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Thursday, November 21, 2013

Q&A: Do Tougher Pleading Standards Affect Plaintiffs’ Summary Judgment Results?

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Professor Jonah B. Gelbach of the University of Pennsylvania Law School talks about research that shows the U.S. Supreme Court's rulings in Bell Atlantic Corp. v. Twombly and Ashcroft v. Iqbal have had little effect on plaintiffs' win rates in summary judgment motions in employment discrimination cases.

Gelbach, who served as the principal investigator to the research, spoke with Bloomberg BNA about the study and its implications. The study's findings are discussed in a report titled "Measuring the Effects of a Heightened Pleading Standard under Twombly and Iqbal."

In analyzing 1,068 employment discrimination cases, researchers found no statistically significant difference in plaintiffs' win rates on summary judgment in the pre-Twombly cases compared with the post-Iqbal cases, the report said. 

The Supreme Court cases created a new pleading standard under Federal Rule of Civil Procedure 12(b)(6), the motion to dismiss for failure to state a claim, that allows judges to dismiss complaints in cases in which the plaintiff fails to establish a "plausible'' claim. The research breaks stride with other Twombly/Iqbal studies by focusing on the summary judgment stage instead of the motion to dismiss stage.

Gelbach and his team compared data from federal court cases filed between Oct 1, 2005, and June 30, 2006 (the pre-Twombly cases), with that from federal court cases filed between Oct. 1 2009, and June 30, 2010 (post-Iqbal cases).

The legal scholars examined employment discrimination cases (excluding Americans with Disabilities Act cases) and contract cases filed in federal district courts, in which a defense summary judgment motion was ruled on and no pro se plaintiff was indicated.

The findings revealed that discrimination plaintiffs won on all challenged claims in summary judgment in 17.3 percent of the pre-Twombly cases compared with 17.1 percent of the post-Iqbal cases, the report noted. The difference of 0.2 percentage points, when the margin of error is considered, is not statistically significant, the report stated

The research also considered the percentage of cases in which discrimination plaintiffs won on at least one challenged claim in a summary judgment motion.

Researchers found that plaintiffs had a 36.6 percent win rate in the pre-Twombly cases compared with a 38 percent win rate in the post-Iqbal cases, the report said. The roughly 1.5 percentage point increase for plaintiffs is not statistically significant when an estimated 3.1 percentage point margin of error is considered, researchers concluded.

The report was issued by the Searle Civil Justice Institute, a nonpartisan public policy institute based at George Mason University's Law & Economics Center.

Bloomberg BNA: Why did you decide to examine the impact of Twombly and Iqbal as the rulings relate to the summary judgment stage?

Gelbach: The reason why we decided to look at summary judgment is that summary judgment typically happens after at least some discovery has taken place. One typically presumes that summary judgment occurs after most or all of discovery in a case.

The idea was that if we wanted to try to understand whether Twombly and Iqbal had had an important effect on the quality of cases that are getting through the pleading stages, then we might be able to look at what share of cases get through to the summary judgment stage when the defendant challenges the summary judgment.

You can basically think of Twombly and Iqbal as asking trial court judges to forecast, at the pleading stage, whether there is likely to be any meat to the case once discovery happens. If the justices in the majority of Twombly and Iqbal are right, then the district court judges should be able to select the weakest cases and get rid of them early.

So when the pleading standard asks more of plaintiffs, the cases that get past that stage might be expected to be more favorable to plaintiffs. If the justices in the majorities in Twombly and Iqbal are right, then a more demanding standard will cut off more cases at the pleading pass.  So the cases that are left to go through discovery following the motion to dismiss stage will be stronger cases.

If we then look at what happens to cases that face summary judgment motions--the stage after the Twombly and Iqbal effect is supposed to occur--that might give us a window as to whether Twombly and Iqbal have had the effect that the Supreme Court justices who supported those cases wanted them to have.

Bloomberg BNA: What should individuals who focus on pleading policy take away from this research?

Gelbach: I don't want to oversell the study's statistical power. But broadly speaking, if Twombly and Iqbal really  had  positive effects on case quality of the sort I was talking about earlier, then we would expect plaintiffs would be winning more at the summary judgment stage in opposition to defendants' summary judgment motions.  

