Andrea Kuperman is the Chief Counsel to the Rules Committees, and she is the former Rules Law Clerk to Judge Lee 1

H. Rosenthal, former Chair of the Judicial Conference Committee on Rules of Practice and Procedure (“Standing

Committee”). Katharine David, temporary Rules Law Clerk to Judge Rosenthal, updated the memorandum to include

cases decided between July 21, 2010 and December 10, 2010. Jeff Barr, an attorney in the Office of Judges Programs

at the Administrative Office of the U.S. Courts, updated the memorandum to include cases decided between December

10, 2010 and August 31, 2011.

 A search in Westlaw reveals that, as of October 26, 2011, Iqbal had been cited over 30,000 times, in case law alone. 2

Westlaw’s KeyCite function, in addition to showing any negative citing references for the case, indicates how extensively

positive citing references examine the case. The depth-of-treatment categories include “examining,” “discussing,”

“citing,” and “mentioning.” This memo includes appellate cases that are labeled in Westlaw as either “examining” or

“discussing” Iqbal, as well as those listed as negative citing references (because, for example, they “decline to extend”

or “distinguish” Iqbal), but excludes cases in these categories that do not substantively discuss the portion of Iqbal

focusing on pleading requirements. This version of the memo includes appellate cases through August 31, 2011.

With respect to district court cases, as of October 26, 2011, there were approximately 12,260 cases listed on

Westlaw as either “examining” or “discussing” Iqbal. Because of the large number of citations, the appendix to this

memo includes a sample of the district court cases, focusing largely on those that examine Iqbal in more detail. For the

initial version of this memo, I also conducted searches for cases involving employment discrimination claims, cases

addressing the adequacy of allegations of mental state, cases addressing pleading where information is in the opposing

party’s possession, and cases addressing whether pleading “on information and belief” is sufficient. While these searches

were limited to cases addressing Iqbal, with these more pointed inquiries I did not limit the searches solely to those cases

listed as “examining” or “discussing” Iqbal. Because these searches turned up many cases, particularly in the category

MEMORANDUM

DATE: November 23, 2011

TO: Civil Rules Committee

Standing Rules Committee

FROM: Andrea Kuperman1

SUBJECT: Review of Case Law Applying Bell Atlantic Corp. v. Twombly and Ashcroft v. Iqbal

PREPARED FOR THE CONSIDERATION OF THE ADVISORY COMMITTEE ON CIVIL RULES

This memorandum addresses the application of the pleading standards after the Supreme

Court’s decisions in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556

U.S. 662, 129 S. Ct. 1937 (2009). I have been asked to continue monitoring and reviewing the case

law for the Civil Rules Advisory Committee’s consideration. Below is a short summary of the case

law, summaries of the holdings in Twombly and Iqbal, and descriptions of cases discussing and

applying Iqbal. The body of the memo addresses the circuit court cases, and the district court cases 2
of employment discrimination, this memo addresses examples drawn from those results.

Updates to this memo after the original submission on October 2, 2009, have focused largely on appellate cases

because as the number of cases applying Iqbal has grown, it has seemed appropriate to focus on appellate cases, which

will guide district courts as to how to apply Iqbal in different contexts.

This version of the memo updates citations for cases that were in a prior version of the memo as a Westlaw

citation, but were later printed in the Federal Reporter, the Federal Supplement, or the Federal Appendix. The pinpoint

citations have not been updated for many of the cases from the Westlaw pinpoints to the reporter’s pinpoint, but the

Westlaw pagination can still be used to look up pinpoint citations in Westlaw.

2

are described in the appendix.

The following cases are new to this version of the memo. The description of each of these

cases is highlighted.

• Soto-Torres v. Fraticelli, 654 F.3d 153, 2011 WL 3632450 (1st Cir. 2011). Page 22.

• Roman-Oliveras v. Puerto Rico Elec. Power Auth., 655 F.3d 43, 2011 WL 3621548

(1st Cir. 2011). Page 27.

• Ocasio-Hernandez v. Fortuno-Burset, 640 F.3d 1, 2011 WL 1228768 (1st Cir.

2011). Page 31.

• Schwab v. Smalls, No. 10-221-cv, 2011 WL 3156530 (2d Cir. Jul. 27, 2011)

(summary order). Page 60.

• Ideal Steel Supply Corp. v. Anza, 652 F.3d 310, 2011 WL 2557618 (2d Cir. 2011).

Page 62.

• In re Lehman Bros. Mortg.-Backed Sec. Litig., 650 F.3d 167, 2011 WL 1778726

(2d Cir. 2011). Page 70.

• Gallop v. Cheney, 642 F.3d 364, 2011 WL 1565858 (2d Cir. 2011). Page 79.

• Argueta v. U.S. Immigration and Customs Enforcement, 643 F.3d 60, 2011 WL

2315125 (3d Cir. 2011). Page 170.

• Cotter v. Newark Hous. Auth., 422 F. App’x 95, 2011 WL 1289731 (3d Cir. 2011)

(unpublished). Page 179.

• Wilson v. City of Philadelphia, 415 F. App’x 434, 2011 WL 692998 (3d Cir. 2011)

(unpublished). Page 181.

• Higgenbotham v. Connatser, 420 F. App’x 466, 2011 WL 1239872 (5th Cir. 2011)

(unpublished) (per curiam). Page 279.
3

• Patterson v. Novartis Pharm. Corp., No. 10-5886, 2011 WL3701884 (6thCir. Aug.

23, 2011) (unpublished). Page 306.

• Havard v. Wayne Cnty., No. 09-1235, 2011 WL 3648226 (6th Cir. Aug. 19, 2011)

(unpublished). Page 310.

• Ctr. for Bio-Ethical Reform, Inc. v. Napolitano, 648 F.3d 365, 2011 WL 3330114

(6th Cir. 2011). Page 314.

• Pulte Homes, Inc. v. Laborers’ Int’l Union, 648 F.3d 295, 2011 WL 3274014 (6th

Cir. 2011). Page 324.

• Watson Carpet & Floor Covering, Inc. v. Mohawk Indus., Inc., 648 F.3d 452,

2011 WL 2462833 (6th Cir. 2011). Page 328.

• New Albany Tractor, Inc. v. Louisville Tractor, Inc., 650 F.3d 1046, 2011 WL

2448909 (6th Cir. 2011). Page 334.

• Rondigo, L.L.C. v. Twp. of Richmond, 641 F.3d 673 (6th Cir. 2011). Page 339. 

• Vance v. Rumsfeld, 653 F.3d 591, 2011 WL 3437511 (7th Cir. 2011). Page 363.

• U.S. v. Corinthian Colleges, 655 F.3d 984, 2011 WL3524208 (9th Cir. 2011). Page

435.

• Lacey v. Maricopa Co., 649 F.3d 1118, 2011 WL 2276198 (9th Cir. 2011). Page

447.

• Cafasso v. General Dynamics C4 Sys., Inc., 637 F.3d 1047, 2011 WL 1053366 (9th

Cir. 2011). Page 459.

• Cook v. Brewer, 637 F.3d 1002, 2011 WL 902111 (9th Cir. 2011). Page 464.

• Cook v. Brewer, 649 F.3d 915, 2011 WL 1213095 (9th Cir. 2011) (per curiam), cert.

denied, 131 S. Ct. 2465 (2011). Page 468.

C Winne v. City of Lakewood, No. 10-1568, 2011 WL 3562921 (10th Cir. Aug. 15,

2011) (unpublished). Page 509.

• Mamani v. Berzain, 654 F.3d 1148, 2011 WL 3795468 (11th Cir. 2011). Page 551.

• Henderson v. J.P. Morgan Chase Bank, No. 10-13286, 2011 WL 3362682 (11th
4

Cir. Aug. 4, 2011) (per curiam) (unpublished). Page 559.

SUMMARY OF THE CASE LAW

The cases recognize that Twombly and Iqbal require that pleadings contain more than legal

conclusions and enough detail to allow the court to infer more than the mere possibility of

misconduct. But the case law to date does not appear to indicate that Iqbal has dramatically changed

the application of the standards used to determine pleading sufficiency. Instead, the appellate courts

are taking a context-specific approach to applying Twombly and Iqbal and are instructing the district

courts to be careful in determining whether to dismiss a complaint. One appellate court has indicated

that Iqbal made clear that the circuit’s heightened pleading standard in cases brought under 42

U.S.C. § 1983 could no longer be applied. In a recent circuit court decision authored by Justice

Souter (who also authored Twombly), the court explained that a “plausible but inconclusive inference

from pleaded facts will survive a motion to dismiss . . . .” Other courts have emphasized that notice

pleading remains intact. Many courts continue to rely on pre-Twombly case law to support some of

the propositions cited in Twombly and Iqbal—that legal conclusions need not be accepted as true and

that at least some factual averments are necessary to survive the pleadings stage. In addition, some

of the post-Iqbal cases dismissing complaints note that those complaints would have been deficient

even before Twombly and Iqbal. And some courts discuss Twombly and Iqbal but dismiss based on

the conclusion that the law does not provide relief, not based on a lack of plausible facts. The

approach taken bymany courts may suggest that Twombly and Iqbal are providing a new framework
 Courts are just beginning to examine whether the Twombly/Iqbal framework applies to affirmative defenses, but the 3

issue has not yet been resolved by the courts of appeals. See FTC v. Hope Now Modifications, LLC, No. 09-1204

(JBS/JS), 2011 WL 883202, at *2, *3 (D.N.J. Mar. 10, 2011) (noting that “no Federal Circuit Court has yet considered

whether to extend the pleading requirements of Twombly and Iqbal to affirmative defenses,” and “join[ing] the two other

Districts in [the Third] Circuit that have addressed this issue by holding that the heightened pleading standard of

Twombly and Iqbal does not apply to affirmative defenses”).

5

in which to analyze familiar pleading concepts, rather than an entirely new pleading standard. Even 3

after Twombly and Iqbal, many appellate court decisions instruct the district courts to use caution

in dismissing complaints and have reversed dismissals where the district courts failed to presume

the facts to be true or required the plaintiff to plead with too much particularity. Recent Supreme

Court decisions exemplify careful application of pleading standards in two very different contexts,

a prisoner civil rights claim and a securities claim.

At the same time, some cases state that Twombly and Iqbal have raised the bar for defeating

a motion to dismiss based on failure to state a claim. Although some of the courts making such

statements actually deny motions to dismiss and find the pleadings sufficient, there are also some

cases in which courts have expressly stated or implied that the claims might have survived before

Twombly and Iqbal, but do not survive under current pleading standards. One recent appellate court

decision indicated that the relevant information was in the defendant’s hands, but that the court could

not allow discovery before dismissal.

Many of the circuit court cases emphasize that the Iqbal analysis is context-specific. Under

this context-specific approach, courts appear to apply the analysis more leniently in cases where

pleading with more detail may be difficult. For example, courts have continued to emphasize that

pro se pleadings are evaluated more leniently than others, and courts continue to find pleading on

“information and belief” to be appropriate when permitted under the rules and cases. Courts also

continue frequently to grant leave to amend if the complaint’s allegations are initially deemed
6

insufficient. Continued monitoring of the case law will be important to further understand how the

appellate courts are instructing the district courts to handle motions to dismiss.

THE TWOMBLY AND IQBAL DECISIONS

The Twombly Decision

On May 21, 2007, the Supreme Court decided Bell Atlantic Corp. v. Twombly, 550 U.S. 544

(2007). In Twombly, the Court addressed the question of “whether a § 1 [of the Sherman Act]

complaint can survive a motion to dismiss when it alleges that major telecommunications providers

engaged in certain parallel conduct unfavorable to competition, absent some factual context

suggesting agreement, as distinct from identical, independent action.” Id. at 548. The complaint

alleged that the “Incumbent Local Exchange Carriers” or “ILECs” had conspired to restrain trade by

“‘engag[ing] in parallel conduct’ in their respective service areas to inhibit the growth of upstart

CLECs [competitive local exchange carriers],” and by “allegedly . . . making unfair agreements with

the CLECs for access to ILEC networks, providing inferior connections to the networks,

overcharging, and billing in ways designed to sabotage the CLECs’ relations with their own

customers.” Id. at 550. The complaint also alleged “agreements by the ILECs to refrain from

competing against one another,” which could be “inferred from the ILECs’ common failure

‘meaningfully [to] pursu[e]’ ‘attractive business opportunit[ies]’ in contiguous markets where they

possessed ‘substantial competitive advantages,’ and from a statement of Richard Notebaert, chief

executive officer (CEO) of the ILEC Qwest, that competing in the territory of another ILEC ‘‘might

be a good way to turn a quick dollar but that doesn’t make it right.’’” Id. at 551 (internal record

citations omitted).

The Twombly Court first discussed the requirements for pleading under Rule 8, noting that
7

Rule 8(a)(2) “requires only ‘a short and plain statement of the claim showing that the pleader is

entitled to relief,’ in order to ‘give the defendant fair notice of what the . . . claim is and the grounds

upon which it rests.’” See id. at 555 (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). The Court

explained that “[w]hile a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need

detailed factual allegations, a plaintiff’s obligation to provide the ‘grounds’ of his ‘entitle[ment] to

relief’ requires more than labels and conclusions, and a formulaic recitation of the elements of a

cause of action will not do.” Id. (internal citations omitted). “Factual allegations must be enough

to raise a right to relief above the speculative level, on the assumption that all the allegations in the

complaint are true (even if doubtful in fact).” Twombly, 550 U.S. at 555 (internal citations, footnote,

and emphasis omitted). The Court emphasized that “[w]hile, for most types of cases, the Federal

Rules eliminated the cumbersome requirement that a claimant ‘set out in detail the facts upon which

he bases his claim,’ Conley v. Gibson, 355 U.S. 41, 47, 78 S. Ct. 99, 2 L. Ed. 2d 80 (1957)

(emphasis added), Rule 8(a)(2) still requires a ‘showing,’ rather than a blanket assertion , of

entitlement to relief. Without some factual allegation in the complaint, it is hard to see how a

claimant could satisfy the requirement of providing not only ‘fair notice’ of the nature of the claim,

but also ‘grounds’ on which the claim rests.” Id. at 555 n.3 (citation omitted). The Court held that

stating a § 1 claim “requires a complaint with enough factual matter (taken as true) to suggest that

an agreement was made.” Id. at 556. But the Court emphasized that “[a]sking for plausible grounds

to infer an agreement does not impose a probability requirement at the pleading stage; it simply calls

for enough fact to raise a reasonable expectation that discovery will reveal evidence of illegal

agreement.” Id. (footnote omitted).

The Court cautioned that “a well-pleaded complaint may proceed even if it strikes a savvy
8

judge that actual proof of those facts is improbable, and ‘that recovery is very remote and unlikely.’”

Id.(citation omitted). Because lawful parallel conduct is not enough to show an unlawful agreement,

the Court concluded that an allegation of parallel conduct and an assertion of conspiracy were not

sufficient, explaining that “[w]ithout more[,] parallel conduct does not suggest conspiracy, and a

conclusory allegation of agreement at some unidentified point does not supply facts adequate to

show illegality.” Id. at 556–57. The Court stated that its conclusion was consistent with Rule 8:

“The need at the pleading stage for allegations plausibly suggesting (not merely consistent with)

agreement reflects the threshold requirement of Rule 8(a)(2) that the ‘plain statement’ possess

enough heft to ‘sho[w] that the pleader is entitled to relief.’” Twombly, 550 U.S. at 557. The Court

held that ‘[a]n allegation of parallel conduct is thus much like a naked assertion of conspiracy in a

§ 1 complaint: it gets the complaint close to stating a claim, but without some further factual

enhancement it stops short of the line between possibility and plausibility of ‘entitle[ment] to

relief.’” Id. (citation omitted).

The Court expressed concern with the expense of discovery on a baseless claim, stating that

“when the allegations in a complaint, however true, could not raise a claim of entitlement to relief,

‘‘this basic deficiency should . . . be exposed at the point of minimum expenditure of time and

money by the parties and the court.’’” Id. at 558 (citations omitted). The Court seemed especially

concerned with those costs in the context of antitrust litigation: “[I]t is one thing to be cautious

before dismissing an antitrust complaint in advance of discovery, but quite another to forget that

proceeding to antitrust discovery can be expensive.” Id. (internal citation omitted). The Court also

expressed doubts about discovery management being effective in preventing unmeritorious claims

from requiring expensive discovery, stating that “[i]t is no answer to say that a claim just shy of a
9

plausible entitlement to relief can, if groundless, be weeded out early in the process through ‘careful

case management,’ given the common lament that the success of judicial supervision in checking

discovery abuse has been on the modest side.” Id. at 559 (citation omitted). The Court continued:

And it is self-evident that the problem of discovery abuse cannot be

solved by “careful scrutiny of the evidence at the summary judgment

stage,” much less “lucid instructions to juries”; the threat of discovery

expense will push cost-conscious defendants to settle even anemic

cases before reaching those proceedings. Probably, then, it is only by

taking care to require allegations that reach the level suggesting

conspiracy that we can hope to avoid the potentially enormous

expense of discovery in cases with no “‘reasonably founded hope that

the [discovery] process will reveal relevant evidence’” to support a §

1 claim.

Id. (internal citation omitted).

The Twombly Court also evaluated the language in Conley v. Gibson 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.’” Twombly, 550

U.S. at 561 (quoting Conley, 355 U.S. at 45–46). The Court explained that this statement in Conley

could not be read literally: “On such a focused and literal reading of Conley’s ‘no set of facts,’ a

wholly conclusory statement of claim would survive a motion to dismiss whenever the pleadings left

open the possibility that a plaintiff might later establish some ‘set of [undisclosed] facts’ to support

recovery. . . . It seems fair to say that this approach to pleading would dispense with any showing

of a ‘‘reasonably founded hope’’ that a plaintiff would be able to make a case.” Id. at 561–62

(citation omitted). The Court held that the “no set of facts” language from Conley should be retired

and was “best forgotten as an incomplete, negative gloss on an accepted pleading standard: once a

claim has been stated adequately, it may be supported by showing any set of facts consistent with

the allegations in the complaint.” Id. at 563 (citations omitted).
10

Using the foregoing principles, the Court concluded that the plaintiff’s complaint was

insufficient. The Court contrasted the conclusory allegations in the complaint with the notice given

by a complaint following Form 9:

Apart from identifying a seven-year span in which the § 1 violations

were supposed to have occurred . . . , the pleadings mentioned no

specific time, place, or person involved in the alleged conspiracies.

This lack of notice contrasts sharplywith the model form for pleading

negligence, Form 9, which the dissent says exemplifies the kind of

“bare allegation” that survives a motion to dismiss. Whereas the

model form alleges that the defendant struck the plaintiff with his car

while plaintiff was crossing a particular highway at a specified date

and time, the complaint here furnishes no clue as to which of the four

ILECs (much less which of their employees) supposedly agreed, or

when and where the illicit agreement took place. A defendant wishing

to prepare an answer in the simple fact pattern laid out in Form 9

would know what to answer; a defendant seeking to respond to

plaintiffs’ conclusory allegations in the § 1 context would have little

idea where to begin.

Id. at 565 n.10. The Court was careful to emphasize that it was not applying a heightened or

particularized pleading standard, which is only required for those categories of claims falling under

Rule 9, and explained its “concern [wa]s not that the allegations in the complaint were insufficiently

‘particular[ized]’; rather, the complaint warranted dismissal because it failed in toto to render

plaintiffs’ entitlement to relief plausible.” Id. at 569 n.14 (internal citation omitted). The Court

concluded: “[W]e do not require heightened fact pleading of specifics, but only enough facts to state

a claim to relief that is plausible on its face. Because the plaintiffs here have not nudged their claims

across the line from conceivable to plausible, their complaint must be dismissed.” Id. at 570.

The Iqbal Decision

Two years after Twombly, the Supreme Court elaborated on the pleading standards discussed

in Twombly in Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009). In Iqbal, the plaintiff, a citizen of Pakistan
11

and a Muslim, was arrested on criminal charges and detained by federal officials. Id. at 1942. The

plaintiff alleged that he was deprived of constitutional rights, and sued numerous federal officials,

including former Attorney General John Ashcroft and FBI Director Robert Mueller. Id. Ashcroft

and Mueller were the only appellants. Id. The complaint alleged that “they adopted an

unconstitutional policy that subjected the plaintiff to harsh conditions of confinement on account of

his race, religion, or national origin.” Id.

The Iqbal Court explained that “the pleading standard Rule 8 announces does not require

‘detailed factual allegations,’ but it demands more than an unadorned,

the-defendant-unlawfully-harmed-me accusation.” Id. at 1949 (citing Twombly, 550 U.S. at 555).

With respect to the “plausibility” standard described in Twombly, Iqbal explained that “[a] claim has

facial plausibility when the plaintiff pleads factual content that allows the court to draw the

reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 129 S. Ct. at

1949 (citing Twombly, 550 U.S. at 556). The Iqbal Court noted that “[t]he plausibility standard is

not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant

has acted unlawfully.” Id. (citing Twombly, 550 U.S. at 556). “Where a complaint pleads facts that

are ‘merely consistent with’ a defendant’s liability, it ‘stops short of the line between possibility and

plausibility of ‘entitlement to relief.’’” Id. (quoting Twombly, 550 U.S. at 557). The Court

explained:

Two working principles underlie our decision in Twombly. First, the

tenet that a court must accept as true all of the allegations contained

in a complaint is inapplicable to legal conclusions. Threadbare

recitals of the elements of a cause of action, supported by mere

conclusory statements, do not suffice. [Twombly, 550 U.S.] at 555,

127 S. Ct. 1955 (Although for the purposes of a motion to dismiss we

must take all of the factual allegations in the complaint as true, we

“are not bound to accept as true a legal conclusion couched as a
12

factual allegation” (internal quotation marks omitted)). Rule 8 marks

a notable and generous departure from the hyper-technical,

code-pleading regime of a prior era, but it does not unlock the doors

of discovery for a plaintiff armed with nothing more than

conclusions. Second, only a complaint that states a plausible claim

for relief survives a motion to dismiss. Id., at 556, 127 S. Ct. 1955.

Determining whether a complaint states a plausible claim for relief

will, as the Court of Appeals observed, be a context-specific task that

requires the reviewing court to draw on its judicial experience and

common sense. 490 F.3d, at 157–158. But where the well-pleaded

facts do not permit the court to infer more than the mere possibility

of misconduct, the complaint has alleged—but it has not

“show[n]”—“that the pleader is entitled to relief.” FED. RULE CIV.

PROC. 8(a)(2).

Id. at 1949–50 (second alteration in original).

The Iqbal Court set out a two-step procedure for evaluating whether a complaint should be

dismissed:

[A] court considering a motion to dismiss can choose to begin by

identifying pleadings that, because they are no more than conclusions,

are not entitled to the assumption of truth. While legal conclusions

can provide the framework of a complaint, they must be supported by

factual allegations. When there are well-pleaded factual allegations,

a court should assume their veracity and then determine whether they

plausibly give rise to an entitlement to relief.

Id. at 1950.

In analyzing the complaint in Iqbal, the Court noted that it alleged that Ashcroft and Mueller

“‘knew of, condoned, and willfully and maliciously agreed to subject [the plaintiff]’ to harsh

conditions of confinement ‘as a matter of policy, solely on account of [his] religion, race, and/or

national origin and for no legitimate penological interest’”; that Ashcroft “was the ‘principal

architect’ of this invidious policy”; and that Mueller “was ‘instrumental’ in adopting and executing

it.” Id. at 1951 (citations omitted). The Court found these allegations to be conclusory, that they

“amount[ed] to nothing more than a ‘formulaic recitation of the elements’ of a constitutional
13

discrimination claim,” and that they were not entitled to a presumption of veracity. Id. (citations

omitted).

Turning to the factual allegations in the complaint, the Iqbal Court noted that the complaint

alleged that the FBI, under Mueller’s direction, arrested and detained thousands of Arab Muslim men

as part of its investigation of the September 11 attacks, and that the policy of holding detainees in

highly restrictive conditions until cleared by the FBI was approved by Ashcroft and Mueller. Id.

The Court concluded that while these allegations were consistent with Ashcroft and Mueller

designating detainees of “high interest” because of their race, religion, or national origin, there were

more likely explanations that prevented the allegations from plausibly establishing a claim. See id.

Because the September 11 attacks were perpetrated by Arab Muslim hijackers claiming to be

members of Al Qaeda, an Islamic fundamentalist group, the Court found that “[i]t should come as

no surprise that a legitimate policy directing law enforcement to arrest and detain individuals because

of their suspected link to the attacks would produce a disparate, incidental impact on Arab Muslims,

even though the purpose of the policy was to target neither Arabs nor Muslims.” Id. The Court also

noted that while there were additional allegations against other defendants, the only factual allegation

against the appellants was that they “adopt[ed] a policy approving ‘restrictive conditions of

confinement’ for post-September-11 detainees until they were ‘‘cleared’ by the FBI.’” Iqbal, 129

S. Ct. at 1952. The Court said this was not enough:

Accepting the truth of that allegation, the complaint does not show,

or even intimate, that petitioners purposefully housed detainees in the

ADMAX SHU due to their race, religion, or national origin. All it

plausibly suggests is that the Nation’s top law enforcement officers,

in the aftermath of a devastating terrorist attack, sought to keep

suspected terrorists in the most secure conditions available until the

suspects could be cleared of terrorist activity. Respondent does not

argue, nor can he, that such a motive would violate petitioners’
14

constitutional obligations. He would need to allege more by way of

factual content to “nudg[e]” his claim of purposeful discrimination

“across the line from conceivable to plausible.” Twombly, 550 U.S.,

at 570, 127 S. Ct. 1955.

Id.

The Iqbal Court also rejected the plaintiff’s argument that because the Federal Rules allowed

pleading discriminatory intent “generally,” his complaint was sufficient. Id. at 1954. The Court

explained:

It is true that Rule 9(b) requires particularity when pleading “fraud or

mistake,” while allowing “[m]alice, intent, knowledge, and other

conditions of a person’s mind [to] be alleged generally.” But

“generally” is a relative term. In the context of Rule 9, it is to be

compared to the particularity requirement applicable to fraud or

mistake. Rule 9 merely excuses a party from pleading discriminatory

intent under an elevated pleading standard. It does not give him

license to evade the less rigid—though still operative—strictures of

Rule 8. And Rule 8 does not empower respondent to plead the bare

elements of his cause of action, affix the label “general allegation,”

and expect his complaint to survive a motion to dismiss.

Id. (internal citation omitted).

Finally, the Iqbal Court also confirmed that the pleading requirements described in Twombly

are not limited to the antitrust context present in that case. See id. at 1953 (holding that the argument

that “Twombly should be limited to pleadings made in the context of an antitrust dispute . . . is not

supported by Twombly and is incompatible with the Federal Rules of Civil Procedure”). The Court

explained that “[t]hough Twombly determined the sufficiency of a complaint sounding in antitrust,

the decision was based on our interpretation and application of Rule 8,” which “in turn governs the

pleading standard ‘in all civil actions and proceedings in the United States district courts.’” Id.

(citations omitted). The Iqbal Court also confirmed Twombly’s rejection of case-management as an

appropriate alternative to disposing of implausible claims, particularly in the context of qualified
 The Supreme Court found that Iqbal’s complaint “fail[ed] to plead sufficient facts to state a claim for purposeful and 4

unlawful discrimination against petitioners,” and remanded to allow the “Court of Appeals [to] decide in the first instance

whether to remand to the District Court so that respondent can seek leave to amend his deficient complaint.” Iqbal, 129

S. Ct. at 1954. On remand, the Second Circuit noted that it was “accustomed to reviewing a district court’s decision

whether to grant or deny leave to amend, rather than making that decision . . . in the first instance,” and found “no need

to depart from the ordinary course . . . .” Iqbal v. Ashcroft, 574 F.3d 820, 822 (2d Cir. 2009) (per curiam). The Second

Circuit remanded to the district court “for further proceedings in light of the Supreme Court’s decision in Ashcroft v.

Iqbal, 129 S. Ct. 1937.” Id. “‘On September 29, 2009, the remaining parties in Iqbal filed a document in [the Second

Circuit] stipulating that the appeal was to be ‘withdrawn from active consideration before the Court . . . because a

settlement ha[d] been reached in principle between Javaid Iqbal and defendant United States.’” Arar v. Ashcroft, 585

F.3d 559, 585 n.8 (2d Cir. 2009) (Sack, J., dissenting) (quoting Iqbal v. Hasty, No. 05-5768-cv (2d Cir. Sept. 30, 2009),

“Stipulation Withdrawing Appeal from Active Consideration” dated September 29, 2009), cert. denied, --- S. Ct. ----,

No. 09-923, 2010 WL 390379 (Jun. 14, 2010).

15

immunity:

Our rejection of the careful-case-management approach is especially

important in suits where Government-official defendants are entitled

to assert the defense of qualified immunity. The basic thrust of the

qualified-immunity doctrine is to free officials from the concerns of

litigation, including “avoidance of disruptive discovery.” There are

serious and legitimate reasons for this. If a Government official is to

devote time to his or her duties, and to the formulation of sound and

responsible policies, it is counterproductive to require the substantial

diversion that is attendant to participating in litigation and making

informed decisions as to how it should proceed. Litigation, though

necessary to ensure that officials comply with the law, exacts heavy

costs in terms of efficiency and expenditure of valuable time and

resources that might otherwise be directed to the proper execution of

the work of the Government. The costs of diversion are only

magnified when Government officials are charged with responding

to, as Judge Cabranes aptly put it, “a national and international

security emergency unprecedented in the history of the American

Republic.” 490 F.3d[] at 179.

Iqbal, 129 S. Ct. at 1953 (internal citations omitted).4

Shortly after Iqbal was decided, the Senate introduced S. 1504, The Notice Pleading

Restoration Act of 2009, which provided that a federal court cannot dismiss a complaint under

Federal Rule of Civil Procedure 12(b)(6) or (e), except under the standards set forth in Conley v.

Gibson, 355 U.S. 41 (1957). The House introduced H.R. 4115, The Open Access to Courts Act of

2009, which provided: “A court shall not dismiss a complaint under subdivision (b)(6), (c) or (e) of
 The Senate bill stated that it applied “[e]xcept as otherwise expressly provided by an Act of Congress or by an 5

amendment to the Federal Rules of Civil Procedure which takes effect after the date of enactment of this Act.” The

House bill stated that it applied “except as otherwise expressly provided by an Act of Congress enacted after the date

of the enactment of this section or by amendments made after such date to the Federal Rules of Civil Procedure pursuant

to the procedures prescribed by the Judicial Conference under this chapter.”

 For a full description of the Ninth Circuit’s opinion and a more detailed description of the facts alleged in the 6

complaint, see the discussion of the Ninth Circuit opinion later in this memo.

16

Rule 12 of the Federal Rules of Civil Procedure unless it appears beyond doubt that the plaintiff can

prove no set of facts in support of the claim which would entitle the plaintiff to relief. A court shall

not dismiss a complaint under one of those subdivisions on the basis of a determination by the judge

that the factual contents of the complaint do not show the plaintiff’s claim to be plausible or are

insufficient to warrant a reasonable inference that the defendant is liable for the misconduct

alleged.”5

SUPREME COURT UPDATE

C Matrixx Initiatives, Inc. v. Siracusano, 131 S. Ct. 1309, 2011 WL 977060 (Mar. 22, 2011).

The Supreme Court examined the question of “whether a plaintiff can state a claim for

securities fraud under § 10(b) of the Securities and Exchange Act of 1934 and Securities and

Exchange Commission (SEC) Rule 10b-5, based on a pharmaceutical company’s failure to

disclose reports of adverse events associated with a product if the reports do not disclose a

statistically significant number of adverse events.” Id. at *3 (internal citations omitted). The

plaintiffs had asserted that Matrixx Initiatives, Inc. and three of its executives (collectively,

“Matrixx”) failed to disclose reports of a possible link between its cold remedy product

(Zicam) and loss of smell (anosmia). Id. The Court’s unanimous decision rejected the

defendants’ argument that the complaint did not adequately allege that Matrixx made a

material representation or omission or that it acted with scienter because it did not allege that

Matrixx knew of a statistically significant number of adverse events requiring disclosure.

Id. The Court declined to adopt a bright-line rule, explaining that “[a]lthough in many cases

reasonable investors would not consider reports of adverse events to be material information,

respondents have alleged facts plausibly suggesting that reasonable investors would have

viewed these particular reports as material.” Id. The Court noted that “Respondents have

also alleged facts ‘giving rise to a strong inference’ that Matrixx ‘acted with the required

state of mind.’” Id. (citation omitted). The Court affirmed the Ninth Circuit’s decision to

reverse dismissal of the complaint.

6

The Court noted that the lower courts had properly assumed all facts alleged in the complaint

to be true, citing Iqbal. Matrixx, 2011 WL 977060, at *4. The Court declined to adopt a
17

bright-line rule that lack of statistical significance of adverse event reports precluded those

reports from being material to reasonable investors, explaining that the “contextual inquiry

may reveal in some cases that reasonable investors would have viewed reports of adverse

events as material even though the reports did not provide statistically significant evidence

of a causal link.” Id. at *11 (footnote omitted). The Court then held that the complaint

adequately pleaded materiality:

Applying Basic[, Inc. v. Levinson, 485 U.S. 224 (1988)]’s

“total mix” standard in this case, we conclude that respondents have

adequately pleaded materiality. This is not a case about a handful of

anecdotal reports, as Matrixx suggests. Assuming the complaint’s

allegations to be true, as we must, Matrixx received information that

plausibly indicated a reliable causal link between Zicam and anosmia.

That information included reports from three medical professionals

and researchers about more than 10 patients who had lost their sense

of smell after using Zicam. Clarot [(Matrix’s vice president for

research and development)] told Linschoten [(a researcher treating

someone who had lost their sense of smell after using Matrixx’s

product)] that Matrixx had received additional reports of anosmia.

(In addition, during the class period, nine plaintiffs commenced four

product liability lawsuits against Matrixx alleging a causal link

between Zicam use and anosmia.) Further, Matrixx knew that

Linschoten and Dr. Jafek [(a colleague of Linschoten who had

observed patients suffering from anosmia after using Matrixx’s

product)] had presented their findings about a causal link between

Zicam and anosmia to a national medical conference devoted to

treatment of diseases of the nose. Their presentation described a

patient who experienced severe burning in his nose, followed

immediately by a loss of smell, after using Zicam—suggesting a

temporal relationship between Zicam use and anosmia.

Critically, both Dr. Hirsch and Linschoten had also drawn

Matrixx’s attention to previous studies that had demonstrated a

biological causal link between intranasal application of zinc and

anosmia. Before his conversation with Linschoten, Clarot, Matrixx’s

vice president of research and development, was seemingly unaware

of these studies, and the complaint suggests that, as of the class

period, Matrixx had not conducted any research of its own relating to

anosmia. Accordingly, it can reasonably be inferred from the

complaint that Matrixx had no basisfor rejecting Dr. Jafek’s findings

out of hand.

We believe that these allegations suffice to “raise a reasonable

expectation that discovery will reveal evidence” satisfying the
18

materiality requirement, Bell Atlantic Corp. v. Twombly, 550 U.S.

544, 556, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007), and to “allo[w]

the court to draw the reasonable inference that the defendant is liable

for the misconduct alleged,” Iqbal, 556 U.S., at ----, 129 S. Ct., at ----

(slip op., at 14). The information provided to Matrixx by medical

experts revealed a plausible causal relationship between Zicam Cold

Remedy and anosmia. Consumerslikely would have viewed the risk

associated with Zicam (possible loss of smell) as substantially

outweighing the benefit of using the product (alleviating cold

symptoms), particularly in light of the existence of many alternative

products on the market. Importantly, Zicam Cold Remedy allegedly

accounted for 70 percent of Matrixx’s sales. Viewing the allegations

of the complaint as a whole, the complaint alleges facts suggesting a

significant risk to the commercial viability of Matrixx’s leading

product.

It is substantially likely that a reasonable investor would have

viewed this information “‘as having significantly altered the [‘]total

mix[’] of information made available.’” Basic, 485 U.S., at 232, 108

S. Ct. 978 (quoting TSC Industries, 426 U.S., at 449, 96 S. Ct. 2126).

Matrixx told the market that revenues were going to rise 50 and then

80 percent. Assuming the complaint’s allegations to be true,

however, Matrixx had information indicating a significant risk to its

leading revenue-generating product. Matrixx also stated that reports

indicating that Zicam caused anosmia were “‘completely unfounded

and misleading’” and that “‘the safety and efficacy of zinc gluconate

for the treatment of symptoms related to the common cold have been

well established.’” Importantly, however, Matrixx had evidence of

a biological link between Zicam’s key ingredient and anosmia, and it

had not conducted any studies of its own to disprove that link. In

fact, as Matrixx later revealed, the scientific evidence at that time was

“‘insufficient . . . to determine if zinc gluconate, when used as

recommended, affects a person’s ability to smell.’”

Assuming the facts to be true, these were material facts

“necessary in order to make the statements made, in the light of the

circumstances under which they were made, not misleading.” 17

CFR § 240.10b-5(b). We therefore affirm the Court of Appeals’

holding that respondents adequatelypleaded the element of a material

misrepresentation or omission.

Id. at *12–13 (footnotes and additional internal citations omitted) (omission in original).

During its discussion of the adequacy of the pleadings, the Court noted that “to survive a

motion to dismiss, respondents need only allege ‘enough facts to state a claim to relief that
19

is plausible on its face.’” Id. at *12 n.12 (quoting Twombly, 550 U.S. at 570). The Court

found the allegations plausible, holding that they “plausibly suggest[ed] that Dr. Jafek and

Linschoten’s conclusions were based on reliable evidence of a causal link between Zicam

and anosmia,” and that the existence of the studies cited in the complaint “suggest[ed] a

plausible biological link between zinc and anosmia, which, in combination with the other

allegations, [wa]s sufficient to survive a motion to dismiss.” Id. at *12 nn.12–13.

The Court also concluded that “Matrixx’s proposed bright-line rule requiring an allegation

of statistical significance to establish a strong inference of scienter [wa]s just as flawed as

its approach to materiality.” Matrixx, 2011 WL 977060, at *13. The Court explained:

The inference that Matrixx acted recklessly (or intentionally,

for that matter) is at least as compelling, if not more compelling, than

the inference that it simply thought the reports did not indicate

anything meaningful about adverse reactions. According to the

complaint, Matrixx was sufficiently concerned about the information

it received that it informed Linschoten that it had hired a consultant

to review the product, asked Linschoten to participate in animal

studies, and convened a panel of physicians and scientistsin response

to Dr. Jafek’s presentation. It successfully prevented Dr. Jafek from

using Zicam’s name in his presentation on the ground that he needed

Matrixx’s permission to do so. Most significantly, Matrixx issued a

press release that suggested that studies had confirmed that Zicam

does not cause anosmia when, in fact, it had not conducted any

studies relating to anosmia and the scientific evidence at that time,

according to the panel of scientists, was insufficient to determine

whether Zicam did or did not cause anosmia.

These allegations, “taken collectively,” give rise to a “cogent

and compelling” inference that Matrixx elected not to disclose the

reports of adverse events not because it believed they were

meaningless but because it understood their likely effect on the

market. Tellabs[, Inc. v. Makor Issues & Rights, Ltd.], 551 U.S.

[308,] 323, 324, 127 S. Ct. 2499 [(2007)]. “[A] reasonable person”

would deem the inference that Matrixx acted with deliberate

recklessness (or even intent) “at least as compelling as any opposing

inference one could draw from the facts alleged.” Id., at 324, 127 S.

Ct. 2499. We conclude, in agreement with the Court of Appeals, that

respondents have adequately pleaded scienter. Whether respondents

can ultimately prove their allegations and establish scienter is an

altogether different question.

Id. at *14 (footnote omitted).
 Under § 1983, “[e]very person who, under color of any statute, ordinance, regulation, custom, or usage, of any State 7

or Territory or the District of Columbia, subjects, or causes to be subjected, any citizen of the United States or other

person within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities secured by the

Constitution and laws, shall be liable to the party injured in an action at law, suit in equity, or other proper proceeding

for redress . . . .” 42 U.S.C. § 1983. This statute will be referred to in this memo as “§ 1983.”

 The Court’s citation of its prior opinion in Swierkiewicz may be noteworthy. In Fowler v. UPMC Shadyside, 578 F.3d 8

203 (3d Cir. 2009), infra, the Third Circuit questioned the continuing vitality of Swierkiewicz, while several other courts

have favorably cited Swierkiewicz since Twombly and Iqbal.

20

C Skinner v. Switzer, 131 S. Ct. 1289, 2011 WL 767703 (Mar. 7, 2011). Skinner, a state

prisoner who had been convicted of capital murder and sentenced to death, filed an action

under 42 U.S.C. § 1983, alleging that the district attorney’s refusal to allow him access to

7

biological evidence for purposes of DNA forensic testing violated his right to due process.

The district court dismissed Skinner’s suit for failure to state a claim, reasoning that postconviction requests for DNA evidence may only be made in habeas corpus proceedings, not

under § 1983. The Fifth Circuit affirmed. The Supreme Court reversed, 6-3, holding that

Skinner had properly invoked § 1983. Justice Ginsburg delivered the opinion of the Court,

in which Justices Roberts, Scalia, Breyer, Sotomayor, and Kagan joined. Justice Thomas

filed a dissenting opinion, in which Justices Kennedy and Alito joined.

The Supreme Court began its discussion by reviewing the standard governing consideration

of a motion to dismiss for failure to state a claim. The Court stated:

Because this case was resolved on a motion to dismiss for

failure to state a claim, the question below was “not whether

[Skinner] will ultimately prevail” on his procedural due process

claim, see Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S. Ct. 1683, 40

L. Ed. 2d 90 (1974), but whether his complaint was sufficient to cross

the federal court’s threshold, see Swierkiewicz v. Sorema N. A., 534

U.S. 506, 514, 122 S. Ct. 992, 152 L. Ed. 2d 1 (2002). Skinner’s

complaint is not a model of the careful drafter’s art, but under the

Federal Rules of Civil Procedure, a complaint need not pin plaintiff’s

claim for relief to a precise legal theory. Rule 8(a)(2) of the Federal

Rules of Civil Procedure generally requires only a plausible “short

and plain” statement of the plaintiff’s claim, not an exposition of his

legal argument. See 5 C. WRIGHT & A. MILLER, FEDERAL PRACTICE

& PROCEDURE § 1219, pp. 277–278 (3d ed. 2004 and Supp.2010).

Skinner, 2011 WL 767703, at *6.8

The dissenting opinion did not mention this passage or discuss any pleading issue.

C Ashcroft v. Al-Kidd, No. 10-98, 131 S. Ct. 415 (Oct. 18, 2010). On October 18, 2010, the

Supreme Court granted certiorari and agreed to review the Ninth Circuit’s opinion in
21

Ashcroft v. Al-Kidd, 580 F.3d 949 (9th Cir. 2009), discussed below. The Court will consider

two questions:

1. Whether the court of appeals erred in denying petitioner absolute immunity

from the pretext claim. 

2. Whether the court of appeals erred in denying petitioner qualified immunity

from the pretext claim based on the conclusions that (a) the Fourth

Amendment prohibits an officer from executing a valid material witness

warrant with the subjective intent of conducting further investigation or

preventatively detaining the subject; and (b) this Fourth Amendment rule was

clearly established at the time of respondent’s arrest.

The Court decided the case on May 31, 2011. See 131 S. Ct. 2074 (2011). The Court

reversed and remanded, but its opinion did not mention Iqbal’s discussion of pleading

standards and stated that the Court would construe the factual allegations as true because the

case arose from a motion to dismiss.
22

CIRCUIT COURT CASE LAW INTERPRETING IQBAL

First Circuit

• Soto-Torres v. Fraticelli, 654 F.3d 153, 2011 WL 3632450 (1st Cir. Aug. 19, 2011).

Plaintiff Soto-Torres filed a complaint under Bivens against defendant Luis Fraticelli, an FBI

agent, claiming unlawful detention and excessive force during the execution of a search

warrant. Fraticelli was the Special Agent in Charge (SAC) of the FBI’s operations in Puerto

Rico. The complaint alleged

actions during the September 23, 2005, execution of a search warrant

by FBI or other federal agents on the residence of Filiberto Ojeda

Rios, a notorious fugitive and convicted felon who was thought to be

dangerous and hiding in a house in Hormigueros, Puerto Rico. That

house was near the property of Soto-Torres’s parents. The complaint

alleges that, in the course of these operations, unnamed FBI agents

assaulted Soto–Torres, pushed him to the ground and handcuffed him,

and detained him in handcuffs for approximately four hours without

explaining the basis of his detention. Although SAC Fraticelli was

in charge of the operation, he was not present during the operation

and had no personal contact with Soto-Torres.

Id. at *1.

The district court denied defendant’s motion to dismiss the complaint on grounds of qualified

immunity. The First Circuit reversed and directed judgment for defendant on the basis of

qualified immunity.

The court of appeals related in detail the background of the complaint, as follows:

We provide some undisputed background facts, agreed upon

by the parties. Soto-Torres’s claims arise out of an FBI operation to

apprehend Filiberto Ojeda Rios, a Puerto Rico fugitive and leader of

the Macheteros group. The Macheteros have claimed responsibility

for acts of violence in Puerto Rico, including the murders of a police

officer in 1978 and U.S. Navy sailors in 1979 and 1982. In 1983,

Macheteros operatives robbed a Wells Fargo facility in West

Hartford, Connecticut. Two years later, when FBI agents acted to

arrest Ojeda and other Macheteros members in connection with the

robbery, Ojeda shot and wounded an agent. He was acquitted of the

shooting charge in a 1989 trial in which he represented himself.

In 1990, while released on bond pending his trial for the

armed robbery charges, Ojeda severed his electronic monitoring
23

device and fled; the next day the U.S. District Court for the District

of Connecticut issued a warrant for his arrest. In 1992, Ojeda was

tried in absentia for the armed robbery, convicted on fourteen counts,

and sentenced to fifty-five years in prison.

In early September 2005, the San Juan FBI determined that

Ojeda was living in a house in Hormigueros on the west side of

Puerto Rico. At this time there were warrants for Ojeda’s arrest both

for his 1990 flight and for his 1992 conviction. Consistent with the

hazards of the operation, on September 22, 2005, “a team of FBI

sniper-observers initiated surveillance of theOjeda residence.” Their

surveillance “continue[d] until September 23, 2005.”

The parents of Soto-Torres lived within “hundreds of feet” of

this Ojeda target residence. The two properties did not adjoin, and

from Soto-Torres’s parents’ home “there was no visibility toward the

targeted residence” due to “the topography of the place.” No warrant

was requested to search Soto-Torres’s parents’ property. During the

period of the FBI surveillance, Soto-Torres went to his parents’

property “on a daily basis” to feed his horse.

On September 23, 2005, at approximately 3:45 p.m., SotoTorres arrived at his parents’ property to feed his horse and work on

fences on the property. At some point between 4:10 p.m. and 4:15

p.m., two unidentified helicopters flew overhead and “several

vehicles . . . full of armed federal agents” arrived at the property.

Soto-Torres alleges that these agents “assaulted and pushed

[him] to the floor” and that he was subsequently “detained and

handcuffed behind his back for almost four hours” while being

“strongly interrogated by several federal agents.” He alleges that the

agents “pointed their firearms” toward him for “most of” this time

and threatened to put him in prison. He alleges that he was not told

what was happening until his eventual release at around 8:00 p.m.,

“having be[en] placed under the most severe mental distress for

almost four (4) hours.” As injury, he alleges that this detention and

treatment caused him “physical harm and emotional suffering,” such

that he “required psychological and medical treatment.” 

Soto-Torres does not allege that SAC Fraticelli was present

when these events occurred or that Fraticelli witnessed their

occurrence. Rather, he makes only two relevant allegations. He

alleges that Fraticelli “was the officer in charge during the incident”

and that he “participated in or directed the constitutional violations
24

alleged . . . or knew of the violation[s] and failed to act to prevent

them.” These are the only allegations that address Fraticelli’s

involvement in Soto-Torres’s detention.

Id. at *2–3.

The court of appeals found that the plaintiff’s complaint failed to adequately allege defendant

Fraticelli’s personal involvement in the alleged events. The court reasoned:

A plaintiff bringing a Bivens action “must plead that each

Government-official defendant, through the official’s own individual

actions, has violated the Constitution.” Iqbal, 129 S. Ct. at 1948.

There is no vicarious liability. See id. (citing Monell v. Dep’t of Soc.

Servs., 436 U.S. 658, 691, 98 S. Ct. 2018, 56 L. Ed. 2d 611 (1978)).

As to an assertion of supervisory liability, we held in

Maldonado that a supervisor may not be held liable for the

constitutional violations committed by his or her subordinates, unless

there is an “‘affirmative link’ between the behavior of a subordinate

and the action or inaction of his supervisor . . . such that the

supervisor’s conduct led inexorably to the constitutional violation.”

568 F.3d at 275 (quoting Pineda v. Toomey, 533 F.3d 50, 54 (1st

Cir.2008)) (internal quotation marks omitted).

In determining whether the facts alleged in the complaint are

sufficient to survive the Rule 12(c)motion, we employ a two-pronged

approach. The first prong is to identify the factual allegation[s] and

to identify statements in the complaint that merely offer legal

conclusions couched as facts or are threadbare or conclusory.

Ocasio–Hernández v. Fortuño–Burset, 640 F.3d 1, 12 (1st Cir. 2011).

“[S]ome allegations, while not stating ultimate legal conclusions, are

nevertheless so threadbare or speculative that they fail to cross ‘the

line between the conclusory and the factual.’” Peñalbert–Rosa v.

Fortuño–Burset, 631 F.3d 592, 595 (1st Cir. 2011) (quoting

Twombly, 550 U.S. at 557 n.5).

The second prong is to ask whether the facts alleged would

“allow[ ] the court to draw the reasonable inference that the defendant

is liable for the misconduct alleged.” Iqbal, 129 S. Ct. at 1949. “The

make-or-break standard ... is that the combined allegations, taken as

true, must state a plausible, not a merely conceivable, case for relief.”

Sepúlveda-Villarini v. Dep’t of Educ. of P.R., 628 F.3d 25, 29 (1st

Cir. 2010). “The plausibility standard is not akin to a ‘probability

requirement,’ but it asks for more than a sheer possibility that a
25

defendant has acted unlawfully.” Id. (quoting Iqbal, 129 S. Ct. at

1949) (internal quotation marks omitted).

When a complaint pleads facts that are “‘merely consistent

with’ a defendant’s liability, it ‘stops short of the line between

possibility and plausibility of entitlement to relief.’” Iqbal, 129 S. Ct.

at 1949 (quoting Twombly, 550 U.S. at 557).

. . . .

Soto-Torres essentially brings this suit on a theory of

supervisory liability. The only allegations in the complaint linking

Fraticelli with the detention of Soto-Torres are that Fraticelli “was the

officer in charge during the incident” and that he “participated in or

directed the constitutional violations alleged herein, or knew of the

violation[s] and failed to act to prevent them.” Iqbal and our

precedents applying it make clear that these claims necessarily fail.

As our discussion of the law of supervisory liability makes

clear, the allegation that Fraticelli was “the officer in charge” does not

come close to meeting the required standard.

While the complaint states that Fraticelli “participated in or

directed the constitutional violations alleged herein,” it provided no

facts to support either that he “participated in” or “directed” the

plaintiff’s detention. In some sense, all high officials in charge of a

government operation “participate in” or “direct” the operation. Iqbal

makes clear that this is plainly insufficient to support a theory of

supervisory liability and fails as a matter of law.

For the complaint to have asserted a cognizable claim, it was

required to allege additional facts sufficient to make out a violation

of a constitutional right. Those additional facts would then be

measured against the standards for individual liability. The complaint

would have had to plead facts supporting a plausible inference that

Fraticelli personally directed the officers to take those steps against

plaintiff which themselves violated the Constitution in some way. 

Such a pleading would then have been tested to see whether the

standards for immunity had been met. But in this case, the complaint

does not even meet the first prong of our two-part Iqbal inquiry.

Our precedents make clear that it is not enough to state that a

defendant “was the officer in charge during the incident” and that he

“participated in or directed the constitutional violations” alleged. We
26

so held in Maldonado, where we dismissed a claim against a mayor

who promulgated a no-pets policy in municipal housing properties

that led to the killing of pets by subordinate officials. 568 F.3d at

273–74. We explained the dismissal by observing that the mayor’s

alleged level of involvement in the killing of the pets was

“insufficient to support a finding of liability,” id. at 273, even though

the complaint alleged that the mayor observed one of the raids and

“supervised, directly or indirectly, the agencies involved,” id. at 274.

The complaint identified “no policy which authorized the killing of

the pets, much less one which the Mayor authorized.” Id. at 273. It

is also the effect of our ruling in Peñalbert–Rosa, where we held that

a complaint did not sufficiently allege the involvement of a governor

in the alleged politically motivated termination of the plaintiff, who

worked at the governor’s mansion. 631 F.3d at 595. The complaint

merely stated that the governor was in charge of approving all

personnel decisions at the mansion, including the termination of the

plaintiff, and that the governor “knew or assumed” that the plaintiff

belonged to a different political party. Id.

Soto-Torres’s allegations about Fraticelli's active involvement

are no more concrete than those of the plaintiff in Iqbal. The plaintiff

in Iqbal alleged that Attorney General Ashcroft and FBI Director

Mueller “knew of, condoned, and . . . agreed to subject” him to harsh

conditions of detention, and that Ashcroft was the “principal

architect” of the policy that led to his detention and that Mueller was

“instrumental” in adopting and executing it. Iqbal, 129 S. Ct. at

1951. The Court deemed those bare allegations to be too conclusory

to be “entitled to the assumption of truth.” Id.

As to Soto-Torres’s alternative formulation that Fraticelli

“knew of the violation[s] and failed to act to prevent them,” his

factual allegations are again insufficient. The complaint does not

provide facts regarding what Fraticelli is alleged to have known

when, nor does it specify how he is alleged to have known it, or how

he somehow personally caused the detention.

Soto-Torres has been unable to provide adequate facts

although he has twice amended his complaint over a period of many

years. If Soto-Torres “had any basis beyond speculation for charging

[Fraticelli] with knowing participation in the wrong, it seems almost

certain that this would have been mentioned.” Peñalbert–Rosa, 631

F.3d at 596.

Id. at *3–5 (footnotes omitted).
27

• Roman-Oliveras v. Puerto Rico Elec. Power Auth., 655 F.3d 43, 2011 WL 3621548 (1st

Cir. Aug. 18, 2011). Plaintiff Hector Roman-Oliveras filed a complaint against defendant

Puerto Rico Electric Power Authority (“PREPA”), its managers James Velez and Julio

Renta, and others, alleging that after over twenty years of successful employment with

PREPA despite suffering from schizophrenia, he was inexplicably removed from his job in

2006, required to undergo multiple medical evaluations, and then terminated even though

each evaluation pronounced him fit to work. The complaint alleged, among other things,

claims under the Americans with Disabilities Act (ADA), asserting that PREPA terminated

plaintiff because of his medical condition.

The court of appeals summarized the complaint as follows:

Before the events at issue in this litigation, Román had

worked successfully for PREPA for twenty-two years while receiving

regular psychiatric treatment for schizophrenia. The condition had

been diagnosed more than thirty years earlier. Román received

excellent evaluations and was always available for overtime work.

Beginning in 2005, Román’s immediate superior, defendant James

Vélez, and the plant superintendent, defendant Julio Renta, made

Román’s life difficult in retaliation for his union activities and role as

a “leader of workm[e]n.” Román’s complaintstates that the PREPA

supervisors harassed him, “making improper rude comments against

him, taking adverse person[ne]l action and fabricating labor cases

against him.” The complaint accuses the defendants of attempting on

one occasion to transfer Román “without the benefit of paying him

[food] and car allowance” and of treating him “differently from

similarly situated individuals outside of his protected group.” The

complaint further alleges that Vélez and Renta used false information

and “their official positions improperly as employees and engineers

of co-defendant PREPA” to cause harm to Román.

On March 1, 2006, PREPA’s social worker asked the

Authority’s physician to bar Román from working until he was

evaluated by a psychiatrist, and PREPA thereafter did not allow him

to work. On April 24, the social worker received the psychiatric

report, which stated that Román could resume his duties. On May 23,

PREPA “formally acknowledge[d]” the psychiatrist’s report and

recommendation. Román, however, remained out of work,

involuntarily, despite the satisfactory report. On August 7, PREPA’s

physician ordered “asbestos [ ] medical evaluations” of Román. The

resulting report stated that Román was “fit for duties including as per

his psychiatric condition.”
28

Although PREPA’s physicians recommended on October 17

that Román return to work, and he repeatedly asked to return,

defendant Renta requested additional medical evaluations on

November 13 and referred Román for an involuntary medical leave.

Román also was asked for the evaluations of his private doctors. In

January 2007, he submitted the requested medical certification from

his psychiatrist. Despite findings by “[a]ll of the doctors” that

Román was capable of resuming his work, defendants again refused

to allow him to do so, “changing the entire process of the

reinstallation of plaintff[’]s duties.”

Román was taken off PREPA’s payroll in February 2007.

Although he alleges that he was terminated, he submitted an

employment certification in Spanish to the district court that,

according to the court, “reflects that Román had been on medical

leave, without pay, since February 10, 2007.” The defendants

presented a translated employment certification stating that, as of

September 5, 2007, Román remained a PREPA employee “hold[ing]

the regular position of Central Power Plant Electrician II.” The

complaint alleges, however, that Renta and Vélez ordered removal of

Román's personal items from the work area, removal of his name

from his locker, and reassignment of his toolbox to another employee.

Id. at *2.

The district court dismissed the plaintiffs’ claims under the ADA on the ground that he had

failed to allege facts showing that he was disabled within the meaning ofthe ADA. The First

Circuit disagreed, and vacated the district court’s dismissal of plaintiff’s ADA claims against

PREPA. The court reasoned as follows:

To state a claim of disability discrimination under Title I of

the ADA, Román needed to allege facts showing that (1) he was

disabled within the meaning of the Act; (2) he could perform the

essential functions of his job, with or without reasonable

accommodation, and (3) the employer took adverse action against

him, in whole or in part, because of his disability. Ruiz Rivera v.

Pfizer Pharm., LLC, 521 F.3d 76, 82 (1st Cir. 2008); Bailey v.

Ga.-Pac. Corp., 306 F.3d 1162, 1166 (1st Cir. 2002). An individual

is disabled for purposes of the ADA if he (1) has a physical or mental

impairment that substantially limits one or more majorlife activities;

(2) has a record of such an impairment; or (3) is regarded as having

such an impairment. Ruiz Rivera, 521 F.3d at 82; see also 42 U.S.C.

§ 12102(2) (2008).
29

The district court concluded that Román had failed to allege

facts sufficient to establish that he was disabled under any of the

statute’s three definitions. We agree that the complaint falls short on

the first two alternatives. As to the first option, the district court

correctly noted that Román did not allege that schizophrenia

substantially limited any aspect of his life, including his ability to

work. Indeed, the thrust of appellant’s complaint is that he was fully

capable of working, but was unfairly denied the opportunity to do so

“because of his medical condition.” He thus has not stated a claim of

disability discrimination based on the condition of schizophrenia

itself.

