    [House Hearing, 111 Congress]
    [From the U.S. Government Publishing Office]

                       OPEN ACCESS TO COURTS ACT OF 2009

    =======================================================================

                                    HEARING

                                   BEFORE THE

                           SUBCOMMITTEE ON COURTS AND
                               COMPETITION POLICY

                                     OF THE

                           COMMITTEE ON THE JUDICIARY
                            HOUSE OF REPRESENTATIVES

                         ONE HUNDRED ELEVENTH CONGRESS

                                 FIRST SESSION

                                       ON

                                   H.R. 4115

                                   __________

                               DECEMBER 16, 2009

                                   __________

                               Serial No. 111-124

                                   __________

             Printed for the use of the Committee on the Judiciary

          Available via the World Wide Web: http://judiciary.house.gov

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                           COMMITTEE ON THE JUDICIARY

                     JOHN CONYERS, Jr., Michigan, Chairman
    HOWARD L. BERMAN, California         LAMAR SMITH, Texas
    RICK BOUCHER, Virginia               F. JAMES SENSENBRENNER, Jr.,
    JERROLD NADLER, New York                 Wisconsin
    ROBERT C. ``BOBBY'' SCOTT, Virginia  HOWARD COBLE, North Carolina
    MELVIN L. WATT, North Carolina       ELTON GALLEGLY, California
    ZOE LOFGREN, California              BOB GOODLATTE, Virginia
    SHEILA JACKSON LEE, Texas            DANIEL E. LUNGREN, California
    MAXINE WATERS, California            DARRELL E. ISSA, California
    WILLIAM D. DELAHUNT, Massachusetts   J. RANDY FORBES, Virginia
    ROBERT WEXLER, Florida               STEVE KING, Iowa
    STEVE COHEN, Tennessee               TRENT FRANKS, Arizona
    HENRY C. ``HANK'' JOHNSON, Jr.,      LOUIE GOHMERT, Texas
      Georgia                            JIM JORDAN, Ohio
    PEDRO PIERLUISI, Puerto Rico         TED POE, Texas
    MIKE QUIGLEY, Illinois               JASON CHAFFETZ, Utah
    JUDY CHU, California                 TOM ROONEY, Florida
    LUIS V. GUTIERREZ, Illinois          GREGG HARPER, Mississippi
    TAMMY BALDWIN, Wisconsin
    CHARLES A. GONZALEZ, Texas
    ANTHONY D. WEINER, New York
    ADAM B. SCHIFF, California
    LINDA T. SANCHEZ, California
    DEBBIE WASSERMAN SCHULTZ, Florida
    DANIEL MAFFEI, New York

           Perry Apelbaum, Majority Staff Director and Chief Counsel
          Sean McLaughlin, Minority Chief of Staff and General Counsel
                                     ------

                 Subcommittee on Courts and Competition Policy

               HENRY C. ``HANK'' JOHNSON, Jr., Georgia, Chairman

    JOHN CONYERS, Jr., Michigan          HOWARD COBLE, North Carolina
    RICK BOUCHER, Virginia               JASON CHAFFETZ, Utah
    ROBERT WEXLER, Florida               BOB GOODLATTE, Virginia
    CHARLES A. GONZALEZ, Texas           F. JAMES SENSENBRENNER, Jr.,
    SHEILA JACKSON LEE, Texas            Wisconsin
    MELVIN L. WATT, North Carolina       DARRELL ISSA, California
    MIKE QUIGLEY, Illinois               GREGG HARPER, Mississippi
    DANIEL MAFFEI, New York

                        Christal Sheppard, Chief Counsel

                        Blaine Merritt, Minority Counsel

                                C O N T E N T S

                                  ----------

                               DECEMBER 16, 2009

                                                                       Page

                                    THE BILL

    H.R. 4115, the ``Open Access to Courts Act of 2009''.............     3

                               OPENING STATEMENTS

    The Honorable Henry C. ``Hank'' Johnson, Jr., a Representative in
      Congress from the State of Georgia, and Chairman, Subcommittee
      on Courts and Competition Policy...............................     1
    The Honorable Howard Coble, a Representative in Congress from the
      State of North Carolina, and Ranking Member, Subcommittee on
      Courts and Competition Policy..................................     6
    The Honorable John Conyers, Jr., a Representative in Congress
      from the State of Michigan, Chairman, Committee on the
      Judiciary, and Member, Subcommittee on Courts and Competition
      Policy.........................................................     8
    The Honorable Bob Goodlatte, a Representative in Congress from
      the State of Virginia, and Member, Subcommittee on Courts and
      Competition Policy.............................................    12

                                   WITNESSES

    The Honorable Jerrold Nadler, a Representative in Congress from
      the State of New York
      Oral Testimony.................................................    14
      Prepared Statement.............................................    17
    Mr. Eric Schnapper, Professor of Law, University of Washington,
      School of Law, Seattle, WA
      Oral Testimony.................................................    23
      Prepared Statement.............................................    25
    Mr. Gregory G. Katsas, former Assistant Attorney General, Civil
      Division, U.S. Department of Justice, Washington, DC
      Oral Testimony.................................................    65
      Prepared Statement.............................................    67
    Mr. Jonathan L. Rubin, Patton Boggs, LLP, Washington, DC
      Oral Testimony.................................................   110
      Prepared Statement.............................................   112
    Mr. Joshua P. Davis, Professor, Center for Law and Ethics,
      University of San Francisco, School of Law, San Francisco, CA
      Oral Testimony.................................................   147
      Prepared Statement.............................................   150

                                    APPENDIX
                   Material Submitted for the Hearing Record

    Prepared Statement of the Committee to Support the Antitrust Laws
      (COSAL)........................................................   257

                       OPEN ACCESS TO COURTS ACT OF 2009

                                  ----------

                          WEDNESDAY, DECEMBER 16, 2009

                  House of Representatives,
                     Subcommittee on Courts and
                                     Competition Policy
                                    Committee on the Judiciary,
                                                        Washington, DC.

        The Subcommittee met, pursuant to notice, at 2:26 p.m., in
    room 2237, Rayburn House Office Building, the Honorable Henry
    C. ``Hank'' Johnson, Jr. (Chairman of the Subcommittee)
    presiding.
        Present: Representatives Johnson, Conyers, Coble, and
    Goodlatte.
        Staff present: (Majority) Christal Sheppard, Subcommittee
    Chief Counsel; Elisabeth Stein, Counsel; Rosalind Jackson,
    Professional Staff Member; and (Minority) Paul Taylor, Counsel.
        Mr. Johnson. The hearing of the Committee on the Judiciary,
    Subcommittee on Courts and Competition Policy, will now come to
    order.
        And without objection, the Chair will be authorized to
    declare a recess of this hearing.
        I now recognize myself for a short statement. First, I will
    say that a little fire to put out caused me to be detained, and
    so I want to apologize to everyone for not getting this meeting
    started on time.
        And access to the courts and the ability for claims to be
    heard by a judge or jury are fundamental to our system of
    justice. For over 50 years, courts have used the Conley
    standard to ensure that plaintiffs had the opportunity to
    present their case to a Federal judge even when they did not
    yet have the full set of facts.
        The court in Conley set a relatively low bar that is,
    effectively, a non-plausibility standard. Only if the plaintiff
    could prove no set of facts in support of his or her claim
    would he or she fail to survive a 12(b)(6) motion to dismiss.
        And in Twombly, a Section 1 antitrust case, the Supreme
    Court revised the Conley standard to require, ``plausible
    grounds'' which provide enough facts to raise a reasonable
    expectation that discovery will reveal evidence of an illegal
    agreement.
        However, it was not clear whether the court intended for
    the standard--this standard to apply only to antitrust cases.
    In its Iqbal decision, the court clarified that the
    plausibility standard not only applies to antitrust cases but
    to all civil cases.
        Further, the court clarified that plausibility--
    ``Plausibility is a context-specific task that requires the
    reviewing court to draw on its judicial experience and common
    sense.''
        One critic of this decision commented that this is a
    subjective standard and it could prove devastating to civil
    rights cases.
        What we have effectively seen is a gradual ratcheting up of
    the standard that plaintiffs must plead to survive a motion to
    dismiss. This raises several concerns in my mind, and I am
    particularly concerned that those who need it most will be
    denied access to the courts under Iqbal, under the pleading
    standard.
        As Chairman of this Subcommittee, I believe it is extremely
    important that plaintiffs be able to survive an initial motion
    to dismiss when the facts in question can only be answered by
    information completely in the hands of the defendant alone.
        In discrimination cases, including gender, race and
    employment discrimination, it is frequently only through the
    discovery process that plaintiffs are able to identify non-
    public information that would support their claims.
        Initial studies have indicated that dismissals have
    increased as much as 10 percent in the 7 months since the court
    decided Iqbal.
        In fact, we already know that employment discrimination
    claims, which the Supreme Court held were explicitly not
    subject to a heightened pleading standard in Swierkiewicz, are
    now subject to the plausibility standard.
        I am also concerned that the Supreme Court may
    inadvertently--may have inadvertently subverted the Rules
    Enabling Act process which Congress established and which the
    Judicial Conference carries out every year.
        The Rules Enabling Act calls for a deliberate process where
    the Judiciary, Congress and the bar can weigh in on potential
    rule changes.
        The court is certainly entitled to change its legal
    interpretation of the Conley pleading standard. However, there
    is a legitimate argument that such a change in the pleading law
    ought to be done through the Rules Enabling Act process.
        Even members of the Supreme Court have noted that the Iqbal
    decision may have changed the Federal rules. In the words of
    Justice Ginsberg, the Supreme Court may have ``messed up the
    Federal rules.''
        The proposed legislation, H.R. 4115, that we are
    considering today was introduced by Congressman Nadler,
    Chairman Conyers and myself earlier this year.
        And the bill, which is entitled ``Open Access to Courts Act
    of 2009,'' is an attempt to clarify the pleading standard and
    ensure that any plaintiff with a valid claim will have an
    opportunity for discovery.
        I look forward to the testimony from today's witnesses, the
    first of which is the primary author of the bill, Mr. Jerry
    Nadler, and I look forward to the testimony of the panel when
    its time comes.
        And I look forward to hearing whether or not you think the
    proposed legislation will help clarify the state of notice
    pleading jurisdiction.
        [The bill, H.R. 4115, follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                  ----------

