Ashcroft v. Iqbal (07-1015), AT&T Corp. v. Hulteen (07-543) and order list

May 21, 2009 Supreme Court Update

Greetings, Court fans!
It isn't often that the Court hands down a decision of equal interest to the popular press and civil procedure professors, but we got one this week in Ashcroft v. Iqbal (07-1015) – which dealt both with the standard for establishing "supervisory liability" for a Bivens claim against federal officials (here, former Attorney General John Ashcroft and former Director of the FBI Robert Mueller) for purposeful and unlawful discrimination (against Muslim Arabic men in the aftermath of 9/11) as well as the pleading standards under Rule 8 of the Federal Rules of Civil Procedure. If you read only one Supreme Court decision this year, you might pick this one, since it will have practical ramifications for every federal court litigator.
The case is a follow-up to the Court's 2007 decision in Bell Atlantic v. Twombly, which did away with the 50 year old holding in Conley v. Gibson (1957), that a complaint is well-pleaded unless the plaintiff can prove "no set of facts" that entitle him to relief. Noting that this phrase had "earned its retirement" as "an incomplete, negative gloss" on federal notice pleading requirements, the Court in Twombly held that in the context of antitrust actions (at least), Rule 8 required enough factual content to "plausibly suggest" a violation of the law. If the facts alleged could equally support lawful and unlawful conduct (in Twombly, either an unlawful conspiracy, or lawful market-driven parallel conduct), the complaint is inadequate. In Iqbal, the Court clarified and beefed-up the Twombly "plausibility" standard and held that it applied to all federal court complaints (not just antitrust claims). This could present a serious obstacle for plaintiffs asserting claims with an intent requirement.
Iqbal, a Muslim citizen of Pakistan, was one of the hundreds of mostly Arabic men who were swept up in the aftermath of the 9/11 attacks. Arrested on charges of fraud relating to identification documents, Iqbal was designated a "person of high interest." As a result of this designation, he was housed in a special wing of a maximum security jail – where he allegedly was abused (including being subjected to physical violence, severe heat and cold, and serial strip and body cavity searches). Iqbal brought claims against numerous government officers, from low-ranking prison guards, all the way up to Ashcroft and Mueller. With respect to those defendants, Iqbal alleged that they designated him a person of high interest not because of any terrorist activity on his part, but because of his race, religion or national origin; that they approved of a policy of holding post-9/11 detainees in highly restrictive conditions until they were "cleared" by the FBI; and that they each "knew of, condoned, and willfully and maliciously agreed to subject" Iqbal to harsh conditions "solely on account of his religion, race, and/or national origin and for no legitimate penological interest." Ashcroft and Mueller moved to dismiss the case on qualified immunity grounds, but the District Court denied their motion, finding that the complaint adequately pled claims against these defendants under the old Conley v. Gibson standard. The Second Circuit accepted defendants' interlocutory appeal (under the collateral order doctrine), and, while the appeal was pending, the Supreme Court issued its decision in Twombly. Interpreting Twombly as calling for a "flexible ‘plausibility standard,'" the Second Circuit held that this standard called for an amplification with some factual allegations, if needed to render the claim plausible – but found that such amplification was not required in Iqbal's case, which sufficiently alleged a Bivens claim so as to survive a motion to dismiss. Judge Cabranes agreed with this interpretation of Twombly, but concurred to express concern that this standard could subject high-level government officials to the burdens of litigation without an adequate factual basis. Cabranes therefore urged the Supreme Court to address this issue at its earliest opportunity – which the Court did, by granting cert and reversing.