For a similar reason, the district court correctly found that

Román’s complaint failed to satisfy the “record of impairment” prong

of the disability definition. The “record” provision is designed “to

protect those who have recovered or are recovering from substantially

limiting impairments from discrimination based on their medical

history.” Bailey, 306 F.3d at 1169. Thus, to qualify for ADA

coverage on the basis of this provision, Román would need to show

that in the past he had, “or has been misclassified as having, an

impairment that substantially limited a major life activity.” Id.

Again, because Román has not alleged substantial limitations as a

result of schizophrenia, he failed to state an ADA claim based on

having a record of impairment.

Finally, the district court rejected appellant’s “regarded as”

claim on the ground that he had “failed to allege facts sufficient to

show that defendants ever regarded Román's schizophrenia as having

a substantial impact on his work.” To prove a regarded as claim

against his employer, a plaintiff ordinarily must show either that the

employer (1) “mistakenly believes that [he] has a physical impairment

that substantially limits one or more major life activities,” or (2)

“mistakenly believes that an actual, nonlimiting impairment

substantially limits one or more major life activities.” Sutton v.

United Air Lines, Inc., 527 U.S. 471, 489 (1999), superseded by

statute, ADA Amendments Act of 2008, Pub.L. No. 110–325, §

2(a)(4)-(6), 122 Stat. 3553; see also Ruiz Rivera, 521 F.3d at 83;

Sullivan v. Neiman Marcus Grp., Inc., 358 F.3d 110, 117 (1st Cir.

2004). We focus on the second of these alternatives.

To survive a motion to dismiss, a plaintiff must allege “only

enough facts to state a claim to relief that is plausible on its face.”

Bell Atl. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has facial

plausibility when the plaintiff pleads factual content that allows the
30

court to draw the reasonable inference that the defendant is liable for

the misconduct alleged.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949

(2009). According to the allegations in the complaint, Román was

removed from his position and forced to undergo multiple medical

evaluations at the behest of the defendants, and also was required to

submit a medical certification from histreating psychiatrist. Despite

favorable test results each time, defendants persisted in refusing to

allow Román to work.

Taken as true, these allegations, together with the allegation

that Román always performed his job well, readily support three

pertinent inferences: (1) defendants mistakenly believed that Román’s

psychiatric condition substantially limited his ability to do his job; (2)

they refused to let him work based on that erroneous, discriminatory

judgment; and (3) they repeatedly attempted to justify removing him

from his job through the psychiatric and other medical testing. To

state a violation of the ADA when the major life activity at issue is

working, however, Román must show “‘not only that the employer

thought that he was impaired in his ability to do the job that he held,

but also that the employer regarded him as substantially impaired in

“either a class of jobs or a broad range of jobs in various classes as

compared with the average person having comparable training, skills,

and abilities.”’” Ruiz Rivera, 521 F.3d at 83 (quoting Sullivan, 358

F.3d at 117 (quoting Murphy v. United Parcel Serv., Inc., 527 U.S.

516, 523 (1999))).

Although the complaint does not explicitly assert that PREPA

had such a broad perception of Román’s incapacity, the allegations

are sufficient to embrace that contention. According to the complaint,

PREPA removed Román from his position without any meaningful

effort to offer him alternative positions appropriate for whatever

limitations his employer attributed to him. Román alleges one

attempted transfer, but his objections to it—based on denial of food

and travel allowance—suggest it was a temporary relocation rather

than reassignment to a new position deemed more suitable for his

abilities. In any event, given that the disability at issue is a mental

condition rather than a discrete physical limitation, defendants’

actions in removing Román and repeatedly demanding psychiatric

evaluations permit the inference that defendants deemed him

disqualified from a broad range of jobs. Cf. Quiles-Quiles v.

Henderson, 439 F.3d 1, 6–7 (1st Cir. 2006) (concluding that

supervisors’ belief that plaintiff’s mental impairment posed a safety

risk to coworkers, “preclud[ing] him from holding most jobs in our

economy,” permitted jurors to find that employer regarded him as
 The district court’s opinion, 639 F. Supp. 2d 217 (D.P.R. 2009), was included in earlier versions of this memo. 9

Because the First Circuit vacated that decision, the district court’s opinion has been removed from the appendix to this

memo.

31

disabled); Watts v. United Parcel Serv., 378 F. App’x 520, 526 (6th

Cir. 2010) (unpublished) (“When a defendant flatly bars a plaintiff

from working at any job at the defendant’s company, that is generally

sufficient proof that the employer regards the plaintiff as disabled in

the major life activity of working so as to preclude the defendant

being awarded judgment as a matter of law.”).

Román has thus made a sufficient showing of disability within

the meaning of the ADA to survive defendants’ motion to dismiss.

His allegations easily satisfy the other two pleading prerequisites for

his claim to proceed: that he could perform the essential functions of

his job and that PREPA took adverse action against him, in whole or

in part, because of his disability. We see no alternative view of the

allegations that is “‘just as much in line’ with innocent conduct” as

with disability discrimination, Ocasio, 640 F.3d at 11 (quoting

Twombly, 550 U.S. at 554); see also Iqbal, 129 S. Ct. at 1949, and

Román hasthus passed “the line between possibility and plausibility”

in asserting a regarded-as violation of the ADA, Twombly, 550 U.S.

at 557.

We hasten to add that we offer no view on the merits of his

claim. The question at this stage of the case is not “the likelihood that

a causal connection will prove out as fact.” Sepúlveda-Villarini, 628

F.3d at 30. Rather, “the standard is plausibility assuming the pleaded

facts to be true and read in a plaintiff’s favor.” Id.; see also Twombly,

550 U.S. at 563 n.8 (“[W]hen a complaint adequately states a claim,

it may not be dismissed based on a district court’s assessment that the

plaintiff will fail to find evidentiary support for his allegations or

prove his claim to the satisfaction of the factfinder.”). Here, the

pleaded facts support “[a] plausible but inconclusive inference” of

discrimination based on disability, Sepúlveda-Villarini, 628 F.3d at

30, and Román is therefore entitled to proceed with his ADA claim.

Id. at *4–6.

• Ocasio-Hernandez v. Fortuno-Burset, 640 F.3d 1, 2011 WL 1228768 (1st Cir. Apr. 1,

2011). Plaintiff Ocasio-Hernandez was one of fourteen maintenance and domestic workers 9

at the Puerto Rico governor’s mansion, known as “La Fortaleza.” Some of the workers had

held their positions for nearly twenty years. In early 2009, after the governorship of the
32

commonwealth changed hands from one political party to another with the election of

Governor Fortuno, each of the workers—without any notice or job evaluation—received a

letter of termination from Ms. Berlingeri, the Administrator at La Fortaleza. The letter did

not state any cause for the terminations. None of the workers had been known to be

members of the new governor’s political party. In answering press questions about layoffs

and terminations at La Fortaleza, Mr. Blanco, the governor’s chief of staff, stated that

terminated employees had been privy to confidential, sensitive information. This was not

true, however, of these fourteen employees, who performed tasks such as laundry, ironing,

sewing, and cleaning.

The fourteen workers brought suit under § 1983, alleging termination for political reasons

in violation of the first amendment, deprivation of property without due process, and denial

of equal protection. The complaint named four defendants: Governor Fortuno; his wife, first

lady Luce Vela, who chaired a committee for the maintenance, restoration, and preservation

of La Fortaleza; Mr. Blanco; and Ms. Berlingeri.

At an initial case conference, the district court informed the plaintiffs that their complaint

satisfied the federal notice pleading standard, and advised the defendants not to file a motion

to dismiss. After the Supreme Court issued its decision in Iqbal, however, the district court

scheduled an emergency hearing to hear arguments on whether Iqbal required the case to be

dismissed for insufficient factual allegations. At that hearing, the defendants moved to

dismiss the complaint. The court denied that motion without prejudice and gave the plaintiff

thirty days to amend their complaint, which they did.

Following amendment of the complaint, the district court granted the defendants’ motion to

dismiss the complaint. As recounted by the court of appeals, 

The district court began its opinion and order in this case by

dismissing all claims against three of the four defendants—Governor

Fortuño, First Lady Vela, and Blanco. According to the court, the

factual allegations in the complaint failed to show with the required

specificity that those three defendants had caused the plaintiffs’

terminations. The court described the plaintiffs’ case against those

defendants as resting on “an implicit assumption that the defendants’

[sic] participated in the decision” because of their positions of

authority. It noted that “no additional factual allegations, such as

interactions between the defendants and particular plaintiffs, . . . tie

Fortuño, Vela, and Blanco to the deprivation of the plaintiffs’

constitutional rights.”

The district court did find, however, that the plaintiffs had

“minimally satisfied” their burden of pleading Berlingeri’s

participation in the terminations, “since the plaintiffs allege that she

signed the letter which officially separated the plaintiffs from their
33

employment at La Fortaleza.” It nevertheless concluded that the

plaintiffs’ political discrimination claim failed because the complaint

lacked sufficient factual allegations to show that Berlingeri had

knowledge of the plaintiffs’ political affiliation or that political

affiliation played a role in the termination decision: “The fact that

Berlingeri may have made disparaging remarks about the previous

administration does not lead to the conclusion that she thought or

knew that plaintiffs were PDP members or supporters.” It found that

“the same can be said” with respect to the plaintiffs’ allegations that

Berlingeri’s trusted aide was a staunch NPP supporter, wore the

party's logo, and sang Governor Fortuño's campaign jingle. The court

also discounted the complaint's allegation that Berlingeri, the other

defendants, and newly hired clerical staff had inquired into the

circumstances of the plaintiffs’ hire at La Fortaleza. It noted that the

complaint “contains no specific account of these conversations,” and

thus described it as “a generic allegation, made without reference to

specific facts that might make it ‘plausible on its face.’” The court

further explained that had such inquiries taken place, that fact would

“not lead to the conclusion that [the defendants] did so in order to

ascertain [the plaintiffs’] political affiliation, or that they in fact

gained that information.”

The court likewise discounted the plaintiffs’ allegation that

they were replaced in their positions by NPP-affiliated workers,

describing it as “a conclusory statement.” It pointed out that the

“plaintiffs do not identify who replaced any or all of the plaintiffs, nor

the date of these replacements” and that the complaint merely asserts

“that this occurred as to all of the plaintiffs.” Further, the court found

that the defendants’ failure to justify the terminations or to conduct

performance evaluations was not “relevant” to the claim, as

“plaintiffs were not entitled to any explanation.” Lastly, the court

explained that “mere temporal proximity” between a change in

administration and an employee’s dismissal is “insufficient to

establish discriminatory animus.”

Id. at *3–4.

The First Circuit vacated the district court’s dismissal of the complaint. The court of appeals

began its discussion with a review of “the current state of federal notice pleading.” The court

stated, 

We distill the following principles from Twombly and Iqbal.

Dismissal of a complaint pursuant to Rule 12(b)(6) is
34

inappropriate if the complaint satisfies Rule 8(a)(2)’s requirement of

“a short and plain statement of the claim showing that the pleader is

entitled to relief,” FED. R. CIV. P. 8(a)(2). See Iqbal, 129 S. Ct. at

1949; Twombly, 550 U.S. at 555, 127 S. Ct. 1955. A “short and

plain” statement needs only enough detail to provide a defendant with

“‘fair notice of what the . . . claim is and the grounds upon which it

rests.’” Twombly, 550 U.S. at 555, 127 S. Ct. 1955 (citing Conley,

355 U.S. at 47, 78 S. Ct. 99); see also Erickson v. Pardus, 551 U.S.

89, 93, 127 S. Ct. 2197, 167 L. Ed. 2d 1081 (2007) (“Federal Rule of

Civil Procedure 8(a)(2) requires only ‘a short and plain statement . .

. .’ Specific facts are not necessary.”). However, in order to “show”

an entitlement to relief a complaint must contain enough factual

material “to raise a right to relief above the speculative level on the

assumption that all the allegations in the complaint are true (even if

doubtful in fact).” See Twombly, 550 U.S. at 555, 127 S. Ct. 1955

(citation omitted); see also Iqbal, 129 S. Ct. at 1950. “Where a

complaint pleads factsthat are ‘merely consistent with’ a defendant's

liability, it ‘stops short of the line between possibility and plausibility

of entitlement to relief.’” Iqbal, 129 S. Ct. at 1949 (quoting

Twombly, 550 U.S. at 557, 127 S. Ct. 1955). In short, an adequate

complaint must provide fair notice to the defendants and state a

facially plausible legal claim.

In resolving a motion to dismiss, a court should employ a

two-pronged approach. It should begin by identifying and

disregarding statements in the complaint that merely offer “‘legal

conclusion[s] couched as . . . fact[ ]’” or “[t]hreadbare recitals of the

elements of a cause of action.” Id. at 1949–50 (quoting Twombly, 550

U.S. at 555, 127 S. Ct. 1955). A plaintiff is not entitled to “proceed

perforce” by virtue of allegations that merely parrot the elements of

the cause of action. See id. at 1950; cf. Sanchez v. Pereira-Castillo,

590 F.3d 31, 49 (1st Cir. 2009) (disregarding as conclusory, under

Iqbal’s first prong, a factual allegation that merely “[p]arrot[ed] our

standard for supervisory liability in the context of Section 1983” in

alleging that defendants had “failed to [supervise] with deliberate

indifference and/or reckless disregard of Plaintiff’s federally

protected rights”). Non-conclusory factual allegations in the

complaint must then be treated as true, even if seemingly incredible.

Iqbal, 129 S. Ct. at 1951 (“To be clear, we do not reject these bald

allegations on the ground that they are unrealistic or nonsensical. . .

. It is the conclusory nature of respondent’s allegations, rather than

their extravagantly fanciful nature, that disentitles them to the

presumption of truth.”). But cf. Peñalbert-Rosa v. Fortuño–Burset,

631 F.3d 592, 595 (1st Cir. 2011) (“[S]ome allegations, while not
35

stating ultimate legal conclusions, are nevertheless so threadbare or

speculative that they fail to cross the line between the conclusory and

the factual.”) (internal quotation marks omitted). If that factual

content, so taken, “allows the court to draw the reasonable inference

that the defendant is liable for the misconduct alleged,” the claim has

facial plausibility. Iqbal, 129 S. Ct. at 1949. “The make-or-break

standard . . . is that the combined allegations, taken as true, must state

a plausible, not a merely conceivable, case for relief.” SepúlvedaVillarini v. Dep’t of Educ. of P.R., 628 F.3d 25, 29 (1st Cir. 2010)

(Souter, J.).

Although evaluating the plausibility of a legal claim “requires

the reviewing court to draw on its judicial experience and common

sense,” Iqbal, 129 S. Ct. at 1950, the courtmay not disregard properly

pled factual allegations, “even if it strikes a savvy judge that actual

proof of those facts is improbable.” Twombly, 550 U.S. at 556, 127

S. Ct. 1955; see also Neitzke v. Williams, 490 U.S. 319, 327, 109 S.

Ct. 1827, 104 L.Ed.2d 338 (1989) (“Rule 12(b)(6) does not

countenance . . . dismissals based on a judge’s disbelief of a

complaint’s factual allegations.”). Nor may a court attempt to

forecast a plaintiff’s likelihood of success on the merits; “a

well-pleaded complaint may proceed even if . . . a recovery is very

remote and unlikely.” Twombly, 550 U.S. at 556, 127 S. Ct. 1955

(internal quotation marks omitted); see also id. at 563 n.8, 127 S. Ct.

1955 (“[W]hen a complaint adequately states a claim, it may not be

dismissed based on a district court’s assessment that the plaintiff will

fail to find evidentiary support for his allegations or prove his claim

to the satisfaction of the factfinder.”). The relevant inquiry focuses

on the reasonableness of the inference of liability that the plaintiff is

asking the court to draw from the facts alleged in the complaint.

Id. at *8–9 (emphasis added).

The court of appeals then ruled that the plaintiffs’ complaint alleged enough to show that all

four defendants had knowledge of the plaintiffs’ political affiliation. The court stated,

The district court concluded that the plaintiffs’ complaint

inadequately alleged Berlingeri’s knowledge. In reaching that

conclusion, it disregarded as “conclusory” an allegation that the

plaintiffs were replaced by NPP-affiliated workers because the

plaintiffs “do not identifywho replaced any or all of the plaintiffs, nor

the date of these replacements.” It also disregarded as “generic,

blanket statements” numerous allegations that the defendants and

their subordinates had questioned the plaintiffs about the
36

circumstances of their hires in order to discern their political

affiliations. The court explained that the complaint “contains no

specific account of these conversations.” The court then added that,

even if the defendants had questioned the plaintiffs about the

circumstances of their employment, such questioning “does not lead

to the conclusion that [the defendants] did so in order to ascertain [the

plaintiffs’] political affiliation, or that they in fact gained that

information.” It reasoned similarly with respect to allegations about

disparaging remarks made by Berlingeri: “The fact Berlingeri may

have made disparaging remarks about the previous administration

does not lead to the conclusion that she thought or knew that

plaintiffs were PDP members or supporters” and that “[t]he same can

be said” of the plaintiffs’ allegations regarding the overtly politicized

conduct of Berlingeri’s aide.

The district court erred by not affording the plaintiffs’

allegations the presumption of truth to which they were entitled.

First, as we explained above, the Supreme Court’s concerns about

conclusory allegations expressed in Twombly and Iqbal focused on

allegations of ultimate legal conclusions and on unadorned recitations

of a cause-of-action’s elements couched as factual assertions.

Allegations of discrete factual events such as the defendants

questioning the plaintiffs and replacing the plaintiffs with new

employees are not “conclusory” in the relevant sense. Second, factual

allegations in a complaint do not need to contain the level of

specificity sought by the district court. See, e.g., Leatherman v.

Tarrant Cty. Narcotics Intelligence & Coordination Unit, 507 U.S.

163, 167–69, 113 S. Ct. 1160, 122 L.Ed.2d 517 (1993); cf. Iqbal, 129

S. Ct. at 1951 (accepting allegations that the FBI “arrested and

detained thousands of Arab Muslim men” pursuant to a policy that

was “approved by [the defendants] in discussions in the weeks after

September 11, 2001”) (internal quotation marks omitted); Twombly,

550 U.S. at 550–51, 564–65, 127 S. Ct. 1955 (accepting allegations

that defendants “engaged in parallel conduct” and failed to

“meaningfully . . . pursue attractive business opportunities”)

(alterations omitted) (internal quotation marks omitted); see also id.

at 565 n.10, 127 S. Ct. 1955 (“Here, our concern is not that the

allegations in the complaint were insufficiently ‘particularized’;

rather, the complaint warranted dismissal because it failed in toto to

render plaintiffs’ entitlement to relief plausible.”) (alteration omitted)

(citation omitted). The plaintiffs’ allegations were sufficiently

detailed to provide the defendants “fair notice of what the . . . claim

is and the grounds upon which it rests.” Id. at 555, 127 S. Ct. 1955

(internal quotation marks omitted). Those allegations should not
37

have been disregarded.

Additionally, the district court erred when it failed to evaluate

the cumulative effect of the factual allegations. The question

confronting a court on a motion to dismiss is whether all the facts

alleged, when viewed in the light most favorable to the plaintiffs,

render the plaintiff's entitlement to relief plausible. See id. at 569

n.14, 127 S. Ct. 1955; Braden v. Wal–Mart Stores, Inc., 588 F.3d

585, 594 (8th Cir.2009) (explaining that “the complaint should be

read as a whole, not parsed piece by piece to determine whether each

allegation, in isolation, is plausible”). No single allegation need

“lead to the conclusion”—in the district court's words—of some

necessary element, provided that, in sum, the allegations of the

complaint make the claim as a whole at least plausible. See

Sepúlveda-Villarini, 628 F.3d at 29 (“The make-or-break standard .

. . is that the combined allegations, taken as true, must state a

plausible, not a merely conceivable, case for relief.”) (emphasis

added). Indeed, the Supreme Court has suggested that allegations

that would individually lack the heft to make a claim plausible may

suffice to state a claim in the context of the complaint’s other factual

allegations. See Twombly, 550 U.S. at 557, 127 S. Ct. 1955 (“An

allegation of parallel conduct . . . gets the complaint close to stating

a claim, but without some further factual enhancement it stops short

of the line between possibility and plausibility.”).

We also reject the district court’s “lead to the conclusion”

formulation to the extent it implies a stronger logical connection than

that demanded by plausibility. As we have said previously, “[a]

plausible but inconclusive inference from pleaded facts will survive

a motion to dismiss.” Sepúlveda-Villarini, 628 F.3d at 30.

Taking all well-pleaded factual allegations as true, the

plaintiffs in this case have pleaded adequate factual material to

support a reasonable inference that the four defendants had

knowledge of their political beliefs. The complaint states that the

defendants asked several plaintiffs about “the circumstances

pertaining to how and when they got to work at Fortaleza”; that an

aide to Berlingeri similarly “asked each of them as to how and when

they began work at the Governor’s Mansion,” taking notes on their

responses; and that confidential clerical personnel brought in by the

new administration “insisted on interrogating them in order to

ascertain their respective political affiliations.” This last allegation,

in particular, contains a clear assertion that the clerical staff inquired

directly into the plaintiffs’ political affiliations, rather than obliquely
38

into circumstances that might imply such affiliations. Cf.

Montfort–Rodríguez v. Rey–Hernández, 504 F.3d 221, 226 (1st Cir.

2007) (finding sufficient evidence of a defendant’s knowledge where

he had asked a subordinate to generate a list of trust employees and

where subordinate thereby acquired knowledge of the political

affiliation of employees). The plaintiffs’ complaint thus plainly

shows that the defendants were actively seeking the knowledge in

question from the plaintiffs.

The plaintiffs’ complaint also shows that the information was

potentially accessible to the defendants from sources other than the

plaintiffs. The complaint states that employees at La Fortaleza knew,

and commonly discussed, the political affiliations of their co-workers.

Cf. Peguero-Moronta v. Santiago, 464 F.3d 29, 48 (1st Cir. 2006)

(finding sufficient evidence of defendants’ knowledge where

“evidence portrays a relatively small workplace where everyone knew

who everyone else was and political affiliations were common office

knowledge”). In the same paragraph, the complaint states that certain

NPP-affiliated employees who possessed this information were

promoted to “high level trust positions” by the defendants following

the change of administration and were consulted by the defendants in

making employment decisions. These allegations are also consistent

with the plaintiffs’ allegation of rumors that had spread among

employees at La Fortaleza suggesting the defendants were

maintaining a list of “employees considered as PDP’s [sic] . . . who

would be terminated and substituted with NPP’ers [sic].”

In short, in light of the pleadings as a whole, these allegations

plausibly show the defendants’ awareness of the plaintiffs’ political

affiliation at the time that they were terminated.

Id. at *10–12 (emphasis added).

Next, the court of appeals ruled that the plaintiffs had alleged enough to show that all four

defendants had played a role in the decision to terminate the plaintiffs. The court stated:

The district court concluded that the allegations of

participation by Governor Fortuño, First LadyVela, and Blanco were

inadequate because they relied entirely on “the positions these

defendants hold within the governor’s mansion,” and “no additional

factual allegations, such as interactions between the defendants and

particular plaintiffs, . . . tie Fortuño, Vela, and Blanco to the

deprivation of the plaintiffs’ constitutional rights.” That conclusion

was erroneous. Although § 1983 liability cannot rest solely on a
39

defendant’s position of authority,see Ayala-Rodriguez v. Rullán, 511

F.3d 232, 236 (1st Cir. 2007), the plaintiffs’ complaint does include

other well-pleaded factual allegations that detail each of these three

defendants’ level of personal involvement in and familiarity with the

plaintiffs’ terminations.

According to the complaint, Governor Fortuño is the

nominating authority at La Fortaleza. He approves or disapproves of

all personnel decisions at the mansion. As early as January 2009,

Governor Fortuño signed an Executive Order authorizing Berlingeri

to issue termination notices at La Fortaleza. The plaintiffs have

alleged that Governor Fortuño personally participated in questioning

them about how and when they began to work at La Fortaleza in order

to learn their political affiliation. When responding to press questions

about the potential termination of government employees, Governor

Fortuño allegedly stated that those who would be terminated “did not

vote for him.”

According to the complaint, First Lady Vela serves as the

chair of a committee charged with the maintenance, restoration, and

preservation of La Fortaleza. In that role, she allegedly oversees

maintenance and domestic workers. Indeed, the complaint states that

she publicly took personal responsibility for overseeing certain

renovations and improvements in her time at La Fortaleza,

demonstrating her active participation in that role.

Vela allegedly interacted with the plaintiffs while they

executed their duties, making disparaging remarks to them about the

prior PDP administration and informing them that “changes had

come.” She is also alleged to have been overheard stating her

intention to “clean up the kitchen,” a remark reasonably understood

as reflecting an intent to replace certain staff members. The district

court improperly disregarded this comment as “an ambiguous remark

that does not necessarily refer to the dismissals at issue in this case.”

On a motion to dismiss, we are obligated to view the facts of the

complaint in the light most favorable to the plaintiffs, and to resolve

any ambiguities in their favor. Given these requirements, the

“necessarily refer” standard of the district court is particularly

inappropriate for evaluating the sufficiency of the allegations in a

complaint.

Finally, Blanco is alleged to be the Chief of Staff at La

Fortaleza, a title which itself indicates his role in personnel

management. According to the complaint, Blanco was also
40

responsible for answering press questions about the specific

terminations at La Fortaleza. In responding to the press, Blanco

allegedly lied about the reason for the plaintiffs’ termination,

claiming that the plaintiffs were privy to confidential information and

that performance evaluations were being regularly conducted. The

allegations in the complaint show, however, that Blanco understood

the true reason for the terminations at La Fortaleza, which he revealed

by making disparaging remarks about the prior PDP administration

to a group of former employees who were protesting at the mansion.

The complaint also states that Blanco openly acknowledged to the

press that some of the terminated employees would be replaced.

As we have often emphasized, one rarely finds “smoking gun”

evidence in a political discrimination case. Lamboy-Ortiz, 630 F.3d

at 240. Circumstantial evidence must, at times, suffice. Moreover,

the requirement of plausibility on a motion to dismiss under Rule

12(b)(6) “simply calls for enough fact to raise a reasonable

expectation that discovery will reveal evidence of the illegal

[conduct].” Twombly, 550 U.S. at 556, 127 S. Ct. 1955. The

allegations above plausibly show that each defendant possessed

knowledge of and shared some responsibility for the termination of

employees at La Fortaleza.

Id. at *13–14 (emphasis added) (footnote omitted).

Finally, the court of appeals ruled that the plaintiffs’ allegations supported a reasonable

inference that the defendants’ decision to terminate the plaintiffs’ employment was

substantially motivated by the plaintiff’s political affiliation. The court concluded:

We have previously explained that a politically charged

employment atmosphere “occasioned by the major political shift from

the NPP to the PDP . . . coupled with the fact that plaintiffs and

defendants are of competing political persuasions[ ] may be probative

of discriminatory animus.” Acevedo-Diaz v. Aponte, 1 F.3d 62, 69

(1st Cir. 1993). Here, the plaintiffs have alleged just such a case.

Following the election of Governor Fortuño, “logos and flyers

allusive to the NPP and Governor Fortuño were in full display and

clear to employees at the Governor’s Mansion.” The political

affiliation of employees was “commonly shared and discussed” while

rumors spread concerning a list of PDP-affiliated workers who were

to be terminated. The plaintiffs alleged that the defendants

contributed to the politically charged atmosphere by repeatedly

inquiring into the political affiliation of employees and by making

disparaging comments to employees about the prior PDP
41

administration, including Vela’s expressed intent to “clean up the

kitchen” and assertions by Vela and Berlingeri’s aide that “things had

indeed changed” at La Fortaleza. Cf. Lamboy-Ortiz, 630 F.3d at 239

(holding that it was reasonable for a plaintiff to bring a political

discrimination suit against a PDP-affiliated mayor who had made

“vitriolic, anti-NPP commentary,” had stated an intent to “make [a]

cleanup” of certain NPP-affiliated employees, and who was rumored

to have maintained a “list” of NPP-affiliated employees he intended

to oust).

The allegations of the complaint go well beyond this

atmospheric evidence, however. The plaintiffs alleged that they were

fired less than ten weeks after Governor Fortuño assumed office.

Although the district court is correct that temporal proximity between

the change in political administration and the turnover of staff is not

itself sufficient to satisfy a plaintiff's burden of proof on the causation

element of a political discrimination claim, it unquestionably

contributes at the motion to dismiss stage to the reasonable inference

that the employment decision was politically motivated. See, e.g.,

Peguero-Moronta, 464 F.3d at 53. In contrast to their treatment, the

plaintiffs alleged that NPP-affiliated employees were promoted to

high-level trust positions following the change in administration.

Similarly, the plaintiffs alleged that their positions at La Fortaleza

were filled almost immediately by NPP-affiliated workers. We have

previously described such comparative evidence as “helpful” in

demonstrating that a particular plaintiff was targeted for his or her

political views. See Mercado-Berrios v. Cancel-Alegría, 611 F.3d 18,

24 (1st Cir. 2010).

Lastly, plaintiffs again point to the public statements made by

the defendants as an acknowledgment of the political motivation

behind the administration's employment decisions. Blanco’s alleged

misstatements to the press about the reasonsforthe terminations at La

Fortaleza and about conducting regular performance evaluations

bolster the plaintiffs’ contention that the terminations had a

discriminatory basis. See Acevedo-Diaz, 1 F.3d at 68 (“[T]o the

extent the reasons given by the employer at the time of the dismissal

are later proven false or frivolous, the weight of the evidence of

discriminatory animus may be enhanced.”). Similarly, viewed in the

light most favorable to the plaintiffs, Blanco’s and Berlingeri’s

alleged disparaging remarks about the prior PDP-affiliated

administration to terminated employees, and Governor Fortuño’s

press statements that “none of them voted for him” when questioned

about potential employee firings, serve to confirm the plaintiffs’ core
42

allegation: the defendants’ political biases played a substantial role in

the employment decisions at La Fortaleza.

The cumulative weight of the plaintiffs’ factual allegations

easily nudges their claim of political discrimination “across the line

from conceivable to plausible” as to each defendant. Iqbal, 129 S.

Ct. at 1951. Read as a whole, the plaintiffs’ complaint

unquestionably describes a plausible discriminatory sequence that is

all too familiar in this circuit.

Id. at *15–16 (emphasis added) (footnote omitted).

• Peñalbert-Rosa v. Fortuno-Burset, 631 F.3d 592 (1st Cir. 2011). Plaintiff Peñalbert was

employed as a receptionist in an office building annexed to the Puerto Rico governor’s

mansion. She was discharged from commonwealth employment in February 2009, shortly

after the governorship of the commonwealth changed hands from one political party to

another. She then brought an action under § 1983 alleging that her position did not entail

policy work or handling confidential information and that her termination resulted from her

political affiliation and therefore violated her federal constitutional rights to free speech and

association, due process, and equal protection. The complaint named as defendants the

governor, the governor’s chief of staff, and the administrator of the governor’s mansion.

The First Circuit’s discussion was as follows:

The complaint adequately alleges a claim that someone

discharged Peñalbert in violation of the First Amendment.

Presumably, whoever discharged her was acting as a state actor, and

no basis has yet been asserted for exempting Peñalbert from the

protections of Branti [v. Finkel, 445 U.S. 507 (1980)] and Elrod [v.

Burns, 427 U.S. 347 (1976)]. While there may have been some reason

independent of political party for the firing, the opposite inference

may be drawn from the timing of the discharge, the lack of

explanation and the replacement by a member of the opposing party.

The trouble with Peñalbert’s complaint is not that the charge

is implausible; political firings after elections in Puerto Rico are not

uncommon. But, save under special conditions, an adequate

complaint must include not only a plausible claim but also a plausible

defendant. Yet there is nothing in the complaint beyond raw

speculation to suggest that the named defendants participated—either

as perpetrators or accomplices—in the decision to dismiss Peñalbert.

To be sure, the complaint asserts that Governor Fortuno

“approves or disapproves of all personnel decisions [at the governor’s
43

mansion], including the personnel decisions concerning the

termination of [Peñalbert]”; that the two named subordinate officials

“participated” in these decisions; that the defendants “knew or

assumed” that Peñalbert belonged to the [Popular Democratic Party

(“PDP”)] “and/or” was not a member of the [New Progressive Party

(“NPP”)]; and ultimately that all three conspired to dismiss Peñalbert

because she was a member of the PDP. All except that conspiracy

charge are at least couched in factual terms.

The plaintiff's factual allegations are ordinarily assumed to be

true in passing on the adequacy of the complaint, which need not

plead evidence. See, e.g., Sepúlveda-Villarini v. Dep’t of Educ.,628

F.3d 25, 30 (1st Cir. 2010); Sandler v. E. Airlines, Inc., 649 F.2d 19,

20 (1st Cir. 1981) (per curiam). But “ordinarily” does not mean

“always”: some allegations, while not stating ultimate legal

conclusions, are nevertheless so threadbare or speculative that they

fail to cross “the line between the conclusory and the factual.” Bell

Atl. Corp. v. Twombly, 550 U.S. 544, 557 n. 5, 127 S. Ct. 1955, 167

L. Ed. 2d 929 (2007).

Thus, in Ashcroft v. Iqbal, --- U.S. ----, 129 S. Ct. 1937, 173

L. Ed. 2d 868 (2009), the complaint charged that two high-ranking

government officials knowingly condoned harsh detention conditions

for the plaintiff “as a matter of policy, solely on account of [his]

religion, race, and/or national origin,” id. at 1944 (quoting complaint).

Although this was patently a factual claim about the named

defendants’ state of mind, the Supreme Court held that the bare

allegation of intent was inadequate absent more specific factual

assertions:

To be clear, we do not reject these bald allegations on

the ground that they are unrealistic or nonsensical.

We do not so characterize them any more than the

Court in Twombly rejected the plaintiffs’ express

allegation of “‘a contract, combination or conspiracy

to prevent competitive entry,’” because it thought that

claim too chimerical to be maintained. It is the

conclusory nature of respondent's allegations, rather

than their extravagantly fanciful nature, that

disentitles them to the presumption of truth.

Id. at 1951 (internal citation omitted).

Iqbal could be viewed as emergent law, see, e.g., 129 S. Ct.
44

at 1961 (Souter, J., dissenting), but we ourselves had earlier said a

complaint that rests on “bald assertions” and “unsupportable

conclusions” may be subject to dismissal, Aulson v. Blanchard, 83

F.3d 1, 3 (1st Cir. 1996); and our decisions since Iqbal have several

times found unadorned factual assertions to be inadequate. Without

trying to lay down a mechanical rule, it is enough to say that

sometimes a threadbare factual allegation bears insignia of its

speculative character and, absent greater concreteness, invites an early

challenge—which can be countered by a plaintiff’s supplying of the

missing detail.

Here, Peñalbert’s complaint does allege that personnel

decisions in the executive mansion are within the authority of the

governor, but nothing beyond speculation supports the further

assertion that the governor or his chief of staff participated in the

decision to dismiss Peñalbert. Someone denominated the

“administrator” of the governor’s mansion might more plausibly be

involved, but nothing in the complaint indicates the administrator’s

actual duties or that the administrator ordinarily passes on the

selection or discharge of a receptionist.

A defendant could be liable, even without knowing of

Peñalbert or her position, if (for example) on some generic basis that

defendant authorized the impermissible firing of PDP supporters

because of their party membership or beliefs. Cf. Figueroa-Serrano

v. Ramos-Alverio, 221 F.3d 1, 8 (1st Cir. 2000) (discussing alleged

statement by mayor of his “intention to rid City Hall of NPP

employees”). But, again, mere possibility is not enough to state a

claim and again no facts are stated in the complaint to show that in

this instance any of the three gave such an order or that it is even

plausible that they did.

If Peñalbert had any basis beyond speculation for charging any

one of the named defendants with knowing participation in the

wrong, it seems almost certain that this would have been

mentioned—if not in the complaint at least in the opposition to the

motion to dismiss. Specific information, even if not in the form of

admissible evidence, would likely be enough at this stage; pure

speculation is not. This may seem hard on a plaintiff who merely

suspects wrongdoing, but even discovery requires a minimum

showing and “fishing expeditions” are not permitted. DM Research,

170 F.3d at 55.

However, Peñalbert’s position is in one respect different: the
45

complaint adequately alleges—based on the non-conclusory facts

already listed—that someone fired Peñalbert based on party

membership. Of course, the factual allegations might be later

undermined or countered by affirmative defenses, e.g., Cepero-Rivera

v. Fagundo, 414 F.3d 124, 132-33 (1st Cir. 2005); but at this stage the

complaint adequately asserts a federal wrong by someone. So while

the present complaint does not justify suit against the defendants

actually named, an avenue for discovery may be open.

A plaintiff who is unaware of the identity of the person who

wronged her can sometimes proceed against a “John Doe” defendant

as a placeholder. E.g., Iqbal, 129 S. Ct. at 1943; Bivens v. Six

Unknown Named Agents of Fed. Bureau of Narcotics, 403 U.S. 388,

390 n. 2, 91 S. Ct. 1999, 29 L. Ed. 2d 619 (1971);see also 5A Wright

& Miller, supra note 1, § 1321, at 382 & n. 6. We have previously

condoned the device, at least when discovery is likely to reveal the

identity of the correct defendant and good faith investigative efforts

to do so have already failed. See Martínez- Rivera v. Sánchez Ramos,

498 F.3d 3, 7-8 (1st Cir. 2007).

Whether Peñalbert could make such a showing is not clear

from the face of her complaint, and she has not sought this “John

Doe” alternative. Rarely do we rescue a civil claim—even to the very

limited extent now contemplated—on grounds not urged either on the

district court or on us. But Twombly and Iqbal are relatively recent;

developing a workable distinction between “fact” and “speculation”

is still a work in progress; and while upholding the dismissal of the

complaint against the named defendants, we think that the interests

of justice warrant a remand to give Peñalbert a reasonable opportunity

to move to amend the complaint to seek relief against a “John Doe”

defendant.

Peñalbert-Rosa, 631 F.3d at 594–597 (emphasis added) (footnotes omitted).

• Plumbers’ Union Local 12 Pension Fund v. Nomura Asset Acceptance Corp., 632 F.3d

762, 2011 WL 183971 (1st Cir. Jan. 20, 2011). Three union pension and welfare funds filed

a putative class action against eight trusts, the “depositor” that organized the trusts, the trusts’

underwriters, and five officers of the depositor. Plaintiffs sought redress for losses suffered

when they acquired trust certificates representing mortgage-backed securities. The gravamen

of the plaintiffs’ complaint was that the trusts’ offering documents, i.e., the registration

statements and prospectus supplements, contained false and misleading statements, and as

a result plaintiffs purchased securities whose true value when purchased was less than what

the plaintiffs paid for them. The district court dismissed all of the plaintiffs’ claims, holding

that on the face of the complaint, the plaintiffs did not sufficiently state any claim.
46

The First Circuit, noting Iqbal and Twombly, observed that “the usual difficulty of parsing

and evaluating misrepresentation claims at the complaint stage in securities cases is further

complicated by recent case law tightening the sieve through which a well-pled complaint

must pass.” The court went on to affirm the dismissal of most, but not all, of the plaintiffs’

claims, reasoning as follows:

This brings us to the individual charges of false or misleading

statements and to the specific allegations of the complaint. . . . [W]e

consider the adequacy of the allegations charge by charge.

The underwriting guidelines. Plaintiffs first point to a set of

statements in the offering documents implying that the banks that

originated the mortgages used lending guidelines to determine

borrowers’ creditworthiness and ability to repay the loans. For

example, the prospectus supplements for the two trusts at issue stated

that First National Bank of Nevada (“FNBN”), one of the “key” loan

originators for those trusts, used “underwriting guidelines [that] are

primarily intended to evaluate the prospective borrower’s credit

standing and ability to repay the loan, as well as the value and

adequacy of the proposed mortgaged property as collateral.”

In fact, plaintiffs allege, FNBN “routinely violated” its lending

guidelines and instead approved as many loans as possible, even

“scrub[bing]” loan applications of potentially disqualifying material.

Indeed, plaintiffs allege that this was FNBN’s “business model,”

aimed at milling applications at high speed to generate profits from

the sale ofsuch risky loans to others. Thus, plaintiffs say, contrary to

the registration statement, borrowers did not “demonstrate[ ] an

established ability to repay indebtedness in a timely fashion” and

employment history was not “verified.”

Admittedly, warnings in the offering documents state, for

example, that the “underwriting standards ... typically differ from, and

are ... generally less stringent than, the underwriting standards

established by Fannie Mae or Freddie Mac”; that “certain exceptions

to the underwriting standards ... are made in the event that

compensating factors are demonstrated by a prospective borrower”;

and that FNBN “originates or purchases loans that have been

originated under certain limited documentation programs” that “may

not require income, employment or asset verification.”

The district court ruled that, read together with such warnings,

the complained-of assurances were not materially false or misleading,

but we cannot agree. Neither being “less stringent” than Fannie Mae
47

nor saying that exceptions occur when borrowers demonstrate other

“compensating factors” reveals what plaintiffs allege, namely, a

wholesale abandonment of underwriting standards. That is true too of

the warning that less verification may be employed for “certain

limited documentation programs designed to streamline the loan

underwriting process.” Plaintiffs’ allegation of wholesale

abandonment may not be proved, but—if accepted at this stage—it is

enough to defeat dismissal.

Defendants saythat no detailed factual support is provided for

the allegation and that it is implausible. Despite the familiar

generalization that evidence need not be pled at the complaint stage,

see Twombly, 550 U.S. at 555, 127 S. Ct. 1955, courts increasingly

insist that more specific facts be alleged where an allegation is

conclusory, see Maldonado, 568 F.3d at 266, 274; and the same is

true for implausibility, at least where the claim is considered as a

whole, Twombly, 550 U.S. at 570, 127 S. Ct. 1955; see Arista

Records LLC v. Doe 3, 604 F.3d 110, 119-21 (2d Cir. 2010).

“Conclusory” and “implausible” are matters of degree

rather than sharp-edged categories. Iqbal, 129 S. Ct. at 1949;

Twombly, 550 U.S. at 555, 127 S. Ct. 1955. However, the practices

alleged in this case are fairly specific and a number of lenders in the

industry are widely understood to have engaged in such practices.

The harder problem is whether enough has been said in the

complaint—beyond conclusory assertions—to link such practices

with specific lending banks that supplied the mortgages that

underpinned the trusts. Similar complaints in other cases have cited

to more substantial sources, including statements from confidential

witnesses, former employees and internal e-mails.

This is a familiar problem: plaintiffs want discovery to

develop such evidence, while courts are loath to license fishing

expeditions. While this case presents a judgment call, the sharp drop

in the credit ratings after the sales and the specific allegations as to

FNBN offer enough basis to warrant some initial discovery aimed at

these precise allegations. The district court is free to limit discovery

stringently and to revisit the adequacy of the allegations thereafter and

even before possible motions for summary judgment. See, e.g., Miss.

Pub. Emps.’ Ret. Sys. v. Bos. Sci. Corp., 523 F.3d 75, 79 (1st Cir.

2008).

Appraisal practices. The complaint also alleges that the

offering documents contained false statements relating to the methods
48

used to appraise the property values of potential borrowers—the ratio

of property value to loan being a key indicator of risk. For example,

the April 19, 2006, registration statement and the prospectus

supplements stated that “[a]ll appraisals” were conducted in

accordance with the “Uniform Standards of Professional Appraisal

Practice” (“USPAP”). These in turn require that appraisers “perform

assignments with impartiality, objectivity, and independence” and

make it unethical for appraisers, among other things, to accept an

assignment contingent on reporting a predetermined result.

The complaint alleges in a single general statement that the

appraisals underlying the loans at issue here failed to comply with

USPAP requirements; but there is no allegation that any specific bank

that supplied mortgages to the trusts did exert undue pressure, let

alone that the pressure succeeded. The complaint fairly read is that

many appraisers in the banking industry were subject to such

pressure. So, unlike the lending standard allegation, the complaint is

essentially a claim that other banks engaged in such practices, some

of which probably distorted loans, and therefore this may have

happened in this case.

On this basis, virtually every investor in mortgage-backed

securities could subject a multiplicity of defendants “to the most

unrestrained of fishing expeditions.” Gooley v. Mobil Oil Corp., 851

F.3d 513, 515 (1st Cir. 1988); see also DM Research, Inc. v. Coll. of

Am. Pathologists, 170 F.3d 53, 55 (1st Cir. 1999). Accordingly, we

agree with the district court that such an allegation—amounting to the

statement that others in the industry engaged in wrongful pressure—is

not enough. Several other district courts have reached precisely this

conclusion.

. . . .

Seller or solicitor allegations. Section 12(a)(2) permits a

plaintiff to sue only a defendant who either sold its own security to

the plaintiff or (for financial gain) successfully solicited the sale of

that security to the plaintiff. Pinter, 486 U.S. at 642-47, 650 & n. 21.

The district court dismissed plaintiffs’ section 12(a)(2) claims,

concluding that they did not adequately allege that defendants sold the

certificates to the plaintiffs or solicited the sales. This was apparently

because the complaint used a more ambiguous phrase—that plaintiffs

“acquired the [c]ertificates pursuant and/or traceable to” the offering

documents—found insufficient by a number of courts. E.g., Pub.

Emps.’ Ret. Sys. of Miss. v. Merrill Lynch & Co. Inc., 714 F. Supp. 2d
49

475, 484 (S.D.N.Y. 2010); Wells Fargo, 712 F. Supp. 2d at 966.

But the complaint also alleged that plaintiffs “acquired . . .

[c]ertificates from defendant Nomura Securities” and that the

“[d]efendants promoted and sold the [c]ertificates to [the p]laintiffs

and other members of the [c]lass” (emphasis added); these allegations

are sufficient to state a claim under section 12(a)(2) so long as

material misstatements or misleading omissions are alleged. The

district court’s dismissal of plaintiffs’ section 12(a)(2) claims for

failure to allege defendants’ requisite connections with the sale was

in error.

Plumbers’ Union, 2011 WL 183971, at *7–10 (emphasis added) (footnotes omitted).

• Sepúlveda-Villarini v. Dep’t of Educ. of Puerto Rico, 628 F.3d 25 (1st Cir. 2010). Public

school teachers (Sepúlveda and Velázquez) sued the Puerto Rico Department of Education,

its Secretary (Aragunde), and the school director (Oliveras), for failure to accommodate an

employee’s disability as required by Title I of the Americans with Disabilities Act (ADA),

42 U.S.C. §§ 12111-12117, and § 504 of the Rehabilitation Act, 29 U.S.C. § 794. Aragunde

was sued in his official capacity; Oliveras was sued in his personal capacity. The district

court dismissed for failure to state a claim. The First Circuit vacated and remanded.

Sepúlveda alleged that he suffered a stroke while teaching and required heart by-pass

surgery. For five years after the surgery, the school made accommodations for Sepúlveda,

providing him a first floor classroom, a reduced number of pupils, and a rest period. Then

Secretary Aragunde issued instructions to keep class size at a minimum of 20. Sepúlveda’s

class size was increased to 30, but a neophyte teacher was assigned to share Sepúlveda’s

duties. Sepúlveda claimed “that the new arrangement is an unreasonable refusal to

accommodate, resulting in emotional consequences with physical symptoms requiring

treatment.” The district court dismissed Sepúlveda’s claims of personal liability against the

school director and all of his Title VII claims. It dismissed the Title I and Rehabilitation Act

claims for failure to allege how smaller class size would allow Sepúlveda to go on teaching.

The district court dismissed the Title II claim, relying on its ruling in a prior case that Title

II did not reach employment-based claims and, alternatively, rejecting the Title II claim for

failure to allege how smaller class size would allow Sepúlveda to go on teaching. 

Velázquez alleged that she suffered from a throat condition known as aphonia, with

symptoms including excessive coughing and shortness of breath, which was allegedly

aggravated by dust and debris stemming from construction at the school some years ago. For

four years she was provided with reduced class size, until Secretary Aragunde issued his

instructions to increase class size. She alleged “that ensuing emotional and physical stress

required treatment.” The district court dismissed her personal liability claims, all Title VII

claims, and her Title II claim on the ground that Title II does not refer to employment

discrimination. The court addressed defendants’ sovereign immunity defense, which it did
50

not reach in Sepúlveda’s case, and sustained the defense, dismissing the Title I claim against

the Department in toto and against the Secretary insofar as Velázquez sought money

damages. The court then dismissed the Title I and Rehabilitation Act claims against the

Secretary for failure to allege how the reduced class size would allow Velázquez to teach,

but the larger class size would not.

The First Circuit, in an opinion by Justice Souter, first noted that all claims of error were

waived, “except as to the sufficiency of allegations as stating claims that the Department and

its Secretary are responsible under Title I or § 504 of the Rehabilitation Act for failures to

make reasonable accommodations for disabilities.”

The court then explained that:

The statement of a claim of actionable failure to make reasonable

employment accommodation for disability under either Title I of the

ADA or §504 of the Rehabilitation Act must allege a disability

covered by the statute, the ability of the plaintiff to do a job with or

without accommodation as the case may be, and the refusal of the

employer, despite knowledge of the disability, to accommodate the

disability by reasonably varying the standard conditions of

employment.

The court set forth the pleading standard:

 “Federal Rule of Civil Procedure 8(a)(2) requires only ‘a short and

plain statement of the claim showing that the pleader is entitled to

relief,’ in order to ‘give the defendant fair notice of what the . . .

claim is and the grounds upon which it rests.” Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 555 (2007) (quoting Fed. R. Civ. P. 8(a)(2)

and Conley v. Gibson, 355 U.S. 41, 47 (1957)). The make-or-break

standard, as the district court recognized, is that the combined

allegations, taken as true, must state a plausible, not a merely

conceivable, case for relief. Ashcroft v. Iqbal, 129 S. Ct. 1937,

1950-51 (2009) (citing Twombly, 550 U.S. at 570); see also Twombly,

550 U.S. at 555 (“Factual allegations must be enough to raise a right

to relief above the speculative level, on the assumption that all the

allegations in the complaint are true (even if doubtful in fact).”

(footnote and citations omitted)). “A claim has facial plausibility

when the plaintiff pleads factual content that allows the court to draw

the reasonable inference that the defendant is liable for the

misconduct alleged. The plausibility standard is not akin to a

‘probability requirement,’ but it asks for more than a sheer possibility

that a defendant has acted unlawfully.” Id. at 1949 (citations

omitted). 
51

The court then decided that the district court erred by demanding “more than plausibility”:

We think that the district court demanded more than

plausibility. Each set of pleadings includes two significant sets of

allegations. First, for a period of four or five school years the school

administration provided the reduced class size in response to the

respective plaintiff’s request, supported by some sort of medical

certification attesting to its legitimacy. In each complaint, those years

of requested accommodation are put forward as establishing, in

effect, a base-line of adequacy under the statute in response to an

implicit acknowledgment that a statutory disability required the

provisions that were made. 

 Second, each set of pleadings describes changed facts beginning

in the 2007-08 year, in which instructions from the defendant

Secretary resulted in raising the class size to 30 (with a young team

teacher to share the load with Sepúlveda). Each complaint alleges

that the plaintiff’s emotional and physical health subsequently

deteriorated to the point of requiring treatment, and each concludes

that assigning 30 pupils was less than reasonable accommodation

under the statute. To be sure, this sequence of alleged facts does not

describe a causal connection in terms of the exact psychological or

physiological mechanism by which each plaintiff’s capacity continues

to be overwhelmed. But reading the allegations with the required

favor to the plaintiff means accepting the changes in class size as the

only variable, from which one would infer that there probably is some

causal connection between the work of a doubled class size and the

physical and emotional deterioration of the disabled teacher. After

all, for years the school authorities themselves apparently thought the

small classes were the reasonable and appropriate size; it does not

seem remarkable that a teacher would be worn down by doubling the

size, even with a young helper, who will need to be supervised.

(footnotes omitted).

The court noted that the district court’s “call for allegations explaining ‘how’ class size was

significant’” was a “call for pleading the details of medical evidence in order to bolster the

likelihood that a causal connection will prove out as fact.” And explained that “Twombly

cautioned against thinking of plausibility as a standard of likely success on the merits; the

standard is plausibility assuming the pleaded facts to be true and read in a plaintiff’s favor.”

Finally, the court explained:

None of this is to deny the wisdom of the old maxim that after
52

the fact does not necessarily mean caused by the fact, but its teaching

here is not that the inference of causation is implausible (taking the

facts as true), but that it is possible that other, undisclosed facts may

explain the sequence better. Such a possibility does not negate

plausibility, however; it is simply a reminder that plausibility of

allegations may not be matched by adequacy of evidence. A plausible

but inconclusive inference from pleaded facts will survive a motion to

dismiss, and the fair inferences from the facts pleaded in these cases

point to the essential difference between each of them and the

circumstances in Twombly, for example, in which the same actionable

conduct alleged on the defendant’s part had been held in some prior

cases to be lawful behavior.

(emphasis added).

• Sanchez v. Pereira-Castillo, 590 F.3d 31, 2009 WL 4936397 (1st Cir. Dec. 23, 2009). The

plaintiff alleged that “while a prisoner at a Puerto Rico correctional institution, correctional

officers subjected him to an escalating series of searches of his abdominal cavity that

culminated in a forced exploratory abdominal surgery.” Id. at *1. The plaintiff sued

correctional officers for the Commonwealth of Puerto Rico Administration of Corrections

(“AOC”) and doctors from the Rio Piedras Medical Center (“Rio Piedras”) under § 1983. Id.

The complaint alleged violations of the plaintiff’s constitutional rights and supplemental

claims under Puerto Rico law. Id. The district court dismissed the complaint for failure to

state a claim. The First Circuit reversed the dismissal of the Fourth Amendment claims

against two of the correctional officers and the doctor who performed the surgery, reinstated

the state law claims, and remanded. Id.

The complaint alleged that after a handheld metal detector gave a positive reading when the

plaintiff was scanned, the plaintiff was subject to increasingly invasive searches. Id. The

plaintiff was allegedly sniffed by law-enforcement dogs, strip-searched, scanned with a metal

detector while naked, subject to abdominal x-rays, placed under constant surveillance, forced

to have bowel movements on the floor in front of correctional officers, subjected to two rectal

examinations and lab tests at Rio Piedras, and eventually subjected to exploratory abdominal

surgery that required the plaintiff to be under total anesthesia and remain in the hospital for

two days of recovery. See Sanchez, 2009 WL 4936397, at *1–3. According to the complaint,

none of the search methods employed after the original metal detector test revealed any

evidence of contraband except that one doctor concluded that the x-rays revealed a foreign

object in the plaintiff’s rectum consistent with a cellular telephone. See id. Defendant

Sergeant Cabán-Rosados (“Cabán”) allegedly conducted the original search of the plaintiff’s

living quarters; asked an unknown doctor, labeled in the complaint as Dr. Richard Roe I, to

order the x-rays; refused to produce a judicial order regarding the x-rays at the plaintiff’s

request; ordered the plaintiff to have bowel movements on the floor; ordered the plaintiff to

be taken to the medical area at the prison; and coordinated the plaintiff’s transport to Rio

Piedras for a rectal examination and/or a medical procedure to remove a foreign object. Id.
53

at *1–2. Dr. Richard Roe I was alleged to have taken the x-ray ordered byCabán; Dr. Richard

Roe II was alleged to have examined the x-ray results and determined that a foreign object

was present in the plaintiff’s rectum and to have issued a referral to the emergency room at

Rio Piedras for further testing or intervention, despite the fact that a second bowel movement

showed no foreign objects and over the plaintiff’s objection, denial, and request for an

additional x-ray; John Doe was a correctional officer alleged to have escorted the plaintiff to

the hospital and to have insisted on rectal examinations and the surgery; Dr. Richard Roe III

was alleged to be a doctor at Rio Piedras who conducted the rectal examinations and ordered

the lab tests; Dr. Richard Roe IV was alleged to be a superior of Dr. Richard Roe III who

participated in the second rectal examination and who, together with Dr. Richard Roe III,

requested a surgical consultation; Dr. Sandra Deniz was the surgeon who evaluated the

plaintiff and conducted the exploratory surgery after she was made aware of the negative

findings of the two rectal examinations, the normal results of the lab tests, the absence of

foreign objects in the bowel movements, the plaintiff’s denials of the allegations that he had

a cell phone, and the plaintiff’s requests for a second set of x-rays. Id. The complaint alleged

that the plaintiff signed a consent form for the surgery only because of pressure from John

Doe and only after Dr. Deniz agreed to perform another rectal examination before the surgery,

which Dr. Deniz failed to do. Id. at *3. The surgery revealed no foreign objects, and this

finding was confirmed by a subsequent x-ray. Id.

In addition to the Drs. Richard Roe I–IV, John Doe, Cabán, Commander Sanchez (who was

never properly served), and Dr. Deniz, the complaint also named Puerto Rico’s secretary of

corrections and rehabilitation, the security director of the AOC, the director of the eastern

region for the AOC, the security director of the eastern region of the AOC, and the

superintendent of the prison (collectively, “administrative correctional defendants,” and

together with Cabán and John Doe, the “correctional defendants”). Sanchez, 2009 WL

4936397, at *3. The administrative correctional defendants and Cabán moved to dismiss the

complaint for failure to state a claim, asserting that the administrative correctional defendants

should be dismissed because respondeat superior liability was not available under § 1983 and

that the correctional defendants were entitled to qualified immunity. Id. Dr. Deniz also

requested dismissal, alleging that the plaintiff’s medical rights were not violated by the

surgery, that the plaintiff was limited to tort remedies for medical malpractice, and that she

was entitled to Eleventh Amendment immunity in her official capacity and qualified immunity

in her personal capacity. Id. The district court granted the motions, finding that because the

defendants were sued in their personal capacity, sovereign immunity did not apply; the strip

searches, x-rays, and rectal examinations were reasonable and did not violate the Fourth

Amendment; the Fifth Amendment claim could not survive because that amendment applies

only to actions of the federal government; the complaint did not state a claim against the

correctional defendants with respect to the surgery because the decision regarding the surgery

was made by Dr. Deniz; and that the claim against Dr. Deniz failed because she was not a

state actor, but was instead acting as a doctor. Id. at *4 & n.3. The district court denied the

plaintiff’s requests for reconsideration and for leave to file an amended complaint. Id.

On appeal, with respect to the Fourth Amendment claim, the court found it “impossible to
54

reconcile the allegations in the complaint with the district court’s conclusion that these

procedures were ‘medical decisions made exclusively by physicians’” because “[a]ccording

to the complaint, the procedures were carried out at the insistence of correctional officials for

the purpose of finding a cell phone in plaintiff’s rectum.” Id. at *6. The court affirmed

dismissal of the claims based on the strip searches and x-rays because the plaintiff did not

pursue them on appeal, as well as the dismissal of Drs. Roe I and II because the complaint had

no allegations that those doctors were involved in the rectal examinations or the surgery. Id.

at *6 n.4. The court explained that the complaint adequately alleged that the rectal

examinations and the surgery were searches within the scope of the Fourth Amendment:

The procedures were the direct culmination of a series of

searches that began when a metal detector used to scan plaintiff’s

person gave a positive reading. The complaint describes the surgery

as “medically unnecessary,” and explains circumstances supporting

that claim, namely that plaintiff had two normal bowel movements

before the searches were conducted, that Dr. Roe III examined him

upon arrival at the hospital and found him to be asymptomatic, and

that several lab tests ordered by Dr. Roe III were found to be “within

normal limits.” Because the procedures described in the complaint

were searches for evidence, they are properly analyzed under the

framework of the Fourth Amendment.

