Employing Twombly: Effect of the New Pleading Standard on Employment Cases

By C. Daniel Lins

"I was turned down for a job because of my race." Not too long ago, Judge Frank Easterbrook of the Seventh Circuit Court of Appeals succinctly remarked that this is all a complaint needed to say in order to state a Title VII claim for discrimination and survive an employer's Rule 12(b)(6) motion to dismiss.¹ The Supreme Court's recent Twombly and Iqbal decisions,² however, have put this statement in doubt and injected a great deal of uncertainty as to what precisely a plaintiff must allege in order to properly state a claim. Now, under Rule 8 of the Federal Rules of Civil Procedure, a complaint must contain enough facts to state a claim to relief that is "plausible on its face."³ The Supreme Court has advised that demonstrating "entitlement to relief requires more than labels and conclusions, and a formulaic recitation of elements of a cause of action will not do."⁴ Pleadings now must contain sufficient factual allegations to make out a plausible claim--not just a conceivable or possible claim as in years past.

What Was "Notice Pleading"?

Rule 8(a)(2) of the Federal Rules of Civil Procedure states that to properly state a claim for relief, a pleading must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." In Conley v. Gibson, 355 U.S. 41, 45-56 (1957), the Supreme Court famously observed that a case should be dismissed for failure to state a claim only if it "appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." This statement became a fixture of responses to motions to dismiss for the next fifty years. In 2007, however, the Supreme Court reshaped Rule 8 analysis with Twombly. Now allegations in a complaint must be more than just conceivable ("no set of facts"), they must be plausible.

How Did Twombly Change Things?

In Twombly, customers of local telephone and internet service companies filed a class action lawsuit against regional carriers, asserting that these regional carriers had engaged in conspiracy in restraint of trade. The customers alleged that these regional carriers engaged in "parallel conduct" to inhibit the growth of the local companies, such as making unfair agreements with the local companies for access to the regional networks, providing inferior connections, overcharging, and billing in ways designed to sabotage the local companies' relationships with their own customers.⁵ According to the complaint, this "parallel conduct" of the regional carriers was evidence of an unlawful conspiracy.

The Twombly Court held that the allegations of parallel conduct between the defendants coupled with a bare assertion of conspiracy did not state a claim for conspiracy. The Court held that a complaint must allege facts that "plausibly suggest" that there was an agreement between the parties, not merely allege facts that are consistent with such an agreement.⁶ In the Court's view, the alleged conduct was just as likely to have been the regional carriers' independent rational business response to the new competition as it was to be evidence of conspiracy. The Court specifically rejected the plaintiffs' argument under Conley that the allegations were sufficient unless it appeared that the plaintiff could "prove no set of facts" that would entitle him to relief. Id. at 563 ("The phrase is best forgotten as an incomplete, negative gloss on an accepted pleading standard."). The reasoning behind the Twombly Court's decision was simple: Discovery can be expensive, especially in complex antitrust cases, and requiring a plaintiff to allege sufficient facts to plausibly suggest he or she is entitled to relief serves the practical purpose of preventing a plaintiff with a largely groundless claim from wasting the time and money of others in discovery, thereby hiking up the case's settlement value.⁷

Although the Twombly decision left lawyers and judges with many unanswered questions, the Court did provide clarity on a few points: The Conley "no set of facts" language was now a thing of the past. And properly pled factual allegation still must be taken as true at the motion to dismiss stage. However, practitioners rightly found themselves asking, what does "plausible" mean? And to what kinds of cases does this new standard apply? Two years later, the Supreme Court answered the second question but not the first.

In Ashcroft v. Iqbal, the Court held that the Twombly standard applied to all civil cases. Iqbal, a Pakistani detainee, filed suit against the Attorney General, FBI Director, and others alleging that they should be held personally liable for alleged discrimination because the defendants agreed to a policy that resulted in his arrest, detention, and harsh conditions of confinement. Citing Twombly, the Court held that Iqbal needed to plead facts to show that the defendants adopted and implemented the detention policies not for a neutral, investigative reason, but for the purpose of discriminating on account of race, religion, or national origin. The Court reasoned that, since the September 11th attacks were perpetrated by Arab Muslims, it is not surprising that certain U.S. policies would have a disparate, incidental impact on Arab Muslims. In short, the Court held that the complaint did not plausibly suggest that Ashcroft's purpose was to discriminate against Arab Muslims.

In addition to confirming that Twombly applied to all civil actions, Iqbal established that "only a complaint that states a plausible claim for relief survives a motion to dismiss."⁸ A claim is plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged."⁹ The Court then explained that determining plausibility is "a context-specific task that requires the reviewing court to draw on its judicial experience and common sense."¹⁰

Where Do We Go From Here?

Working together, Twombly and Iqbal suggest that when evaluating a motion to dismiss for failure to state a claim, a court should weed out legal conclusions and recitations of elements of the claim. The court should then evaluate the remaining factual allegations to see if they "plausibly suggest" entitlement to relief. If fact allegations are as consistent with non-tortious behavior as with tortious behavior, a plaintiff has not stated a claim. As we have seen, however, determining whether allegations are plausible is "context-specific" and based on "judicial experience and common sense." Thus, context is key. As one court has put it, "the height of the pleading requirement is relative to circumstances."¹¹

Depending on the context, seemingly conclusory factual allegations may or may not plausibly suggest that the plaintiff is entitled to relief. For example, the allegation, "Sally struck Billy with a hammer, and Billy was injured as a result," most likely meets the plausibility standard. People do not usually strike each other with hammers (and when they do, liability is often associated therewith). However, the allegation, "Employer fired Employee from his job, and Employee was damaged as a result," does not meet the plausibility standard. Employers routinely fire employees for nondiscriminatory reasons. Likewise, the allegation, "Employer fired Employee from his job because of his age, and Employee was damaged as a result," likely does not meet the new standard. Although this allegation certainly would satisfy the pre-Twombly standard (see Judge Easterbrook, above), it probably does not satisfy the new Twombly-Iqbal standard, because it does not contain facts other than a general recitation of the elements of the claim. An allegation that "Employer fired Employee from his job because of his age while making age-related jokes and wearing an anti-elderly button," likely states a claim, as illustrated by the recent cases below.

