SCOTUS tightens pleading standards

In a sweeping decision with the potential to impact every plaintiff in a civil lawsuit, the Supreme Court announced a new pleading standard Monday— apparently abandoning the liberal pleading rules which have prevailed for decades.

Writing for the Court’s five conservatives in Ashcroft v. Iqbal, --- S.Ct. ----, No. 07-1015, 2009 WL 1361536 (May 18, 2009), Justice Kennedy created a two-step test which all civil complaints must now comply with in order to survive a motion to dismiss in federal court.  Additionally, the Court held—despite a concession to the contrary by the defendants—that a senior federal official cannot be subject to “supervisory liability” arising from the actions of their subordinates under the Court’s decision in Bivens v. Six Unknown Fed. Narcotics Agents, 403 U.S. 388 (1971).  Justice Souter wrote the principal dissent on behalf of the Court’s four moderates, with Justice Breyer also writing a brief dissenting opinion.

Iqbal arose in the wake of the Supreme Court’s recent decision in Bell Atlantic Corp. v. Twombly, 550 U.S. 554 (2007).  Twombly required an antitrust plaintiff to plead specific facts in their complaint in order to survive a motion to dismiss, sparking confusion in the lower courts regarding whether this pleading standard applies in all cases or simply those which are likely to produce sprawling and costly discovery.  Justice Kennedy’s decision resolves this question in favor of defendants—the Twombly pleading standard now applies to all civil suits—but Iqbal also expands upon Twombly’s holding to create a two step test governing motions to dismiss cases on the pleadings.

Under the new pleading standard announced in Iqbal, a court must first examine the plaintiff’s complaint to determine which of its allegations are “legal” and which are “factual.”  Although factual allegations remain entitled to the traditional presumption of truthfulness, legal allegations are now deemed “conclusory,” and they play no role in determining whether or not a complaint pleads sufficient facts to survive a motion to dismiss.  After sorting factual wheat from legal chaff, the Court then asks whether the plaintiff’s factual allegations, standing alone, “plausibly suggest” that the defendant engaged in illegal action.

Although the suggestion that a court should not assume either party’s conclusions of law to be true is hardly inappropriate, Iqbal appears to blur the lines between just what sort of allegations are legal in nature, and which allegations are factual.  Iqbal’s claim that former Attorney General John Ashcroft was the “principal architect” of a policy that subjected him to harsh conditions of confinement “solely on account of [his] religion, race, and/or national origin” is dismissed as a legal conclusion because it “amount[s] to nothing more than a ‘formulaic recitation of the elements’ of a constitutional discrimination claim.”  Conversely, Iqbal’s claim that former FBI Director Robert Mueller “arrested and detained thousands of Arab Muslim men . . . as part of [the FBI’s] investigation of the events of September 11” was deemed to be a factual assertion.  Nevertheless, having culled the meat of Iqbal’s complaint by declaring most of his allegations to be conclusory legal assertions, the Court determined that Iqbal’s claims against Ashcroft and Mueller must be dismissed for failure to allege facts which plausibly could lead to the conclusion that these officials engaged in purposeful discrimination.

Despite no briefing on the question by the parties, the Court also determined that a Bivens defendant cannot be liable on a theory of “supervisory liability.”  Although the defendants’ conceded in their brief that they would be subject to liability if Iqbal could prove that they “had actual knowledge of the assertedly discriminatory nature [of Iqbal’s detention and treatment,] and they were deliberately indifferent to that discrimination,” the Court sua sponte determined that such liability does not exist under Bivens.

Perhaps the most disturbing aspect of the opinion, however, is dicta suggesting that the damages remedy available under Bivens may not be available to plaintiffs raising claims under certain constitutional amendments.  Noting that “implied causes of action are disfavored,” the Court stated that “while we have allowed a Bivens action to redress a violation of the equal protection component of the Due Process Clause of the Fifth Amendment . . . we have not found an implied damages remedy under the Free Exercise Clause.”  Nevertheless, the Court “assume[d], without deciding” that First Amendment claims are actionable under Bivens.  Because this decision arose in the Bivens context, the Court’s dicta focused exclusively on implied causes of action for a damages remedy and did not directly address the availability of other remedies against federal officials, such as declaratory or injunctive relief.

Justice Souter focused most of his dissent on the Court’s decision to sua sponte hold that supervisory liability is not available under Bivens—a question he would have deferred until a future case which presented both parties the opportunity to brief the issue.  Souter—the author of Twombly—also took issue with the new pleading standard, disagreeing both with the majority’s decision to sort many of Iqbal’s seemingly factual allegations into the legal wastebasket, as well as its determination that a court may dismiss a case at the pleadings stage because it is skeptical of the plaintiff’s factual allegations.  Though he also joined Justice Souter’s opinion, Justice Breyer wrote separately to argue that discovery rules provide an adequate means for judges to protect against “unwarranted litigation,” and that the majority’s decision to screen cases at the pleading stage goes too far.