible that I do not mean to suggest that a state the increased costs alone render New court should never follow federal Pleading a net cost to the system. At precedent. The District of this time, we cannot say for sure. But Columbia, for example, we ought to find out. is governed by a stat- ute that requires its .. Federalism courts to follow New Pleading also has more latent the Federal are be systemic effects. One potential effect is Rules of Civil a shadow effect on state courts, which Procedure they other, also are actors in the litigation market- unless place. As noted above, some state local rules to favoraL courts have rejected New Pleading. mandate But six others (so far) have adopted a different then New or endorsed it." Widespread adop- result.69 For tion risks creating the perception that this reason, justice pr states and state courts are, in the main, the D.C. mere followers rather than intellectual Court of orious pI independents." was In the U.S. federal system, states on defensible reasonabl, are free to create their own procedures, grounds when it including pleading rules. Federal-court construed its rule to interpretations of federal rules have no - which mirrors force of law on the interpretation or Rule 8(a) of the Federal VOL. 99 NO. 2

Court has followed operative language initial steps. But, they are but a small of dismissal rates deemphasizes poten- from Twombly without any explanation part of the information necessary to tially more important stories of costs at all.74 The Supreme Court of South assess New Pleading holistically." and other ancillary effects. Dakota adopted Twombly merely because Second, information sharing ought In some ways, though, we can the federal rule and the state rule both to be a two-way street. Market partic- relish the fact that the focus once use the word "showing," but it offered ipants both consume and produce again is on pleadings. Perhaps it is no reasoning based on state policy or information. They consume informa- time to have another "war" - or the correctness (or even persuasiveness) tion to make informed decisions, while at least a debate. New studies and of Twombly.11 And in Massachusetts, their decisions then produce additional scholarship might lead to intriguing although courts had followed the "no information to be consumed by others. new possibilities domestically. That, set of facts" standard of Conley for more Yet the information consumed by at least, is worth applauding. than 30 years, the Supreme Judicial market participants is rarely complete. Court followed Twombly in an opinion Market participants with broad that simply stated, without explana- consumptive and productive capacity 355 U.S. 41 (1957). tion, that the court "agree[dl" with (such as the Supreme Court) along with Scott Dodson, New Pleading, New Discovery, 109 Twombly's analysis." market "outsiders" (such as academ- MIcH. L. REV. 53 (2010). Blindly following federal prec- ics, rulemakers, and legislatures"0) can 3 550 U.S. 544 (2007). edent when it is not controlling, better ensure that the information they 4 556 U.S. 662 (2009). as Minnesota, South Dakota, and produce gets to, and is consumed by, Massachusetts have done with New market participants. 5 See ROBERT G. BONE, THE ECONOMICS OF CIVIL PROCEDURE (2003). Pleading, devalues both state law and For example, parties and courts may state courts. It devalues state law by find it useful to understand the poten- 6 See SCOTT DODSON, NEw PLEADING IN THE refusing to countenance that state law tial costs of increased motion practice TWENTY-FIRST CENTURY: SLAMMING THE FEDERAL COURTHOUSE DOORS? 