Recent Employment Cases Under Twombly

Under Twombly and Iqbal, plaintiffs must now allege sufficient facts to show that it is plausible that they were discriminated against because of their race, color, sex, national origin, or religion. Courts have struggled to define "plausibility" and to determine the level of factual allegations necessary to meet this standard. In Kasten v. Ford Motor Company, 2009 WL 3628012 (E.D. Mich. Oct. 30, 2009), the plaintiffs alleged age discrimination, specifically that they were over 40 years old, that Ford let them go while retaining younger, less-qualified workers for jobs they were qualified to perform, and that Ford employed a policy that disproportionately targeted older workers. In its motion to dismiss, Ford argued that the complaint failed to provide sufficient facts to state a plausible claim for relief, and that it is more likely that plaintiffs' layoffs resulted from a rational decision to trim the company's work force based on job performance, rather than from discriminatory intent.

The Kasten Court held that the plaintiffs' complaint failed to allege sufficient material facts.¹² The Kasten Court reasoned that although the complaint stated the plaintiffs' ages, it did not name those who replaced them, or give their ages. It identified the policy that resulted in their severance, but did not explain why the policy disproportionately targeted older workers. It claimed Ford was aware that the policy was discriminatory but did not state where this awareness came from or supply evidence that Ford designed the policy purposefully to cut older workers from its ranks. Interestingly, the Kasten Court stated that it had no doubt that the plaintiffs' complaint would have survived a motion to dismiss prior to Twombly-Iqbal. However, under the new standard, plaintiffs' factual allegations simply were not enough.

Riley v. Vilsack, et al., 2009 WL 3416255 (W.D. Wis. Oct. 21, 2009) involved a 60-year-old, disabled IT specialist employed by the U.S. Department of Agriculture whose job was outsourced. The plaintiff alleged that the department's outsourcing program targeted older workers, including himself, as evidenced by a department document that discussed "younger highly qualified professionals [who] will have a modern professionally managed information infrastructure at their disposal." The plaintiff also alleged disability discrimination and retaliation.

With regard to the disability claim, the Riley Court held that the allegation that the defendant "failed to accommodate plaintiff's disability with the intention to force him into early retirement" was simply a conclusion, which the court could not accept as true under Iqbal.¹³ Likewise, the allegation that "the defendant began a campaign of retaliation which included, but was not limited to label[ing] him and others as 'trouble makers' for opposing the outsourcing plan" was insufficient in that it did not allege a materially adverse action required for retaliation.¹⁴ The court held that, after Twombly and Iqbal, conclusory allegations of discrimination were no longer sufficient to satisfy federal pleading requirements, and bare assertions that the defendant failed to accommodate his disability and engaged in a "campaign of retaliation" against him were insufficient to satisfy Rule 8.

The Riley Court found, however, that the plaintiff had stated a claim upon which relief could be granted with respect to his age discrimination claim. The court found that the allegations that defendant "targeted" older workers' jobs for outsourcing while making ambiguous comments about their preference for younger workers was sufficient to state a claim. The court stated that "[t]his evidence would not likely be enough for plaintiff to prove his claim, but it is enough to "nudge his claim across the line from conceivable to plausible."¹⁵ In doing so, the court rejected the defendant's proffered "more likely explanation[s]" for its behavior toward plaintiff, stating that, under Twombly, its responsibility was simply to determine whether the complaint is plausible on its face.¹⁶ Thus, the Riley Court managed to draw a plausibility line between the various allegations of discrimination. Focusing on those facts that went beyond mere conclusions and a recitation of the elements, the court found that the plaintiff's age claim met the Twombly-Iqbal standard but his disability and retaliation claims did not.

Where to draw the line between conceivability and plausibility is the real issue in these cases. What remains unclear going forward under Twombly-Iqbal, is what level of factual allegations is necessary to give the defendant fair notice, and what level is necessary to "nudge claims" from merely conceivable to plausible. Twombly and Iqbal are short on specifics in this regard, and there is no guidebook for courts to use to determine whether well-pleaded facts meet the plausibility standard and entitle a plaintiff to relief. For now, lawyers and judges are left with the rather loose advice that these questions are "context-specific" and draw on "judicial experience and common sense." Until the Supreme Court speaks again on the issue, employees are wise to include in their complaints specific, non-conclusory factual allegations in addition to those constituting the elements of the claim, and employers are wise to challenge those complaints that do not.

1 Bennett v. Schmidt, 153 F.3d 516, 518 (7th Cir. 1998).
2 Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007); Ashcroft v. Iqbal, 129 S.Ct. 1937 (2009).
3 Twombly, 550 U.S. at 570.
4 Id. at 555.
5 Id. at 550.
6 Id. at 556-57.
7 Id. at 557-58.
8 Iqbal, 129 S.Ct. at 1950.
9 Id. at 1949 (citing Twombly, 550 U.S. at 556).
10 Id. at 1950.
11 Cooney v. Rossiter, 2009 WL 3103998 at *3 (7th Cir. Sep. 30, 2009).
12 Kasten, 2009 WL 3628012 at *4.
13 Riley, 2009 WL 3416255 at *12.
14 Id. at *14.
15 Id. at *10.
16 Id. at *11.