By Georgene Vairo
Most of students dread having to take civil procedure. Rules. How boring. I try to hook them on the course during my first class by giving them examples of the "Power of Procedure." I tell them about cases in which the rules we use in civil dispute resolution can make a dramatic difference: Jones v. Clinton, for example, in which a discovery dispute ultimately led to the impeachment of President Clinton. I give them several examples of how forum selection battles seem to have more of an impact on outcomes than the substantive law itself.
When my civil procedure curriculum swings away from personal and subject matter jurisdiction, and turns to an examination of the Federal Rules of Civil Procedure, I begin by telling them how lucky they are to be lawyers in the 21st century, rather than early in the 20th century and before. Back then, lawsuits were routinely kicked out for technical pleading violations, and it was nearly impossible to get any evidence from the other side. Now, we have "notice pleading" and "liberal discovery." Thanks to an act of Congress in 1934, the Rules Enabling Act, the Supreme Court was given the task of coming up with uniform rules to be applied in all federal trial courts. The court promulgated the Federal Rules of Civil Procedure in 1938. Two of the most significant concepts embodied in the rules were "notice pleading" - under Rule 8, all a plaintiff is required to plead is a "short, plain statement of the claim showing that the pleader is entitled to relief" - and, liberal discovery. Most states have a procedural system modeled on the Federal Rules. We all grew up under the notice pleading/liberal discovery regime. This system has a lot going for it: Easy access to courts. No more hidden smoking guns. More settlements or summary judgments because both sides will know whether the plaintiffs have the evidence to prove their claims.
Most observers would agree that the system worked well. The procedural system a society uses to translate rights into remedies says a lot about that society. The Federal Rules of Civil Procedure did open the door - and keep the door open - to many worthy plaintiffs who would have been summarily dismissed in the older regimes. Perhaps, though, the easy access enabled by notice pleading allowed some plaintiffs to abuse the system. Moreover, sometime during the last quarter of the last century, defendants began to really grumble about costly and intrusive discovery. Cases like the antitrust case against IBM led to an amount of discovery that some estimated would stack up to the moon and back. Additionally, the increase in statutory rights and evolution of the common law favorable to plaintiffs led to increased filings of civil cases. Corporate defendants complained about employment discrimination cases - it is too easy for a terminated or un-promoted employee to claim (and plead) that discrimination was the cause. Changes made to the class action rule in 1966 made it possible for mass tort and other cases involving huge sums of money to be filed that exerted maximum leverage on companies that did not want to "bet the company" and settled instead.
Over time, changes were made to the discovery rules in the 1970s, and then again in the 1980s to try to tighten up discovery to make it less costly. Yet, the changes were "mere tinkering," as some Supreme Court justices said at the time. In 1983, Rule 11 was amended to make it easier for judges to impose sanctions on lawyers who file frivolous cases, and Rule 16 was amended to require judges to more actively manage the cases before them. The federal rules making committees continued to present the Supreme Court with solutions aimed at improving the discovery process and lessening the costs and delays of litigation. Changes were made to the Federal Rules - fewer interrogatories and fewer depositions of a shorter duration were allowed. But the sense that the system was broken, especially from the defense perspective, persisted. Maybe the issue wasn't liberal discovery as much as it was notice pleading.
Congress got that point in 1995 when it enacted the Private Securities Litigation Reform Act. Under the act, the pleading standards in securities fraud cases were made more rigorous than the standards under Rule 8 and Rule 9(b). A claimant alleging securities fraud must "specify each statement alleged to have been misleading, the reason or reasons why the statement is misleading, and, if an allegation regarding the statement or omission is made on information and belief, the complaint shall state with particularity all the facts on which that belief is formed." Unquestionably, Congress had the power to make statutory modifications to Rule 8 because it retained authority to enact laws on federal civil procedure notwithstanding its broad delegation of rulemaking authority to the Supreme Court and to other Article III federal courts.
The act had a dramatic impact, making it far easier for defendants to obtain dismissals at the pleadings stage. In other words, a plaintiff's attorney who saw swings in stock prices could no longer simply argue that corporate offices must have known something. Now, that attorney must have the facts and can't wait for discovery to find the smoking gun. So, what about Rule 8 - is merely a "short, plain statement" still required in non-Private Securities Litigation Reform Act cases? A couple of years ago, one would have thought so. Indeed, in various cases, the Supreme Court struck down attempts by appellate courts to require heightened pleading standards in civil rights and other cases. In 2007, however, the Supreme Court changed its tune. In Bell Atlantic v. Twombly, 550 U.S. 544 (2007), the court announced a new "plausibility" standard for pleading in the context of an antitrust case. And, it retired the venerable Conley v. Gibson, 355 U.S. 41 (1957), and its "no set of facts" standard and set out a more stringent standard for evaluating the sufficiency of a complaint. This term, in Ashcroft v. Iqbal, 129 S.Ct. 1937 (2009), picked up where Twombly left off: The Supreme Court held that in deciding a motion to dismiss a complaint, a district court need not accept as true assertions that are no more than recitals of the elements of a cause of action, supported by mere conclusory statements. Rather, only well-pleaded factual allegations are entitled to an assumption of veracity, and a district court should then determine whether such allegations plausibly give rise to an entitlement to relief. The 5-4 opinion significantly raised the Supreme Court's "plausibility" pleading standard that it had announced in Twombly.
Together, Iqbal and Twombly are a defendant's dream come true. Although the amendment to Rule 11 in 1983 had an impact on cutting back on frivolous cases, and the Supreme Court's 1986 trilogy of summary judgment cases made it easier for defendants to get summary judgment. But plaintiffs still had the opportunity for discovery. And, some judges remained reluctant to grant summary judgment. Rule 11 was watered down a bit again in 1993. So, the costs of discovery still loom large. The Supreme Court made clear in both Twombly and Iqbal that it believed consideration of costs was relevant even at the pleading stage. The court is saying, "Why let plaintiffs take up defense and judicial resources when they aren't likely to win?" The problem is that this approach turns the notice pleading/liberal discovery regime on its head.
The federal rules-making apparatus - its various committees - are studying whether Rule 8 ought to be amended. But it appears that the Supreme Court already has amended it without going through the Rules Enabling Act process. Sure, the Supreme Court ultimately passes each amendment that comes out of the committee process. But the process is an important one because the public has an opportunity to weigh in on the changes. Maybe the costs of litigation ought to be curbed by some form of heightened pleading requirements.
It seems that Rule 11 sanctions, managerial judging and changes to the discovery rules have not reined in all the costs or abuses in the civil justice system. Given such a significant change, however, we ought to be thinking carefully about who should make the change. Should it be Congress? Indeed, Sen. Arlen Specter has introduced a bill to bring back Conley v. Gibson. But it is scary to think that Congress ought to be drafting the rules of procedure. Should it be the Supreme Court? We are talking about the Federal Rules of Civil Procedure. But Congress has set out a process for adopting and amending the rules, and it should be followed.
Georgene Vairo is a professor of law and William M. Rains Fellow at Loyola Law School. |