Sanchez, 2009 WL 4936397, at *6. The court found that the rectal examinations were not

unreasonable under the Fourth Amendment because “[t]he complaint describe[d] no abusive

or otherwise unprofessional conduct on the part of the correctional officers or the doctors

during the rectal exams” and did not “set forth any facts to suggest that the rectal

examinations of plaintiff’s person by medical professionals were more intrusive than similar

exams carried out as a matter of policy by paraprofessionals at other prisons,” and because the

plaintiff did “not argue that the digital rectal searches were not related to a legitimate

penological need” or “describe any circumstances surrounding the examinations that would

[have] ma[de] the searches appear abusive.” Id. at *8. The court concluded that “the rectal

searches of plaintiff described in the complaint, carried out by medical professionals in the

relatively private, sanitary environment of a hospital, upon suspicion that plaintiff had

contraband in his rectum, and with no abusive or humiliating conduct on the part of the law

enforcement officers or the doctors, were not unreasonable.” Id. (footnote omitted). As a

result, the court affirmed the dismissal of Drs. Roe III and IV because, “according to the

complaint, they did not encourage or participate in the surgery.” Id. at *8 n.6.

The court determined that the complaint adequately alleged an unreasonable search with

respect to the surgery, noting that the complaint stated that the plaintiff “was forced to

undergo dangerous, painful, and extremely intrusive abdominal surgery for the purpose of

finding a contraband telephone allegedly concealed in hisintestines, even though the basis for

believing there was a telephone was slight, several tests had indicated the absence of any such

object, and additional, far less intrusive testing could easily have obviated any need for such
55

grievous intrusion.” Id. at *9. The court disagreed with the district court’s conclusion that

the signed consent for surgery eliminated Fourth Amendment concerns, “reiterat[ing] that the

district court was obligated . . . to accept the well-pleaded facts in the complaint as true.” Id.

at *10. The court concluded:

Plaintiff was a prisoner who had been under constant

surveillance for more than a day prior to the surgery, and had been

forced to submit to searches, x-rays, and invasive rectal examinations

prior to his signing the consent form. He had twice been forced to

excrete on a floor in the presence of prison personnel. In light of these

intimidating circumstances, plaintiff’s claim that he was pressured and

intimidated into signing the consent form is plausible.

Sanchez, 2009 WL 4936397, at *10. In addition, the court noted that according to the

complaint, the plaintiff gave consent to the surgery only if Dr. Deniz would first conduct

another rectal examination, which she did not do. Id. The court stated that “[v]iewing the

plaintiff’s well-pleaded factual allegations as true, [it] conclude[d] that ‘society is prepared

to recognize’ that a prisoner has a reasonable expectation that he will not be forced to undergo

abdominal surgery for the purpose of finding contraband, at least in these circumstances.” Id.

at *12. The court noted that the plaintiff “was surgically invaded for the purpose of searching

for a cell phone when other, less-invasive means had already indicated the absence of such

an object,” “there [wa]s serious doubt whether the surgery was even ‘likely to produce

evidence of a crime,’ and by far less drastic measures[,] the existence of the telephone could

easily have been excluded.” Id. (internal citation omitted). The court held that “the

allegations in the complaint describe[d] an unreasonable search conducted under the color of

state law.” Id. (footnote omitted).

Having found that the plaintiff had “alleged facts which, if proved, would amount to a

violation of his Fourth Amendment rights,” the court turned to “the sufficiency of his claims

that the various defendants in this action caused that violation.” Id. After emphasizing that

the evaluation of a complaint is a context-specific task, the court concluded that the claims

against Cabán, John Doe, and Dr. Deniz had “‘facial plausibility,’” but that the claims against

the administrative correctional defendants did not. Sanchez, 2009 WL 4936397, at *12 (citing

Iqbal, 129 S. Ct. at 1949). The court noted that under Iqbal, it could “‘begin by identifying

pleadings that, because they are no more than conclusions, are not entitled to an assumption

of truth.’” Id. at *13 (quoting Iqbal, 129 S. Ct. at 1950). The court stated:

Turning to plaintiff’s complaint, we find that it does little more than

assert a legal conclusion about the involvement of the administrative

correctional defendants in the underlying constitutional violation.

Parroting our standard for supervisory liability in the context of

Section 1983, the complaint alleges that the administrative defendants

were “responsible for ensuring that the correctional officers under their

command followed practices and procedures [that] would respect the
56

rights and ensure the bodily integrity of Plaintiff” and that “they failed

to do [so] with deliberate indifference and/or reckless disregard of

Plaintiff’s federally protected rights.” This is precisely the type of

“the-defendant-unlawfully-harmed-me” allegation that the Supreme

Court has determined should not be given credence when standing

alone.

Id. (citing Iqbal, 129 S. Ct. at 1949) (alterations in original). The court continued:

The sole additional reference to the administrative correctional

defendants’ role in the surgery is the complaint’s statement that “[t]he

pushiness exerted by John Doe [upon the doctors] followed . . . the

regulations and directives designed by [Puerto Rico’s Secretary of

Corrections and Rehabilitation] Pereira and construed and

implemented by all of the other Supervisory Defendants.” However,

the only regulations described in the complaint are the strip search and

x-ray regulations promulgated by Pereira. The deliberate indifference

required to establish a supervisory liability/failure to train claim cannot

plausibly be inferred from the mere existence of a poorly-implemented

strip search or x-ray policy and a bald assertion that the surgery

somehow resulted from those policies. We conclude, therefore, that

the “complaint has alleged—but it has not ‘show[n]’—‘that the

pleader is entitled to relief’” from the administrative correctional

defendants. Iqbal, 129 S. Ct. at 1950 (quoting FED. RULE CIV. PROC.

8(a)(2)). Although it did so on different grounds, the district court was

correct to dismiss the claims against those defendants.

Id. (first, second, and fourth alterations in original) (footnote omitted). The court noted that

“[t]he complaint contain[ed] more specific factual allegations about the administrative

correctional defendant[s’] supervisoryresponsibility for the strip and x-ray searches,” but that

“[b]ecause [the court] f[ound] there to be no underlying constitutional violation arising from

the strip and x-ray searches of plaintiff, the claims for supervisory liability arising from those

searches must fail.” Id. at *13 n.9.

However, with respect to Cabán and John Doe, the court found the plaintiff’s allegations

“sufficient to allow [it] ‘to draw the reasonable inference that [each] defendant [wa]s liable

for the misconduct alleged.’” Id. at *14 (quoting Iqbal, 129 S. Ct. at 1949) (second alteration

in original). The court explained:

Although the claims against John Doe and Cabán also rest on a form

of supervisory liability in the sense that neither one actually performed

the surgery on plaintiff, those claims do not depend on a showing by

plaintiff of a failure to train amounting to deliberate indifference to his

constitutional rights. Instead, plaintiff succeeds in pleading that the
57

defendants were liable as “primary violator[s] . . . in the

rights-violating incident,” thereby stating a sufficient claim for relief.

Sanchez, 2009 WL 4936397, at *14 (citation omitted). The court found the claims against

Cabán plausible:

Plaintiff’s complaint specifically alleges that Cabán was directly

involved in all phases of the search for contraband, and in the ultimate

decision to transport plaintiff to the hospital “for a rectal examination

and/or a medical procedure to remove the foreign object purportedly

lodged in Plaintiff’s rectum.” The complaint goes on to allege that

John Doe, acting pursuant to “orders imparted by Cabán,” pressured

the doctors to conduct a medical procedure to remove the illusory cell

phone from plaintiff’s bowels. Given these allegations, it is a

plausible inference that Cabán caused plaintiff to be subjected to the

deprivation of his Fourth Amendment rights. See 42 U.S.C. § 1983.

Id. at *14 (footnote omitted). Because “an actor is ‘responsible for ‘those consequences

attributable to reasonably foreseeable intervening forces, including the acts of third parties,’’”

and because the court “read the plaintiff’s complaint to state that Cabán affirmatively set in

motion the trip to the hospital for the purpose of removing the alleged contraband from within

plaintiff’s body, with a resort by medical professionals to whatever procedure was required

to achieve that goal,” the plaintiff had adequately stated a claim against Cabán. Id. (citations

omitted). With respect to John Doe, the court held:

The complaint alleges that plaintiff arrived at the hospital emergency

room “accompanied by John Doe.” The complaint further states that

“[a]t all times John Doe insisted that plaintiff was hiding a cellular

phone in his rectum and pressured the medical personnel at the

emergency room . . . to conduct a medical procedure to remove it.”

Thus, the complaint charges John Doe with affirmatively causing the

violation of plaintiff’s rights by insisting at the hospital that the

doctors perform a medical procedure to remove the suspected

contraband from his stomach. Like Cabán, he is alleged to be a

primary violator of plaintiff’s Fourth Amendment rights.

Id. (alteration in original).

The court next considered whether the plaintiff had adequately pleaded state action with

respect to Dr. Deniz. (It was undisputed that the correctional defendants were state actors.

Id. at *15 n.12.) The plaintiff argued that Dr. Deniz was a state actor under the state

compulsion test, which provides that a party is a state actor “‘when the state ‘has exercised

coercive power or has provided such significant encouragement, either overt or covert, that

the [challenged conduct] must in law be deemed to be that of the State.’’” Id. at *15 (citation
58

omitted). The court concluded that the complaint, “which describe[d] ‘the insistence and

pressure exerted by John Doe upon all of the physicians that examined him at the Rio Piedras

Medical Center,’ sufficiently allege[d] facts that m[et] the state compulsion test.” Sanchez,

2009 WL 4936397, at *15.

The court concluded that Cabán and John Doe were not entitled to qualified immunity

because “the surgery described in the complaint and its attendant circumstances were so

outrageous, [the court] could comfortably conclude that a reasonable officer would understand

that, under the particular facts of this case, the surgery violated plaintiff’s clearly established

right to be free from an unreasonable search.” Id. at *16 (citation omitted). The court

determined that Dr. Deniz also was not entitled to qualified immunity, explaining that “a

reasonable doctor should have understood that the surgery at issue here, performed at the

insistence of the correctional authorities and not for plaintiff’s benefit, violated plaintiff’s

Fourth Amendment right to be free of unreasonable searches and seizures.” Id. at *18.

Finally, because the court found that some of the federal claims should not have been

dismissed, it reinstated the supplemental state law claims and remanded. Id.

• Maldonado v. Fontanes, 568 F.3d 263 (1st Cir. 2009). Residents of public housing

complexes brought a civil rights suit under § 1983 against the mayor of Barceloneta, Puerto

Rico, alleging that their rights had been violated by the seizures and cruel killings of their pet

cats and dogs. Id. at 266. The pets were taken in two separate raids after the Municipality of

Barceloneta assumed control of the public housing complexes. Id. Prior to that transfer, the

plaintiffs had been allowed to keep pets in the housing complexes. Id. A few days before the

raids, the residents were told to surrender their pets or face eviction. Id. The plaintiffs alleged

that after their pets were seized, the pets were violently killed. Id. The mayor, in his personal

capacity, moved to dismiss all damages claims against him on the ground of qualified

immunity. Maldonado, 468 F.3d at 266. The district court denied the motion to dismiss, and

the mayor took an interlocutory appeal. Id. The First Circuit affirmed the denial of the

motion for qualified immunity on the Fourth Amendment and Fourteenth Amendment

procedural due process claims, but applied Iqbal to reverse the denial of qualified immunity

to the mayor as to the Fourteenth Amendment substantive due process claims. Id. The mayor

also moved to dismiss for failure to state a claim, and the district court granted the motion as

to some claims and denied it as to the Fourth and Fourteenth Amendment claims and pendent

state law claims, but that order was not appealable. Id. at 267 n.1.

With respect to the substantive due process claim, the First Circuit stated: “[A]nalyzing the

pleadings under Iqbal, we hold that the allegations of the complaint do not allege a sufficient

connection between the Mayor and the alleged conscience-shocking behavior—the killing of

the seized pets—to state the elements of a substantive due process violation.” Id. at 273.

Specifically, the court noted that the mayor’s alleged liability did not involve a policy of the

municipality and was not based on the mayor’s personal conduct, but instead was based on

the allegation that the mayor promulgated a pet policy for the public housing complexes and

was present at and participated in one of the raids. Id. The court concluded that this was

insufficient to find the mayor liable because there was nothing conscience-shocking about the
59

pet policy itself, which did not address how prohibited pets were to be removed, and because

the complaint alleged no policy authorizing the killing of the pets and no such policy

authorized by the mayor. Id. The court noted that the complaint alleged an informal policy

from the repeating of the raids, but held that a single repetition was not sufficient to show the

mayor’s endorsement of an informal policy, stating that it would “reject such ‘‘naked

assertion[s]’ devoid of ‘further factual enhancement.’’” Maldonado, 568 F.3d at 273 n.6

(quoting Iqbal, 129 S. Ct. at 1950 (quoting Twombly, 550 U.S. at 557)).

The court also concluded that there was no allegation that the mayor was personally involved

in any of the conscience-shocking behavior. Id. at 274. The court noted that while the

complaint alleged that the mayor was present at the first raid and observed it, he was “not

named as the individual who directly planned, supervised, and executed the raids,” and there

was no allegation that he participated in the killings or directed the private contractor who

captured the pets. Id. Instead, the complaint only alleged that “he supervised, directly or

indirectly, the agencies involved.” Id. The court noted the “generalized” allegation that the

mayor “planned, personally participated in, and executed the raids in concert with others,” but

stated that “the others are named as the persons with specific administrative responsibilities

as to the public housing complexes.” Id. The court concluded that “‘[t]hese bare assertions,

much like the pleading of conspiracy in Twombly, amount[ed] to nothing more than a

‘formulaic recitation of the elements’ of a constitutional [tort],’ Iqbal, at 1951 (quoting

Twombly, 550 U.S. at 55, 127 S. Ct. 1955), and [we]re insufficient to push the plaintiffs’

claim beyond the pleadings stage.” Id. (second alteration in original). The court continued:

“[T]he complaint alleges, without any more details, that the Mayor was among all the other

public and private employees ‘snatching pets from owners.’ Although these bare allegations

may be ‘consistent with’ a finding of liability against the Mayor for seizure of the same pets,

such allegations ‘stop[ ] short of the line between possibility and plausibility of ‘entitlement

to relief’ on the larger substantive due process claim.” Maldonado, 568 F.3d at 274 (quoting

Iqbal, 129 S. Ct. at 1960 (quoting Twombly, 550 U.S. at 557) (internal quotation marks

omitted)) (second alteration in original). The court held that the allegations against the mayor

did not show “that his involvement was sufficiently direct to hold him liable for violations of

the plaintiffs’ substantive due process rights.” Id.

Finally, the court concluded that the allegations did not support a theory of supervisory

liability because “supervisory liability lies only where an ‘‘affirmative link’ between the

behavior of a subordinate and the action or inaction of his supervisor’ exists such that ‘‘the

supervisor’s conduct led inexorably to the constitutional violation,’’” and the allegations did

not support finding such a link. See id. at 274–75 (citations omitted).

The court also concluded that there was no liability under a theory of deliberate indifference

because such liability “‘will be found only if it would be manifest to any reasonable official

that his conduct was very likely to violate an individual’s constitutional rights,’” but “the

Mayor’s promulgation of a pet policy that was silent as to the manner in which the pets were

to be collected and disposed of, coupled with his mere presence at one of the raids, [wa]s

insufficient to create the affirmative link necessary for a finding of supervisory liability, even
60

under a theory of deliberate indifference.” Id. at 275 (citation omitted). The court concluded

that qualified immunity on the Fourteenth Amendment substantive due process claim was

warranted. Id.

Second Circuit

• Schwab v. Smalls, No. 10-221-cv, 2011 WL 3156530 (2d Cir. Jul. 27, 2011) (summary

order). Plaintiff Marilyn Schwab, a former school employee, filed a complaint against, among

others, two school officials, defendants Robert Smalls and Robert Chakar, under § 1983,

alleging that the defendants terminated her employment on the basis of her race in violation

of her right to equal protection. The court of appeals summarized the allegations of the

plaintiff’s complaint as follows:

From 1997 to 2008, Schwab, who is white, worked part-time

at Woodlands High School as the Youth Employment Services

(“YES”) Coordinator for the defendant Greenburgh Central School

District No. 7 (the “District”). Schwab asserts that between June and

October of 2008, Smalls, the District Superintendent of Schools (who

is African–American), and Chakar, the principal of Woodlands High

School (whom the plaintiff terms “Arab–Lebanese,” J.A. 6),

“coerce[d] her [into] involuntary retirement,” J.A. 8, by demanding

that she provide a report regarding the students’ success securing

employment, which data Smalls knew Schwab had never been asked

to collect or report. In essence, Schwab alleges that Smalls’s and

Chakar’s demands for the data were a pretext for racial discrimination

against her. When Schwab failed to provide a report meeting Smalls’s

professed expectations, he declined to recommend her reappointment

for the 2008–09 school year and named defendant Brown (who is

African–American) as Schwab’s replacement.

Id. at *1.

The district court dismissed Schwab’s complaint, without prejudice, for failure to state a

claim. The district court “analyzed Schwab’s complaint under the three-part burden-shifting

standard articulated in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802 (1973),

concluding that because the plaintiff had not ‘alleged facts giving rise to an inference of [the

defendants’] discriminatory intent,’ J.A. 30, she had not met her burden of pleading a

plausible claim ‘that any of the [i]ndividual [d]efendants acted unlawfully.’” Id. at *2.

The Second Circuit reversed the district court’s dismissal of Schwab’s complaint. The court

reasoned as follows:

In Swierkiewicz v. Sorema N.A., 534 U.S. 506 (2002), the
61

Supreme Court interpreted the McDonnell Douglas standard to be “an

evidentiary standard, not a pleading requirement,” id. at 510; see

generally id. The teaching of Swierkiewicz, then, is that a plaintiff

alleging employment discrimination need not plead facts establishing

a plausible prima facie case of discrimination to survive a motion to

dismiss.

Questions have been raised, however, as to Swierkiewicz’s

continued viability in light of Twombly and Iqbal. Compare Boykin v.

KeyCorp, 521 F.3d 202, 212–13 (2d Cir. 2008) (pre Iqbal case

concluding that Twombly “affirmed the vitality” of Swierkiewicz ), and

Al– Kidd v. Ashcroft, 580 F.3d 949, 974 (9th Cir. 2009) (stating that

Twombly “reaffirmed” Swierkiewicz’s “reject[ion of] a fact pleading

requirement for Title VII employment discrimination”), rev’d on other

grounds sub nom. Ashcroft v. Al–Kidd, 131 S. Ct. 2074 (2011), with

Fowler v. UPMC Shadyside, 578 F.3d 203, 211 (3d Cir. 2009)

(Swierkiewicz “has been repudiated by both Twombly and Iqbal . . . at

least insofar as [Swierkiewicz] concerns pleading requirements and

relies on Conley [v. Gibson, 355 U.S. 41 (1957) ].”).

We need not address these questions, however, because we

conclude that Schwab’s complaint alleges facts sufficient to state a

claim of employment discrimination against defendants Smalls and

Chakar under both the Swierkiewiczstandard and the more demanding

McDonnell Douglas-based approach adopted by the district court. The

plaintiff’s complaint alleges that (1) she is white and Smalls and

Chakar are African–American and “Arab–Lebanese,” respectively; (2)

she held her position without incident for many years; . . . (3) her

employment was terminated after Smalls refused to recommend her

reappointment; and (4) the circumstances of her termination are

suggestive of discrimination. With regard to the fourth point—the

final element of a prima facie case of discrimination under McDonnell

Douglas and the only element that the defendants contest for the

purposes of this appeal—the complaint provides the approximate date

and substance of the defendants’ meeting at which they agreed to their

“plan”; alleges that their aim was to force Schwab out of her position

so that they could appoint a less qualified African-American woman

in her place; and details the allegedly pretextual requests for data that

Schwab had never been asked or required to maintain. We think this

satisfies Schwab’s burden at this early stage of the litigation under

either of the two arguably applicable pleading standards.

Id. at *2.
62

• Ideal Steel Supply Corp. v. Anza, 652 F.3d 310, 2011 WL 2557618 (2d Cir. Jun. 28, 2011).

Plaintiff Ideal Steel Supply Corp., a retailer selling steel products, bought a complaint under

the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1962–68,

against its competitor, the National Steel Supply Co., owned by Joseph and Vincent Anza.

The court of appeals summarized the factual background of the plaintiff’s complaint as

follows:

Ideal operates a retail business in the New York City boroughs

of Queens and the Bronx, selling steel mill products and related

hardware and services to professional ironworkers, small steel

fabricators, and do-it-yourself homeowners in the New York, New

Jersey, and Connecticut area. Defendant National Steel Supply, Inc.,

is owned by defendants Joseph and Vincent Anza (collectively “the

Anzas”) and is Ideal’s competitor. National operates two retail outlets,

one in Queens and one in the Bronx, each located a few minutes’ drive

from the Ideal store in that borough. Ideal and National sell

substantially the same products to essentially the same customer base.

Ideal commenced the present action in 2002,

principally-asserting two civil RICO claims. First, it asserted a claim

against the Anzas, alleging that they had conducted, or participated in

the conduct of, the affairs of an interstate-business enterprise through

a pattern of racketeering activity, in violation of 18 U.S.C. § 1962(c).

Ideal alleged that, since at least 1998, National at its Queens store, at

the direction of the Anzas, had engaged in a pattern of racketeering

activity by (a) not charging sales tax to any customers who paid for

their purchases in cash (the “cash-no-tax” scheme), thereby violating

state laws that required merchants to charge and collect such taxes, and

(b) then submitting, by mail and wire, fraudulent sales and income tax

reports and returns that concealed National’s cash sales and

misrepresented its total taxable sales, thereby evading substantial sums

in income tax. Ideal alleged that by engaging in the cash-no-tax

scheme through a pattern of mail and wire frauds in violation of §

1962(c), National injured Ideal’s business by luring away customers

who chose to buy from National simply in order to save more than

eight percent on their purchases by not paying the required sales tax.

Second, Ideal alleged that in 1999 and 2000, the Anzas and

National, in violation of § 1962(a), invested funds derived from

National’s Queens store’s cash-notax scheme to establish National's

store in the Bronx. The opening of that facility caused Ideal to lose a

substantial amount of business at its Bronx store. 

Id. at *1–2.
63

In other words, Ideal alleged claims under two different provisions of RICO—section 1962(c)

and section 1962(a). Section 1962(c) makes it unlawful for any person employed by or

associated with an enterprise “to conduct or participate, directly or indirectly, in the conduct

of such enterprise’s affairs through a pattern of racketeering activity or collection of unlawful

debt.” Section 1962(a) makes it “unlawful for any person who has received any income

derived, directly or indirectly, from a pattern of racketeering activity . . . to use or invest,

directly or indirectly, any part of such income, or the proceeds of such income, in acquisition

of any interest in, or the establishment or operation of, any enterprise . . . .”

Years of litigation already had culminated in a visit to the Supreme Court, which ruled in

Ideal Steel Supply Corp. v. Anza, 547 U.S. 451 (2006), that the plaintiff’s RICO claim under

section 1962(c) was untenable because plaintiff did not allege facts showing, under the

Court’s analysis of the RICO statute, that “the alleged violation led directly to the plaintiff’s

injuries.” Id. at 460–61. Because the Second Circuit’s prior ruling had not dealt with the

plaintiff’s section 1962(a) claim, however, the Supreme Court remanded the case for further

consideration of the section 1962(a) claim.

The district court dismissed the plaintiff’s section 1962(a) claim on the ground that the

complaint failed to allege facts sufficient to show that the defendants’ alleged racketeering

activity was the proximate cause of injury to the plaintiff. According to the court of appeals,

the district court ruled as follows:

The Complaint again described the cash-no-tax scheme

conducted at National’s Queens facility in the late 1990s and early

2000s, and the attendant mail and wire frauds that allowed defendants

to retain unreported profits and avoid paying proper taxes. It alleged

that defendants used the concealed unlawful profits and tax savings to

finance the opening ofthe National store in the Bronx to compete with

Ideal. According to the Complaint and materials developed in

discovery, for 1999 and 2000 National filed tax returns reporting total

income of $145,118. Following the commencement of the present

lawsuit, however, National filed amended tax returns showing that its

total income for those years had instead been nearly $1.7 million, and

that for the period 1998–2003 National had underreported its taxable

income by a total of $4.3 million, allowing it to underpay its taxes by

approximately $1.7 million. Discovery and other proceedings revealed

that the Anzas had created a corporation called Easton Development

Corporation (“Easton Corporation”) to purchase property in 1999 to

enable National to open its store in the Bronx, and that the cash

portion of the purchase price was $500,000, which was paid by

National. (See Deposition of Joseph Anza at 34; Declaration of

Vincent Anza dated December 12, 2008 (“Anza Decl.”), ¶¶ 10, 11;

Deposition of Vincent Anza (“Anza Dep.”) at 188.) National began

operating its Bronx store in 2000. (See Anza Decl. ¶ 4.) Defendants
64

stated that “National expended approximately $850,000 to open its

Bronx facility” (id. ¶ 5); a report prepared by accountants retained by

Ideal concluded that National had spent considerably more.

Ideal asserted that prior to 2000 there were no companies

capable—in either size or breadth of offerings—of competing with

Ideal in the Bronx, and that in 1998–2000, Ideal consistently had

annual sales in the range of $4 million–$4.6 million. It alleged that

defendants’ opening of the National store in the Bronx injured Ideal in

two ways. First, simply by being there and offering products and

services comparable to those offered by Ideal, the new National store

took customers from Ideal, causing Ideal’s annual sales in 2001–2002

to drop by about one-third, to $2.7 million–$2.9 million. Second, Ideal

asserts that at the Bronx store National engaged in the same

cash-no-tax scheme that it conducted in the Queens store, thus

allowing National to lure customers with the lower prices financed by

the prior tax frauds.

Defendants moved for judgment on the pleadings pursuant to

Fed.R.Civ.P. 12(c), or alternatively for summary judgment pursuant to

Fed.R.Civ.P. 56, dismissing the Complaint on the ground that Ideal

could not show that its lost sales were proximately caused by the mere

creation of National’s Bronx facility through the alleged investment of

the proceeds of racketeering activity. In Ideal Steel Supply Corp. v.

Anza, No. 02 Civ. 4788, 2009 WL 1883272 (S.D.N.Y. June 30, 2009)

(“ Ideal IV ”), the district court found defendants’ position persuasive,

and it granted judgment on the pleadings and, alternatively, summary

judgment.

First, the court found that Ideal’s Complaint failed to meet the

standard set by Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.

Ct. 1955, 167 L.Ed.2d 929 (2007) (“Twombly”), which requires a

plaintiff to plead “‘more than labels and conclusions, and a formulaic

recitation of the elements of a cause of action,’” Ideal IV, 2009 WL

1883272, at *3 (quoting Twombly, 550 U.S. at 555). The district court

found that “[d]efendants argue persuasively that Plaintiff fails to plead

facts showing that Ideal’s lost sales were proximately caused by the

mere creation of National’s Bronx facility through the alleged

investment of an unspecified amount of RICO proceeds.” Ideal IV,

2009 WL 1883272, at *4 (internal quotation marks omitted). It also

found the Complaint

deficient . . . in that it does not allege facts explaining

how Defendants’ investment of purported racketeering
65

income to establish and operate its Bronx business

location proximately caused Ideal to lose sales, profits,

and market share. . . . Plaintiff’s allegations that

“Defendants substantially decreased Ideal’s sales,

profits, and local market share, and eliminated Ideal’s

dominant market position, by using racketeering

proceeds to acquire, establish, and operate their Bronx

business operation,” . . . are little more than “labels

and conclusions,” Twombly, 550 U.S. at 555, and do

not show how Defendants[’] “alleged violation [of

RICO] led directly to [Ideal’s] injuries,” [Ideal] III,

547 U.S. at 461. They are insufficient to state a claim

under Section 1962(a).

Ideal IV, 2009 WL 1883272, at *4 (emphases added).

In the alternative, the district court granted defendants’ motion

for summary judgment. The court noted that the Supreme Court in

Ideal III had found that proximate cause was lacking with respect to

Ideal’s 1962(c) claim because “‘it would require a complex assessment

to establish what portion of Ideal’s lost sales were the product of

National’s [conduct]’ because ‘[b]usinesses lose and gain customers

for many reasons,’” Ideal IV, 2009 WL 1883272, at *6 (quoting Ideal

III, 547 U.S. at 459). The district court stated that “[t]his is no less

true here” with respect to the 1962(a) claim. Ideal IV, 2009 WL

1883272, at *6.

Plaintiff’s Section 1962(a) RICO claim raises the same

concerns in view of Plaintiff’s assertions that its

injuries include “a permanent loss ofsales, profits, and

market share,” . . . That is, it would be purely

speculative . . . for this Court to conclude that Ideal’s

alleged injuries resulted from Defendants’ conduct as

opposed to other factors . . . . “The element of

proximate causation . . . is meant to prevent these types

of intricate, uncertain inquiries from overrunning

RICO litigation.” [Ideal] III, 547 U.S. at 460.

Ideal IV, 2009 WL 1883272, at *6.

The court found that proximate cause was lacking because

“there were intervening factors that may have caused Ideal’s alleged

lost sales, profits, and diminution in market share.” Id. at *5.
66

For one thing, Ideal’s principal, Giacomo Brancato,

testified that Ideal’s Bronx location had “thousands of

customers that buy thousands of products for many

different uses.” . . . The decisions of individual

purchasers, i.e., in this case presumably not to buy

steel products from Ideal, have been held to constitute

an independent intervening act between the alleged

RICO violations and the alleged injuries.

Id. (emphases added). The court also found that “Ideal’s Bronx

operation had several competitors,” id. at *5 n.2, that Ideal “received

and accepted” inferior products, id. at *6, and that Ideal made various

business decisions such as deciding whether or not to lower its prices

to match those of National, see id., all of which the court held

constituted intervening factors preventing Ideal from establishing

proximate cause.

Accordingly, the district court dismissed Ideal’s claim under §

1962(a).

Id. at *5–7.

The Second Circuit panel, by a 2-1 vote, reversed the district court’s dismissal of the

plaintiff’s claim under section 1962(a). The court reasoned:

[T]he district court dismissed the Complaint pursuant to Rule 12(c) on

the grounds that it did not specify the amount of RICO proceeds used

to create National’s Bronx facility, Ideal IV, 2009 WL 1883272, at *4,

and “d[id] not allege facts explaining how Defendants’ investment of

purported racketeering income to establish and operate its Bronx

business location proximately caused Ideal to lose sales, profits, and

market share,” id.; and that Ideal’s “allegations that Defendants

substantially decreased Ideal’s sales, profits, and local market share,

and eliminated Ideal’s dominant market position, by using racketeering

proceeds to acquire, establish, and operate their Bronx business

operation, . . . [we]re little more than ‘labels and conclusions,’” id.

(quoting Twombly, 550 U.S. at 555 (other internal quotation marks

omitted)), or “‘a formulaic recitation of the elements of a cause of

action,’” id. at *3 (quoting Twombly, 550 U.S. at 555). We disagree

with the district court’s characterizations and its application of

Twombly.

First, the Twombly Court noted that Fed.R.Civ.P. 8(a)(2)

“requires only ‘a short and plain statement of the claim showing that
67

the pleader is entitled to relief,’ in order to give the defendant fair

notice of what the . . . claim is and the grounds upon which it rests,”

Twombly, 550 U.S. at 555 (other internal quotation marks omitted);

see also Swierkiewicz v. Sorema N.A., 534 U.S. 506, 508, 512, 122 S.

Ct. 992, 152 L.Ed.2d 1 (2002) (to satisfy Rule 8(a)(2), a plaintiff who

alleges facts that provide fair notice of his claim need not also allege

“specific facts establishing a prima facie case”). The Twombly Court,

while stating that mere “labels and conclusions” or “formulaic

recitation[s] of the elements of a cause of action will not do,” stated

that “a complaint attacked by a Rule 12(b)(6) motion to dismiss does

not need detailed factual allegations,” but only “[f]actual allegations

[that are] enough to raise a right to relief above the speculative level,”

550 U.S. at 555, i.e., enough to make the claim “plausible,” id. at 570;

see Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 1949, 173

L.Ed.2d 868 (2009) (“A claim has facial plausibilitywhen the plaintiff

pleads factual content that allows the court to draw the reasonable

inference that the defendant is liable for the misconduct alleged.”).

The Twombly Court stated that “[a]sking for plausible grounds . . .

does not impose a probability requirement at the pleading stage; it

simply calls for enough fact to raise a reasonable expectation that

discovery will reveal evidence of illegal[ity].” 550 U.S. at 556.

The district court in Ideal IV demanded of Ideal a pleading at

a level of specificity that was not justified by Twombly. The

Complaint’s “allegations that Defendants substantially decreased

Ideal’s sales, profits, and local market share, and eliminated Ideal’s

dominant market position, by using racketeering proceeds to acquire,

establish, and operate their Bronx business operation,” Ideal IV, 2009

WL 1883272, at *4 (internal quotation marks omitted), were not

properly characterized as “labels,” id., nor could the allegations—as

they were set forth in the Complaint—be considered a mere formulaic

repetition of the statutory language or considered so conclusory as to

lack facial plausibility. The Complaint alleged, inter alia, that the

income of National, as a Subchapter S corporation under the Internal

Revenue Code, passed through to the Anzas as its sole shareholders

(see Complaint ¶ 26); that from at least 1996 to the spring of 2004,

National and the Anzas filed fraudulent tax returns understating the

amount of their taxable income and enabling them to save and amass

substantial funds (see, e.g., id. ¶¶ 28, 30, 61); that after the

commencement of this lawsuit in 2002, defendants admitted the falsity

of those income tax returns by filing amended returns showing that

they had falsely underreported National’s income to tax authorities for

several years (see id. ¶ 29); that defendants’ false tax returns from

1996 to spring 2004 were filed by mail and fax, violated federal laws
68

against mail and wire fraud, and constituted a pattern of racketeering

activity in violation of RICO (see id. ¶¶ 34–35, 45, 61); that for each

of the years 1999 and 2000, defendants reported taxable income of less

than $100,000 (see id. ¶ 38); that the purchase and renovation

expenses for National’s Bronx facility were capital expenses that could

not be funded with pre-tax dollars (see id. ¶ 39); that the expense of

purchasing, renovating, equipping, stocking, and opening National’s

Bronx facility was estimated by Ideal to be in excess of $1 million (see

id. ¶ 37); and that in 1999–2000, defendants fraudulently

underreported their income by more than $1 million (see id. ¶ 40).

The Complaint alleged that before National opened its Bronx facility,

Ideal had a dominant market position there, with no serious

competitors, as no other Bronx vendors offered as comprehensive an

array of goods and services as Ideal (see id. ¶ 11); that National’s

Bronx facility, opened in the summer of 2000 a mere eight minutes’

drive from Ideal’s facility, began to offer an array of goods and

services similar to those offered by Ideal (see id. ¶¶ 9–15); and that the

opening of National’s Bronx facility caused a substantial decrease in

Ideal’s sales, profits, and local market share (see id. ¶ 43). We see

nothing implausible in the allegations that a plaintiff business entity

that had once enjoyed a dominant market position, with no serious

competition from other, more limited, entities, lost business when a

large competitor comparable in size and offerings to the plaintiff

opened nearby.

Second, although the standards for dismissal pursuant to Rule

12(c) are the same as for a dismissal pursuant to Rule 12(b)(6), see,

e.g., Rivera v. Heyman, 157 F.3d 101, 103 (2d Cir. 1998), and the

standard set by Twombly for evaluation of the viability of the pleading

is the same under each Rule, see, e.g., Hayden v. Paterson, 594 F.3d

150, 160–61 (2d Cir. 2010), we view the district court’s focus solely

on the allegations of the Complaint, given the posture of this case, as

a misapplication of Twombly. Twombly is meant to allow the parties

and the court to avoid the expense of discovery and other pretrial

motion practice when the complaint states no plausible claim on which

relief can be granted:

[W]hen the allegations in a complaint, however true,

could not raise a claim of entitlement to relief, this

basic deficiency should . . . be exposed at the point of

minimum expenditure of time and money by the parties

and the court.

Twombly, 550 U.S. at 558 (internal quotation marks omitted)
69

(emphasis ours). In the present case, the point of minimum expense

had long since been passed. The case had been addressed at each of

the three levels of the federal judicialsystem; and, by the time of Ideal

IV, discovery had been completed. To be sure, whether the complaint

states a claim upon which relief can be granted is a question of law,

and that question may be raised even as late as at the trial of the action,

see Fed.R.Civ.P. 12(h)(2). But pleadings often may be amended.

Prior to trial, after the time to amend as of right has passed, “[t]he

court should freely give leave [to amend] when justice so requires,”

Fed.R.Civ.P. 15(a)(2); see, e.g., Rachman Bag Co. v. Liberty Mutual

Insurance Co., 46 F.3d 230, 234–35 (2d Cir. 1995); see also

Fed.R.Civ.P. 15(b)(1) (even at trial, “[t]he court should freely permit

an amendment” to conform the pleadings to the proof, unless the

objecting party can show prejudice). Indeed, the availability of

“amendment of pleadings” was one of the reasons for Congress’s

expectation that the private right of action for RICO violations would

be an effective tool. S.Rep. No. 91–517, at 82.

In light of the fact that discovery in this case had been

completed prior to the decision in Ideal IV, we do not regard

Twombly as requiring that defendants’ Rule 12(c) motion be granted

if evidence that had already been produced during discovery would fill

the perceived gaps in the Complaint. For example, although the

district court found persuasive the defendants’ argument that the

Complaint did not specify how much RICO income was invested to

create the National facility in the Bronx, materials in the record

showed that the purchase price of the property was $2.5 million; that

of that sum, $500,000 in cash was paid at the closing, and that that

$500,000 was provided by National (see, e.g., Anza Dep. at 186–87,

435); that defendants admit that opening the Bronx store cost at least

$850,000 (see, e.g., Anza Decl. ¶ 5); and that Ideal’s expert accountant

estimated that the total cost exceeded $1 million. To the extent that

the district court viewed as conclusory the Complaint’s allegations that

defendants had filed income tax returns that substantially understated

their taxable income, the court should have taken into account the tax

returns in the record—both those that were originally filed by National

showing less than $73,000 in taxable income for each of the years

1999 and 2000, and the amended returns showing taxable income for

those two years totaling nearly $1.7 million, as well as the deposition

testimony of an accountant for National that those and other amended

returns filed for National showed that for 1998–2003 National had

unreported income totaling approximately $4.3 million (see

Deposition of Jay L. Ofsink at 40). And to the extent that the court

viewed the Complaint’s allegation that Ideal’s Bronx operation lost
70

sales after the advent of National as conclusory, it should have taken

into consideration, inter alia, the deposition testimony of Ideal’s sole

shareholder, Giacomo Brancato, who stated that in each of the years

1998, 1999, and 2000, Ideal had sales in the range of $4 million—$4.6

million (Deposition of Giacomo Brancato (“Brancato Dep.”) at 282);

and that after National opened its Bronx facility in the summer of

2000, Ideal’s sales in 2001 and 2002 dropped by about one-third, to

$2.7 million–$2.9 million (see id.). The record also permits the

inference that the sales lost by Ideal were made by National.

National’s tax returns for 2001 and 2002 showed that its gross sales

for those years, the first two full years of its Bronx facility’s operation,

were, respectively, some $1.2 million and $2.3 million more than its

gross sales during the last year before the Bronx facility was opened.

Although the returns do not provide figures for National’s Queens and

Bronx facilities separately, it is surely inferable that at least a

substantial portion of its 24–47% increase in sales was attributable to

the Bronx facility.

In these circumstances, assuming the truth of the Complaint’s

allegations and of evidence in the record supporting those allegations,

if defendants’ investment of the proceeds of their alleged pattern of

mail and wire frauds has not sufficiently directly harmed Ideal to meet

the standard of proximate cause, we find it difficult to envision anyone

who could show injury proximately caused by that investment—or to

fathom to whom Congress meant to grant a private right of action

under subsection (a). We conclude that the district court erred in

dismissing Ideal’s Complaint pursuant to Rule 12(c).

Id. at *11–14 (emphasis added).

Judge Cabranes dissented from the panel’s ruling, but his dissent rested on issues of the

analysis of proximate causation for purposes of RICO section 1962(a), and not on issues

regarding the proper interpretation of Twombly and Iqbal.

• In re Lehman Bros. Mortg.-Backed Sec. Litig., 650 F.3d 167, 2011 WL 1778726 (2d Cir.

May 11, 2011). Plaintiffs, a number of union and other pension trusts, filed a class action

complaint seeking to hold defendant McGraw Hill, through its subsidiaries Standard and

Poor’s, Moody’s Investors Service, and Fitch, Inc. (the “Rating Agencies”), liable as

underwriters or “control persons” for misstatements or omissions in securities offering

documents, in violation of sections 11 and 15 of the Securities Act. The plaintiffs alleged that

the Rating Agencies were “underwriters” as defined by the statute because they helped

structure the securities in order to achieve desired ratings. Plaintiffs also alleged that the

Rating Agencies provided advice and direction about how to structure the securities

transactions to the primary violators of the securities laws, making the Rating Agencies also
71

liable as “control persons” under the statute.

The court of appeals summarized the details of the plaintiffs’ allegations as follows:

A. The Securities Offerings

1. Mortgage Pass–Through Certificates

In the period from 2005 to 2007, plaintiffs and similarly

situated persons purchased approximately $155 billion worth of

mortgage pass-through certificates registered with the Securities and

Exchange Commission (“SEC”) entitling them to distributions from

underlying pools of mortgages. To create such certificates, a

“sponsor” originates or acquires mortgages. Next, the loans are sold to

a “depositor” that securitizes the loans—meaning, in effect, that the

depositor secures the rights to cash flows from the loans so that those

rights can be sold to investors. The loans are then placed in issuing

trusts, which collect the principal and interest payments made by the

individual mortgage borrowers and, in turn, pay out distributions to the

purchasers of the mortgage pass-through certificates. Finally, different

risk levels, or “tranches” of risk, are created by using various types of

credit enhancement, such as subordinating lower tranches to absorb

losses first, overcollateralizing the loan pools in excess of the bond

amount, or creating an excess spread fund to cover the difference

between the interest collected from borrowers and amounts owed to

investors. Each tranche is denominated by a credit rating—in these

cases issued by one or more Rating Agencies—determined by the

seniority level and the expected loss of the loan pool. Finally, the

depositor sells the certificates to underwriters, who then offer them to

investors.

Many of the certificates here at issue received AAA ratings, the

“safest” tranche supposedly least likely to default. Investment-grade

ratings were crucial to the certificates’sale because many institutional

investors must purchase investment-grade securities. Moreover, some

senior certificates’ sales were conditioned on the receipt of AAA

ratings.

2. Union Plaintiffs’ Purchase of Certificates

The Union Plaintiffs and other similarly situated persons

bought certificates in ninety-four offerings between September 29,

2005, and July 28, 2007, that were sponsored by Lehman Brothers

Holdings, Inc. (“LBHI”) and underwritten by Lehman Brothers, Inc.,
72

with Structured Asset Securities Corporation (“SASCo”), a

wholly-owned LBHI entity, acting as depositor (collectively,

“Lehman”). The certificates were issued pursuant to one of two

registration statements, initially filed with the SEC on September 16,

2005, and August 8, 2006, respectively. S & P and Moody’s rated the

securities.

3. Wyoming’s Purchase of Certificates

Wyoming and similarly situated persons purchased certificates

sponsored by IndyMac Bank, with IndyMac MBS, Inc. acting as

depositor. Many large investment banks underwrote the offerings,

which were issued pursuant to three registration statements first filed

on August 15, 2005, February 24, 2006, and February 14, 2007,

respectively. S & P, Moody’s, and Fitch rated Wyoming’s certificates.

4. Vaszurele’s Purchase of Certificates

Vaszurele and similarly situated plaintiffs acquired senior

mortgage pass-through certificates, issued on June 28, 2006, by the

Residential Asset Securitization Trust 2006–A8 (“RAST”). IndyMac

Bank sponsored Vaszurele’s certificates, with IndyMac MBS, Inc.

acting as depositor and Credit Suisse Securities (USA) Inc. as lead

underwriter. S & P and Moody’s rated the certificates acquired by

Vaszurele, which are traceable to a registration statement initially filed

on February 24, 2006.

B. Rating Agencies’ Alleged Role in the Offerings

In the transactions described above, plaintiffs allege that the

Rating Agencies, which ordinarily serve as passive evaluators of credit

risk, exceeded their traditional roles by actively aiding in the

structuring and securitization process. Specifically, plaintiffs allege

that issuing banks engaged particular Rating Agencies through a

“ratings shopping” process, whereby the Rating Agencies reviewed

loan-level data for a mortgage pool and provided preliminary ratings.

Union Compl. ¶ 66; Wyoming Compl. ¶ 200. The banks then

negotiated with the Rating Agencies regarding the amount of credit

enhancements and percentage of AAA certificates for each mortgage

pool. By thus “play[ing] the agencies off one another” and choosing

the agency offering the highest percentage of AAA certificates with

the least amount of credit enhancements, the banks purportedly

“engender[ed] a race to the bottom in terms of rating quality.” Union

Compl. ¶ 170.
73

During and after this negotiation, the Rating Agencies engaged

in an “iterative process” with the banks, providing “feedback” on

which combinations ofloans and credit enhancements would generate

particular ratings. Id. ¶ 177 (internal quotation marks and emphasis

omitted); Wyoming Compl. ¶ 91 (internal quotation marks and

emphasis omitted); Vaszurele Compl. ¶ 38 (internal quotation marks

and emphasis omitted). In the course of this dialogue, issuers adjusted

the certificates’ structures until they achieved desired ratings. As one

Moody’s officer described the process: “You start with a rating and

build a deal around a rating.” Union Compl. ¶ 176 (internal quotation

marks and emphasis omitted); Wyoming Compl. ¶ 90 (internal

quotation marks omitted); Vaszurele Compl. ¶ 38 (internal quotation

marks and emphasis omitted). Plaintiffs submit that the Rating

Agencies thus helped determine the composition of loan pools, the

certificates’ structures, and the amount and kinds of credit

enhancement for particular tranches.

Toward this end, the Rating Agencies allegedly provided their

modeling tools to the banks’ traders to help them pre-determine the

combinations of credit enhancements and loans needed to achieve

specific ratings. S & P’s LEVELS or SPIRES models, and Moody’s

M–3 model, analyzed fifty to eighty different loan characteristics in

estimating the number and extent of likely loan defaults. Based on

these factors, the models calculated the amount of credit enhancement

required for a specific pool of loans to receive a AAA rating.

According to the Union Plaintiffs, LBHI used the modeling data in

determining bidding prices for loans. Moody’s and S & P also received

loan-level files and advised Lehman on appropriate loan prices. The

Rating Agencies, however, had purportedly failed to update their

models to reflect accurately the higher risks of certain underlying

loans, such as subprime, interest-only, and negative amortization

mortgages. The models also failed to account for deteriorating loan

origination standards. As a result, plaintiffs complain that the

certificates’ AAA or investment-grade ratings did not accurately

represent their risk.

Id. at *1–3 (footnote omitted).

The district court granted the defendants’ motion to dismiss. The district court found that the

plaintiffs did not allege facts showing that the Rating Agencies fell within the statutory

definition of “underwriter” when they participated in creating the securities, since they did not

purchase the securities for resale. The district court also found that the plaintiffs did not

allege facts showing that the Rating Agencies’ power to influence or persuade the primary
74

violators constituted the requisite “practical ability to direct the actions of people who issue

or sell securities.” Id. at 4.

The Second Circuit affirmed the district court’s dismissal of the complaint. The court

reasoned as follows:

Applying the underwriter definition on de novo review, we

conclude that plaintiffs failed to allege facts sufficient to state a

plausible § 11 claim against the Rating Agency defendants.

The complaints contain extensive descriptions of the Rating

Agencies’ activities in structuring the certificate transactions, dictating

the kinds and quantity of loans or credit enhancements needed for

desired ratings, and providing modeling tools to traders to

pre-structure loan pools. Plaintiffs submit that these allegations

demonstrate that the Rating Agencies played a necessary role in the

securities’ distribution because (1) their ratings translated opaque

financial products into understandable risk levels, (2) institutional

investors were required to buy investment-grade securities, and (3)

offerings were conditioned on senior tranches receiving AAA ratings.

We disagree. Like all of the district courts to have considered similar

claims, we conclude that structuring or creating securities does not

constitute the requisite participation in underwriting.

As the district court in this case explained, even assuming, as

we must, that the Rating Agencies “had a good deal to do with the

composition and characteristics of the pools of mortgage loans and the

credit enhancements of the [c]ertificates that ultimately were sold,”

plaintiffs failed to allege that defendants “participated in the relevant”

undertaking: that of purchasing securities from the issuer with a view

towards distribution, or selling or offering securities for the issuer in

connection with a distribution. In re Lehman Bros. Sec. & ERISA

Litig., 681 F. Supp. 2d at 499; see also In re Wells Fargo

Mortg.-Backed Certificates Litig., 712 F. Supp. 2d at 968–69

(dismissing § 11 claims when plaintiffs failed to allege rating agencies

undertook “activities related to the [securities’] distribution or sale”);

New Jersey Carpenters Vacation Fund v. Royal Bank of Scot. Grp.,

PLC, 720 F. Supp. 2d at 263–64 (concluding that playing “significant

role in the creation” of certificates does not constitute requisite

“participat[ion] in the sale or distribution” of securities). The Rating

Agencies’ efforts in creating and structuring certificates occurred

during the initial stages of securitization, not during efforts to disperse

certificates to investors. See New Jersey Carpenters Vacation Fund v.

Royal Bank of Scot. Grp., PLC, 720 F. Supp. 2d at 263–64 (noting that
75

certificate creation occurred during “securitization process” rather than

during marketing, distribution, or sale (internal quotation marks

omitted)).

The fact that the market needed ratings to understand

structured financial products or that particular ratings were essential

to the certificates’ eventual sale does not change the analysis. While

it is certainly true that some investors will refrain from buying

securities that do not bear a AAA rating, and that some banks will

decline to assume the risk of pursuing a public offering unless a

security receives a high credit rating, plaintiffs, once again, fail to

demonstrate that the Rating Agencies were involved in a statutorily

listed distributional activity.

The rating issued by a Rating Agency speaks merely to the

Agency’s opinion of the creditworthiness of a particular security. In

other words, it is the sort of expert opinion classically evaluated under

the “expert” provision of § 11, not under the “underwriter” provision.

See 15 U.S.C. § 77k(a)(4) (providing for “expert” liability against

“accountant[s], engineer[s], or appraiser[s], or any person whose

profession gives authority to a statement made by him, who has with

his consent been named as having prepared or certified any part of the

registration statement.”);see also id. § 77g(a) (providing requirements

by which “consent” must be established for purposes of § 77k(a)(4)).

Indeed, each offering document explained that the assigned credit

rating was “not a recommendation to buy, sell or hold securities and

may be subject to revision or withdrawal at any time.” See, e.g., Defs.’

Br. at 7.

. . . .

In sum, because plaintiffs failed to plead facts sufficient to

bring the Rating Agencies within the statutory definition of

underwriter, their § 11 claims against these defendants were properly

dismissed.

C. Section 15 Control Person Claims

The Union Plaintiffs and Wyoming also appeal the district

court’s dismissal of their § 15 control person claims against the Rating

Agencies. Section 15 imposes joint and several liability on “[e]very

person who, by or through stock ownership, agency, or otherwise . . .

controls any person liable under” § 11. 15 U.S.C. § 77o(a). To

establish § 15 liability, a plaintiff must show a “primary violation” of
76

§ 11 and control of the primary violator by defendants. ECA & Local

134 IBEW Joint Pension Trust v. JP Morgan Chase Co., 553 F.3d 187,

206–07 (2d Cir. 2009); see also In re Morgan Stanley Info. Fund Sec.

Litig., 592 F.3d at 358. Because it is undisputed that plaintiffs

adequately pleaded primary § 11 violations by the certificates’ issuers

or depositors, the only question on appeal is whether the facts alleged

permit an inference that the Rating Agencies controlled the primary

violators.

Although our Court has not yet discussed “control” for § 15

purposes, in the context of claims under § 20(a) of the 1934 Act

against persons controlling primary § 10(b) violators, we have defined

“control” as “‘the power to direct or cause the direction of the

management and policies of [the primary violators], whether through

the ownership of voting securities, by contract, or otherwise.’” SEC

v. First Jersey Sec., Inc., 101 F.3d 1450, 1472–73 (2d Cir. 1996)

(quoting 17 C.F.R. § 240.12b–2). Because § 15 and § 20(a) are

roughly parallel control person provisions under the 1933 and 1934

Acts, respectively, we here adopt the quoted First Jersey definition of

control for § 15 claims. See 15 U.S.C. § 77o(a) (imposing liability on

persons who “control[ ] any person liable” under § § 11 or 12); id. §

78t (imposing liability on persons who “control[ ] any person liable”

under § 10(b)); In re Refco, Inc. Sec. Litig., 503 F. Supp .2d 611, 660

(S.D.N.Y. 2007) (noting that § 20(a) and § 15 “are parallel

provisions”).

The parties dispute whether we should further adopt the

requirement that § 20 plaintiffs demonstrate “culpable participation”

by the alleged controlling person for purposes of § 15. See SEC v.

First Jersey Sec., Inc., 101 F.3d at 1472 (requiring § 20 plaintiff to

show that “controlling person was in some meaningful sense a

culpable participant in the fraud perpetrated by the controlled person”

(internal quotation marks and brackets omitted)). That issue has

divided district courts in this Circuit. Compare P. Stolz Family

P’ship, L.P. v. Daum, 166 F. Supp. 2d 871, 873 (S.D.N.Y. 2001)

(requiring culpable participation), reversed in part on other grounds

by 355 F.3d 92 (2d Cir. 2004), with In re Refco, Inc. Sec. Litig., 503

F. Supp. 2d at 660–61 & n.43 (noting that despite similarity between

§ 15 and § 20(a), “culpable participation” requirement applies only to

§ 20(a) because § 20(a) excepts from liability those acting “in good

faith ” who did not directly or indirectly induce violation (emphasis in

original));In re CINAR Corp. Sec. Litig., 186 F. Supp. 2d 279, 309–10

(E.D.N.Y. 2002) (declining to require culpable participation because

§ 11, unlike § 10(b), does “not contain an intent element”). We need
77

not decide here whether “culpable participation” is a necessary

element for § 15 liability because plaintiffs’ § 15 claims fail in any

event for inadequate pleading of the undisputed element of control.

Plaintiffs contend that the district court erroneously applied a

heightened pleading standard by requiring their complaints to support

an inference “that the decision making power lay entirely with the

Rating Agencies.” In re Lehman Bros. Sec. & ERISA Litig., 681 F.

Supp. 2d at 501 (emphasis added). Unlike plaintiffs, we do not

understand the district court’s passing reference to “entire” control to

require a pleading that defendants controlled the primary violators to

the exclusion of all others. The district court correctly observed that §

15 imposes liability on “‘[e]very person’ “who controls a primary

violator. Id. at 500 (quoting 15 U.S.C. § 77o) (emphasis added).

Moreover, the district court analyzed explicitly whether plaintiffs

pleaded “allegations . . . sufficient to justify a conclusion that the

Rating Agencies controlled others who violated [§ 11].” Id. In any

event, after de novo review we conclude that plaintiffs’ allegations are

insufficient.

Wyoming alleges that defendants “actively collaborated” with

the depositors in creating the transactions by providing “direct input,”

“advisory opinions,” and “guidance” on which loans or structures

would achieve desired ratings. Wyoming Compl. ¶¶ 47–49, 64, 89,

97. The Union Plaintiffs similarly allege that the Rating Agencies

influenced the primary violators by providing advice and feedback on

appropriate loan prices and structures, thereby “largely determin[ing]

the amount and kind of credit enhancement” that would result in

specific ratings. Union Compl. ¶¶ 173–75, 178.

At most, these allegations suggest that the Rating Agencies

provided advice and “strategic direction,” Wyoming Br. at 32, on how

to structure transactions to achieve particular ratings. Such purported

involvement in transaction-level decisions falls far short of showing

a power to direct the primary violators’ “management and policies.”

Moreover, allegations of advice, feedback, and guidance fail

to raise a reasonable inference that the Rating Agencies had the power

to direct, rather than merely inform, the banks’ ultimate structuring

decisions. Put another way, providing advice that the banks chose to

follow does not suggest control. See Harrison v. Dean Witter

Reynolds, Inc., 974 F.2d 873, 877 (7th Cir. 1992) ( “[T]he ability to

persuade and give counsel is not the same thing as ‘control’ . . . .”

(internal quotation marks omitted)); New Jersey Carpenters Health
78

Fund v. Residential Capital, LLC, No. 08 CV 8781, 2010 WL

1257528, at *7 (S.D.N.Y. Mar. 31, 2010) (dismissing control person

claim against underwriters because ability to persuade issuers

insufficient).

Indeed, plaintiffs’ “ratings shopping” allegations undermine

their control theory. Specifically, plaintiffs allege that the banks

wielded “incredible leverage over,” Wyoming Compl. ¶ 195, and

“pressured” the Rating Agencies, Union Compl. ¶ 168, by awarding

business to the agency providing the highest percentage of AAA

ratings with the lowest levels of credit enhancement. Such allegations

might suggest that the primary violators had power over the Rating

Agencies’ policies by “engendering a race to the bottom in terms of

rating quality.” Wyoming Compl. ¶ 170. But they do not support any

inference that the Rating Agencies had the power to direct the primary

violators’ policies.

Nor are we persuaded by the Union Plaintiffs’ argument that

they adequately alleged control by stating that SASCo was a “dummy

corporation” with the sole purpose of securitizing transactions. The

complaint does not, in fact, allege that SASCo was a “dummy

corporation,” see Manning v. Utils. Mut. Ins. Co., 254 F.3d 387, 401

(2d Cir. 2001) (noting that allegations must be contained in complaint

to defeat motion to dismiss), nor does it plead facts suggesting that

SASCo was a shell company created to avoid liability for securities

law violations, cf. In re Refco, Inc. Sec. Litig., 503 F. Supp. 2d at 661

(concluding defendants could be liable when they allegedly controlled

entities exercising power over shell entities). In any event, the

complaint alleges that Lehman wholly owned SASCo and “controlled

every aspect of the securitization,” without alleging that the Rating

Agencies created SASCo or directed its management or policies.

Union Compl. ¶ 6. Such allegations do not raise a reasonable inference

that the Rating Agencies controlled SASCo.

Accordingly, we affirm the district court’s dismissal of the

control person claims.

Id. at *11–16 (citations and footnotes omitted).

