Issues of legality of plaint under US Civil Procedures Law

The Federal Rules of Civil Procedure do not require a plaint to set out in detail the facts upon which the plaintiff bases him claim. To the contrary, all that Rules require is “a short and plain statement of the claim” that will give the defendant fair notice of what the plaintiff’s claim is and the grounds upon which it rests. The illustrative forms appended to the Rules plainly demonstrate this. Such simplified “notice pleading” is made possible by the liberal opportunity for discovery and the other precisely the basis of both claim and defence and to define more narrowly the disputed facts and issues.

Pleading rules are important for the following purposes:

a) Defendant knowing the nature of claim;

b) Identifying baseless claims;

c) Setting each party’s view of facts;

d) Narrowing the issues.

Pleading also raise an important question whether it generates excessive costs by allowing the filing of baseless suits that require discovery and court time. The issue of pleadings has remained a focal point before courts and policy makers.

For example, in the case of Gillispie v Goodyear Services the issue of legality of a plaint was reviewed by the court and it was held that where a complaint does not state facts upon which legal conclusions can be predicted the same is not maintainable as being demurable for failure to state facts sufficient to constitute a cause of action.

Rule 8(a)(2) of the US Federal Rules of Civil Procedures simply requires “a short and plain statement of the claim showing that the pleader is entitled to relief.” While Construing Rule 8(a)(2) the US Supreme Court in Conley v. Gibson established the legal standard governing the adequacy of a complaint challenged on a motion to dismiss under Rule 12(b)(6) of the Federal Rules, ruling that a complaint may not be dismissed at the pleading stage “unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.”

In Bell Atlantic Corp v. Twombly,’ it was held by the US Supreme Court that a complaint which alleges mere parallel behaviour among rival telecommunications companies, coupled with stray statements of agreement leads to failed legal conclusions, in violation of section 1 of the Sherman Act. The Court ruled that in order to withstand a motion to dismiss, an antitrust conspiracy complaint must plead “enough factual matter (taken as true) to suggest that an unlawful agreement was made.” Those plaintiffs need not set forth detailed factual allegations, but at the same time “grounds showing entitlement to relief require more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not be sufficient.” There must be “Plausible grounds from which one can infer an agreement” and allege “enough fact to raise a reasonable expectation that discovery will reveal evidence of illegal agreement.” It all puts an end to notice pleading as it has been understood in the past particularly after the enactment of the Federal Rules of Civil Procedure.

The US Federal Rules of Civil Procedure have simplified pleading requirements and it would be a mistake to suggest that the Federal Rules somehow dispensed with the pleading of facts altogether. In fact the Federal Rules merely relieve the plaintiff of the need to “set out in detail the facts upon which he bases his claim.” But the factual allegations are critical to a plaintiff’s claim. In order to get relief, a pleader must assert “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.”

Thus, to survive a motion to dismiss, a complaint must set forth facts “plausibly suggesting (not merely consistent with) agreement.’ An allegation of conscious parallelism without more “stays in neutral territory.

Much of the post-Twombly conversation has focused on the meaning of “plausible” in the context of surviving a motion to dismiss and whether the Twombly holding should be read broadly to apply to all federal cases or narrowly to apply only to complex cases.

In 1989, the Brookings Institution issued a report critical of the manner in which federal litigation was being conducted, noting in particular that the process was laden with unnecessary costs and delays.

Recent Amendments in US Civil Procedure Law suggest that judges may use pretrial conferences as vehicles for managing the entire pretrial process and not simply as the means of planning the conduct of the trial. Thus, for example, pretrial conferences can be used to resolve discovery disputes, to dismiss sua sponte insubstantial claims or defences, or to promote settlement efforts. For example, Rule 11 mandates imposition of sanctions for assertion of baseless claims or defenses, and Rule 26 mandates sanctions when discovery sought stands disproportional to the needs of the case.

The Amendments made in the Civil Procedure’s Law imposed presumptive limits on the number of depositions and interrogatories in a given case. Depositions are presumptively limited to ten per side and interrogatories are limited to twenty-five per party, thus the Amendments recognised inherent limits on discovery based on the needs of the particular case.

The new rules require that the parties meet and confer prior to the initial pretrial conference to formulate a joint discovery plan for presentation to the judge, for approval at the first pretrial conference. This process can force parties to think about discovery systematically, rather than in an ad hoc manner. By approaching discovery systematically, the parties can be more effective in determining their needs on discovery and can better estimate the overall cost of discovery.