6-78 (Oxford could demand a different result. And under New Pleading. They also could University Press 2013). it devalues state courts by creating the benefit from clarifications of how New perception that they do not exercise Pleading and discovery could work FED. R. CIv. P. 8(a)(2). the rigorous, independent analysis that together. State courts perhaps could s See Scott Dodson, Comparative Convergences in becomes the judicial function. benefit from better information on Pleading Standards, 158 U. PA. L. REV. 441 Now, state courts could avoid this the impact of New Pleading in federal (2010). devaluation entirely by demonstrating court and on the differences between 9 Geoffrey C. Hazard, Jr., From Whom No Secrets more rigorous reasoning in their opin- federal and state litigation and plead- are Hid, 76 TEx. L. REV. 1665, 1671 (1998). ions. But the U.S. Supreme Court could ing practice. In short, New Pleading 0 See DODSON, supra note 6, at 18-22. help by recognizing the state courts presents an opportunity for both Stephen B. Burbank, Summaryjudgment, Plead- as eager marketplace consumers. A market participants and traditional ing, and the Future of TranssbstantiveProcedure, Twombly or Iqbal footnote emphasizing outsiders to make a real difference 43 AKRON L. REV. 1189, 1992 n.14 (2010). the limited reach of federal-court inter- through the dissemination of studies 355 U.S. 41 (1957). pretations of federal rules and acknowl- and scholarship. edging that even analogous state rules Third, New Pleading offers an oppor- Richard L. Marcus, The American Pleading Wars (2013) (unpublished manuscript). may demand different interpretation tunity for procedural scholars to bring For a comprehensive account of Conley, see could help spur state courts to rational- together a rich, interdisciplinary mix DODSON, suPra note 6, at 26-30. ize adoption more rigorously. Without of theory, practice, empirics, doctrine, such cautionary signals, New Pleading political science, economics, and norma- 15Conley v. Gibson, 355 U.S. 41, 43-47 (1957). risks contributing to the depreciation of tivity. Simply put, it is an exciting time 16See DODSON, supra note 6, at 35-45. state law and state courts. to be an American proceduralist. " Ashcroft v. lqbal, 556 U.S. 662 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007). MOVING FORWARD Conclusion l1qbal, 556 U.S. at 664. Situating New Pleading in the broader Assessments of New Pleading to date litigation marketplace reveals a have focused on directly observable " See DODSON, supra note 6, at 83-89. number of insights. First, it accentu- effects, namely, New Pleading's effect 2o See Marcus, supra note 13, at 21. ates the need for more sophisticated on dismissal rates. I have argued here study of intended effects, ancillary For one of the few defenses of this position, see that this focus elides the complexity Adam Steinman, The Pleading Problem, 62 STAN. effects, and costs. The existing empir- that the litigation marketplace imparts L. REV. 1293 (2010). ical and anecdotal studies are good to dismissal-rate studies. And the story JUDICATURE

See, e.g., Fowler v. UPMC Shadywide, 578 E3d 862-64 (Wash. 2010); Roth v. DeFelicecare,Inc., See Jonah B. Gelbach, Note, Locking the Doors to 203 (3d Cir. 2009) ("[Pjleading standards have 700 S.E.2d 183, 188-89 & n.4 (W. Va. 2010). Discovery? Assessing the Effects ofTwombly and seemingly shifted from simple notice pleading By contrast, six states that formerly followed Iqbal on Access to Discovery, 121 YALE L.J. 2270, to a more heightened form of pleading."). Conley have adopted New Pleading as the rule 2330-32 (2012). for pleading under their state rules. See infra 2' Pamela Atkins, Twombly, lqbal Introduce More 4 See A. Benjamin Spencer, UnderstandingPleading note 67. Another 16 or so already follow a form Subjectivity to Rulings on Dismissal Motions,judge Doctrine, 108 of fact pleading. See Kevin M. Clermont, Three MICH. L. REV. 1, 29-30 (2009). Says, 78 U.S.L.W 2667 (May 11, 2010) (quot- Myths About Twombly-Iqbal, 45 WAKE FOREST ing Judge Stein). 