The court of appeals also affirmed the district court’s denial of leave to amend. The court

reasoned:

In their briefs in opposition to the motions to dismiss, plaintiffs

requested leave to amend without specifying what additional facts, if
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any, they might assert in a new pleading. As we have previously ruled,

“[i]t is within the [district] court’s discretion to deny leave to amend

implicitly by not addressing” requests for amendment made

“informally in a brief filed in opposition to a motion to dismiss.”

Joblove v. Barr Labs. Inc. ( In re Tamoxifen Citrate Antitrust Litig.),

466 F.3d 187, 220 (2d Cir. 2006); see also Litwin v. Blackstone Grp.,

L.P., 634 F.3d 706, 723 (2d Cir. 2011). Where, as here, the district

court did not specify in its decisions that it dismissed the complaints

with prejudice, and plaintiffs thereafter failed to make formal motions

to amend or to offer proposed amended complaints, we identify no

abuse of discretion in the district court’s implicit denial of plaintiffs’

cursory requests for leave to amend.

In any event, a denial of leave to amend is not an abuse of

discretion if amendment would be futile. See In re Tamoxifen Citrate

Antitrust Litig., 466 F.3d at 220. While plaintiffs’ conclusorily assert

on appeal that recent government investigations provide new

information about the Rating Agencies’ role in the transactions, they

fail to identify new facts that might redress the complaints’ noted

deficiencies. Accordingly, we reject as without merit plaintiffs’

challenge to the denial of leave to amend.

Id. at *16–17.

• Gallop v. Cheney, 642 F.3d 364, 2011 WL 1565858 (2d Cir. Apr. 27, 2011). April Gallop

filed a Bivens complaint against high U.S. government civilian and military officials alleging

that she was injured in the attack on the Pentagon on September 11, 2001, and that that attack

was caused by the defendants in order (1) to create a domestic political atmosphere in which

they could pursue their policy objectives, and (2) to conceal the misallocation of large sums

of money appropriated to the Department of Defense. The court of appeals described the

complaint:

[T]he Complaint hypothesizes a fantastical alternative history to the

widely accepted account of the “explosion” that injured Gallop and

killed hundreds of other men and women inside the Pentagon. Among

other things, Gallop’s complaint alleges that American Airlines Flight

77 did not crash into the Pentagon—indeed, that no plane crashed into

the Pentagon. . . . Instead, the Complaint alleges that the United States

most senior military and civilian leaders “cause[d] and arrange[d] for

high explosive charges to be detonated inside the Pentagon, and/or a

missile of some sort to be fired at the building . . . to give the false

impression that hijackers had crashed the plane into the building, as

had apparently happened in New York.”
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Gallop further contends that these officials knew of the

September 11 attacks in advance, facilitated their execution, and

attempted to cover up their involvement in order to “generate a

political atmosphere of acceptance in which [the government] could

enact and implement radical changes in the policy and practice of

constitutional government in [the United States].” In addition, Gallop

alleges that the attacks were intended to conceal the revelation on

September 10, 2001, that $2.3 trillion in congressional appropriations

“could not be accounted for” in a recent Department of Defense audit.

Id. at *2–3.

The district court dismissed the complaint with prejudice as frivolous and as failing to make

out non-conclusory factual allegations. The Second Circuit affirmed, agreeing that the

complaint failed to state a plausible claim for relief. The court observed:

After a de novo review, we have no hesitation in concluding

that the District Court correctly determined that the few conceivably

“well-pleaded” facts in Gallop’s complaint are frivolous. While, as a

general matter, Gallop or any other plaintiff certainly may allege that

the most senior members of the United States government conspired

to commit acts of terrorism against the Untied States, the courts have

no obligation to entertain pure speculation and conjecture. Indeed, in

attempting to marshal a series of unsubstantiated and inconsistent

allegations in order to explain why American Airlines Flight 77 did

not crash into the Pentagon, the complaint fails to set forth a

consistent, much less plausible, theory for what actually happened that

morning in Arlington, Virginia. See, e.g.,Complaint ¶ 3 (alleging that

defendants may have caused “high explosive charges to be detonated

inside the Pentagon”); ¶ 21 (alleging that defendants “may have

employed Muslim extremists to carry out suicide attacks; or . . . may

have used Muslim extremists as dupes or patsies”); id. (alleging that

“four planes” were in fact hijacked on the morning of September 11);

¶ 33 (alleging that “[i]f Flight 77, or a substitute, did swoop low over

the [Pentagon], to create the false impression of a suicide attack, it was

then flown away by its pilot, or remote control, and apparently crashed

somewhere else”); ¶ 40(d)(3) (alleging that apart from Flight 77 “a

different, additional, flying object . . . hit the Pentagon”); ¶ 43

(alleging that there “may have been a missile strike, perhaps

penetrating through to the back wall, which helped collapse the section

that fell in, possibly augmented by explosives placed inside”).

Furthermore, and notwithstanding the unsupported

assumptions regarding the fate of American Airlines Flight 77, the
81

complaint also fails to plausibly allege the existence of a conspiracy

among the defendants. Gallop offers not a single fact to corroborate

her allegation of a “meeting of the minds” among the conspirators.

Complaint ¶ 55. It is well settled that claims of conspiracy “containing

only conclusory, vague, or general allegations of conspiracy to deprive

a person of constitutional rights cannot withstand a motion to

dismiss.” Leon v. Murphy, 988 F.2d 303, 311 (2d Cir. 1993)

(quotation marks omitted). We therefore agree with the District Court

that Gallop’s allegations of conspiracy are baseless and spun entirely

of “cynical delusion and fantasy.” The District Court did not err in

dismissing the complaint with prejudice.

Id. at *6–7 (citation omitted).

The court of appeals also rejected the plaintiff’s argument that she should have been permitted

to amend her complaint. The court noted that the plaintiff never requested leave to amend,

and held that “in the absence of any indication that Gallop could—or would—provide

additional allegations that might lead to a different result, the District Court did not err in

dismissing her claim with prejudice. As we have had occasion to explain, ‘[a] counseled

plaintiff is not necessarily entitled to a remand for repleading whenever he has indicated a

desire to amend his complaint, notwithstanding the failure of plaintiff’s counsel to make a

showing that the complaint’s defects can be cured.’ Porat v. Lincoln Towers Cmty. Ass'n, 464

F.3d 274, 276 (2d Cir. 2006).” Id. at *8.

• Litwin v. Blackstone Group, L.P., 634 F.3d 706, 2011 WL 447050 (2d Cir. Feb. 10, 2011),

cert. denied, --- S. Ct. ----, 2011 WL4532981 (Oct. 3, 2011). The plaintiffs brought a putative

securities class action on behalf ofthemselves and all others who purchased the common units

of the Blackstone Group (“Blackstone”) at the time of its IPO. They sought remedies under

the Securities Act for alleged material omissions from, and misstatements in, Blackstone’s

registration statement and prospectus.

Blackstone, the Second Circuit explained, is one of the largest independent alternative asset

managers in the world, with total assets under management of approximately $88.4 billion as

of 2007. Blackstone receives a substantial portion of its revenues from two sources: (1) a

1.5% management fee on its total assets under management, and (2) performance fees of 20%

of the profits generated from the capital it invests on behalf of its limited partners. Under

certain circumstances, when investments perform poorly, Blackstone may be subject to a

“claw-back” of already-paid performance fees. In other words, it may be required to return

fees which it has already collected. 

The plaintiffs alleged that, at the time of Blackstone’s IPO and unbeknownst to non-insider

purchasers of Blackstone common units, two of Blackstone’s portfolio companies (FGIC

Corp. and Freescale), as well as its real estate fund investments, were experiencing problems.

Blackstone allegedly knew of these problems and reasonably expected these problems to
82

subject it to reduced future performance fees and a claw-back of past performance fees,

thereby materially affecting its future revenues. The plaintiffs alleged that Blackstone was

required to disclose these material adverse developmentsin itsregistration statement, but did

not. The plaintiffs further alleged that Blackstone omitted material information regarding the

downward trend in the real estate market and its likely input on Blackstone’s real estate

investments. The plaintiffs alleged that Blackstone’s registration statement contained the

following affirmative material misstatement:

The real estate industry is also experiencing historically high levels

of growth and liquidity driven by the strength of the U.S. economy .

. . and the availability of financing for acquiring real estate assets. . .

. . The strong investor demand for real estate assets is due to a number

of factors, including persistent, reasonable levels of interest rates . .

. and the ability of lenders to repackage their loans into

securitizations, thereby diversifying and limiting their risk. These

factors have combined to significantly increase the capital committed

to real estate funds from a variety of institutional investors.

In addition, the plaintiffs alleged that Blackstone’s unaudited financial statements for

the three-month periods ending March 31, 2007 and March 31, 2006, respectively, which

were included in its registration statement, violated generally accepted accounting principles

(“GAAP”) and materially overstated the values of Blackstone’s real estate investments and

its investment in FGIC. The plaintiffs also alleged that Blackstone’s disclosure of certain

risk factors was too general and failed to inform investors adequately of the then-existing

specific risks related to the real estate and credit markets.

The district court dismissed the plaintiffs’ complaint for failure to state a claim. The district

court’s opinion found that the alleged omissions and misstatements concerning FGIC,

Freescale, and Blackstone’s real estate investments were not material. First, the district court

analyzed the relative scale or quantitative materiality of the alleged FGIC and Freescale

omissions. After noting the Second Circuit’s and the SEC’s acceptance of a 5% threshold

as an appropriate “starting place” or “preliminary assumption” of immateriality, the district

court noted that “Blackstone’s $331 million investment in FGIC represented a mere 0.4%

of Blackstone's [total] assets under management at the time of the IPO.” The district court

then addressed the plaintiffs’ argument that the materiality of the omissions is best illustrated

by the effect the eventual $122.2 million drop in value of Blackstone’s FGIC investment had

on Blackstone’s 2007 annual revenues. The district court found that the decline in FGIC’s

investment value was quantitatively immaterial as compared with Blackstone's $3.12 billion

in total revenues for 2007.

The district court next looked at the quantitative materiality of the Freescale omissions, again

comparing Blackstone’s investment to its total assets under management. The court stated

that “the $3.1 billion investment in Freescale represented 3.6% of the total $88.4 billion [that

Blackstone] had under management at the time of the IPO.” The district court found it
83

significant that the complaint did not (and likely could not) allege that Freescale’s loss of its

exclusive supplier relationship with Motorola would cause Blackstone’s investment in

Freescale to lose 100% of its value.

The district court then pointed to the structure of the Blackstone enterprise as further support

for the immateriality of the alleged omissions. According to the district court, because the

performance of individual portfolio companies only affects Blackstone’s revenues after

investment gains or losses are aggregated at the fund level, the poor performance of one

investment may be offset by the strong performance of another. Accordingly, “there is no

way to make a principled distinction between the negative information that Plaintiff[s] claim[

] was wrongfully omitted from the Registration Statement and information . . . about every

other portfolio company.” The district court found that requiring disclosure of information

about particular portfolio companies or investments would risk “obfuscat[ing] truly material

information in a flood of unnecessary detail, a result that the securities laws forbid.”

The district court acknowledged that this quantitative analysis is not dispositive of

materiality, but found that only one of the qualitative factors that the Second Circuit or the

SEC often consider was present in this case. Specifically, the court found that: (1) none of

the omissions concealed unlawful transactions or conduct; (2) the alleged omissions did not

relate to a significant aspect of Blackstone’s operations; (3) there was no significant market

reaction to the public disclosure of the alleged omissions; (4) the alleged omissions did not

hide a failure to meet analysts’ expectations; (5) the alleged omissions did not change a loss

into income or vice versa; and (6) the alleged omissions did not affect Blackstone’s

compliance with loan covenants or other contractual requirements. The district court noted

that the one qualitative factor it did find present in this case—that the alleged omissions had

the effect of increasing Blackstone's management's compensation—was not enough, by itself,

to make the omissions material. Accordingly, the district court held that the alleged

omissions concerning FGIC and Freescale were immaterial as a matter of law.

The district court separately analyzed the alleged omissions and misstatements regarding

Blackstone’s real estate investments. It first noted that the complaint failed to “identify a

single real estate investment or allege a single fact capable of linking the problems in the

subprime residential mortgage market in late 2006 and early 2007 and the roughly

contemporaneous decline in home prices (which are well-documented by the [complaint])

to Blackstone’s real estate investments, 85% of which were in commercial and hotel

properties.” According to the district court, without further factual enhancement as to how

the troubles in the residential mortgage markets could have a foreseeable material effect on

Blackstone’s real estate investments, the plaintiffs’ allegations fell short of the plausibility

standard set forth in Twombly. In addition, the district court found that the plaintiffs had

failed to allege any facts that, if true, would render false those statements alleged to be

affirmative misrepresentations. The district court further found that insofar as the plaintiffs

alleged that Blackstone was required to disclose general market conditions, such omissions

are not actionable because Sections 11 and 12(a)(2) do not require disclosure of publicly

available information: “The omission of generally known macro-economic conditions is not
84

material because such matters are already part of the ‘total mix’ of information available to

investors.” Finally, the district court noted that the complaint contained no allegations that

Blackstone knew that market conditions “were reasonably likely to have a material effect on

its portfolio of real estate investments,” and stated that “generalized allegations that problems

brewing in the market at large made it ‘foreseeable’ that a particular set of unidentified

investments would sour are insufficient to ‘nudge[ ] [the] claims across the line from

conceivable to plausible.’”

On appeal, the Second Circuit noted that the plaintiffs’ complaint explicitly did not allege

fraud. Instead, the complaint alleged that Blackstone acted negligently in preparing its

registration statement and prospectus. Further, Blackstone did not argue on appeal that the

plaintiffs’ claims were premised on allegations of fraud. Accordingly, the Second Circuit

found that the plaintiffs’ claims were not subject to the heightened pleading standard of FED.

R. CIV. P. 9(b).

The Second Circuit, through the following lengthy analysis, identified the core issue as

whether the downward trend and uncertainty in the real estate market, already known and

existing at the time of the IPO, was reasonably likely to have a material impact on

Blackstone’s financial condition:

Section 11 of the Securities Act imposes liability on issuers

and other signatories of a registration statement that, upon becoming

effective, “contain[s] an untrue statement of a material fact or omit[s]

to state a material fact required to be stated therein or necessary to

make the statements therein not misleading.” 15 U.S.C. § 77k(a).

Section 12(a)(2) imposes liability under similar circumstances on

issuers or sellers of securities by means of a prospectus. See id. §

77l(a)(2). So long as a plaintiff establishes one of the three bases for

liability under these provisions—(1) a material misrepresentation; (2)

a material omission in contravention of an affirmative legal disclosure

obligation; or (3) a material omission of information that is necessary

to prevent existing disclosures from being misleading, see In re

Morgan Stanley Info. Fund Sec. Litig., 592 F.3d 347, 360 (2d Cir.

2010)—then, in a Section 11 case, “the general rule [is] that an

issuer’s liability . . . is absolute.” . . . The primary issue before us is

the second basis for liability; that is, whether Blackstone's

Registration Statement and Prospectus omitted material information

that Blackstone was legally required to disclose.

Required Disclosures Under Item 303 of Regulation S-K

Plaintiffs principally contend that Item 303 of SEC Regulation

S-K, 17 C.F.R. § 229.303(a)(3)(ii), provides the basis for

Blackstone’s disclosure obligation. Pursuant to Subsection (a)(3)(ii)

of Item 303, a registrant must “[d]escribe any known trends or
85

uncertainties ... that the registrant reasonably expects will have a

material . . . unfavorable impact on . . . revenues or income from

continuing operations.” Instruction 3 to paragraph 303(a) provides

that “[t]he discussion and analysis shall focus specifically on material

events and uncertainties known to management that would cause

reported financial information not to be necessarily indicative of

future operating results or of future financial condition.” 17 C.F.R. §

229.303(a) instruction 3. The SEC’s interpretive release regarding

Item 303 clarifies that the Regulation imposes a disclosure duty

“where a trend, demand, commitment, event or uncertainty is both [1]

presently known to management and [2] reasonably likely to have

material effects on the registrant’s financial condition or results of

operations.”

Although the District Court opinion and the parties on appeal

primarily focus on the materiality of Blackstone’s alleged omissions,

Blackstone does urge that plaintiffs’ complaint fails to adequately

allege that Blackstone was required by Item 303 to disclose trends in

the real estate market for the purpose of Sections 11 and 12(a)(2).

We disagree. Plaintiffs allege that the downward trend in the real

estate market was already known and existing at the time of the IPO,

and that the trend or uncertainty in the market was reasonably likely

to have a material impact on Blackstone’s financial condition.

Therefore, plaintiffs have adequately pleaded a presently existing

trend, event, or uncertainty, and the sole remaining issue is whether

the effect of the “known” information was “reasonably likely” to be

material for the purpose of Item 303 and, in turn, for the purpose of

Sections 11 and 12(a)(2).

Litwin, 2011 WL 447050, at *6–7 (internal citation omitted).

The court then held that the plaintiffs met their pleading burden to plausibly allege that the

information Blackstone omitted from its offering documents was “material”:

In this case, the District Court confronted a Rule 12(b)(6)

motion, a motion for which plaintiffs need only satisfy the basic

notice pleading requirements ofRule 8. So long as plaintiffs plausibly

allege that Blackstone omitted material information that it was

required to disclose or made material misstatements in its offering

documents, they meet the relatively minimal burden ofstating a claim

pursuant to Sections 11 and 12(a)(2), under which, should plaintiffs’

claims be substantiated, Blackstone’s liability as an issuer is absolute.

Where the principal issue is materiality, an inherently fact-specific

finding, the burden on plaintiffs to state a claim is even lower.
86

Accordingly, we cannot agree with the District Court at this

preliminary stage of litigation that the alleged omissions and

misstatements “are so obviously unimportant to a reasonable investor

that reasonable minds could not differ on the question of their

importance.”

Materiality of Omissions Related to FGIC and Freescale

As to the materiality of the omissions related to FGIC and

Freescale, Blackstone first argues that the relevant information was

public knowledge, and thus could not be material because it was

already part of the “total mix” of information available to investors.

Specifically, Blackstone contends that, as the complaint itself alleges

based on citations to news articles and analysts’ calls, the shift in

FGIC’s strategy toward a less conservative approach to bond

insurance and Freescale’s loss of its exclusive contract with Motorola

were facts publicly known at the time of the IPO.

It is true that, as a general matter, the “‘total mix’ of

information may . . . include information already in the public domain

and facts known or reasonably available to [potential investors].”

United Paperworkers Int’l Union v. Int’l Paper Co., 985 F.2d 1190,

1199 (2d Cir. 1993) (internal quotation marks omitted). But case law

does not support the sweeping proposition that an issuer of securities

is never required to disclose publicly available information.

In this case, the key information that plaintiffs assert should

have been disclosed is whether, and to what extent, the particular

known trend, event, or uncertainty might have been reasonably

expected to materially affect Blackstone’s investments. And this

potential future impact was certainly not public knowledge,

particularly in the case of FGIC, which was not even mentioned in

Blackstone’s Registration Statement and thus cannot be considered

part of the “total mix” of information already available to investors.

Again, the focus of plaintiffs’ claims is the required disclosures under

Item 303—plaintiffs are not seeking the disclosure of the mere fact of

Blackstone’s investment in FGIC, of the downward trend in the real

estate market, or of Freescale’s loss of its exclusive contract with

Motorola. Rather, plaintiffs claim that Blackstone was required to

disclose the manner in which those then-known trends, events, or

uncertainties might reasonably be expected to materially impact

Blackstone’s future revenues.

While it is true that Blackstone’s investments in FGIC and
87

Freescale fall below the presumptive 5% threshold of materiality, we

find that the District Court erred in its analysis of certain qualitative

factors related to materiality. First, the District Court and Blackstone

place too much emphasis on Blackstone’s structure and on the fact

that a loss in one portfolio company might be offset by a gain in

another portfolio company. Blackstone is not permitted, in assessing

materiality, to aggregate negative and positive effects on its

performance fees in order to avoid disclosure of a particular material

negative event. Cf. SAB No. 99, Fed.Reg. at 45,153 (noting in the

context of aggregating and netting multiple misstatements that

“[r]egistrants and their auditors first should consider whether each

misstatement is material, irrespective of its effect when combined

with other misstatements”). Were we to hold otherwise, we would

effectively sanction misstatements in a registration statement or

prospectus related to particular portfolio companies so long as the net

effect on the revenues of a public private equity firm like Blackstone

was immaterial. The question, of course, is not whether a loss in a

particular investment’s value will merely affect revenues, because

even after aggregation of gains and losses at the fund level, it will

almost certainly have some effect. The relevant question under Item

303 is whether Blackstone reasonably expects the impact to be

material. We see no principled basis for holding that an historically

“private” equity company that has chosen to go public is somehow

subject to a different standard under the securities disclosure laws and

regulations than a traditional public company with numerous

subsidiaries. See Mohsen Manesh, Legal Asymmetry and the End of

Corporate Law, 34 DEL. J. CORP. L. 465, 482 (2009) (noting that

Blackstone, as a publicly listed entity, is “substantively

indistinguishable from [its] publicly traded corporate counterparts”).

In a case of pure omissions, to the extent that the securities laws

require information to be disclosed and the information in question

is material in the eyes of a reasonable investor, Blackstone must

disclose the information. Blackstone’s structure is no defense on a

motion to dismiss. 

Second, the District Court erred in finding that the alleged

omissions did not relate to a significant aspect of Blackstone’s

operations. In discussing “considerations that may well render

material a quantitatively small misstatement,” SAB No. 99 provides

that “materiality . . . may turn on where [the misstatement] appears in

the financial statements:” “[S]ituations may arise . . . where the

auditor will conclude that a matter relating to segment information is

qualitatively material even though, in his or her judgment, it is

quantitatively immaterial to the financial statements taken as a
88

whole.” SAB No. 99, 64 Fed.Reg. at 45,152. SAB No. 99 also

provides that one factor affecting qualitative materiality is whether

the misstatement or omission relates to a segment that plays a

“significant role” in the registrant’s business. Id. In this case,

Blackstone makes clear in its offering documents that Corporate

Private Equity is its flagship segment, playing a significant role in the

company’s history, operations, and value. Blackstone states that its

Corporate Private Equity fund is “among the largest . . . ever raised,”

and that its “long-term leadership in private equity has imbued the

Blackstone brand with value that enhances all of [its] different

businesses and facilitates [its] ability to expand into complementary

new businesses.” Because Blackstone’s Corporate Private Equity

segment plays such an important role in Blackstone’s business and

provides value to all of its other asset management and financial

advisory services, a reasonable investor would almost certainly want

to know information related to that segment that Blackstone

reasonably expects will have a material adverse effect on its future

revenues. Therefore, the alleged misstatements and omissions relating

to FGIC and Freescale were plausibly material.

Furthermore, with respect to Freescale in particular,

Blackstone’s investment in the company accounted for 9.4% of the

Corporate Private Equity segment’s assets under management, and

the investment was nearly three times larger than the next largest

investment in that segment as reported in Blackstone’s Prospectus.

Even where a misstatement or omission may be quantitatively small

compared to a registrant’s firm-wide financial results, its significance

to a particularly important segment of a registrant’s business tends to

show its materiality. See In re Kidder Peabody, 10 F. Supp. 2d at

410–11 (noting that while amount of “false profits may have been

minor compared to GE’s earnings as a whole, they were quite

significant to” a subsidiary’s profits, which, “in turn, represented a

significant portion of GE's balance sheet”). Viewed in that light, we

cannot hold that the alleged loss of Freescale’s exclusive contract

with its largest customer and the concomitant potential negative

impact on one of the largest investments in Blackstone’s Corporate

Private Equity segment was immaterial.

Finally, the District Court failed to consider another relevant

qualitative factor—that the omissions “mask[ ] a change in earnings

or other trends.” SAB No. 99, 64 Fed.Reg. at 45,152. Such a

possibility is precisely what the required disclosures under Item 303

aim to avoid. Here, Blackstone omitted information related to FGIC

and Freescale that plaintiffs allege was reasonably likely to have a
89

material effect on the revenues of Blackstone’s Corporate Private

Equity segment and, in turn, on Blackstone as a whole. Blackstone’s

failure to disclose that information masked a reasonably likely change

in earnings, as well as the trend, event, or uncertainty that was likely

to cause such a change.

All of these qualitative factors, together with the District

Court’s correct observation that the alleged omissions “doubtless had

‘the effect of increasing management’s compensation,’” see SAB No.

99, 64 Fed.Reg. at 45,152, show that the alleged omissions were

material. Accordingly, we hold that plaintiffs have adequately

pleaded that Blackstone omitted material information related to FGIC

and Freescale that it was required to disclose under Item 303 of

Regulation S-K.

Materiality of Omissions and Misstatements Related to Real Estate

Investments

We also find that the District Court erred in its analysis of the

alleged omissions and misstatements related to Blackstone’s real

estate investments. First, the District Court’s opinion implies that to

state a plausible claim, plaintiffs’ complaint had to identify specific

real estate investments made or assets held by Blackstone funds that

might have been at risk as a result of the then-known trends in the real

estate industry. This expectation, however, misses the very core of

plaintiffs' allegations, namely, that Blackstone omitted material

information that it had a duty to report. In other words, plaintiffs’

precise, actionable allegation is that Blackstone failed to disclose

material details of its real estate investments, and specifically that it

failed to disclose the manner in which those unidentified, particular

investments might be materially affected by the then-existing

downward trend in housing prices, the increasing default rates for

sub-prime mortgage loans, and the pending problems for complex

mortgage securities. That is all Item 303 requires in order to trigger

a disclosure obligation: a known trend that Blackstone reasonably

expected would materially affect its investments and revenues.

Plaintiffs allege that they were unaware of, but legally entitled to

disclosure of, the very information that the District Court held had to

be specified in plaintiffs’ complaint.

Moreover, there are two problems with the District Court’s

finding that plaintiffs’ claims fail because they cannot establish any

“link[ ]” between the declining residential real estate market and

Blackstone's heavy investments in commercial real estate. See id. at
90

544. First, the offering documents indicate, and Blackstone admits,

that Blackstone has at least one modest-sized residential real estate

investment, and, drawing all reasonable inferences in plaintiffs’ favor,

its residential real estate holdings might constitute as much as $3

billion and 15% of the Real Estate segment’s assets under

management. See supra n. 6. This alone is enough on a Rule

12(b)(6) motion to establish a plausible link between the alleged trend

in the residential real estate market and Blackstone’s real estate

investments. Second, even if the overwhelming majority of

Blackstone’s real estate investments are commercial in nature, it is

certainly plausible for plaintiffs to allege that a collapse in the

residential real estate market, and, more importantly, in the market for

complex securitizations of residential mortgages, might reasonably be

expected to adversely affect commercial real estate investments.

Blackstone’s own disclosures in its Registration Statement make this

link clear, given that it admitsthat “the ability of lenders to repackage

their [residential] loans into securitizations” is one factor contributing

to the “significant[ ] increase [in] the capital committed to

[predominantly commercial] real estate funds.”

Finally, the District Court erred when it stated that

“Plaintiff[s] fail[ ] to allege any facts . . . that if true, would render

false the few statements alleged to be affirmative misrepresentations.”

To the contrary, plaintiffs provide significant factual detail about the

general deterioration of the real estate market and specific facts that,

drawing all reasonable inferences in plaintiffs’ favor, directly

contradict statements made by Blackstone in its Registration

Statement. First, the chart in plaintiffs’ complaint illustrating the

seasonally adjusted price change in the U .S. housing market

contradicts Blackstone’s representation that the “real estate industry

[was] . . . experiencing historically high levels of growth,” because

the chart shows that the rate of price appreciation began to decline

significantly beginning in late 2005. In addition, Blackstone’s

representation that “strong investor demand for real estate assets is

due [in part] to . . . persistent, reasonable levels of interest rates” is

refuted by plaintiffs’ allegations that “[a]s key short-term and the

prime rates rose [beginning in June 2004], other interest rates rose as

well, including those for most residential mortgage loans” and that

“[t]his rise in interest rates made it more difficult for borrowers to

meet their payment obligations.” Also, Blackstone’s statement that

“lenders [were able] to repackage their loans into securitizations,

thereby diversifying and limiting their risk,” is at least impliedly

refuted by plaintiffs’ detailed allegations as to how the increasing

sub-prime mortgage loan defaults were going to impact negatively the
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existing and future uses of, and value associated with, CDOs,

RMBSs, and CDSs.

Absent these errors, the materiality of the alleged omitted and

misstated information related to Blackstone’s real estate investments

becomes clear. First, Blackstone’s real estate segment played a

“significant role,” SAB No. 99, 64 Fed.Reg. at 45,152, in

Blackstone’s business. While Blackstone’s real estate segment may

not be as prominent to the company’s traditional identity as its

Corporate Private Equity segment, Blackstone’s real estate segment

nevertheless constituted 22.6% of Blackstone’s total assets under

management. A reasonable Blackstone investor may well have

wanted to know of any potentially adverse trends concerning a

segment that constituted nearly a quarter of Blackstone’s total assets

under management. Second, the alleged misstatements and omissions

regarding real estate were qualitativelymaterial because they masked

a potential change in earnings or other trends. Finally, the alleged

misstatements and omissions, if proven, had “the effect of increasing

management's compensation,” id. For all these reasons, we conclude

that the District Court erred in dismissing plaintiffs’ allegations

relating to Blackstone’s real estate investments. Plaintiffs plausibly

allege that Blackstone omitted material information that it was

required to disclose and that it made material misstatements in its IPO

offering documents.

. . . .

In sum, we hold that the District Court erred in dismissing for

failure to state a claim plaintiffs’ complaint brought pursuant to

Sections 11, 12(a)(2), and 15 of the Securities Act because (1)

plaintiffs plausibly allege that Blackstone omitted from its

Registration Statement and Prospectus material information related

to its investments in FGIC and Freescale that Blackstone was required

to disclose under Item 303 of Regulation S-K; (2) plaintiffs plausibly

allege that Blackstone both omitted material information that it was

required to disclose under Item 303 and made material misstatements

in its offering documents related to its real estate investments; and (3)

plaintiffs’ remaining GAAP and risk disclosure allegations are

derivative of their primary allegations, and therefore these secondary

allegations are sufficient to state a claim.

Litwin, 2011 WL 447050, at *8–14 (internal citations omitted).

• DiFolco v. MSNBC Cable L.L.C., 622 F.3d 104 (2d Cir. 2010). Following the termination
92

of her employment as a correspondent for MSNBC, Plaintiff DiFolco sued MSNBC, its

President (Kaplan), and an Executive Producer (Leon) for breach of contract, defamation,

and tortious interference with prospective business relations. Id. at 106. 

Defendants filed a motion to dismiss the complaint for failure to state a claim. Id. at 109.

The district court dismissed DiFolco’s complaints. Id. It concluded that DiFolco repudiated

her contract in an exchange of emails and, therefore, that MSNBC had no financial

obligations to DiFolco under the terms of her contract. Id. In reaching that conclusion, the

district court found that the contract was “unambiguous in its requirement that [DiFolco] was

to be at MSNBC's disposal for a two-year period” and that the August 23 and August 31

emails from DiFolco unambiguously “constituted repudiation of the Contract and relieved

MSNBC of future obligations.” Id. The district court also dismissed DiFolco's defamation

claims because it concluded that two of the claims were based on true statements and the

third consisted of non-actionable opinion. DiFolco, 622 F.3d at 110. And it dismissed her

tortious interference with prospective business relations claim because it was predicated on

the tortious interference claim. Id. The Second Circuit reversed as to the breach of contract

and defamation claims, but affirmed the dismissal of the tortious interference with

prospective business relations claim.

In support of her breach of contract claim, DiFolco made the following allegations:

38. While she expressed her hopes to have maintained a productive

working relationship with the Company and “be a part of [Kaplan’s]

team for a long time to come,” Ms. DiFolco realized the Defendants

Leon and Brownstein continued to cancel her shoots and force her off

the air. As such, she indicated to Defendant Kaplan that they should

“discuss [her] exit from the shows.” This was Ms. DiFolco’s way of

expressing to Kaplan her desire not to disrupt the shows on which she

worked.

39. Defendant Kaplan agreed to meet with her as proposed to further

discuss the matters raised in her email.

40. That same day, Ms. DiFolco informed Defendant Leon that she

planned to meet with Defendant Kaplan on September 1, 2005. She

also stated that she hoped to record the shows for early September out

of New Jersey since she had to be in New York to cover “Fashion

Week,” noting that it would save the Company time and money on

airfare if she simply remained on the East coast for that entire time

period. Defendant Leon agreed to this arrangement.

41. The next day, on August 24, 2005, Defendant Leon responded by

abruptly informing her that they “decided to change the direction of

the fashion week coverage” and planned to send the New York Times
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style editor to cover the shows instead of Ms. DiFolco.

42. Ms. DiFolco immediately contacted Defendant Kaplan,

forwarding Defendant Leon’s most recent example of his ongoing

effort to force her off the air and asked to know why she was being

taken off the scheduled shoots. She specifically inquired whether

Defendant Kaplan had made Defendant Leon aware of her previous

request for a meeting, fearing that Defendant Leon had canceled her

participation in Fashion Week in retaliation for approaching his

superior and that her email would be misinterpreted.

43. Ms. DiFolco clearly expressed that “[she] did not resign

yesterday” and confirmed their agreed meeting scheduled for

September 1, 2005.

44. Defendant Kaplan acknowledged that he made Defendant Leon

aware of her previous email. His email stated, “My complete

impression is that you have resigned,” and then continued, “sooner is

better since your obvious intent is to leave.”

45. While Ms. DiFolco was in flight from California, Defendant

Leon left her a voicemail message that her meeting with Kaplan was

canceled. At the same time, Defendant MSNBC sent Ms. DiFolco a

proposed separation and release agreement through her agent,

claiming that she had resigned.

Id. at 107-08.

In support of her defamation claim, DiFolco’s complaint alleged that “one or more

Defendants began making ... defamatory statements about Ms. DiFolco on the Internet and

to various media outlets.” Id. at 108. DiFolco alleged that the defamatory statements were

“made by, with the participation of and/or under the authority and direction of one or more

of Defendants.” Id. The allegedly defamatory statements were (1) that “DiFolco had

resigned, broken her contract and/or deserted her co-anchor;” (2) that DiFolco had resigned

“in the middle of her contract;” and (3) that “[l]uscious Claudia DiFolco has quit MSNBC

in the middle of her contract, leaving Sharon Tay as the sole host of ‘Entertainment Hotlist’

and ‘At the Movies.’” DiFolco, 622 F.3d at 108. DiFolco claimed that these statements

“could only have originated from MSNBC officials given the confidential nature of her

contract dispute.” Id. DiFolco also claimed that defendants caused another defamatory

message about her to be posted on a website. Id. The message stated that DiFolco:

[B]elieve[d] that cleavage, over time [sic] in the makeup chair and a

huge desire to become a star is ... how to pay your dues” and that

“throughout her irrelevant career at MSNBC, she constantly ignored
94

directions from news producers during live shots, refused to do

alternate takes for editing purposes, pouted like a child and never was

a team player.” 

Id. at 108-09 (alterations in original).

In support of her tortiousinterference claim, DiFolco alleged that “[d]efendants intentionally

interfered with Plaintiff’s professional relationships and opportunities for employment” and

that “[d]efendants actions permanently injured Plaintiff’s business relationships in the [news

and entertainment] industry.” Id. at 115.

The Second Circuit set forth the standard of review from Twombly and Iqbal:

In its formulation of the Twombly-Iqbal requirements for a statement

of claim, the Supreme Court has established the following order to be

followed in determining whether the pleading is adequate: “When

there are well-pleaded factual allegations, a court should assume their

veracity and then determine whether they plausibly give rise to an

entitlement to relief.”

Id. at 111 (quoting Iqbal, 129 S. Ct. at 1950).

The court next considered whetherthe lower court properly considered DiFolco’s emails and

explained that, in considering a 12(b)(6) motion to dismiss, a district court may consider:

[T]he facts alleged in the complaint, documents attached to the

complaint as exhibits, and documents incorporated by reference in the

complaint. Where a document is not incorporated by reference, the

court may never[the]less consider it where the complaint “relies

heavily upon its terms and effect,” thereby rendering the document

“integral” to the complaint.

DiFolco, 622 F.3d at 111 (quoting Mangiafico v. Blumenthal, 471 F.3d 391, 398 (2d Cir.

2006)) (internal citations omitted). An “integral” document should be considered, however,

only if there is no dispute about the authenticity and accuracy of the document and there are

no material disputed issues of fact regarding the relevance of the document. Id.

The Second Circuit determined that the August 23 email could be considered because

DiFolco referred to it in her complaint (id. at 112), but that the district court erred in

considering the August 31 e-mail because it “was not attached to the complaint, was not

incorporated by reference in the complaint, and was not integral to the complaint.” Id. at

113.

In any event, the court disagreed that the emails showed conclusively that DiFolco had
95

resigned. Id. The court noted that, under New York law, “a repudiation can be determined

to have occurred only when it is shown that ‘the announcement of an attention not to perform

was positive and unequivocal.’” DiFolco, 622 F.3d at 112 (quoting Tenavision, Inc. v.

Neuman, 379 n.E.2d 1166, 1168 (1978)). And that the issue of repudiation is generally an

issue of fact. Id. Then the court examined the language of DiFolco’s emails and disagreed

that she unambiguously expressed an intention to leave as a matter of law: “There are at

least factual issues as to whether DiFolco had made a final and definite communication of

an intent to forego performance or had indicated her refusal to perform in a clear and

unqualified way such as to justify a conclusion that she had repudiated her contract.” Id. at

112-13. The court reinstated DiFolco’s breach of contract claim. Id. at 113.

The court then considered DiFolco’s defamation causes of action. It explained that, under

New York law, a defamation claim may be based on a “writing which tends to disparage a

person in the way of [her] office profession, or trade.” Id. at 114 (quoting Nichols v. Item

Publishers, Inc., 132 N.E.2d 860, 862 (1956)). The court decided that DiFolco’s complaint

“sets forth the necessary elements to make out a claim for defamation in New York,

including the element of malice” and reinstated the defamation claims. Id.

Turning to the tortious interference claim, the Second Circuit concluded that: “ [a]side from

the fact that these allegations are too conclusory, vague, and lacking in a factual basis to

make out DiFolco’s tortious interference claim, the complaint fails entirely to describe any

third party with whom DiFolco had prospective business relations to be interfered with.”

DiFolco, 622 F.3d at 114-15.

• Kiobel v. Royal Dutch Petroleum, 621 F.3d 111 (2d Cir. 2010) (per curiam), cert. denied,

Shell Petroleum N.V. v. Kiobel, --- S. Ct. ----, 2011 WL4533484 (2011). Plaintiffs, residents

of Nigeria, alleged that Dutch, British, and Nigerian corporations engaged in oil exploration

and production had aided and abetted the Nigerian government in committing violations of

the law of nations. Id. at 117. Specifically, plaintiffs brought claims of aiding and abetting

(1) extrajudicial killing; (2) crimes against humanity; (3) torture or cruel, inhuman, and

degrading treatment; (4) arbitrary arrest and detention; (5) violation of the rights to life,

liberty, security, and association; (6) forced exile; and (7) property destruction. Id. at 123.

The district court dismissed the following claims for failure to state a claim: aiding and

abetting property destruction; forced exile; extrajudicial killing; and violations of the rights

to life, liberty, security, and association. Id. at 124. The district court denied defendants’

motion to dismiss with respect to the remaining claims of aiding and abetting arbitrary arrest

and detention; crimes against humanity; and torture or cruel, inhuman, and degrading

treatment. Id. The district court certified its entire order for interlocutory appeal. Id. The

Second Circuit affirmed in part and reversed in part, holding that it lacked subject matter

jurisdiction over all of the plaintiffs’ claims because corporate liability is not a “rule of

customary international law.” Kiobel, 621 F.3d at 120, 145. 

The court first determined that it had jurisdiction under the ATS only if corporations were

subject to tort liability under the ATS. See id. at 117, 126. The court then examined
96

international law to determine the scope of liability. See id. at 131-145. The court looked

to the history and conduct of international tribunals (id. at 132-37), international treaties (id.

at 137-41), and works of scholars and jurists (id. at 142-144) and concluded that:

Together, those authorities demonstrate that imposing liability on

corporations for violations of customary international law has not

attained a discernible, much less universal, acceptance among nations

of the world in their relations inter se. Because corporate liability is

not recognized as a “specific, universal, and obligatory” norm, it is

not a rule of customary international law that we may apply under the

ATS. Accordingly, insofar as plaintiffs in this action seek to hold

only corporations liable for their conduct in Nigeria (as opposed to

individuals within those corporations), and only under the ATS, their

claims must be dismissed for lack of subject matter jurisdiction.

Kiobel, 621 F.3d at 145 (internal citation omitted).

Judge Leval filed a concurring opinion. He disagreed with the majority that corporations are

not subject to international law. See id. at 150 (Leval, J., concurring). But would have

dismissed Kiobel’s complaint for the alternative reason that it “fail[ed] to state a proper legal

claim of entitlement to relief.” Id. at 153. He explained:

[T]he pertinent allegations of the Complaint fall short of mandatory

standards established by decisions of this court and the Supreme

Court. We recently held in Presbyterian Church of Sudan v.

Talisman Energy, Inc., 582 F.3d 244 (2d Cir. 2009), that liability

under the ATS for aiding and abetting in a violation of international

human rights lies only where the aider and abettor acts with a purpose

to bring about the abuse of human rights. Id. at 259. Furthermore,

the Supreme Court ruled in Ashcroft v. Iqbal, --- U.S. ----, 129 S. Ct.

1937, 173 L. Ed. 2d 868 (2009), that a complaint is insufficient as a

matter of law unless it pleads specific facts that “allow[ ] the court to

draw the reasonable inference that the defendant is liable for the

misconduct alleged.” Id. at 1949. When read together, Talisman and

Iqbal establish a requirement that, for a complaint to properly allege

a defendant's complicity in human rights abuses perpetrated by

officials of a foreign government, it must plead specific facts

supporting a reasonable inference that the defendant acted with a

purpose of bringing about the abuses. The allegations against

Appellants in these appeals do not satisfy this standard. While the

Complaint plausibly alleges that Appellants knew of human rights

abuses committed by officials of the government of Nigeria and took

actions which contributed indirectly to the commission of those

offenses, it does not contain allegations supporting a reasonable
97

inference that Appellants acted with a purpose of bringing about the

alleged abuses.

Kiobel, 621 F.3d at 188 (Leval, J., concurring) (second alteration in original). Judge Leval

discussed the pleading standard from Twombly and Iqbal:

“To survive a motion to dismiss, a complaint must contain sufficient

factual matter, accepted as true, to ‘state a claim to relief that is

plausible on its face.’” Iqbal, 129 S. Ct. at 1949 (emphasis added)

(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct.

1955, 167 L. Ed. 2d 929 (2007)). “Facial plausibility” means that the

plaintiff’s factual pleadings “allow[ ] the court to draw the reasonable

inference that the defendant is liable for the misconduct alleged.” Id.

A complaint that pleads facts that are “merely consistent with” a

defendant's liability is not plausible. Id.

Conclusory allegations that the defendant violated the

standards of law do not satisfy the need for plausible factual

allegations. Twombly, 550 U.S. at 555, 127 S. Ct. 1955 (holding that

“courts are not bound to accept as true a legal conclusion couched as

a factual allegation” (internal quotation marks omitted)); see also

Kirch v. Liberty Media Corp., 449 F.3d 388, 398 (2d Cir.2006)

(“[C]onclusory allegations or legal conclusions masquerading as

factual conclusions will not suffice to [defeat] a motion to dismiss.”

(internal quotation marks and citation omitted) (second alteration in

original)). This requirement applies to pleadings of intent as well as

conduct. See Iqbal, 129 S. Ct. at 1954.

Kiobel, 621 F.3d at 191 (Leval, J., concurring) (alterations in original). 

Kiobel alleged that (1) “Shell itself aided and abetted the government of Nigeria in the

government’s commission of various human rights violations against the Ogoni,” (2)

alternatively, that Shell is liable on either of two theories for the actions of its subsidiary

SPDC - either as SPDC’s alter ego, or as SPDC’s principal on an agency theory. Id. at 191.

With respect to his claim that Shell was directly involved as an aider and abetter, Kiobel

pleaded that Shell:

willfully ... aided and abetted SPDC and the Nigerian military regime

in the joint plan to carry out a deliberate campaign of terror and

intimidation through the use of extrajudicial killings, torture, arbitrary

arrest and detention, military assault against civilians, cruel, inhuman

and degrading treatment, crimes against humanity, forced exile,

restrictions on assembly and the confiscation and destruction of

private and communal property, all for the purpose of protecting Shell
98

property and enhancing SPDC’s ability to explore for and extract oil

from areas where Plaintiffs and members of the Class resided.

Id. at 191-92. And also that “the Nigerian military’s campaign of violence against the Ogoni

was ‘instigated, planned, facilitated, conspired and cooperated in’ by Shell.” Id. at 192.

Judge Leval opined that “[s]uch pleadings are merely a conclusory accusation of violation

of a legal standard and do not withstand the test of Twombly and Iqbal. They fail to “state a

claim upon which relief can be granted.” Id. (quoting FED. R. CIV. P. 12(b)(6)).

Kiobel also asserted:

(1) that SPDC and Shell met in Europe in February 1993 and

“formulate[d] a strategy to suppress MOSOP and to return to

Ogoniland,” (2) that “[b]ased on past behavior, Shell and SPDC knew

that the means to be used [by the Nigerian military] in that endeavor

would include military violence against Ogoni civilians,” and (3) that

“Shell and SPDC” provided direct, physical support to the Nigerian

military and police operations conducted against the Ogoni by, for

example, providing transportation to the Nigerian forces; utilizing

Shell property as a staging area for attacks; and providing food,

clothing, gear, and pay for soldiers involved.

Id. (alterations in original). Judge Leval also considered these allegations legally insufficient

“because they do not support a reasonable inference that Shell provided substantial

assistance to the Nigerian government with a purpose to advance or facilitate the Nigerian

government’s violations of the human rights of the Ogoni people.” Kiobel, 621 F.3d at 192

(Leval, J., concurring) (emphasis in original).

Judge Leval next considered Kiobel’s allegations that Shell “provided financial support and

other assistance to the Nigerian forces with knowledge that they would engage in human

rights abuses,” and pointed out that:

[T]he Complaint fails to allege facts (at least sufficiently to satisfy the

Iqbal standard) showing a purpose to advance or facilitate human

rights abuses. The provision of assistance to the Nigerian military

with knowledge that the Nigerian military would engage in human

rights abuses does not support an inference of a purpose on Shell’s

part to advance or facilitate human rights abuses. An enterprise

engaged in finance may well provide financing to a government, in

order to earn profits derived from interest payments, with the

knowledge that the government’s operations involve infliction of

human rights abuses. Possession of such knowledge would not

support the inference that the financier acted with a purpose to

advance the human rights abuses. Likewise, an entity engaged in
99

petroleum exploration and extraction may well provide financing and

assistance to the local government in order to obtain protection

needed for the petroleum operations with knowledge that the

government acts abusively in providing the protection. Knowledge

of the government’s repeated pattern of abuses and expectation that

they will be repeated, however, is not the same as a purpose to

advance or facilitate such abuses, and the difference is significant for

this inquiry.

Id. at 193. Judge Leval concluded that:

In sum, the pleadings do not assert facts which support a plausible

assertion that Shell rendered assistance to the Nigerian military and

police for the purpose of facilitating human rights abuses, as opposed

to rendering such assistance for the purpose of obtaining protection

for its petroleum operations with awareness that Nigerian forces

would act abusively. In circumstances where an enterprise requires

protection in order to be able to carry out its operations, its provision

of assistance to the local government in orderto obtain the protection,

even with knowledge that the local government will go beyond

provision of legitimate protection and will act abusively, does not

without more support the inference of a purpose to advance or

facilitate the human rights abuses and therefore does not justify the

imposition of liability for aiding and abetting those abuses.

Id. at 193-94.

• Hollander v. Copacabana Nightclub, 624 F.3d 30, 2010 WL 3419954 (2d Cir. Sept. 1,

2010) (per curiam), cert. denied, 131 S. Ct. 914 (2011). Plaintiff brought a § 1983 action

against nightclub operators and promoters, alleging that “Ladies Night” promotions, charging

women discounted admission, constituted sex discrimination in violation of his equal

protection rights. Id. at *1. The district court dismissed after concluding that the nightclubs

were not state actors and the Second Circuit affirmed. Id.

The court first discussed the plausibility standard from Twombly and Iqbal:

To survive a motion to dismiss, the complaint must set out only

enough facts to state a claim to relief that is plausible on its face.

Ashcroft v. Iqbal, --- U.S. ----, 129 S. Ct. 1937, 1949, 173 L. Ed. 2d

868 (2009). This standard “is not akin to a ‘probability requirement,’

but it asks for more than a sheer possibility that a defendant has acted

unlawfully.” Id. (quoting Bell Atlantic Corp. v. Twombly, 550 U.S.

544, 556, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007)). “Where a

complaint pleads facts that are ‘merely consistent with’ a defendant’s
100

liability, it ‘stops short ofthe line between possibility and plausibility

of “entitlement to relief.”’” Id. (quoting Twombly, 550 U.S. at 557,

127 S. Ct. 1955).

Id. And the court explained that, to assert a § 1983 claim, a “plaintiff must allege that the

state was involved in the activity that caused the injury giving rise to the action” Id. at *2

(quoting Sybalski v. Independent Group Home Living Program, Inc., 546 F.3d 255, 257 (2d

Cir. 2008) (per curiam)) (emphasis in original). The court decided that the only state action

alleged – state issuance of a liquor license – was an insufficient basis to establish nightclubs

were “state actors” for purposes of a § 1983 action. Id. at *3.

• Mortimer Off Shore Services, Ltd. v. The Federal Republic of Germany, 615 F.3d 97 (2d

Cir. 2010), cert. denied, 131 S. Ct. 1502 (2011). Plaintiff Mortimer filed an action under the

Federal Sovereign Immunities Act (“FSIA”) to enforce against the Federal Republic of

Germany (“FRG”) 351 bearer bonds valued at over $400,000,000. Id. at 98. The bonds were

initially issued in 1928, by private banks within the state of Prussia – territory that later

constituted West Germany and East Germany, which have since been reunified to make up

the present-day FRG. Id. at 99. Mortimer alleged that the FRG assumed liability for the

bonds. Id. The district court denied FRG’s motion to dismiss for lack of subject matter

jurisdiction and granted FRG’s motion to dismissfor failure to state a claim. Id. at 104. The

district court noted that “unlike private parties, sovereigns can only assume liability for debt

of predecessor states through explicit acts that leave traces in legal documents.” Id.

(emphasis in original). The district court concluded that “Mortimer did not affirmatively

plead the source of [the FRG]’s obligation to satisfy the bonds, and thus failed to ‘state a

claim of relief that is plausible on its face.’” Mortimer, 615 F.3d at 104 (quoting Twombly,

550 U.S. at 570) (internal citations omitted). Mortimer filed motions to amend the judgment

and for leave to file an amended complaint. Id. The district court denied the motions. Id.

Mortimer appealed the dismissal of its complaint for failure to state a claim, and the denial

of its motionsto amend the judgment and for leave to file an amended complaint. Id. at 105.

The FRG cross-appealed, challenging the district court’s holding that it had subject matter

jurisdiction. Id. The Second Circuit affirmed.

The Second Circuit explained that the FSIA “is the sole source for subject matter jurisdiction

over any action against a foreign state,” (id. (quoting Cabiriri v. Republic of Ghana, 165 F.3d

193, 196 (2d Cir. 1999))), and that it “provides that a foreign sovereign ‘shall be immune

from the jurisdiction of the courts of the United States,’ unless one of the FSIA’s exceptions

applies.” Mortimer, 615 F.3d at 105. (quoting 28 U.S.C. § 1604). The court discussed bonds

issued by banks in the territory that became West Germany separately from the bonds issued

by the banks in the territory that became East Germany. Id. The court’s analysis turned on

whether the FRG had assumed liability for the bonds, thus falling within the FSIA

“commercial activity exception.” Id. at 105-06. Because the FRG “agreed that it had

assumed liability for properly validated West German bonds,” the court determined that the

FSIA exceptions applied to the West German bonds. Id. at 107-08. 
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With respect to the East German bonds, “Mortimer’s proposed amended complaint ... alleged

that upon unification, the FRG assumed liability for East Germany’s debts, including the East

German bonds.” Id. at 112. The Second Circuit noted that, under the Unification Treaty, the

FRG assumed indebtedness for East Germany’s state debts, but pointed out that Mortimer

failed to allege “how East Germany assumed liability for bonds issued by private banks

located in the state of Prussia.” Id. “Thus, Mortimer’s allegation that the Unification Treaty

alone provides no basis for liability beyond speculation that East Germany assumed liability

for the bonds. A claim based on such speculation is implausible.” Mortimer, 615 F.3d at

112. The court decided that Mortimer’s original complaint contained “mere conclusory

statements” that the FRG assumed liability for the East German bonds. Id. And agreed with

the district court that “leave to amend would have been futile” since Mortimer’s proposed

amended complaint did not cure these deficiencies. Id. 

After determining that it had subject matter jurisdiction over the West German bonds, the

court considered Mortimer’s claim as to those bonds on the merits. Id. The court determined

that Mortimer was required to comply with certain validation procedures before it could

recover. Mortimer, 615 F.3d at 115. Mortimer did not comply with the validation

procedures or explain why its delay in doing so was excusable. Id. at 117. Thus, the Second

Circuit held that “Mortimer, by not satisfying either criterion, has failed to set forth a

plausible basis in either the complaint or the proposed amended complaint for enforcing the

West German Bonds.” Id. The court also affirmed the district court’s denial of leave to

amend with respect to the West German bonds because the proposed amended complaint

also failed to set forth a plausible basis for enforcing the West German bonds. Id.

• DiPetto v. U.S. Postal Serv., 383 F. App’x 102, No. 09-3203-cv, 2010 WL 2724463 (2d Cir.

Jul. 12, 2010) (unpublished summary order). The pro se plaintiff appealed the district court’s

decision to dismiss his employment discrimination claimssua sponte. Id. at *1. The Second

Circuit noted that “[a]lthough a district court may dismiss a complaintsua sponte for failure

to comply with Rule 8, ‘[d]ismissal . . . is usually reserved for those cases in which the

complaint is so confused, ambiguous, vague, or otherwise unintelligible that its true

substance, if any, is well disguised.’” Id. (second alteration and omission in original)

(quoting Simmons v. Abruzzo, 49 F.3d 83, 86 (2d Cir. 1995)). The court stated that it had

“recently addressed the application of . . . Iqbal . . . to pro se pleadings and noted that, even

after . . . Twombly . . . , [it] remain[ed] obligated to construe pro se complaints liberally.”

Id. (citing Harris v. Mills, 572 F.3d 66, 71–72 (2d Cir. 2009)). The court stated that “while

pro se complaints must contain sufficient factual allegations to meet the plausibility standard,

we should look for such allegations by reading pro se complaints with ‘special solicitude’

and interpreting them to raise the ‘strongest [claims] that they suggest.’” Id. (alteration in

original) (quoting Triestman v. Fed. Bureau of Prisons, 470 F.3d 471, 474–75 (2d Cir. 2006)

(emphasis in original)). The courtfurther noted that “[w]ith respect to discrimination claims,

[it had] explained in Boykin [v. KeyCorp, 521 F.3d 202, 212 (2d Cir. 2008)] that plaintiffs

are not required ‘to plead facts sufficient to establish a prima facie disparate treatment claim’

under Title VII, because ‘the McDonnell Douglas burden-shifting framework ‘is an

evidentiary standard, not a pleading requirement,’ and that to require more than Rule 8(a)’s
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‘simplified notice pleading standard’ would unjustifiedly impose a heightened pleading

requirement on the plaintiff.’” Id. (quoting Boykin, 521 F.3d at 212). The court cited a preTwombly case law to emphasize that it had “held there is no heightened pleading requirement

for civil rights complaints alleging racial animus, and ha[d] found such claims sufficiently

pled when the complaint stated simply that the plaintiffs ‘[were] African-Americans,

describe[d] defendants’ actions in detail, and allege[d] that defendants selected [plaintiffs]

for maltreatment ‘solely because of their color.’’” DiPetto, 2010 WL 2724463, at *1

(second, third, fourth, and fifth alterations in original) (quoting Phillip v. Univ. of Rochester,

316 F.3d 291, 298 (2d Cir. 2003)). The court found the amended complaint’s allegations

sufficient under these standards:

[R]eading Appellant’s amended complaint to raise the strongest

claims that it suggests, we find that Appellant stated he was

Caucasian, described specific discriminatory actions that had been

taken against him by his supervisor, and alleged that he was treated

differently, inter alia, on the basis of his race. While Appellant did

not explicitly state that he was filing a Title VII claim, federal

employees are restricted to challenges under Title VII when

complaining about employment discrimination. Accordingly, we

conclude that Appellant’s amended complaint, unlike his original

complaint, which did not provide relevant details about his race or the

race of relevant persons involved with the employment actions, gave

fair notice to Appellee that he was raising a claim, pursuant to Title

VII, on the basis that, because he was Caucasian, he received less

overtime and work breaks than other employees, and that sick and

annual leave policies were applied differently to him. See Erickson,

551 U.S. at 93 (holding that a complaint must “give the defendant fair

notice of what the . . . claim is and the grounds upon which it rests”

(ellipsis in original)).

Id. at *2 (footnote omitted). The court rejected the argument that dismissal was appropriate

because the plaintiff failed to attach a right-to-sue letter from the EEOC, explaining that the

plaintiff “was not required to demonstrate at the pleading stage that his claims were

administratively exhausted,” and that, as a federal employee, he was not required to obtain

a right-to-sue letter. Id. (citations omitted). The court stated that “the district court erred

when it concluded that Appellant failed to give fair notice of his claims as required under

Rule 8(a)(2), because his ‘allegations, taken as true, indicate the possibility of discrimination

and thus present a plausible claim of disparate treatment.’” Id. (quoting Boykin, 521 F.3d

at 215–16; and citing Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514 (2002)).

• Ruston v. Town Bd. for Skaneateles, 610 F.3d 55, No. 09-4480-cv, 2010 WL 2680644 (2d

Cir. Jul. 8, 2010), cert. denied, 131 S. Ct. 824 (2010). The court applied Iqbal to a “class of

one” equal protection claim and determined that Iqbal effectively overruled earlier Second

Circuit precedent regarding pleading a “class of one” claim. The plaintiffs alleged that they
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owned a 27-acre lakefront lot in the Town of Skaneateles (the “Town”), but outside the

Village of Skaneateles (the “Village”). Id. at *1. The plaintiffs asserted that the Town and

the Village unconstitutionally frustrated their plans to develop their land. Id. Specifically,

in 1990, the plaintiffs presented the Town with a plan to subdivide their lot and build a new

housing development, and the Town required the plaintiffs to get permission from the

Village to connect the new homes to the Village sewer system. Id. The Village denied this

request. Id. Then, in 2000, the plaintiffs sought permission from the Town to subdivide

their property to build a development with 14 residential units, but the complaint alleged that

“the Town delayed and raised a series of obstacles to their application.” Id. The plaintiffs

twice sought to connect the new homes to the Village sewer system, but both requests were

denied. Ruston, 2010 WL 2680644, at *1. The plaintiffs filed a renewed application with

the Town, but the Town delayed consideration for over a year, by which time a new zoning

law had become effective. Id. The plaintiffs alleged that the law was designed to block their

proposed development and that the Town cited the new law in denying their development

application. Id. The plaintiffs filed suit under §§ 1983 and 1985 against the Village, the

Town Board, the Town Planning Board, and members of the Town Board and the Town

Planning Board. Id. The complaint asserted a conspiracy to violate the plaintiffs’ civil

rights, violation of due process, and violation of equal protection rights, as well as claims

against the Town defendants alleging that the new zoning law was unconstitutionally vague

and violated their substantive due process rights and their equal protection rights. Id. The

complaint also asserted a state law claim to enforce vested property rights. Upon motion by

the Village and the Town defendants, the district court dismissed the § 1985 conspiracy

claims against all defendants with prejudice; the substantive due process claim against the

Village with prejudice; and the equal protection claim against the Village without prejudice.

