We all know that the basic pleading standards have changed in the wake of Twombly/Iqbal, but the real question is how much? In 16630 Southfield Limited Partnership v. Flagstar Bank, the Sixth Circuit sought to provide some guidance on that question. The case involved the dismissal of a complaint for a national origin discrimination in connection with real estate loans.
Starting with Rule 8, the Sixth Circuit explained that Twombly/Iqbal dictates that this rule “imposes legal and factual demands on the authors of complaints.” No longer can plaintiffs simply rely on “conclusory allegations” in the complaint, and instead the plausibility of an inference “depends on a host of considerations, including common sense and the strength of competing explanations for the defendant’s conduct.” The Court emphasized the practical justification for these basic principles, highlighting the costs that discovery imposes on defendants, the courts, and society. This aspect of Rule 8 seeks to prevent plaintiffs from using the threat of the burdens of discovery to coerce defendants into settling.
Against this backdrop, the Court found that the complaint in this case did not support a inference of discrimination. It contained no factual allegations that any type of discriminatory conduct actually occurred. To the contrary, “a more obvious explanation, indeed than most obvious explanation, for Flagstar’s conduct was its understandable concern about repayment.” It accordingly affirmed the dismissal of the case.
Plaintiffs and defendants are constantly exploring the limits of Twombly/Iqbal and what they mean for modern pleading. The Sixth Circuit has addressed a number of cases on this topic over the past few years, but this is certainly the most recent analysis of these standards. To be sure, there is a “know it when you see it” aspect to this analysis, but the Court’s opinion in this case certainly provides guidance to both those drafting complaints and those seeking to dismiss them.
