Raising the Bar Quite a Bit: Twombly/Iqbal Now Applies in State Court

It may seem very geeky to think about the factual standard you have to reach in filing a complaint in a lawsuit, but it makes a big difference as to whether your complaint will be dismissed. The current federal pleading standard made famous by Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009), requires that a complaint present facts that make the claim “plausible on its face.” This standard has found a state home in Colorado. This past Monday, the Colorado Supreme Court announced that the pleading standard of Colorado’s Rule 8 should mirror its federal counterpart, as that rule has been interpreted by the U.S. Supreme Court. Previously, Colorado had differed from the federal standard by applying the “no set of facts” standard first announced in the U.S. Supreme Court’s decision Conley v. Gibson, 355 U.S. 41 (1957). The old standard meant that the complaint would not be dismissed unless there was “no set of facts” that would let the plaintiff win. The federal standard is much more difficult to meet, especially because the plaintiff may not have had the opportunity even to find out all the facts yet. While the new federal standard has been around nearly 10 years, the Colorado Supreme Court had yet to decide whether Twombly and Iqbal changed Colorado’s interpretation as well.

The case that announced the new rule— Warne v. Hall, 2016 CO 50—involved a claim of intentional interference with contract. The defendant moved to dismiss the complaint in the district court, urging the state court to review the motion under the “plausible on its face” standard of Twombly/Iqbal, rather than the “no set of facts” standard from Conley. The district court did not change the legal standard. But it nevertheless granted the motion to dismiss, and the defendant appealed.

The Court of Appeals reversed. That Court explained it was bound by the U.S. Supreme Court’s prior decisions adopting the Conley “no set of facts” standard. Applying that standard, the panel determined that the complaint was sufficient to state a claim.

This teed up the question of which standard to use for the Colorado Supreme Court. Should the court continue to follow its prior decisions—which were clearly based on an abrogated U.S. Supreme Court case? Or should it join the federal bench and apply Twombly/Iqbal? According to the majority, the question it posed suggested the answer: “The question before us today is therefore less one of whether we will abandon the Conley pleading standard in favor of the Twombly/Iqbal standard than whether our pleading standard has always represented an attempt to mirror the accepted federal construction of the virtually identical federal pleading rules, rather than to adopt the particular interpretation of the corresponding federal rule that was prevalent at the time.” In plainer words, it was more important to decide whether or not to follow the federal court than to decide which standard might actually be better.

Ultimately, the court landed on the side of uniformity. The Colorado Supreme Court has always preferred to interpret our rules in harmony with the federal rules, the majority stated. By interpreting C.R.C.P. 8 consistently with Fed. R. Civ. P. 8, the Court anticipated convenience, practical benefits and consistent outcomes, regardless of the chosen forum. And the pros outweighed the cons. The majority considered the idea that the “no set of facts” rule had become so much a part of the fabric of state practice that the benefit of keeping it would outweigh the benefits of consistency of identical federal and state rules of civil procedure. But it rejected that idea.

Now in Colorado, just as with the similar federal court rule, in order to survive a Rule 12(b)(5) motion to dismiss, a complaint must contain enough allegations of fact, taken as true, to state a claim to relief that is plausible on its face. A plaintiff must nudge his or her claims across the line from conceivable to plausible in order to survive the motion to dismiss stage.

The majority then applied the new standard and concluded that the plaintiff’s complaint was not adequate. However, because the plaintiff had not had notice of the terms in which his claim must be pled, the court concluded that justice required that he be given an opportunity to amend his complaint to comply with the new standard.

The outcome was close. Four justices joined the majority opinion, but three dissented. In an opinion by Justice Gabriel, the dissent emphasized how the plausibility standard would deny access to justice for innumerable plaintiffs with legitimate complaints. (This would happen primarily because plaintiffs do not always have access to all the facts.) The dissent chided the majority’s application of the standard, saying it demonstrated the overreaching nature and ultimate unfairness of the standard.

The Warne decision has clear implications for practice in Colorado. Pleadings filed in Colorado state court will now have to meet a higher bar before discovery. But fortunately, the bench and the bar have nearly a decade of persuasive authority to help in applying this standard. Federal courts have been grappling for years with how to apply the plausibility standard, and have developed a vast body of law. You can expect trial courts to turn to federal case law for help in applying this new standard. Colorado litigators may be able to use some of that case law to work toward avoiding the injustices predicted by the dissent.