Id. The plaintiffs “filed an amended complaint, renewing all claims against the Town

defendants (except the § 1985 conspiracy claims), and re-casting the equal protection claim

against the Village.” Ruston, 2010 WL 2680644, at *2. The district court dismissed with

prejudice all federal claims against the Town defendants and the Village, and also dismissed

the state law claim without prejudice after declining to exercise supplemental jurisdiction.

Id.

On appeal, the plaintiffs primarily asserted error in the dismissal of their equal protection

claim. Id. The Second Circuit summarily rejected their claims of error with respect to the

substantive due process claim and the claim challenging the facial constitutionality of the

new zoning law. Id. at *2 n.2. The court explained that “[a]sto theirsubstantive due process

claim, they had no federally protected property right to approval of the sewer hookups or the

development itself (as approval of either required a favorable exercise of discretion), and

they did not allege governmental behavior that ‘may fairly be said to shock the contemporary

conscience . . . .’” Id. (internal citations omitted). “As to the facial constitutionality of the

new zoning law, [the court held that] the Rustons failed to allege that ‘‘no set of

circumstances exist[ed] under which the [law] would be valid.’’” Id. (third alteration in

original) (citation omitted).

The Second Circuit began by noting that “[t]he Supreme Court ha[d] recently clarified the
104

pleading standard required to withstand a motion to dismiss,” and by emphasizing that

determining whether a complaint states a plausible claim for relief is a context-specific task.

Ruston, 2010 WL 2680644, at *2 (citing Iqbal, 129 S. Ct. at 1950). The court noted that

“[d]istrict courts within [the Second] Circuit differ[ed] as to the impact of this pleading

standard on a ‘class of one’ equal protection claim,” explaining that “[t]his uncertainty [wa]s

attributable to the tension between [i] [the Second Circuit’s] decision in DeMuria v. Hawkes,

328 F.3d 704, 707 (2d Cir. 2003), which held under a now-obsolete pleading standard that

a ‘class of one’ claim is adequately pled (‘albeit barely’ so) even without specification of

others similarly situated, and [ii] the Supreme Court’s recent clarifications, which require

that a complaint allege facts sufficient to establish ‘a plausible claim for relief.’” Id. (quoting

Iqbal, 129 S. Ct. at 1950; and citing Twombly, 550 U.S. at 566). The court held that “the

pleading standard set out in Iqbal supersedes the ‘general allegation’ deemed sufficient in

DeMuria . . . .” Id. at *3.

The court concluded that the facts alleged in the complaint were insufficient to meet the

Iqbal standard:

The Rustons’ complaint fails to allege facts that “plausibly

suggest an entitlement to relief.” As to the Town defendants, the

Rustons’ argument appears to be that the Town refused to consider

their application while considering applications submitted by those

similarly situated. However, the Rustons do not allege specific

examples of the Town’s proceedings, let alone applications that were

made by persons similarly situated. The equal protection claim as to

the Town defendants therefore fails for lack of factual allegations to

support the legal conclusion.

As to the Village, the Rustons argue that other, similarly

situated properties were allowed to connect to the Village’s sewer

system. The Rustons do identify several properties that allegedly

were allowed to connect to the Village’s sewer system, all of them

individual homes or businesses that (like the Rustons’ land) were

outside the Village but within the Town. We credit, as we must, the

factual allegations that these other properties received sewer access

while the Rustons’ property did not. Nevertheless the complaint fails

to state a claim that would support relief.

“[C]lass-of-one plaintiffs must show an extremely high degree

of similarity between themselves and the persons to whom they

compare themselves.” Clubside, Inc. v. Valentin, 468 F.3d 144, 159

(2d Cir.2006). “Accordingly, to succeed on a class-of-one claim, a

plaintiff must establish that (i) no rational person could regard the

circumstances of the plaintiff to differ from those of a comparator to

a degree that would justify the differential treatment on the basis of
105

a legitimate government policy; and (ii) the similarity in

circumstances and difference in treatment are sufficient to exclude the

possibility that the defendants acted on the basis of a mistake.” Id.

(internal quotation marks omitted).

Under this standard, none of the properties cited by the

Rustons suffice: a house built in 1987; a country club that was

renovated in “the early 1990’s”; two neighboring

properties—“connected to the Village sewer system for

decades”—that are not further described; a house built “in or around

2004”; a “luxury spa” built “in the late 1990’s”; and a “large

commercial building.” None of these properties is similar to the

Rustons’ proposed 14-home development, let alone so similar that no

rational person could see them as different: some are commercial

properties versus the residential properties at issue, see Campbell v.

Rainbow City, 434 F.3d 1306, 1314–15 (11th Cir. 2006) (properties

that differed in land use were not prima facie similarly situated); see

also Clubside, Inc., 468 F.3d at 159, and the residential connections

were single homes, not a new development as proposed by the

Rustons, see id. at 159–60 (projects involving “different types of

housing and density levels” were not similarly situated as a matter of

law).

As the Rustons fail to allege that properties sufficiently

similar to theirs were treated more favorably by either the Village or

the Town, they have failed to state a “class of one” equal protection

claim.

Id. at *3–4 (alterations in original).

• Vaughn v. Air Line Pilots Ass’n, Int’l, 604 F.3d 703, No. 08-4173-cv, 2010 WL 1930278

(2d Cir. May 14, 2010). More than 100 U.S. Airways pilots, over or approaching the age of

sixty, sued the Air Line Pilots Association, International (“ALPA”) and Duane Woerth,

former president of ALPA, alleging violations of the duty of fair representation, among other

claims. The district court dismissed the fourth amended complaint, and the Second Circuit

affirmed.

ALPA was the labor organization that represented U.S. Airways pilots. Id. at *1. Under the

collective bargaining agreement in place in 2001, U.S. Airways maintained a defined benefit

plan (“DB Plan”) for the pilots, guaranteeing the pilots a certain level of pension benefits at

retirement. Id. Underthe Employee Retirement Income SecurityAct (ERISA), the plan was

required to have sufficient funding to pay 80% of the promised benefits at all times, and if

the funding dropped below that level, U.S. Airways was required to make contributions to

ensure sufficient funding. Id. Although the DB Plan was fully funded or over-funded
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between 1999 and 2001, U.S. Airways reported in 2002 that the plan was only funded at

64%. Id. In the spring and summer of 2002, U.S. Airways negotiated with ALPA to obtain

substantial concessions from the pilots on wages and benefits, claiming that the concessions

were necessary to avoid bankruptcy. Id. U.S. Airways also obtained tentative approval of

a $1 billion loan package guaranteed by the Air Transportation Stabilization Board

(“ATSB”), “conditioned on U.S. Airways demonstrating that it could achieve certain revenue

and cost reduction targets over a seven-year period.” Vaughn, 2010 WL 1930278, at *1.

U.S. Airways filed for Chapter 11 bankruptcy in 2002. Id. at *2. U.S. Airways obtained

another loan, but after determining that it could not meet the revenue targets upon which that

loan and the earlier loan were conditioned, asked ALPA for additional concessions from the

pilots. Id. ALPA did not conduct an independent audit, but agreed to concessions, including

modification of the DB Plan. Id. “When confronted by itsfailure to conduct an audit, ALPA

erroneously stated to its members that it could not compel the company to disclose the

financial condition of the DB Plan,” while “[i]n fact, the collective bargaining agreement

explicitly gave ALPA the right to conduct such an audit.” Id. Despite the additional

concessions, the DB Plan continued to have a deficit. Id. After efforts failed to solve the

deficit problem, U.S. Airways and ALPA engaged in confidential negotiations that resulted

in U.S. Airways agreeing to negotiate and create a follow-up pension plan if the DB Plan had

to be terminated. Vaughn, 2010 WL 1930278, at *2. “The terms of this agreement were to

remain confidential if and until the DB Plan was terminated, although ALPA members soon

learned of the agreement, interpreting it as ALPA’s tacit consent to the DB Plan’s

termination.” Id. U.S. Airways then petitioned the bankruptcy court to “distress terminate”

the DB Plan under ERISA. Id. ALPA objected, but “the bankruptcy court ruled that U.S.

Airways met the requirements for a distress termination, recognizing that the $1 billion loan

guarantee from ATSB was dependent on resolution of the pension funding deficit.” Id. U.S.

Airways and ALPA engaged in negotiations to terminate the DB Plan and create a follow-up

plan, and during the negotiations, “several ALPA members received letters from two union

officials, assuring the pilots that they would have an opportunity to vote on any proposal to

terminate the DB Plan and implement a new plan.” Id. (footnote omitted). Despite this

notice, U.S. Airways and ALPA agreed to replace the DB Plan with a new defined

contribution plan (“DC Plan I”), without any vote by ALPA members. Id. The court

explained the details of DC Plan I:

Under the DC Plan I, U.S. Airways was required to make

contributions at different rates for each pilot based on a complex

formula aimed at helping pilots achieve a target benefit amount upon

retirement. The formula provided for greater contributions to pilots

approaching the mandatory retirement age of 60 than to younger

pilots who had more time to accrue contributions. However, the

higher contributions to older pilots were still limited to 100% of the

pilot’s salary, meaning that regardless of the higher contributions,

pilots close to 60 were less likely to meet the targeted retirement

amount than younger pilots. Plaintiffs also allege that under the plan,

older pilots would also receive a significant amount of their
The dismissal of the RICO claims was affirmed in a separate Second Circuit opinion. See Vaughn v. Air Line Pilots 10

Ass’n, No. 08-4173-cv, 2010 WL 1932388 (2d Cir. May 14, 2010). The plaintiffs appealed “only the dismissal of those

portions of the complaint alleging that ALPA committed racketeering acts premised on fraud-wire fraud, mail fraud and

fraud in connection with a bankruptcy proceeding.” Id. at *1. The court noted that predicate acts premised on fraud

require pleading scienter, but that Rule 9(b) did not require pleading scienter with specificity. See id. The court cited

a pre-Twombly case to noted that “‘the relaxation of Rule 9(b)’s specificity requirement for scienter must not be mistaken

for [a] license to base claims fo fraud on speculation and conclusory allegations,’ and a plaintiff must still ‘allege facts

that give rise to a strong inference of fraudulent intent.’” Id. (alteration in original) (quoting Shields v. Citytrust Bancorp,

Inc., 25 F.3d 1124, 1128 (2d Cir. 1994) (quotation marks and citations omitted)) (internal citation omitted). The Second

Circuit rejected the plaintiffs argument that they had established a “strong inference of fraudulent intent”:

We cannot conclude that plaintiffs have provided a sufficient basis upon which to

infer that ALPA had a motive for committing fraud and a clear opportunity to do

so. In a nutshell, plaintiffs allege . . . that ALPA conspired with U.S. Airways to

“exact hundreds of millions of dollars a year in pilot concessions—for each of

several years,” thus “decimat[ing]” pension benefits so that ALPA could receive

management fees under the DC Plan and U.S. Airways could terminate the DB

Plan. We cannot draw the requisite “strong inference” of fraudulent intent based

on these allegations because: (1) the complaint does not allege that the fees were of

such proportion to the amounts frittered away so as to make it plausible that ALPA

would engage in the alleged scheme; and (2) ALPA is legally permitted to receive

fees for a service. See Rombach v. Chang, 355 F.3d 164, 177 (2d Cir. 2004). In

107

contributions subject to immediate taxation whereas younger pilots

would be able to defer their tax obligations. In contrast to the DB

Plan, U.S. Airways was not required to guarantee a particular benefit

level; rather, U.S. Airways only had to make the promised

contributions according to the formula.

Vaughn, 2010 WL 1930278, at *3. Even after these measures, U.S. Airways filed for a

second bankruptcy under Chapter 11, and ALPA then “agreed to further concessions,

including an amendment to the defined contribution plan (‘DC Plan II’) that eliminated the

formula and targeted benefit concept and instead required U.S. Airways to make

contributions to each pilot’s individual account at the same rate—10% of the pilot’s

salary—regardless of age, seniority, or any other factor.” Id. “At around the same time,

some pilots—but not all—received a Summary Annual Report stating that the DB Plan had

been fully funded as of December 31, 2002, directly contradicting the statements U.S.

Airways and ALPA had made at the time.” Id.

The plaintiffs’ complaint alleged breach of the duty of fair representation under the Railway

Labor Act against ALPA and Woerth; violations of the Age Discrimination in Employment

Act (ADEA) against ALPA and U.S. Airways; violations of ERISA against U.S. Airways;

and violations of the Racketeer Influenced and Corrupt Organizations Act (RICO) against

ALPA, U.S. Airways, and an entity that had given U.S. Airways a loan. Id. The plaintiffs

voluntarily withdrew their claims against U.S. Airways, and the district court granted the

motion by the remaining defendants to dismiss all claims. Id. This appellate opinion

discussed only the duty of fair representation claims.

10
addition, the alleged circumstances of conscious behavior are insufficient to raise

the strong inference of fraudulent intent for the same reasons those allegations fail

to support plaintiffs’ duty of fair representation claims.

Id. at *2 (alteration in original).

108

On appeal, the plaintiffs argued that the district court erred in dismissing their claims that

ALPA breached its duty of fair representation. Id. at *4. The court noted that its “review of

such allegations is ‘highly deferential, recognizing the wide latitude that [unions] need for

the effective performance of their bargaining responsibilities.’” Vaughn, 2010 WL 1930278,

at *4 (alteration in original) (quoting Air Line Pilots Ass’n v. O’Neill, 499 U.S. 65, 74

(1991)). Proving a union has breached its duty of fair representation requires establishing

that the union’s actions or inactions “‘are either ‘arbitrary, discriminatory, or in bad faith’’”

and that there is “‘a causal connection between the union’s wrongful conduct and [the

plaintiffs’] injuries.’” Id. (citations omitted). The court noted that “[a] union’s actions are

‘arbitrary only if, in light of the factual and legal landscape at the time of the union’s actions,

the union’s behavior is so far outside a wide range of reasonableness as to be irrational,’” and

that “‘even negligence on the union’s part does not give rise to a breach.’” Id. (citations

omitted). The court held:

Applying those standards here, we conclude that the district

court did not err in dismissing counts I through III of the complaint.

Count I alleges that ALPA’s failure to conduct an audit,

misrepresentation of its ability to do so, and later after-the-fact audit

were a breach of the duty of fair representation. However, the

allegations are only capable of supporting a finding that ALPA acted

negligently. Since, even as alleged in the complaint, these events

occurred against a particular “factual landscape”—after September

11, 2001, when U.S. Airways “suffered further severe economic

losses on top of prior financial difficulties,”—we cannot conclude

that ALPA’s failure to conduct the audit was “so far outside a wide

range of reasonableness as to be irrational.” O’Neill, 499 U.S. at 67

(internal citations and quotation marks omitted).

Id. at *5 (footnote omitted). The court rejected the argument that “ALPA acted in bad faith

by agreeing to the termination of the DB Plan so that it could reap lucrative fees for

managing the follow-up plan,” stating:

As pled, we do not believe that the allegations “nudge [plaintiffs’

claim] across the line from conceivable to plausible.” Iqbal, 129 S.

Ct. at 1951 (quoting Twombly, 550 U.S. at 570). The complaint does

not allege that the fees were of such proportion to the concessions so

as to make it plausible that ALPA was improperly motivated by the

fees when it agreed to the termination of the DB Plan. Plaintiffs have
109

offered no plausible explanation for why ALPA would believe that

such an arrangement would be in its self-interest. As for ALPA’s

alleged intentional misrepresentation of its right to conduct an audit,

plaintiffsthemselves allege that ALPA made the misrepresentation in

an attempt to “legitimize ALPA’s abdication of its responsibility,” an

allegation that supports a claim of negligence, not bad faith.

Id. (alteration in original) (footnote omitted). The court pointed out that “the mere collection

of management fees in exchange for services legally rendered does not, without more,

evidence an improper motive,” noting that the cases the plaintiffs cited all involved illegal

kickback schemes, but the plaintiffs had not alleged an illegal kickback scheme here. Id.

The court also concluded:

Moreover, plaintiffs have failed to allege a causal connection

between ALPA’s failure to conduct the audit and the termination of

the DB Plan. When ALPA finally did hire an actuary to conduct an

audit, the actuary confirmed U.S. Airways’s numbers. Thus, it is

unclear how the audit would have increased ALPA’s bargaining

power or changed the result of the negotiations. Plaintiffs argue that

the later audit was insufficient because it “simply asked an actuary to

use U.S. Airways’ same models (indeed, their same computer and

numbers) to make sure those numbers added up correctly.” Yet,

Plaintiffs themselves state in their complaint that the DB Plan was

only funded at 64% in 2002. Thus, whether or not the later audit was

sufficient, plaintiffs appear to agree with U.S. Airways that the DB

Plan was substantially underfunded.

Vaughn, 2010 WL 1930278, at *5 (footnote and internal citation omitted). The court

dismissed the plaintiffs’ argument that the Summary Annual Report stated that the DB Plan

was fully funded in December 2002 and thus created a fact issue as to whether the DB Plan

was actually underfunded in 2002, noting that “plaintiffs themselves do not allege that the

plan was fully funded in 2002 and, indeed, allege the opposite—that it was underfunded at

64%.” Id. at *5 n.7. The court stated that “Plaintiffs may not argue this both ways—they

either believe that the DB Plan was underfunded or they believe it is an open question.” Id.

In Count II, the plaintiffs made the same allegations as in Count I, “but further allege[d] that

ALPA officials promised that termination of the DB Plan would be voted on by the

membership, but notwithstanding this promise, no vote was held, and the plan was

terminated.” Id. at *6. With respect to causation, “this count alleged that ‘ALPA’s rapid

turnaround on the ratification issue prevented pilots from having any say as to the terms of

the proposed DC Plan and thus disadvantaged certain ALPA members,’ and further that

‘[t]he promise of a ratification vote lulled the pilots into a false sense of security, with the

result that they could do nothing but watch as their rights and their futures were traded

away.’” Id. (alteration in original). The Second Circuit concluded that the complaint failed
110

to plead causation adequately:

Assuming that the allegations in count II, if true, would

constitute bad faith, plaintiffs have failed to plead a causal connection

between this claim and their injuries. Plaintiffs have not alleged that,

had a vote occurred, the pilots would not have voted for the DB Plan.

Nor do they allege that rejecting the agreement would have resulted

in a plan more generous to older pilots. It is true that if plaintiffs had

been informed that no vote would take place, they might have lobbied

hard to prevent termination of the DC Plan I. But even then, there is

no allegation that the DB Plan could have been saved, given the

bankruptcy court’s ruling that U.S. Airways qualified for distress

termination. In short, plaintiffs have failed to plausibly allege that

ALPA’s alleged bad faith affected the outcome of the negotiations in

any way.

Id. (footnote omitted).

In Count III, “plaintiffs allege[d] that ALPA discriminated against them by agreeing to the

terms of the DC Plans, which ‘impacted older pilots more harshly than younger pilots.’”

Vaughn, 2010 WL 1930278, at *6 (citation omitted). Noting that “a union’s acts are only

discriminatory if they are ‘intentional, severe, and unrelated to legitimate union objectives,’”

the court held:

Here, the DC Plan I actually benefitted older pilots by requiring U.S.

Airways to make larger contributions to older pilots’ plans, which

directly contradicts plaintiffs’ theory that ALPA intended to

discriminate against them. Similarly, the DC Plan II guaranteed older

and younger pilots pension benefits based on the same formula—10%

of the pilot’s salary. The fact that older pilots may have received

fewer benefits under the plan is, as the district court explained in the

context of plaintiffs’ ADEA claims, “the result of basic economics,

specifically the time value of money, and is not related to the older

pilots’ age.”

Id. The court also noted that “there is no requirement that unions treat their members

identically as long as their actions are related to legitimate union objectives.” Id. The court

concluded that “[g]iven that U.S. Airways could not successfully reorganize and emerge

from bankruptcy protection without decreasing its pension obligations, it was inevitable that

the resulting negotiations would affect some pilots more harshly than others,” and that

“[w]ithout additional evidence that the union intended to discriminate against plaintiffs, the

mere fact that older pilots were disproportionately affected [wa]s not sufficient to show that

ALPA acted in a discriminatory manner.” Id.
 A summary of the district court’s opinion in this case was included in an earlier version of this memo, but has now 11

been removed from the appendix because the decision was vacated on appeal.

 Rule 12(i)—formerly Rule 12(d) before the 2007 restyling—provides: “If a party so moves, any defense listed in Rule 12

12(b)(1)–(7)—whether made in a pleading or by motion—and a motion under Rule 12(c) must be heard and decided

before trial unless the court orders a deferral until trial.” FED. R. CIV. P. 12(i). According to one treatise, “Rule 12(i)

allows a party to assert Rule 12(b) defenses and a Rule 12(c) motion for judgment on the pleadings before trial on the

merits, contemplating the possible hearing and determination of jurisdictional or other issues in advance of trial. The

district court is free to decide the best way to deal with the question, because neither the federal rules nor the statutes

provide a prescribed course. The court’s decision whether to hold a preliminary hearing or to defer the matter to trial

on the merits may be set aside on appeal only for abuse of discretion.” 2 JAMES WM. MOORE ET AL., MOORE’S FEDERAL

PRACTICE § 12.50 at 12-142 (3d ed. 2009) (footnotes omitted). The treatise explains: “Because most of the defenses in

Rule 12(b) that can be addressed by a preliminary hearing affect the court’s jurisdiction, it is advisable to dispose of them

before trial if at all possible, regardless of the court’s power to defer them. On the other hand, if ruling on the defense

entails substantial consideration of the merits, as is often the case, the question can most effectively be addressed during

trial. Deferring matters until trial also allows a court to give consideration to matters with such grave consequences as

motions for dismissal under Rule 12(b)(1)–(7) or a judgment on the pleadings under Rule 12(c).” Id. at 12-143. The

treatise also notes that “[b]oth Rule 12’s preliminary hearing and its discretionary deferral to trial are valuable but often

overlooked tools in the court’s arsenal.” Id. at 12-143–44.

Another treatise has explained that in determining whether to exercise discretion to grant a preliminary hearing,

as opposed to deferring the issues to trial, “the district court must balance the need to test the sufficiency of the defense

or objection and the right of a party to have his defense or objection decided promptly and thereby possibly avoid costly

and protracted litigation against such factors as the expense and delay the hearing may cause, the difficulty or likelihood

of arriving at a meaningful result of the question presented by the motion at the hearing, and the possibility that the issue

to be decided on the hearing is so interwoven with the merits of the case, which . . . can occur in various contexts, that

a postponement until trial is desirable.” 5C CHARLES A. WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND

111

• Kregler v. City of New York, 375 F. App’x 143, No. 09-3840-cv, 2010 WL 1740806 (2d Cir.

May 3, 2010) (unpublished summary order). The Second Circuit overturned the district 11

court’s dismissal of Kregler’s complaint under § 1983. The court discussed the pleading

standards after Iqbal and concluded:

Kregler’s amended complaint pleads facts sufficient to clear

this threshold. He alleges that in response to his announced stance in

support of a candidate in a heated local political campaign, employees

of the New York City Fire Department induced contacts at the

Department of Investigation to prevent his appointment as a City

Marshal. This allegation is neither a legal conclusion nor asserts a

claim that is implausible on its face. Kregler’s claim that political

animus caused certain defendants to lie about or mischaracterize

Kregler’s disciplinary record, and that that same political animus

caused other defendants to accept their misrepresentations is not

implausible on its face and therefore not susceptible to a motion to

dismiss. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).

Id. at *1 (footnote omitted). The court noted that the district court had utilized a Rule 12(i)

hearing to examine the issue, but “express[ed] no opinion . . . as to the use of that procedure 12
PROCEDURE § 1373 (3d ed. 2004) (footnotes omitted). This treatise also notes: “A district court cannot dismiss a

complaint on the basis of a Rule 12(b) defense or objection without giving the plaintiff an opportunity to be heard; a

dismissal without that opportunity has been properly characterized as a denial of due process. At a preliminary hearing,

the court may consider affidavits and other documentary matter and if the decision turns on issues of credibility or

disputed questions of fact, the district judge may hear oral testimony.” Id. (footnotes omitted). The treatise further notes

that “[i]f the issue is of so complex or uncertain a nature that witnesses are necessary, it would be wise for the court to

defer the determination of the matter until trial.” Id. (footnote omitted).

112

or the impact of the facts adduced therein.” Id. at *1 n.1. The court held that “Kregler’s

motion for leave to amend, which was denied below as futile, should be granted upon

remand.” Id. at *2.

• Arista Records LLC v. Doe 3, 604 F.3d 110, No. 09-0905-cv, 2010 WL 1729107 (2d Cir.

Apr. 29, 2010). In this copyright infringement case, the district judge approved the

magistrate judge’s ruling denying the defendants’ motion to quash a subpoena served on the

defendants’ Internet service providers seeking information disclosing the defendants’

identities. Id. at *1. In considering the motion to quash, the magistrate judge looked at the

allegations in the complaint and concluded that the defendants’ qualified First Amendment

right of anonymity was outweighed by the plaintiffs’ allegations that the defendants were

illegally downloading and/or distributing copyrighted music over the Internet and the

plaintiffs’ need for the information in order to enforce their rights. Id. On appeal, defendant

Doe 3 argued that the allegations in the complaint were not sufficient to overcome his First

Amendment right of anonymity and that the motion to quash was improperly referred to the

magistrate judge. Id. The Second Circuit affirmed.

The plaintiff recording companies’ complaint alleged that the defendants had infringed the

plaintiffs’ copyrights by using an online file-sharing network to download and/or distribute

the plaintiffs’ copyrighted music. Id. The complaint attached an Exhibit A, which listed for

each defendant: the IP address at a stated date and time, the name of the file-sharing network

used, the titles of 6–10 songs downloaded from the IP address, and which plaintiff was the

copyright owner of each song. Id. The complaint requested damages and injunctive relief

prohibiting further infringement of the copyrights. Arista Records, 2010 WL 1729107, at

*1. The plaintiffs did not know the defendants’ identities, and sought authorization to serve

a subpoena on the defendants’ common ISP, the State University of New York at Albany

(“SUNYA”), to obtain each defendant’s name, address, phone number, email address, and

Media Access Control address identifying the device engaged in the online communication.

Id. The plaintiffs ultimately voluntarily dismissed most of the defendants, and the remaining

defendants filed a motion to quash, arguing that the First Amendment provided them with

a qualified right to use the Internet anonymously and that under Rule 45(c)(3)(A)(iii), a

subpoena must be quashed or modified if it “‘requires disclosure of privileged or other

protected matter, if no exception or waiver applies.’” Id. at *2. The defendants conceded

that the First Amendment right to anonymity was not a license to infringe copyrights, but

argued that their privilege could “‘only be overcome by a substantial and particularized

showing,’ sufficient to ‘plead a prima facie case of copyright infringement,’” a showing that
113

the defendants argued was not made in the complaint. Id. The defendants argued that the

heightened pleading standard imposed by Twombly required the plaintiffs to “‘state, on

personal knowledge, a specific claim for copyright infringement against each and every Doe

defendant.’” Id. Specifically, the defendants asserted that the plaintiffs were required

to present specific evidence, including a declaration from whoever

examined the files available for download from each defendant’s

computer, listened to the files, verified that they were copyrighted

songs, determined that the copyrights were registered (and to which

plaintiffs), to list the songs that a particular defendant made available

for download, and to annex corresponding copyright registration

certificates for the songs.

Id. (quotation marks omitted). The defendants further argued that the complaint failed to

allege actual distribution of song files to the public and that the plaintiffs were required to

both show that their claims could withstand a motion to dismiss for failure to state a claim

and produce sufficient evidence supporting each element of the claims. Arista Records, 2010

WL 1729107, at *2.

The magistrate judge evaluated five factors for balancing the First Amendment right to

anonymity against a copyright owner’s right to disclosure of the identity of a possible

trespasser, including: the defendants’ expectation of privacy, the prima facie strength of

plaintiffs’ claims of injury, the specificity of the discovery request, the plaintiffs’ need for

the information, and the availability of the information through other means. Id. at *3. The

magistrate judge concluded that all five factors weighed against quashing the subpoena, and

noted that the “plaintiffs had sufficiently pleaded copyright infringement claims, alleging

ownership of the copyrights, copying, and distribution of the protected works by the Doe

defendants without the consent of the owners.” Id. The magistrate judge also noted that the

allegations of distribution were supported by Exhibit A, which specified the plaintiffs’

investigator’s sampling of some of the downloads. Id.

On review of the magistrate judge’s decision, the district court rejected the contention that

Doe 3’s motion to quash was “in essence a motion to dismiss under Rule 12(b)(6) and hence

was a dispositive motion, noting that the Rule, by its terms confers the right to move for

dismissal for failure to state a claim on ‘‘a party,’’” and that because the defendants had not

yet been served, they were not yet “parties.” Id. at *4. The court rejected the proposition that

the magistrate judge lacked authority to rule on the motion. Id.

Doe 3’s primary appellate argument was that the complaint did not state a claim sufficient

to overcome his First Amendment privilege of anonymity. Arista Records, 2010 WL

1729107, at *4. The Second Circuit agreed that the motion to quash was not a dispositive

motion, explaining that under the five-factor test the magistrate judge applied, the judge

could have granted the motion “despite the sufficiency of the Complaint if it had found, for

example, that the subpoena was unduly broad or that plaintiffs had easy access to the Doe
114

defendants’ identities through other means,” and that “[q]uashing the subpoena on such a

basis plainly would not have ended the action.” Id. at *5. The court also noted that even if

the motion to quash could be considered a dispositive motion, that would only have resulted

in de novo review by the district court, and the district court had indicated that even under

de novo review, it would have upheld denial of the motion. Id.

With respect to the challenge to the substantive ruling on the motion to quash, “Doe 3

contend[ed] that the court should have found that plaintiffs did not make a ‘particularized

showing’ sufficient to overcome his qualified privilege.” Id. at *7 (internal citation omitted).

The Second Circuit held that “[n]either Doe 3’s reliance on Twombly/Iqbal nor his

contention that plaintiffs’ allegations [we]re insufficiently specific ha[d] merit.” Id. at *8.

The court explained:

[T]he notion that Twombly imposed a heightened standard that

requires a complaint to include specific evidence, factual allegations

in addition to those required by Rule 8, and declarations from the

persons who collected the evidence is belied by the Twombly opinion

itself. The Court noted that Rule 8(a)(2) of the Federal Rules of Civil

Procedure “requires only ‘a short and plain statement of the claim

showing that the pleader is entitled to relief,’ in order to give the

defendant fair notice of what the . . . claim is and the grounds upon

which it rests,” Twombly, 550 U.S. at 555 (other internal quotation

marks omitted); see also Swierkiewicz v. Sorema N.A., 534 U.S. 506,

508, 512 (2002) (holding that, at the pleading stage, an employment

discrimination plaintiff who alleges facts that provide fair notice of

his claim need not also allege “specific facts establishing a prima

facie case,” for such a “heightened pleading standard . . . conflicts

with Federal Rule of Civil Procedure 8(a)(2).”).

Id. (omissions in original). The court also noted that “[t]he Twombly plausibility standard,

which applies to all civil actions, see Iqbal, 129 S. Ct. at 1953, does not prevent a plaintiff

from ‘pleading facts alleged ‘upon information and belief,’’ where the facts are peculiarly

within the possession and control of the defendant, see, e.g., Boykin v. KeyCorp., 521 F.3d

202, 215 (2d Cir. 2008), or where the belief is based on factual information that makes the

inference of culpability plausible, see Iqbal, 129 S. Ct. at 1949 . . . .” Arista Records, 2010

WL 1729107, at *8. The court pointed out that the Twombly court specifically stated that

“‘we do not apply any ‘heightened’ pleading standard,’” and “emphasized that its holding

was consistent with its ruling in Swierkiewicz that ‘a heightened pleading requirement,’

requiring the pleading of ‘‘specific facts’ beyond those necessary to state [a] claim and the

grounds showing entitlement to relief,’ was ‘impermissible.’” Id. at *9 (quoting Twombly,

550 U.S. at 569 n.14, 570 (alterations in original)). The court explained that Iqbal also did

not raise the pleading requirements: “Nor did Iqbal heighten the pleading requirements.

Rather, it reiterated much of the discussion in Twombly and rejected as insufficient a

pleading that the Iqbal Court regarded as entirely conclusory.” Id. “[A]lthough Twombly
115

and Iqbal require ‘‘factual amplification [where] needed to render a claim plausible,’’” id.

(alteration in original) (quoting Turkmen v. Ashcroft, 589 F.3d 542, 546 (2d Cir. 2009)), the

court “reject[ed] Doe 3’s contention that Twombly and Iqbal require the pleading of specific

evidence or extra facts beyond what is needed to make the claim plausible,” id. (first

alteration in original). The court found “[e]ven less meritorious . . . Doe 3’s contention that

plaintiffs’ showing in the present case was vague and conclusory.” Id. The court noted that

the defendant’s brief omitted a crucial portion of the complaint—the citation to Exhibit A.

Arista Records, 2010 WL 1729107, at *9. The court explained:

To the extent that ¶ 22’s allegations are made on information and

belief, virtually all of them are supported by factual assertions in

Exhibit A. For example, the allegation that each Doe defendant ‘has

used’ file-sharing networks to download and distribute plaintiffs’

music is supported by Exhibit A’s lists of specific songs found in the

respective Doe defendants’ file-sharing folders, on the date shown, at

the time indicated, on the specified online, peer-to-peer, file-sharing

network. The allegation that there was “continue[d]” use is supported

by, inter alia, the utter improbability that the songs observed by

plaintiffs’ investigators in a given Doe defendant’s file-sharing folder

at a particular time were there only at the precise instant at which they

were observed, and not before and not afterwards; the inference of

continued use is also supported by the facts that Exhibit A lists each

of the “Doe” defendants as engaging in such file-sharing on a

different date and that defendants’ attorney has represented that some

of the “Doe” defendants are in fact the same person. The principal

assertion made only on information-and-belief is that defendants’

copying and/or distribution of plaintiffs’ music were without

permission. But no more definitive assertion as to lack of permission

seems possible when the users remain anonymous.

Id. at *10 (emphasis added) (alteration in original) (internal citations omitted). The court

noted that “[p]age 3 of . . . Exhibit [A] makes assertions as to Doe 3 and could hardly be

more specific.” Id. The court explained that “[i]t specifie[d] that at ‘IP address [ ]

169.226.226.24’ at 2:15:57 a.m. on April 12, 2007, the ‘P2P Network [ ] AresWarez’ was

in use (emphases in original); that a total of 236 audio files were present in a file-sharing

folder at that IP address at that time; and that among those files were the following songs,

whose respective copyrights were owned by the plaintiffs indicated: . . . .” Id. (third and

fourth alterations in original). The court concluded that “[g]iven the factual detail in the

Complaint and its Exhibit, plaintiffs’ pleading plainly state[d] copyright infringement claims

that [we]re plausible.” Id. (citing Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545

U.S. 913, 920 (2005); In re: Aimster Copyright Litig., 334 F.3d 643, 645 (7th Cir. 2003)).

The court also noted that the declaration submitted in support of the subpoena “pointed out

that Exhibit A list[ed] only samples of the numerous ‘audio files that were being shared by

[the Doe d]efendants at the time that the RIAA’s agent . . . observed the infringing activity,’
 28 U.S.C. § 1915 addresses proceedings in forma pauperis, and subsection (e)(2) provides that a court shall dismiss 13

the case under certain circumstances, including that the action is frivolous or malicious or fails to state a claim on which

relief can be granted. See 28 U.S.C. § 1915(e)(2).

116

and that complete lists would be provided to the court upon request.” Id. at *11 (alteration

and omission in original) (internal citations omitted). The court stated that “[n]o greater

specificity in the Complaint or in plaintiffs’ submissions in support of their request for the

subpoena to SUNYA was required.” Arista Records, 2010 WL 1729107, at *11. The court

rejected Doe 3’s argument that the complaint did not adequately allege copyright

infringement because “merely ‘making . . . available’ a work on a peer-to-peer network does

not violate the copyright holder’s distribution right absent proof of actual distribution,”

explaining that it did not “need [to] address the question of whether copyright infringement

occurs when a work is simply made available . . . because the Complaint allege[d] not that

defendants merely made songs available on the network but that defendants both actually

downloaded plaintiffs’ copyrighted works and distributed them.” Id. (first omission in

original). The court found that “the facts asserted in the Complaint [we]re adequate to

support these allegations.” Id. The court noted that it “need not decide whether the

requirement [it] endorse[d] . . . , that a plaintiff seeking to subpoena an anonymous Internet

defendant’s identifying information must make a ‘concrete showing of a prima facie claim

of actionable harm,’ would be satisfied by a well-pleaded complaint unaccompanied by any

evidentiary showing” because “plaintiffs’ Complaint, attached exhibit, and supporting

declaration [we]re clearly sufficient to meet that standard.” Id. The court affirmed the denial

of the motion to quash.

• Shomo v. New York, 374 F. App’x 180, No. 06-5434-pr, 2010 WL 1628771 (2d Cir. Apr.

22, 2010) (unpublished summary order). The district court sua sponte dismissed the pro se

plaintiff’s § 1983 complaint, with leave to amend, relying on Rules 8 and 10 and 28 U.S.C.

§ 1915(e). Id. at *1. The court noted that it had not previously set forth a standard of 13

review for sua sponte dismissal of a complaint under Rule 8 or Rule 10, but “conclude[d]

that, under either an abuse of discretion or de novo standard, the district court erred in

dismissing Appellant’s complaint, even with leave to amend, because many of Appellant’s

claims, if true, would be actionable under the Eighth Amendment, the American with

Disabilities Act [(ADA)], . . . and section 504 of the Rehabilitation Act of 1973 . . . .” Id.

The court found that “[w]hile the district court afforded Appellant the opportunity to amend

his complaint, Appellant’s complaint was not so deficient as to require its dismissal at such

an early stage of litigation.” Id.

The court discussed the standard for dismissal:

The jurisprudence involving Rule 8, traced from our decision

in Salahuddin[ v. Cuomo, 861 F.2d 40 (2d Cir. 1988)] through the

Supreme Court’s recent Iqbal decision, is difficult to apply to the

dismissal of a complaint containing too much detail, especially where
117

the complaint is filed by a pro se litigant. On the one hand, pleadings

“need only give the defendant fair notice of what the . . . claim is and

the grounds upon which it rests,” Erickson v. Pardus, 551 U.S. 89, 93

(2007) (internal quotation marks omitted), and a court has the power

to dismiss a complaint that is “prolix” or has a “surfeit of detail,”

Salahuddin, 861 F.2d at 42–43. On the other hand, “[d]ismissal . . .

is usually reserved for those cases in which the complaint is so

confused, ambiguous, vague, or otherwise unintelligible that its true

substance, if any, is well disguised.” Id. at 42. A complaint must

plead “enough facts to state a claim to relief that is plausible on its

face.” See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007); see

also Ashcroft v. Iqbal, --- U.S. ----, 129 S. Ct. 1937, 1949 (2009)

(holding that Rule 8 calls for “sufficient factual matter, accepted as

true, to ‘state a claim to relief that is plausible on its face’”). “A

claim has facial plausibility when the plaintiff pleads factual content

that allows the court to draw the reasonable inference that the

defendant is liable for the misconduct alleged.” Iqbal, 129 S. Ct. at

1949 (citing Twombly, 550 U.S. at 556).

Id. (emphasis added). The court emphasized that pro se complaints must be reviewed with

leniency, stating that “even after Twombly, where a litigant is proceeding pro se, courts

remain ‘obligated’ to construe pro se complaints liberally.” Id. at *2 (citing Harris v. Mills,

572 F.3d 66, 72 (2d Cir. 2009). The court explained that “while pro se complaints must

contain sufficient factual allegations to meet the plausibility standard, courts should look for

such allegations by reading pro se complaints with ‘special solicitude’ and interpreting them

to raise the ‘strongest [claims] that they suggest.’” Shomo, 2010 WL 1628771, at *2

(alteration in original) (quoting Triestman v. Fed. Bureau of Prisons, 470 F.3d 471, 474–75

(2d Cir. 2006) (per curiam) (emphasis in original)). The court concluded that the complaint

was sufficient:

Notwithstanding the length and detail of Appellant’s

complaint, his claims enunciate recognizable unconstitutional

behavior. The day-to-day events described by Appellant concern the

activities of his daily living: his need to be fed, bathed, and aided with

toileting. While citing to numerous federal statutes (a practice not

uncommon for pro se litigants), Appellant’s claims centered around

his disability and the alleged deliberate indifference to his serious

medical needs. He then amplified these claims, as required under

Twombly and Iqbal, by making specific references to events that he

claimed were evidence of such deliberate indifference. Insofar as he

cited multiple civil rights statutes, “[t]he failure in a complaint to

state a statute, or to cite the correct one, in no way affects the merits

of a claim. Factual allegations alone are what matters.” Albert v.

Carovano, 851 F.2d 561, 571 n.3 (2d Cir. 1988).
118

In fact, while not a model of clarity, Appellant’s complaint is

neither “unintelligible” nor “a labrynthian prolixity of unrelated and

vituperative charges that defied comprehension.” Prezzi v. Schelter,

469 F.2d 691, 692 (2d Cir. 1972). Significantly, we have recognized

that it “is not unusual [for] a pro se litigant” to present “allegations

[that are] not neatly parsed and include[ ] a great deal of irrelevant

detail.” Phillips v. Girdich, 408 F.3d 124, 130 (2d Cir. 2005). The

details in Appellant’s complaint are all “related” to his need to be

aided in the activities of his daily living. Finally, Appellant’s

complaint arguably gave the State “fair notice” of his Eighth

Amendment, ADA and Rehabilitation Act claims, allowing it to

engage in motion practice or prepare for trial by reviewing

Appellant’s medical history, medical needs, and the care provided to

him.

Id. (alterations in original).

With respect to the dismissal under section 1915(e), the court found the dismissal

inappropriate “because the district court did not, in fact, review the merits of his claims to

determine whether they were frivolous under the relevant civil rights statute, and, in fact,

acknowledged that some of the claims had plausible merit.” Id.

The court next disapproved of the district court’s order that the plaintiff “confine his

amended complaint to a certain number of pages and . . . sue no more than twenty

defendants.” Id. at *3. The court explained that “a district court may not impose pleading

requirements on a complaint that exceed the floor set byRule 8 of the Federal Rules of Civil

Procedure, ‘[f]or then district courts could impose disparate levels of pleading requirements

on different sorts of plaintiffs.’” Id. (quoting Wynder v. McMahaon, 360 F.3d 73, 78 (2d Cir.

2004)). The court explained that imposing such requirements would violate “‘Rule 8’s

purpose—to lower the entry barriers for federal plaintiffs and to establish prospectively a rule

common to all litigants . . . .’” Id. (quoting Wynder, 360 F.3d at 78).

The court noted that although the district court had erred by imposing requirements on the

complaint that went beyond the requirements in the civil rules, some aspects of the complaint

might not survive dismissal. Shomo, 2010 WL 1628771, at *3. The court explained:

“For one thing, there is a critical distinction between the

notice requirements of Rule 8(a) and the requirement, under Rule

12(b)(6), that a plaintiff state a claim upon which relief can be

granted.” [Wynder, 360 F.3d at 78.] Thus, the district court will

remain free to consider whether each claim in any amended complaint

states a claim upon which relief can be granted or is otherwise

frivolous.
119

Id. The Second Circuit remanded the case to the district court for reinstatement of the

plaintiff’s Eighth Amendment, ADA, and Rehabilitation Act claims. Id.

• Peter F. Gaito Architecture, LLC v. Simone Dev. Corp., 602 F.3d 57, No. 09-2613-cv, 2010

WL 1337225 (2d Cir. Apr. 7, 2010). The district court dismissed the plaintiffs’ copyright

infringement complaint, finding that it failed to allege substantial similarity between the

plaintiffs’ architectural design and the allegedly infringing design, and the Second Circuit

affirmed. The complaint alleged that the City of New Rochelle issued a request for

development proposals for a mixed-use development in downtown. Id. at *1. The plaintiffs

and the defendants agreed to jointly submit a proposal, with the plaintiffs designing the

architectural plans and the defendants securing financing. Id. The City awarded the project

to the group, and the plaintiffs then registered their designs with the U.S. Copyright Office.

Id. Defendant Simone Church Street LLC entered into a memorandum of understanding with

New Rochelle to serve as the developer for the project. Id. A dispute arose as to the

defendants’ payment to plaintiffs for the project, and the defendants then terminated their

relationship with the plaintiffs and instead hired another architectural firm. Id. at *2. The

complaint alleged that the defendants used the plaintiffs’ copyrighted designs for the project,

and identified 35 alleged similarities between the plaintiffs’ design and the defendants’ redesign. Peter F. Gaito Architecture, 2010 WL 1337225, at *2. The plaintiffs alleged

violations of the Copyright Act and asserted claims for quantum meruit and unjust

enrichment under state law. Id. The district court granted the defendants’ motion to dismiss,

finding that, assuming actual copying occurred, “there was no substantial similarity between

defendants’ re-design and the protectible elements of plaintiffs’ design.” Id. The district

court then declined to exercise supplemental jurisdiction over the state law claims and

dismissed them without prejudice. Id.

The Second Circuit considered whether it was proper to determine whether there was a

substantial similarity between the two designs at the pleadings stage. The court noted that

“questions of non-infringement have traditionally been reserved for the trier of fact,” but

stated that “[t]he question of substantial similarity is by no means exclusively reserved for

resolution by a jury, however, and we have repeatedly recognized that, in certain

circumstances, it is entirelyappropriate for a district court to resolve that question as a matter

of law, ‘either because the similarity between the two works concerns only non-copyrightable

elements of the plaintiff’s work, or because no reasonable jury, properly instructed, could

find that the two works are substantially similar.’” Id. at *5 (citations omitted). The court

explained that “[t]hese same principles hold true when a defendant raises the question of

substantial similarity at the pleadings stage on a motion to dismiss.” Id. The court noted that

“[i]n copyright infringement actions, ‘the works themselves supersede and control contrary

descriptions of them,’ including ‘any contrary allegations, conclusions or descriptions of the

works contained in the pleadings.’” Peter F. Gaito Architecture, 2010 WL 1337225, at *5

(internal citation omitted) (quoting 3-12 NIMMER ON COPYRIGHT § 12.10) (additional

citations omitted). The court also noted that “[w]hen a court is called upon to consider

whether the works are substantively similar, no discovery or fact-finding is typically

necessary, because ‘what is required is only a visual comparison of the works.’” Id. (quoting
120

Folio Impressions, Inc. v. Byer Cal., 937 F.2d 759, 766 (2d Cir. 1991)). The court concluded

that “where, as here, the works in question are attached to a plaintiff’s complaint, it is

entirely appropriate for the district court to consider the similarity between those works in

connection with a motion to dismiss, because the court has before it all that is necessary in

order to make such an evaluation.” Id. at *6. The court explained that “[i]f, in making that

evaluation, the district court determines that the two works are ‘not substantially similar as

a matter of law,’ Kregos v. A.P., 3 F.3d 656, 664 (2d Cir. 1993), the district court can

properly conclude that the plaintiff’s complaint, together with the works incorporated therein,

do not ‘plausibly give rise to an entitlement to relief.’” Id. (quoting Iqbal, 129 S. Ct. at 1950;

citing Wiren v. Shubert Theatre Corp., 5. F. Supp. 358, 362 (S.D.N.Y. 1933)). The court was

“mindful that a motion to dismiss does not involve consideration of whether ‘a plaintiff will

ultimately prevail’ on the merits, but instead solely ‘whether the claimant is entitled to offer

evidence’ in support of his claims,” “acknowledge[d] that there can be certain instances of

alleged copyright infringement where the question of substantial similarity cannot be

addressed without the aid of discovery or expert testimony,” and stated that “[n]othing in this

opinion should be read to upset these settled principles, or to indicate that the question of

non-infringement is always properly considered at the pleadings stage without the aid of

discovery.” Id. at *7. But the court concluded that “where, as here, the district court has

before it all that is necessary to make a comparison of the works in question, . . . [there is]

no error in the district court’s decision to resolve the question of substantial similarity as a

matter of law on a Rule 12(b)(6) motion to dismiss.” Id.

In reviewing whether the two designs were substantially similar, the court noted that it was

“principally guided ‘by comparing the contested design’s ‘total concept and overall feel’ with

that of the allegedly infringed work,’ as instructed by [the court’s] ‘good eyes and common

sense.’” Peter F. Gaito Architecture, 2010 WL 1337225, at *8 (internal citation omitted)

(quoting Hamil Am. Inc. v. GFI, 193 F.3d 92, 99 (2d Cir. 1999)). On its de novo review of

the designs, the court concluded that there was an “utter lack of similarity between the two

designs.” Id. The court stated that “[u]pon examining the ‘total concept and feel’ of the

designs with ‘good eyes and common sense,’ . . . [it could] confidently conclude that no

‘average lay observer would recognize the alleged copy as having been appropriated from

the copyrighted work.’” Id. at *9 (citations omitted). The court held that “it [could not] be

said that defendantsmisappropriated plaintiffs’ specific ‘personal expression’ of the project,

but instead merely used the unprotectible concepts and ideas contained in plaintiffs’

designs.” Id. at *11. The court held that “because plaintiffs ha[d] failed to allege that ‘a

substantial similarity exists between [defendants’] work and the protectible elements of

[plaintiffs’],’ the district court properly dismissed plaintiffs’ federal copyright claim.” Id.

(second and third alterations in original) (internal citation omitted). The court also found no

error in the district court declining to exercise supplemental jurisdiction over the state law

claims, after the federal claim was dismissed. Id. The court concluded that the complaint

did not “‘state a claim to relief that [wa]s plausible on its face,’” and affirmed the dismissal.

Peter F. Gaito Architecture, 2010 WL 1337225, at *11 (quoting Iqbal, 129 S. Ct. at 1949).

• Kuck v. Danaher, 600 F.3d 159, No. 08-5368-cv, 2010 WL 1039273 (2d Cir. Mar. 23,
121

2010). The plaintiff alleged that his rights were violated when he attempted to renew his

permit to carry a firearm with the Connecticut Department of Public Safety (“DPS”). Id. at

*1. According to the complaint, after Kuck applied to renew his permit, a DPS employee

requested that Kuck provide a U.S. passport, birth certificate, or voter registration card to

prove his citizenship. Id. Kuck objected, arguing that he had submitted proof of citizenship

when he first applied for a permit and that he had not been required to provide proof of

citizenship with a previous renewal application. Id. Kuck alleged that “the DPS requirement

was arbitrary, designed to harass, and, in any event, not authorized by state law.” Id. Kuck

refused to provide the documentation and his permit was denied. Id. Kuck, who served as

Secretary of the Board of Firearms Permit Examiners, appealed to the Board. Kuck, 2010

WL 1039273, at *1. His appeal hearing was not scheduled for over eighteen months, and he

was deprived of his permit during that time. Id. Just before his hearing, but after his lawsuit

was filed, Kuck provided documentation, and his renewal request was granted. Id. Kuck

“contend[ed] that DPS and the Board ha[d] acted to burden gun-owners’ ability to obtain

carry permits by improperly denying applications in the first instance and then subjecting

applicants to unjustified and prolonged appeals.” Id. at *2. Kuck asserted a violation of

procedural due process, a violation of substantive due process, and a First Amendment

retaliation claim. Id. Kuck filed the suit as a putative class action, “seeking to represent a

class of individuals whose permits ha[d] been erroneously denied by DPS and ha[d]

subsequently been subjected to a long-delayed appeal before the Board.” Id. The district

court dismissed, finding that “the hearing delay was not so long as to make the availability

of review ‘meaningless or nonexistent.’” Kuck, 2010 WL 1039273, at *2. The district court

also denied Kuck’s request to amend his complaint as futile. Id.

With respect to the procedural due process claim, “Kuck’s main contention [wa]s that the

eighteen-month period he waited to receive an appeal hearing before the Board was, in light

of the liberty interest at stake, excessive and unwarranted, and thus violated due process.”

Id. “Kuck further allege[d] that, as a matter of practice, DPS deliberately seeks to prolong

the appeals process in order to unlawfully deprive citizens of pistol permits.” Id. The

Second Circuit noted that under the Supreme Court’s decision in Mathews v. Eldridge, 424

U.S. 319 (1976), the court was required to balance three factors, and explained that

“determining the moment at which state procedures become so untimely that they become

meaningless is a matter of context, driven by the Mathews factors.” Kuck, 2010 WL

1039273, at *3. The court determined that the first factor—the private interest at

stake—“[t]hough not overwhelming or absolute, . . . remain[ed] significant.” Id. at *5. With

respect to the second factor—the risk of erroneous deprivation—the court noted that Kuck

alleged that “the DPS frequently denies permit applications for bogus or frivolous reasons,

thereby subjecting qualified applicantsto a lengthy appeals process, only to grant the permit

months or years later, just before the appeal hearing,” and that “Kuck claimed that DPS was

not entitled under state law to require proof of citizenship with his 2007 renewal application,

and that his permit should not have been denied for lack of such documentation.” Id. “Kuck

offer[ed] figures suggesting that the number of appeals ‘resolved’ without a hearing [wa]s

indeed far greater than those actually heard by the Board,” and the court noted that “[t]his

data [wa]s consistent with [Kuck’s] allegation that many permits are granted or reinstated
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shortly before the Board is due to hear the applicant’s appeal.” Id. The court also noted that

“Kuck . . . [wa]s in an unusual position to describe the process by which appeals [we]re

resolved,” explaining that “[be]cause he sits on the Board itself, his allegations ha[d] some

additional plausibility at this early stage of the proceedings.” Id. at *5 n.5 (citing Iqbal, 129

S. Ct. at 1950, for the proposition that “‘[d]etermining whether a complaint states a plausible

claim for relief will . . . be a context-specific task’”). Kuck alleged that the delay was not

trivial, resulting in applicants waiting fourteen to twenty months to receive an appeal hearing.

Id. at *5. The court held that “[t]ogether, these allegations plausibly allege[d] a state practice

of delaying appeals, only to moot them at the very last minute, after the applicant has waited

more than one year for a hearing.” Kuck, 2010 WL 1039273, at *5 (citing Iqbal, 129 S. Ct.

at 1949–50). The court concluded that the second Mathewsfactor weighed in favor of Kuck

at the early stage of litigation. Id. With respect to the third factor—the governmental interest

at stake—the court found the state’s explanation for delay “far from overwhelming,” noting

that “the complaint suggest[ed] that the appeal sits gathering dust for nearly all of the interim

period, awaiting a scheduled hearing date.” Id. at *6. The court concluded that Kuck had

properly stated a procedural due process claim, and noted that “[w]hether discovery will bear

out his claim is a matter for the district court to determine on remand.” Id.

Kuck also asserted a substantive due process claim, alleging that the “DPS imposed arbitrary

requirements contrary to state law which, when combined with the lengthy appeals process,

denied him substantive due process.” Id. at *7. The appellate court agreed with the district

court that “DPS’s alleged misconduct was not so ‘egregious, outrageous, or shocking to the

contemporary conscience’ that it violated substantive due process.” Id. The court noted that

“nothing in the complaint ‘shocks the conscience’ or suggests a ‘gross abuse of governmental

authority,’” and that “substantive due process does not entitle federal courts to examine every

alleged violation of state law, especially ones that, while perhaps vexatious, are more routine

than egregious.” Kuck, 2010 WL 1039273, at *7. The court affirmed the dismissal of this

claim.

Kuck also asserted “that his First Amendment rights were violated when he was threatened

and harassed by a DPS officer, allegedly on account of his outspoken criticism of the agency

and the appeals board.” Id. The court concluded that “[w]hile Kuck ha[d] adequately

alleged that he engaged in protected speech, he ha[d] not pleaded facts that suggest[ed] he

was actually threatened by any of the defendants,” explaining that “[a]t most, the allegations

suggest[ed] that the DPS officer intended to strictlyenforce lawslimiting the sale of firearms

at upcoming gun shows.” Id. Because “retaliation cannot be established where no adverse

action has been alleged,” and because “nothing in the complaint suggest[ed] that Kuck’s

speech was ‘actually chilled’ as a result of the DPS officer’s statements,” the Second Circuit

affirmed the district court’s dismissal of this claim. Id.

The court did not reach the plaintiff’s request to join additional defendants or his motion to

amend, and directed the district court to consider these issues on remand. Id. at *8.

• Sanders v. Grenadier Realty, Inc., 367 F. App’x 173, No. 09-2341-cv, 2010 WL 605715 (2d
123

Cir. Feb. 22, 2010) (unpublished summary order). The plaintiffs, who served as president

and vice president of their housing project’s tenants’ association, sued the housing project

(Stevenson Commons) and Grenadier Realty, Inc. for violations of 42 U.S.C. § 1982, the Fair

Housing Act (FHA), 42 U.S.C. § 3601 et seq., the First Amendment, and New York state

law. Id. at *1. The district court dismissed the complaint under Rule 12(b)(6) and denied

leave to amend. Id. The Second Circuit affirmed.

In support of the section 1982 claim, the plaintiffs alleged that “‘[u]pon information and

belief, non-black residents have been granted subsidies and re-certifications while plaintiffs

have been denied the same in the same period,’” and that “‘[i]n light of the foregoing

therefore, the defendants discriminated against plaintiffs on account of their race and national

origin in violation of Title VIII, and sections 1982 and 1981.’” Id. The Second Circuit

concluded that “[w]hile paragraph 17 d[id] allege facts consistent with a discrimination

claim, i.e., that non-black residents were granted subsidies, it nevertheless ‘stop[ped] short

of the line between possibility and plausibility of entitlement to relief’ because plaintiffs

d[id] not allege any facts supporting an inference of racial animus.” Id. (internal citation to

Iqbal, 129 S. Ct. at 1949, omitted). The court disapproved of the plaintiffs’ use of pleading

“on information and belief” under the circumstances:

Further, plaintiffs allege no basis for the “information and belief” on

which their assertion that non-black residents were granted subsidies

rests. “[P]leading on information and belief is not an appropriate

form of pleading if the matter is within the personal knowledge of the

pleader or ‘presumptively’ within his knowledge, unless he rebuts

that presumption. Thus, matters of public record or matters generally

known in the community should not be alleged on information and

belief inasmuch as everyone is held to be conversant with them.” 5

CHARLES ALAN WRIGHT &ARTHUR R. MILLER, FEDERAL PRACTICE

AND PROCEDURE § 1224, at 300–01 (3d ed. 2004). Because the

complaint does not illuminate the nature of the challenged

re-certification process, we do not know whether this assertion is a

matter of public record which plaintiffs should plead on personal

knowledge. In any event, while pleadings may be based on “the best

of the [attorney’s] knowledge, information, and belief,” that

information and belief must be “formed after an inquiry reasonable

under the circumstances.” FED. R. CIV. P. 11.