        Mr. Johnson. I now recognize my colleague, Mr. Coble, the
    distinguished Ranking Member of the Subcommittee, for his
    opening remarks.
        Mr. Coble. Thank you, Mr. Chairman.
        Mr. Chairman, we are here today to discuss proposed
    legislation H.R. 4115 that would overturn the Supreme Court's
    decision in Iqbal v. Ashcroft. In that decision, decided last
    May, the Supreme Court held that a lawsuit could only go
    forward if a plaintiff has a plausible claim, which the court
    defined as ``factual content that allows the court to draw the
    reasonable inference that the defendant is liable for the
    misconduct alleged.''
        In so holding the Supreme Court reaffirmed the longstanding
    principle that a lawsuit based solely upon the bald and
    conclusory assertions should not proceed to the discovery stage
    of litigation.
        The Supreme Court in Iqbal, Mr. Chairman, dismissed the
    lawsuit on the ground that a terrorism detainee's complaint
    failed to plead sufficient facts to state an intentional
    discrimination claim against government officials, including
    the director of the FBI and the attorney general.
        Mr. Iqbal was arrested in the United States on criminal
    charges and detained by Federal officials after the September
    11 terrorist attacks. He pleaded guilty to the criminal
    charges, served time in prison and was removed to his native
    Pakistan.
        But then he indiscriminately sued high-level government
    officials, arguing that they were somehow responsible for
    allegedly tough treatment he received while in prison. The
    issue in this case was whether Mr. Iqbal had alleged claims
    against the Federal officials that were reasonably specific
    enough to allow the case to proceed.
        The Supreme Court held he had not, stating as follows: The
    pleading standard, Federal Rule 8, analysis does not require
    detailed factual allegations, but it demands more than an
    unadorned the--defendant-unlawfully-harmed-me accusation.
        A pleading that offers labels and conclusions or a
    formulaic recitation of the elements of a cause of action will
    not do. Nor does a complaint suffice if it tenders naked
    assertions devoid of further factual enhancement.
        The best evidence indicates that Iqbal decision was simply
    a reiteration of well-settled case law and consequently the
    Federal courts have continued to allow plausible claims to go
    forward while dismissing factually baseless claims.
        The most comprehensive study to date of how the Federal
    courts have applied the Iqbal decision is currently being
    performed by the Advisory Committee on Civil Rules within the
    Judicial Conference of the United States, which is chaired by
    United States District Court Judge Mark Kravitz.
        An advisory committee memo recently explained that at this
    early stage of the development of the case law discussing and
    applying the Iqbal pleading, standards--the Iqbal pleading
    standards, it is difficult to draw many generalized conclusions
    as to how the courts are interpreting and applying that
    decision.
        Overall, the memorandum concludes the case law does not
    appear to indicate a major change in the standards used to
    evaluate the sufficiency of complaints. The Iqbal decision has
    certainly not led to a wholesale dismissal of lawsuits.
        A recently released letter from the Judicial Conference
    states that the official research body of the Federal courts
    conducted an empirical review of the 94 Federal court dockets,
    comparing the granting of motions to dismiss before and after
    the Iqbal decision. The data shows that the Iqbal decision has
    not resulted in an increase in the dismissal of civil rights
    suits.
        Indeed, courts have continued to deny motions to dismiss in
    cases involving claims against government officials for actions
    undertaken in defending the country against terrorist attack as
    well as in the cases involving commercial claims. Likewise,
    complaints alleging civil rights claims have survived motions
    to dismiss.
        In sum, all the evidence to date indicates it would be
    premature at best for the Congress to statutorily disrupt the
    court's reasonable application of longstanding precedents.
    These precedents go back many decades, Mr. Chairman.
        As early as 1972, the Second Circuit explained that even
    under the liberal Federal Rules of Civil Procedure, a bare-
    bones statement of conspiracy or an injury without any
    supporting facts permits dismissal.
        In reviewing the sufficiency of a constitutional claim in
    1968, the Supreme Court held that for the purposes of this
    motion to dismiss we are not bound to accept as true a legal
    conclusion couched as a factual allegation.
        Dozens of lower court decisions applied the same standard,
    refusing to credit a complaint's bald assertions, unsupported
    conclusions, unwarranted inferences or the like when deciding a
    motion to dismiss for failure to state a claim.
        Further, even if some of the lower courts conclude that
    some lawsuits can't pass muster, courts continue to have the
    power under the Federal Rules of Civil Procedure to permit
    plaintiffs to amend their complaints.
        Courts continue to allow plaintiffs the opportunity to
    amend their complaints to provide more specifics and to re-file
    their cases in a way that allows them to proceed.
        Finally, courts can and should continue to perform an
    essential gatekeeping function. They have a responsibility to
    ensure that the courts are not overwhelmed with frivolous cases
    and that defendants are not hauled into court on a whim.
        The Federal courts themselves have not indicated they are
    having problems applying the Iqbal decision as it was nothing
    more than a reaffirmation of longstanding case law.
        I have an open mind on this topic, Mr. Chairman, although I
    am not embracing it warmly, as you can tell by my statement.
        But unless and until the Federal courts themselves indicate
    there is a reason for Congress to intervene, there is much
    reason to believe that any statutory amendments to the existing
    rule could very likely do more harm than good.
        And I thank you again, Mr. Chairman, for having called this
    hearing.
        Thank the panelists for appearing.
        And I yield back my time.
        Mr. Johnson. Thank you, Congressman Coble.
        I will, in response, say that I am happy that you have an
    open mind on this issue, as I do, but I will tell you that the
    issue of pretrial discovery is important to litigants because
    it--much of it puts people under oath and there is an
    opportunity to learn the real truth and thus amend the
    pleadings, as opposed to going through this nebulous standard
    which the Supreme Court has imposed.
        I thank the gentleman for his statement, and I now
    recognize Mr. John Conyers, a distinguished Member of this
    Subcommittee and also the Chairman of the Committee on
    Judiciary.
        Mr. Conyers. Thank you, Chairman Johnson.
        Could we offer a series of condolences for Committee
    Chairman Nadler, who has been forced to sit through our
    lectures to him and the audience? Normally he is on this side
    of the hearing process, and he gives lectures himself.
        And now he has to receive them before he can make his
    statement. I don't know if that is justice--retributable
    justice, or if it is unfair or what, Jerry, but----
        Mr. Nadler. Turnabout is always fair play.
        Mr. Conyers. Well, it looks like that is what might be
    happening this afternoon.
        But I am proud to join with Chairman Nadler and Chairman
    Johnson in trying to examine this whole question of access to
    the courts, and that is really what we are here to examine
    today.
        And it seems to turn mostly around the Supreme Court
    decisions of Bell Atlantic v. Twombly and the other case of
    Ashcroft v. Iqbal.
        And what we are trying to do is deal with a phenomenon that
    has been noted in The Nation magazine by Herman Schwartz,
    September 30 of this year, 2009, in which this distinguished
    lawyer and professor had published an article entitled ``The
    Supreme Court Slams the Door.''
        And I just want you to hear these two sentences. The
    Supreme Court ruling--and also ask unanimous consent that it be
    included in the record.
        [The information referred to follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                   __________

