Twombly, Iqbal and Class Allegations

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In 2007 and 2008, the United States Supreme Court issued landmark decisions clarifying the pleading standards that must be met for a complaint to survive a motion to dismiss under Fed. R. Civ. P. 12(b)(6).  After the decisions in Bell Atlantic Corp. v. Twombly and Ashcroft v. Iqbal, bare notice pleading is no longer sufficient.  Rather, a complaint must set forth enough facts to show that the plaintiff has a plausible entitlement to relief.

Twombly and Iqbal were hailed by defense attorneys as injecting greater rationality, and less waste, in federal civil practice.  The decisions were seen as substantially limiting the risk that defendants would be forced to spend enormous sums defending what they ultimately would be able to show was meritless litigation, but which could not be stopped at the outset because pleading standards were too liberal and  few judges were willing to award sanctions for frivolous claims.

In many courts, Twombly and Iqbal have lived up to their promise, but the application of the new pleading standard has not been uniform.  Some district judges, either because they disagree with the standard, don't understand it, or conclude that it does not apply to the case before them, continue to apply the low bar that existed pre-Twombly.  And, because it is virtually impossible to obtain appellate review of a denial of a motion to dismiss, the practical consequence in those courts is that defendants who should be entitled to dismissal of non-meritorious lawsuits must continue to spend large sums in discovery and motion practice before finally getting the case thrown out.  For all practical purposes, in some courts, it is as if Twombly and Iqbal were never decided.

 A district court decision that carefully analyzes each claim in a complaint and grants a well-supported motion to dismiss, applying the Twombly and Iqbal standards, therefore represents a welcome breath of fresh air to those businesses that hope for a rational and economically efficient judicial system.  Those of us who practice in the District of Massachusetts were treated to just such a decision when Judge Rya Zobel decided the case of Manning v. Boston Medical Center Corporation.

The plaintiffs in Manning sought to bring an opt-in collective action for alleged violations of the Fair Labor Standards Act, and an opt-out Rule 23 class action with respect to other statutory and common law claims.  Plaintiffs claimed that certain of defendants' employees had been forced to work off-the-clock and had unpaid meal periods automatically deducted from their time, resulting in unpaid straight time and overtime for the named plaintiffs and members of the putative class.  

Noting first that the class included people occupying more than 50 different categories of employees, Judge Zobel focused on the individualized inquiries that would be required to resolve each class member's claim.  She also found that the allegations that defendants knew that employees were working through unpaid meal breaks and that they did not have rules prohibiting such work, coupled with the lack of any specific allegations giving examples of employees being asked to work off the clock or identifying the number of hours that they did so, were insufficient to state a claim.  

Among the motions before the court was defendants' motion to strike class allegations.  After reciting the Twombly and Iqbal standards, Judge Zobel observed that “[a] motion to strike class allegations is also analyzed under the 12(b)(6) standard.”  She went on to hold:

Before being permitted to proceed, a plaintiff must properly allege a factual basis showing that there are similarly situated persons entitled to relief pursuant to 29 U.S.C. Section 216(b) and/or that common issues of fact that predominate are sufficient to pass muster under the traditional Fed. R. Civ. P. 12(b)(6) standard [citing Iqbal and Twombly].

Under the analytical framework applied by Judge Zobel, district courts may take a first look at whether class certification standards will be met at the initial pleading stage.  By faithfully applying the Supreme Court's heightened pleading standards to the class allegations of a complaint, a district judge can serve an important gatekeeping function, preventing non-certifiable cases from proceeding through costly discovery and motion practice, and avoiding unnecessary delay, inefficiency and expense, which benefit no one.  Complaints containing sufficient factual support for plaintiffs' allegations that defendants engaged in wrongful conduct on a class-wide basis will and should survive such early scrutiny, and defense counsel should resist the temptation to move to strike class allegations in every case.  However, the savings to be gained by applying the Twombly/Iqbal standard to the class allegations of insufficiently supported complaints can well serve public and private interests alike.