Id. at *1 n.2 (alterationsin original). The court held that the section 1982 claim was properly

dismissed. Sanders, 2010 WL 605715, at *1.

In support of the plaintiffs’ FHA claim, they “alleged that theywere ‘refused a recertification

that would [have] granted [them] much needed rent subsidies’ in violation of the FHA.” Id.

at *2 (alterations in original). The court held that the complaint “fail[ed] adequately to plead

that plaintiffs ‘were qualified to rent or purchase the housing,’” noting that the only support
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in the complaint consisted of the conclusory allegations that “‘Sanders was . . . denied the

right to subsidies that she is entitled to,’” and that “‘[a]t all times plaintiffs were competent

and able to pay their rent under the subsidies offered to [them] under the National Housing

Act.’” Id. (third alteration in original). The court explained that “a necessary precondition

to rent subsidies is a resident’s submission of required reports as to her income and

household composition within ten days of the landlord’s written request,” and that “[b]ecause

plaintiffs ha[d] not alleged satisfaction of this requirement for the year at issue, [the court

could not] conclude that the complaint plausibly allege[d] plaintiffs’ entitlement to the

subsidies that qualif[ied] them to pay their rent.” Id. The court held that “[i]n light of this

omission and plaintiffs’ failure to allege what defendants did or did not do to deny them

subsidies, [there was] no error in the district court’s dismissal of plaintiffs’ FHA claim.” Id.

(citing Iqbal, 129 S. Ct. at 1949, for the proposition that “‘[t]hreadbare recitals of the

elements of a cause of action, supported by mere conclusory statements, do not suffice’”).

The district court dismissed the First Amendment claim because the plaintiffs did not

adequately plead that the defendants were state actors, and the appellate court found this

dismissal proper. See id. The Second Circuit explained that “the complaint [wa]s

ambiguous regarding the relationship between defendants’ challenged conduct and decisions

regarding government subsidies,” and that “[p]laintiffs’ allegation that ‘they have also been

threatened with eviction and refused a recertification that would [have] granted [them] much

needed rent subsidies,’ [wa]s insufficient to support an inference of state action because it

d[id] not demonstrate state responsibility for tenants’ recertification.” Sanders, 2010 WL

605715, at *2 (second and third alterations in original) (internal citation omitted). In

addition, the court noted that “the fact of government subsidy, by itself, [cannot] establish

state action.” Id. (citation omitted).

The Second Circuit also affirmed the denial of leave to amend, noting that the “plaintiffs

were afforded two opportunities to amend before their complaint was dismissed” and “the

district courtreasonablyconcluded that leave to amend would be futile because the affidavits

plaintiffs submitted in support of their proposed additional claims contained the same

deficient, conclusory allegations that led the district court to dismiss the complaint.” Id. at

*3.

• Samuel v. Bellevue Hosp. Ctr., 366 F. App’x 206, No. 08-4635-cv, 2010 WL 537725 (2d

Cir. Feb. 17, 2010) (unpublished summary order), cert. denied, 131 S. Ct. 100 (2010). The

plaintiff appealed the district court’s dismissal of his employment discrimination lawsuit.

Id. at *1. The Second Circuit noted that “the district court’s method of dismissing part of

Samuel’s complaint by anticipating an inability to prevail on summary judgment was

questionable,” but concluded that the judgment could be affirmed on other grounds. Id. The

court held that “[i]n the context of the fantastic and delusional nature of the majority of his

complaint, Samuel failed to allege sufficient facts to render plausible his conclusory assertion

that the defendants discriminated against him on the basis of his membership in a protected

class,” and that “[a]ccordingly, Samuel ha[d] not created a reasonable inference that Bellevue

Hospital Center [wa]s liable for the misconduct alleged.” Id. (citing Iqbal, 129 S. Ct. at
125

1949).

• Hayden v. Paterson, 594 F.3d 150 (2d Cir. 2010). The complaint challenged the validity of

New York’s constitutional provision that required the legislature to enact felon

disenfranchisement laws and a New York election law that disenfranchised convicted felons

who were incarcerated or on parole. Id. at 154. The plaintiffs alleged that these enactments

violated their rights under the Voting Rights Act of 1965 (VRA); the First, Fourteenth and

Fifteenth Amendments to the Constitution; the Civil Rights Acts of 1957 and 1960; and

customary international law. Id. The defendants moved for judgment on the pleadings under

Rule 12(c). Id. The district court dismissed the VRA claim, and the Second Circuit, sitting

en banc, had previously affirmed that decision, finding that the VRA did not apply to

prisoner disenfranchisement laws. Id. at 155. The district court also held that the factual

allegations were not sufficient to state claims under the Fourteenth and Fifteenth

Amendments because the allegations did not support finding that New York’s constitutional

provision requiring the legislature to disenfranchise felons was passed with discriminatory

intent and because “New York’s non-uniform legislative practice of disenfranchising only

those felons sentenced to incarceration or serving parole ‘[wa]s entirely rationale.’” Id. The

only issues on appeal were whether the district court erred in finding that the plaintiffs failed

to allege facts to support the intentional discrimination and equal protection claims. Hayden,

594 F.3d at 155.

The constitutional provision at issue “require[d] the legislature to ‘enact laws excluding from

the right of suffrage all persons convicted of bribery or of any infamous crime,’” and the state

statute at issue “prohibit[ed] convicted felons from voting while they [we]re serving a prison

sentence or while they [we]re on parole following a prison sentence.” Id. The statute

allowed felons to vote if they had completed their sentences or had never been sentenced to

a term of imprisonment. Id. The complaint alleged that there was a history of racial

discrimination in New York’s disenfranchisement laws, that the state statute was disparately

applied, and that there were racial disparities in the disenfranchisement rates of certain

minorities. Id. at 157. “[P]laintiffs contend[ed] that New York’s constitutional provision

mandating felon disenfranchisement was enacted with the intent to discriminate against

persons on account oftheirrace in violation ofthe Equal Protection Clause of the Fourteenth

Amendment and the Fifteenth Amendment.” Id. “Plaintiffs further argue[d] that New

York’s felon disenfranchisement scheme violate[d] equal protection guarantees because it

distinguish[ed] among felons in an unconstitutional manner by denying the right to vote only

to those felons sentenced to incarceration or serving parole and not to those who ha[d] their

prison sentence suspended or who [we]re sentenced to probation.” Id. The Second Circuit

described the complaint’s factual allegations as follows:

New York has historically used a wide variety of mechanisms to

discriminate against minority voters. “Throughout the New York

Constitutional Conventions addressing the right of suffrage, the

framers made explicit statements of intent to discriminate against

minority voters.” “Delegates created certain voting requirements that
126

expressly applied only to racial minorities and crafted other

provisions with seemingly neutral language that they knew would

have a discriminatory effect on racial minorities. The

disenfranchisement of felons was one aspect of this effort to deprive

minorities of the right to vote.” For example, plaintiffs’ complaint

alleges that in 1777, the framers initially excluded minorities “by

limiting suffrage to property holders and free men,” but then as more

Blacks became property holders and freemen, the legislature removed

all property restrictions and instead expressly excluded Blacks from

participating in the 1801 election of constitutional delegates.

Furthermore, “[a]t the second New York Constitutional

Convention in 1821, the delegates met to addressthe issue of suffrage

generally and Black suffrage in particular”; the conversation “sparked

heated discussions, during which many delegates expressed the view

that racial minorities were essentially unequipped to participate in

civil society,” and “[s]ome delegates made explicit statements

regarding Blacks’ natural inferiority and unfitness for suffrage.” For

example, one delegate to the 1821 convention instructed his

colleagues to “[l]ook to your jails and penitentiaries. By whom are

they filled? By the very race, whom it is now proposed to cloth [sic]

with the power of deciding upon your political rights.” Another

delegate urged his fellow delegates to “[s]urvey your prisons—your

alms-houses—your bridewells and your penitentiaries, and what a

darkening host meets your eye! More than one-third of the convicts

and felons which those walls enclose, are of your sable population.”

Another argued that the “right of suffrage” should be “extended to

White men only.”

“Based on their belief in Blacks’ unfitness for democratic

participation, the delegates designed new voting requirements aimed

at stripping Black citizens of their previously held right to vote.”

“Article II of the Constitution of 1821 incorporated the new

discriminatory restrictions and contained new and unusually high

property requirements that expressly applied only to men of color.

Only [a tiny percentage of the total] Black population met these

requirements. Article II also provided new citizenship requirements

that applied only to men of color. Id.” As one delegate to the 1821

Constitutional Convention explained, while the new property

qualification “did not directly restrict the right to vote to the ‘White’

male, as some had desired, nevertheless, the same result was

accomplished by inserting property qualifications . . . that were not

required for the White man.” “Article IIfurther restricted the suffrage

of minorities by permitting the state legislature to disenfranchise
127

persons ‘who have been, or may be, convicted of infamous crimes.’

N.Y. CONST. art. II, § 2. Through common law and legislative

interpretation, ‘infamous crimes’ came to mean traditional felonies.”

In 1826, an amendment to the New York Constitution abolished all

property qualifications for White male suffrage, but left intact the

unduly onerous property requirements for Black males.

In 1846, at the third Constitutional Convention of New York,

“heated debates over suffrage again focused on Blacks. Advocating

for the denial of equal suffrage, delegates continued to make explicit

statements regarding Blacks’ unfitness for suffrage, including a

declaration that the proportion of ‘infamous crime’ in the minority

population was more than thirteen times that in the White

population.” “Felon disenfranchisement was further solidified in the

Convention of 1846. As amended, the relevant constitutional

provision stated: ‘Laws may be passed excluding from the right of

suffrage all persons who have been or may be convicted of bribery,

of larceny, or of any infamous crime . . . .’ N.Y. Const. art. II, § 2

(amended 1894) (emphasis added).” “When re-enacting the felon

disenfranchisement provision and specifically including ‘any

infamous crime’ in the category of convictions that would disqualify

voters, the delegates were acutely aware that these restrictions would

have a discriminatory impact on Blacks.” At the 1866–1867 fourth

Constitutional Convention of New York, “after engaging in heated

debates,” legislators “rejected various proposals to expand suffrage

and instead chose to maintain racially discriminatory property

qualifications.”

New York’s explicit racially discriminatory suffrage

requirements were in place until voided by the adoption of the

Fifteenth Amendment to the United States Constitution in 1870.

Under § 1 of the Fifteenth Amendment, “The right of citizens of the

United States to vote shall not be denied or abridged by the United

States or by any State on account of race, color, or previous condition

of servitude.” “[T]wo years after the passage of the Fifteenth

Amendment, an unprecedented committee convened and amended the

disenfranchisement provision of the New York Constitution to

require the state legislature, at its following session, to enact laws

excluding persons convicted of infamous crimes from the right to

vote. N.Y. CONST. art. II, § 2 (amended 1894). Theretofore, the

enactment of such laws was permissive.”

Hayden, 594 F.3d at 157–59 (alterations in original) (internal citations and footnotes

omitted). However, the court noted that “[u]nlike the allegations just described, plaintiffs’
128

complaint include[d] no specific factual allegations of discriminatory intent that post-date

1874.” Id. at 159. The court explained:

For example, with regard to the present constitutional provision that

remains in force today and that was enacted in 1894, plaintiffs simply

state that “[i]n 1894, at the Constitutional Convention following the

[1874 New York constitutional amendment], the delegates

permanently abandoned the permissive language and adopted a

constitutional requirement that the legislature enact

disenfranchisement laws.” Plaintiffs further allege that this is the

constitutional provision “pursuant to which § 5-106 of the New York

State Election Law was enacted and under which persons incarcerated

and on parole for felony convictions are presently disenfranchised in

New York State.” As is apparent from this quoted language,

plaintiffs’ amended complaint does not allege any facts as to

discriminatory intent behind the delegates’ adoption of the 1894

constitutional provision, which is still in effect today. Nor do

plaintiffs make any non-conclusory factual allegations of

discriminatory intent with respect to the enactment of, and subsequent

amendments to, New York’s felon disenfranchisement statute.

Id. (alterations in original).

With respect to the allegation that New York’s laws had a disparate impact on particular

groups, the plaintiffs alleged that “Blacks and Latinos in New York are prosecuted,

convicted, and sentenced to incarceration at rates substantially disproportionate to Whites,”

and cited statistics from the 2000 census. Id. at 159–60. The complaint also alleged that

“‘Blacks and Latinos are sentenced to incarceration at substantially higher rates than Whites,

and Whites are sentenced to probation at substantially higher rates than Blacks and Latinos,”

again citing statistics to back up this assertion. Id. at 160.

The Second Circuit held that while “plaintiffs’ allegations [were] sufficient with regard to

the 1821, 1846, and 1874 constitutional provisions, . . . plaintiffs fail[ed] to allege any nonconclusory facts to support a finding of discriminatory intent as to the 1894 provision or

subsequent statutory enactments.” Id. at 161. The court “conclude[d] that plaintiffs fail[ed]

to state a claim that [wa]s plausible on its face or, stated differently, that ‘nudge[d] [their]

claims of invidious discrimination across the line from conceivable to plausible.’” Id. (fourth

alteration in original) (quoting Iqbal, 129 S. Ct. at 1951). The Second Circuit remanded to

allow the plaintiffs to seek leave to amend. Hayden, 594 F.3d at 161.

The court began its analysis by identifying the conclusory allegations that were not entitled

to an assumption of truth. The court stated:

Plaintiffs allege, for example, that “[t]he disenfranchisement of felons
129

was one aspect of [constitutional delegates adopting certain voting

requirements] to deprive minorities of the right to vote,” which is a

“bare assertion[ ] . . . amount[ing] to nothing more than a formulaic

recitation of the elements of a constitutional discrimination claim,”

Iqbal, 129 S. Ct. at 1951 (internal quotation marks omitted) . . . .

Similarly, plaintiffs’ allegation that the 1821 Constitution “further

restricted the suffrage of minorities by permitting the state legislature

to disenfranchise persons ‘who have been, or may be, convicted of

infamous crimes’” is conclusory, for whether the facially neutral

disenfranchisement provision “restricted the suffrage of minorities”

in effect and intent is the very assertion that plaintiffs must prove.

Finally, plaintiffs allege that New York Election Law § 5-106(2) “was

enacted pursuant to . . . the New York State Constitution with the

intent to disenfranchise Blacks,” which is not only a bare assertion,

but is the only allegation in plaintiffs’ amended complaint that New

York’s felon disenfranchisement statutory provisions were enacted

with discriminatory intent.

Id. at 161–62 (alterations and first and third omissions in original) (internal citations

omitted). The court explained that after setting aside the conclusory allegations, it still found

that the plaintiffs had alleged enough facts to show that the 1821, 1846, and 1874

constitutional provisions were enacted with a racially discriminatory purpose, but that, “fatal

to plaintiffs’ intentional discrimination claim, they ha[d] failed to allege that this invidious

purpose motivated the enactment of either the 1894 constitutional provision or any of the

statutory provisions.” Id. at 162. The court also concluded that the “plaintiffs d[id] not

plausibly allege that the 1971 or 1973 amendments to New York Election Law § 5-106(2)

were enacted because of the 1894 Constitution’s mandate that the legislature enact felon

disenfranchisement laws.” Id.

With respect to Iqbal’s second prong, the court concluded that although “plaintiffs

undoubtedly ha[d] alleged sufficient facts to establish the disproportionate impact of New

York’s felon disenfranchisement laws on Blacks and Latinos, as compared with Whites[,]

[t]he question remain[ed] . . . as to whether plaintiffs ha[d] sufficiently ‘traced’ that impact

‘to a purpose to discriminate on the basis of race,’ thereby stating a plausible claim of

intentional race discrimination.” Id. at 164 (internal citations omitted). The court explained:

As an initial matter, we find that plaintiffs have alleged

sufficient facts to support a plausible claim that the 1821, 1846, and

1874 felon disenfranchisement constitutional provisions were passed

at least in part because of their adverse effects on Blacks. First,

plaintiffs allege that during the New York Constitutional Convention

in 1821, there were “heated discussions” during which delegates

expressed the view that Blacks were “natural[ly] inferior[ ] and unfit[

] for suffrage.” Plaintiffs further allege that specific property and
130

citizenship requirementstied to voting, which expressly applied only

to Blacks, were incorporated in the Constitution of 1821. Second,

plaintiffs assert that at the Constitutional Convention in 1846, “heated

debates” continued regarding Blacks’ unfitness for suffrage,

“including a declaration that the proportion of [felonies committed]

in the minority population was more than thirteen times that in the

White population.” Finally, plaintiffs state that New York’s explicit

discriminatory suffrage requirements were in place until voided by

the adoption of the Fifteenth Amendment in 1870, but that “two years

after the passage of the Fifteenth Amendment, an unprecedented

committee convened and amended the disenfranchisement provision

of the New York Constitution to require the state legislature, at its

following session, to enact laws excluding persons convicted of

infamous crimes from the right to vote.” Drawing all reasonable

inferences in favor of plaintiffs based on these well-pleaded factual

allegations, we find that plaintiffs satisfy the Iqbal plausibility

standard as to the alleged discriminatory intent behind the pre-1894

constitutional provisions.

Id. at 164–65 (alterations in original) (internal citations omitted). The court noted that

“[a]lthough plaintiffs’ allegations as to the 1874 enactment [we]re less direct than their

allegations as to prior constitutional enactments, [it was] satisfied that the alleged close

temporal proximity to the passage of the Fifteenth Amendment and the ‘unprecedented’

nature of the committee convened indicate[d] a ‘[d]eparture[ ] from . . . normal

procedur[es],’ which ‘might afford evidence that improper purposes [we]re playing a role.’”

Hayden, 594 F.3d at 165 n.13 (fifth, sixth, and seventh alterations and omission in original).

But the court explained that the plausibility of the allegations regarding the pre-1894

constitutional provisions did not resolve the relevant issue:

The issue we are confronted with here, though, is whether the

enactment of the 1894 constitutional provision, albeit preceded by

earlier provisions that plausibly admit of racist origins, can support

an equal protection claim. More specifically, the issue here is

whether plaintiffs adequately allege intentional discrimination where

they have pleaded sufficient factual matter to plausibly show that the

1821, 1846, and 1874 enactments were motivated by a discriminatory

purpose, but where they have not made any adequately supported

factual allegations of impermissible motive affecting the delegates to

the 1894 convention.

Id. at 165. The court concluded that “under these circumstances, plaintiffs fail[ed] to state

a plausible claim of intentional discrimination as to the enactment of the 1894 constitutional

provision, which continues in effect today.” Id. at 165–66. The court stated:
131

Here, the 1894 amendment to New York’s constitutional

provision was not inconsequential. The provision that existed until

that time, as amended in 1874, provided that the legislature was

required to pass a felon disenfranchisement law at its next session,

but thereafter the passage of such laws was left to the legislature’s

discretion, as it had always been. In 1894, however, the constitutional

delegates made permanent the mandatoryaspect ofthe provision, and

felon disenfranchisement laws have been required in New York ever

since. This amendment served to substantively change how

legislatures were permitted to consider, or no longer consider,

whether felon disenfranchisement laws should be passed—such laws

were mandated. Given this substantive amendment to New York’s

constitutional provision and the lack of any allegations by plaintiffs

of discriminatory intent “reasonably contemporaneous with the

challenged decision,” we cannot hold that plaintiffs state a plausible

claim of intentional discrimination as to the 1894 constitutional

provision, which is the bridge necessary for plaintiffs to sufficiently

trace any disparate impact of New York Election Law § 5-106(2) “to

a purpose to discriminate on the basis of race[.]”

Id. at 167 (internal citations omitted). The court said it was not concerned about the

possibility that lawmakers might avoid challenges by reenacting a law originally enacted with

discriminatory intent, without significant changes, because “(i) plaintiffs ha[d] not alleged

any such bad faith on the part of the 1894 delegates; (ii) the 1894 amendment was not only

deliberative, but was also substantive in scope; and (iii) there [we]re simply no nonconclusory allegations of any kind as to discriminatory intent of the 1894 delegates . . . .”

Id. The court noted that there was a more likely explanation for the constitution provision,

citing both Iqbal and pre-Twombly case law:

Moreover, not only is a discriminatory purpose not alleged with

respect to the 1894 enactment, but an “‘obvious alternative

explanation’” exists to support the propriety of the 1894 enactment.

See Iqbal, 129 S. Ct. at 1951–52 (quoting Twombly, 550 U.S. at 567,

127 S. Ct. 1955). As defendants contend, “prisoner

disenfranchisement is more likely the product of legitimate motives

than invidious discrimination,” as demonstrated by its adoption in

virtually every state, its affirmative sanction in § 2 of the Fourteenth

Amendment, and its widespread support among New York

politicians. In some cases, “notwithstanding [discriminatory]

impact[,] the legitimate noninvidious purposes of a law cannot be

missed.” [Pers. Adm’r of Mass. v.] Feeney, 442 U.S. [256,] 275, 99

S. Ct. 2282 [(1979)] (explaining that the distinction made by the

Massachusetts veterans preference law “is, as it seems to be, quite

simply between veterans and nonveterans, not between men and
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women”);see also Soberal-Perez v. Heckler, 717 F.2d 36, 42 (2d Cir.

1983) (affirming dismissal of equal protection challenge to Secretary

of Health and Human Services’ failure to provide forms in Spanish

because plaintiffs failed to suggest any evidence of discriminatory

intent and legitimate noninvidious purpose was obvious), cert.

denied, 466 U.S. 929, 104 S. Ct. 1713, 80 L. Ed. 2d 186 (1984).

Absent any adequately supported factual allegations as to

discriminatory intent behind the enactment ofthe 1894 constitutional

provision, we are compelled to find that the New York Constitution’s

requirement that the legislature pass felon disenfranchisement laws

is based on the obvious, noninvidious purpose of disenfranchising

felons, not Blacks or Latinos.

Id. at 167–68 (first and second alterations in original) (internal citations and footnote

omitted). The court continued:

Finally, there is anotherindependent basis for our holding that

plaintiffs fail to state a plausible claim of intentional discrimination.

The 1894 constitutional provision, and all earlier constitutional

provisions, simply authorize the New York legislature to enact felon

disenfranchisement laws. That is, the constitutional provision does

not operate to deny plaintiffs the right to vote, rather the statutory

enactment pursuant to the constitutional provision does. Therefore,

plaintiffs either must allege that the statutory enactments were

motivated at least in part by discriminatory intent—which they have

completely failed to do in their amended complaint—or they must

state a plausible claim that New York Election Law § 5-106 and all

of its prior amendments were in fact passed because of the 1894

constitutional provision’s mandate. It is possible that the legislature

has acted since 1894 to enact felon disenfranchisement laws because

it was required to under the constitutional provision. But given the

more likely explanations discussed above and the laws’ obvious,

noninvidious distinction between felons and non-felons, it is not

plausible, at least as plaintiffs’ allegations presently read, that the

New York legislature would have rejected a felon disenfranchisement

statute if the statute had not been constitutionally required.

Hayden, 594 F.3d at 168–69 (footnote omitted).

The court determined that the appropriate course was to remand to allow the plaintiffs to seek

leave to amend:

Accordingly, plaintiffs’ amended complaint fails to state a plausible

claim that New York’s felon disenfranchisement laws were enacted
133

with discriminatory intent. Although they have alleged sufficient

facts to support a claim that the 1821, 1846, and 1874 constitutional

provisions were motivated at least in part by discriminatory intent,

they fail to allege any facts to support a claim that the 1894

constitutional provision or any of the New York legislature’s statutory

enactments were passed because of racial animus. However, in light

of Federal Rule of Civil Procedure 15’s suggestion that a “court

should freely give leave [to amend] when justice so requires,” FED.

R. CIV. P. 15(a)(2), and our preference to allow a district court to

evaluate such a motion by plaintiffs in the first instance, see Iqbal v.

Ashcroft, 574 F.3d 820, 822 (2d Cir. 2009) (per curiam), we will

remand to the District Court to allow plaintiffs to seek leave to amend

their deficient complaint as to this claim.

Id. at 169 (alteration in original).

With respect to the claim that New York’s statute violated the Equal Protection Clause of the

Fourteenth Amendment because it distinguishes among felons, the court found that under the

relevant case law, rational basis review applied. See id. at 169–70. The legislative history

explained the reasons for enactment of the statutes, and the Second Circuit concluded that

the statutes passed the rational basis review, and that dismissal was appropriate. See id. at

171.

• Starr v. Sony BMG Music Entm’t, 592 F.3d 314 (2d Cir. 2010), cert. denied, 131 S. Ct. 901

(2011). The complaint alleged a claim under Section 1 of the Sherman Act, asserting a

conspiracy by major recording labels to fix prices and terms under which their music would

be sold over the Internet. Id. at 317. The complaint alleged: “Defendants produce, license

and distribute music sold as digital files (‘Digital Music’) online via the Internet (‘Internet

Music’) and on compact discs (‘CDs’). Together, defendants EMI, Sony BMG Music

Entertainment (‘Sony BMG’), Universal Music Group Recordings, Inc. (‘UMG’), and

Warner Music Group Corp. (‘WMG’), control over 80% of Digital Music sold to end

purchasers in the United States.” Id. at 318. The complaint further alleged that “defendants

Bertelsmann, Inc. (‘Bertelsmann’), WMG, and EMI agreed to launch a service called

MusicNet,” and “Defendants UMG and Sony Corporation (‘Sony’) agreed to launch a service

called Duet, later renamed pressplay,” and that “[a]ll defendants signed distribution

agreements with MusicNet or pressplay and sold music directly to consumers over the

Internet through these ventures (the ‘joint ventures’).” Id. The complaint explained that

“[t]o obtain Internet Music from all major record labels, a consumer initially would have had

to subscribe to both MusicNet and pressplay, at a cost of approximately $240 per year,” and

that “[b]oth services required customers to agree to unpopular Digital Rights Management

terms (‘DRMs’).” Id. The DRMs included limitations such as prohibiting customers from

copying more than two songs from the same artist within a month, providing that music

would expire unless repurchased, and prohibiting the transfer of songs from a customer’s

computer to portable music players. Id. According to the complaint, “[o]ne industry
134

commentator observed that MusicNet and pressplay did not offer reasonable prices, and one

prominent computer industrymagazine concluded that ‘nobody in their right mind will want

to use’ these services.” Id. The complaint also alleged that despite the dramatic decrease in

costs of selling music over the Internet as compared to selling CDs, “these dramatic cost

reductions were not accompanied by dramatic price reductions for Internet Music, as would

be expected in a competitive market.” Starr, 592 F.3d at 318. “Eventually, defendants and

the joint ventures began to sell Internet Music to consumers through entities they did not own

or control,” but “the entities could only sell defendants’ music if they contracted with

MusicNet to provide Internet Music for the same prices and with the same restrictions as

MusicNet itself or other MusicNet licensees,” and “[i]f the licensee attempted to license

music from another company, defendants forced them to pay penalties or terminated their

licenses.” Id. The complaint also stated that “each defendant was paid shares of the total

revenue generated by a joint venture licensee, rather than on a per song basis, linking each

defendant’s financial interest in the joint venture to the total sales of all labels rather than to

its own market share.” Id. at 318–19. In addition, the complaint alleged that “Defendants

also used Most Favored Nation clauses (‘MFNs’) in their licenses that had the effect of

guaranteeing that the licensor who signed the clause received terms no less favorable than

the terms offered to other licensors,” and that “Defendants attempted to hide the MFNs

because they knew they would attract antitrust scrutiny.” Id. at 319. Further, “[a]fter

services other than defendants’ joint ventures began to distribute defendants’ Internet Music,

defendants ‘agreed’ to a wholesale price floor of 70 cents per song, which they enforced in

part through MFN agreements.” Id. (footnote omitted). According to the complaint,

“[w]hereas eMusic, the most popular online music service selling Internet Music owned by

independent labels, currently charges $0.25 per song and places no restrictions on how

purchasers can upload their music to digital music players (like the iPod) or burn to CDs,

defendants’ wholesale price is more than double, about $0.70 per song,” and “all defendants

refuse to do business with eMusic, the # 2 Internet Music retailer behind only the iTunes

store.” Id. The complaint also alleged that the defendants’ activities were being investigated

by the New York State Attorney General and the Department of Justice. Starr, 592 F.3d at

319.

The complaint asserted claims under Section 1 of the Sherman Act and state antitrust and

unfair and deceptive trade practices statutes, and also asserted state common law claims for

unjust enrichment. Id. at 320. At oral argument in the district court, the plaintiffs sought

leave to amend paragraph 99 of the complaint to allege a parallel price increase. Id. The

district court held that the complaint did not state a claim under Twombly, finding that the

“plaintiffs did not challenge the existence or creation of the joint ventures and the operation

of the joint ventures therefore did not yield an inference of illegal agreement,” and that “the

plaintiffs’ ‘bald allegation that the joint ventures were shams [wa]s conclusory and

implausible.’” Id. The district court also concluded that the “plaintiffs did not challenge the

joint ventures’ ‘explicit agreement,’ and any inference ‘of subsequent agreement based on

prior, unchallenged explicit agreement [wa]s unreasonable’”; that “other circumstances

alleged by plaintiffs were ‘equivocal’ and did not justify the inference of agreement”; and

that “the imposition of the unpopular DRMs and pricing structure was not against
135

defendants’ individual economic self-interest when viewed against the backdrop of

widespread music piracy.” Id. The district court denied the motion for leave to amend as

futile. Id. at 320–21.

The Second Circuit cited Twombly to differentiate between the standards for summary

judgment and dismissal on the pleadings: “While for purposes of a summary judgment

motion, a Section 1 plaintiff must offer evidence that ‘tend[s] to rule out the possibility that

the defendants were acting independently,’ to survive a motion to dismiss under Rule

12(b)(6), a plaintiff need only allege ‘enough factual matter (taken as true) to suggest that an

agreement was made.’” Starr, 592 F.3d at 321 (internal citation omitted). The court

concluded that the district court had erred by dismissing the complaint under Twombly:

Applying the language and reasoning of Twombly to the facts

of this case leads us to conclude respectfully that the district court

erred in dismissing the complaint for failure to state a Section 1

claim. The present complaint succeeds where Twombly’s failed

because the complaint alleges specific facts sufficient to plausibly

suggest that the parallel conduct alleged was the result of an

agreement among the defendants. As discussed above, the complaint

contains the following non-conclusory factual allegations of parallel

conduct. First, defendants agreed to launch MusicNet and pressplay,

both of which charged unreasonably high prices and contained similar

DRMs. Second, none of the defendants dramatically reduced their

prices for Internet Music (as compared to CDs), despite the fact that

all defendants experienced dramatic cost reductions in producing

Internet Music. Third, when defendants began to sell Internet Music

through entities theydid not own or control, they maintained the same

unreasonably high prices and DRMs as MusicNet itself. Fourth,

defendants used MFNs in their licenses that had the effect of

guaranteeing that the licensor who signed the MFN received terms no

less favorable than terms offered to other licensors. For example,

both EMI and UMG used MFN clauses in their licensing agreements

with MusicNet. Fifth, defendants used the MFNs to enforce a

wholesale price floor of about 70 cents per song. Sixth, all

defendants refuse to do business with eMusic, the # 2 Internet Music

retailer. Seventh, in or about May 2005, all defendants raised

wholesale prices from about $0.65 per song to $0.70 per song. This

price increase was enforced by MFNs.

Id. at 323 (footnote omitted). The court also held that “[b]ecause the proposed amendment

to paragraph ninety-nine of the [complaint] contained, along with the remainder of the

complaint, ‘enough fact to raise a reasonable expectation that discovery will reveal evidence

of illegal agreement,’ the district court erred in denying the motion to amend on the ground

of futility.” Id. at 323 n.3 (internal citation omitted). The court elaborated:
136

More importantly, the following allegations, taken together,

place the parallel conduct “in a context that raises a suggestion of a

preceding agreement, not merely parallel conduct that could just as

well be independent action.” Twombly, 550 U.S. at 557, 127 S. Ct.

1955. First, defendants control over 80% of Digital Music sold to

end purchasers in the United States. Second, one industry

commentator noted that “nobody in their right mind” would want to

use MusicNet or pressplay, suggesting that some form of agreement

among defendants would have been needed to render the enterprises

profitable. Third, the quote from Edgar Bronfman, the current CEO

of WMG, suggests that pressplay was formed expressly as an effort

to stop the “continuing devaluation of music.”

Fourth, defendants attempted to hide their MFNs because they

knew they would attract antitrust scrutiny. For example, EMI and

MusicNet’s MFN, which assured that EMI’s core terms would be no

less favorable than Bertelsmann’s or WMG’s, was contained in a

secret side letter. “EMI CEO Rob Glaser decided to put the MFN in

a secret side letter because ‘there are legal/antitrust reasons why it

would be bad idea to have MFN clauses in any, or certainly all, of

these agreements.” According to the executive director of the Digital

Music Association, seller-side MFNs are “inherently price-increasing

and anticompetitive.”

Fifth, whereas eMusic charges $0.25 per song, defendants’

wholesale price is about $0.70 per song. Sixth, defendants’

price-fixing is the subject of a pending investigation by the New York

State Attorney General and two separate investigations by the

Department of Justice. Finally, defendants raised wholesale prices

from about $0.65 per song to $0.70 per song in or about May 2005,

even though earlier that year defendants’ costs of providing Internet

Music had decreased substantially due to completion of the initial

digital cataloging of all Internet Music and technological

improvements that reduced the costs of digitizing new releases.

This complaint does not resemble those our sister circuits

have held fail to state a claim under Twombly. See, e.g., Rick-Mik

Enters., Inc. v. Equilon Enters., LLC, 532 F.3d 963, 975–976 (9th

Cir. 2008) (dismissing Section 1 price fixing complaint under

Twombly where complaint alleged only that defendant conspired with

“numerous” banks to fix the price of credit and debit card processing

fees and received kickbacks from “numerous” banks as consideration

for its unlawful agreement); Kendall v. Visa U.S.A., Inc., 518 F.3d

1042, 1048–50 (9th Cir. 2008) (where plaintiffs alleged no facts to
137

support their theory that defendant banks conspired or agreed with

each other, dismissing Section 1 claim because plaintiffs pleaded only

legal conclusions, and “failed to plead the necessary evidentiary facts

to support those conclusions”).

Id. at 323–24 (internal citations omitted). The court rejected the defendants’ arguments for

dismissal:

Defendants’ arguments that plaintiffs have failed to state a

claim are without merit. Defendants first argue that a plaintiff

seeking damages under Section 1 ofthe Sherman act must allege facts

that “tend[ ] to exclude independent self-interested conduct as an

explanation for defendants’ parallel behavior.” This is incorrect.

Although the Twombly court acknowledged that for purposes of

summary judgment a plaintiff must present evidence that tends to

exclude the possibility of independent action, 550 U.S. at 554, 127 S.

Ct. 1955, and that the district court below had held that plaintiffs

must allege additional facts that tended to exclude independent

self-interested conduct, id. at 552, 127 S. Ct. 1955, it specifically held

that, to survive a motion to dismiss, plaintiffs need only “enough

factual matter (taken as true) to suggest that an agreement was made,”

id. at 556, 127 S. Ct. 1955; see also 2 Areeda & Hovenkamp § 307d1

(3d ed. 2007) (“[T]he Supreme Court did not hold that the same

standard applies to a complaint and a discovery record. . . . The

‘plausibly suggesting’ threshold for a conspiracy complaint remains

considerably less than the ‘tends to rule out the possibility’ standard

for summary judgment.”).

Defendants next argue that Twombly requires that a plaintiff

identify the specific time, place, or person related to each conspiracy

allegation. This is also incorrect. The Twombly court noted, in dicta,

that had the claim of agreement in that case not rested on the parallel

conduct described in the complaint, “we doubt that the . . . references

to an agreement among the [BabyBells] would have given the notice

required by Rule 8 . . . [because] the pleadings mentioned no specific

time, place, or person involved in the alleged conspiracies.” 550

[U.S.] at 565 n. 10. In this case, as in Twombly, the claim of

agreement rests on the parallel conduct described in the complaint.

Therefore, plaintiffs were not required to mention a specific time,

place or person involved in each conspiracy allegation.

Defendants then argue that inferring a conspiracy from the

facts alleged is unreasonable because plaintiffs’ allegations “are the

very same claims that were thoroughly investigated and rejected by
138

the Antitrust Division of the Department of Justice,” which closed its

inquiry in December 2003 and publicly announced that it had

uncovered no evidence that the joint ventures had harmed

competition or consumers of digital music. Even if we could

consider this evidence on a motion to dismiss, defendants cite no case

to support the proposition that a civil antitrust complaint must be

dismissed because an investigation undertaken by the Department of

Justice found no evidence of conspiracy. Second, this argument

neglects the fact that the complaint alleges that the Department of

Justice has, since 2003, launched two new investigations into whether

defendants engaged in collusion and price fixing and whether

defendants misled the Department about the formation and operation

of MusicNet and pressplay.

Id. at 325 (first, second, third, and fourth alterations in original) (internal citations omitted).

The court also rejected the defendants’ argument that “the conduct alleged in the complaint

‘would be entirely consistent with independent, though parallel, action.’” Id. at 327. The

court explained that “[u]nder Twombly, allegations of parallel conduct that could ‘just as well

be independent action’ are not sufficient to state a claim,” but that “in this case plaintiffs

ha[d] alleged behavior that would plausibly contravene each defendant’s self-interest ‘in the

absence of similar behavior by rivals.’” Starr, 592 F.3d at 327. The court explained that

“[f]or example, it would not be in each individual defendant’s self-interest to sell Internet

Music at prices, and with DRMs, that were so unpopular as to ensure that ‘nobody in their

right mind’ would want to purchase the music, unless the defendant’s rivals were doing the

same.” Id. The court remanded the case for additional proceedings. Id.

Judge Newman wrote a separate concurring opinion “to explore a perplexing aspect of the

Supreme Court’s decision in Bell Atlantic v. Twombly . . . .” Id. at 328 (Newman, J.,

concurring). Judge Newman was concerned about the statement in the Twombly opinion that

“‘[w]hile a showing of parallel ‘business behavior is admissible circumstantial evidence from

which the fact finder may infer agreement,’ it falls short of ‘conclusively establish[ing]

agreement or . . . itself constitut[ing] a Sherman Act offense.’” Id. (second and third

alterations and omission in original) (quoting Twombly, 550 U.S. at 553). Judge Newman

noted that the Twombly Court had relied on a case involving dismissal of an antitrust claim

at the directed verdict stage:

If, as the Court states in the first part of this sentence, a fact-finder is

entitled to infer agreement from parallel conduct, one may wonder

why a complaint alleging such conduct does not survive a motion to

dismiss. The answer is surely not supplied by the remainder of the

Court’s sentence. That portion states the unexceptional proposition

that parallel conduct alone is not conclusive evidence of an agreement

to fix prices. To support that proposition, the Court cites Theatre

Enterprises. But that case was an appeal by an antitrust plaintiff
139

whose complaint had survived a motion to dismiss. Indeed, that

plaintiff had been permitted to present its evidence to a jury, only to

have the jury reject on the merits the claim of a section 1 violation.

The plaintiff sought review on the ground that the trial court had erred

in not granting a motion for a directed verdict in the plaintiff’s favor.

See Theatre Enterprises, 346 U.S. at 539, 74 S. Ct. 257. The

Supreme Court understandably found no error. See id. at 539–42, 74

S. Ct. 257. In Twombly, the Court noted the extraordinary claim that

the Theatre Enterprises plaintiff had made. “An antitrust conspiracy

plaintiff with evidence showing nothing more than parallel conduct

is not entitled to a directed verdict.” Twombly, 550 U.S. at 554, 127

S. Ct. 1955 (emphasis added).

The fact that an allegation of parallel conduct was held insufficient to

require a directed verdict in the plaintiff’s favor is hardly a basis for

ruling that such an allegation is insufficient to survive a motion to

dismiss for failure to state a claim on which relief may be granted.

Id. Judge Newman noted that the Twombly decision was based on the context of the claim

at issue:

In view of the Court’s initial observation in Twombly that

parallel conduct is sufficient to support a permissible inference of an

agreement, the reason for the rejection of the complaint in Twombly

must arise from something other than the plaintiff’s reliance on

parallel conduct. That reason is not difficult to find. It is the context

in which the defendants’ parallel conduct occurred. “[W]hen

allegations of parallel conduct are set out in order to make a § 1

claim, they must be placed in a context that raises a suggestion of a

preceding agreement, not merely parallel conduct that could just as

well be independent action.” Id. at 557, 127 S. Ct. 1955.

The context in Twombly was the aftermath of the divestiture

of A[T] & T’s local telephone service, resulting in the creation of

seven Regional Bell Operating Companies, the so-called “Baby

Bells” or Incumbent Local Exchange Carriers (“ILECs”). See id. at

549, 127 S. Ct. 1955. Originally restricted to providing local

telephone service, the ILECs were later permitted by the

Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56

(Feb. 8, 1996), to enter the long-distance market upon compliance

with conditions concerning the opportunity for competitive local

exchange carriers (“CLECs”) to make use of an ILEC’s network. See

Twombly, 550 U.S. at 549, 127 S. Ct. 1955.
140

In that context, it was entirely understandable for the Court to

cast a jaundiced eye on the claim that the parallel conduct of these

newly created ILECs would suffice to permit an inference of

agreement.

Starr, 592 F.3d at 328–29 (Newman, J., concurring) (alteration in original). Judge Newman

noted that the Court had reemphasized in Iqbal that the sufficiency of a complaint will

depend on the context. Id. at 329. Judge Newman explained:

I believe it would be a serious mistake to think that the Court

has categorically rejected the availability of an inference of an

unlawful section 1 agreement from parallel conduct. Even in those

contexts in which an allegation of parallel conduct will not suffice to

take an antitrust plaintiff’s case to the jury, it will sometimes suffice

to overcome a motion to dismiss and permit some discovery, perhaps

leaving the issue for later resolution on a motion for summary

judgment.

In the pending case, . . . the context in which the defendants’

alleged parallel conduct occurred, amplified by specific factual

allegations making plausible an inference of agreement, suffices to

render the allegation of a section 1 violation sufficient to withstand

a motion to dismiss.

Id.

• Turkmen v. Ashcroft, 589 F.3d 542, 2009 WL 4877787 (2d Cir. Dec. 18, 2009) (per

curiam). Seven named plaintiffs, who were non-citizens detained on immigration charges

following September 11, 2001, filed a putative class action alleging “that on account of their

Arab or Muslim background (or perceived background), they were subjected to excessively

prolonged detention, abused physically and verbally, subjected to arbitrary and abusive strip

searches, and otherwise mistreated while in custody.” Id. at *1. The plaintiffs acknowledged

that they were in the country illegally and subject to removal, but asserted constitutional

violations based on the conditions of their confinement and the length of their detention,

which they alleged was “illegally prolonged so that the Government could investigate any

potential ties to terrorism.” Id. Among the 31 identified defendants were the United States,

former Attorney General John Ashcroft, FBI Director Robert Mueller, former Immigration

and Naturalization Service Commissioner James Ziglar, and officials and corrections officers

from the Metropolitan Detention Center. Id. “The United States, Ashcroft, Mueller, and

Ziglar, as well as four high-ranking MDC officials . . . moved to dismiss certain claims on

grounds that include[d] qualified immunity and failure to state a claim.” Id. (footnote

omitted). The district court denied the motions with respect to the conditions of

confinement, but granted dismissal with respect to the length of detention. Id. Both sides

appealed.
141

In considering the defendants’ challenge to the denial of dismissal for the claims based on

conditions of confinement, the court noted:

The district court ruled on the defendants’ motions to dismiss

prior to the Supreme Court’s decisions in Twombly and Iqbal. It

applied a standard ofreview under which it would not dismiss a claim

“unless it appears beyond doubt . . . that the plaintiff can prove no set

of facts which would entitle him to relief.” Now, following the

district court’s decision, Twombly and Iqbal require “a heightened

pleading standard in those contexts where factual amplification is

needed to render a claim plausible.” Ross v. Bank of America, N.A.

(USA), 524 F.3d 217, 225 (2d Cir. 2008) (internal quotation marks,

citations, brackets, and emphasis omitted). We could undertake to

decide whether the challenged claims satisfy the pleading standard of

Twombly and Iqbal; however, in the circumstances of this

case—where plaintiffs have already announced their intent to file a

Fourth Amended Complaint to preserve for the putative class the

claims asserted only by the settling plaintiffs—we think it better to

vacate that portion of the district court’s order denying dismissal of

the conditions of confinement claims on the ground that an outdated

pleading standard was applied, and to remand the case for further

proceedings consistent with the standard articulated in Twombly and

Iqbal.

Turkmen, 2009 WL 4877787, at *2 (internal citation omitted). The court stated that the

district court might, on remand, “grant plaintiffs leave to file the proposed Fourth Amended

Complaint to satisfy the heightened pleading standard,” but “decline[d] to consider whether

plaintiffs should be allowed to replead yet again because ‘[i]n the ordinary course, [the court

was] accustomed to reviewing a district court’s decision whether to grant or deny leave to

amend, rather than making that decision for [itself] in the first instance.’” Id. at *3 (quoting

Iqbal v. Ashcroft, 574 F.3d 820, 822 (2d Cir. 2009)). The court directed:

If the district court denies leave to file the proposed Fourth

Amended Complaint, it should evaluate the sufficiency of the Third

Amended Complaint in light of the settlement and the heightened

pleading standard. The district court can then address whether, under

Twombly and Iqbal, the Third Amended Complaint fails to state a

claim, or inadequately alleges the personal involvement of the

moving defendants, or entitles the moving defendants to qualified

immunity with respect to the conditions of confinement claims.

Id. The court emphasized that “[a]t this stage of proceedings, [the court] d[id] no more than

vacate the order denying the motions to dismiss with respect to the conditions of confinement
142

claims, and remand to the district court for further proceedings.” Id.

With respect to the dismissed claims based on the length of detention, the court noted that

these claims “allege[d] generally that defendants detained plaintiffs longer than necessary to

effect their removal (or voluntary departure) from the United States.” Id. The complaint

alleged that the defendants used the plaintiffs’ acknowledged “immigration violations ‘as a

cover, as an excuse’ to investigate whether plaintiffs were tied to terrorism.” Id. The

complaint alleged that the detentions constituted a seizure under the Fourth Amendment, a

violation of the Due Process Clause of the Fifth Amendment, and a violation of the equal

protection right encompassed in the Fifth Amendment. Turkmen, 2009 WL 4877787, at *3

& n.4. By statute, aliens ordered removed are to be removed by the Attorney General within

a 90-day “removal period,” and “[t]he government is required to detain an alien ordered

removed until removal is effected, at least for the removal period.” Id. at *3. Relevant

regulations provide that a review is conducted of the alien’s record to determine whether

detention is appropriate after the removal period, if removal cannot be completed during that

period. Id. The Second Circuit noted that in Zadvydas v. Davis, 533 U.S. 678 (2001), the

Supreme Court “accorded a presumption of reasonableness to six months’ detention for an

alien subject to an order of removal,” and that “thereafter, the alien’s continued detention

would be deemed unlawful ‘if (1) an alien demonstrate[d] that there [wa]s no significant

likelihood of removal in the reasonably foreseeable future and (2) the government [wa]s

unable to rebut this showing.’” Turkmen, 2009 WL 4877787, at *4 (quoting Wang v.

Ashcroft, 320 F.3d 130, 146 (2d Cir. 2003)) (footnote omitted). The court noted that

“Turkmen, Sachdeva, and two of the settling plaintiffs were detained for less than six

months,” and that their detentions “thus were presumptively reasonable.” Id. at *4 & n.5.

The court explained the district court’s analysis:

The district court, relying on Zadvydas and Wang, concluded

that plaintiffs failed to state a claim because “the complaint does not

allege that during the period of their detention there was no

significant likelihood of removal in the reasonably foreseeable

future.” The complaint alleged simply that the detentions were

“longer than necessary” to effectuate removal. As the district court

reasoned, recognizing such a claim as a violation of due process

would “flood the courts with habeas petitions brought by aliens

seeking to be removed as soon as they deemed it practicable.” The

district court explained that:

[Plaintiffs] assume that all that is required for the

Attorney General to secure removal is a deportation

order and an airplane. This assumption ignores

legitimate foreign policy considerations and

significant administrative burdens involved in

enforcing immigration law in general, and,

specifically, those concerns immediately following a
143

terrorist attack perpetrated on the United States by

non-citizens, some of whom had violated the terms of

their visas at the time of the attack.

Id. at *4 (internal citations omitted) (alteration in original). On appeal, the plaintiffs

“argue[d] that they were detained for a criminal investigation, and their detentions thus

constituted separate seizures requiring their own justification and probable cause.” Id. at *5.

The plaintiffs “assert[ed] that the Zadvydas standard identifies constitutional violations only

‘when removal isimpossible’; they submit[ted] that it is inadequate to identify constitutional

violations where, as alleged here, defendants employ[ed] ‘detention as an alternative to

removal.’” Id. (citation omitted). The Second Circuit disagreed:

In Whren v. United States, 517 U.S. 806, 813, 116 S. Ct. 1769, 135

L. Ed. 2d 89 (1996), the Supreme Court held that a law enforcement

official’s actual motivation for the Fourth Amendment seizure of a

person is constitutionally irrelevant if the seizure is supported by

probable cause. To the extent plaintiffs challenge their prolonged

detention after final orders of removal (or voluntary departure) were

entered against them, it is clear from the complaint that such

detention was supported by the IJs’ findings of removability, which

constitute a good deal more than probable cause. Because plaintiffs

were thus lawfully detained as aliens subject to orders of removal (or

voluntary departure), they could not state a claim for

unconstitutionally prolonged detention without pleading facts

plausibly showing “no significant likelihood of removal in the

reasonably foreseeable future.” Wang, 320 F.3d at 146; see also

Zadvydas, 533 U.S. at 699. In the absence of such a pleading,

plaintiffs’ challenge to their detention was properly dismissed under

Federal Rule of Civil Procedure 12(b)(6). Moreover, we need not

decide whether or under what circumstances aliens subject to removal

(or voluntary departure) orders could state claims for unconstitutional

detentions without satisfying Zadvydas. To the extent plaintiffs’

claims are not based on Zadvydas, the moving defendants are entitled

to qualified immunity.

Id. The court continued:

In light of the analysis above, plaintiffs can point to no

authority clearly establishing a due process right to immediate or

prompt removal (following an order of removal or voluntary

departure). The moving defendants therefore are entitled to qualified

immunity with respect to claim 2.

Assuming arguendo that the Fourth Amendment applies to
 In Bivens v. Six Unknown Named Agents of Federal Bureau of Narcotics, 403 U.S. 388 (1971), the Supreme Court 14

recognized a cause of action for damages against federal officers for violation of the Fourth Amendment.

144

post-arrest detention, probable cause would be required only if the

detentions at issue were not otherwise authorized. For reasons stated

above, the moving defendants had an objectively reasonable belief

that the detentions were authorized, and therefore are entitled to

qualified immunity with respect to claim 1.

Similarly, plaintiffs point to no authority clearly establishing

an equal protection right to be free of selective enforcement of the

immigration laws based on national origin, race, or religion at the

time of plaintiffs’ detentions. The moving defendants therefore are

entitled to qualified immunity with respect to claim 5 (to the extent

that claim 5 is based on the length of plaintiffs’ detentions).

Turkmen, 2009 WL 4877787, at *5–6 (internal citations omitted).

• Arar v. Ashcroft, 585 F.3d 559 (2d Cir. 2009) (en banc), cert. denied, 130 S. Ct. 3409, 2010

WL 290379 (2010). The plaintiff filed suit against the AttorneyGeneral of the United States,

the Secretary of Homeland Security, the Director of the FBI, and others, including senior

immigration officials, after he was allegedly detained while changing planes in New York.

Id. at 563. Arar alleged that he was mistreated for 12 days while in U.S. custody, then

removed to Syria via Jordan with the understanding that he would be detained, interrogated,

and tortured in Syria. Id. The complaint alleged violations of the Torture Victims Protection

Act (“TVPA”) and of his Fifth Amendment substantive due process rights based on the

conditions of his detention in the United States, the denial of access to counsel and the courts

in the United States, and his detention and torture in Syria. Id. The district court dismissed

the complaint, and on appeal, the Second Circuit panel unanimously found that the district

court had jurisdiction over the Attorney General, the former Acting Attorney General, and

the Director of the FBI; that Arar failed to state a claim under the TVPA; and that Arar failed

to establish subject matter jurisdiction over his request for a declaratory judgment. Id. A

majority of the panel dismissed Arar’s Bivens claims. Id. On rehearing en banc, the 14

Second Circuit affirmed the district court’s holding. Arar, 585 F.3d at 563.

On rehearing, the majority stated:

We have no trouble affirming the district court’s conclusions

that Arar sufficiently alleged personal jurisdiction over the defendants

who challenged it, and that Arar lacks standing to seek declaratory

relief. We do not reach issues of qualified immunity or the state

secrets privilege. As to the TVPA, we agree with the unanimous

position of the panel that Arar insufficiently pleaded that the alleged

conduct of United States officials was done under color of foreign
The Second Circuit’s note that Twombly was decided after the district court’s decision in Arar shows that the district 15

court found the allegations regarding the detention in the United States insufficient even under pre-Twombly standards,

and that the Second Circuit majority agreed under post-Twombly standards.

145

law. We agree with the district court that Arar insufficiently pleaded

his claim regarding detention in the United States, a ruling that has

been reinforced by the subsequent authority of Bell Atlantic Corp. v.

Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 167 L. Ed. 2d 929 15

(2007). Our attention is therefore focused on whether Arar’s claims

for detention and torture in Syria can be asserted under Bivens . . . .

Id. (emphasis added).

Arar alleged that he was a dual citizen of Canada and Syria, and resided in Canada. Id. at

565. While on vacation in Tunisia, he was called back to work in Canada and had to change

planes in New York. Id. During his stop in New York, Arar was detained by immigration

officials and transferred the next day to a detention center in Brooklyn, where he was kept

for a week and a half. Id. The INS began removal proceedings based on its conclusion that

Arar belonged to a terrorist organization. Id. Despite Arar’s request for removal to Canada,

the INS ordered his removal to Syria, found that removal would be consistent with Article

3 of the Convention Against Torture (“CAT”), and barred Arar from reentering the United

States for five years. Arar, 585 F.3d at 566. The INS Regional Director determined that

Arar was a member of Al Qaeda and inadmissible in the United States, and the Deputy

Attorney General stated that the removal to Syria would be consistent with the CAT, despite

the fact that Arar stated that he feared torture in Syria. Id. According to the complaint, Arar

was transferred to Jordan and then to Syria, where he remained for a year and where he was

tortured. See id. “Arar allege[d] that United States officials conspired to send him to Syria

for the purpose of interrogation under torture, and directed the interrogations from abroad

by providing Syria with Arar’s dossier, dictating questions for the Syrians to ask him, and

receiving intelligence learned from the interviews.” Id. Arar eventually signed a confession

stating that he had been trained as a terrorist in Afghanistan. Id. Arar was later released to

the custody of a Canadian embassy official. Id. at 566–67.

Arar’s complaint contained four counts against federal officials and sought damages resulting

from Arar’s detention and torture. Arar, 585 F.3d at 567. The counts included claims for:

(1) relief under the TVPA, (2) relief under the Fifth Amendment for torture in Syria, (3)

relief under the Fifth Amendment for detention in Syria, and (4) relief under the Fifth

Amendment for the detention in the United States prior to the removal to Syria. Id. Arar

also sought a declaratory judgment that the defendants violated his “‘constitutional, civil, and

human rights.’” Id.

As to the first count, which alleged that the defendants conspired with Jordanian and Syrian

officials to have Arar tortured in violation of the TVPA, the court noted that “[a]ny allegation

arising under the TVPA requires a demonstration that the defendants acted under color of
 It appears that the court concluded that the conduct alleged was insufficient to state a claim for relief because the 16

applicable law—the TVPA—provided no grounds for relief where “United States officials encouraged and facilitated

the exercise of power by Syrians in Syria,” not that the facts alleged were insufficiently detailed or implausible.

146

foreign law, or under its authority.” Id. at 568 (citation omitted). The court held that Arar

failed to state a claim under the TVPA:

Accordingly, to state a claim under the TVPA, Arar must

adequately allege that the defendants possessed power under Syrian

law, and that the offending actions (i.e., Arar’s removal to Syria and

subsequent torture) derived from an exercise of that power, or that

defendants could not have undertaken their culpable actions absent

such power. The complaint contains no such allegation. Arar has

argued that his allegation of conspiracy cures any deficiency under the

TVPA. But the conspiracy allegation is that United States officials

encouraged and facilitated the exercise of power by Syrians in Syria,

not that the United States officials had or exercised power or

authority under Syrian law. The defendants are alleged to have acted

under color of federal, not Syrian, law, and to have acted in

accordance with alleged federal policies and in pursuit of the aims of

the federal government in the international context. At most, it is

alleged that the defendants encouraged or solicited certain conduct

by foreign officials. Such conduct is insufficient to establish that the

defendants were in some way clothed with the authority of Syrian law

or that their conduct may otherwise be fairly attributable to Syria.

We therefore agree with the unanimous holding of the panel and

affirm the District Court's dismissal of the TVPA claim.16

Id. (internal citation and footnote omitted) (emphasis added).

With respect to the fourth count, which alleged that the conditions of confinement in the

United States and the denial of access to courts during the detention violated Arar’s

substantive due process rights, the district court dismissed the claim as insufficiently pleaded

and gave Arar an opportunity to replead, which Arar declined. Id. at 569. The Second

Circuit majority agreed that the claim was insufficiently pleaded:

Arar alleges that “Defendants”—undifferentiated—“denied

Mr. Arar effective access to consular assistance, the courts, his

lawyers, and family members” in order to effectuate his removal to

Syria. But he fails to specify any culpable action taken by any single

defendant, and does not allege the “meeting of the minds” that a

plausible conspiracy claim requires. He alleges (in passive voice) that

his requests to make phone calls “were ignored,” and that “he was

told” that he was not entitled to a lawyer, but he fails to link these
147

denials to any defendant, named or unnamed. Given this omission,

and in view of Arar’s rejection of an opportunity to re-plead, we

agree with the District Court and the panel majority that this Count of

the complaint must be dismissed.

Arar, 585 F.3d at 569 (emphasis added). The court “expressed no view as to the sufficiency

of the pleading otherwise, that is, whether the conduct alleged (if plausibly attributable to

defendants) would violate a constitutionally protected interest.” Id.

Having dismissed the claims based on Arar’s detention in the United States, the court noted

that the “remaining claims s[ought] relief on the basis of torture and detention in Syria . . .

