New Pleading Standards in Federal Court: Will They Impact Franchise Cases?
For decades, law students have learned in their first-year civil procedure class that federal courts require notice pleading only and that a complaint cannot be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove "no set of facts" in support of its claim that would entitle it to relief.1 In two recent cases, the U.S. Supreme Court retired the ubiquitous "no set of facts" standard and thrust the fundamental principles of notice pleading into a state of flux. In May 2007, the Court decided Bell Atlantic Corp. v. Twombly,2 an antitrust conspiracy case, and created a new "plausibility" standard that requires a plaintiff to plead "enough facts to state a claim to relief that is plausible on its face."3 Then, in May 2009, Ashcroft v. Iqbal4 clarified that the plausibility standard applies to all civil actions, not just those alleging antitrust conspiracies, and further counseled that federal courts draw on "judicial experience and common sense" when determining the plausibility of claims.5 This gatekeeper function, which requires federal courts to determine the sufficiency and plausibility of pleadings at the outset of a case, stands traditional notice pleading on its head. Whether the new pleading standard will truly affect the ultimate outcome of motions to dismiss remains to be seen. At a minimum, however, Twombley and Iqbal undeniably have breathed a new life into such motions.