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June 13, 2012 Articles

Do Twombly and Iqbal Apply to Affirmative Defenses?

With little guidance from the courts, the old adage applies: Know your judge.

By Carla R. Walworth, Mor Wetzler, and Jessica Oliva

Years after the Supreme Court revised the pleading standard in Twombly and Iqbal, courts still disagree on whether the standard established in those decisions applies to affirmative defenses. The start of 2012 brought new district-court decisions on the question, but there is still no resolution. For example, courts in the District of Delaware and the Southern District of California have declined to extend heightened pleading standards to affirmative defenses, while courts in the District of Maryland and Northern District of California applied the heightened Twombly standard. While many district-court judges follow the precedent of other judges within their districts, intra-district splits on the question also exist, for example, within the District of Minnesota, the Western District of Washington, and the Middle District of Florida. In spite of these disagreements, no circuit court has yet taken up this question, and thus an answer from the U.S. Supreme Court appears far off. Practitioners are left with little guidance beyond the old adage: Know your judge.

The Pleading Standard under Twombly and Iqbal
The notice-pleading standard under Federal Rule of Civil Procedure 8 changed substantially in 2007 with the Supreme Court’s decision in Bell Atlantic Corp. v. Twombly. 550 U.S. 544 (2007). The Court’s previous standard under Conley v. Gibson stated that “a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” 355 U.S. 41, 45–46 (1957). Relying on the high cost of discovery and the potential to force settlements, even against “largely groundless” claims, the Court in Twombly altered the interpretation of Rule 8’s pleading requirement to require a plaintiff to state “enough facts to state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 557–58, 570. Two years later, the Court reiterated this plausibility requirement, explaining that the Twomblystandard applies to all civil actions. Ashcroft v. Iqbal, 129 S. Ct. 1937, 1951, 1953 (2009).

The Court did not, however, clarify whether the plausibility standard applied only to pleadings under Rule 8(a), or whether it also applied to affirmative defenses pled under Rule 8(c). Over the past several years, district courts have split on the question—the majority apply Twombly to affirmative defenses, but a significant minority have declined to do so.

The Majority View: Twombly Applies
The majority of district courts addressing the issue have held that Twombly applies to affirmative defenses in the same manner as it applies to the complaint. These courts often cite a fairness rationale. Many courts note that the purpose behind pleading claims and affirmative defenses is the same—to provide notice to the other party—and, therefore, Twombly’s pleading standard should apply equally to both. See, e.g.Smith v. Mustang Independent School Dist., 2012 WL 10848 (W.D. Okla. Jan. 3, 2012); Shaw v. Prudential Ins. Co. of Am., 2011 WL 5920912 (W.D. Mo. Nov. 28, 2011) (citing Hayne v. Green Ford Sales, Inc., 263 F.R.D. 647 (D. Kan. Dec. 22, 2009)). Similarly, some courts apply Twombly to affirmative defenses because the similarity of underlying public-policy goals compels the same treatment for claims and defenses. These courts note the concern that “boilerplate” defenses clutter dockets and expand discovery unnecessarily and thus should be subject to the same early pleading standards as claims that might otherwise unnecessarily clutter dockets and expand discovery. See, e.g., Smith, 2012 WL 10848, at *1; Dion v. Fulton Friedman & Gullace LLP, 2012 WL 160221 (N.D. Cal. Jan. 17, 2012).

The Minority View: Twombly Does Not Apply
Courts that do not extend Twombly’s pleading standards to affirmative defenses cite similarly strong rationales based on both fairness concerns and underlying public-policy implications. The District of Delaware recently summarized many of these points. Among the court’s nine enumerated reasons for declining to apply Twombly to affirmative defenses, it noted the textual differences between Rules 8(a) and Rule 8(c): Rule 8(a) requires plaintiffs asserting a claim to “show” entitlement to relief, but Rule 8(c) does not. The court further noted that Form 30, which demonstrates the “appropriate pleading of an affirmative defense,” lacks the detail that would be called for under Twombly’s pleading standard. Bayer Cropscience AG v. Dow Agrosciences LLC, 2011 WL 6934557 (D. Del. Dec. 30, 2011). This concern has been echoed by several other courts, which refuse to replace existing circuit-court-designated pleading standards with Twombly standards absent specific guidance from their circuit court or the Supreme Court. GE Capital Commercial, Inc. v. Worthington Nat. Bank, 2011 WL 5025153 (N.D. Tex. Oct. 20, 2011); U.S. Bank Nat’l Ass’n v. Ed. Loans, Inc., 2011 WL 5520437 (D. Minn. Nov. 14, 2011).

