The New Pleading Standard in Federal Court Requires Greater Factual Content

The United States Supreme Court is your new friend in seeking dismissal in federal district court.  Its Iqbal v. Ashcroft has been heralded as the “most significant Supreme Court decision in a decade for day-to-day litigation in the federal courts.”  Senator Arlen Specter (D-PA) has filed legislation to force a reversal of Iqbal.  The uproar among some counsel is in full swing.

What’s the big deal, you ask?  Well, the Court reiterated and extended in Iqbal its holding from Bell Atlantic Corp. v. Twombly, the shift in the pleading standard from simple “notice pleading” to “facial plausibility,” which provides that in order to “survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”

The Iqbal Court disclosed that a “claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”  The plausibility standard “asks for more than a sheer possibility that a defendant has acted unlawfully.”  Moreover, “[w]here a complaint pleads facts that are ‘merely consistent with’ a defendant’s liability, it ‘stops short of the line between possibility and plausibility of ‘entitlement to relief.’”

One question that remained following Twombly was whether the ruling was intended to apply beyond the antitrust arena.  The Court expressly rejected this argument.  The Court applied Twombly and identified the two “working principles” found in Twombly: 1) “that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.”  And 2) only a complaint that states a plausible claim for relief survives a motion to dismiss.  To determine facial plausibility, the district court judge must “draw on its judicial experience and common sense,” however, “where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged—but it has not “show[n]”—“that the pleader is entitled to relief.”

The Court rejected an assertion that under Rule 9, Federal Rules of Civil Procedure, “general allegations,” i.e., conclusory allegations, are sufficient to assert a claim of discriminatory intent.  The Court held that “the Federal Rules do not require courts to credit a complaint’s conclusory statements without reference to its factual context.”  Moreover, the Court found that “Rule 8 does not empower respondent to plead the bare elements of his cause of action,affix the label ‘general allegation,’ and expect his complaint to survive a motion to dismiss.”

There has been no Utah state court appellate decision to cite either Twombly or Iqbal, however, you should take advantage of them state court because “[i]nterpretations of the Federal Rules of Civil Procedure are persuasive where the Utah Rules of Civil Procedure are ‘substantially similar’ to the federal rules.”  Tucker v. State Farm Mut. Auto. Ins. Co., 2002 UT 54, ¶ 7 n. 2, 53 P.3d 947 (citation omitted).  Moreover, the compiler’s notes to Utah’s Rule 8 admits that the Federal and State Rule 8 are “substantially the same” and the courts, therefore, “freely refer to authorities which have interpreted the federal rule.”  Gold Standard, Inc. v. American Barrick Res. Corp., 805 P.2d 164, 168 (Utah 1990).

Let us know if you have any success applying the Iqbal “facial plausibility” standard in state court.

Your Motion to Dismiss in Utah Is Not Limited to the Allegations in the Complaint

Normally, in considering a motion made under Rule 12(b)(6), the court accepts the plaintiff’s allegations as true, drawing all reasonable inferences in plaintiff’s favor. See Russell v. Standard Corp., 898 P.2d 263, 264 (Utah 1995). Utah courts, however, insist that facts be plead– not conjecture, or speculation.  “[T]he sufficiency of [plaintiffs’] pleadings ‘must be determined by the facts pleaded rather than the conclusions stated.’” Bennett v. Jones, Waldo, Holbrook & McDonough, 2003 UT 9, ¶60, 70 P.3d 17 (quotations omitted).

It is also clear that in considering a motion made under Rule 12(b)(6), “[t]he court is not bound by a complaint’s legal conclusions, deductions and opinions couched as facts.” In re FX Energy, Inc. Securities Litigation, 2009 WL 1812828 (D. Utah) (slip copy) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1964-65, 167 L.Ed.2d 929 (2007)).  Moreover, the court is not “required to accept as true conclusory allegations that are contradicted by documents referred to in the complaint, and [the Court does] not necessarily assume the truth of legal conclusions merely because they are cast in the form of factual allegations.” Paulsen v. CNF Inc., 559 F.3d 1061, 1071 (9^th Cir. 2009); see In re FX Energy, 2009 WL 1812828 at *6 (same); Rapoport v. Asia Electronics Holding Co., 88 F.Supp.2d 179, 184 (S.D.N.Y. 2000) (same).

If you find that the plaintiff’s complaint does not include all of the facts necessary to support your motion to dismiss, there are circumstances which allow you to attach the supporting documents and still retain the motion under 12(b)(6).  If “a plaintiff does not incorporate by reference or attach a document to its complaint, but the document is referred to in the complaint and is central to the plaintiff’s claim, a defendant may submit an indisputably authentic copy to the court to be considered on a motion to dismiss.”  Oakwood Village LLC v. Albertsons, Inc., 2004 UT 101, ¶13, 104 P.3d 1226 (citation omitted).  Also, “[a] court shall take judicial notice if requested by a party and supplied with the necessary information.”  Rule 201(d), Utah Rules of Evidence.  Moreover, “[t]he rules are clear that documents attached to a complaint are incorporated into the pleadings for purposes of judicial notice and are fair game for [the]court to consider in addition to the complaint’s averments.” Id. at ¶10.

Feel free to think outside of the complaint to find the facts necessary to make a motion to dismiss.