Justice Kennedy authored the majority opinion, joined by the Chief, Scalia, Thomas, and Alito. The Court first addressed its jurisdiction to hear the appeal. Appellate courts typically only hear appeals from final judgments, but under the collateral order doctrine, courts will review certain orders that decide issues "separable from, and collateral to, rights asserted in the action." The Court found that the denial of a motion to dismiss based on qualified immunity, at least where the decision is based on the allegations in the complaint alone (and not on any evidence), is sufficiently severable from the merits because it essentially involves a question of law, and also because the qualified immunity doctrine is intended to shield government officials from the burdens of litigation – a protection that would be lost without the opportunity for interlocutory review. Turning to the merits, the Court explained that a plaintiff asserting a Bivens claim based on discrimination in violation of the equal protection component of the Due Process Clause of the Fifth Amendment must "plead and prove that the defendant acted with discriminatory purpose" (i.e., that the defendant took action because of, not merely in spite of, adverse effects on an identifiable group). Thus, "supervisory liability" is a bit of a "misnomer" because "purpose rather than knowledge" is required to impose liability on a supervisor, no less than a subordinate, where a constitutional claim for discrimination is at play. (As an aside, the majority suggested (though it did not decide) that there may be no Bivens liability for First Amendment claims of religious discrimination; an issue not presently before it.)
Next, the Court turned to whether Iqbal pled enough to meet this standard. The majority began by setting forth two "working principles" it drew from Twombly: first, a court need not accept as true "[t]hreadbare recitals of the elements of the cause of action"; and second, "only a complaint that states a plausible claim for relief survives a motion to dismiss." The Court found the allegations of Ashcroft's and Mueller's intent in devising the abusive conditions to be "bare assertions," mere "formulaic recitations of the elements" of a discrimination claim – and rejected these, not because of any fancifulness, but solely because of their "conclusory nature." Having struck these from the complaint, the remaining allegations that could be taken as true did not plausibly establish that Ashcroft and Mueller purposefully adopted a policy of classifying post-9/11 detainees as "high interest" solely on the basis of their race, religion, or national origin. The more plausible reading of these facts, the Court held, was just that the nation's top law enforcement officials sought to keep suspected terrorists in the most secure conditions available, following the attacks (and, given the makeup of the 9/11 attackers, it was "unsurprising" that most of those rounded up were Muslim Arabic men). Rounding out its holding, the Court also declared that: (1) Twombly was not intended to be limited to the antitrust context; (2) the "careful case management" alternative of limiting discovery against high officials was no replacement for a robust qualified immunity doctrine that limits the detrimental effects of litigation on the efficient performance of the Government; and (3) even with respect to elements of intent, Rule 8 requires some factual allegations to nudge the complaint sufficiently into the realm of plausibly asserting a violation of the law.
Justice Souter (who wrote the majority opinion in Twombly) penned an uncharacteristically feisty dissent. Although the majority noted the distinction between respondeat superior (where the master is responsible for the servant's torts) and supervisory liability (where the master is instead responsible for their own failures in their duties of supervision), Souter took the Court's judgment as in fact "eliminating Bivens supervisory liability entirely." This particularly perturbed him insofar as he understood the issue to be conceded by the parties. (Ashcroft and Mueller had agreed that they would be subject to liability if they "had ‘actual knowledge' of discrimination by their subordinates and exhibited ‘deliberate indifference' to that discrimination.") Because it was therefore not briefed by them at all, it was unfair to Iqbal. Souter was not on the same page as the majority with respect to the pumped-up Twombly pleading standards, either: he would hold that the "sole exception" to the assumption that a complaint's allegation are true, for purposes of a motion to dismiss, "lies with allegations that are sufficiently fantastic to defy reality as we know it: claims about little green men, or the plaintiff's recent trip to Pluto, or experiences of time travel." The "conclusory" allegations struck from Iqbal's complaint by the majority needed to be viewed in light of the other factual allegations in the complaint. When so viewed, they were adequate to support a claim that Ashcroft and Mueller at the very least knew of discriminatory conduct by their subordinates and acted with deliberate indifference to such conduct. Justice Breyer issued a short, separate dissent. Though he agreed with the majority that unwarranted litigation ought not burden the work of the Government, he thought mechanisms such as beginning discovery at lower levels of officialdom before moving up the ladder were better options than the robust interpretation of Twombly adopted by the Court.