The new rules also bar discovery until after the discovery plan had been approved by the assigned judge. Interrogatories and deposition notices can be, and frequently served with the complaint, to the obvious advantage of the plaintiff. Before the amendments parties were free to pursue discovery in any order once the complaint had been filed.

The Amendments introduced the concept of mandatory automatic disclosure into the pretrial discovery process in order to turn over core information, such as the names of witnesses, documents upon which the parties rely, and damage calculations, without being asked.

These amendments, however, contradict the major premise of the Twombly decision that the parties and not the courts control the claims and assert defences in an action. It is evident that the courts have the power to eliminate insubstantial claims or defences early on in a lawsuit. But the Courts failed to recognise or even mention case management techniques advocated in the Manual for Complex Litigation.

The Court in Twombly failed to acknowledge empirical studies that have found that in roughly fifty-percent of the civil cases litigated in the federal system, there is minimal discovery or no discovery at all.

Dismissal is particularly harsh in conspiracy cases when there is an asymmetry of information, given that the defendant’s conduct is typically covert and the evidence of conspiracy is in the exclusive control of the defendant. The Twombly ruling means that conspiracies, already difficult enough to prove, will escape detection.

The rule-makers will have to weigh the present set of rules for two reasons: (1) the uncertainty of the Twombly holding which is creating confusion in the lower courts; and (2) to re-examine notice pleading and determine whether the current Rule 9(b) categories related to pleadings be expanded.

Twombly has created “considerable uncertainty concerning the standard for assessing the adequacy of pleadings.” Twombly has overruled Conley v. Gibson, it is imperative for rule makers to that the revisit the pleading standards under Rule 8. This is not to suggest that notice pleading be abandoned. Indeed, the Supreme Court in Erickson recognised the value of notice pleading. Nevertheless, the litigation landscape in federal court has changed significantly since the Federal Rules were adopted.

The present status of plaint and pleadings as settled by the US Courts is as under:

— A plaint should allege an appropriate state of mind showing that defendant acted knowingly or the like.

— The short and plain statement made in the plaint must provide the defendant with fair notice of what the plaintiff’s claim is and the grounds upon which it rests.

— Plaint must indicate a loss and casual connection that the plaintiff has in mind.

— A plaint must specify the economic loss through facts stated.

— A complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts.

— A short and plain statement of the claims showing that the pleader is entitled to relief is sufficient.

— A claim requires a complaint with enough factual matter to suggest that an agreement was made; asking plausible grounds to infer an agreement does not impose a probability requirement at the pleading stage.

— Rule of procedure simply call for enough facts to raise a reasonable expectation that discovery will reveal evidence of illegal agreement.

— An allegation of parallel conduct and a bare assertion of conspiracy will not suffice.

— Pleadings must be placed in a context that raises a suggestion of a proceeding agreement, not merely parallel conduct that could just be termed as an independent action.

— There is no need for heightened pleading requirement.

— Merits of a claim can be sorted out during a flexible pretrial process and, as appropriate, through the crucible of trial.

— Once it is clear that a plaintiff has stated a claim that, if true, would entitle him to relief, matter of proof are appropriately relegated to other states of trial process.

— The factual allegations must be enough to raise a right to relief above the speculative level on the assumption that all the allegations in the complaint are true.

— Something beyond the mere possibility of impropriety must be alleged so that Ps with groundless claims cannot be allowed to take up the time of other people during the discovery phase.

— There is no requirement for heightened fact pleading of specifics, but only enough facts to state a claim to relief that is plausible on its face. Where the Plaintiff has not nudged their claims across the line from conceivable to plausible, the complaint must be dismissed.

In one case of negligence, the courts did rule that the facts which constitute the negligence charges and also the facts which establish such negligence as the proximate cause or as one of the proximate cause of the injury must be alleged. Similarly in the case of Dio Guards v Durning, a suit was dismissed on the ground that the plaint failed to state facts sufficient to constitute a cause of action. Even an amended complaint was rejected on the same ground. The court of appeal held that a claim cannot be rejected by contending that the defendant had failed to meet the requirement of law. In fact the rule laid down in Conley v Gibbson states that a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.

(The writer is an advocate and is currently working as an associate with Azim-ud-Din Law Associates Karachi. To see author’s other areas of interest visit Zafars Blog on International Studies http://blogoninternationalstudy.blogspot.com/)