The Twombly Standard
A Step Towards Limiting Pre-trial Discovery Costs
By K.K.
Bell Atlantic Corp. v. Twombly, 127 S.Ct 1955 (2007)
Employee/Employer Implicated: Parties to anti-trust suits
eLesson Learned: The E-discovery process for unspecified claims would result in tremendous costs to a company considering the reams of paper and huge sources of data a company may be forced to sift through. Make sure to plead a reasonable claim from the start, or else your claim might never be heard.
In Bell Atlantic Corp v. Twombly, the United States Supreme Court effectively limited frivolous anti-trust claims founded on broad assertions without any reasonable grounds. The impact of this case is critical for companies concerned with litigation costs – particularly the costs of E-discovery. The expensive pre-trial discovery often forces companies to settle unsubstantiated claims. As a result of this decision, a plaintiff may no longer assert broad anti-trust claims that cause companies to take on the burden of E-discovery unless the plaintiff can provide reasonable grounds for the claim.
Pleading Something More
In Twombly, the Supreme Court dismissed the plaintiff’s broad claims that the telecommunication companies’ parallel acts established a conspiratorial agreement to monopolize regional markets. The Court held that the plaintiff’s anti-trust claim required something more than just an assertion of parallel behavior. Essentially, the plaintiff would need to provide some factual details to establish the grounds of the assertion.
Limiting the Costs of Discovery
An important impact of this decision is its effective limitation on pre-trial discovery costs. The Court’s opinion mentions that reporting discovery accounts for 90 percent of litigation costs. The E-discovery process of unspecified claims would result in tremendous costs to a company considering the reams of paper and huge sources of data the company would be forced to sift through.
Dismissing Abusive Discovery Tactics
Plaintiffs often abuse the discovery process by leveraging the high cost of discovery to force companies into settlement agreements. Rather than force companies to pay for expensive discovery investigations or enter into settlements regarding unsubstantiated claims, the Court effectively uses pleading standards to ensure a fair process. The Twombly standard does not establish a heightened pleading standard. Instead, it merely requires a plaintiff to clearly identify the conspiracy claims and enough facts supporting its claims in order for the case to proceed past a 12(b)(6) motion.
What about limiting discovery?
The dissenting opinion in this case suggests that proper case management and limited, controlled discovery would be a better alternative than dismissing the case. However, this approach does not address the plaintiff’s failure to provide clear grounds for its cause of action. Without stating the grounds for the claim, the limited discovery still involves a huge expense to find a needle in a haystack – a needle that may not exist. I would question the effectiveness of limited discovery when the grounds for the claim are not established. The majority’s opinion dismissed this suggestion stating that ultimately the issue is establishing adequate grounds for the claim. Discovery – limited or not – should not proceed without a properly made claim.
This decision does not create a heightened burden of pleading. Instead, it merely requires that the plaintiff have some grounds for establishing the claim. A broad assertion of the claim is not enough to survive a 12(b)(6) motion. As a result, companies may avoid abusive and costly anti-trust lawsuits.
KK is third-year law student at Seton Hall Law School and looks forward to joining a litigation firm in Texas after graduation.
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