The Court's second decision, while certainly important, will not have such wide-ranging impact. In AT&T Corp. v. Hulteen (07-543), the Court held 7-2 that AT&T's payment of pension benefits calculated in part under an accrual rule that – prior to the April 29, 1979 effective date of the Pregnancy Discrimination Act, ("PDA"), 42 U.S.C. § 2000e(k) – differentiated pregnancy leave from other types of medical leave, did not violate the PDA. Because the accrual rule was part of a bona fide seniority system, § 703(h) of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-(2)(h), shielded the rule from discrimination challenges. Hulteen and the other respondents were long-time female employees of AT&T who had taken maternity leave at a time when AT&T's pension plan provided less service credit for pregnancy/maternity leave than for other types of temporary medical leave. As a result, their current pension benefits were lower than they would have been had plaintiffs taken another type of medical leave. In General Electric Co. v. Gilbert (1976), the Court had sustained the validity of such benefit plans, holding that excluding pregnancy from disability benefit plans was not sex-based discrimination within the meaning of Title VII. But in 1978, Congress overturned Gilbert by enacting the PDA, which made "clear that it is discriminatory to treat pregnancy-related conditions less favorably than other medical conditions." On the effective date of the PDA, AT&T modified its disability plan to provide the same service credit for pregnancy leave as would be provided for other types of temporary disability. However, AT&T did not retroactively adjust the service credit accumulated by employees who took pregnancy leave before the modification. Plaintiffs successfully argued in the trial court and before the Ninth Circuit that AT&T's "post-PDA retirement eligibility calculations [that] incorporated pre-PDA accrual rules that differentiated on the basis of pregnancy" resulted in a current violation of Title VII. The Sixth and Seventh Circuits had previously adopted a contrary rule, however, so the Court took cert to resolve the circuit split.
The majority opinion, authored by Justice Souter, began by noting that the Court had previously interpreted § 703(h) of Title VII to provide that benefit "differentials produced by a bona fide seniority-based pension plan are permitted unless they are the result of an intention to discriminate." Though AT&T's pension plan, prior to the PDA, facially differentiated pregnancy leave from other types of medical leave, such differentiation, under Gilbert, was not "gender-based discrimination at all." Therefore, AT&T's plan constituted a "bona fide seniority system," immunized from attack under § 703(h). Justice Ginsburg, joined by Justice Breyer, dissented, explaining that Gilbert was an egregious error, which Congress swiftly corrected by passing the PDA. The PDA did not establish new law, but simply overruled Gilbert's incorrect interpretation of Title VII and required "an immediate end to any pretense that classification on the basis of pregnancy can be facially nondiscriminatory." The dissenters would find the post-PDA payment of benefits based on a pre-PDA accrual rule that discriminated based on pregnancy a "current violation of Title VII." Justice Stevens wrote a separate concurrence, explaining that he agreed with much of Justice Ginsburg's dissent, but nevertheless "must accept Gilbert's interpretation of Title VII" as "governing law until Congress enacted" the PDA.
The Court also added four more cases to its docket for the 2009 Term:
Free Enterprise Fund v. Public Co. Oversight Bd. (08-861), where the Court will address some significant questions regarding the structure of government through the lens of the Sarbanes-Oxley Act of 2002 ("SOX"). The case presents three questions for review: "(1) Whether [SOX] violates the Constitution's separation of powers by vesting members of the Public Company Accounting Oversight Board ("PCAOB") with far-reaching executive power while completely stripping the President of all authority to appoint or remove those members or otherwise supervise or control their exercise of that power . . . ? (2) Whether the court of appeals erred in holding that, under the Appointments Clause, PCAOB members are "inferior officers" directed and supervised by the Securities and Exchange Commission ("SEC"), where the SEC lacks any authority to supervise those members personally, to remove the members for any policy-related reason or to influence the members' key investigative functions, merely because the SEC may review some of the members' work product. (3) If PCAOB members are inferior officers, whether the Act's provision for their appointment by the SEC violates the Appointments Clause either because the SEC is not a "Department" under Freytag v. Commissioner, 501 U.S. 868 (1991), or because the five commissioners, acting collectively, are not the "Head" of the SEC."
