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The U.S. Supreme Court on May 21 issued a decision that marks not only a surprising departure from ingrained federal pleading rules, but also raises the riveting possibility of wreaking havoc with class action pleading. Thus we have troubling Twombly, whose ripple effects may prove tsunamic for class action pleading. See Bell Atlantic Corp. v. Twombly, No. 05-1126, slip op. (U.S. May 21, 2007) (available at www.supremecourtus.gov/opinions/06slipopinion.html). In a 24-page opinion by Justice David H. Souter, a seven-justice majority made striking inroads on the notice pleading regime characterizing federal pleading for 70 years. And, in revisiting the 50-year reign of Conley v. Gibson, 355 U.S. 41 (1957), the court articulated a new “plausibility” standard for pleading federal complaints. So striking is the majority’s revision of notice pleading that Justice John Paul Stevens’ dissent, joined by Justice Ruth Bader Ginsburg, inspired 28 pages in protest and eulogy. ‘Twombly’ could broadly affect class action pleadings Twombly is significant not only for its startling attack on federal notice pleading, but because the decision potentially affects class action pleading where general, conclusory allegations are the norm. Thus, Twombly may herald a new era of rigorous analysis of class action pleading that may make federal courts a difficult venue to pursue class action relief. William Twombly brought a class action in the U.S. District Court for the Southern District of New York on behalf of subscribers of local telephone and Internet services against a group of incumbent local exchange carriers (ILECs), alleging that these ILECs violated � 1 of the Sherman Act. Section 1 of the Sherman Act prohibits “every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations.” The Twombly complaint alleged that the defendants illegally restrained trade. First, the ILECs engaged in parallel conduct to inhibit the growth of competitive local exchange carriers. Second, the ILECs had agreements to refrain from competition, which could be inferred from their common failure to pursue attractive business opportunities. The plaintiffs alleged these actions inflated charges for consumers. The district court dismissed the complaint. 313 F. Supp. 2d 174 (S.D.N.Y. 2003). The court concluded that mere allegations of parallel business conduct did not state a claim under � 1, nor did the alleged facts raise an inference that the ILECs’ actions were conspiratorial. The plaintiffs had to allege additional facts to exclude independent self-interested conduct as an explanation for the parallel behavior. The 2d U.S. Circuit Court of Appeals reversed, holding that the district court tested the complaint by the wrong standard. The court held that “plus factors are not required to be pleaded to permit an antitrust claim based on parallel conduct to survive dismissal.” 425 F.3d 99, 114 (2005). The Supreme Court’s analysis of Twombly combined substantive standards of Sherman Act proof with the procedural pleading issue. The court reiterated that in Sherman Act conspiracy cases, “[t]he crucial question” is whether the challenged anti-competitive conduct “[s]tems from independent decision or from an agreement, tacit or express” (citing Theatre Enterprises Inc. v. Paramount Film Distributing Corp., 346 U.S. 537 (1954)). The court also reiterated that mere independent parallelism is not enough to establish an illegal contract, combination, or conspiracy. However, the court located the nub of the case as a pleading problem: “This case presents the antecedent question of what a plaintiff must plead in order to state a claim under � 1 of the Sherman Act.” In so doing, the court dissected long-standing principles relating to pleading under Fed. R. Civ. P. 8(a)(2), and the venerated pleading decision Conley v. Gibson, 355 U.S. 41 (1957). Fed. R. Civ. P. 8(a)(2) requires only “a short and plain statement of the claim showing that the pleader is entitled to relief.” Justice Hugo Black’s Conley opinion noted that the purpose of a federal complaint is to give the defendant notice of the claim and the grounds on which it rests. The Conley opinion also famously stated 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 as would entitle him to relief.” 