Archive for the ‘Case Precedent’ Category

Twombly/Iqbal Stay of Litigation

judge-gavel.gifUnder Twombly/Iqbal pleading standards, defendants who are named in a poorly drafted lawsuit should not have to bear the expense of defending frivolous claims before the court can evaluate the plaintiff’s claims. As the Supreme Court noted in Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009), a plaintiff who fails to adequately allege a viable complaint is not entitled to “unlock the doors of discovery.” 129 S. Ct. at 1950. The purpose of a Motion to Dismiss is to streamline litigation by testing the legal sufficiency of a claim without extensive and costly discovery.  See Mann v. Brenner, 375 Fed. Appx. 232, 239 (3rd Cir. 2010). Therefore, “[i]n certain circumstances it may be appropriate to stay discovery while evaluating a motion to dismiss where, if the motion is granted, discovery would be futile.” Id. (citing and quoting Iqbal, 129 S. Ct. at 1954 (“Because respondent’s complaint is deficient under Rule 8, he is not entitled to discovery.”)).

Although courts may be reluctant to allow cases to languish on their dockets, the Supreme Court was clear that civil cases should not proceed on complaints that do not meet the pleading standards of Rule 8. Also, the Court specifically noted that limitations on discovery will not be sufficient to allow litigation to proceed on a defective complaint.

Recently, we successfully stayed a shareholder dispute in federal court pending the court’s resolution of our Rule 12(b)(6) motion to dismiss the plaintiffs’ amended complaint. The court previously dismissed their original complaint and allowed to the plaintiffs another attempt.

Twombly/Iqbal Dismissal of Litigation


Courtesy of Courtoons

The Twombly/Iqbal pleading standard can be effective in resisting frivolous claims by plaintiffs. This pleading standard demands “more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)).

In applying these standards, a court considering a Rule 12(b)(6) motion to dismiss need not accept the truth of legal conclusions–only well-pleaded, nonclusory facts. Id., at 1949-50. Rule 12(b)(6) requires that a complaint set forth the grounds of the pleader’s entitlement to relief through more than labels, conclusions and a formulaic recitation of the elements of a cause of action. Id., at 1949 (citing Twombly, at 555). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. “Nor does a complaint suffice if it tenders ‘naked assertions’ devoid of ‘further factual enhancement.’” Iqbal, at 1949 (quoting Twombly, at 555).

Furthermore, “only a complaint that states a plausible claim for relief survives a motion to dismiss.” Id. at 1950. If the “well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged — but it has not ‘show[n]’ —  ‘that the pleader is entitled to relief.’” Iqbal, at 1950 (quoting Fed. R. Civ. P. 8(a)(2)).

Recently, we convinced a federal court to dismiss a shareholder suit because the complaint did not meet the pleading standards of Twombly/Iqbal.

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