        Mr. Conyers. The Supreme Court ruling in May, Ashcroft v.
    Iqbal, on how much information civil complaints in a lawsuit
    must contain, might seem a narrow technical matter of interest
    only to lawyers and law journals. Yet it is on just such
    technicalities that the legal rights of victims of public or
    private wrongdoings often hang. For almost four decades, the
    court's right wing has been perfecting such technicalities as
    legal weapons to deny Americans an opportunity to enforce their
    rights in court.
        And they go on to point out, as I do in the rest of my
    statement, that there are a couple of classes of litigants that
    could be very negatively impacted. And the first that come to
    mind is the fact that there will be a number of civil rights
    and civil liberties cases that could be negatively affected.
        And the claim of weeding out non-meritorious claims sounds
    quite appropriate, but sometimes these decisions may throw out
    the baby with the bath water.
        Studies have shown that the dismissal rules are up quite a
    bit, and that the protection of civil rights is--and this
    always normally ends up in Federal court--is essential. And the
    Supreme Court is now, through cleverly narrowing the rules of
    procedure, making it harder and harder for those kinds of cases
    to find their way into court.
        And what we have is studies that show that these dismissals
    under 12(b)(6) are up 10 percent. Behind these statistics are
    numbers, countless numbers, of people who have suffered an
    injustice and are unable, therefore, to seek redress in court.
        Now, some believe that these dismissals are higher for
    cases involving race, gender and employment discrimination. And
    it is often difficult to secure evidence that the--that
    demonstrates discrimination without first going through
    discovery. And if you can't get through discovery, you never
    can get the case into court in the first instance.
        And so it seems that under these new standards, plaintiffs
    may often be locked out of the courthouse unless they can
    present a sort of smoking gun that shows that there is clear
    evidence of discrimination before you get to the case.
        I can see some--well, some say it is unintentional. Some
    say it is deliberate. But in essence, the plaintiffs have to
    prove their case before they have a chance to gather the
    evidence to prove their claims. And this is not a very good
    picture.
        And finally, the Rules Enabling Act provides a procedure
    for making changes as significant as elevating the pleading
    statement. While the Supreme Court does have the power to
    reverse their prior interpretation, it seems more proper to
    call upon the collective experience of bench and bar to develop
    these sweeping and significant changes in the pleading
    standard.
        And so this is an important hearing. It is not just for
    lawyers alone. And I am glad that Chairman Nadler has been able
    to go through this without too much encroachment. I hope the
    Chair will give him as much time as he needs to make the case
    for our bill.
        And thank you very much, Chairman Johnson.
        Mr. Johnson. Thank you, Mr. Chairman.
        Congressman Nadler, your ordeal will be over with shortly.
        And I want to thank--well, I want to now recognize Mr. Bob
    Goodlatte out of Virginia for his opening statement.
        Mr. Goodlatte. Well, thank you, Mr. Chairman. And, Mr.
    Chairman, I appreciate the opportunity to offer some comments
    on this.
        I think that all of us here would agree, including you, and
    Chairman Conyers and Chairman Nadler as well, that if this
    involved a criminal investigation that we would require that
    somebody, before they got a search warrant of somebody's home,
    to allege some facts, some foundation, for obtaining that
    search warrant.
        So when the Supreme Court in two cases now says that there
    should be a similar standard before a plaintiff can begin the
    process of searching somebody through their documents and their
    depositions, and questioning their family members and friends
    and employees, or whoever the people that may have discoverable
    evidence in a matter can proceed, that they have to allege some
    facts, some foundation, for doing so, seems to me to be very
    reasonable.
        And H.R. 4115, the ``Open Access to Courts Act of 4009,''
    is an economic stimulus package for trial lawyers. This
    legislation removes any certainty that currently exists with
    regard to the legal standard for determining whether a
    complaint's allegations are sufficient to survive a motion to
    dismiss.
        Incredibly, this legislation literally states that a court
    shall not dismiss a complaint when a judge believes the facts
    alleged do not show the claims to be plausible.
        Similarly, a judge may not dismiss a claim when he believes
    that the facts are insufficient to warrant a reasonable
    inference that the defendant is liable for the misconduct
    alleged. This would overturn Federal rules and decades of
    precedent governing pleading standards.
        The confusion created by this legislation would cause a
    huge flood of claims filed by plaintiffs because now, rather
    than presenting a factual pleading that shows some plausible
    way the defendant could be liable, plaintiffs need only a wild
    allegation and then enjoy access to discovery to try to prove
    their theory.
        The bill's literal text binds the hands of judges from
    throwing cases out that are blatantly frivolous. The result is
    that defendants of all stripes will be forced to open up their
    wallets to foot the bill for discovery costs and attorneys'
    fees to defend even the most ridiculous claims.
        In addition, the bill would overturn any standards that
    Congress has previously passed relating to the required
    substance of complaints. The text explains that the provisions
    of H.R. 4115 would trump everything other than acts of Congress
    passed after the effective date of the bill.
        America's small businesses are hurting. They are not
    receiving capital from banks because banks are being forced to
    invest in the most risk-averse assets like Treasury securities,
    which happen to fund the debt accumulated from big government
    spending.
        They are facing uncertainty about massive new taxes on
    energy and health care as well as penalties for those
    businesses that cannot afford to comply with the new
    regulations in these areas.
        And now we are going to eliminate the very standards that
    protect them from extremely expensive frivolous lawsuits. The
    clear message seems to be that Congress does not want these
    small businesses to succeed or to create new jobs.
        Mr. Chairman, it is getting close to Christmas, but
    American citizens and businesses cannot afford to pay for the
    gift this bill gives to the trial lawyers this year. Indeed, it
    is the gift that keeps on giving.
        And I yield back.
        Mr. Johnson. I thank the gentleman for his statement.
        And without objection, other Members' opening statements
    will be included in the record.
        I am now pleased to introduce our witness on panel one,
    Representative Jerry Nadler, the distinguished representative
    from the 8th District of New York.
        Representative Nadler's district includes parts of
    Manhattan and Brooklyn, and he is a Member of the Judiciary
    Committee where he chairs the Subcommittee on Constitution,
    Civil Rights--Constitution, Civil Rights and Civil Liberties.
    He also serves as the most senior northeastern Member of the
    Committee on Transportation and Infrastructure.
        Mr. Nadler, don't put us through an ordeal to make us pay.
    I will count on Chairman Conyers to rule your time has expired.
    But please proceed with your statement, sir.

    TESTIMONY OF THE HONORABLE JERROLD NADLER, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF NEW YORK

        Mr. Nadler. Thank you, Chairman Johnson, Chairman Conyers,
    Ranking Member Coble, other distinguished Members of the
    Subcommittee.
        Thank you for holding today's hearing on H.R. 4115, the
    ``Open Access to Courts Act of 2009'', which I introduced with
    Chairman Johnson and Chairman Conyers on November 19th.
        The Supreme Court's decision in Ashcroft v. Iqbal was the
    subject of a hearing I chaired in the Subcommittee on the
    Constitution, Civil Rights, and Civil Liberties on October 26
    entitled ``Access to Justice Denied:
        Ashcroft v. Iqbal.''
        It is the legislative response to that hearing's findings
    that bring us here today. What is really significant about the
    Iqbal decision is that it sets up a very stringent new standard
    that prevents people from having their day in court.
        It does so not based on the evidence or on the law but on
    the judge's own subjective criteria. Rights without remedies
    are no rights at all. That is an ancient legal maxim.
        All Americans are entitled to have access to the courts so
    that their claims can be heard, the evidence weighed, and their
    rights can be vindicated. Without recourse to the courts, our
    rights are merely words on paper.
        In Iqbal, the court established a new test that Federal
    judges must use when ascertaining whether civil complaints will
    withstand a motion to dismiss under Rule 12(b)(6) of the
    Federal Rules of Civil Procedure.
        Rather than questioning, as required under Rule 8(a)(2),
    only that the plaintiff had included ``a short and plain
    statement of the claim showing that the pleader is entitled to
    relief,'' it dismissed the case not on the merits or on the law
    but on the bald assertion that the claim was not plausible.
        In the past, the rule had been, as the Supreme Court stated
    in Conley v. Gibson, that the pleading rules exist to ``give
    the defendant fair notice of what the claim is and the grounds
    upon which it rests,'' not as a substantive bar to
    consideration of the case.
        Now the court has required, in effect, that the pleading
    serve as a substantive bar to the consideration of the case by
    requiring that prior to discovery, courts must somehow assess
    the plausibility of the claim, dismissing claims the court
    finds not plausible--before discovery and without submission of
    evidence.
        This rule will reward defendants who succeed in concealing
    evidence of wrongdoing, since claims will be dismissed before
    discovery can proceed, whether it is government officials who
    violate people's rights, polluters who poison the drinking
    water or employers who engage in blatant discrimination.
        Often, evidence of wrongdoing is in the hands of the
    defendants, and the facts necessary to prove a valid claim can
    only be ascertained through discovery.
        The Iqbal decision overturned--and some of the statements
    of the last few minutes assume that--or asserted that my bill
    would establish a new requirement, a new standard. In fact, it
    will simply reassert the standard that existed for 50 years
    until the Iqbal decision.
        The Iqbal decision has overturned 50 years of precedent and
    will effectively slam shut the courthouse door on legitimate
    plaintiffs based on the judge's subjective take on the
    plausibility of a claim rather than the--on the actual
    evidence.
        At our hearing on Ashcroft v. Iqbal, we heard compelling
    testimony from the witnesses that the Iqbal decision has
    resulted in the substantial departure from previously well-
    settled practice in civil litigation.
        Several witnesses said the new standard put forward by the
    Supreme Court to decide a motion to dismiss a civil complaint
    amounts to a heightened pleading standard.
        Professor Arthur Miller of New York University School of
    Law, an expert on civil procedure, testified that ``what we
    have now is a far different model of civil procedure than the
    original design.''
        We also heard from seasoned litigators. John Vail of the
    Center for Constitutional Litigation stated that there is ``no
    doubt that the Supreme Court intended a sea change in pleading
    law.''
        Debo Adegbile of the NAACP Legal Defense Fund referred to
    the Iqbal decision as a ``judicially heightened pleading
    barrier erected by the Supreme Court.''
        These three witnesses agreed that a legislative response
    like H.R. 4115, the ``Open Access to Courts Act of 2009,'' is
    very necessary.
        In addition to our witnesses, a diverse coalition of 36
    civil rights, consumer, environmental and other organizations
    support a legislative response to
        Ashcroft v. Iqbal.
        Mr. Chairman, I ask that a copy of their letter be included
    in the record following my testimony.
        Mr. Johnson. Without objection.
        Mr. Nadler. Thank you, Mr. Chairman.
        H.R. 4115 would restore the notice pleading standard that
    existed prior to Ashcroft v. Iqbal, a standard that was
    articulated over 50 years ago in Conley v. Gibson. Notice it
    would not establish a brand new standing, opening the
    courthouse doors to all sorts of frivolous claims. It would
    reestablish the pleading standard that existed for 50 years
    prior to Ashcroft.
        Using the language in Conley, the Open Court--Access to
    Courts Act provides that a complaint under Rule 12(b)(6)(c) or
    (e) cannot be denied ``unless it appears beyond doubt that the
    plaintiff can prove no set of facts in support of the claim
    that would entitle the plaintiff to relief.'' That is not
    language that I invented. That is language from the Conley
    decision of roughly 50 years ago.
        That was the correct and workable standard for a half-
    century. It is well understood and practical. The Open Access
    to Courts Act would simply restore that time-tested standard.
        Mr. Chairman, this Supreme Court seems to be engaged on a
    crusade to deny access to the courts increasingly to litigants
    of all sorts by tightening and redefining the standing
    standards--and that is a constitutional doctrine we can't
    correct--and by redefining and amending through court ruling
    the rules of civil procedure, a change we can correct and
    should by passing this bill.
        Again, I thank you, Mr. Chairman, for holding today's
    hearing and for your leadership on this issue. I look forward
    to working with you and with the other Members of the
    Subcommittee and the full Committee to restore the rights of
    all Americans to a day in court by enacting H.R. 4115, the
    ``Open Access to Courts Act of 2009.''
        Thank you, and I yield back the balance of my time.
        [The prepared statement of Mr. Nadler follows:]
              Prepared Statement of the Honorable Jerrold Nadler,
            a Representative in Congress from the State of New York