.” Id. The court declined to definitively resolve complex jurisdictional questions because

it determined that the case had to be dismissed for other reasons. See id. at 570–71. The

court framed the remaining issue as “whether allowing this Bivens action to proceed would

extend Bivens to a new ‘context,’ and if so, whether such an extension is advisable.” Id. at

572. As to context, the court concluded that “the context of extraordinary rendition in Arar’s

case is the complicity or cooperation of United States government officials in the delivery

of a non-citizen to a foreign country for torture (or with the expectation that torture will take

place),” and concluded that this was a “new context” because “no court ha[d] previously

afforded a Bivensremedy for extraordinary rendition.” Id. The court concluded that “special

factors” counseled against creation of a Bivens remedy in this context. See Arar, 585 F.3d

at 573. Specifically, the court found that a Bivens action in the context of extraordinary

rendition “would have the natural tendency to affect diplomacy, foreign policy, and the

security of the nation,” which “counsel[ed] hesitation” in creating a Bivens remedy. Id. at

574. The court explained that “[a]bsent clear congressional authorization, the judicial review

of extraordinary rendition would offend the separation of powers . . . and inhibit this

country’s foreign policy.” Id. at 576. The court also cited the fact that classified information

was involved, id.; the fact that “reliance on information that cannot be introduced into the

public record is likely to be a common feature of any Bivens actions arising in the context

of alleged extraordinary rendition,” in view of the “preference for open rather than

clandestine court proceedings,” id. at 577; the fact that extending Bivens into the

extraordinary rendition context would require assessing assurances made by foreign countries

that the alien would not be tortured, id. at 578; the possibility that Bivens suits would “make

the government ‘vulnerable to ‘graymail,’ i.e., individual lawsuits brought to induce the

[government] to settle a case (or prevent its filing) out of fear that any effort to litigate the

action would reveal classified information that may undermine covert operations,’ or

otherwise compromise foreign policy efforts,” Arar, 585 F.3d at 578–79 (alteration in

original) (citation omitted); and its conclusion that “Congress is the appropriate branch of

government to decide under what circumstances (if any) these kinds of policy

decisions—which are directly related to the security of the population and the foreign affairs

of the country—should be subjected to the influence of litigation brought by aliens,” id. at

580–81.

Several dissenting opinions were filed. Judge Sack dissented, joined by Judges Calabresi,
148

Pooler, and Parker, and disagreed with the majority’s finding that there was no Bivens

remedy, finding that the majority reached its conclusion “by artificially dividing the

complaint into a domestic claim that does not involve torture . . . and a foreign claim that

does . . . .” Id. at 582–83 (Sack, J., dissenting). Judge Sack’s dissent noted that after

dividing the claims, “[t]he majority then dismisse[d] the domestic claim as inadequately

pleaded and the foreign claim as one that cannot ‘be asserted under Bivens’ . . . .” Id. at 583.

Judge Sack argued that even if the claim regarding Arar’s treatment in the United States were

treated separately, “it was adequatelypleaded in [Arar’s] highly detailed complaint.” Id. But

Judge Sack asserted that it was improper to consider the claim regarding Arar’s treatment in

the United States in isolation, and that, viewed in the context of the entire complaint, the

allegations did “not present a ‘new context’ for a Bivens action.” Id. Judge Sack’s dissent

also concluded that even if a new context were presented, the majority’s approach to

determining whether to create a Bivens remedy was improper. See Arar, 585 F.3d at 583

(Sack, J., dissenting). Judge Sack noted that Arar declined to replead his fourth claim

because he wanted early appellate review of the dismissal of the first three claims. See id.

at 590 n.13. Judge Sack asserted that “Arar should not have been required to ‘name those

defendants [who] were personally involved in the alleged unconstitutional treatment’”

because under § 1983, courts “allow plaintiffs to ‘maintain[ ] supervisory personnel as

defendants . . . until [they have] been afforded an opportunity through at least brief discovery

to identify the subordinate officials who have personal liability.’” Id. at 591 (alterations in

original). Judge Sack’s dissent explained the impact of Iqbal:

To be sure, the Supreme Court has recently set a strict

pleading standard for supervisory liability claims under Bivens against

a former AttorneyGeneral of the United States and the Director of the

FBI. See Iqbal, supra. We do not think, however, that the Court has

thereby permitted governmental actors who are unnamed in a

complaint automatically to escape personal civil rights liability. A

plaintiff must, after all, have some way to identify a defendant who

anonymously violates his civil rights. We doubt that Iqbal requires

a plaintiff to obtain his abusers’ business cards in order to state a civil

rights claim. Put conversely, we do not think that Iqbal implies that

federal government miscreants may avoid Bivens liability altogether

through the simple expedient of wearing hoods while inflicting injury.

Some manner of proceeding must be made available for the reasons

we recognized in Davis [v. Kelly, 160 F.3d 917, 921 (2d Cir. 1998)].

Id. at 591–92. Judge Sack’s dissent asserted that the complaint’s allegations were sufficient:

Whether or not there is a mechanism available to identify the

“Doe” defendants, moreover, Arar’s complaint does sufficiently name

some individual defendants who personally took part in the alleged

violation of his civil rights. The role of defendant J. Scott Blackman,

formerly Director of the Regional Office of INS, for example, is, as
149

reflected in the district court’s explication of the facts, set forth in

reasonable detail in the complaint. So are at least some of the acts of

the defendant Edward J. McElroy, District Director of the INS.

Id. at 592 (internal citation and footnotes omitted). Judge Sack’s dissent pointed out that the

complaint alleged:

Early on October 8, 2002, at about 4 a.m., Mr. Arar was taken in

chains and shackles to a room where two INS officials told him that,

based on Mr. Arar’s casual acquaintance with certain named

individuals, including Mr. Almalki as well as classified information,

Defendant Blackman, Regional Director for the Eastern Region of

Immigration and Naturalization Services, had decided to remove Mr.

Arar to Syria. Without elaboration, Defendant Blackman also

stipulated that Mr. Arar’s removal would be consistent with Article

3 of CAT . . . . 

Id. at 592 n.15 (quoting Arar’s complaint at ¶ 47) (quotation marks omitted). The complaint

also alleged:

The only notice given [Arar’s counsel prior to his interrogation late

on the evening of Sunday, October 6, 2002] was a message left by

Defendant McElroy, District Director for Immigration and

Naturalization Services for New York City, on [counsel’s] voice mail

at work that same [Sunday] evening. [She] did not retrieve the

message until she arrived at work the next day, Monday morning,

October 7, 2002—long after Mr. Arar’s interrogation had ended. 

Arar, 585 F.3d at 592 n.16 (Sack, J., dissenting) (quoting Arar’s complaint at ¶ 43)

(quotation marks omitted) (alterations in original). The dissent found the allegations

sufficient:

[A]n identification of the unnamed defendants by their “roles” should

be sufficient to enable a plaintiff to survive a motion to dismiss, and

subsequently to use discovery to identify them. And while the

majority is correct that the complaint does not utter the talismanic

words “meeting of the minds” to invoke an agreement among the

defendants, it is plain that the logistically complex concerted action

allegedly taken to detain Arar and then transport him abroad implies

an alleged agreement by government actors within the United States

to act in concert.

Id. at 592 (internal citation omitted).
150

Judge Sack also argued that the denial of access to courts and counsel claim was improperly

dismissed because such a claim requires pleading “(1) a ‘nonfrivolous, arguable underlying

claim’ that has been frustrated by the defendants’ actions, and (2) a continued inability to

obtain the relief sought by the underlying claim,” and Judge Sack thought the pleadings were

sufficient. Id. at 592–93 Judge Sack explained:

But taking the allegationsin the complaint as true, as we must,

the complaint clearly implies the existence of an underlying claim for

relief under CAT. The defendants can hardly argue that under Arar’s

assertions, which we take to be true, they lacked notice of such a

claim, since the complaint says that it was they who first notified Arar

about it: Arar alleges that on October 8, 2002, “two INS officials told

him that . . . Defendant Blackman . . . had decided to remove [him]

to Syria,” and “Defendant Blackman also stipulated that [such action]

would be consistent with Article 3 of CAT.” Compl. ¶ 47. Indeed,

the complaint alleges that Arar asked defendants for reconsideration

of that decision—i.e., relief from it—in light of the prospect of torture

in Syria, but the officials said that “the INS is not governed by the

‘Geneva Conventions.’” Id.

Id. at 593 (alterations in original). Judge Sack’s dissent concluded:

Contrary to the district court’s ruling, then, Arar’s complaint

put the defendants on notice of claims seeking relief to bar his

removal that were frustrated by the defendants’ actions. Whatever the

ultimate merits of those claims, they would not have been “frivolous.”

And absent a remedy for the rendition and torture themselves—the

district court, and the majority, of course, conclude there is none—no

contemporaneous legal relief is now possible except through the

access to courts and counsel claim. The Fourth Claim for Relief

therefore states a sufficient due process access claim.

Id. at 593–94 (internal citation omitted). Judge Sack’s dissent explained that the allegations

were sufficient under Iqbal:

More generally, we think the district court’s extended

recitation of the allegations in the complaint makes clear that the facts

of Arar’s mistreatment while within the United States—including the

alleged denial of his access to courts and counsel and his alleged

mistreatment while in federal detention in the United States—were

pleaded meticulously and in copious detail. The assertion of relevant

places, times, and events—and names when known—is lengthy and

specific. Even measured in light of Supreme Court case law

post-dating the district court’s dismissal of the fourth claim, which
151

instituted a more stringent standard of review for pleadings, the

complaint here passes muster. It does not “offer[ ] ‘labels and

conclusions’ or ‘a formulaic recitation of the elements of a cause of

action.’” Iqbal, 129 S. Ct. at 1949 (quoting Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 167 L. Ed. 2d 929

(2007)). Nor does it “tender[ ] ‘naked assertion[s]’ devoid of ‘further

factual enhancement.’” Id. (quoting Twombly, 550 U.S. at 557, 127

S. Ct. 1955). Its allegations of a constitutional violation are

“‘plausible on [their] face.’” Id. (quoting Twombly, 550 U.S. at 555,

127 S. Ct. 1955). And, as we have explained, Arar has pled “factual

content that allows the court to draw the reasonable inference that the

defendant[s] [are] liable for the misconduct alleged.” Id. (quoting

Twombly, 550 U.S. at 556, 127 S. Ct. 1955). We would therefore

vacate the district court’s dismissal of the Fourth Claim for Relief.

Id. at 594 (emphasis added) (alterations in original).

With respect to the second and third claims, Judge Sack stated that even if the fourth claim

were properly dismissed, the dissenters “would still not concur in [the majority’s] crabbed

interpretation of Arar’s complaint in light of the facts alleged in it.” Arar, 585 F.3d at 594

(Sack, J., dissenting). Judge Sack noted that although Arar pleaded his fourth claim for

domestic detention separately from his other claims, the complaint had to be construed as a

whole. See id. at 595. Judge Sack explained:

According to the complaint: (1) Arar was apprehended by

government agents as he sought to change planes at JFK; (2) he was

not seeking to enter the United States; (3) his detention was for the

purpose of obtaining information from him about terrorism and his

alleged links with terrorists and terrorist organizations; (4) he was

interrogated harshly on that topic—mostly by FBI agents—for many

hours over a period of two days; (5) during that period, he was held

incommunicado and was mistreated by, among other things, being

deprived of food and water for a substantial portion of his time in

custody; (6) he was then taken from JFK to the MDC in Brooklyn,

where he continued to be held incommunicado and in solitary

confinement for another three days; (7) while at the MDC, INS agents

sought unsuccessfully to have him agree to be removed to Syria

because they and other U.S. government agents intended that he

would be questioned there along similar lines, but under torture; (8)

U.S. officials thwarted his ability to consult with counsel or access

the courts; and (9) thirteen days after Arar had been intercepted and

incarcerated at the airport, defendants sent him against his will to

Syria, where they allegedly intended that he be questioned under

torture and while enduring brutal and inhumane conditions of
 Judge Sack stated that the majority’s finding that extending a Bivens remedy in this context would essentially be a 17

constitutional challenge to executive policies was the strongest argument for denying a Bivens remedy. Arar, 585 F.3d

at 602 (Sack, J., dissenting). Judge Sack noted that “[a]fter Iqbal, it would be difficult to argue that Arar’s complaint

can survive as against defendants who are alleged to have been supervisors with, at most, ‘knowledge’ of Arar’s

mistreatment” but concluded that this did “not dispose of the cases against the lower-level defendants.” Id. (citation

omitted). Judge Sack further noted that “[i]t also may be that to the extent actions against ‘policymakers’ can be equated

with lawsuits against policies, they may not survive Iqbal either,” but asserted that “the relief Arar himself [sought was]

principally compensation for an unconstitutional implementation of [the extraordinary rendition] policy,” and that “[t]hat

is what Bivens actions are for.” Id.

152

captivity. This was, as alleged, all part of a single course of action

conceived of and executed by the defendants in the United States in

order to try to make Arar “talk.”

Id. Judge Sack explained that while “[i]t may not have been best for Arar to file a complaint

that structure[d] his claims for relief so as to charge knowing or reckless subjection to

torture, coercive interrogation, and arbitrary detention in Syria (the second and third claims)

separately from charges of cruel and inhuman conditions of confinement and ‘interfere[nce]

with access to lawyers and the courts’ while in the United States (the fourth claim)[,] . . .

such division of theories [wa]s of no legal consequence.” Id. (third alteration in original).

Judge Sack asserted that the factual allegations supporting the second and third claims were

much more comprehensive when the complaint was viewed as a whole:

The assessment of Arar’s complaint must, then, take into account the

entire arc of factual allegations that it contains—his interception and

arrest; his interrogation, principally by FBI agents, about his putative

ties to terrorists; his detention and mistreatment at JFK in Queens and

the MDC in Brooklyn; the deliberate misleading of both his lawyer

and the Canadian Consulate; and his transport to Washington, D.C.

and forced transfer to Syrian authorities for further detention and

questioning under torture. Such attention to the complaint’s factual

allegations, rather than its legal theories, makes perfectly clear that

the remaining claims upon which Arar seeks relief are not limited to

his “detention or torture in Syria,” . . . but include allegations of

violations of his due process rights in the United States. The scope

of those claims is relevant in analyzing whether a Bivens remedy is

available.

Id. at 595–96. After considering the complaint as a whole, Judge Sack’s dissent concluded

that the complaint did not present a new context for a Bivens remedy. See id. at 596. Even

if the context were new, Judge Sack thought “it mistaken to preclude Bivens relief solely in

light of a citation or compilation of one or more purported examples of . . . ‘special factors.’”

Id. at 600. Judge Sack disagreed with the majority’s conclusion with respect to most of the

special factors. He felt that secrecy issues should be dealt with through the state secrets 17

privilege. Arar, 585 F.3d at 603 (Sack, J., dissenting).
153

Judge Parker also filed a dissent, which was joined by Judges Calabresi, Pooler, and Sack.

Judge Parker asserted that the majority’s decision to dismiss the fourth count and “proceed[]

as though the challenged conduct [wa]s strictly extraterritorial . . . [went] far beyond any

pleading rule [the court was] bound to apply, and it [wa]s inconsistent with both Rule 8 of

the Federal Rules of Civil Procedure and recent Supreme Court decisions.” Id. at 616

(Parker, J., dissenting) (footnote omitted). Judge Parker explained:

Even after Ashcroft v. Iqbal, --- U.S. ----, ----, 129 S. Ct. 1937,

1949, 173 L. Ed. 2d 868 (2009), which dismissed discrimination

claims against policymakers on account of inadequate pleading,

Claim Four readily exceeds any measure of “plausibility.” Claim

Four seeks to hold Defendants John Ashcroft, Larry Thompson,

Robert Mueller, James Ziglar, J. Scott Blackman, Edward McElroy,

and John Does 1-10 responsible for the extreme conditions under

which Arar was held in the United States. While the majority finds

that Arar failed to allege the requisite “meeting of the minds”

necessary to support a conspiracy, see Maj. Op. 24, it ignores the fact

that Arar pleaded multiple theories of liability. Formal conspiracies

aside, he also alleges that the defendants commonly aided and abetted

his detention and removal—that is, that the defendants were

personally involved in his mistreatment both in the United States and

abroad.

Id. (footnote and citations omitted). Judge Parker further stated:

In support of his claim for mistreatment and due process

violations while in American custody, Arar includes factual

allegations that are anything but conclusory. Indeed, he provides as

much factual support as aman held incommunicado could reasonably

be expected to offer a court at this stage. The complaint alleges that

Defendant McElroy was personally involved in Arar’s failure to

receive the assistance of counsel. It alleges that Defendants

Blackman and Thompson personally approved Arar’s expedited

transfer from the United States to Syria, implicating these officials in

his inability to access the courts. And it recounts statements by

Arar’s American interrogators that they were discussing his situation

with “Washington D.C.” More broadly, Arar details the harsh

conditions under which he was held, including shackling, strip

searches, administrative segregation, prolonged interrogation, and a

near communications blackout. Notably, these are not “[t]hreadbare

recitals of the elements of a cause of action, supported by mere

conclusory statements.” Iqbal, 129 S. Ct. at 1949. They easily satisfy

the requirements of both Iqbal and also Rule 8, whose “short and

plain statement” remains the baseline for notice-pleading. See FED.
154

R. CIV. P. 8(a)(2).

Moreover, as Iqbal made clear, plausibility is

“context-specific,” requiring the reviewing court “to draw on its

judicial experience and common sense.” Iqbal, 129 S. Ct. at 1950.

There, the Supreme Court rejected Iqbal’s discrimination claims

against high-ranking federal officials because his complaint lacked

sufficient factual allegations supporting the inference of

discriminatory intent. Id. at 1952. Central to the majority’s decision

was the fact that these officials faced a devastating terrorist attack

“perpetrated by 19 Arab Muslim hijackers.” Id. at 1951. Against this

backdrop, the majority found Iqbal’s claim overwhelmed by the

“obvious alternative explanation”—that his arrest stemmed from a

“nondiscriminatory intent to detain aliens . . . who had potential

connections to those who committed terrorist acts.” Id. at 1951

(quoting Twombly, 550 U.S. at 567, 127 S. Ct. 1955). Apparently

having their own views about the defendants’ state of mind, the

majority simply found Iqbal’s discrimination claim incredible.

Plausibility, in this analysis, is a relative measure.

Allegations are deemed “conclusory” where they recite only the

elements of the claim. They become implausible when the court’s

commonsense credits far more likely inferences from the available

facts. Plausibility thus depends on a host of considerations: The full

factual picture presented by the complaint, the particular cause of

action and its elements, and the available alternative explanations.

See Iqbal, 129 S. Ct. at 1947–52. As Rule 8 implies, a claim should

only be dismissed at the pleading stage where the allegations are so

general, and the alternative explanations so compelling, that the claim

no longer appears plausible. See FED. R. CIV. P. 8(a); Twombly, 550

U.S. at 556, 127 S. Ct. 1955 (requiring simply “enough fact to raise

a reasonable expectation that discovery will reveal evidence”

supporting the claims).

Arar’s claim readily survives this test, particularly in light of

the Court’s obligation to “draw[ ] all reasonable inferences in the

plaintiff’s favor” on a motion to dismiss.

Id. at 616–17 (additional internal citations omitted) (emphasis added) (alterations in

original). Judge Parker argued that “[t]he notion that high-ranking government officials like

Defendants Ashcroft and Mueller were personally involved in setting or approving the

conditions under which suspected terrorists would be held on American soil—and even

oversaw Arar’s detention and removal—is hardly far-fetched,” id. at 617–18, and

distinguished Iqbal:
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In contrast to Iqbal, it is the alternative here that is difficult to

fathom. To think that low-level agents had complete discretion in

setting the conditions for holding a suspected member of al Qaeda

defies commonsense. It requires the Court to believe that, while

high-level officials were involved in arranging Arar’s removal to

Syria—a premise the majority does not question—they were

oblivious to the particulars of his detention. The majority was, of

course, bound to credit all reasonable inferences from the allegations

in the complaint, understanding that their factual basis would be

thoroughly tested in discovery. See Twombly, 550 U.S. at 555, 127

S. Ct. 1955 (a court must proceed “on the assumption that all the

allegations in the complaint are true (even if doubtful in fact)”). The

inference that, in 2002, high-level officials had a role in the detention

of a suspected member of al Qaeda requires little imagination.

Further, unlike Iqbal, Arar’s due process claims do not ask the

Court to speculate about the mental state of government officials.

Rather, Claim Four rests on objective factors—the conditions of

confinement and his access to the courts—that are independent of

motive. Compare Iqbal, 129 S. Ct. at 1948 (claim of invidious

discrimination requires the plaintiff to “plead and prove that the

defendant acted with discriminatory purpose”), with Kaluczky v. City

of White Plains, 57 F.3d 202, 211 (2d Cir. 1995) (government

conduct that is “arbitrary, conscience-shocking, or oppressive in a

constitutional sense” violates substantive due process). The

complaint contains more than sufficient factual allegations detailing

these deprivations.

Finally, it should not be lost on us that the Department of

Homeland Security’s Office of Inspector General has itself confirmed

the broad contours of Arar’s mistreatment, producing a lengthy report

on the conditions of his detention in American custody. This report

provides a powerful indication of the reliability of Arar’s factual

allegations at this stage . . . . 

Ultimately, it is unclear what type of allegations to overcome

a motion to dismiss by high-level officials could ever satisfy the

majority. In refusing to credit Arar’s allegations, the majority cites

the complaint’s use of the “passive voice” in describing some of the

underlying events. This criticism is odd because the occasional use

of the passive voice has not previously rendered pleadings defective,

particularly where the defendants’ roles can be easily ascertained

from the overall complaint. See . . . Yoder v. Orthomolecular

Nutrition Institute, Inc., 751 F.2d 555, 561 (2d Cir. 1985) (“It is
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elementary that, on a motion to dismiss, a complaint must be read as

a whole, drawing all inferences favorable to the pleader.”) (citations

omitted). Specifically, the majority faults Arar for not pinpointing the

individuals responsible for each event set out in the complaint and for

failing to particularize more fully when and with whom they

conspired. The irony involved in imposing on a plaintiff—who was

held in solitary confinement and then imprisoned for ten months in an

underground cell—a standard so self-evidently impossible to meet

appears to have been lost on the majority.

Id. at 618–19 (additional internal citations and footnotes omitted). Judge Parker expressed

concern with the majority’s approach:

The flaws in the majority’s approach are not unique to Arar,

but endanger a broad swath of civil rights plaintiffs. Rarely, if ever,

will a plaintiff be in the room when officials formulate an

unconstitutional policy later implemented by their subordinates. Yet

these closeted decisions represent precisely the type of misconduct

that civil rights claims are designed to address and deter. Indeed, it

is this kind of executive overreaching that the Bill of Rights sought

to guard against, not simply the frolic and detour of a few “bad

apples.” The proper way to protect executive officials from

unwarranted second-guessing is not an impossible pleading standard

inconsistent with Rule 8, but the familiar doctrine of qualified

immunity.

Even if the majority finds that Arar’s factual allegations fall

short of establishing the personal involvement of Defendants

Ashcroft and Mueller, they plainly state a claim against defendants

such as Thompson, Blackman, McElroy, and John Doe FBI and ICE

agents. The direct involvement of these defendants is barely

contested by the appellees and barelymentioned by the majority. For

this reason alone, there is no legal justification for the majority to

dismiss Claim Four outright.

Arar, 585 F.3d at 619 (Parker, J., dissenting) (internal citations omitted) (emphasis added).

Judge Pooler separately dissented, joined by Judges Calabresi, Sack, and Parker. Judge

Pooler asserted:

I would hold the Arar should have a Bivens remedy—to reinforce our

system of checks and balances, to provide a deterrent, and to redress

conduct that shocks the conscience. I understand the majority’s

opinion today to be a result of its hyperbolic and speculative
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assessment of the national security implications of recognizing Arar’s

Bivens action, its underestimation of the institutional competence of

the judiciary, and its implicit failure to accept as true Arar’s

allegations that defendants blocked his access to judicial processes so

that they could render him to Syria to be tortured, conduct that shocks

the conscience and disfigures fundamental constitutional principles.

This is a hard case with unique circumstances. The majority’s

disappointing opinion should not be interpreted to change Bivenslaw.

Id. at 627 (Pooler, J., dissenting). Judge Pooler also disagreed with the majority’s decision

to dismiss the TVPA claim, noting that “[i]n the Section 1983 context, the Supreme Court

has held that private individuals may be liable for joint activities with state actors even where

those private individuals had no official power under state law.” Id. at 628. Judge Pooler

noted that “[b]ecause plaintiffs must meet a plausibility standard for claims against federal

officials under Ashcroft v. Iqbal, supra, [she was] not concerned that subjecting federal

officials to liability under the TVPA would open the floodgates to a waive of meritless

litigation.” Id. at 629 n.7.

Judge Calabresi filed a separate dissent, joined by Judges Pooler, Sack, and Parker. Judge

Calabresi stated: “[B]ecause I believe that when the history of this distinguished court is

written, today’s majority decision will be viewed with dismay, I add a few words of my own,

‘ . . . more in sorrow than in anger.’” Id. at 630 (Calabresi, J., dissenting) (quoting Hamlet,

act 1 sc. 2). Judge Calabresi argued that the majority decided a constitutional question

unnecessarily. See id. at 633–34. Judge Calabresi’s dissent did not separately address

pleading issues.

• Meijer, Inc. v. Ferring B.V. (In re DDAVP Direct Purchaser Antitrust Litig.), 585 F.3d

677 (2d Cir. 2009), cert. denied, 130 S. Ct. 3505, 2010 WL 1220530 (2010). The plaintiffs,

direct purchasers of the antidiuretic prescription medication desmopressin acetate (DDAVP),

filed a class action against Ferring B.V. and Ferring Pharmaceuticals (collectively, “Ferring”)

and Aventis Pharmaceuticals (“Aventis”), alleging that the defendants abused the patent

system to unlawfully maintain a monopoly over DDAVP. Id. at 682. Ferring developed,

patented, and manufactured DDAVP, and Aventis had FDA approval for DDAVP tablets and

a license from Ferring to market and sell the drug. Id. The plaintiffs asserted that the

defendants inflated the price of DDAVP by suppressing generic competition for the tablets,

in violation of antitrust laws. Id. The district court dismissed the suit, finding that the

plaintiffs lacked standing and that they failed to state a claim upon which relief could be

granted. Id.

Ferring had filed an earlier patent infringement suit against Barr Laboratories (“Barr”), which

was heard by the same district court that dismissed the present suit. Id. Barr had filed an

Abbreviated New Drug Application (“ANDA”) for a generic version of the DDAVP drug,

and filed a certification stating that Ferring’s patent for the DDAVP drug (the “’398 patent”)

was invalid, unenforceable, and/or would not be infringed by Barr’s generic version. Meijer,
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585 F.3d at 682. Ferring’s suit alleged patent infringement, but the district court found on

summary judgment that the ’398 patent was unenforceable due to inequitable conduct before

the Patent and Trademark Office (PTO) by Ferring. Id. at 683. In “Ferring I,” the Federal

Circuit affirmed. Id. The ’398 patent had initially been rejected by PTO examiners as

anticipated by or obvious from another patent (the “’491 patent”), and this decision was

affirmed by the Board of Patent Appeals and Interferences on different grounds. Id. at 683.

Two Ferring employees then submitted declarations from several scientists stating that the

’491 patent and another article did not suggest the ’398 patent, but the employees failed to

disclose that four of the five declarants “previously had either ‘been employed or had

received research funds from Ferring.’” Id. Based on the declarations, the PTO issued the

’398 patent. Id. The district court found the failure to disclose the declarants’ relation to

Ferring to be inequitable conduct in the Barr litigation. On appeal in the Barr litigation, the

Federal Circuit held that the undisclosed affiliations would have been material to the decision

to issue the ’398 patent and that the relationships were “‘deliberately concealed.’” Id. The

Federal Circuit affirmed the district court’s decision to find the patent unenforceable as

against Barr and all other parties. Meijer, 585 F.3d at 683.

In the instant lawsuit, the plaintiffs alleged that the defendants’ conduct made the ’398 patent

unenforceable and violated the antitrust laws. Specifically, 

[t]hey allege[d] that defendants Ferring and Aventis “engaged in an

exclusionary scheme” that included (1) “[p]rocuring the ’398 patent

by committing fraud and/or engaging in inequitable conduct before

the PTO,” (2) “[i]mproperly listing the fraudulently obtained ’398

patent in the [FDA’s] Orange Book,” thereby enabling patent

infringement claims against potential competitors, (3) prosecuting

sham infringement litigation against generic competitors, and (4)

“filing a sham citizen petition to further delay FDA final approval of

Barr’s ANDA.”

Id. (citation omitted) (third, fourth, and fifth alterations in original). The plaintiffs alleged

that “the lack of competing, generic versions of DDAVP injured them by forcing them to pay

monopolistic prices for the drug.” Id. The district court acknowledged that under Walker

Process Equip., Inc. v. Food Mach. & Chem. Corp., 382 U.S. 172, 173 (1965), a patentee

loses First Amendment immunity for obtaining and enforcing a patent, and can incur antitrust

liability for enforcing a patent, if the patent was obtained by fraud on the PTO. Id. at 684.

But the district court concluded that the plaintiffs failed to plead fraud on the PTO with

particularity, “noting that fraud requires a greater showing of culpability than the inequitable

conduct that can render a patent unenforceable.” Id. Although the district court found this

sufficient for dismissal, it also concluded that the plaintiffs lacked antitrust standing. Id. The

district court also rejected the non-Walker Process claims, including the Orange Book listing,

the sham infringement litigation, and the sham citizen’s petition, finding that the defendants

had “not acted ‘in subjective bad faith.’” Id. The district court also dismissed the claims

against Aventis because the plaintiffs had failed to sufficiently allege that Aventis was
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complicit in Ferring’s fraud on the PTO. Meijer, 585 F.3d at 684.

In addressing jurisdiction, the Second Circuit found that it had jurisdiction because the

plaintiffs’ theory that the defendants failed to supplement, amend, or withdraw their citizen

petition, which asked the FDA to conduct additional testing of the generic drug after the

defendants knew that the patent was unenforceable, “could plausibly constitute a Sherman

Act violation,” and therefore “support[ed] a patent-independent theory of liability.” See id.

at 687 (citing Twombly, 550 U.S. at 566 (“suggesting that either ‘action or inaction’ could

be plausibly alleged as an antitrust violation”)). The Second Circuit also found that the

plaintiffs had standing.

In considering the adequacy of the complaint, the Second Circuit found that the antitrust

claim was plausible under Iqbal. The plaintiffs’ first theory, Walker-Process fraud, required

showing:

(1) a representation of a material fact, (2) the falsity of that

representation, (3) the intent to deceive or, at least, a state of mind so

reckless as to the consequences that it is held to be the equivalent of

intent (scienter), (4) a justifiable reliance upon the misrepresentation

by the party deceived which induces him to act thereon, and (5) injury

to the party deceived as a result of his reliance on the

misrepresentation.

Id. at 692 (quoting Nobelpharma AB v. Implant Innovations, Inc., 141 F.3d 1059, 1069–70

(Fed. Cir. 1998)) (quotation marks omitted). The court noted that Rule 9 requires “[a] party

‘alleging fraud or mistake . . . [to] state with particularity the circumstances constituting

fraud or mistake.’” Id. (quoting FED.R.CIV. P. 9(b)). The court found that the plaintiffs had

“alleged a series of ‘highly material’ omissions, without which ‘the ’398 patent would not

have issued,’” and that “[t]he Federal Circuit agreed on the ‘high[] material[ity]’ of the

omissions when it found the ’398 patent unenforceable.” Id. (second and third alterations

in original). The court further found that “[t]he Ferring I litigation also addressed the third

element of intent, as the district court found ‘clear and convincing evidence of an intent to

mislead the examiners.’” Id. (citation omitted). Finally, the court found that “[r]eliance and

injury, the fourth and fifth elements, [we]re straightforward here: the PTO was justified in

relying on the information the defendants provided, and injury is a ‘matter of course

whenever the other four elements are met.’” Meijer, 585 F.3d at 692 (citation omitted). The

Second Circuit rejected the defendants’ argument that the district judge’s involvement in

both the patent litigation finding the patent unenforceable and the instant litigation “enabled

him to validly conclude that his previous findings could not support a claim of fraudulent

procurement in the instant case.” Id. The Second Circuit described the defendants’

argument as “a logical non sequitur,” explaining that “[t]he district court could be correct in

determining that inequitable conduct occurred and yet mistaken that such conduct did not

amount to fraud,” and that “the defendants’ argument ignore[d] the distinction between

findings and pleadings” because “[e]ven if the district court was correct that the earlier
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record did not show fraud, the record in this case could be different following discovery.”

Id. (emphasis added). The court also rejected the defendants’ argument that “simply adding

a conclusory allegation of fraud to the previous findings is inadequate to meet the plaintiffs’

obligation to ‘allege facts that give rise to a strong inference of fraudulent intent,” noting that

courts are “‘lenient in allowing scienter issues to withstand summary judgment based on

fairly tenuous inferences,’ because such issues are ‘appropriate for resolution by the trier of

fact,’” and “[t]he same holds true for allowing such issues to survive motions to dismiss.”

Id. at 693 (quoting Press v. Chem. Inv. Servs. Corp., 166 F.3d 529, 538 (2d Cir. 1999)). The

court concluded that “[t]he district court found ‘an intent to deceive’ in the patent litigation,”

and that “[g]ranting the plaintiffs all favorable inferences as we must on a motion to dismiss,

and given that the omissions at issue occurred repeatedly over a period of years, this intent

is sufficient to plausibly support a finding of Walker Process fraud.” Id.

The Second Circuit also rejected the defendants’ argument that the plaintiffs needed to allege

intent separate from the omission itself. Id. The court noted that “[w]hile a false or clearly

misleading statement can permit an inference of deceptive intent, a misrepresentation in the

form of an omission is more likely to be innocent and cannot support Walker Process fraud

without ‘evidence of intent separable from the simple fact of the omission.’” Meijer, 585

F.3d at 693 (quoting Dippin’ Dots, Inc. v. Mosey, 476 F.3d 1337, 1347 (Fed. Cir. 2007)).

The court further noted that “[t]he issue in the initial infringement litigation was inequitable

conduct, not Walker Process fraud,” and that “the district court in that litigation correctly

noted that high materiality could overcome a lesser showing of intent.” Id. The court

concluded that “[w]hile such balancing is impermissible with Walker Process claims, we

think the plaintiffs’ allegations are nonetheless sufficient.” Id. The court explained that

“Dippin’ Dots concerned findings, not pleadings; even if the district court’s findings in the

Ferring I litigation could not satisfy Dippin’ Dots, the plaintiffs’ pleadings could plausibly

lead to additional findings that would satisfy Dippin’ Dots, which is all that is required at

this stage of the litigation.” Id. (internal citation omitted) (emphasis added).

The Second Circuit further rejected the defendants’ argument that the allegations of

materiality were insufficient to support a claim for Walker Process fraud. The defendants

had argued that because the plaintiffs did not dispute the patentability of the ’398 patent on

the merits or claim that, but for the fraud, no patent could have issued to anyone, the

plaintiffs’ claim had to fail. Id. The court explained that “Walker Process fraud must

concern a material issue of patentability; otherwise, a patent would have issued regardless

of any fraud, and potential plaintiffs would have suffered the same monopoly effects (but

legitimately).” Id. The court found that even though “the plaintiffs [did] not address

patentability directly in their complaint, the issue [was] implicit in their allegations.” Meijer,

585 F.3d at 693. The court explained:

The defendants’ allegedly fraudulent affidavits were attempts to

explain away prior art. The Federal Circuit found them ‘absolutely

critical’ to the defendants’ overcoming the patent application’s initial

rejection. Ferring I, 437 F.3d at 1189. Whether or not these
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declarations, if accompanied by full disclosure, would have resulted

in an enforceable patent is debatable, but we think that, at the

pleading stage, the fact of non-disclosure is sufficient to properly

allege materiality. Overall, then, the plaintiffs have sufficiently

alleged Walker Process fraud to survive the defendants’ motion to

dismiss on the pleadings.

Id. at 693–94 (emphasis added).

The Second Circuit also concluded that the sham litigation claim was properly pleaded. This

claim required alleging that “‘the litigation in question is: (i) ‘objectively baseless,’ and (ii)

‘an attempt to interfere directly with the business relationships of a competitor through the

use of the governmental process . . . as an anticompetitive weapon.’’” Id. at 694 (quoting

Primetime 24 Joint Venture v. Nat’l Broadcasting Co., 219 F.3d 92, 100–02 (2d Cir. 2000)).

The court found that “[b]ased on the same facts alleged to sustain a Walker Process claim,

. . . in the circumstances of this case, the plaintiffs’ allegations are also sufficient to make out

a sham litigation claim,” and that “[t]he defendants effectively concede[d] as much” by

arguing that the sham litigation claim was duplicative of the patent fraud claim. Id. The

court further concluded that the Orange Book claim could proceed, finding that “[h]aving

determined that the Walker Process and sham litigation theories are still in play, . . . the

plaintiffs ha[d] adequately alleged that the defendants improperly listed the ’398 patent in

the FDA’s Orange Book.” Id.

Finally, the Second Circuit concluded that the citizen petition theory was adequately pleaded.

The court explained:

The district court dismissed this theory on the basis that it concerned

petitioning activity protected by the First Amendment. To reach this

conclusion, the district court presumably reasoned that the plaintiffs

could not plausibly show the petition to be a sham, i.e., objectively

and subjectively baseless, a proposition with which we disagree. The

FDA found that the citizen petition “had no convincing evidence” and

lacked “any basis” for its arguments. In the Ferring I litigation, the

district court suggested that the petition might have been “nothing

more than a hardball litigation tactic, motivated by a desire to keep

out competition for as long as possible after the expiration of the

patent and raise transactional costs for Barr.” Ferring B.V., 2005 WL

437981, at *17. Together these findings indicate the plaintiffs could

plausibly show the citizen petition to have been a sham.

Id. (internal citations omitted). The defendants argued that the citizen petition could not be

the basis for antitrust liability because “it could not have impacted the FDA’s decision, as

the FDA ultimately rejected the petition.” Meijer, 585 F.3d at 694. The court rejected that

argument, explaining that it “ignore[d] the possibility that the sham petition caused a delay
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in generic competition, a possibilityreinforced by the fact that the FDA approved the generic

drug on the same day that it rejected the petition.” Id. (citation omitted). The court found:

Whether the ’398 patent was valid on the date the petition was filed

is immaterial to this theory’s success, because the plaintiffs can

plausibly show the patent to have been fraudulently procured. It may

turn out at trial that this petition was not a sham, or that the FDA’s

approval of the generic drug was not delayed by the petition, but the

possibility that the petition was a sham, and that it impacted the

FDA’s decision, is sufficiently plausible to defeat the motion to

dismiss.

Id. at 694–95 (emphasis added). The court concluded that “[o]verall, the plaintiffs have

stated an antitrust claim upon which relief may be granted,” noting that “[b]ased on the

pleadings, each of their four theories could plausibly succeed.” Id. at 695.

The Second Circuit also found that the district court had erred by dismissing the claims

against Aventis on the basis that the fraud had not been pleaded with sufficient particularity

under Rule 9. The district court had concluded that the theory “‘[t]hat Aventis would pay

to license a patent which it knew to be unenforceable fl[ew] in the face of reason,’” but the

Second Circuitfound the “allegations plausible, and sufficient to survive a motion to dismiss

on the pleadings.” Id. The Second Circuit explained:

At the time Aventis filed its [new drug application] and listed

DDAVP in the Orange Book, the ’398 patent’s validity was already

in question with the patent having been rejected twice, and the PTO

having raised concerns of bias. Yet, the plaintiffs assert that Aventis

apparently made no effort to independently investigate and attest to

the validity of the ’398 patent. Rule 9(b) requires only the

circumstances of fraud to be stated with particularity; knowledge

itself can be alleged generally. Especially considering the longstanding relationship between Aventis and Ferring, the plaintiffs have

adequately stated circumstances that give rise to a plausible inference

of knowledge and liability. At this early stage, the plaintiffs need

only state a plausible claim of monopolization, and they have alleged

enough for their suit against Aventis to proceed.

Id. (internal citation omitted).

• Selevan v. N.Y. Thruway Auth., 584 F.3d 82 (2d. Cir. 2009). The plaintiffs challenged an

interstate highway toll policy that provided a discount to residents of a particular New York

city. The defendant’s policy allowed residents of Grand Island, New York to pay as little as

nine cents per trip on the Grand Island Bridges, while others were required to pay 75 cents.

Id. at 86–87. The plaintiffs, individuals who had paid the non-resident toll during trips
 “The Supreme Court has held that ‘prudential standing encompasses the general prohibition on a litigant’s raising 18

another person’s legal rights, the rule barring adjudication of generalized grievances more appropriately addressed in

the representative branches, and the requirement that a plaintiff’s complaint fall within the zone of interests protected

by the law invoked.’” Selevan, 584 F.3d at 91 (quoting Elk Grove Unified Sch. Dist. v. Newdow, 542 U.S. 1, 12 (2004)).

163

through New York to New Jersey for shopping, tourism, and other activities, brought suit

under § 1983, alleging that the policy violated the dormant Commerce Clause and the

plaintiffs’ rights under the Equal Protection Clause and the Privileges and Immunities Clause

of the Fourteenth Amendment, the Privileges and Immunities Clause of Article IV of the

Constitution, and the Equal Protection Clause of the New York Constitution. Id. at 87. The

district court dismissed the complaint, finding that the plaintiffs lacked standing under the

“prudential standing” doctrine because the claims were not within the “zone of interests”

18

protected by the Commerce Clause, the Fourteenth Amendment’s Equal Protection Clause,

or the Privileges and Immunities Clause of Article IV. Id. at 87–88. The district court did

not consider whether the complaint stated a claim under the Privileges and Immunities

Clause of the Fourteenth Amendment because the complaint merely recited that provision,

and the court concluded that even if the plaintiffs had standing to bring their equal protection

claim, they failed to state a claim. Id. at 88.

On appeal, the Second Circuit held that the plaintiffs had met the Article III standing

requirements. The court concluded that the district court had improperly dismissed the

complaint for lack of prudential standing, noting that “the zone-of-interests requirement

invoked by the District Court in this case is ‘not a rigorous one.’” Id. at 91 (quoting Nat’l

Weather Serv. Employees Org., Branch 1-18 v. Brown, 18 F.3d 986, 989 (2d Cir. 1994))

(additional citation omitted). The Second Circuit also noted that “[b]ecause this cause comes

before us following a decision on a motion to dismiss, we need only consider whether the

complaint alleges a plausible claim that the regulation violates the Commerce Clause,”

Selevan, 584 F.3d at 92 (citing Iqbal, 129 S. Ct. at 1950), and that “[w]hether the 75-cent

toll is actually a burden on interstate commerce is a question left for later proceedings.” Id.

(emphasis added). The Second Circuit also reasoned that dismissal was not appropriate

based on the argument that the defendants were acting as “market participants.” Id. at 93–94.

“The [market participant] doctrine ‘differentiates between a State’s acting in its distinctive

governmental capacity, and a State’s acting in the more general capacity of a market

participant; only the former is subject to the limitations of the [dormant] Commerce

Clause.’” Id. at 93 (quoting New Energy Co. of Ind. v. Limbach, 486 U.S. 269, 277 (1988)).

The court concluded that “at least in this stage of the litigation, a finding that [the defendant]

acted as a ‘market participant’ (rather than in its governmental capacity) is not warranted,”

explaining that “the toll may well be permissible, but, absent a finding that [the defendant]

acted as a market participant, it is subject to scrutiny under the dormant Commerce Clause.”

Id. at 94.

In considering whether the complaint stated a claim under the dormant Commerce Clause,

the court noted that the plaintiffs had alleged that the “toll policy discriminates against

interstate commerce and that, in the alternative, it imposes a burden on interstate commerce
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that is not justified by any benefits it creates.” Id. at 95. The court noted that “in order to

state a claim for discrimination in violation of the Commerce Clause, a plaintiff must

‘identify an[ ] in-state commercial interest that is favored, directly or indirectly, by the

challenged statutes at the expense of out-of-state competitors,’” id. (quoting Grand River

Enters. Six Nations, Ltd. v. Pryor, 425 F.3d 158, 169 (2d Cir. 2005) (internal quotation marks

omitted)), and found that the plaintiffs had “failed to ‘identify an[ ] in-state commercial

interest that is favored,’” and had not “point[ed] to a particular ‘out-of-state competitor’ that

[wa]s harmed by [the defendant’s] toll policy.” Selevan, 584 F.3d at 95. As a result, the

court concluded that the plaintiffs had failed to allege that the “toll policy ‘discriminates’

against interstate commerce.” Id.

The Second Circuit explained that while the district court had correctly determined that the

plaintiffs failed to allege that the policy discriminated against interstate commerce, the

district court had failed to inquire whether the policy otherwise violated the Commerce

Clause. Id. The court noted that under Pike v. Bruce Church, Inc., 397 U.S. 137, 142

(1970), “a nondiscriminatory regulation that ‘regulates even-handedly to effectuate a

legitimate local public interest,’ is nevertheless unconstitutional if ‘‘the burden imposed on

interstate commerce is clearly excessive in relation to the putative local benefits.’’” Id.

(internal citations omitted). The court found the allegations sufficient to survive dismissal:

As noted, plaintiffs have alleged that [the defendant’s] policy of

charging non-residents of Grand Island tolls that are more than eight

times greater than the tolls charged to Grand Island residents

“place[s] burdens on interstate commerce that exceed any local

benefit that allegedly may be derived from them.” Because at this

state of a suit we are required to assume all “well-pleaded factual

allegations” are true and assess the complaint only to “determine

whether [the allegations] plausibly give rise to an entitlement to

relief” at this stage of litigation, Iqbal, 129 S. Ct. at 1950, we

conclude that plaintiffs’ allegations are sufficient to survive a motion

to dismiss.

Id. (internal citation omitted) (emphasis added) (second and third alterations in original).

The court further explained that although the lead plaintiffs in the putative class had alleged

only a small injury to themselves, the court was “confident that neither the number of

prospective class members nor the cumulative difference between the tolls they paid and

those paid by Grand Island residents [wa]s negligible,” and noted that “whether a state policy

violates the dormant Commerce Clause does not depend on the extent of its impact on an

individual plaintiff,” but “must be judged by its overall economic impact on interstate

commerce in relation to the putative local benefits conferred.” Id. at 95–96 (citing Pike, 397

U.S. at 142).

The Second Circuit directed the district court on remand to “undertake the inquiry prescribed

by the Supreme Court for determining whether a fee imposed by a governmental entity to
 The Second Circuit noted that it had already determined that the amended complaint failed to allege that the policy 19

discriminated against interstate commerce, and that, as a result, unless the plaintiffs were given leave to amend their

complaint, the district court only had to assess the other two factors on remand. Selevan, 584 F.3d at 98 n.4.

165

defray the cost of facilities used by those engaged in interstate commerce violates the

dormant Commerce Clause or the right to travel . . . .” Selevan, 584 F.3d at 96. Under the

relevant Supreme Court precedent, “states are always permitted to require interstate travelers

‘to bear a fair share of the costs of providing public facilities that further travel,’” id. (quoting

Evansville-Vanderburgh Airport Auth. District v. Delta Airlines, Inc., 405 U.S. 707, 712

(1972)), and “a fee is reasonable and constitutionally permissible ‘if it (1) is based on some

fair approximation of use of the facilities, (2) is not excessive in relation to the benefits

conferred, and (3) does not discriminate against interstate commerce.’” Id. (quoting 19

Northwest Airlines, Inc. v. County of Kent, 510 U.S. 355, 369 (1994)). The court noted that

“[w]hether the fee schedule exception provided to Grand Island residents violates the

dormant Commerce Clause will depend in part on whether the fee represents a fair

approximation of that group’s use of the bridge—an inquiry that is too fact-dependent to be

decided upon examination of the pleadings.” Id. at 98 (citing Northwest Airlines, 510 U.S.

at 369) (emphasis added).

The Second Circuit also disagreed with the district court’s determination that the complaint

failed to assert a claim for violation of the right to travel under the Fourteenth Amendment’s

Privileges and Immunities Clause, finding that the “plaintiffs’ complaint supplied a detailed

description of [the defendant’s] Grand Island Bridge toll policy,” and “[u]nder the heading

‘Causes of Action,’ the complaint alleged that [the defendant’s] toll policy deprived plaintiffs

of ‘their constitutional rights under the Privileges and Immunities Clause of Article IV and/or

the Fourteenth Amendment by charging them more for traveling than [the defendant] charged

certain New York State residents.’” Id. at 99. The court held that “[t]aken together,

plaintiffs’ allegations clearly implicate[d] a violation of plaintiffs’ right to travel under the

Fourteenth Amendment’s Privileges and Immunities Clause . . . .” Id. The Second Circuit

noted that the plaintiffs had not alleged that they routinely paid the full toll to commute to

work or that the toll had some other significant financial impact on them, but only that they

paid the toll on the way to New Jersey for shopping and other activities, and concluded that

“[t]hese facts suggest at most a ‘minor restriction’ on plaintiffs’ right to travel, rather than

a ‘penalty.’” Id. at 101 (footnote omitted). But the court held: “Nevertheless, plaintiffs’

allegations implicate a possible violation of the right to travel in the context discussed in

Evansville inasmuch as they contend that they have been charged an excessive toll for use

of the Grand Island Bridge while residents of New York are charged substantially less.”

Selevan, 584 F.3d at 101–02. The court concluded that “the District Court erred in applying

rational basis review to [the defendant’s] toll policy,” and directed the district court on

remand to “determine whether the toll policy implicates the right to travel in the context

discussed in Evansville and, if so, . . . to apply strict scrutiny.” Id. at 102. The court further

directed that if the district court “[found] that the toll [wa]s merely a ‘minor restriction on

travel’ that d[id] not amount to the denial of a fundamental right, then the District Court

[should] apply the Northwest Airlines test to determine if the toll discriminate[d] against
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interstate commerce.” Id. (internal citation omitted).

Finally, the Second Circuit held that the district court had properly dismissed the claim

alleged under the Privileges and Immunities Clause of Article IV by one of the plaintiffs,

who was a U.S. citizen residing in Canada, because “neither the text nor the purpose of the

Privileges and Immunities Clause of Article IV—integrating the various states into a

coherent whole—would be served by extending its protection to residents of foreign

countries, even U.S. citizens residing in foreign countries.” Id. at 103.

• Panther Partners Inc. v. Ikanos Commc’ns, Inc., 347 F. App’x 617, No. 08-3398, 2009 WL

2959883 (2d Cir. Sept. 17, 2009) (unpublished summary order). The plaintiff alleged that

defendant Ikanos, and various directors and underwriters, negligently made false statements

in connection with the company’s initial public offering and its secondary offering, in

violation of the Securities and Exchange Act of 1933. Id. at *1. The district court dismissed

the complaint under Rule 12(b)(6), denied leave to amend, and denied a request to

reconsider. Id.

The Second Circuit concluded that the standard applied by the district court was too strict,

but nonetheless concluded that the complaint was not sufficient under the more lenient

standard described in Twombly. See id. at *2. The complaint alleged that “‘[b]y January

2006, Ikanos learned that the VDSL Version Four chips were failing,’” and that “‘Ikanos

determined that the VDSL Version Four chips had a failure rate of 25 % [to] 30%, which was

extremely high.’” Id. (alteration in original). The Second Circuit found that the district court

had improperly required the plaintiff to allege when Ikanos knew the failure rate was

specifically 25 to 30%, and explained that the plaintiff only needed to allege that Ikanos

knew of abnormally high failure rates before the company published the registration

statement accompanying its secondary offering. Id. The court explained: “The plausibility

standard would not require that plaintiff assert, for example, exactly when the company knew

the difference in defect rates between the VDSL chips and other chips was statistically

significant. The plausibility standard, however, does require a statement alleging that they

knew of the above-average defect rate before publishing the registration statement.” Id. The

court concluded that “the amended complaint failed to meet the plausibility requirements of

Twombly because it did not allege facts sufficient to complete the chain of causation needed

to prove that defendants negligently made false statements.” Panther Partners, 2009 WL

2959883, at *2.

In reviewing the district court’s denial of reconsideration, the Second Circuit noted that the

proposed second amended complaint alleged additional facts, but none of those facts

resolved the critical issue of when the company knew that the defect rates were unusually

high. Id. at *3. However, the court found that amendment might cure the defect, stating:

“[C]ourts may consider all possible amendments when determining futility. Because it

seems to us possible that plaintiff could allege additional facts that Ikanos knew the defect

rate was above average before filing the registration statement, and that this allegation, if

made, would be sufficient to meet the high standards that Iqbal and Twombly require for
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pleadings, further amendment may not be futile.” Id. at *4 (emphasis added). The court

concluded: “[W]e recognize that Iqbal and Twombly raised the pleading requirements

substantially while this case was pending,” and vacated the district court’s denial of the

motion to reconsider its decision to deny leave to amend. Id. (emphasis added).

• Bruno v. Metro. Transp. Auth., 344 F. App’x 634, No. 08-1993-cv, 2009 WL 2524009 (2d

Cir. Aug. 19, 2009) (unpublished summary order). The plaintiff sued his employer under the

Federal Employers’ Liability Act, which provides that a railroad engaged in interstate

commerce will be liable “‘to any person suffering injurywhile he is employed by such carrier

in such commerce . . . for such injury or death resulting in whole or in part from the

negligence of any of the officers, agents, or employees of such carrier,” id. at *1 (quoting 45

U.S.C. § 51), and which requires “‘the plaintiff [to] prove the traditional common law

elements of negligence: duty, breach, foreseeability, and causation,’” id. (quoting Tufariello

v. Long Island R.R., 458 F.3d 80, 87 (2d Cir. 2006)).

The Second Circuit concluded that the plaintiff’s claim that “he suffered ‘severe and

disabling injuries’ as a result of the [defendant’s] policy that requires its employees who are

not on active work status to remain at home during working hours, unless they receive a ‘no

work’ status” was “implausible on its face.” Id. The court justified dismissal by noting that

the complaint did not allege that the defendant had any duty to grant the “no work” status or

that there was a causal link between the policy and the plaintiff’s injuries, and that the

plaintiff alleged “no facts apart from conclusory assertions as to how the MTA’s denial of

his no work status caused unspecified ‘severe and disabling injuries.’” Id. The court

concluded that the claim was frivolous. Id.

The Second Circuit concluded that the plaintiff’s second claim, “that on or prior to

September 13, 2001, the [defendant] assigned [the plaintiff] to work at or near the World

Trade Center, and that he sustained ‘severe and disabling injuries’ by reason of the

[defendant’s] negligence,” should also be dismissed. Bruno, 2009 WL 2524009, at *1. The

court explained that the plaintiff had conceded that he was precluded from bringing this

claim in the absence of fraud because of a release he signed, and that he had not pleaded

fraud. Id.

• South Cherry Street, LLC v. Hennessee Group LLC, 573 F.3d 98 (2d Cir. 2009). The

plaintiff alleged breach of contract and violation of § 10(b) of the Securities and Exchange

Act of 1934 and Rule 10b-5 promulgated by the SEC, in connection with the defendant’s

alleged failure to learn and disclose that a hedge fund in which the plaintiff invested on the

defendant’s recommendation was part of a Ponzi scheme. Id. at 99–100. The district court

dismissed the contract claim as barred by the Statute of Frauds, and dismissed the securities

fraud claim on the ground that the complaint failed to plead scienter as required by the

PSLRA. Id. at 100. The Second Circuit affirmed.

The PSLRA requires that “‘[i]n any private action arising under this chapter in which the

plaintiff may recover money damages only on proof that the defendant acted with a particular
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state of mind, the complaint shall, with respect to each act or omission alleged to violate this

chapter, state with particularity facts giving rise to a strong inference that the defendant

acted with the required state of mind.’” Id. at 110 (quoting 15 U.S.C. § 78u-4(b)(2))

(emphasis added by South Cherry Street court). The court explained that “‘[a] plaintiff

alleging fraud in a § 10(b) action . . . must plead facts rendering an inference of scienter at

least as likely as any plausible opposing inference.’” Id. at 111 (quoting Tellabs, 551 U.S.

at 328) (emphasis added by South Cherry Street court). “And in determining whether this

standard has been met, the court must consider whether ‘all of the facts alleged, taken

collectively, give rise to a strong inference of scienter, not whether any individual allegation,

scrutinized in isolation, meets that standard.’” Id. (quoting Tellabs, 551 U.S. at 323). The

court concluded that the complaint “lack[ed] sufficient factual allegations to give rise to a

strong inference of either fraudulent intent or conscious recklessness.” South Cherry Street,

573 F.3d at 112. The court found that the complaint failed to allege intentional

misrepresentation because it alleged only that the defendant would have learned about the

problems with the recommended funds if it had performed the due diligence it promised, and

did not allege that the defendant had any knowledge that its representations about the funds

were untrue. See id. The court also found that the complaint failed to allege recklessness

because the complaint alleged only that the defendant breached its contractual obligation by

failing to take obvious investigative steps and ignoring clear red flags, but did not allege that

the defendant did not believe the funds’ representations were accurate or any facts that the

defendant knew that either made the falsity of the funds’ representations obvious or that

should have alerted the defendant that the representations were questionable. Id. The court

concluded that while it might be plausible to infer that the defendant had acted negligently,

it was “far less plausible to infer that an industry leader that prides itself on having expertise

that is called on by Congress, that emphasizes its thorough due diligence process, that values

and advertises its credibility in the industry—and that evaluates 550 funds—would

deliberately jeopardize its standing and reliability, and the viability of its business, by

recommending to a large segment of its clientele a fund as to which it had made, according

to South Cherry, little or no inquiry at all.” Id. at 113.

Although the court was examining the heightened pleading requirements under the PSLRA,

it focused on the plausibility standard and discussed the need to plead more than speculation

in order to meet the requirements of Rule 8. The Second Circuit noted that the plaintiff’s

assertion on appeal that it would be appropriate to draw the inference that the defendant acted

illegally appeared nowhere in the complaint and the plaintiff had conceded that the inference

was speculative. Id. The court continued:

[The plaintiff] argues that because such facts would be peculiarly

within the knowledge of the defendants, it had no obligation to

include such an allegation in the Complaint, intimating that it might

hope to develop some such evidence in discovery. To be sure, South

Cherry should not include such an allegation in its pleading without

having a “factual basis or justification,” FED. R. CIV. P. 11 Advisory

Committee Note (1993). But “before proceeding to discovery, a
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complaint must allege facts suggestive of illegal conduct,” Twombly,

550 U.S. at 564 n.8, 127 S. Ct. 1955; and a plaintiff whose

“complaint is deficient under Rule 8 . . . is not entitled to discovery,”

Iqbal, 129 S. Ct. at 1954. South Cherry’s confessed inability to offer

more than speculation that there may have been such unlawful

conduct underscores, rather than cures, the deficiency in the

Complaint.

Id. at 113–14 (emphasis added).

