May 22, 2007
New take on 12(b)(6)
Yesterday the Supreme Court handed down Bell Atlantic Corp. v. Twombly, __ U.S. __ (2007) with a 7-2 ruling. The case is an antitrust action, but has implications far beyond antitrust law. The heart of the issue on appeal is the standard under which motions for dismissal for failure to state a claim upon which relief can be granted. Rule 12(b)(6). The previous standard, set forth in Conley v. Gibson, 355 U.S. 41, 47 (1957), states that a complain should not be dismissed unless it appears beyond doubt that the plaintiff can prove no set of facts which would entitle him to relief.
In Twombly, the Court held that the "'no set of facts' language has been questioned, criticized, and explained away long enough by courts and commentators, and is best forgotten as an incomplete, negative gloss on an accepted pleading standard: once a claim has been stated adequately, it may be supported by showing any set of facts consistent with the allegations in the complaint. Conley described the breadth of opportunity to prove what an adequate complaint claims, not the minimum standard of adequate pleading to govern a complaint’s survival."
This is a higher standard than in Conley, and it seems that the court has formally adopted the "plausibility" standard endorsed by many commentators who are dissatisfied with the "no set of facts" standard. The new standard is "enough fact to raise a reasonable expectation" that discovery will bear out the allegations in the complaint.
The case itself is directed specifically at complaints invoking § 1 of the Sherman Antitrust Act, so its applicability to other complaints would be by analogy. Here, the Court seems to be motivated in avoiding discovery abuse by plaintiffs seeking a settlement without much hope of establishing their case in discovery. Discovery in antitrust suits can be incredibly expensive, so the incentive to settle for a significant sum can be higher than in other cases. Still, it is likely that this new plausibility standard will be the rule for 12(b)(6) motions from here on out.