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                   __________

        Mr. Johnson. Thank you, Congressman Nadler.
        And I am pleased to--we will call this hearing, this part
    of the hearing, to a halt, allowing the full ordeal to be over,
    Mr. Congressman.
        And then we will call up our second panel. Thank you.
        And by the way, he is one of the brightest guys in
    Congress, and also long-winded. [Laughter.]
        Okay, this is the second panel of this very important
    hearing. And I want to first start by introducing the people
    who are serving on this Committee, and I also want to thank all
    of you all for serving on this Committee as well.
        The first witness is Professor Eric Schnapper. Professor
    Schnapper is a professor of law at the University of Washington
    School of Law where he is an expert in employment
    discrimination law, equal protection and civil rights.
        He previously worked as assistant counsel at the NAACP
    Legal Defense and Education Fund.
        Welcome, Professor Schnapper.
        The next witness will be Mr. Gregory Katsas. Mr. Katsas was
    the former assistant attorney general for the Civil Division of
    the U.S. Department of Justice. In his work at the U.S.
    Department of Justice, Mr. Katsas argued or supervised most of
    the leading civil appeals brought by the U.S. government
    between 2001 and 2009.
        Mr. Katsas was directly involved in defending Attorney
    General Ashcroft and FBI Director Robert Mueller in the Iqbal
    litigation.
        Welcome, Mr. Katsas.
        Next, we will hear from Jonathan Rubin. Mr. Rubin is a
    partner at Patton Boggs LLP in Washington, DC. He practices all
    facets of antitrust law, including litigation, mergers and
    acquisitions, counsel in compliance and public policy.
        Mr. Rubin is the author of ``Twombly and its Children,''
    which was recently presented to the American Antitrust
    Institute.
        Welcome, Mr. Rubin.
        And last but certainly not least, we will hear from
    Professor Joshua Davis. Professor Davis is the director of the
    Center for Law and Ethics at the University of San Francisco
    School of Law. He also teaches civil procedure, remedies, legal
    ethics, constitutional theory and First Amendment law.
        I tell you, those law students might hit you for more than
    three or four classes, so I would advise them to be quite nice
    to you, sir.
        And Professor Davis is a member of the advisory board of
    the American Antitrust Institute.
        We want to welcome you to the panel and to this hearing.
        Without objection, your written statements will be placed
    into the record, and we would ask that you limit your oral
    argument--or your oral remarks to 5 minutes.
        You will note that we have a lighting system that starts
    with a green light. At 4 minutes it turns yellow, then red at 5
    minutes. After each witness has presented his or her testimony,
    Subcommittee Members will be permitted to ask questions subject
    to the 5-minute limit.
        Professor Schnapper, will you please proceed with your
    statement, sir?
        Mr. Schnapper. [Off mike.]
        Mr. Johnson. Thank you, Professor. And is that green
    button--okay, it is a green button.
        Mr. Schnapper. Oh, but it is light green. Now it is a dark
    green.
        Mr. Johnson. All right. Okay. All right, thank you.

     TESTIMONY OF ERIC SCHNAPPER, PROFESSOR OF LAW, UNIVERSITY OF
                 WASHINGTON, SCHOOL OF LAW, SEATTLE, WA

        Mr. Schnapper. The decisions in these cases, particularly
    Iqbal, present a serious obstacle to the enforcement of Federal
    laws which forbid actions because they are the result of an
    unlawful purpose.
        Most civil rights cases today involve claims of an unlawful
    but secret motive. Iqbal makes those cases much more difficult
    to pursue. It requires that the plaintiff have enough evidence
    before the lawsuit starts to convince a judge that his or her
    claims are plausible.
        Mr. Coble raised a question--Congressman Coble raised a
    question of whether that might be consistent with laws going
    back many decades. I personally go back many decades, and I----
        Mr. Coble. [Off mike.]
        Mr. Schnapper. I wouldn't have guessed.
        And I can assure you, this is not the legal system on which
    we were practicing for the year--the many years that I have
    been handling these cases in court.
        I have set out in my written statement a number of lower
    court decisions I think correctly describing what the new set
    of standards under Iqbal as new, and I could provide with a
    substantial number of others.
        Congressman Goodlatte expressed the concern--and I think it
    was an entirely legitimate question--about what the
    consequences of this bill would be, and I think it is always
    appropriate for Congress to be concerned about that.
        But the legal regime that the bill would establish is the
    legal regime that has been in place for four decades. We have
    got years of experience with it. And it just hasn't had the
    kind of concerns that have been expressed.
        Mr. Chairman, your point was exactly correct when you noted
    that in civil rights cases it is usually essential to be able
    to have access to discovery in order to prove claims of
    discrimination.
        In most cases, the most telling evidence--sometimes almost
    all the evidence--only comes out in the course of discovery.
    And that is true of employment discrimination cases under Title
    7, the ADA, the Age Discrimination in Employment Act.
        The effect of Iqbal is the equivalent of writing an
    exemption for good liars into the statutes, because if
    defendant does a good job of covering his or her tracks, it is
    going to be very difficult to meet the standard.
        That intent standard isn't limited to employment
    discrimination cases. It also applies to retaliation and
    whistleblower statutes.
        There are many antiretaliation provisions in Federal
    discrimination laws, but it is--they are present in many other
    laws such as Sarbanes-Oxley. And constitutional claims
    involving free speech or equal protection also require proof of
    secret motives.
        What we will be reliably left with as viable claims are
    going to be primarily claims involving fairly inept
    discriminators, people who blurt out their motives or do a very
    bad job of covering their tracks.
        And my brother Mr. Katsas has a list of a number of cases
    which have survived Twombly and Iqbal. I only had a chance to
    look at the list he had in his previous testimony. But they are
    exactly those kinds of cases, discriminatory officials who make
    avowedly discriminatory remarks directly to the plaintiff at
    the time, and those simply aren't typical cases.
        Congressman Coble, you expressed a concern to perhaps defer
    action until the courts themselves were indicating a concern
    about what is happening in the law.
        That concern is out there, and I quote one of those cases
    in my prepared statement from the Ocasio-Hernandez case where
    the judge applies the law as he understands it and dismisses a
    case and then, frankly, says that as the standard he has being
    forced to apply is draconian and that it is requiring proof of
    a smoking gun, and the vast majority of plaintiffs in
    discrimination cases just aren't going to have that.
        There are concerns, and I understand them, that this may
    be--this imposes a burden on plaintiffs--on defendants. I have
    to point out to the Committee that when this same standard has
    been applied to defendants, or when plaintiffs have tried to
    apply the standard to defendants, because defendants have to
    file pleadings too, the defendants have vehemently objected to
    that.
        The standard that defendants have asked be applied to
    defendant pleadings is notice pleading. And I think they are
    right. But I think sauce for the goose should be sauce for the
    gander. But defendants don't like this rule at all when it is
    applied to them, only when it is applied to plaintiffs.
        So there----
        Mr. Johnson. If you could wrap up, please, Professor
    Schnapper. You are almost at the end of your time.
        Mr. Schnapper. I am happy to end here. Thank you, Mr.
    Chairman.
        [The prepared statement of Mr. Schnapper follows:]
                      Prepared Statement of Eric Schnapper

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                   __________

        Mr. Johnson. Thank you, sir.
        And, Mr. Katsas, would you please begin your testimony?

       TESTIMONY OF GREGORY G. KATSAS, FORMER ASSISTANT ATTORNEY
         GENERAL, CIVIL DIVISION, U.S. DEPARTMENT OF JUSTICE,
                             WASHINGTON, DC

        Mr. Katsas. Chairman Johnson, Ranking Member Coble, Members
    of the Subcommittee, thank you for the opportunity to testify
    about whether Congress should overrule the Supreme Court's
    recent decisions in Twombly and Iqbal.
        For many reasons, I believe that it should not. As
    explained in my written testimony, Twombly and Iqbal are
    consistent with decades of prior precedent. In essence, those
    cases hold that conclusory and implausible claims should not
    proceed to discovery.
        That conclusion follows from settled principles of black
    letter law that courts, even on a motion to dismiss, are not
    bound to accept conclusory allegations or to draw unreasonable
    inferences from the specific allegations actually made, and
    also that discovery is not appropriate for fishing expeditions.
    Dozens, if not hundreds, of cases support those basic
    propositions.
        Twombly and Iqbal also protect government officials from
    being subjected to baseless litigation and a threat of personal
    liability simply for doing their jobs.
        Those cases reinforce the doctrine of qualified immunity
    which protects government officials from burdensome pretrial
    civil discovery described by the Supreme Court as peculiarly
    disruptive of effective government.
        Such disruption is most apparently where, as in the Iqbal
    case itself, the litigation is conducted against high-ranking
    officials and involves conduct undertaken during a war or other
    national security emergency.
        Imagine the paralyzing effect if any of the thousands of
    detainees currently held abroad by our military could seek
    damages and discovery from the secretary of defense merely by
    alleging in a complaint that the detention was motivated by
    religious animus in which the secretary was complicit.
        That astounding result is exactly what Iqbal forecloses.
    Overruling that decision would, in the words of Second Circuit
    Judge Cabranes, provide a blueprint for terrorists and others
    to sue those government officials called upon to prosecute two
    ongoing wars abroad and to defend the Nation at home.
        In less dramatic contexts as well, Twombly and Iqbal
    prevent--protect defendants from being unfairly subjected to
    the burdens of discovery in cases likely devoid of merit. That
    is no small consideration. Discovery is almost always
    expensive, and electronic discovery costs alone can easily run
    into the millions of dollars in complex cases.
        Defendants cannot recover their discovery costs, even if
    the plaintiff's case turns out to be meritless. So if weak
    cases are routinely allowed to proceed to discovery, defendants
    would have no choice but to settle rather than incur the
    substantial and non-reimbursable discovery costs.
        Twombly and Iqbal have not prevented the pursuit of
    meritorious claims. In fact, according to data compiled by the
    Civil Rules Committee of the Judicial Conference, data that
    encompasses hundreds of thousands of cases filed between
    January 2007 and September 2009, Twombly and Iqbal have had at
    most a negligible impact on how the Federal courts adjudicate
    motions to dismiss.
        Moreover, a 150-page memorandum prepared for the committee
    after exhaustively reviewing dozens of lower court opinions
    that discuss Twombly and Iqbal concluded that overall the case
    law does not appear to indicate a major change in the standards
    used to evaluate complaints.
        Judge Mark Kravitz, who chairs the committee, likewise has
    concluded that courts are taking a nuanced view of Twombly and
    Iqbal and that neither decision has proven to be a blockbuster.
        Individual decisions confirm that, in the words of the
    Seventh Circuit, Twombly and Iqbal preserve a liberal notice
    pleading regime.
        In sum, conclusory and implausible claims have always been
    subject to dismissal on the pleadings. Congress should not
    enact what would be a wrenching departure from that fundamental
    and critically important principle.
        Thank you.
        [The prepared statement of Mr. Katsas follows:]
                    Prepared Statement of Gregory G. Katsas

