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Bench & Bar of Minnesota is the official publication of the Minnesota State Bar Association.

Pleadings Plain or Plausible: Minnesota Claims Survive Twombley/Iqbal Challenge

Notice pleading, for many years the preferred standard in both Minnesota and federal courts, was constrained at least in federal litigation when the United States Supreme Court decided to require that civil pleadings state claims that are not only possible but demonstrably plausible. To the surprise of some and relief of others, the Minnesota Supreme Court has declined to follow the federal lead.

Until 2007, a Minnesota lawyer drafting a civil complaint simply wrote “a short and plain statement of the claim showing that the pleader is entitled to relief.”1 This instruction applied to all claims (except for fraud and other special matters) whether filed in state or federal court. The United States Supreme Court decisions in Bell Atlantic Corp. v. Twombly2 and Ashcroft v. Iqbal,3 however, raised the pleading standard by requiring the plaintiff to allege “sufficient factual matter … to state a claim that is plausible on its face.”4 This heightened standard applies to all cases filed or removed to federal court. Would the Minnesota Supreme Court, interpreting identical language, reach the same conclusion?

On August 6, 2014, the
Minnesota Supreme Court answered the question in Walsh v. U.S. Bank, N.A.5 The court determined that no compelling reason exists to depart from the traditional pleading standard for civil actions (short and plain) by following Twombly/Iqbal and declined to do so. Obviously, the news that “nothing has changed” is far less dramatic than the sea change which would have followed adoption of Twombly/Iqbal. Nevertheless, the case is important both to plaintiff’s attorneys (breathing a sigh of relief) and defense attorneys who were convinced that the Twombly/Iqbal standard in state court was within reach.

Some History

Those who drafted the Federal Rules of Civil Procedure clearly intended to impose notice pleading, which was viewed more favorably than the previous practice of fact- pleading. Just as clearly, the drafters of the Minnesota Rules of Civil Procedure intended the same result and copied the federal language word for word. The subsequent decisions of the United States Supreme Court in Conley v. Gibson6 and the Minnesota Supreme Court in Northern States Power Co. v. Franklin7 demonstrate that the courts have followed the intent of the twin Rules 8.

Then along came Twombly in 2007 which, at least in antitrust lawsuits, (1) imposed the “plausibility” standard on all claims by the plaintiff (“plausible” occurring somewhere between “possible” and “probable”), (2) admonished that acceptance of the truthfulness of statements alleged in the complaint did not apply to legal conclusions, and (3) gave the trial courts the responsibility to act as Rule 12 gatekeepers, thereby shielding defendants from implausible claims prior to their incurring the cost of discovery. Justice Souter, who authored Twombly, was surprised two years later when the Supreme Court broadened its ruling to virtually all civil actions filed in or removed to federal court in its 2009 Iqbal decision.8

Naturally, defense attorneys embraced the Twombly/Iqbal plausibility standard. For the past five years, plaintiffs in federal court (and those in state court if the action was removed to a federal court) have been required to articulate sufficient facts in the complaint demonstrating that each claim is plausible. Twombly/Iqbal provides a mechanism whereby the trial court scrutinizes the plaintiff attorney’s drafting skills and the degree of specificity of the claims before the plaintiff’s attorney has the opportunity to collect and relate facts found in discovery. This scrutiny is applied claim by claim so that even if a plaintiff survives a Rule 12 motion, it may do so without all of its claims intact.

Plaintiff attorneys, just as naturally, regarded the plausibility standard as unduly restricting their clients’ access to their day in court. Motion practice can consume months at the Rule 12 stage. Amending the complaint several times may be necessary as plaintiffs attempt to meet alleged deficiencies, often without success.9 For the plaintiff, products liability and employment cases, among others, are especially problematic because the plaintiff does not have access to discoverable information that could transform the claim from possible to plausible or maybe even probable. The 8th Circuit Court of Appeals addressed this concern in Braden v. Wal-Mart,10 which recognized that a plaintiff may experience difficulty in alleging specific facts in the complaint when the defendant possesses all the relevant information.

State Court Standards

Obviously, Twombly/Iqbal sets a federal standard that does not necessarily apply in state courts and will not apply in a specific case unless removal occurs due to diversity or the presence of a federal question. Nevertheless, state courts often follow federal decisions in matters of practice and procedure, particularly when the federal and state rules share substantially identical language. Moreover, some states never adopted notice pleading and, in effect, were following Twombly/Iqbal before those decisions were ever announced. Our analysis here will focus on states which, like Minnesota, adopted notice pleading long before Twombly/Iqbal.

In these states, notice pleading has been or inevitably will be challenged in every jurisdiction. Where the issue has reached the highest court of the jurisdiction, the results are fairly even. Prior to August of this year, the states of Arizona, Iowa, Tennessee, Vermont and Washington had rejected Twombly/Iqbal.11 On the other hand, Twombly/Iqbal had become the standard in Massachusetts, Nebraska, and South Dakota.12 In Minnesota, a number of appeals had presented the issue without fully resolving it. In which camp would Minnesota pitch its tent?