4 See, e.g., Limestone Den. Corp. v. Village of Lemont, L. REV. 1337, 1340 n.19 (2010). The others Ill., 520 E3d 797, 803-04 (7th Cit. 2008) 2" Hon. Colleen McMahon, The Law of Unintended have not yet conclusively adopted or rejected (Posner, J.); J. Douglas Richards, Three Limita- Consequences: Shockwaves in the Lower Courts After New Pleading. tions of Twombly: Antitrust Conspiracy Inferences Bell Atlantic Corp. v. Twombly, 41 SUFFOLK U. in a Context of The Supreme Court has recently tightened the HistoricalMonopoly, 82 ST. JOHN'S L. REV. 851, 853 (2008). L. REV. 849, 851 (2008); scope of . See DaimlerAG v. Douglas G. Smith, The Twombly Revolution?, 36 PEPP. L. REV. 25 Adam Liptak, 9111 Case Could Bring Broad Shift Bauman, 134 S. Ct. 746 (2014); Walden v. Fiore, 1063, 1083-85 (2009). on Civil Suits, N.Y TIMES, July 20, 2009, at 134 S. Ct. 1115 (2014);J. McIntyre Machinery A10 (quoting Tom Goldstein). Ltd. v, Nicastro, 131 S. Ct. 2780 (2011). See, e.g., Chesbrough v. VPA, PC., 655 E3d 461, 472 (6th 2' For the definitive paper highlighting the 13 See Clermont & Yeazell, supra note 28, at 832 Cir. 2011); Santiago v. Warminster Twp., 629 E3d 121, importance of litigant selection effects, see n.41. 134 n. 10 (3d Cit. 2010); S. Cherry St. George L. Priest & Benjamin Klein, The LLC c Hennessee Group LLC, 573 E3d See BONE, supra note 5, at 148. Although 98, 113-14 (2d Cir. 2009). Selection of Disputesfor Litigation, 13 J. LEGAL no studies have attempted to measure the STUD. 1 (1984). For a Twombly-limited model See Edward A. Hartnett, Taming Twombly, Even filing-screening effect of New Pleading, a controlling for plaintiff selection effects, see After Iqbal, 158 U. PA. L. REV. 473, 503-15 recent analogous study found that stricter William H.J. Hubbard, Testingfor Change in (2010); Suzette M. Malveaux, Front Loading and pleading standards under the federal securities ProceduralStandards, with Application to Bell Heavy Lifting: How Pre-DismissalDiscovery Can have had a screening effect on the filing of Atlantic v. Twombly, 42 J. LEGAL STUD. 35 Address the Detrimental Effect of Iqbal on Civil securities class actions. See Stephen Choi, Karen (2013). Rights Cases, 14 LEWIS & CLARK K. Nelson & Adam C. Pritchard, The Screening L. REV. 65, 123-41(2010). 21 See Leslie A. Gordon, For Federal Plaintiffs, Effect of the Private Securities Litigation Reform Twombly and Iqbal Still Present a Catch-22, Act, 6J. EMP. LEGAL STUD. 35 (2009). FED. R. CIv. P. 26(c). A.B.A. J. (Jan. 1, 2011); Herbert Hovenkamp, Interestingly, though the hope might be that 41Bell Atl, Corp, v Twombly, 550 The Pleading Problem in Antitrust and Beyond, U.S. 544, 559 New Pleading would incentivize settlement, 95 IOWA L. REv. BULL. 55, 56-57, 63 (2010); (2007). the available empirical evidence does not EMERY G. LEE III & THOMAS E. WILLGING, support increased settlement rates in filed cases SId. at 564 n.8. FED. JUDICIAL CTR., ATTORNEY SATISFACTION after Iqbal. See Christina L. Boyd & David A. WITH THE FEDERAL RULES OF CIVIL PROCE- Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009). Hoffman, Litigating Toward Settlement, 28 J. L. DURE 12 (2010), 51 ECON. & ORG. 898 (2013). Id. at 686. 2 See Kevin M. Clermont & Stephen C. Yeazell, 36See LEE & WILLGING, supra note 27, at 11-12. 52See DODSON, supra note 6, at 176-78. Inventing Tests, Destabilizing Systems, 95 IOWA L. REV. 821 (2010) (arguing that New Pleading See Gordon, supra note 27 (reporting that James See Edward A. Hartnett, Taming Twombly: imposes a novel standard). Wareham, the chair of Paul Hastings's D.C. An Update After Matrixx, 75 L. & CONTEMP. litigation group, raises Twombly and Iqbal in PiROBS. 1, 49-50 (collecting examples) (2012). 29 ExparteAnderson, 644 So. 2d 961, 964 (Ala. "nearly every securities case he handles"); Janet 1994); Berger v. Cuomo, 644 A.2d 333, 337 There is some empirical evidence that amend- Cecelia Walthall, Iqbal, Twombly Pleading (Conn. 1994); Holzman c. Manhattan & Bronx ments can minimize the dismissal effect of New Standards Hotly Debated by Conference Panelists, Surface Transit Operating Auth., 707 N.YS.2d Pleading, see JOE S. CECIL ET AL., FED. JUDI- 78 U.S.L.W. 2782, 2782 (2010) (quoting John 159, 161 (N.Y App. Div. 2000); OHIO CIv. R. CIAL CTR., UPDATE ON RESOLUTION OF RULE Freedman, a partner at Arnold & Potter, as 34(D)(1); PA. R. CIV. P. 4003.8(a); TEx. R. Civ. 12(B)(6) MOTIONS GRANTED WITH LEAVE TO saying, "I am more likely now to file a motion P. 202.1, 202.4. AMEND 13-14 (2011), but more evidence is to dismiss under Rule 12(b)(6) in almost every needed to understand the full scope and magni- 3o See Scott Dodson, FederalPleading andState case"). tude of the effect of amendments. PresuitDiscovery, 14 LEWIs & CLARK L. REV. 43 3' See Clermont & Yeazell, supra note 28, at 840. (2010). Cf BONE, supra note 5, at 45-49, 150-55 39 JOE S. CECIL, GEORGE W. CORT, MARGARET S. (documenting systemic disincentives to filing 31 Cullen v. Aito-Owners Ins. Co., 189 P.3d 344, WILLIAMS & JARED J. BATAILLON, FED. JUDI- frivolous claims). 