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Bell Atlantic Corp. v. Twombly: A New Definition of Notice Pleading for Federal Courts
By Charles B. Goodwin

In terms of day-to-day civil practice, the U.S. Supreme Court’s recent decision in Bell Atlantic Corp. v. Twombly1 is, at least on its face, the most significant of the past year and perhaps the past decade. In Twombly, the Supreme Court expressed concern that the broad principles which have governed American civil procedure for the last 50 years — liberal pleading standards that make it easy to commence cases, followed by the crucibles of discovery, summary judgment and trial that separate the cases with merit from those without — too often lead to substantial injustice.

In the court’s view, liberal pleading standards, while generally laudable, have become increasingly onerous on litigants as the costs of discovery and pretrial litigation have risen. The result of these exorbitant costs has been, in particular, to unduly punish defendants charged with conceivable (i.e., well-pled) but plainly groundless claims by requiring them to either pay to litigate those claims until, at the earliest, they can be disposed of through summary judgment or settle claims they know to be groundless in order to avoid that expense.

Compelled by this concern, the Supreme Court announced a standard of review for motions to dismiss that places stricter burdens on plaintiffs, requiring them to demonstrate the plausibility of their claims prior to the expense of litigation. Specifically, the court held that a claim must be dismissed unless the plaintiff has alleged “enough facts to state a claim to relief that is plausible on its face.”2 In so holding, the court “retired” the formulation — first articulated by the court in 1957 in Conley v. Gibson — that dismissal may not be ordered “unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.”3

That said, whether the actual significance of Twombly will match its facial significance appears doubtful. To begin, Twombly is nuanced (some might say inconsistent): its more extreme statements, those which caused the dissent to label Twombly a “dramatic departure from settled procedural law,”4 are counterbalanced by repeated qualifications that the court remains committed to liberal notice pleading. Further, even as to Twombly’s more extreme statements, it is unclear whether there is enough “bright-line” distinction between the plausibility standard announced therein and the standards previously employed to create a real difference in how judges assess the sufficiency of a complaint. Thus, while Twombly presents little good news for plaintiffs, the bad news is not as bad as defendants might hope.

In 1938, with the adoption of the Federal Rules of Civil Procedure, the United States rejected the technical pleading requirements of English common law and the field code in favor of the liberal standards of notice pleading.5 As every first-year law student learns, Fed. R. Civ. P. 8(a)(2) requires only that any pleading asking for relief “contain…a short and plain statement of the claim showing that the pleader is entitled to relief.” In 1957, in Conley v. Gibson, the Supreme Court explained that a brief and general complaint will satisfy Rule 8(a) and thus survive a motion to dismiss “unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.”6

This commitment to liberal pleading standards was confirmed by the Supreme Court as late as 2002. In Swierkiewicz v. Soreman, the court unanimously held that an employment discrimination plaintiff need not plead a prima facie case of discrimination in order to survive a motion to dismiss.7 The court cautioned that the function of Rule 8(a) is not to separate meritorious from unmeritorious claims; rather, the rule “relies on liberal discovery rules and summary judgment motions to define facts and issues and to dispose of unmeritorious claims.”8

In 2005, the Supreme Court in Dura Pharmaceuticals Inc. v. Broudo indicated that it was thinking anew about the effects of liberal pleading standards. In Dura, the court affirmed the dismissal of a claim for violation of Section 10(b) of the Securities Exchange Act of 1934 because the putative plaintiffs had failed to plead loss causation.9 The court found that, despite the plaintiffs’ allegations that the price at which they purchased the defendant’s stock had been artificially inflated due to the defendant’s fraudulent misrepresentations and that the plaintiffs had suffered damages thereby, the plaintiffs’ § 10(b) claim should have been dismissed because they failed to allege that their damages were caused by disclosure of the fraud and not any of the lawful events which could in whole or part cause a decline in price.10 In so holding, the court stated that permitting a claim to go forward absent such specific allegations would allow a “largely groundless claim to simply take up the time of a number of other people, with the right to do so representing an in terrorem increment of the settlement value, rather than a reasonably founded hope that the discovery process will reveal relevant evidence.”11

In Twombly, a putative class of end-users of local telephone and Internet services brought suit in the U.S. District Court for the Southern District of New York against the four major successors to the “Baby Bell” companies, which collectively control over 90 percent of the market for local telephone service in the contiguous United States.12 Specifically, the plaintiffs alleged that the defendants had conspired to restrain trade in violation of Section 1 of the Sherman Antitrust Act, both by 1) inhibiting the growth of upstart local telephone/Internet carriers in each defendant’s respective service area, and 2) refraining from competing in each other’s service areas.