And the reason is that we would expect the weakest cases would have been filtered out at the Twombly and Iqbal stage. The results that we see for contract cases seem to suggest at least some evidence that that's happened. I don't want to claim that it is definitively or overwhelmingly clear statistically. But the results are at least indicative.

For the employment discrimination cases, we have not actually seen in our data any real changes in the frequency with which plaintiffs are winning at the summary judgment stage against defense challenges. This suggests that there has not been the kind of quality increase that the reasoning motivating Twombly and Iqbal would predict.

There are different possible explanations for that. One of those explanations is that while some of these weak cases are being filtered out in the way that Twombly and Iqbal suggest they should be, perhaps at the same time some strong cases are also being filtered out by accident. This could happen if district court judges are having a hard time predicting which cases in the employment discrimination context are likely to wind up with material evidence post discovery and which are not. 

The question arises as to why that would happen. The answer that some critics of Twombly and Iqbal offer is that there are some fundamental differences between contract cases and employment discrimination cases.  In contract cases, you would expect that the plaintiff has a pretty good ability to explain why he or she thinks there has been a breach in the contract or other contractual problems in the case.

In the employment discrimination context, there is a concern that plaintiffs might not have access to the data they need to show the court at the early stages of litigation that their complaint is really plausible. The employer might control information [related to the claim]. It is the differences in access to information across different type of cases that might potentially explain why we are seeing no changes in the employment discrimination cases summary judgment results.

Bloomberg BNA: Were you surprised by the research findings?

Gelbach: I am not particularly surprised. The findings were entirely in line with what I thought would be conceivable.

Bloomberg BNA: Why are legal scholars fascinated with these two cases, which were decided in 2007 and 2009?

Gelbach: Twombly and Iqbal are blockbuster cases in that they changed the standards for getting in the door to federal courts. They potentially affect an enormous array of cases. Up until now, the formal standard for getting past the pleading stage was really quite low.

And even cases that didn't seem to be affected by the pleading standards might have been affected. For example, Twombly and Iqbal might have changed the amount of money paid in a settlement that would have been reached before the case gets filed. And settlement amounts might also have changed in cases that would have been filed before Twombly but settled before the motion to dismiss stage.

We could have big changes in the share of cases that parties are willing or able to settle at all. So even though not that many cases actually face these motions, many more cases could be subtly affected then might be apparent. Another reason why Twombly and Iqbal have been so controversial is that many liberal critics of the Supreme Court see these cases as fitting into a pattern of tightened up access to the federal courts. One can point to exceptions to that pattern, but that is perception among some quarters for sure.

Bloomberg BNA: Do the findings raise other legal issues that you think legal scholars should explore in the future?

Gelbach: For the most part, this was a pretty focused project. We knew from the start what we wanted to analyze. The heightened pleading standard has been a heated policy debate. I do think that there is something for everyone in this report; it is not a slam dunk for one side of the debate.  Who knows? Maybe it will be a bit of a Rorschach test in that sense. However, it would have been nice to have more data, because I think if we had bigger sample sizes we might be able to draw more definitive conclusions. 

Bloomberg BNA: Any final thoughts about the report and its findings?

Gelbach: Particularly among critics of Twombly and Iqbal, there has been a suggestion that one of the things that was wrong with what the Supreme Court did by weighing in on these issues is that the court stepped on the institutional role of the Judicial Conference. There's a statutorily designated process for revising the Federal Rules of Civil Procedure, and many of Twombly and Iqbal's critics believe the Supreme Court overreached by reinterpreting Rule 8, the rule that governs pleading, rather than allowing that process to play out as it normally does.

Among the reasons for the criticism is that the court is not situated very well institutionally to make use of empirical information.  I hope that this is the kind of empirical analysis that can be helpful for people in thinking about whether pleading policy is being chosen appropriately. I certainly don't think this report would shut the door on anybody's position, but I think the style of the work and the idea of trying to look at actual outcomes and cases quantitatively can be a useful thing.  

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If you are interested in participating in a Q&A on enforcement actions, legal developments, and news related to the Equal Employment Opportunity Commission or the Office of Federal Contract Compliance Programs or have a suggestion for a Q&A topic, send an email to lbridgeford@bna.com.You can also follow me on Twitter @LCBridgeford.

 

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