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Judge: ‘Twiqbal’ doesn’t apply to affirmative defenses

Breaking with other Virginia federal judges, Roanoke U.S. District Judge Samuel G. Wilson has ruled the stricter “plausibility” standard used to judge civil complaints does not apply to affirmative defenses.

The heightened civil pleading standard derives from two U.S. Supreme Court cases, Twombly and Iqbal. Plaintiffs who want to survive a motion to dismiss must allege sufficient facts to make their claims “plausible.” Federal litigators have been watching closely for “Twiqbal creep,” to see if courts start applying the same standard to answers filed by defendants.

Wilson’s Nov. 24 published decision in Odyssey Imaging LLC v. Cardiology Assoc. of Johnston LLC (VLW 010-3-621), creates a split among Virginia federal courts. Two earlier opinions from U.S. magistrate judges in Virginia held the so-called Twiqbal standard does apply to affirmative defenses.

The Roanoke court deconstructed the decisions in Bell Atlantic Corp. v. Twombly and Ashcroft v. Iqbal and said there is a reason not to weigh affirmative defenses on the same scale as a plaintiff’s claims.

Wilson rejected the “plausibility” standard in favor of a test that “looks to whether those defenses are contextually comprehensible.”

The Odyssey ruling was cold comfort for the defendant in that case, a medical practice that saw its counterclaims dismissed and most of its affirmative defenses struck.

In the business contract case, a North Carolina cardiologist, doing business as Cardiology Associates of Johnston, arranged for the Roanoke-based Odyssey Imaging to provide nuclear imaging services at his practice near Raleigh. Odyssey sued in state court for breach of contract. The defendant removed the case to federal court and filed two counterclaims and an answer with 19 affirmative defenses.

Wilson said the counterclaims – based on the doctor’s demand for rent payments for equipment storage – failed to present plausible claims for relief under Twombly and Iqbal.

Turning to the affirmative defenses raised by Cardiology Associates, Wilson said Rule 8 of the Federal Rules of Civil Procedure sets different standards for pleading claims and defenses. The rule does not require a party to “show” it is entitled to a defense. “Instead, the court simply looks to whether those defenses are contextually comprehensible,” Wilson said.

“Pleading standards that account for the differences between the pleading of claims and defenses make sense,” Wilson wrote. “Knowledge at the pleading stage is often asymmetrical, disproportionately favoring the pleading of a claim by a plaintiff who has had the opportunity to time its filing. While the plaintiff often can conduct an investigation before filing the complaint to ensure its allegations are adequately supported, the defendant must respond quickly after being served,” Wilson reasoned.

In contrast, the primary purpose of Rule 8(c) addressing affirmative defenses “is to ensure that the plaintiff has adequate notice that a defense will be raised,” not to show that the defendant is entitled to the defense, Wilson said.

While that holding validated Cardiology Associates’ arguments on the issue, the ultimate decision favored Odyssey. Reaching beyond the arguments of the parties’ briefs, Wilson imposed a strict standard for affirmative defenses under “pre-Iqbal notice pleading standards.”

And affirmative defenses still are subject to scrutiny under Rules 11 and 12 of the Federal Rules of Civil Procedure, Wilson said.

Roanoke lawyer John D. Eure, who represents Odyssey, said the opinion is significant as the first pronouncement on the application of Twiqbal to affirmative defenses by a Virginia U.S. district judge. “So far as we know, there is no [federal] circuit court opinion on this yet,” he said.

Eure said the Odyssey lawyers relied on the two Virginia U.S. magistrate judge opinions on the subject, both applying Twiqbal to affirmative defenses. It came as a surprise that Wilson pinned his reasoning on different authority. Nevertheless, “It got us where we wanted to go,” Eure said.

“Judge Wilson agreed that ‘Twombly-Iqbal’ does not apply to affirmative defenses the way it applies to complaints and the reasoning of the recent opinion of Judge Shlitz … is correct and proper,” said Roy Morris of Arlington, co-counsel for Cardiology Associates. Morris referred to an October opinion from a Minnesota U.S. district judge who said applying Twiqbal to affirmative defenses would “radically change” federal civil practice.

Other lawyers who reviewed the Odyssey opinion said it’s a warning to defense lawyers to avoid throwing out a “bare bones” list of defenses in every instance.

“It strongly cautions against raising every boiler plate defense imaginable,” said John D. McGavin of Fairfax, a past president of the Virginia Association of Defense Attorneys. “It seems the court may have been frustrated with that approach and used the opportunity to narrow the pleadings. This opinion should put all lawyers on notice, plaintiff and defendant, that Iqbal is going to be strictly applied to narrow the initial pleadings by both sides,” McGavin wrote in an e-mail.

Richmond attorney Betty S.W. Graumlich, who argued one of the prior Virginia cases applying Twiqbal to affirmative defenses, said the Odyssey opinion “highlights for defense counsel the importance of articulating affirmative defenses with sufficient specificity to allow the plaintiff and the court to understand the basis for the defense.”

Elizabeth S. Skilling of Richmond, another defense lawyer, sees Wilson steering a course between the heightened standard of Twiqbal, the majority view as of now, and a more liberal approach with only Rule 11 as a guide. “I think Judge Wilson adopted more of a ‘middle ground’,” Skilling wrote in an e-mail.

From the plaintiffs’ bar perspective, Washington attorney William R. Wilder, a member of the Virginia Trial Lawyers Association, said Wilson’s decision tends to overstate the disadvantages of defendants in civil cases.

“The distinction made appears to create an unlevel playing in which a defendant can interpose non-meritorious (but not frivolous) defenses and the plaintiff must then expend resources debunking the defense for summary judgment,” Wilder wrote in an e-mail.

Related article: Twiqbal guide cuts both ways
As VLW reported this summer, two U.S. magistrate judges from both the Eastern and Western Districts have held that the Twombley-Iqbal pleading standard applies with equal force to affirmative defenses.

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