355 U.S. at 45-46. The court has reaffirmed that complaints need not include detailed factual renditions, and academic commentators, and Stevens, in dissent, argue that Rule 8(a)(2) does not require, nor invite, fact pleading. Indeed, notice pleading has withstood numerous attacks seeking more stringent fact-pleading requirements in civil rights and other cases. In Twombly, however, the court’s majority tacked away from this Conley current into new unchartered pleading waters. Citing various authorities, the court suggested that a plaintiff’s obligations to provide the grounds for relief required more than labels, conclusions, or formulaic recitations of a claim’s elements. The court endorsed the view that there must be enough factual allegations to raise a right to relief above the speculative level. Most importantly, the court repudiated Conley‘s “no set of facts” language. Slip op. at 14-17. In burying this long-standing talismanic language, the court noted that Conley‘s “no set of facts” language had been questioned and criticized for 50 years. “[A]fter puzzling the profession for fifty years, this famous observation has earned its retirement. “The phrase 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.” Slip op. at 16. The court aligned with the recent pronouncements in Dura Pharmaceuticals Inc., where the court cautioned about the in terrorem settlement implications based on mere allegations of loss causation. Slip op. at 11; see Dura Pharmaceuticals Inc. v. Broudo, 544 U.S. 336 (2005). Pragmatically, the court noted the danger of permitting ill-founded complaints in large-scale litigation: that the threat of discovery expenses “would push cost-conscious defendants to settle even anemic cases” before summary judgment or trial. Slip op. at 13. In repudiating the Conley standard, the court called for pleading enough facts to support the plausibility, and not a mere possibility, of an illegal agreement. The court concluded that to evade a motion to dismiss, a Sherman Act � 1 claim “requires a complaint with enough factual matter (taken as true) to suggest that an agreement was made.” Slip op. at 9. The Twombly complaint failed to do this. Slip op. 18-22. The court suggested that this standard does not violate the stricture against assessing the probability of success on the merits, based on pleadings. “Asking for plausible grounds to infer an agreement does not impose a probability requirement at the pleading stage, it simply calls for enough fact to raise a reasonable expectation that discovery will reveal evidence of illegal agreement.” Slip op. at 9. Souter suggested that the plausibility requirement reflects the threshold of Rule 8(a)(2) requirement that a plaintiff’s plain statement “possess enough heft” to show that the plaintiff is entitled to relief. Slip op. at 10. Thus, a mere allegation of parallel conduct, without more, was like a “naked assertion” of a conspiracy in a � 1 complaint: “[i]t gets the complaint close to stating a claim, but without some further factual enhancement, it stops short of the line between possibility and plausibility of ‘entitlement to relief.’ ” Slip op. at 10. Questions left on class action conspiracy claims The Twombly decision leaves numerous unanswered pleading questions, especially for class action conspiracy claims. First, will Twombly‘s holdings be cabined only to Sherman Act � 1 antitrust claims, or will the court’s rulings apply to all pleadings alleging conspiracy claims? If so, many conspiracy-based class actions, such as RICO claims, may now face higher pleading hurdles than before Twombly. More significantly, will Twombly standards now be imported into all federal pleadings, requiring allegations to meet the court’s “plausibility, not possibility” standard? If so, the implications of Twombly could prove revolutionary in federal and state courts. As Stevens notes in dissent, 26 states and the District of Columbia use the Conley “no set of facts” language as their pleading standard. Stevens, J., dissenting, slip op. at 8. The most difficult Twombly legacy, of course, will be the judiciary’s task to assess “plausibility, not possibility” in allegations. Judges now will have to determine where the line is between possibility and plausibility, and what quantity or quality of facts are needed to provide sufficient “heft,” as Souter suggested, to put the pleader over the line and entitled to relief. Twombly will induce many defendants to file more Rule 12(b)(6) motions to dismiss than in the past. Twombly has opened this plausible door. In short, not only has a plaintiff’s life become more complicated, but so has the task of federal judges. Linda S. Mullenix holds the Fulbright Senior Distinguished Chair in Law at Trento, Italy, for the spring of 2007. She can be reached at [email protected].

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