Weighing Minnesota Claims

Prior to August 2014, the Minnesota Supreme Court cited Twombly in a substantive manner exactly twice and Iqbal not at all. Although the court did not adopt the Twombly plausibility standard in either case, some observers predicted that adoption of Twombly/Iqbal was inevitable.

Hebert v. City of Fifty Lakes13 reached the Minnesota Supreme Court in 2008, after Twombly but prior to Iqbal. The case involved a land dispute between certain property owners and the city of Fifty Lakes located in Crow Wing County. The trial court granted the city’s Rule 12 Motion to Dismiss. That decision was reversed by the Minnesota Court of Appeals, and the supreme court affirmed the court of appeals. Thus, the plaintiff’s pleading survived. With respect to the trespass claim, the supreme court based its decision on NSP v. Franklin, which had firmly identified Minnesota as a notice-pleading jurisdiction. In the context of that discussion, the court cited Twombly as “see also” for the proposition that “[w]e are not bound by legal conclusions stated in a complaint when determining whether the complaint survives a motion to dismiss for failure to state a claim.” Citing Twombly, the court parenthetically described Twombly as “explaining that a plaintiff’s obligation to provide the grounds of its entitlement to relief ‘requires more than labels and conclusions.’”14 Describing Franklin as dispositive, the court stated that on the available record it could not determine whether a continuing trespass existed. Accordingly, the court remanded the claim to the trial court for further proceedings.

Bahr v. Capella University15 involved an employment dispute. The trial court granted Capella’s motion to dismiss and the court of appeals reversed. The supreme court reversed the appellate court and reinstated the dismissal. Two justices dissented. With reference to Twombly, the court stated:

We have said that “a pleading will be dismissed only if it appears to a certainty that no facts, which could be introduced consistent with the pleadings, exist which would support granting the relief demanded.” [citing Franklin] But a legal conclusion in the complaint is not binding on us. [citing Hebert] A plaintiff must provide more than labels and conclusions. See [Hebert] (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)).16

Thus, the court promoted Twombly from “see also” status to a real, stand-alone citation.

Based on Hebert and Bahr, one commentator declared that their relationship to Franklin “states a paradox.”17 The commentator concluded that “it makes sense that the Minnesota Supreme Court should expressly adopt the plausibility standard as the rule for judging the legal sufficiency of claims for relief in Minnesota at its earliest opportunity.”18

Another commentator flatly stated that “Minnesota falls into the category of states that have impliedly adopted the Twombly/Iqbal standard.”19 The commentator suggested that attorneys file pleadings that conform to the Twombly/Iqbal standard because “[a]fter Bahr, for all intents and purposes, Twombly/Iqbal is in effect in Minnesota state courts.”

Walsh v. U.S. Bank

The commentators, however, failed to predict the August 6, 2014, decision of the Minnesota Supreme Court in Walsh v. U.S. Bank, N.A.20 The case involved a residential, nonjudicial foreclosure proceeding. After foreclosure, Walsh sued U.S. Bank to vacate the sale of the property because of ineffective service of the foreclosure-related documents in violation of statute. The bank’s motion to dismiss relied on the plausibility standard of Twombly/Iqbal. The trial court dismissed the complaint stating the complaint did not give rise to a plausible claim for relief. The Minnesota Court of Appeals reversed because “it is possible for Walsh to produce evidence consistent with [her legal] theory.”21 The Minnesota Supreme Court granted review to decide whether the plausibility standard, applied by the trial court, “or our traditional pleading standard, applied by the court of appeals, governs civil pleadings in Minnesota.”22

Justice David Lillehaug began his opinion with a history of the issue much as stated in this article.
The court then addressed the two occasions in which it cited Twombly in a substantive manner, Hebert and Bahr, concluding that in those cases “we did not mention or adopt the plausibility standard.”23

The court then provided its rationale for “declin[ing] to engraft the plausibility standard from Twombly and Iqbal onto our traditional interpretation of [Rule 8.01].” Finding nothing in the language of the rule or its history to warrant changing its 50-year-old interpretation as given in Franklin, the court declined the invitation to overturn Franklin for five stated reasons.

First, the court noted that when more factual specificity is desirable, Rule 9 requires it. Of course, the federal rules also require additional specificity in the same manner, and those requirements did not deter the United States Supreme Court when it imposed the plausibility standard in those routine pleadings governed by Rule 8.

Second, the court noted that the rules indicate a strong preference for short statements of facts in the complaint, citing the “simple, concise and direct” language in Rule 8.05(a) and the requirement in Rule 10.02 of numbered paragraphs, each of which must be limited to a single set of circumstances. The federal rules, however, also require that each allegation be “simple, concise and direct.”24 Federal Rule 10(b) contains the same requirements as the corresponding state rule with respect to separate paragraphs.