The District of Delaware added that the risk of increased discovery costs is not as high for affirmative defenses as it is for claims, because “it is unlikely that either side will pursue discovery on frivolous defenses.” Moreover, the court noted that there is less concern about putting a plaintiff on notice of the defenses alleged, as plaintiffs have the opportunity to obtain additional information during discovery and are not required to reply to the defenses listed.

The court further noted that it would be unfair to hold the plaintiff and the defendant to the same pleading standards, as the plaintiff has until the end of the statute of limitations to plead its allegations, whereas the defendant has only 21 days to respond and to state its defenses. Contra U.S. Bank Nat. Ass’n v. Education Loans Inc., 2011 WL 5520437, at *6 n.4 (D. Minn. Nov. 14, 2011) (noting that its decision not to extend Twombly to affirmative defenses does not rest on the defendants’ shorter response time, as Twombly standards still apply to counterclaims).

Waiting for the Circuit Courts
While a circuit court has yet to address this issue, some district courts have found indirect guidance from their circuit courts. As noted above, several courts have explicitly declined to apply Twombly to affirmative-defense pleading standards, noting that pre-Twombly cases control until their circuit court or the Supreme Court holds otherwise. Other district courts have sought indirect guidance within circuit-court opinions.

For example, in 2010, the Ninth Circuit cited to its pre-Twombly pleading standard for affirmative defenses. Simmons v. Navajo Cty. 609 F.3d 1011 (9th Cir. 2010) (citing Wyshak v. City Nat’l Bank, 607 F.2d 824 (9th Cir. 1979). The Central District of California and the Southern District of California have cited to this decision as a basis to decline to extend Twombly to affirmative-defense pleading standards. Enough for Everyone v. Provo Craft & Novelty, Inc., 2012 WL 177576 (C.D. Cal. Jan.20, 2012); Kohler v. Islands Restaurants, LP, 2012 WL 524086 (S.D. Cal. Feb. 16, 2012). In a similar analysis, the Middle District of Florida has cited to a post-Twombly Eleventh Circuit decision that emphasized the notice requirement of stating affirmative defenses as an indication that it should not extend Twombly to affirmative defenses. See Ioselev v. Shilling, 2011 WL 5855342, at *1, *2 (M.D. Fla. Nov. 22, 2011) (citing Hewitt v. Mobile Research Technology, Inc., 285 F. App’x 694 (11th Cir. 2008)); Adams v. JP Morgan Chase Bank, 2011 WL 2938467 (M.D. Fla. July 21, 2011) (same).

In contrast, the Northern District of California distinguished Simmons and held that Twomblyapplies to affirmative-defense pleading standards. Dion, 2012 WL 160221, at *2 n.2. The district court explained that the Ninth Circuit had cited the pre-Twombly standard in a discussion of when—rather than how—to plead affirmative defenses. Similarly, in the Middle District of Florida, other courts have declined to adopt the Ioselev court’s approach, and instead apply Twombly to affirmative defenses without referencing Hewitt. See, e.g., Barnhart v. Am. Home Mortgage Serv., 2012 WL 366930 (M.D. Fla. Feb 3. 2012) (citing Hansen v. ABC Liquors, Inc., 2009 WL 3790447 (M.D. Fla. Nov. 9, 2009)). Without clear guidance from the circuit courts of appeal, district courts and practitioners attempt to interpret pre-Twomblydecisions, but those decisions appear to support either viewpoint.

Conclusion

As federal courts grapple with the application of Twombly and Iqbal to affirmative-defense pleading standards, deeper splits are emerging within circuits and even within districts. Both sides of the argument point to similar justifications of judicial efficiency, notice requirements, and public policy. It remains to be seen what will happen when the appellate courts have the opportunity to address this nuanced point, and if a proper test case could result in the Supreme Court addressing pleading standards once more.

Keywords: litigation, pretrial practice and discovery, Facebook, Twitter, ABA Model Rules

Carla R. Walworth, Mor Wetzler, and Jessica Oliva – June 13, 2012