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                   __________
        Mr. Johnson. Thank you, Mr. Katsas.
        I think it is appropriate now, because we are just--you
    just called for votes, is that right? Okay.
        I think it is appropriate, so that Professor Davis would
    not feel abandoned and left out, that he have Mr. Rubin to do
    his statement along with you. And so I think it is good for us
    to break here, go vote. That is going to take, I would say, 40
    minutes--30 to 40 minutes.
        And so if you all could stay with us, we would greatly
    appreciate it. This hearing is now in recess.
        [Recess.]
        Mr. Johnson. Mr. Rubin?

    TESTIMONY OF JONATHAN L. RUBIN, PATTON BOGGS, LLP, WASHINGTON,
                                   DC

        Mr. Rubin. Thank you, Mr. Chairman.
        Chairman Johnson, Ranking Member Coble, Members of the
    Subcommittee, thank you for the opportunity to testify today
    about H.R. 4115, the ``Open Access to Courts Act of 2009'' and
    the Supreme Court's recent decisions in Bell Atlantic v.
    Twombly and Ashcroft v. Iqbal.
        My name is Jonathan Rubin, and I am a practicing attorney
    here in Washington, D.C., where I practice antitrust law. I
    have written scholarly articles and given lectures about the
    interpretation and application of the Twombly standard in
    practice.
        I appear today as an individual and not in any capacity
    representing my law firm or any of its clients, so the views I
    express are solely my own.
        Rule 8(a)(2) of the Federal Rules of Civil Procedure
    requires civil pleadings to contain a short and plain statement
    of the claims showing that the pleader is entitled to relief.
        In the 1957 case of Conley v. Gibson, the Supreme Court
    interpreted these words to mean that civil cases should not be
    dismissed 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.
        Under the Conley standard, courts were directed not to
    dismiss a claim unless it is implausible--that is, unless no
    set of facts could support it.
        In Twombly, the court overruled the Conley no-set-of-facts
    test for what Rule 8 requires, imposing a new, stricter
    interpretation for what constitutes an adequate statement of a
    plaintiff's entitlement to seek relief.
        Civil pleadings must now set forth a particular factual
    narrative supporting liability, and courts must disregard
    conclusory or factually neutral allegations not pleaded in a
    sufficiently suggestive factual context.
        This new and nuanced standard does not affect all
    pleadings, but it does eliminate meritorious claims presented
    in pleadings that allege facts consistent with liability but
    unable to satisfy the stricter requirements of the new
    standard.
        Significantly, the cases that cannot be pleaded to Twombly
    standards are generally those in which the plaintiff lacks
    essential information about the defendant's wrongful acts.
        This is likely to occur in factually complex cases, in
    cases involving abstract economic or financial subject matter,
    and in cases such as a conspiracy or discrimination in which
    the culpable conduct is committed in private or under a cloak
    of secrecy.
        These cases include antitrust conspiracy, fraudulent
    financial schemes, employment discrimination, civil rights
    violations and other substantive areas of the law in which
    private enforcement, in addition to compensating the immediate
    victim of actionable conduct, is particularly useful in
    remediating public wrongs, promoting sound public policy and
    deterring similar wrongdoing by others.
        The principal undesirable effect of the Twombly pleading
    standard, therefore, is to impair the contribution of private
    enforcement to the regulation of business, governmental and
    other conduct affecting the public interest.
        The Twombly standard disproportionately penalizes private
    civil cases most likely to generate positive public
    externality.
        While the investigatory function of private enforcement can
    be restored by enacting legislation designed to reinstate the
    pre-Twombly civil pleading standard, such as the Open Access to
    Courts Act of 2009, capturing the pre-Twombly standard could be
    a challenging legislative task because it rests on a more
    fulsome jurisprudence beyond Conley v. Gibson.
        In my view, Congress should decline to engage directly in
    writing or interpreting the Federal Rules of Civil Procedure.
    As an alternative, the erosion of the investigatory function of
    Federal civil litigation due to Twombly could be mitigated by a
    statutory option granted to a plaintiff in lieu of dismissal
    with prejudice on Twombly grounds to proceed to targeted
    discovery followed by the filing of an amended pleading and
    post-discovery re-review.
        Such proceedings in aid of pleading would substantially
    alleviate the problem of placing a judicial remedy out of the
    reach of cases based on a well-founded suspicion of wrongdoing
    but where the allegations cannot be pleaded to the satisfaction
    of the Twombly plausibility standard.
        At the same time, such an option would retain the
    advantages engendered by Twombly's enhanced and more
    disciplined standards of pleading.
        I thank the Committee for its attention and for the
    opportunity to share my views on this important subject. I have
    submitted a recent paper on Twombly and would ask that it be
    introduced as part of my written statement. And I look forward
    to answering your questions.
        [The prepared statement of Mr. Rubin follows:]
                    Prepared Statement of Jonathan L. Rubin

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                   __________
        Mr. Johnson. Thank you, sir.
        And now we will hear from Professor Davis.

      TESTIMONY OF JOSHUA P. DAVIS, PROFESSOR, CENTER FOR LAW AND
        ETHICS, UNIVERSITY OF SAN FRANCISCO, SCHOOL OF LAW, SAN
                             FRANCISCO, CA

        Mr. Davis. My name is Josh Davis. I am a professor at the
    University of San Francisco School of Law. My teaching is
    largely in civil procedure and somewhat in complex litigation
    and antitrust law. I have some practical experience there as
    well.
        And I want to thank you sincerely for the honor and the
    privilege of presenting testimony today.
        Twombly and Iqbal do very substantially undermine private
    enforcement of the law generally and private enforcement in
    antitrust in particular. So very briefly, in the time allotted
    to me, I want to make a handful of points.
        I want to emphasize the importance of the antitrust laws. I
    want to emphasize the importance of private enforcement of the
    antitrust laws. And I want to express some concerns about
    Twombly and Iqbal which can be summarized as--that they are an
    attempt to make a change in the law to fix a problem that
    probably doesn't exist, that engendered great cost and
    inefficiency, and gives rise to significant problems of
    political illegitimacy.
        So first, as to the importance of antitrust law, antitrust
    violations are a little bit like steroids in sports. When you
    violate the antitrust laws, cheaters win, consumers lose, and
    honest competitors, including small businesses, are at a
    terrible disadvantage.
        But antitrust law is far more important. And in particular,
    in Exhibit A to my written testimony, I have co-authored an
    article, and that article demonstrates that since 1990
    plaintiffs in private antitrust cases have recovered many
    hundreds of millions of dollars, almost a billion dollars,
    alone from the pharmaceutical industry.
        And in a day and age when everyday citizens are having to
    choose between paying for their medication and buying food or
    paying their rent, that is an issue of the greatest sort.
        Now, as to private enforcement of the antitrust laws, as
    opposed to government enforcement, it is an elegant free market
    solution to a free market problem.
        It is a reflection of American ingenuity, if you will, the
    genius of America, that we would come up with harnessing the
    power of private action in service of the public good.
        And that same study that I did, the written--attached as
    Exhibit A to my written testimony, shows that private
    plaintiffs' lawyers perform two key functions, compensation and
    deterrence.
        As for compensation, cumulatively in just those 40 cases,
    plaintiffs have recovered--plaintiffs' lawyers and plaintiffs
    have recovered over $18 billion as a result of antitrust
    violations.
        Over 5 billion of those dollars come from foreign actors
    who were preying on the American economy. It is important
    compensation that would not occur in the absence of private
    enforcement.
        In a separate article that currently is being drafted,
    attached as Exhibit B to my written testimony, I also, with my
    co-author, established that the deterrence effect of private
    enforcement in those 40 cases alone since 1990 is probably
    significantly greater than the deterrence effect of all of the
    Department of Justice's excellent efforts in criminal
    enforcement. So private antitrust enforcement is absolutely
    crucial.
        Now to my three criticisms, very quickly, of Twombly and
    Iqbal--that they are an attempted solution to a problem that
    probably doesn't exist, expensive and inefficient, and of
    questionable legitimacy.
        First of all, Twombly is premised almost entirely as a
    matter of public policy on the speculation that plaintiffs'
    lawyers may bring cases--plaintiffs may bring cases without any
    significant merit and defendants may settle those cases because
    of the fear of litigation costs.
        The problem with Twombly is it offered absolutely no
    evidence that this is a phenomenon that occurs with any
    significant frequency at all. And indeed, there isn't any
    evidence that I have come across anywhere, and I said that in
    writing. It has been published. It has been out for a couple of
    years. And nobody has responded otherwise. And so I don't think
    there is evidence.
        And it is implausible as a matter of theory once we attend
    to the dynamics of litigation, because the reality is that the
    defendants in these actions are large corporations with
    substantial resources and sophistication.
        They benefit from the delay of litigation. In effect, they
    get an interest-free loan from the plaintiff until they have to
    pay, so that is very valuable to them.
        They also benefit, as do their lawyers, from having a
    reputation of being tough fighters. And then finally, the
    lawyers are paid by the hour, and so protracted litigation is
    very attractive to them. So defendants have every reason to
    fight hard in this litigation, and they do.
        Plaintiffs and plaintiffs' lawyers, on the other hand, have
    reason to settle on reasonable terms and early. They are small
    players. The plaintiffs are giving an interest-free loan to the
    defendants so they can recover. And the plaintiffs' lawyers are
    paid on a purely contingent basis. And so what they want to do
    is settle early, if reasonably.
        In terms of costs, the massive change--and it is a massive
    change that we have seen in the pleading standards--is
    incredibly costly for parties to litigate and for courts to try
    to figure out and apply.
        And then in terms of the political legitimacy issues, first
    of all, the Supreme Court made up facts in Twombly. As I said,
    that is a form of activism just like making value judgments
    that are better delegated to the democratic branches.
        Also--and I would be happy in questions to address this at
    greater length--they didn't follow the protocol in the--set out
    in the Rules Enabling Act.
        And then, as to the judges themselves, they have been
    granted tremendous discretion under these new pleadings
    standards. We have four panelists here, and I think if you
    asked us to define Twombly and the new standard under Twombly
    and Iqbal you would get five opinions.
        And that gives tremendous discretion for judges to indulge
    their ideology rather than to respond to the merits in deciding
    any particular case and determining who gets access to justice.
        And therefore, I encourage you to overrule Twombly and
    Iqbal along the lines of H.R. 4115 or some similar legislation.
    Thank you for your time.
        [The prepared statement of Mr. Davis follows:]
                     Prepared Statement of Joshua P. Davis

