Bell Curve The Law Talking Guy Raised by Republicans U.S. West
Well, he's kind of had it in for me ever since I accidentally ran over his dog. Actually, replace "accidentally" with "repeatedly," and replace "dog" with "son."

Thursday, August 06, 2009

Iqbal and Specter

No, this is not the latest crime-fighting duo. Iqbal is a case decided this term by the US Supreme Court requiring heightened pleading standards in all federal cases, and Arlen Specter is the Senator from Pennsylvania who wants to overturn it. Specter is right.

A little background. Under the old common law before Blackstone, pleading was very formalized. Pleading is the act of putting in an official request for the court to take action - the papers that accompany a lawsuit. In the post-Henry-II period, there were a set of "writs" that worked like chemical formulas. If you could plead X, Y, and Z, then you could get a specific kind of relief from the court. (btw, Writs remain today with limited uses: e.g., certiorari, supersedeas, mandamus, coram nobis/vobis, habeas corpus - all that Latin mumbo jumbo). Gradually a single form of civil action was created as we know today, but it remained necessary to plead the specific facts that gave rise to what is called a "cause of action."

Here's the issue with pleading: how specific do you have to be? For example, imagine you are pleading fraud. This requires that someone made a false statement with the intention that you rely on it to your detriment, and that you did reasonably rely on that false statement, and that you suffer damages. How do you plead it? You are not allowed to merely say, as a conclusory statement, "Dan defrauded me." The rule developed that you had to plead the elements listed above. But how do you show intention? You can't say "At 12:56pm Dan decided he would make a false statement" becasue you don't know that. There has been no "discovery" yet (no interrogatories, depositions, etc.). So you plead enough facts to give rise to an inference of each element of the cause of action. This is called "fact pleading."

In the 1930s, the federal courts adopted a new standard called "notice pleading" that was intended to move entirely away from any "gotcha!" rules of the fact pleading world. Rule 8 of the Federal Rules requires a "short and plain statement" of the facts entitling a person to relief. It is meant to put you on notice of the claim against you, not require artful pleading techniques. Then there is very liberal discovery designed to put all the facts on the table quickly and efficiently. Federal courts require massive turnover of information at the outset of a case without even beign asked. The plus side is that they prevent abuse: there is a 7-hour limit on depositions (in many states they can run for days, even weeks). Most states followed these reforms. Some states, like California, continue to require fact pleading, but adopted the standard that all pleadings be construed liberally to do justice. Game-playing with pleading is out.

Iqbal is a giant step back for federal civil procedure. It has the potential to require fact pleading again in the federal courts. The problem is worse, though, because the law has evolved in such a way that fact pleading is very hard. The old causes of action that form most of state law (fraud, contract violations) are cases where each party knows the facts pretty well. But this is a huge problem when it comes to the federal areas of law for antitrust, securities law, discrimination law, and product defect litigation, where the plaintiff knows she has been injured, but the detailed facts of defendants' actions will not be known until after the lawsuit and discovery is commenced. Requiring more specific fact pleading can simply cut you out of court. Take a discrimination case. You black, get fired, and suspect that it is on the basis of race, since you are pretty sure that people with similar employee reviews are not fired if they are white. So you bring a claim alleging this. But you don't have the employer records yet, and you can't plead the number of wrongful claimants to prove what you suspect, that in the past few years African Americans have been treated differently than white employees with the same personnel files are not. After Iqbal, these cases become very hard to bring into court even if you are, in fact, right, because all the evidence is with the defendants and you will need to plead facts you can't get without that evidence.

Similarly with antitrust cases, you cannot plead details of a conspiracy in restraint of trade that you strongly suspect until you get the defendants to cough up the information. Iqbal is particularly damaging to these cases. The result is that cases are thrown out at the pleading stage on procedural grounds, by a judge, rather than on the merits, i.e., where the evidence is reviewed, by a jury. This, Senator Specter asserts, denies due process. That may be too strong, but I agree it is inimical to the principle that cases be decided on the merits, not through pleading games. I support his "Notice Pleading Restoration Act" to overturn Iqbal. Unfortunately, no other senator has signed onto it yet. It will probably die. The result will not be that there are many fewer lawsuits, only that to bring them you need fancier and more expensive lawyers who can artfully plead around the absence of evidence to create the necessary legal inferences to withstand pleading challenges.


Raised By Republicans said...

Wow. This sounds like a big deal. But it is kind of arcane. I can see why a typical Senator wouldn't care to do the homework required to write the bill in the first place but once Specter has done that why aren't more Senators signing on? Seriously, what is your informed speculation about why they aren't interested?

I would think President Obama would be interested in this kind of thing too.

The Law Talking Guy said...

RBR - Make it easier to bring lawsuits? Sounds like a loser. The best thing is to wait for something specific - like the Ledbetter case was for discrimination in pay for women - that can be used as rallying cry. Also, it's too new. Iqbal was decided in May, I think. The ABA is also divided between defense bar (which likes Iqbal) and plaintiff's bar that will learn to hate it. Give it another 2 years.

Raised By Republicans said...

I would guess too that the people who would benefit from it (people who might bring law suits against corporations) have two problems in forming an effective pressure group/constituency....

1) People rarely go through life expecting to join a class action suit or sue their employer - well, normal people don't, I'm sure Seventh Sister can tell some stories about her friends from Idaho who like to file liens.

2) People who are most likely to file a class action suit or discrimination suit such as mentioned by LTG, are also likely to be relatively poorly informed about the intricacies of legal procedures. And so would unlikely to demand this particular change.

This adds up to Senators not hearing anyone ask for this change.

At the same time, the people who would suffer from it, corporations, CEOs etc, are both better informed about legal procedure and more likely to expect to go to court. And to top it all off, they are better connected.

I hope LTG is correct that in 2 years this can get going but if I had to bet, after thinking about it, I'd bet it's a no-hoper.