Black v. United States (08-876), which asks (1) "Whether 18 U.S.C. § 1346 [which expands the definition of a ‘scheme or artifice to defraud' under the mail and wire fraud statutes to encompass schemes that ‘deprive another of the intangible right of honest services'] applies to the conduct of a private individual whose alleged ‘scheme to defraud' did not contemplate economic or other property harm to the private party to whom honest services were owed. (2) Whether a court of appeals may avoid review of prejudicial instructional error by retroactively imposing an onerous preservation requirement not found in the federal rules."
Allen v. Wood (08-9156), where the Court will decide: "(1) Whether a state court's decision on post-conviction review is based on an unreasonable determination of the facts when it concludes that, during the sentencing phase of a capital case, the failure of a novice attorney . . . to . . . present evidence of defendant's severely impaired mental functioning was a strategic decision, while the court ignores evidence in the record before it that demonstrates otherwise? (2) Whether the rule followed by . . . the majority in this case, abdicates the court's judicial review function under the Antiterrorism and Effective Death Penalty Act by failing to determine whether a state court decision was unreasonable in light of the entire state court record and instead focusing solely on whether there is clear and convincing evidence in that record to rebut certain subsidiary factual findings?"
Beard v. Kindler (08-992), which will determine whether "a state procedural rule [is] automatically ‘inadequate' under the adequate-state-grounds doctrine – and therefore unenforceable on federal habeas corpus review – because the state rule is discretionary rather than mandatory."
While I don't normally report on cases where the Court simply grants cert, vacates, and remands (g/v/r's) for consideration of a recent Court decision, two are worth mentioning here because they occasioned dissents by Justice Alito. First, in Grooms v. United States (07-9086), the Court g/v/r'd in light of its recent decision in Arizona v. Gant (2009), which held that a law enforcement officer who arrests a vehicle occupant may conduct a search of the vehicle incident to arrest if he has reason to believe that the vehicle may contain evidence of the offense of arrest. Grooms made a threat to a bouncer at a bar that he was going to come back with a gun. The bar called the cops and Grooms was arrested on unrelated warrants (for which a search of the vehicle would be unlikely to yield any evidence). When officers nonetheless searched the vehicle, they found a gun. Alito felt that Gant left open an important question: whether, when an arrest is made pursuant to a warrant, officers may search a vehicle for evidence relating to another crime for which they have probable cause and thus, could have made a warrantless arrest. However, because it was unclear here whether the evidence was sufficient to establish probable cause that Grooms made a "terroristic threat" (the crime that arguably would have supported the vehicle search), Alito would not have granted cert. Justice Alito also dissented from the g/v/r in light of Gant in Megginson v. United States (07-6309). In Megginson, defendant was arrested on a warrant for threatening to kill his wife. When his vehicle was searched, drugs and a gun were recovered. Alito would have granted cert and considered the case on the merits to determine the meaning and specificity of the "reasonable suspicion" requirement in Gant. (I.e.: Since Megginson didn't say he was going to use a gun as opposed to say – his bare hands – could police still search the vehicle?).
Finally, the Court asked the SG to weigh in on Lewis v. Chicago (08-974), which would address when a disparate impact claim based on challenged test results is timely filed. Specifically, does the time for filing begin to run from the date the test results are announced or when they used to make employment actions.
With that, I leave you to enjoy the long holiday weekend!
From the Appellate Practice Group at Wiggin and Dana
For more information, contact Kim Rinehart or any other member of the Practice Group at 203-498-4400