The Minnesota Supreme Court recently rejected the federal pleading standards of Twombly and Iqbal, holding that claims need not be factually plausible to survive a motion to dismiss.
In Bell Atlantic Corp. v. Twombly, the U.S. Supreme Court held that, in order to survive a motion to dismiss for failure to state a claim upon which relief can be granted, a complaint must contain “enough facts to state a claim to relief that is plausible on its face.” 550 U.S. 544 (2007). Unless the complaint contains sufficient facts to “nudge” the claims “across the line from conceivable to plausible,” the complaint must be dismissed.
In Ashcroft v. Iqbal, the U.S. Supreme Court further expanded on the plausibility requirement of Twombly. 556 U.S. 662 (2009). In Iqbal, the Court explained that a complaint must contain “more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” When a complaint pleads facts that are “merely consistent” with a defendant’s liability, but does not allow the court to draw the reasonable inference that the defendant is liable for the misconduct alleged, the complaint does not meet the plausibility standard of Twombly and must be dismissed.
In Walsh v. U.S. Bank, the issue before the Minnesota Supreme Court was whether the federal pleading standards of Twombly and Iqbal applied to lawsuits filed in Minnesota state courts. A13-0742 (Minn., Aug. 6, 2014). Although the pleading standard under Rule 8 of the Minnesota Rules of Civil Procedure is identical to the pleading standard of Rule 8 of the Federal Rules of Civil Procedure, the Minnesota Supreme Court rejected the plausibility standard of Twombly and Iqbal. Instead, the Minnesota Supreme Court held that “[a] claim is sufficient against a motion to dismiss for failure to state a claim if it is possible on any evidence which might be produced, consistent with the pleader’s theory, to grant the relief demanded.” In other words, a claim need not be factually plausible to survive a motion to dismiss and subject a defendant to costly discovery – it is sufficient if a court determines that it is “possible” for evidence to be introduced that might support the plaintiff’s theory of liability.
Takeaway: The Minnesota Supreme Court’s decision in Walsh permits claims to survive motions to dismiss even if they are factually implausible. The primary effect of this decision for employers is that it will be easier for plaintiffs to proceed with lawsuits in state courts, likely resulting in increased litigation costs – at least prior to a motion for summary judgment.