[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
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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.]
A P P E N D I X
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