345-48 (Ariz. 2008); Hawkeye Foodservice CIAL CTR., MOTIONS TO DISMISS FOR FAILURE Distrib., Inc. v. Iowa Educators Corp., 812 For exploration of this justice concern, see TO STATE A CLAIM AFTER IQBAL 8-10 (2011). N.W.2d 600, 607-08 (Iowa 2012); Walsh v. Dodson, supra note 2. U.S. Bank, N.A, 851 N.W. 2d 598,600 (Minn. ' Marcus, supra note 13, at 16; cf. Richard A. 5' Alexander A. Reinert, The Costs of Heightened 2014); McKinnon v. W Sugar Coop, Corp., 225 Epstein, Bell Atlantic v. Twombly: How Motions Pleading, 86 IND. L.J. 119, 134 (2011). P.3d 1221, 1223 (Mont. 2010); Webb v. Nash- to Dismiss Became (Disguised)SummaryJdgments, ville Area Habitatfor Humanity, Inc., 346 S.W.3d 25 WASH. U. J.L. & POL'Y 61 (2007) (compar- Id. at 149-50. 433, 427-37 (Tenn. 2011); Colby v. Umbrella, ing New Pleading motions to summary-judg- '9 See Jonah B. Gelbach, MaterialFacts in the Inc., 955 A.2d 1082, 1086 n.1 (Vt. 2008); ment motions). Dispute over Twombly and Using Defense McCurry v. Chevy Chase Bank, 233 P.3d 861, Iqbal: " See FED. R. CIV. P. 8(b). Win Rates to Measure the VOL. 99 NO. 2

Quality of Cases Affected by Heightened Pleading, See Data Key Partnersv. Permira Advisers LLC, ProceduralUniformity, 108 COLUM. L. REV. 68 STAN L. REV. (forthcoming 2016). 849 N.W.2d 693, 699-701 (Wis, 2014); 1431 (2008). Potomac De. Corp. v. District of Columbia, 28 See Robert G. Bone, Plausibility Pleading Revis- " See Bean, 939 A.2d at 680-81. A.3d 531 (DC. 2011); Bean v. Cummings, 939 ited and Revised: A Comment on Ashcroft v. Iqbal, A.2d 676 (Me. 2008); lannacchino v. Ford Motor " SeeDoe, 788 N.W.2d at 274-78. 85 NOTRE DAME L. REV. 849, 878 (2010). Co., 888 N.E.2d 879 (Mass. 2008); Doe v. Bd. 74See Bahr v.Capella Univ., 788 N.W.2d 76, 80 61 See Emery G. Lee III & Thomas E. Willging, of Regents of the Univ. of Neb., 788 N.W.2d 264 (Minn. 2010); seealso Charles H. Wesley Educ. Defining the Problem of Cost in FederalCivil Liti- (Neb. 2010); Sisney v. Best Inc., 754 N.W2d Found., Inc. v.State Election Bd., 654 S.E.2d 127, gation, 60 DUKE L.J. 765, 769-70 (2010). 804 (S.D, 2008). 714 & n.7 (Ga. 2007) (Sears, C.J., dissenting) 62 Bell Ad. Corp. v Twombly, 550 U.S. 544, I develop this argument more fully in Scott (doing the same in dissent). 559-60 (2007). Dodson, The GravitationalForce of Federal Law, See Sisney v. Best fIc., 754 N.W.2d 804, 808-09 164 U. PA. L. REV. (forthcoming 2015). 6oAshcroft v. Iqbal, 556 U.S. 662, 678-79 (2009). (S.D. 2008). 69 See D.C. Code § 11-946; see also Behradresaerev. 6o See THOMAS E. WILLGING & EMERY G. LEE See lannacchino v. Ford Motor Co., 888 Dashtara, 910 A.2d 349, 356 n.8 (D.C. 2006) N.E.2d III, FED. JUDICIAL CTR., IN THEIR WORDS: ("We construe rules that are substantially iden- 879, 890 (Mass. 2008). ATTORNEY VIEWS ABOUT COSTS AND PROCE- tical to the corresponding federal rule in light For a similar conclusion, see David Freeman DURES IN FEDERAL CIVIL LITIGATION 25 of the meaning given to the federal rule."). Engstrom, The Twiqbal Puzzle and Empirical (2010). Study o See Potomac, 28 A.3d at 543. of Civil Procedure, 65 STAN. L. REV, 1203 61 See CECIL ET AL., supra note 39 (finding a 50 (2013). " Perhaps a need for vertical uniformity could percent increase in the motion-filing rate after I recognize that these groups are not wholly Iqba). justify slavish state-court adherence to federal precedent for similarly worded rules, but, if so, outside the litigation marketplace. I use the 6 See THOMAS E. WILLGING, FED. JUDICIAL that argument must be made and defended. terms "outsider" and "participant" here to CTR., USE OF RULE 12(B)(6) IN Two FEDERAL For the position that even uniformity is not reflect relative rather than absolute roles. DISTRICT COURTS (1998) (finding a 13 percent enough, see Z.W. Julius Chen, Note, Following rate). the Leader: Twombly, Pleading Standards,and