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                   __________
        Mr. Johnson. Thank you, Professor Davis. I wish I could
    overrule the Supreme Court decision or decisions in Twombly,
    Iqbal.
        I have got a question I will recognize myself for. And you
    know, this was a judicial animal the way that it was done for
    the last 40 years--I mean, not a judicial animal but a
    legislative animal. Is that correct?
        This standard of the previous standard which was ruled
    unconstitutional--is that standard still--we have had that--let
    me just drop that question and move on.
        This is a case of kind of legislative ruling from the
    bench. Is that right? In other words, taking out legislation
    that Congress enacted and then changing it for no real good
    reason?
        Mr. Davis. Is that to the panel generally, or----
        Mr. Johnson. Yes, generally.
        Mr. Davis. I am happy to take a stab at that. I think that
    Conley is certainly an interpretation of the Federal Rules of
    Civil Procedure and that the judiciary is bound under the Rules
    Enabling Act by the Federal rules.
        And I do think that within certain parameters the judiciary
    has room to interpret those rules. But I actually think that
    Twombly and Iqbal exceed those bounds.
        And just as an example, to make this concrete, part of the
    Federal Rules of Civil Procedure under Rule 84 are the forms.
    And one of the forms is what used to be called Form 9 and is
    now Form 11.
        And what it says--all it says--and this is supposed to be
    absolutely sufficient--according to the Federal rules, for a
    complaint, is it says on a date to be specified, at a place to
    be specified, the defendant negligently drove a motor vehicle
    against the plaintiff.
        Now, that is conclusory. There is no explanation of the
    negligence. And if you take Twombly and Iqbal literally--now,
    the court says that survives, but it doesn't really give a very
    satisfactory explanation as to why.
        If you take Iqbal and Twombly literally, you would say,
    ``Well, negligence--that is a conclusion. There is nothing else
    other than the word negligence to say the defendant did
    anything wrong.'' I think there is a very good argument that
    applying Twombly and Iqbal literally--that form is no longer
    good.
        Now, nobody wants to go there, but I think that that is a
    powerful piece of evidence that in Twombly and Iqbal the
    Supreme Court really didn't abide by the framework that was
    enacted pursuant to the Rules Enabling Act and it acted in
    essentially a legislative fashion.
        Mr. Johnson. The legislating from the bench. I am going to
    move on.
        How does Iqbal--how does it affect the ability of a
    litigant to go to court? I want to ask Mr. Katsas that.
        Mr. Katsas. Based on the data we have to date, which
    admittedly cover only a few months, the answer is Iqbal has had
    essentially zero impact on the ability of litigants. The
    federal----
        Mr. Johnson. Well, if I might ask, why is it that previous
    law was changed if this is not having much effect on litigants'
    ability to come into the courthouse and file their pleadings?
        Mr. Katsas. Because previous law wasn't changed, Mr.
    Chairman. Previous law was crystal clear on the propositions I
    mentioned. Conclusory allegations aren't good enough, a
    plaintiff is only entitled to the reasonable inferences from
    the facts pled, discovery is not for fishing expeditions, and
    so on.
        Mr. Johnson. Let me ask Professor Schnapper to respond to
    it, and also Mr. Rubin.
        Mr. Schnapper. Well, with all deference to my colleague, I
    disagree with both that characterization of what the law was
    before and what its impact has been.
        Certainly, you can see any number of cases--and I have
    tried to identify a number of them in my prepared remarks--
    which were dismissed under the new standard which wouldn't have
    been dismissed under the old standard and which the judges said
    wouldn't have been dismissed under the old standard.
        So it is clearly--it has clearly had an effect. And as I
    noted earlier, it has had an effect on defendants, because
    judges have been striking affirmative defenses under the Iqbal-
    Twombly standard, and that was not something that would have
    happened before.
        Mr. Johnson. Thank you.
        And, Mr. Rubin?
        Mr. Rubin. Thank you, Mr. Chairman. I think that the
    question of legislating from the bench is not a rigorous way of
    looking at it. This is not an unusual situation where the
    Supreme Court interprets, for example, a statute.
        If the interpretation is within the range of the
    interpretations that were envisioned for the statute by
    Congress, then we say the Supreme Court is interpreting. If the
    Supreme Court goes outside of that range, then we say the
    Supreme Court is legislating from the bench.
        In this case, the question is whether or not the Supreme
    Court exceeded in some manner its authority in its more
    granular and more specific interpretation of the pleading
    requirements set down in Rule 8(a)(2).
        Now, I believe that the Supreme Court was probably within
    its rights to interpret the rule as it did. Others may think
    that that is a--such a far-out interpretation that it is
    essentially legislating in the sense that it is changing the
    essential nature of the rule.
        I think that we don't have to decide that question to know
    that there is a change, that the change is very clear in the
    sense that the requirements for expressing entitlement to seek
    relief in a civil complaint have been changed, and it is
    important to see how they have been changed.
        They have been changed in a way that only certain cases are
    going to be affected by the change. And as I tried to point out
    in my statement, there is a class of cases which comes up to
    the edge of the Twombly standard but does not, as the court
    said, go over the line into plausibility, and those cases are
    cases where the plaintiff is in the dark with respect to some
    of the essential ingredients of their claim.
        They can allege facts that are consistent with the claim,
    but they cannot allege facts that get over the line established
    by Twombly. When we are talking about some fix for the problem,
    I believe this is the problem we are talking about, a class of
    cases that will get--which is a minority of cases, or maybe a
    majority, maybe more than 50 percent--I don't know how many
    there.
        But we know that there are cases that are unaffected by the
    Twombly standard because it keeps intact most of the existing
    motion to dismiss standard, but we always--also know that there
    is a class of cases that will be ensnared by Twombly.
        That is the problem to be addressed. Those cases----
        Mr. Johnson. Those pro se----
        Mr. Rubin [continuing]. Did not have a problem before the
    court made its decision. They do have a problem now.
        Mr. Johnson. Pro se cases, cases involving unpopular
    ideas--those cases would be adversely impacted.
        Mr. Katsas. Actually, Mr. Chairman, there is a case called
    Erikson decided between Twombly and Iqbal in which the Supreme
    Court very specifically said that pro se litigants are still
    entitled to the benefit of the doubt in construing their
    complaint, so I don't think that is right.
        Mr. Rubin. Well, if I could address that, Mr. Chairman, I
    think that something that gets lost in this debate is that not
    all cases are created equal. There is a class of cases, such as
    an automobile negligence complaint, which needs only the barest
    allegations in order to make clear what the entitlement of the
    plaintiff to sue is based on.
        Everyone knows that an automobile accident will result--can
    result in injury to people and property. It is not necessary in
    a complaint to allege exactly how the injury was caused and the
    other factual details in order to support and to demonstrate
    the entitlement of the plaintiff to sue.
        And Erikson was also such a case, because in that case the
    essential allegation was that medical treatment was being
    denied a prisoner, and all of us know from our common
    experience that when medical treatment is denied, injury can
    result. We do not need specific factual allegations in order to
    support the entitlement to sue in such a context.
        Contrast that with a--yes, sir.
        Mr. Johnson. So the point that you are making, if you could
    just boil it down----
        Mr. Rubin. Well, is that there is a different kind of case
    that is a complicated case, an economic case, a case of
    discrimination, a case of financial shenanigans, where it is
    not close to our experience what the basis of the entitlement
    to sue is.
        And in those cases, the Twombly standard will come into
    effect. And in those cases, the court is saying, ``We need
    additional factual enhancements in order to make clear the
    entitlement to sue.''
        So you can't say that Twombly is somehow inconsistent with
    Rule--pardon me, with Form 9, which is now Form 11. They are
    two different kinds of case, two different worlds, one to which
    Twombly applies and one to which it doesn't.
        Mr. Davis. Oh, sorry. May I say just a word on this? I
    mean, Mr. Rubin has one theory of Twombly, which is a very
    interesting one, and I could respond on the particulars of that
    issue.
        But I do think the more important point is that
    fundamentally you are right that there is a threat from Twombly
    to the very cases, the very important cases, that you have
    identified. And the reality is that there are lots of ways to
    construe Twombly and Iqbal.
        They have given judges far more room than existed under the
    old system. And so if you get--draw Mr. Rubin as a judge, you
    may get one conclusion. If you draw somebody with a different
    take on Twombly that kind of fits the reasoning in many ways,
    you get a different one.
        And if you get a judge who feels that unpopular views or
    the claims of a pro se litigant are implausible, whatever that
    means based on the good sense of that particular judge, there
    is a very real possibility of dismissal.
        And this is one of the concerns about Twombly and Iqbal,
    that any one of us may come up with our theory of what it--what
    they mean, but there is an awful lot of room that will vary by
    the judge.
        And Mr. Rubin is putting forth one very insightful, well-
    reasoned possibility that has to compete with all the others
    that judges may apply in any given case.
        Mr. Johnson. Thank you.
        One last question can be answered a yes, no, maybe so, and
    that is do you think the legislation H.R. 4115 will remedy this
    situation that exists at this time?
        Mr. Schnapper. As drafted, it will remedy it for plaintiffs
    but not for defendants because it only applies to complaints.
    As written, it will not apply to affirmative defenses. It
