In Bell Atlantic Corp. v. Twombly,1 the Supreme Court heightened the pleading standard in an antitrust case when it construed and applied Federal Rule of Civil Procedure 8, which governs the pleading standard “in all civil actions” commenced in federal court. Rule 8 is a gatekeeper setting the standard for a complaint that must be satisfied before a claim may proceed and subject a defendant to costly discovery. In Twombly, the Supreme Court held that when alleging an agreement in restraint of trade in violation of Section 1 of the Sherman Act, “[c]onclusory allegation[s] of agreement at some unidentified point” is not sufficient to satisfy the plaintiff’s pleading obligations.2 The Court clarified that “we do not require heightened fact pleading of specifics, but only enough facts to state a claim to relief that is plausible on its face.”3
Two years after Twombly, the Supreme Court confirmed in Ashcroft v. Iqbal,4 that the stricter pleading standard articulated in Twombly extends beyond the antitrust context to all civil cases brought in federal court. While the Twombly federal pleading standard is widely recognized in federal courts (cited by courts across the country thousands of times), state court application of Twombly remains uncertain. For example, to date, New York state courts have not cited or discussed Twombly in published opinions; therefore, it is hard to predict whether the new standard will apply to antitrust cases initiated in New York state courts.
Before the Supreme Court’s decision in Twombly, many state courts used a traditional notice pleading standard.5 In his dissenting opinion in Twombly, Justice Stevens noted that “26 States and the District of Columbia utilize as their standard for dismissal of a complaint the very language [of Conley v. Gibson,6] which the majority repudiates: whether it appears ‘beyond doubt’ that ‘no set of facts’ in support of the claim would entitle the plaintiff to relief.”7 In New York, for example, Civil Practice Law and Rules (“C.P.L.R.”) 3014 requires that “every pleading shall consist of plain and concise statements”— almost identical to Federal Rule of Civil Procedure 8 which requires “a short and plain statement of claims.”
Today, every state has its own antitrust laws which are enforced by their respective state attorneys general. Many states also allow a private right of action. Typically, state antitrust laws are modeled after the federal antitrust laws. In New York, for example, the Donnelly Act is “patterned after the Sherman Anti-Trust Act and is generally construed in light of federal precedent.”8 However, guidance from federal precedent in this context typically refers to substantive issues and provides little guidance as to state court application of procedural rules, such as the rules governing pleading standards.
Since the Supreme Court’s decision in Twombly, some courts, including Washington State and the District of Columbia, have continued to rely on a liberal notice pleading standard.9 Other state courts, including Colorado, Massachusetts, West Virginia and Vermont, have affirmatively stated that Twombly will not effect or change the pleading standard adopted by their respective states.10 The Supreme Court in Vermont has stated, “we have relied on the Conley standard for over twenty years, and are in no way bound by federal jurisprudence in interpreting our state pleading rules.”11 Yet others, such as Delaware’s Chancery Court, cite Twombly with approval, noting that the “nation’s high court has now embraced the pleading principle that Delaware courts have long applied, which is that a complaint must plead enough facts to plausibly suggest that the plaintiff will ultimately be entitled to the relief she seeks.”12
The impact of Twombly has not gone unnoticed. Many have criticized Twombly – including Justice Ginsburg, who concurred in Justice Stevens’ dissent, telling a group of federal judges in June 2009 that the high court “messed up the federal rules” in that decision.13 And the future of Twombly is uncertain; Senator Arlen Specter (D-Pa.) has introduced a bill in Congress titled the “Notice Pleading Restoration Act of 2009,” which seeks to require courts to apply the Conley v. Gibson standards to pleadings.14 When introducing the bill, Sen. Specter said of Twombly: “I think that is an especially unwelcome development at a time when, with the litigating resources of our executive-branch and administrative agencies stretched thin the enforcement of federal antitrust, consumer protection, civil rights and other laws that benefit the public will fall increasingly to private litigants.”15 At least one critic of Twombly has noted that the decision has “put a damper on many potential suits, especially in the antitrust arena.”16 However, subjecting defendants to costly discovery in cases where the plaintiff lacks sufficient facts often results in a “holdup.” As the Supreme Court noted in Twombly, “it is one thing to be cautious before dismissing an antitrust complaint in advance of discovery…, but quite another to forget that proceeding to antitrust discovery can be expensive.”17 “[A] district court must retain the power to insist upon some specificity in pleading before allowing a potentially massive factual controversy to proceed.”18
While the dispute over Twombly rages in federal court, the question of its applicability in state court has not been answered. A recent case originating in Kansas titled Jackson v. Sprint Nextel Corp.,19 provides a prime illustration of the importance of this question to litigants, because it bounced back and forth between state and federal court. Depending on which court (state or federal) actually takes a case may significantly affect whether the complaint will survive a motion to dismiss. Sprint Nextel involved a class action where Plaintiffs sued Sprint in Kansas state court for alleged violations of the section of the Kansas Unfair Trade and Consumer Protection Act dealing with antitrust violations, Kan. Stat. § 50-112, titled “Trusts, combinations and agreements in restraint of trade and free competition declared unlawful.” Specifically, Plaintiffs alleged that Sprint engaged in a conspiracy to artificially increase prices of text messages in violation of Kansas law. Sprint removed the case to federal court in Kansas pursuant to the Class Action Fairness Act of 2005 (“CAFA”).20 The case was then transferred by the U.S. Judicial Panel on Multidistrict Litigation to the Northern District of Illinois for consolidation. Ultimately, however, the case was remanded back to Kansas state court pursuant to the home-state controversy exception set forth in CAFA.21 The route that the Sprint Nextel case has taken—from state court to federal court and back to state court—has subjected it to potentially different pleading standards, depending on where it ended up. Indeed, only time will tell whether the forum will make a difference—i.e., whether the Kansas state court will opt to apply Twombly or a more liberal standard to that antitrust action.