Thursday, May 21, 2009

Supreme Court’s expanded pleading rules give employers added tool to combat lawsuits

Today, I am going to get a little academic, but I promise I’ll bring it back around at the end with some practical information for employers.

Two years ago, in Bell Atlantic Corp. v. Twombly [PDF], the U.S. Supreme Court ruled that to state a legal claim and survive a motion to dismiss, a legal pleading (the initial filing in a lawsuit) cannot simply recite the elements of a cause of action or make an unsubstantiated conclusion, but must set forth a claim that is “plausible on its face.” The Court explained:

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 “entitlement to relief” requires more than labels and conclusions, and a formulaic recitation of a cause of action’s elements will not do. Factual allegations must be enough to raise a right to relief above the speculative level on the assumption that all of the complaint’s allegations are true. (internal citations omitted).

For example, in discrimination case, I sometimes see complaints that simply say, “X was terminated because of his race in violation of Title VII.” While Twombly was an antitrust case, if it’s rationale extended to employment cases these types of pleadings would not suffice. Twombly, however, left open the question of whether it applied beyond the antitrust arena.

Earlier this week, the Supreme Court decided Ashcroft v. Iqbal [PDF], which extended the Twombly pleading rules to an unlawful detention case. In the wake of the Court’s expansion of Twombly outside the antitrust context, it is likely that its pleadings requirements will apply in all civil litigation. In other words, a discrimination plaintiff should no longer be able to simply speculate that discrimination occurred, or make bald, unsubstantiated conclusions. A discrimination plaintiff will have to plead sufficient, specific facts to at least put the employer on notice of what is alleged to have actually happened.

The Ashcroft decision has three big practical implications for employers:

  1. Employees will be required to file much more detailed complaints, and employers will know at the earliest stages of the lawsuit exactly what is being alleged. Employers will no longer have to engage in expensive discovery just to learn the theory of the plaintiff’s case.

  2. Employers will be able to make more accurate analyses of cases earlier. Earlier analysis of a case’s strengths and weaknesses will allow employers to decide early in the litigation whether a case is worth fighting, or should be settled earlier. Thus, companies should save defense costs.

  3. More lawsuits should be dismissed for failing to state a claim. In theory, the less meritorious lawsuits will fall by the wayside, saving businesses the cost of defending nuisance lawsuits.


Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus.

For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.