The district court dismissed the plaintiffs’ complaint, finding that the facts alleged therein only suggested parallel conduct by the defendants and not, as required to state a claim for violation of § 1 of the Sherman Act, an agreement to engage in anticompetitive activity.13 On appeal, the 2nd Circuit reinstated the claim, holding that it could not “conclude that there is no set of facts that would permit a plaintiff to demonstrate that the particular parallelism asserted was the product of collusion rather than coincidence.”14 The Supreme Court reversed, ruling 7-2 that the plaintiffs’ claim must be dismissed because “[w]hen we look for plausibility in this complaint,…plaintiffs’ claim of conspiracy in restraint of trade comes up short.”15

Writing for the court, Justice Souter explained that a plaintiff must plead “enough facts to state a claim for relief that is plausible on its face.”16 Although no specific definition of plausibility was given, the court provided the following guidelines:

Importantly, the Supreme Court in Twombly examined plausibility solely by reference to the facts alleged by the plaintiffs. Thus, despite the plaintiffs’ express allegations that the defendants “entered into a contract, combination or conspiracy to prevent competitive entry into their…markets and have agreed not to compete with one another,” the court found that dismissal was required because those statements are “merely legal conclusions.”18 The court cautioned that a plaintiff’s “formulaic” and “naked” recitation of the elements is immaterial, as is “a legal conclusion couched as a factual allegation.”19 Although detailed factual matter need not be set out in a complaint, “Rule 8(a)(2) still requires a ‘showing,’ rather than a blanket assertion, of entitlement to relief.”20

The court was direct in its criticism of Conley v. Gibson, stating that the “no set of facts” language that has long been used in determining motions to dismiss will no longer be observed.21 Justice Souter wrote that this “language has been questioned, criticized and explained away long enough.”22 Thus, “after puzzling the profession for 50 years, this famous observation has earned its retirement. The phrase is best forgotten as an incomplete, negative gloss on an accepted pleading standard. …”23 Not exactly a warm farewell.

The Supreme Court was also direct in stating that its adoption of the plausibility standard was motivated at least in part by the increasingly exorbitant costs of modern discovery and pretrial litigation. After repeating Dura’s caution against wasting time and money on groundless claims, Justice Souter held that “when the allegations in a complaint, however true, could not raise a claim of entitlement to relief, this basic deficiency should be exposed at the point of minimum expenditure of time and money by the parties and the court.”24 Souter further stated, “a district court must retain the power to insist upon some specificity in pleading before allowing a potentially massive factual controversy to proceed.”25 While there is little dispute that discovery and pretrial litigation costs have reached staggering levels in complex commercial cases, particularly since the advent of e-mail and electronic document storage, the fact that the Supreme Court is re-examining pleading standards based on those costs must be, at minimum, unsettling to plaintiffs’ attorneys.

Further, the Supreme Court took pains to expressly reject the principal argument made in rebuttal to complaints about high litigation costs, namely that active and effective district judges can keep such costs in control. Departing from Swierkiewicz, the Supreme Court flatly discounted the ability of trial courts to limit such costs in any significant way. Even when abuse is not an issue, discovery in large cases involving large corporate defendants is “a sprawling, costly, and hugely time-consuming undertaking.”26 And when abuse is an issue, “the success of judicial supervision…has been on the modest side.”27 Further, because summary judgment generally occurs upon completion of discovery and pretrial litigation, it offers little assistance in lessening costs because the damage is already done. Thus, “the threat of discovery expense will push cost-conscious defendants to settle even anemic cases before reaching those proceedings.”28 Again, these are not new concerns; what is new is that they are impelling action by the Supreme Court on such a fundamental precept as notice pleading.

