Our federal court system operates under a “notice pleading” scheme, which simply means that a complaint filed to begin a lawsuit serves the purpose of putting the defendant on notice of the subject matter of the suit. It has been well-settled that detailed factual allegations are not required at the pleading stage; the plaintiff only need give enough information to make the defendant reasonably aware of the suit and able to begin preparing a defense.

So it was somewhat of a shock when, not even a year ago, the Supreme Court dismissed a RICO claim under a Fed. R. Civ. P. 12(b)(6) motion for failure to state a claim, based on the fact that the plaintiff’s pleadings failed to allege facts that crossed the line from “possible” to “plausible.” Bell Atlantic Corp. v. Twombly, 127 S. Ct. 1955 (U.S. 2007). The effect of such a ruling is still unknown, and some have gone as far as to suggest that Bell Atlantic may have ushered in a “post-notice pleading” era in federal civil practice.

Seventh Circuit Judge Richard Posner (the famed law and economics proponent and one of the most oft-quoted judges in casebooks of all colors) recently weighed in on the effect of Bell Atlantic. Judge Posner suggested that the holding of Bell Atlantic ought to be considered peculiar to complicated RICO cases and others like them, and suggested that the requirement for additional facts in the complaint which show a “plausible” claim is appropriate where discovery would be more costly than usual. Limestone Dev. Corp. v. Village of Lemont, Ill., No. 07-1438, 2008 WL 852586, at *5 (7th Cir. Apr. 1, 2008).

Judge Posner echoed the Supreme Court, stating that Bell Atlantic does not impose a heightened pleading standard. Nonetheless, it is hard to read it any other way. At the very least, Judge Posner’s explanation seems to indicate that those who will be most aversely affected by this line of cases will be those who are the most interested in obtaining relief, and it seems to protect those who are in the best position to handle the costs of the potential lawsuit. Large corporations typically have all the evidence, especially in RICO cases. The purpose of discovery is to unearth that evidence. By effectively holding that plaintiffs must have enough evidence to even get to the procedural phase in which they are empowered to obtain it places an additional hedge of protection around large corporations who now merely have to claim that the plaintiff’s complaint (while “possible”) is not “plausible,” and contend that discovery would be more costly than usual.

HT: Fight the Hypo