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Lawyers adjust to changed standard for pleading cases

One impact of ‘Iqbal’: More removals to federal court

Civil defense attorneys long have viewed removing cases to Virginia federal courts as a way to get complaints disposed of quickly – and out of the hands of jurors.

That was largely because federal procedural rules favor handling cases on summary judgment while state procedural rules make summary judgment impractical by excluding the use of depositions and most other discovery to win it.

But summary judgment typically is granted only after substantial discovery, and with the speed required by the “rocket docket” in the Eastern District of Virginia, defense attorneys often run up fees of $50,000 to $100,000 to win it, said Richmond lawyer David N. Anthony.

The recent U.S. Supreme Court cases of Bell Atlantic v. Twombly and Ashcroft v. Iqbal provide even more incentive for defendants to jump to federal court.

Those cases raise the pleading standard in federal court – already substantially higher as a practical matter than the notice pleading in state court – even higher.

The allegations must be “plausible,” not merely possible or conceivable.

“[T]he tenet that a court must accept a complaint’s allegations as true is inapplicable to threadbare recitals of a cause of action’s elements, support by mere conclusory statements,” Justice Anthony Kennedy wrote for the 5-4 majority in Iqbal. “Where 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.’ ”

That means a case might be kicked on a motion under Rule 12(b)(6) of the Federal Rules of Civil Procedure before the defendant incurs the expense of discovery.

Anthony said he did not want to overstate the likely effect of Iqbal. The viewpoint of judges always has varied substantially on just what is sufficient to state a claim, and he said he would be hard-pressed to point to a case in which a 12(b)(6) ruling was different than it might have been under earlier cases before Twombly and Iqbal.

That said, he has argued Iqbal, and it is apparent that “the judges are acutely aware of it.” His view is that the case represents “more of a shaking out of the standard. If you allege a prima facie case with facts, your case survives.”

And winning a 12(b)(6) motion still can be an expensive proposition, Anthony noted, as illustrated by a consumer case filed by a pro se litigant in which 70 pleadings were filed before he prevailed on his motion to dismiss.

Patricia K. Epps, a Richmond lawyer who typically represents defendants in employment cases, said the case may be more helpful to her clients who often must go through summary judgment to get what she views as flimsy cases dismissed.

In the past, an allegation by a plaintiff that she is a member of a protected class, that something adverse happened to her and that she believed it was because of discrimination often was enough to get to summary judgment, only to have the case dismissed at that point, she said.

“It’s not fair to put the defendant through the cost of a fishing expedition,” she said.

John D. McGavin, a defense attorney in Northern Virginia, expects Iqbal to alter the playing field. “There’s no question that the case is going to change everything we’re doing. I just wish we had something like it in state court.”

The advice he has for his clients is to remove the case from circuit court whenever possible in an effort to get the case dismissed on the pleadings or on summary judgment.

Removal represents the greater flexibility procedural rules give federal judges and not any lack of confidence in state courts, he emphasized.

On the plaintiff’s side, Leonard A. Bennett, a Newport News lawyer who frequently represents consumer litigants in federal court, said he has noticed “an increase in early motions practice” but regards the higher pleading standard as “more of a nuisance than a threat to your ability to litigate cases” in its requirement for more care in the drafting of complaints.

Iqbal can be an issue in requiring the development of information to show that a violation of consumer laws is the result of a company’s policy rather than a mistake by an employee, he said.

John E. Lichtenstein, a plaintiff’s attorney in Roanoke, sees a similar difficulty in alleging misconduct by the highest level of management without the benefit of discovery. Iqbal is “already affecting our practice in terms of what we feel we need to plead,” he said.

He said he hopes that judges will consider the context of Iqbal, which involved allegations that the U.S. attorney general and other top government officials had devised policies that unlawfully discriminated against Muslims in reaction the terrorist attacks in Sept. 11, 2001.

Concerns about subjecting top government officials to the distraction of discovery have little to do with a typical discrimination or consumer case, he said.

“Outside of the high government official context, there should be substantial leave to amend,” especially in cases filed under state notice pleading standards that have been removed to state court, he said.

He acknowledged Anthony’s point that what constitutes a plausible pleading differs from judge to judge and added that their analysis also may be colored by the “huge range of how much investigation lawyers do before they file.”

Lichtenstein said attorneys and judges in the Western District have “a great culture” that includes a genuine camaraderie and concern for each other.

“I’d be very reluctant to rely on that culture if Iqbal spreads,” he said.

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