    wouldn't apply to counterclaims.
        It is unclear if it would apply to a cross complaint. I
    would think it would. But so it works for plaintiffs. It
    doesn't work for defendants.
        Mr. Johnson. Mr. Katsas?
        Mr. Katsas. The legislation would make it impossible for
    any complaint to be dismissed based on either the conclusory or
    implausible nature of the allegations. To that extent, it would
    overrule decades of prior precedent and eliminate any screening
    of complaints on a motion to dismiss.
        Those changes would not simply restore the law to what it
    was immediately before Twombly. It would work very substantial
    and very unwelcome changes in the law.
        Mr. Johnson. Mr. Rubin?
        Mr. Rubin. Well, as I said in my testimony, I would favor a
    less ambitious approach. This legislation would remedy the
    problem we are discussing, but it may also do a lot more and
    have other unintended consequences, which is why I favor a more
    limited approach.
        Mr. Davis. May I----
        Mr. Johnson. Well, what kind of--what kind of things could
    happen as a result of this particular legislation?
        Mr. Rubin. Well, one of the things that it appears that the
    legislation overlooks is the fact that a motion to dismiss is
    a--it is primarily a legal maneuver in order to test the
    illegal sufficiency of the claim as pleaded.
        Not all motions to dismiss go to whether the facts alleged
    are sufficiently informative. Sometimes we are going to--
    whether the facts allege--try to state a case that might be
    non-cognizable for other reasons besides a failure of the
    factual allegations--for example, where there is----
        Mr. Johnson. Well----
        Mr. Rubin [continuing]. Immunity or some other legal reason
    not to proceed.
        If the statute says that you can't dismiss because--unless
    no set of facts could support the case, where is the
    demarcation between what we are trying to remedy, which is the
    Twombly problem case--which is where you can allege consistent
    but you can't allege suggestive--and the other range of
    12(b)(6) dismissals, which are an interaction between facts and
    law?
        Because the facts are going to be an input into whether or
    not you have got a legal problem with your claim, whether you
    have got an immunity, whether you have got a Trinko-type
    situation where it is not a cognizable claim because of
    regulation--that sort of thing.
        So that is what I am referring to by the unintended
    consequences of the statute.
        Mr. Johnson. All righty.
        And, Professor Davis, will this legislative proposal remedy
    the state of pleading now so that people are not restricted in
    coming into court?
        Mr. Davis. I think in large measure it would, and let me
    just say three quick things about it. First, I think the gist
    of the bill is to say let's undo Iqbal and Twombly and take us
    back to the position we were in before those very significant
    changes that the Supreme Court effected.
        And so to that extent, I think it absolutely will. It will
    put us back to a system that worked. It wasn't broke. We
    shouldn't have tried to fix it.
        There are two other points I might make. One is it says a
    court shall not dismiss a complaint, and I think that
    consistent with the current language of Rule 8 it might be
    better to say ``shall not dismiss a claim.'' That would deal
    with counterclaims, cross claims, and not just complaints. So I
    think that is a very technical civil procedure sort of point,
    but that would be an improvement.
        And then one might consider more express language saying
    that this doesn't--this just takes us back to the pre-Twombly,
    pre-Iqbal world. One could consider that.
        But I think on the whole it is a very reasonable bill and
    it would solve a lot of the problems that have been created by
    Iqbal and Twombly.
        Mr. Johnson. Thank you.
        And I will now turn it over to the Ranking Member for
    questions.
        Mr. Coble. Thank you, Mr. Chairman.
        And good to have you all with us, gentlemen.
        Mr. Katsas, Judge Mark Kravitz, the chair of the Judicial
    Rules Advisory Committee, recently commented that judges are
    ``taking a fairly nuanced view of Iqbal and that Iqbal has not
    thus far proven to be a blockbuster that gets rid of any case
    that is filed.''
        What is your comment on Judge Kravitz's judgment?
        Mr. Katsas. His judgment is supported by a massive array of
    statistics collected by the Judicial Conference and by a
    comprehensive 150-page memorandum prepared for the Judicial
    Conference.
        With respect to the statistics, the Judicial Conference has
    looked at some 800,000 cases between the beginning of 2007 and
    September of 2009. That is about 20,000 cases filed a month.
    They have looked at motions to dismiss--how many are filed, how
    many are granted, in the period before Twombly and compared
    that to the period after Iqbal.
        One can hypothesize all one wants about what some
    particular judge might do, but what the statistics show over
    some 55,000 motions to dismiss is that motions to dismiss prior
    to Twombly were granted at a 38 percent rate in the 4 months
    before Twombly. Motions to dismiss in the 4 months after Iqbal
    were granted at a 38 percent rate as well.
        That is pretty strong initial evidence that Judge Kravitz's
    view that there is no big change here is, in fact, correct.
        Mr. Coble. And I want to ask you another question, Mr.
    Katsas, then I want to hear from the other panelists as well,
    but you first, Mr. Katsas. And you touched on it peripherally.
        Experience in the 6 months since Iqbal was decided provides
    that no basis for believing that the decision will limit access
    to the Federal courts for plaintiffs with legitimate claims as
    defendants continue to lose motions to dismiss complaints even
    when they rely upon Iqbal.
        Do you think that this indicates that the Iqbal decision
    was simply a reiteration of what had already been largely
    prevailing law?
        You first, Mr. Katsas. Then the other gentlemen.
        Mr. Katsas. Yes, I do. The fact that motions to dismiss are
    not being granted at higher rates tends to confirm what is
    quite obvious on the face of Twombly and Iqbal themselves,
    which is that neither decision changes prior law.
        We have heard some suggestion that the court just made up a
    plausibility requirement out of whole cloth. If you look at
    Iqbal, nine justices agreed that there is a plausibility
    requirement, citing Twombly, and disagreed about the particular
    complaint.
        In Twombly, seven justices endorsed plausibility, citing
    the respected treaties of Professor Wright and Miller and the
    numerous cases that I have mentioned.
        So whether you look at pre-Twombly case law or post-Iqbal
    case law, the plaintiffs have a great deal of leeway to pursue
    litigation, but at some point conclusory or implausible claims
    have to be dismissed in order to protect qualified immunity, in
    order to protect defendants from harassment in meritless cases,
    and so on.
        Mr. Coble. I thank you for that.
        And, folks, I am trying to beat my red light, so if you all
    can sum up as quickly as you can.
        Professor, go ahead.
        Mr. Schnapper. Thank you, your Honor--sorry. Just a couple
    of quick points. There are a number of studies which reach the
    opposite conclusion about the effect of this, and I could
    provide copies of those to the staff.
        But having read them, it is my view that none of this
    material is helpful. And the reason is, as Mr. Katsas points
    out, it is about the rate at which motions to dismiss are
    granted. The problem is that motions to dismiss are now made in
    cases they wouldn't have been made before.
        Defendants don't move to dismiss in all cases. They move to
    dismiss in cases that fit the law at the time. And they are now
    moving to dismiss in cases that wouldn't have been dismissed
    before. That is where the problem is, and it is reflected in
    two things.
        First of all, the numbers of dismissals of employment
    discrimination cases is up about a third after Iqbal. The rate
    hasn't changed in all the studies, but the number has gone up.
        Secondly, in one of the cases I have referred to in my
    materials, the Ocasio-Hernandez case, at the end of the case
    the judge points out that until Iqbal--and the judge dismissed
    the case under Iqbal.
        At the end of the case, he points out that before Iqbal the
    defense lawyer, who was a very good lawyer, he said, didn't
    even move to dismiss, because under the law that existed prior
    to Iqbal that wasn't suitable for motion.
        So I think the problem isn't the rates, it is the numbers.
        Mr. Coble. And my red light is on, guys, so if you can--if
    you could sum up as quickly as you can, I would appreciate it.
        Mr. Rubin. Yes, I just would like to--I don't find the
    statistical evidence helpful one way or the other. We simply
    don't know what wasn't filed after Iqbal because of Iqbal, and
    we don't know what really was dismissed because of Iqbal or
    Twombly just because they cite Iqbal or Twombly. So I don't
    find them informative at all.
        Mr. Coble. Thank you.
        Professor?
        Mr. Davis. And just two quick points. One is Arthur Miller,
    the author of the very treatise to which Mr. Katsas cites, has
    described Iqbal and Twombly as a sea change. And the reality is
    it is a radical change from what existed before.
        The other thing on statistics--I would just concur about
    how limited is what we know. If they have the effect that we
    believe, where it is harder to survive a motion to dismiss, you
    would expect more violations of the law because defendants are
    emboldened, because they are unlikely to be held accountable.
        You would expect stronger cases to be filed as plaintiffs
    give up on some of the cases they would have filed before
    because they can't survive a motion to dismiss.
        And then a similar level of either filing of motions to
    dismiss or of granting them wouldn't tell us much, because the
    whole background has changed in light of these rules.
        And until we can figure out how to measure those things,
    the statistics aren't really going to tell us much one way or
    the other. It is a dynamic system, not a static one.
        Mr. Katsas. Could I just make one quick point? We actually
    do know something about the rate of filing of motions to
    dismiss.
        In that same universe of 55,000 cases that I mentioned--
    motions to dismiss filed in 34 percent of cases in the 4 months
    before Twombly, 36 percent of cases in the 4 months after
    Iqbal--that does not, to me, sound like a sea change.
        Mr. Coble. Gentlemen, you have been a good panel.
        And I yield back, Mr. Chairman.
        Mr. Johnson. Thank you, sir.
        All right, I will recognize Bob Goodlatte for questions.
        Mr. Goodlatte. Well, thank you, Mr. Chairman.