Despite the apparent significance of the Supreme Court’s pronouncements in Twombly regarding plausibility, can litigators expect a substantial difference in how judges assess the sufficiency of pleadings? Probably not. It seems doubtful that trial courts will be able to draw a functional difference between a party alleging sufficient facts to state a claim for relief that is plausible on its face and that party providing a statement with sufficient facts to support a conceivable inference of a valid claim. There are differences between these standards, but they are ones of degree and not likely to cause a major (or minor) shift in how motions to dismiss are resolved.

Moreover, there is ample material in Twombly to counterbalance its more extreme statements. For example, the Supreme Court cautions that it remains the case that in determining a motion to dismiss, all factual allegations in a complaint must be presumed to be true. Thus, the court in Twombly explains that its decision cannot be read as permitting a district judge to dismiss a claim simply because he or she doubts the probability of the plaintiff proving the facts alleged.29

Most notably, the Supreme Court throughout Twombly reaffirms its commitment to notice pleading.30 Indeed, only weeks after Twombly was decided, the court in Erickson v. Pardus reversed the dismissal of a civil rights complaint which the 10th Circuit had found to be “conclusory.”31 Citing Twombly for the proposition that under Rule 8(a)(2) “the statement [of a claim] need only give the defendant fair notice of what the…claim is and the grounds upon which it rests,” the court reinstated the plaintiff’s claims.32

Some early commentators on Twombly suggested that its application is limited to antitrust cases. However, that conclusion is contradicted by Twombly itself, wherein the Supreme Court states that its analysis is based solely on an interpretation of Rule 8(a)(2) and not any heightened pleading standard.33 Thus, Twombly’s interpretation of Rule 8(a)(2) applies to all pleadings governed by that rule. Further, the suggestion that Twombly only applies to antitrust cases has found little support among the federal district and circuit courts to consider it, which have applied Twombly’s plausibility standard across the broad spectrum of civil claims.34

In instances where an Oklahoma procedural rule is identical to its federal counterpart, Oklahoma courts view the decisions of federal courts interpreting that rule as persuasive.35 Although there are variations between the rules, Okla. Stat. tit. 12, § 2008(a)(1) is identical to Fed. R. Civ. P. 8(a)(2) in its requirement that all pleadings contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” Likewise, Okla. Stat. tit. 12, § 2012(b)(6) is in pertinent part identical to Fed. R. Civ. P. 12(b)(6).36 Thus, prior to Twombly, Oklahoma courts called upon to decide motions to dismiss frequently did so by reference to the “no set of facts” formulation prevalent in federal jurisprudence.37

Oklahoma courts will now have to choose whether to continue to apply that standard or, like the U.S. Supreme Court in Twombly, retire it in favor of a new plausibility standard. To date, no Oklahoma appellate court has discussed Twombly or directly confronted the question of whether the U.S. Supreme Court’s new interpretation of the pleading rules will be applied in Oklahoma. However, notwithstanding the identity of the Oklahoma and federal rules, there is an increasing possibility that Oklahoma courts may decline to follow Twombly. In the months since Twombly was decided, the Oklahoma Supreme Court has, in three opinions and as late as Jan. 29, 2008, invoked the “no set of facts” formulation as the controlling standard for a motion to dismiss.38 Because no mention of Twombly is made in any of those decisions, it remains to be seen whether the Oklahoma Supreme Court’s continued use of the “no set of facts” formulation is a rejection of Twombly’s plausibility standard or a preservation of the status quo while awaiting full consideration of that standard.

