SPECIAL ADVERTISING SECTION
can be expensive” and concluded that basic deficiencies
should be exposed “at the point of minimum expendi-
ture of time and money by the parties and the court.”
Id. “Given the common lament that the success of judi-
cial supervision in checking discovery abuse has been on
the modest side,” the Court reasoned that “[i]t is no
answer to say that a claim just shy of a plausible entitle-
ment to relief can, if groundless, be weeded out early in
the discovery process through ‘careful case manage-
ment.’” Id. at 559. Concerned that “the threat of dis-
covery expense will push cost-conscious defendants to
settle even anemic cases before reaching” the later stages
where groundless claims can be weeded out, the Court
opined that only by requiring plausibility at the pleading
stage, “can [we] hope to avoid the potentially enormous
expense of discovery” in such cases. Id.
The Plausibility Standard
But what does it mean for a claim to be “plausible?”
While the Court provided some guidance, it also
declared that “whether a complaint states a plausible
claim for relief will . . . be a context-specific task that
requires the reviewing court to draw on its judicial experience and common sense.” Iqbal, 129 S. Ct. at 1950.
One thing is clear: plausibility lies somewhere between
possibility and probability. Because Rule 8(a)( 2)
“requires a ‘showing,’ rather than a blanket assertion, of
entitlement to relief,” Twombly, 550 U.S. at 555 n. 3,
“[f]actual allegations must be enough to raise a right to
relief above the speculative level.” Id. at 555. However,
the standard does not impose a “probability requirement,” just “more than a sheer possibility that a defendant has acted unlawfully.” Iqbal, 129 S. Ct. at 1949.
In Iqbal, the Court articulated a two-pronged
approach for courts to apply in assessing the sufficiency
of a pleading. First, the court should identify and set
aside conclusory allegations because they are not entitled
to an assumption of truth. Id. at 1949-51. “Threadbare
recitals of the elements of a cause of action, supported
by mere conclusory statements, do not suffice.” Id. at
1949. Second, the court should assume the veracity of
the remaining well-pleaded non-conclusory facts and
“determine whether they plausibly give rise to an entitle-
ment to relief.” Id. at 1950. A claim is facially plausible
when the alleged facts permit the court “to draw the
reasonable inference that the defendant is liable for the
misconduct alleged.” .. at 1949. “[W]here 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]’ [as required] – ‘that the
pleader is entitled to relief.’” Id. at 1950.
COMPLEX BUSINESS LITIGATION
Conclusion
The contours of the plausibility standard in practical
application will take some time to develop. Meanwhile,
defense counsel have more ammunition to try to terminate groundless claims before facing the costs and burdens of discovery, while careful plaintiffs’ counsel will do
well to plead the factual details of the alleged wrongdoing “showing” that they are “entitled to relief.” Because
application of the standard will be “context-specific” and
subject to “judicial experience,” it will be more important than ever for counsel on both sides of a 12(b)( 6)
motion to research whether there are post-Twombly
and Iqbal cases in their jurisdiction that are arguably
analogous to their own.
Joseph P. Noonan III is an associate with Butler Rubin
Saltarelli & Boyd LLP, a national litigation boutique based
in Chicago. His practice includes reinsurance litigation and
arbitration and complex commercial litigation disputes.
The views expressed are personal to the author.