Third, the court noted that the sample complaints appended to the rules illustrate that short and general statements of fact in complaints are adequate.

Fourth, the court noted that a defendant may move for a more definite statement pursuant to Rule 12.05. That relief is also available in federal court pursuant to Rule 12(e).

The court’s fifth rationale addressed the U.S. Bank argument that the plausibility standard reduces the costs of litigation by providing grounds to dismiss claims which are not plausible prior to discovery. The court noted that the rules give the trial court considerable discretion to manage discovery. Obviously, the federal trial court possesses the same case-management mechanisms and a few more.

The members of the Minnesota Supreme Court are well-aware that Minnesota practice has no characteristics that were not present in federal court prior to Twombly. Unlike other state court opinions rejecting the plausibility standard,25 Walsh does not articulate any policy rationale for its decision. Perhaps the court had the visceral belief that the plausibility standard impeded access to a judicial determination on the merits. Perhaps the court viewed the time and cost burden of frequent Twombly motions as contributing to cost and delay rather than avoiding it. In short, the court determined that Twombly/Iqbal was not a good idea. Since the name of the court contains the word “supreme,” the court has every right to make that decision.

Two justices concurred without joining the opinion of the remaining five. Chief Justice Lorie Gildea and Justice Christopher Dietzen concluded that the Walsh complaint met the Twombly/Iqbal standard, which made it unnecessary for the court to decide whether that standard should apply in all cases. Presumably, those two justices would prefer a case where the plaintiff met the Franklin standard but not that of Twombly/Iqbal. That result, however, would have kept Minnesota lawyers and judges in doubt for now regarding the pleadings standard and would lead to inconsistent results. Now there is no doubt.


Stephen Rathke is a trial lawyer with 40 years of experience. He is of counsel with the Minneapolis law firm Lommen Abdo and recently formed Rathke Mediation, LLC, www.rathkemediation.com. He can be reached at srathke@rathkemediation.com.


Notes

1 Fed. R. Civ. P 8 (a) (2); Minn. R. Civ. P. 8.01. The rules provide for “pleading special matters” such as fraud in Rule 9.

2 Bell Atlantic Corp. v. Twombly, 550 U.S. 554 (2007).

3 Ashcroft v. Iqbal, 556 U.S. 662 (2009).

4 Iqbal, 556 U.S. at 663.

5 Walsh v. U.S. Bank, N.A., 2014 WL 3844201, ___N.W.2d___, (Minn. 2014).

6 Conley v. Gibson, 355 U.S. 41 (1957).

7 Northern States Power Co. v. Franklin, 122 N.W.2d 26 (Minn. 1963).

8 Iqbal, 556 U.S. at 687 ff., Souter, J., dissenting.

9 See, e.g., Burks v Abbott Laboratories, 639 F. Supp. 2d 1006 (D. Minn. 2009).

10 Braden v. Wal-Mart, 588 F.3d 585 (8th Cir. 2009).

11 Cullen v.Auto-Owners Ins. Co., 189 P.3d 344 (Ariz. 2008); Hawkeye Food Service Distrib., Inc, v. Iowa Educators Corp., 812 N.W.2d 600 (Iowa 2012); Webb v. Nashville Area Habitat for Humanity, 346 S.W.3d 422 (Tenn. 2011); Colby v. Umbrella, Inc., 955 A.2d 1082 (Vt. 2008); McCurry v. Chevy Chase Bank, FSB, 233 P.3d 861 (Wash. 2010).

12 Iannacchino v. Ford Motor Co., 888 N.E.2d 879 (Mass. 2008); Doe v. Bd. of Regents of Univ. of Nebraska, 788 N.W.2d 879 (Neb. 2010); Sisney v. Best, Inc., 754 N.W.2d 804 (S.D. 2008).

13 Hebert v. City of Fifty Lakes, 744 N.W.2d 226 (Minn. 2008).

14 Id. at 235.

15 Bahr v. Capella University, 788 N.W.2d 76 (Minn. 2010).

16 Id. at 80.

17 Paul E. D. Darsow, “Resolving the Bahr-Hebert-Franklin Paradox: Considerations for Applying Twombly and Its Progeny to Pleading and Rule 12 Motion Practice in Minnesota’s State Courts,” 36 Hamline L. Rev. 437, 476 (2013).

18 Id. at 477.

19 Max Heerman and Maren Grier, “The New Twombly/Iqbal Pleading Standard Extends Its Reach,” The Hennepin Lawyer (02/28/2011), at 23.

20 Walsh, supra n. 5.

21 Walsh v. U.S. Bank, N.A., A13-742, 2013 WL 6050427 at *3 (Minn. App. 11/18/2013) (unpublished).

22 Walsh, supra n. 5, at *2

23 Id. at *4.

24 Fed. R. Civ. P. (d)(1).

25 See, e.g., Webb v. Nashville Area Habitat for Humanity, 346 S.W.3d 422 (Tenn. 2011).

 

 

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