1. 127 S. Ct. 1955 (2007).
2. Id. at 1974.
3. 355 U.S. 41, 45-46 (1957).
4. Twombly, 127 S. Ct. at 1975.
5. See Charles E. Clark, The New Federal Rules of Civil Procedure: The Last Phase — Underlying Philosophy Embodied in Some of the Basic Provisions of the New Procedure, 23 A.B.A. J. 976, 977 (1937) (“There is certainly no longer reason to force the pleadings to take the place of proof, and to require other ideas than simple concise statements, free from the requirement of technical detail.”). Judge Clark was the principal drafter and proponent of the Federal Rules of Civil Procedure.
6. 355 U.S. 41, 46-47 (1957).
7. 534 U.S. 506, 508 (2002).
8. Id. at 512.
9. 544 U.S. 336, 347 (2005).
10. Id.
11. Id. (internal quotation marks and citations omitted).
12. The four defendants, known as incumbent local exchange carriers (“ILECs”), are BellSouth Corporation, Qwest Communications International, Inc., SBC Communications, Inc., and Verizon Communications, Inc. Twombly, 127 S. Ct. at 1962, n. 1.
13. 313 F.Supp.2d 174, 179 (2003).
14. 425 F.3d 99, 114 (2d Cir. 2005).
15. Twombly, 127 S. Ct. at 1970.
16. Id. at 1974.
17. Id. at 1965, 1966, and 1974.
18. Id. at 1970.
19. Id.
20. Id. at 1965 n. 3 (disagreeing with the dissent’s argument that notice pleading dispensed with the necessity of pleading facts and citing Wright & Miller that Rule 8(a)(2) “contemplates the statement of circumstances, occurrences, and events in support of the claim presented”).
21. Id. at 1969.
22. Id.
23. Id.
24. Id. at 1966 (internal quotation marks omitted).
25. Id. at 1967.
26. Id. at 1967, n. 6.
27. Id. at 1967.
28. Id.
29. Id. at 1965.
30. Id.
31. 127 S. Ct. 2197 (2007) (per curiam).
32. Id.
33. Twombly, 127 S. Ct. at 1973, n. 14.
34. See, e.g., Ton Servs. v. Qwest Corp., 493 F.3d 1225, 1236 (10th Cir. 2007) (claims for violation of the Telecommunications Act of 1996); The Ridge at Red Hawk, L.L.C. v. Schneider, 493 F.3d 1174, 1177 (10th Cir. 2007) (claim to vacate or modify an arbitration award); Alvarado v. KOB-TV, L.L.C., 493 F.3d 1210, 1215 (10th Cir. 2007) (claims for invasion of privacy and intentional infliction of emotional distress).
35. See, e.g., Shores v. First City Bank Corp., 689 P.2d 299, 301 (Okla. 1984).
36. One caveat is that the 1993 Committee Comment to § 2012 expressly states that “a petition should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” The significance of this statement would appear to be small given that it is made in the commentary and not the rule, and the support provided is pre-Twombly federal jurisprudence and specifically the now-overruled Conley v. Gibson.
37. See, e.g., Dyke v. Saint Francis Hospital, Inc., 861 P.2d 295, 298 (Okla. 1993) (“The applicable test for appraising the sufficiency of a pleading challenged for failure to state a claim upon which relief may be granted teaches that no dismissal may be effected unless it should appear beyond doubt that the plaintiff can prove no set of facts in support of the claim which would entitle her to relief.”). Notably, an argument could be made that a specific provision of the Oklahoma Antitrust Reform Act makes Twombly’s plausibility standard applicable to Oklahoma antitrust claims. The Act provides that it shall be interpreted in a manner consistent with federal antitrust law “and the case law applicable thereto.” Okla. Stat. tit. 79, § 212. Consequently, specific application of Twombly to Oklahoma antitrust claims would depend upon whether, notwithstandings its procedural nature, Twombly falls within the scope of § 212.
38. See Gens v. Casady School, ___ P.3d ___, 2008 WL 223301, *2 (Okla. Jan. 29, 2008) (not released for publication at time of publication of this article); see also Darrow v. Integris Health, Inc., ___ P.3d ___, 2008 WL 187389, *2 (Okla. Jan. 15, 2008) (not released for publication at time of publication of this article); State ex rel. Wright v. Oklahoma Corp. Com’n, 170 P.3d 1024, 1040 (Okla. 2007).

Charles B. Goodwin is a shareholder and director of Crowe & Dunlevy PC, where he focuses his practice on complex commercial litigation and state and federal appeals. He is a graduate of the University of Oklahoma, having received degrees in economics and letters in 1994, and a J.D. in 1997.

Bell Atlantic Corp. v. Twombly: A New Definition of Notice Pleading for Federal Courts
Published 79 OBJ 519 (March 8, 2008)