Pleading Matters
Don’t call it a trend, but several recent decisions may portend change for the spam bar’s typical tactics.
First, the Supreme Court recently handed down a significant (or “quite insignificant”, depending on your perspective) decision in Bell Atlantic Corp. v. Twombly, a class-action antitrust case. In short, the Court upheld the dismissal of a class action against several Baby Bells. The defendants were alleged to have violated Section 1 of the Sherman Act by participating in a conspiracy in restraint of trade. The plaintiffs, a class of subscribers of local telephone and high speed Internet services, drafted their complaint in a broad, conclusory manner, which the court held insufficient.
The level of pleading generally required in federal court is called “notice pleading” and can be met by providing a “short and plain statement of the claim.” The Twombly decision dismissed the complaint for failure to state a claim noting that “we do not require heightened fact pleading of specifics, but only enough facts to state a claim to relief that is plausible on its face” and finding that the claims in that case were not sufficient "to raise a right to relief above the speculative level."
The basic dynamic here is that once plaintiffs meet their initial burden (and survive other early motions) both sides must participate in discovery. Discovery is the most expensive aspect of litigation, and in a case like Twombly, where the allegations involved the activities of several large telephone companies over a number of years, the costs could easily reach into tens of millions of dollars.
Hence Prof. Richard Epstein’s praise for Twombly. Because it raises the pleading bar for federal complaints, the decision reduces the ability of plaintiffs to force defendants to decide between paying a settlement demand and engaging in costly discovery by merely “spending an hour in front of a word processor.”
This dynamic is a factor in deciding whether to settle spam cases, a subject matter where the pleading standard is especially unclear. At least one federal district court has rejected the notion that the heightened pleading requirements for fraud apply to spam complaints. (A plaintiff must state “with particularity” the nature of a claim alleging fraud.) However, in another recent case, a court required a spam plaintiff to provide “more definite” details regarding the emails that he alleges violated the law. So the pleading standard for spam complaints is now somewhere between “with particularity” and “more definite”? Hmm.
Where this will all end up is unclear, but it looks like, between Twombly and a handful of recent district court cases, spam plaintiffs must now do their homework before suing and spam defendants get a new tool for motions to dismiss.
First, the Supreme Court recently handed down a significant (or “quite insignificant”, depending on your perspective) decision in Bell Atlantic Corp. v. Twombly, a class-action antitrust case. In short, the Court upheld the dismissal of a class action against several Baby Bells. The defendants were alleged to have violated Section 1 of the Sherman Act by participating in a conspiracy in restraint of trade. The plaintiffs, a class of subscribers of local telephone and high speed Internet services, drafted their complaint in a broad, conclusory manner, which the court held insufficient.
The level of pleading generally required in federal court is called “notice pleading” and can be met by providing a “short and plain statement of the claim.” The Twombly decision dismissed the complaint for failure to state a claim noting that “we do not require heightened fact pleading of specifics, but only enough facts to state a claim to relief that is plausible on its face” and finding that the claims in that case were not sufficient "to raise a right to relief above the speculative level."
The basic dynamic here is that once plaintiffs meet their initial burden (and survive other early motions) both sides must participate in discovery. Discovery is the most expensive aspect of litigation, and in a case like Twombly, where the allegations involved the activities of several large telephone companies over a number of years, the costs could easily reach into tens of millions of dollars.
Hence Prof. Richard Epstein’s praise for Twombly. Because it raises the pleading bar for federal complaints, the decision reduces the ability of plaintiffs to force defendants to decide between paying a settlement demand and engaging in costly discovery by merely “spending an hour in front of a word processor.”
This dynamic is a factor in deciding whether to settle spam cases, a subject matter where the pleading standard is especially unclear. At least one federal district court has rejected the notion that the heightened pleading requirements for fraud apply to spam complaints. (A plaintiff must state “with particularity” the nature of a claim alleging fraud.) However, in another recent case, a court required a spam plaintiff to provide “more definite” details regarding the emails that he alleges violated the law. So the pleading standard for spam complaints is now somewhere between “with particularity” and “more definite”? Hmm.
Where this will all end up is unclear, but it looks like, between Twombly and a handful of recent district court cases, spam plaintiffs must now do their homework before suing and spam defendants get a new tool for motions to dismiss.
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