        I find this debate about the impact that this--these two
    decisions have had to be very interesting. I, quite frankly,
    agree with Mr. Katsas that the evidence does not show a
    significant change, and I think that that in and of itself
    reflects on the fact that these decisions were not a
    significant change in the law.
        In fact, this legislation--and Mr. Nadler in his testimony
    harkened back to the Conley decision, which I don't think has
    ever had a very high standard of credibility in our courts--
    there is a long chain of decisions by a host of courts and
    legal scholars and notes in various legal--I have got two pages
    of these things in our memo here on this.
        And it culminated in the comment by Justice Souter in the
    Twombly case, who concluded that the standard that some have
    advocated should be imposed through this legislation in H.R.
    4115, the standard of Conley, had puzzled the profession long
    enough, and it made no sense to employ it any further.
        So quite frankly, Justice Souter--and some have alleged,
    including Mr. Nadler and others, that this is a conservative
    cabal, this is a conservative legislating from the bench.
    Justice Souter is not known by many people on my side of the
    aisle as a conservative justice in any way, shape or form.
        And quite frankly, I think every single member of the court
    recognized that there is a requirement for plausibility.
        So my question for each and every one of you is can you
    actually sit here with a straight face and say that we should
    put into a statute language that says a court shall not dismiss
    a complaint under one of those subdivisions on the basis of a
    determination by the judge that the factual contents of the
    complaint do not show the plaintiff's claim to be plausible?
        In other words, if the plaintiff's claim is implausible,
    that is not a basis for dismissing the case. This, in my
    opinion, would be a radical sea change in the standards that
    are set in our courts, not the other way around.
        So I will start with you, Professor Schnapper, and you are
    welcome to respond to that. But this language is stunning in
    terms of specifically instructing judges in our Federal courts
    to not dismiss cases if they are implausible. How do you defend
    that?
        Mr. Schnapper. Your Honor, let me--I don't want to seem too
    word-smithy about this, but there is some--there is an
    important distinction here between whether the plaintiff,
    without discovery, is able to establish that a complaint is
    plausible, or whether the judge affirmatively concludes it is
    an implausible claim.
        The problem is that the--we are talking about a decision
    that is made before all the evidence is known. And you know, at
    the point--we get to a point where----
        Mr. Goodlatte. So is your standard anything goes? I mean,
    you really like this Conley no-set-of-facts standard that you
    can allege anything and get into court?
        I mean, we talked here about how--in fact, Professor Davis
    cited that one of the reasons why we can argue about the
    statistics is that a lot of people may not have filed cases
    because they couldn't stand up in court. That, to me, is a good
    thing, not a bad thing.
        Why would we waste billions of dollars of resources in our
    country, jamming our courts with cases that shouldn't be in
    those courts, because we specifically tell the courts--the
    Congress specifically tells the courts that if you find a case
    is implausible, you can't dismiss it on that basis?
        Mr. Davis. If I may just--because the word ``plausible,''
    as so many legal terms do, has--is a term of art. And
    plausibility has been read to require all sorts of things that
    very reasonable plaintiffs are unable to show.
        If you had told me that it was--that Tiger Woods had
    cheated on his spouse, I would have found that not only
    implausible but outrageous. And if his wife had brought suit on
    that basis, she never would have had her day in court, though
    it turned out she was absolutely right.
        The Bernie Madoff scheme--there are many things that happen
    that are implausible. And the way that courts have interpreted
    that word is often to ask plaintiffs not only to establish that
    something may well have happened that gives them every reason
    to believe they have a legal right, but that they at times have
    to allege the who, what, where, how of things they could not
    possibly know or get dismissed.
        And so that is--the word ``plausible'' here----
        Mr. Goodlatte. Well----
        Mr. Davis [continuing]. It is----
        Mr. Goodlatte [continuing]. We don't have divorce cases in
    Federal courts. But in the state of Virginia, you have to
    allege adultery with specificity. You can't just say this
    happened.
        So you know, I understand what you are saying, but I don't
    understand how you could build a standard into the law that
    says the issue of plausibility is off the table in every single
    pleading.
        Mr. Katsas?
        Mr. Katsas. Yes. Think of the black-letter statements of
    motion to dismiss law. A plaintiff is entitled to have the
    truth assumed of well-pleaded factual allegations and all
    reasonable inferences from those allegations.
        A court need not accept unwarranted inferences. All right?
    Those are standard formulations that one sees in all of the
    case law.
        What this bill would do is compel the courts to adopt the
    opposite formulation, which is that a court must accept even
    unwarranted and unreasonable inferences from the facts pled. To
    me, that is just crazy.
        And think about how it would play out on the facts of Iqbal
    itself, right? We are in the wake of an unprecedented national
    security emergency after September 11th. The attorney general
    uses his authority under immigration law to detain people who
    may be connected to the terrorist attacks.
        And one of those guys wants to say, ``Well, I was just
    detained because of my religion and the attorney general was
    not acting to protect the country but to discriminate against
    Muslims. I get to sue the attorney general.'' That seems to me
    crazy. And that is exactly what would be permitted under this
    bill.
        And as Judge Cabranes said in the Second Circuit decision
    in Iqbal, if you allow that case to go forward, you have a
    blueprint--a blueprint--for people to bring baseless,
    politically motivated suits against cabinet officers for doing
    their job and making very tough calls to keep the country safe
    and to exercise all sorts of other--make all sorts of other
    difficult decisions in the performance of their duties.
        That seems to me a floodgate that we should not open.
        Mr. Schnapper. If I could respond a second----
        Mr. Goodlatte. Yes, we took it away from Professor
    Schnapper, and I think we need to let him get back to----
        Mr. Schnapper. Just to respond to the second questions you
    asked, I understand that your view is that the no-set-of-facts
    standard is a bad standard and that that is not what the courts
    were applying prior to Iqbal.
        I took a look in Westlaw for that particular phrase to see
    if it was, in fact, being relied on by the courts prior to
    Iqbal, in the year before Iqbal. The number of cases in which
    it was cited is 1,631. So it was out there.
        Mr. Goodlatte. Yes, but you have to read what those cases
    said, because I have here in front of me--well, I am going to--
    here you have a case--no-set-of-facts standard has never been
    taken literally, or unfortunately provided conflicting
    guideposts, or no-set-of-facts language in Conley has never
    been taken literally, or noting that Conley's no-set-of-facts
    language has not been--is not to be taken literally, noting
    that Conley's no-set-of-facts statement if taken literally
    would foolishly protect from challenge complaints alleging that
    only that the defendant wronged the plaintiff or owes plaintiff
    a certain sum, literal compliance with Conley could consist
    simply of giving names of the plaintiff and the defendant and
    asking for judgment.
        I mean, so I don't--you know, we are talking about
    statistics here. I don't think you can simply say that you ran
    a search on no-set-of-facts and found that the courts were
    favorably viewing that as a standard in pleadings cases.
        And let me just close--my time has expired, too--by saying
    that this is an area that is clearly a fine point in the law.
    We want people to be able to get into court, and they are not
    going to be able to allege in their pleadings a full set of
    facts upon which they base their claims because they don't know
    the full set of facts and want to get to discovery.
        But we have to have some kind of standard other than no-
    set-of-facts to get into court. Otherwise, we are going to see,
    you know, an explosion of litigation. In this day of the
    preservation of information--e-mails and so on--the amount of
    and the cost of discovery in these cases is staggering.
        And to say that you can get into court on the basis of no-
    set-of-facts and then start plowing through and require the
    defendant to plow through and provide documentation when they
    have an infinitely larger amount of data to plow through than
    they ever did in the old environment, where every--where
    whatever was kept was on a piece of paper, is a standard that I
    don't think is an acceptable one for the future.
        I think that we are far better off letting the court deal
    with these nuances than trying to ham-handedly write
    legislation that would actually say into law that a judge
    cannot dismiss a case that he finds to be implausible.
        Thank you, Mr. Chairman.
        Mr. Johnson. Thank you, Mr. Goodlatte.
        And since I took so much time asking questions myself, I
    feel obligated to bestow that same right upon my friends on the
    other side of the aisle.
        Mr. Coble. I am fine, Mr. Chairman.
        Mr. Johnson. All right. All right.
        No further questions. This has been an intriguing hearing.
    And a lot needs to be done to restore--I guess not sanity, but
    to restore the conditions which allowed people to come into
    court with a pleading.
        Now, it may or may not be meritorious. How do you make
    that--how do you make that determination? Is it something that
    you just don't like this claim, and you don't like the party
    who made the claim, and a judge deciding to--well, it is not
    very meritorious?
        I think we have heard the answer to that question. But it
    really does concern me deeply. And this will not be the last
    hearing that we have on this issue.
        I want to appreciate your time and your effort in coming to
    testify today. And I wish everybody happy holidays as well.
        And with that, this hearing is adjourned.
        [Whereupon, at 5:22 p.m., the Subcommittee was adjourned.]

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