• Harris v. Mills, 572 F.3d 66 (2d Cir. 2009). The plaintiff, formerly licensed by the state of

New York as a doctor of osteopathic medicine, had his medical license revoked because he

committed fraud and engaged in improper medical practices. The New York State Education

Department denied the plaintiff’s petition to reinstate his license, and the plaintiff brought

a pro se action under the Americans with Disabilities Act (ADA), the Rehabilitation Act, and

42 U.S.C. § 1983, claiming that he was illegally denied a reasonable accommodation for his

cognitive disabilities and unconstitutionally deprived of due process. Id. at 68. The district

court dismissed the accommodation claims under the ADA and the Rehabilitation Act

against the individual defendants because the statutes did not provide for individual liability,

and dismissed the Rehabilitation Act claim and the remaining claims for failure to state a

claim. The Second Circuit affirmed the finding that the claims were legally insufficient,

“even when read with the lenity that must attend the review of pro se pleadings.” Id.

The plaintiff’s first accommodation claim alleged that “the Education Department wrongly

denied him an ‘understanding of the impact of [his] disabilities,’” which deprived him of a

fair reinstatement hearing, and prevented the Department from properly assessing his

“‘rehabilitation.’” Id. at 74 (citation omitted). The Second Circuit noted that the complaint

did not identify how the plaintiff’s disabilities affected the behavior that caused the

revocation of his license or how those disabilities could be accommodated to reform that

behavior. Id. The court explained that “[g]enerally construed, this allegation amount[ed]

onlyto the contention that Harris’s medical licensing qualifications should be relaxed in light

of his disability,” but “[t]his [wa]s not a reasonable accommodation claim.” Id.

The plaintiff’s second accommodation claim—based on denial of the opportunity “to read

to the Committee on Professions a written explanation so his case ‘would be more organized

and clearly presented’”—failed because, even liberally construed, there was no allegation

that the plaintiff was denied the opportunity to read his statement “‘by reason’ of his

disability, let alone ‘solely by reason’ of his disability, as the Rehabilitation Act requires.”

Harris, 572 F.3d at 74–75. It was also unclear how the requested accommodation would

have helped, since the plaintiff alleged “‘difficulty with comprehending the written word’

and ‘a related problem with written expression.’” Id. at 75 (citations omitted).

The plaintiff’s due process claim was dismissed because the plaintiff “was given notice and

an opportunity to be heard before his petition for reinstatement was denied,” and state law
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provided an adequate post-deprivation hearing for the denial of his petition to reinstate his

license. Id. at 76.

Finally, the court found dismissal appropriate for the “cause of action that the defendants’

decisions were ‘[a]rbitrary and capricious’ inasmuch as the defendants failed to follow their

own procedural rules.” Id. (citation omitted). The court found that “[i]nsofar as this [wa]s

intended to be a stand-alone legal claim based solely on violations of state regulations, it

[wa]s not actionable in federal court,” and “therefore state[d] no claim upon which relief

c[ould] be granted.” Id.

Third Circuit

• Argueta v. U.S. Immigration and Customs Enforcement, 643 F.3d 60, 2011 WL 2315125

(3d Cir. Jun. 14, 2011). The plaintiffs were New Jersey residents of Latino origin who

alleged that between 2006 and 2008 they had been subjected to unlawful and abusive raids

conducted by Immigration and Customs Enforcement (“ICE”) under a Department of

Homeland Security program known as “Operation Return to Sender.” The plaintiffs filed

a Bivens action against several high-level ICE and Department of Homeland Security

officials (Myers, Torres, Weber, and Rodriguez), alleging in general that these defendants

had failed to adequately supervise the conduct of the raids. 

More specifically, the plaintiffs alleged that each ICE agent was ordered to arrest a quota of

fugitive aliens each year, and that in or around 2006 this quota was drastically increased from

125 to 1,000 under the Operation Return to Sender program. The court of appeals

summarized the further allegations of the complaint as follows:

Plaintiffs explained that the “practice” of unlawful and

abusive raids flourished as a predictable consequence of the

“arbitrary” and “exponentially-increased” quotas. “Under pressure

from these quotas immigration agents have regularly disregarded the

obligation to secure a judicial warrant or probable cause in carrying

out unlawful entries and dragnet searches of homes in which the

agents only loosely suspect immigrant families may reside.” Plaintiffs

alleged that their own personal experiences (also described in some

detail in their pleading) “are typical of the ‘Operation Return to

Sender’ home raid modus operandi throughout the state and the

nation, which has been comprehensively documented through media

reports and first-hand accounts from other victims.”

Specifically, the raids allegedly violated the Fourth and Fifth

Amendments to the United States Constitution. Due to the flaws in

the database and other deficiencies, the unconstitutional conduct

allegedly began even before the team of ICE agents arrived at a
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particular residence. In other words, “[a]gents regularly raid homes

where the purported ‘fugitive’ target is not present and could not be

present.” It is uncontested that the agents must obtain consent in

order to enter a person's home. According to Plaintiffs, the agents

typically failed to obtain the requisite consent. The pattern of

unconstitutional conduct then allegedly continued once the ICE

agents actually entered the home. Plaintiffs claimed that this whole

process was then repeated at other homes until the agents’ van was

filled. According to Plaintiffs, the agents’ actions had an especially

devastating impact on children (most of them citizens), who had to

watch “law enforcement agents sweeping through their homes with

guns, ordering them and their parents to gather together and suddenly

handcuffing and dragging away their parents in the middle of the

night.”

With respect to [defendants], Plaintiffs asserted that,

“[d]espite aggressively increasing the arrest quotas and the number of

agents participating in ‘Operation Return to Sender,’ and thereafter

being notified—via press reports, lawsuits, and congressional

testimony—of the widespread allegations of unconstitutional and

abusive conduct by ICE agents as part of this program, the DHS

supervisory officials named in this Complaint have continued to

foster an institutional culture of lawlessness.” In short, these

supervisory officials allegedly failed to develop meaningful

guidelines or oversight mechanisms to ensure that home searches

were conducted in a constitutional fashion, to furnish their agents

with adequate training (and, in the case of some newer agents, any

training whatsoever) on the lawful execution of lawful operations,

and to provide some sort of basic accountability for violations of the

Constitution. Appellants instead “have proudly publicized the

increasing numbers of arrests made as a result of the unconstitutional

raids that continue to be carried out in the shadows and in the dark of

night.” Plaintiffs sought to hold accountable “those who conducted,

directed, and sanctioned the complained-of conduct.” 

According to Plaintiffs, the “nationwide pattern and practice”

of unconstitutional conduct described above “has been the subject of

widespread media reporting as well as multiple lawsuits filed in other

federal district courts.” Plaintiffs cited to five lawsuits, all from

outside this Circuit. Members of Congress also allegedly raised

questions about the raids. In a letter dated June 11, 2007, three

legislators expressed their concerns about reports of misconduct

occurring during raids executed in New Haven, Connecticut, on June

6, 2007 (i.e., ICE agents pushing their way into homes without search
172

warrants, inappropriately treating both adults and children, and

ultimately catching only four fugitives out of the thirty-one arrested).

The raids were also allegedly criticized in a March 5, 2008 report by

the United Nations Special Rapporteur on the Human Rights of

Migrants. Plaintiffs alleged that reports of raids—and related

misconduct—were especially prevalent in New Jersey, and they

specifically cited to a number of newspaper articles purportedly

describing incidents of misconduct dating from May 2006 to February

2008.

Plaintiffs included a whole section in their Second Amended

Complaint entitled “Defendants’ Supervisory Responsibility.”

(JA561 (emphasis omitted).) In this section, they again attempted to

explain in more detail the four [defendants’] alleged involvement in

the unconstitutional conduct described above.

Accordingly, Plaintiffs made the following specific allegations

with respect to Myers and Torres: (1) these two Appellants oversaw

the implementation of a five-fold increase in the number of FOTs

between 2005 and 2007 and approved a “remarkable” 800% increase

in the arrest quota for each team without providing the necessary

training to prevent ICE agents, who now faced new pressures from

the drastically increased quota,from acting abusively and unlawfully;

(2) Myers and Torres “facilitated the creation of a culture of

lawlessness and lack of accountability within an agency they

supervise”; (3) in recent years, they “have been repeatedly on notice

of the routine unconstitutional home-raid practices by ICE agents

throughout the country,” specifically because “defendants Myers and

Torres have been sued numerous times for their roles in these

practices”; (4) the National Immigration Forum sent a letter on June

11, 2007 to Chertoff questioning the conduct of ICE agents in the

June 2007 New Haven raids; (5) Myers herself responded to the

National Immigration Forum correspondence in a letter dated July 6,

2007, in which she acknowledged that only five of the twenty-nine

individuals arrested in New Haven were fugitive aliens, agents

routinely lacked judicially-issued warrants and thereby had to obtain

voluntary and knowing consent before entry, and (as emphasized by

Plaintiffs) “such consent was ensured simply by assigning a

Spanish-speaking officer to each Fugitive Operations Team”; (6)

Torres possessed “direct responsibility for the execution of fugitive

operations” and, like Myers, he was made aware of the

unconstitutional home raid practices of his subordinates through the

media and lawsuits filed against him dating back to November 2006;

(7) also like Myers, Torres received specific notice of the misconduct
173

in New Haven by means of a June 2007 telephone call from the city’s

own mayor claiming that ICE agents “barged into houses without

warrants and verbally abused the people and children were

manhandled” and asking whether “Torres's office should continue to

allow such home raids to be conducted with these allegations

pending”; (8) despite their awareness of the unconstitutional home

raid practices through lawsuits, Congressional inquiries, national

media reports, and other sources, Myers and Torres repeatedly failed

to conduct any meaningful investigations or provide any specific

guidelines or training to ensure that such raids satisfied constitutional

requirements and also, upon information and belief, failed to

discipline any responsible agents in a meaningful fashion; and (9) on

the contrary, Myers and Torres, “have contributed to such unlawful

conduct by continuing to publicize, and laud as ‘successful,’ their

department’s dramatic increase in immigration arrests over the past

two years” in several press releases, and their behavior further

confirmed “that the high number of arrests were made pursuant to the

nationwide interior immigration enforcement strategy announced by

defendant Myers and Secretary Chertoff.”

Plaintiffs advanced a similar set of allegations with respect to

Weber and Rodriguez: (1) as Newark DRO Field Office Directors,

the two men were directly responsible for overseeing fugitive

operations and the execution of Operation Return to Sender in New

Jersey, and they both made frequent reports and public comments

regarding the number of arrests and related matters; (2) “[c]omments

to the media by each of them regarding allegations of inappropriate

action by their fugitive operations personnel, including

unconstitutional home raids, suggest that defendants Rodriguez and

Weber at best acquiesced, and at worst, encouraged such behavior”;

(3) for example, when Weber was confronted by the press with

specific allegations regarding a pattern of raids conducted without

search warrants or consent, he was quoted in a newspaper article as

saying that “‘I don’t see it as storming a home. . . . We see it as trying

to locate someone.’”; and (4) upon information and belief, Weber and

Rodriguez (a) knew that ICE agents were entering and searching New

Jersey homes without search warrants and without the requisite

consent, (b) failed to implement any guidelines, protocols, training,

oversight, or record-keeping requirements to ensure that agents acted

within constitutional limitations, (c) failed to conduct any substantial

investigations into allegations of unconstitutional home raids of

which they were made aware or otherwise discipline any responsible

agent in a meaningful fashion, and (d) instead simply continued to

publicize the “successful” increase in arrests in New Jersey over the
174

past two years “while allowing the unconstitutional means for many

of the arrests to continue unchecked.” 

Id. at *3–5 (footnotes and citations omitted).

The district court—in a decision that came after Twombly and Iqbal—denied defendants’

motion to dismiss the complaint on grounds of qualified immunity. The court of appeals

characterized the district court’s ruling as follows:

In its opinion, the District Court rejected Appellants’ theory

that the Supreme Court’s decision [in Iqbal] worked a substantial

change in the existing law governing the qualified immunity analysis

and the liability of supervisors, at least in the specific circumstances

presented by the current proceeding. Because Plaintiffs advanced

claims under the Fourth Amendment, they were not required to show

discriminatory purpose (unlike their counterpart in Iqbal who brought

a claim of invidious discrimination under the First and Fifth

Amendments). According to the District Court, they therefore

adequately “allege that [defendants] had actual knowledge, initiated,

and directed their subordinate agents to go beyond the limits of their

non-judicial warrants in violation of Plaintiffs’ Fourth Amendment

rights to be free from illegal searches and seizures.” Argueta v. U.S.

ICE, No. 08–1652, 2010 WL 398839, at *6 (D.N.J. Jan. 27, 2010).

In other words, “there are sufficient factual allegations set forth in the

Complaint for the Court, in applying its experience and common

sense, to conclude that there is a plausible claim against each

[defendant] that their personal involvement, direction and knowledge

or acquiescence permitted a search of the residence of plaintiffs

without consent in violation of the Fourth Amendment.”

Id. at *6.

The Third Circuit reversed the ruling of the district court and dismissed the complaint on the

basis of qualified immunity. The court reasoned:

Initially, certain allegations in the Second Amended

Complaint were conclusory in nature and merely provided, at best, a

“framework” for the otherwise appropriate factual allegations. Iqbal,

129 S. Ct. at 1950. For instance, the broad allegations regarding the

existence of a “culture of lawlessness” are accorded little if any

weight in our analysis. We further note that the relevant counts in the

pleading contained boilerplate allegations mimicking the purported

legal standards for liability, which we do not assume to be true. We

also must reject certain broad characterizations made by the District
175

Court, which were not supported by either the actual factual

allegations in the Second Amended Complaint or reasonable

inferences from such allegations. Most significantly, the District

Court went too far by stating that Myers and Torres “worked on these

issues everyday.” Argueta, 2010 WL 398839, at *8.

Turning to the non-conclusory factual allegations in the

Second Amended Complaint, we begin with the critical issue of

notice. Plaintiffs did reference an impressive amount of

documentation that allegedly provided notice to Appellants of their

subordinates’ unconstitutional conduct. However, these alleged

sources of notice were fatally flawed in one way or another. Broadly

speaking, we must point out the typical “notice” case seems to

involve a prior incident or incidents of misconduct by a specific

employee or group of employees, specific notice of such misconduct

to their superiors, and then continued instances of misconduct by the

same employee or employees. The typical case accordingly does not

involve a “knowledge and acquiescence” claim premised, for

instance, on reports of subordinate misconduct in one state followed

by misconduct by totally different subordinates in a completely

different state. Although there were some New Jersey-specific

allegations in the Second Amended Complaint, we are generally

confronted here with an attack on the alleged misconduct of

numerous ICE agents at different raids executed across the country

over a period of years. As Appellants further point out, the court cases

specifically cited in Plaintiffs’ pleading either did not involve

individual capacity claims against Myers and Torres, were filed after

at least some of the New Jersey raids specifically alleged in the

Second Amended Complaint took place, or did not even involve

Operation Return to Sender. All of these cases were also filed outside

of New Jersey, and certain other alleged sources of notice implicated

raids that took place in other states, especially in New Haven,

Connecticut. Likewise, some alleged sources (like the February 2008

hearing and the March 2008 UN report) post-dated most of the

specific New Jersey raids that allegedly harmed Plaintiffs themselves.

In the end, we conclude that Plaintiffs did not plausibly allege that the

Appellants had legally sufficient notice of the underlying

unconstitutional conduct of their subordinates.

Second, we observe that allegations specifically directed

against Appellants themselves (unlike the allegations directed at the

agents who actually carried out the raids) described conduct

consistent with otherwise lawful behavior. See, e.g., Iqbal, 129 S. Ct.

at 1950. In other words, a federal official specifically charged with
176

enforcing federal immigration law appears to be acting lawfully when

he or she increases arrest goals, praises a particular enforcement

operation as a success, or characterizes a home entry and search as an

attempt to locate someone (i.e., a fugitive alien). In fact, the qualified

immunity doctrine exists to encourage vigorous and unflinching

enforcement of the law. See, e.g., id. at 1953–54. We add that, far

from adopting a facially unconstitutional policy or expressly ordering

ICE agents to engage in unconstitutional home entries and searches,

Myers clearly stated in her response to the National Immigration

Forum correspondence that agents were required to obtain consent

before entering private residences and that all allegations of

misconduct were taken seriously and fully investigated (and that,

among other things, similar statements were made by Weber in

connection with his “[w]e see it as trying to locate someone”

comment to the press).

We also agree with Appellants’ assertion that Plaintiffs

themselves did not really identify in their pleading what exactly

Appellants should have done differently, whether with respect to

specific training programs or other matters, that would have

prevented the unconstitutional conduct. See, e.g., Beers–Capitol v.

Whetzel, 256 F.3d 120, 134 (3d Cir. 2001); Sample v. Diecks, 885

F.2d 1099, 1118 (3d Cir. 1989). Forinstance, the Inspector General’s

report, emphasized in the Second Amended Complaint, actually

stated that all FOT members were required to complete a special

three-week basic training course within two years of their assignment,

most officers had completed the requisite training, and, in any case,

all team members had previously undergone some form of basic law

enforcement training (which presumably would have covered basic

principles governing, among other things, the entry into a private

residence without a judicial warrant). Far from recommending a

complete training overhaul, the Inspector General ultimately

recommended a “refresher course,” and ICE accepted this

recommendation. 

We also cannot overlook the fact that Appellants themselves

occupied relatively high-ranking positions in the federal hierarchy.

Following the example set by the District Court, Plaintiffs assert that

Appellants cannot be compared with Attorney General Ashcroft, who

held the highest position in the federal law enforcement hierarchy.

They add that the Iqbal Court emphasized that both Ashcroft and

Mueller had to make quick policy decisions to respond to an

unprecedented national emergency, while, on the other hand,

Appellants oversaw Operation Return to Sender over a number of
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years. We certainly acknowledge that it is crucial to consider context

and the particular circumstances of each and every case. See, e.g .,

Iqbal, 129 S. Ct. at 1950. However, the context here involved, at the

very least, two very high-ranking federal officials based in

Washington D.C. who were charged with supervising the

enforcement of federal immigration law throughout the country (as

well as two other officials responsible for supervising such

enforcement throughout an entire state). Appellants accordingly note

that Myers and FBI Director Mueller reported directly to their

respective agency heads (the Secretary of Homeland Security and the

Attorney General), were appointed by the President and confirmed by

the Senate, and were responsible for setting national and international

polices. In fact, it appears uncontested that Myers and Torres

oversaw an agency with more than 15,000 employees and a budget of

more than $3.1 billion.

In Rode v. Dellarciprete, 845 F.2d 1195 (3d Cir. 1988), a

civilian employee of the Pennsylvania State Police filed a civil rights

action under § 1983 and 42 U.S.C. § 1985 against several defendants,

including Pennsylvania Governor Thornburgh and Attorney General

Zimmerman, id. at 1197–98. Among other things, she alleged that

she was a victim of unlawful retaliation in the form of an unlawful

work suspension and impermissible changes in her duties and

working conditions. Id. Affirming the district court’s dismissal of

her claims against these two state officials, this Court specifically

determined that she failed “to allege knowledge and acquiescence

with the required particularity” as to her claim against the Governor.

Id. at 1208. We observed that “Rode’s assertion that the Governor

had ‘responsibility for supervising’ the other defendants is irrelevant.”

 Id. We then expressly rejected her “hypothesis” that the Governor

had personal knowledge of the retaliation “directed against Hileman

[Rode’s co-plaintiff] because of numerous articles that appeared in

newspapers throughout the state and through the introduction of a

legislative resolution seeking an investigation into racially motivated

retaliation against [Pennsylvania State Police] employees, the filing

of grievances with the Governor’s office of administration, and

telephone calls and correspondence with the office of the Lieutenant

Governor.” Id. In the end, we concluded that, “[i]n a large state

employing many thousands of employees, a contrary holding would

subject the Governor to potential liability in any case in which an

aggrieved employee merely transmitted a complaint to the Governor’s

office of administration or to the Lieutenant Governor’s office.” Id.

We add that the Ninth Circuit reached the same result in a
178

recent post- Iqbal decision. In al-Kidd v. Ashcroft, 580 F.3d 949 (9th

Cir. 2009), rev’d on other grounds, --- U.S. ––––, 131 S. Ct. 2074,

179L. Ed. 2d 1149 (2011), the Ninth Circuit expressly rejected a

“conditions of confinement” claim against Ashcroft brought by an

individual detained under the material witness statute following

September 11 because “the complaint does not allege any specific

facts—such as statements from Ashcroft or from high-ranking

officials in the DOJ—establishing that Ashcroft had personal

involvement in setting the conditions of confinement.” Id. at 978. The

Ninth Circuit acknowledged that al-Kidd made several allegations

regarding media reports and other sources of information describing

the conditions of confinement, but it then explained that “the

non-specific allegations in the complaint regarding Ashcroft’s

involvement fail to nudge the possible to the plausible, as required by

Twombly.” Id. at 978–79; see also, e.g., Santiago, 629 F.3d at 134

(concluding that “allegation that Lt. Springfield was placed in charge

of the operation, coupled with what happened during the operation,

[failed to make it] plausible that Lt. Springfield knew of and

acquiesced in the use of excessive force against Santiago.”).

We acknowledge that the specific circumstances presented in

this prior case law may be distinguishable in one way or another. For

instance, the appointed head of a federal agency, charged with

enforcing the law and specifically implementing a particular

enforcement operation, clearly possessed different responsibilities

than the elected governor of a state. See, e.g., Atkinson, 316 F.3d at

270–71 (distinguishing state correctional commissioner and

lower-ranking officials from governor and state attorney general).

However, we cannot overlook the marked similarities between the

allegations at issue here and the allegations deemed to be insufficient

in Rode and al-Kidd. Furthermore, we again note that Myers and

Torres, in particular, had national and even international

policymaking and supervisory responsibilities. In the end, we

believe that this prior case law supports our conclusion that Plaintiffs

failed to meet the plausibility requirement.

Finally, we wish to emphasize that our ruling here does not

leave Plaintiffs without any legal remedy for the alleged violation of

the United States Constitution. [Certain of the plaintiffs] are still free

to pursue their official capacity claims for injunctive relief against any

further intimidation or unlawful entry into their home. Also, we do

not address Plaintiffs’ individual capacity claimsfor damages against

the lower-ranking ICE agents named in the Second Amended

Complaint. See, e.g., Iqbal, 129 S. Ct. at 1952 (“It is important to
179

note, however, that we express no opinion concerning the sufficiency

of respondent’s complaint against the defendants who are not before

us. Respondent’s account of his prison ordeal alleges serious official

misconduct that we need not address here. Our decision is limited to

the determination that respondent’s complaint does not entitle him to

relief from petitioners [Ashcroft and Mueller].”).

Id. at *12–15.

• Cotter v. Newark Hous. Auth., 422 F. App’x 95, 2011 WL 1289731 (3d Cir. Apr. 6, 2011)

(unpublished). James Cotter and his company filed suit against the Newark Housing

Authority (the “NHA”) for breach of contract and promissory estoppel. The dispute arose

out of negotiations for the sale of 30 acres of land from the NHA to Cotter. The district court

granted the defendant’s motion to dismiss, concluding that the allegations of the amended

complaint did not sufficiently allege the existence of a contract or a clear and definite

promise that could provide the basis for a claim of promissory estoppel. 

The Third Circuit, by a vote of 2-1, affirmed the district court’s grant of the motion to

dismiss. The court reasoned:

When do negotiations turn into a contract? 

The answer is only when there is a valid offer and acceptance.

Here there was neither. In its January 2001 letter, NHA stated “we

request that Cotter give us an offer to purchase.” (J.A. 22, 45). This

was not an offer, but merely a request for an offer. Id. Similarly, the

March 2001 letter from NHA said that the Authority was “willing” to

convey the 22 acres for $2,486,000, yet another signal that NHA was

ready to negotiate. (J.A. 22, 48.). Paragraph 23 of the Amended

Complaint references the June 1 letter Cotter sent to NHA, which

states that an agreement had been reached between the parties. But

if this is an allegation that an agreement had been reached, it is a legal

assertion, not a factual one, which the District Court properly ignored.

See Ashcroft v. Iqbal, --- U.S. ----, ----, 129 S. Ct. 1937, 1949, 173

L.Ed.2d 868 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544,

555, 127 S. Ct. 1955, 167 L.Ed.2d 929 (2007)). The June 4, 2001

letter from NHA to Cotter stated that “subject to final approval by the

Authority’s Board of Commissioners, the Authority will enter into a

contract” that will have certain features. (J.A. 24, 54.) The use of the

future tense makes it clear that, once again, NHA was simply setting

the stage for the an actual agreement. Nowhere does this letter allege

an offer or acceptance.

The March 17, 2004 letter states that the parties had
180

“previously negotiated an agreement” but, once again, any allegation

that an agreement had been reached is a legal conclusion, not a factual

one. (J.A. 9, 65). Later in the letter (and the allegation of the

Amended Complaint incorporating the letter), NHA pitched the

following:

At this time, the NHA is requiring that if your client

has a continued interest in this property, it must close

on or before May 1, 2004. Please advise me before

the close of business on April 15, 2004 if your client

desires to acquire this property in its current condition

based upon the terms and conditions of our proposed

agreement.

(J.A. 9, 65). This is the first offer—a “manifestation of willingness

to enter into a bargain, so made as to justify another person in

understanding that his assent to that bargain is invited and will

conclude it”—alleged in the Amended Complaint. Restatement

(Second) of Contracts § 24 (1981). Paragraph 34 of the Amended

Complaint then references an April letter in which Cotter stated that

he was “ready to close May 1, 2004” but then pointed to problems

with the contract proposed in the March 17 letter before drawing

attention to a copy of the contract enclosed with “requisite changes.”

(J.A. 10, 67). This was a counter-offer, which the next paragraph of

the Amended Complaint states was not executed by NHA.

Fletcher–Harlee Corp., 482 F.3d at 250; Restatement (Second) of

Contracts § 59 (“A reply to an offer which purports to accept it but is

conditional on the offeror’s assent to terms additional to or different

from those offered is not an acceptance but is a counter-offer.”).

With this factual and legal framework established, we agree

with the District Court that the Amended Complaint failed to state a

plausible breach of contract claim because the Amended Complaint

nowhere alleged a valid offer and acceptance. As the District Court

concluded, this makes the instant case similar to 4 Orchard where

there was a course of dealing culminating in a “flurry of letters” but

the context made it apparent that the parties intended to be bound

only by a written contract. 180 N.J. 118, 849 A.2d 164. Here, the

allegations are that no offer was made until March 17, 2004, that the

offer included a written contract, and that the offer was rejected in

favor of a counter-offer. “No offer and no acceptance means no

contract.” Fletcher–Harlee, 482 F.3d at 251. The District Court

properly dismissed Cotter’s breach of contract claim because there

was no plausible entitlement to relief on such a claim, based on the
181

allegations in the Amended Complaint.

Id. at *2–3 (footnote and citations omitted).

One judge (Pollak, J., sitting by designation) dissented from the court of appeals’ affirmance

of the grant of the motion to dismiss. The dissent explained:

The majority holds that documents exchanged between the

parties do not plausibly support the assertion that an agreement had

been reached because whether “an agreement had been reached ... is

a legal assertion, not a factual one, which the District Court properly

ignored.” Maj. Op. at ---- (citing Ashcroft v. Iqbal, --- U.S. ----, ----,

129 S. Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) and Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 167 L.Ed.2d 929

(2007)). However, Twombly and Iqbal prohibit courts only from

crediting a complaint’s “[t]hreadbare recital[ ] of the elements of a

cause of action, supported by mere conclusory statements.” Iqbal,

129 S. Ct. at 1949 (citing Twombly, 550 U.S. at 570, 127 S. Ct.

1955). Far from simply making a threadbare recital of the elements

of a breach of contract claim, the complaint here referenced multiple

documents in which both parties referred to an “agreement,” and it

made factual recitals of the actions that both parties took in reliance

upon that agreement.

Accordingly, I respectfully dissent.

Id. at *4 (Pollack, J., dissenting).

• Wilson v. City of Philadelphia, 415 F. App’x 434, 2011 WL 692998 (3d Cir. Mar. 1, 2011)

(unpublished). Harold Wilson was convicted of murder in 1989 and sentenced to death.

Fifteen years later, he was granted a new trial, acquitted, and released from prison. He filed

an action under § 1983 against former members of the Philadelphia District Attorney’s

Office alleging they committed misconduct during their investigation of the crime.

The district court denied the defendants’ motion to dismiss the complaint. The court of

appeals summarized the district court’s findings:

The District Court in this case, looking to the issue of

entitlement to relief, accurately reviewed the legal principles with

respect to prosecutor’s immunity in stating that “absolute immunity

may not apply when a prosecutor is not acting as ‘an officer of the

court,’ but is instead engaged in other tasks, say, investigative or

administrative tasks.” Van de Kamp v. Goldstein, 555 U.S. 335, ----,

129 S. Ct. 855, 861, 172 L.Ed.2d 706 (2000) (quotation omitted).
182

After applying those principles to dismiss many of the allegations as

to the appealing defendants, the District Court stated that: “plaintiff’s

Amended Complaint also alleges that ‘[i]n an effort to arrest and

imprison Plaintiff for the crimes he did not commit, Defendants,

acting personally, as well [sic] by and through conspiracy with others,

manipulated and coached witnesses, and then withheld from Plaintiff

that they had done so’” (quoting from complaint). The District Court

concluded that to the extent that Wilson’s amended complaint alleges

conduct relating to manipulation and coaching of witnesses in an

investigative capacity, defendants were not entitled to either absolute

or qualified prosecutorial immunity. The District Court recognized

the paucity of factual allegations but permitted the complaint to stand,

liberally viewing the allegations. 

Id. at *2 (citation omitted).

On appeal, the Third Circuit vacated the district court’s denial of the defendants’ motion to

dismiss and remanded to the district court with instructions that the district court grant the

plaintiff leave to file an amended complaint. The court of appeals stated:

We believe the Supreme Court’s jurisprudence requires us to apply

a more exacting scrutiny of the complaint.

An examination of the Supreme Court’s treatment of

allegations in Iqbal is instructive. There, Iqbal alleged that John

Ashcroft, the former United States Attorney General, and Robert

Mueller, the Director of the FBI, “knew of, condoned, and willfully

and maliciously agreed to subject [Iqbal] to harsh conditions of

confinement as a matter of policy, solely on account of [Iqbal’s]

religion, race, and/or national origin and for no legitimate penological

interest,” that Ashcroft was the “principal architect” of this policy,

and that Mueller was “instrumental” in adopting and executing it. 129

S. Ct. at 1951 (quotations omitted). The Supreme Court concluded

that these allegations were conclusory. Id. The Supreme Court also

held that Iqbal’s factual allegations that were well-pleaded failed to

plausibly allege that his arrest was the result of an invidious policy of

unconstitutional discrimination. Id. at 1951–52.

We agree with Appellants that Wilson’s complaint, like

Iqbal’s, falls short of what is required to survive a motion to dismiss.

Wilson’s allegations against Appellants are conclusory, are not

entitled to an assumption of truth, and are insufficient to support his

claims. Nonetheless, this court has held that when a civil rights

complaint will be dismissed for failure to state a claim, a plaintiff
183

should be granted the opportunity to amend the complaint unless

amendment would be inequitable or futile. See Fletcher-Harlee

Corp. v. Pote Concrete Contractors, Inc., 482 F.3d 247, 251–52 (3d

Cir. 2007).

Although that assessment is for the District Court in the first

instance, Wilson has not specified on appeal what supplemental

factual averments he would make by way of amendment. It may be

that the District Court will grant defendants’ motion to dismiss, but

granting him leave to amend certainly would not be inequitable here.

As Wilson explains, he filed his amended complaint just two months

after Iqbal was decided, “well before this Circuit had an opportunity

to flesh out the pleading requirements in light of that case.”

Accordingly, we will vacate that part of the District Court’s

judgment denying Appellants’ motion to dismiss and remand with

instructions to grant Wilson leave to amend his amended complaint

if he can do so to comport with the pleading requirements.

Id. at *2–3 (emphasis added) (citation omitted).

• Abulkhair v. Bush, 413 F. App’x 502, 2011 WL 453477 (3d Cir. 2011) (unpublished) (per

curiam), cert. denied, 131 S. Ct. 2884 (2011). Plaintiff Assem Abulkhair filed a complaint

challenging the denial by the U.S. Customs and Immigration Service of his application for

naturalization as a U.S. citizen. Abulkhair sought monetary damages under Bivens against

President Bush and a number of Customs and Immigration Service officials for violation of

his constitutional rights. All of his claims were premised on his assertion that his

application was denied because he is a “Moslem living in the U.S.” The district court

dismissed his complaint for failure to state a claim, and also granted a motion for summary

judgment against him.

The Third Circuit affirmed the dismissal for failure to state a claim, reasoning as follows:

The defendants moved to dismiss Abulkhair’s Bivens claims

based on, among other things, his failure to allege any facts that the

named federal defendants were personally involved in the alleged

violations of his constitutional rights. We agree with the district court

that Abulkhair failed to sufficiently plead a claim against any

defendant under Bivens.

“To survive a motion to dismiss, a complaint must contain

sufficient factual matter, accepted as true, ‘to state a claim to relief

that is plausible on its face.’” [Iqbal, 129 S. Ct.] at 1949 (citing Bell

Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “Threadbare
184

recitals of the elements of a cause of action, supported by mere

conclusory statements, do not suffice.” Id. Further, to state a Bivens

claim based on alleged unconstitutional discrimination, the petitioner

“must plead sufficient factual matter to show that [a defendant]

adopted and implemented the ... policies at issue not for a neutral . .

. reason but for the purpose of discriminating on account of race,

religion, or national origin.” Id. at 1948–49.

Abulkhair did not make specific claims against any of the

named defendants. Rather, reading the complaint liberally, he appears

to be asserting that the defendants adopted an unconstitutional policy

of discrimination against Muslim applicantsfor naturalization. As in

Iqbal, Abulkhair’s conclusory assertions against the federal officials

have not “nudged [his] claims of invidious discrimination across the

line from conceivable to plausible,” so as to be entitled to a

presumption of truth, as is required to survive a motion to dismiss. Id.

at 1950–51 (internal quotations omitted) (alteration in original).

Accordingly, the district court appropriately dismissed these claims

under Rule 12(b)(6).

Id. at *3–4.

• Santiago v. Warminster Township, 629 F.3d 121 (3d Cir. 2010). Plaintiff Gloria Santiago

filed a complaint under § 1983 and state tort law against Warminster Township and three

of its senior police officers, including the police chief, alleging that she suffered a heart

attack after being subjected to excessive force during a police raid on her home. Her claims

against the police officers who actually conducted the raid—a group that operated under

the moniker “Alpha Team”—were dismissed as untimely. Her remaining claims were

against the Township and against three senior police officers who were not present at the

raid but who allegedly planned and supervised the raid. The district court dismissed all of

these claims for failure to state a claim.

The purpose of the raid was to apprehend one of Santiago’s grandsons, for whom the police

had a warrant. According to the complaint, at the commencement of the raid, the occupants

of Santiago’s home were awakened by police using a public address system. Santiago, who

was 60 years old, looked through a window and saw an armored vehicle and police officers

wearing combat uniforms and carrying automatic weapons. A police officer ordered

everyone to exit the house one at a time. Santiago came out first and was commanded, at

gun point, to raise her hands and walk toward the officers. When she did not raise them

high enough, she was ordered to raise them higher or else be shot. When Santiago reached

the officers, an officer conducted an invasive pat down search. He then restrained her

hands behind her back and seated her on the ground next to the police vehicle. Santiago

was frightened and complained of chest pain. She sat with her hands tied for

approximately 30 minutes while her home was searched. She continued to complain of
185

pain and told another of her grandsons that she felt pain in her heart. The grandson told the

officers that Santiago was having a heart attack, and the officers summoned an ambulance

to take her to the hospital.

The Third Circuit began by summarizing Santiago’s allegations against the three police

officers:

Chief Michael Murphy is Police Chief of Warminster

Township Police Department. . . . Although Chief Murphy was not

present at the scene on May 13, 2006, he ordered and approved the

plan to execute the arrest warrants. This early morning “surround and

call out” operation specifically sought to have all occupants exit the

Plaintiff’s home, one at a time, with hands raised under threat of fire,

patted down for weapons, and then handcuffed until the home had

been cleared and searched. Chief Murphy violated Plaintiff’s Fourth

Amendment rights in that this plan used excessive force in restraining

Plaintiff, a non-target occupant who presented no threat or risk, for a

lengthy period of time and used coercion in obtaining her consent to

search the premises.

Christopher Springfield was a police officer with Warminster

Township Police Department. On May 13, 2006, he held the rank of

Lieutenant and was in [sic] placed in charge of the “surround and call

out” operation by Chief Murphy. . . . Lt. Springfield violated

Plaintiff’s Fourth Amendment rights in that he permitted the use of

excessive force in restraining Plaintiff, a non-target occupant who

presented no threat or risk, for a lengthy period of time and used

coercion in obtaining her consent to search the premises.

Lt. James Donnelly is an officer with the Warminster

Township Police Department. . . . Chief Murphy ordered Lt.

Donnelly to plan and help execute an early morning “surround and

call out” operation which sought to have all occupants exit the

Plaintiff’s home, one at a time, with hands raised under threat of fire,

patted down for weapons, and then handcuffed until the home had

been cleared and searched. Lt. Donnelly violated Plaintiff’s Fourth

Amendment rights in that this plan used excessive force in restraining

Plaintiff, a non-target occupant who presented no threat or risk, for a

lengthy period of time, and used coercion in obtaining her consent to

search the premises. As Tactical Team Leader . . . , Lt. Donnelly was

responsible for the actions of Alpha Team.

The Third Circuit affirmed the district court’s dismissal of the complaint, reasoning as

follows:
186

We take as true all the factual allegations of the Third Amended

Complaint and the reasonable inferences that can be drawn from

them, Sheridan v. NGK Metals Corp., 609 F.3d 239, 262 n. 27 ([3d

Cir.] 2010), but we disregard legal conclusions and “recitals of the

elements of a cause of action, supported by mere conclusory

statements.” Iqbal, 129 S. Ct. at 1949. “To survive a motion to

dismiss, ‘a complaint must contain sufficient factual matter, accepted

as true, to state a claim to relief that is plausible on its face.’”

Sheridan, 609 F.3d at 262 n. 27 (quoting Iqbal, 129 S. Ct. at 1949).

“‘A claim has facial plausibility when the plaintiff pleads factual

content that allows the court to draw the reasonable inference that the

defendant is liable for the misconduct alleged.’” Id.

. . . .

We address first the dismissal of Santiago’s claims against the

Supervising Officers. The District Court dismissed those claims

because it held that Santiago had not pled any basis of liability in the

Supervising Officers’ own acts but, instead, had alleged only a theory

of respondeat superior liability, which cannot serve as the basis of a

claim for constitutional violations. See Iqbal, 129 S. Ct. at 1948

(“Government officials may not be held liable for the unconstitutional

conduct of their subordinates under a theory of respondeat superior.”).

While we conclude that the Third Amended Complaint can be read

as alleging liability based on the Supervising Officers’ own acts, we

will nevertheless affirm the District Court’s ruling because those

allegations fail to meet the pleading requirements set forth by the

Supreme Court in Twombly and Iqbal.

. . . .

. . . . Santiago’s allegations appear to invoke a theory of liability

under which “a supervisor may be personally liable . . . if he or she

participated in violating the plaintiff’s rights, directed others to

violate them, or, as the person in charge, had knowledge of and

acquiesced in his subordinates' violations.” A.M. ex rel. J.M.K. v.

Luzerne Cnty. Juvenile Det. Ctr., 372 F.3d 572, 586 (3d Cir. 2004).

Specifically, Santiago alleges that Chief Murphy and Lt. Donnelly

developed a plan that “sought to have all occupants exit the Plaintiff’s

home, one at a time, with hands raised under threat of fire, patted

down for weapons, and then handcuffed until the home had been

cleared and searched.” The claim is thus that, through the creation

and authorization of the plan, Chief Murphy and Lt. Donnelly
187

“directed others to violate [Santiago’s rights].” A.M., 372 F.3d at

586. The related allegation that Lt. Springfield, as the person in

charge of the operation, “permitted the use of excessive force”

appears to be a claim that Lt. Springfield “acquiesced in his

subordinates’ violations.” A.M., 372 F.3d at 586. 

Consequently, although the Third Amended Complaint seeks

a species of supervisory liability, it is not respondeat superior

liability.

That Santiago has alleged supervisory liability claims does not

mean that she has supported those allegations with “sufficient factual

matter, accepted as true, to ‘state a claim to relief that is plausible on

its face,’” Sheridan, 609 F.3d at 262 n. 27 (quoting Iqbal, 129 S. Ct.

at 1949), as is required by the seminal Supreme Court decisions in

Iqbal and Twombly. To determine the sufficiency of a complaint

under the pleading regime established by those cases, a court must

take three steps: First, the court must “tak[e] note of the elements a

plaintiff must plead to state a claim.” Iqbal, 129 S. Ct. at 1947.

Second, the court should identify allegations that, “because they are

no more than conclusions, are not entitled to the assumption of truth.”

Id. at 1950. Finally, “where there are well-pleaded factual

allegations, a court should assume their veracity and then determine

whether they plausibly give rise to an entitlement for relief.” Id.

. . . . 

To state a claim of supervisory liability against Chief Murphy

and Lt. Donnelly, at least of the kind that it appears Santiago is

advancing, she must plead that they “directed others to violate [her

rights],” A.M., 372 F.3d at 586. Of course, Chief Murphy and Lt.

Donnelly could only be liable if the people they supposedly directed

to violate her rights actually did so; otherwise, “the fact that [Chief

Murphy and Lt. Donnelly] might have [directed] the use of

constitutionally excessive force is quite beside the point.” City of Los

Angeles v. Heller, 475 U.S. 796, 799, 106 S. Ct. 1571, 89 L. Ed. 2d

806 (1986). Thus, any claim that supervisors directed others to

violate constitutional rights necessarily includes as an element an

actual violation at the hands of subordinates. In addition, a plaintiff

must allege a causal connection between the supervisor’s direction

and that violation, or, in other words, proximate causation.

Proximate causation is established where the supervisor gave

directions that the supervisor “knew or should reasonably have
188

known would cause others to deprive the plaintiff of her

constitutional rights.” Conner v. Reinhard, 847 F.2d 384, 397 (7th

Cir. 1988); see also Snell v. Tunnell, 920 F.2d 673, 700 (10th Cir.

1990). Particularly after Iqbal, the connection between the

supervisor's directions and the constitutional deprivation must be

sufficient to “demonstrate a ‘plausible nexus’ or ‘affirmative link’

between the [directions] and the specific deprivation of constitutional

rights at issue.” Hedges v. Musco, 204 F.3d 109, 121 (3d Cir. 2000)

(internal quotation marks and citation omitted). Therefore, to state

her claim against Chief Murphy and Lt. Donnelly, Santiago needs to

have pled facts plausibly demonstrating that they directed Alpha

Team to conduct the operation in a manner that they “knew or should

reasonably have known would cause [Alpha Team] to deprive

[Santiago] of her constitutional rights.” Conner, 847 F.2d at 397.

As to her claim against Lt. Springfield, Santiago must allege

facts making it plausible that “he had knowledge of [Alpha Team's

use of excessive force during the raid]” and “acquiesced in [Alpha

Team's] violations.” A.M., 372 F.3d at 586.

Having identified the elements of Santiago’s claims, Iqbal

directs that the next step is to identify allegations that, “because they

are no more than conclusions, are not entitled to the assumption of

truth.” Iqbal, 129 S. Ct. at 1950. In other words, “[we] must accept

all of the complaint’s well-pleaded facts as true, but may disregard

any legal conclusions.” Fowler, 578 F.3d at 210–11. We also

disregard “naked assertions devoid of further factual enhancement”

and “threadbare recitals of the elements of a cause of action,

supported by mere conclusory statements.” Iqbal, 129 S. Ct. at 1949.

Santiago alleges that the plan developed and authorized by

Chief Murphy and Lt. Donnelly “specifically sought to have all

occupants exit the Plaintiff’s home, one at a time, with hands raised

under threat of fire, patted down for weapons, and then handcuffed

until the home had been cleared and searched.” Because this is

nothing more than a recitation of what Santiago says the Alpha Team

members did to her, it amounts to a conclusory assertion that what

happened at the scene was ordered by the supervisors. While the

allegations regarding Alpha Team’s conduct are factual and more

than merely the recitation of the elements of a cause of action, the

allegation of supervisory liability is, in essence, that “Murphy and

Donnelly told Alpha team to do what they did” and is thus a

“formulaic recitation of the elements of a [supervisory liability]

claim,” Iqbal, 129 S. Ct. at 1951 (internal quotation marks
189

omitted)—namely that Chief Murphy and Lt. Donnelly directed

others in the violation of Santiago’s rights. Saying that Chief Murphy

and Lt. Donnelly “specifically sought” to have happen what allegedly

happened does not alter the fundamentally conclusory character of the

allegation.

Our conclusion in this regard is dictated by the Supreme

Court’s decision in Iqbal. The plaintiff’s claim in that case required

proving that the defendants, Attorney General John Ashcroft and FBI

Director Robert Mueller, had “adopted a policy because of, not

merely in spite of, its adverse effects upon an identifiable group.”

129 S. Ct. at 1951. The Court disregarded allegations that

“petitioners knew of, condoned, and willfully and maliciously agreed

to subject [respondent] to harsh conditions of confinement as a matter

of policy, solely on account of [his] religion, race, and/or national

origin” and that “Ashcroft was the principal architect of this invidious

policy, and that Mueller was instrumental in adopting and executing

it.” Id. (internal quotation marks omitted). The Supreme Court

called those allegations “nothing more than a formulaic recitation of

the elements of a constitutional discrimination claim.” Id. (internal

quotation marks omitted). The Court emphasized that the claims

required dismissal not because they were fanciful, but because they

were conclusory. Id. Likewise, in this case where Santiago is

required to prove that the Supervising Officers directed others to use

excessive force, an allegation that the plan “specifically sought” that

use of force is nothing more than a formulaic recitation of the

elements of a supervisory liability claim and hence is not entitled to

the assumption of truth. The same is true for Santiago’s allegation

that Lt. Springfield “permitted the use of excessive force,” which is

nothing more than a conclusory statement that he acquiesced in his

subordinates’ violations.

In short, Santiago’s allegations are “naked assertion[s]” that

Chief Murphy and Lt. Donnelly directed Alpha Team to conduct the

operation in the allegedly excessive manner that they did and that Lt.

Springfield acquiesced in Alpha Team’s acts. As mere restatements

of the elements of her supervisory liability claims, they are not

entitled to the assumption of truth. However, it is crucial to recognize

that our determination that these particular allegations do not deserve

an assumption of truth does not end the analysis. It may still be that

Santiago’s supervisory liability claims are plausible in light of the

non-conclusory factual allegations in the complaint. We therefore

turn to those allegations to determine whether the claims are

plausible.
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“A claim has facial plausibility when the plaintiff pleads

factual content that allows the court to draw the reasonable inference

that the defendant is liable for the misconduct alleged.” Iqbal, 129 S.

Ct. at 1949. . . . 

. . . .

. . . . [T]he allegations against Alpha Team are that the officers

ordered everyone to exit the house one at a time; that Santiago exited

first under threat of fire; that Santiago was patted down in a

demeaning fashion, found to be unarmed, and subsequently

handcuffed; that the remaining occupants of the home then exited,

some of whom were handcuffed while others were not; that

Santiago’s daughter was coerced into consenting to a search of the

home; and that Santiago was left restrained for thirty minutes while

her home was searched, during which time she had a heart attack.

The question then becomes whether those allegations make it

plausible that Chief Murphy and Lt. Donnelly directed Alpha Team

to conduct the operation in a manner that they “knew or should

reasonably have known would cause [Alpha Team] to deprive

[Santiago] of her constitutional rights,” Conner, 847 F.2d at 397, or

that Lt. Springfield “had knowledge [that Alpha Team was using

excessive force during the raid]” and “acquiesced in [Alpha Team’s]

violations.” A.M., 372 F.3d at 586.

First, with respect to Chief Murphy and Lt. Donnelly, we

consider whether the fact that they planned the operation coupled

with the fact that the operation resulted in excessive force against

Santiago makes it plausible that the plan called for the use of

excessive force. We conclude that it does not. Santiago has only

alleged that excessive force was used against her. The complaint does

not allege that any other occupant was threatened with fire. It

specifically states that the other women were not handcuffed. It does

allege that the two grandsons were handcuffed, but one of them was

the subject of the arrest warrant and there are no allegations stating

whether the other was found to be armed or a risk of flight.

Consequently, there is no basis in the complaint to conclude that

excessive force was used on anyone except Santiago. Even if

someone else had been subjected to excessive force, it is clear that the

occupants were not being treated uniformly. Thus, Santiago’s

allegations undercut the notion of a plan for all occupants to be

threatened with fire and handcuffed. While it is possible that there

was such a plan, and that Alpha Team simply chose not to follow it,
191

“possibility” is no longer the touchstone for pleading sufficiency

after Twombly and Iqbal. Plausibility is what matters. Allegations

that are “merely consistent with a defendant's liability” or show the

“mere possibility of misconduct” are not enough. Iqbal, 129 S. Ct. at

1949–50 (internal quotation marks omitted). Here, given the

disparate treatment of the occupants of the home, one plausible

explanation is that the officers simply used their own discretion in

determining how to treat each occupant. In contrast with that

“obvious alternative explanation” for the allegedly excessive use of

force, the inference that the force was planned is not plausible. Id. at

1951-52 (quoting Twombly, 550 U.S. at 567, 127 S. Ct. 1955).

Where, as here, an operation results in the use of allegedly

excessive force against only one of several people, that use of force

does not, by itself, give rise to a plausible claim for supervisory

liability against those who planned the operation. To hold otherwise

would allow a plaintiff to pursue a supervisory liability claim anytime

a planned operation resulted in excessive force, merely by describing

the force used and appending the phrase “and the Chief told them to

do it.” Iqbal requires more.

We next ask whether the allegation that Lt. Springfield was

placed in charge of the operation, coupled with what happened during

the operation, makes it plausible that Lt. Springfield knew of and

acquiesced in the use of excessive force against Santiago. Again, we

conclude that it does not. The complaint implies but does not allege

that Lt. Springfield was present during the operation. Assuming he

was present, however, the complaint still does not aver that he knew

ofthe allegedly excessive force, nor does it give rise to the reasonable

inference that he was aware of the level of force used against one

individual. See McKenna v. City of Philadelphia, 582 F.3d 447, 460

(3rd Cir. 2009) (holding that a supervisor’s presence “in the vicinity

of the arrest at some point after [plaintiff] was handcuffed . . . is not

a legally sufficient evidentiary basis” to find knowledge and

acquiescence). Consequently, the allegations are insufficient to

“nudge [Santiago’s] claims across the line from conceivable to

plausible.” Twombly, 550 U.S. at 570, 127 S. Ct. 1955.

In sum, while Santiago’s complaint contains sufficient

allegations to show that the Supervising Officers planned and

supervised the operation and that, during the operation, Alpha Team

used arguably excessive force, her allegations do nothing more than

assert the element of liability that the Supervising Officers

specifically called for or acquiesced in that use of force. As a result,
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her allegations may “get[ ] the complaint close to stating a claim, but

without further factual enhancement [they] stop[ ] short of the line

between possibility and plausibility of entitlement to relief.”

Twombly, 550 U.S. at 557, 127 S. Ct. 1955 (internal quotation marks

and alterations omitted). Because the Third Amended Complaint

does not give rise to a plausible claim for relief against the

Supervising Officers, the District Court did not err in dismissing the

claims against them.

We now turn to the dismissal of Santiago’s claim against

Warminster [Township]. The District Court dismissed that claim

because Santiago had failed to allege that Chief Murphy was a final

policymaker, which, under Monell, was necessary to the survival of

her claim against the Township. Santiago offers two arguments for

why the dismissal was improper. First, she argues that, while she

may not have used the words “final policymaker,” “the factual

averments of the complaint are more than sufficient to show that

Chief Murphy was the ‘final policymaker’ with respect to the tactical

decisions made here.” Second, she argues that the District Court

applied the wrong standard—consideringwhetherChief Murphy was

a final policymaker as a factual question instead of a legal one, as

required under Supreme Court precedent. Not only are those

arguments inconsistent, they miss the point. The dispositive point is

that, whether or not Chief Murphy is a final policymaker, Santiago

has failed to plead facts showing that his plan caused her injury.

Under Monell, for municipal liability to attach, any injury

must be inflicted by “execution of a government’s policy or custom.”

436 U.S. at 694, 98 S. Ct. 2018. Drawing all factual inferences in

favor of Santiago, as is required at this juncture, we nevertheless

cannot conclude that the Third Amended Complaint alleges

municipal liability. The complaint does not allege that Chief Murphy

had policymaking authority, nor does it allege what action he took

that could fairly be said to be policy. The allegation that Chief

Murphy ordered a plan to execute arrest warrants does not imply the

existence of an official policy in violation of Santiago’s constitutional

rights. See McTernan v. City of York, 564 F.3d 636, 658 (3d Cir.

2009) (a claimant “must identify a custom or policy, and specify what

exactly that custom or policy was”);see also McGreal v. Ostrov, 368

F.3d 657, 685 (7th Cir. 2004) (“[T]he plaintiff must first allege that

a defendant is a final policymaker. Only then can a court proceed to

the next question of whether the single act or single decision of that

defendant constituted municipal policy.”). More to the point, though,

we have already held that Santiago’s pleadings fail to plausibly allege
193

that Chief Murphy directed others to violate her rights. Thus, even if

Chief Murphy were a final policy maker and his plan were deemed to

be official Warminster policy, Santiago has failed to properly plead

that the plan was the source of her injury. Therefore, she has not

shown that her injury was inflicted by “execution of [Warminster’s]

policy or custom,” Monell, 436 U.S. at 694, 98 S. Ct. 2018, and she

has no claim against the Township.

Santiago, 629 F.3d at 128–35 (emphasis added) (footnotes and internal citations omitted).

• West Penn Allegheny Health System, Inc. v. UPMC, 627 F.3d 85, 2010 WL 4840093 (3d

Cir. Nov. 29, 2010), cert. denied, --- S. Ct. ----, No. 10-1341, 2011 WL 4530161 (Oct. 3,

2011). West Penn Allegheny Health System, Pittsburgh’s second-largest hospital system,

alleged that Pittsburgh’s dominant hospital system (UPMC) and dominant insurer

(Highmark) violated sections 1 and 2 of the Sherman Act by forming a conspiracy to protect

one another from competition. Id. at *1. The district court dismissed for failure to state a

claim. Id. The Third Circuit reversed. Id.

In its opinion dismissing the complaint, the district court stated that “judges presiding over

[antitrust] cases have a duty to act as gatekeepers” and must subject pleadings in such cases

to heightened scrutiny. Id. at *6-7. The Third Circuit disagreed: 

Although Twombly acknowledged that discovery in antitrust cases

“can be expensive,” 550 U.S. at 558, it expressly rejected the notion

that a “ ‘heightened’ pleading standard” applies in antitrust cases, id.

at 569 n. 14, and Iqbal made clear that Rule 8’s pleading standard

applies with the same level of rigor in “‘all civil actions,’” 129 S. Ct.

at 1953. See also Swierkiewicz v. Sorema N.A., 534 U.S. 506, 512-13

(2002); Leatherman v. Tarrant County Narcotics Intelligence &

Coordination Unit, 507 U.S. 163, 167-68 (1993) (rejecting Fifth

Circuit’s adoption of a heightened pleading standard for civil rights

cases alleging municipal liability); 5 Charles Alan Wright & Arthur

R. Miller, Federal Practice & Procedure § 1221 (3d ed.2004) (noting

that Rule 8’s pleading standard applies with the same degree of rigor

“in every case, regardless of its size, complexity, or the numbers of

parties that may be involved”). 

It is, of course, true that judging the sufficiency of a pleading is a

context-dependent exercise. See Iqbal, 129 S. Ct. at 1950; Twombly,

550 U.S. at 567-68; Phillips, 515 F.3d at 232. Some claims require

more factual explication than others to state a plausible claim for

relief. See In re Ins. Brokerage Antitrust Litig., 618 F.3d 300, 320 n.

18 (3d Cir.2010). For example, it generally takes fewer factual

allegations to state a claim for simple battery than to state a claim for
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antitrust conspiracy. See A. Benjamin Spencer, Understanding

Pleading Doctrine, 108 MICH.L.REV. 1, 13-18 (2009). But, contrary

to the able District Court’s suggestion, this does not mean that

Twombly’s plausibility standard functions more like a probability

requirement in complex cases.

We conclude that it is inappropriate to apply Twombly’s plausibility

standard with extra bite in antitrust and other complex cases. We

now turn to address whether West Penn’s complaint satisfies the

plausibility standard.

Id. at *7-8.

The court first considered the conspiracy claims. With respect to the Section 1 claims, the

court explained:

Section 1 provides that “[e]very contract, combination in the form of

trust or otherwise, or conspiracy, in restraint of trade or commerce

among the several States ... is declared to be illegal.” Despite its

seemingly absolute language, section 1 has been construed to prohibit

only unreasonable restraints of trade. Standard Oil Co. v. United

States, 221 U.S. 1, 58 (1911); United States v. Brown Univ., 5 F.3d

658, 668 (3d Cir.1993). Some agreements are so plainly

anticompetitive that they are condemned per se; that is, they are

conclusively presumed to unreasonably restrain trade. E.g., United

States v. Trenton Potteries Co., 273 U.S. 392, 397-400 (1927)

(horizontal agreements to fix prices); Palmer v. BRG of Ga., Inc., 498

U.S. 46, 49-50 (1990) (per curiam) (horizontal agreements to divide

markets). Other agreements are condemned only if evaluation under

the fact-intensive rule of reason indicates that they unreasonably

restrain trade. E.g., Leegin Creative Leather Prods., Inc. v. PSKS,

Inc., 551 U.S. 877 (2007) (vertical agreements to maintain resale

prices).

West Penn, 2010 WL 4840093 at *8. With respect to the Section 2 claims, liability is

imposed on “[e]very person who shall monopolize, or attempt to monopolize, or combine

or conspire with any other person or persons, to monopolize any part of the trade or

commerce among the several States.” Id. (quoting 15 U.S.C. § 2).

Defendants argued that the complaint failed to allege an agreement, which is required for

both the Section 1 and 2 claims. Id. With aspect to the agreement between UPMC and

Highmark, West Penn alleged that:

West Penn asked Highmark to refinance the loan that was used to
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fund the 2000 merger, that Highmark agreed that refinancing was a

good idea, but that Highmark would not sign off on the refinancing.

Highmark explained that if it helped West Penn out financially,

UPMC, which was “obsessed” with driving West Penn out of

business, would retaliate against it for violating their agreement - an

agreement that Highmark admitted was “probably illegal.” Indeed,

UPMC had sent Highmark a letter warning that if it extended

financial assistance to West Penn, UPMC would enter a provider

agreement with a Highmark competitor, thus reducing Highmark’s

dominance in the insurance market. The complaint also alleges that

in 2005 and 2006, West Penn asked Highmark to increase its

reimbursement rates, that Highmark acknowledged that the rates were

too low and suggested that it would raise them, but that Highmark

refused to follow through, explaining that if it increased West Penn’s

rates, UPMC would retaliate against it for violating their agreement.

Finally, the complaint alleges that at an employees’ meeting, UPMC’s

CEO admitted that he decided to shrink UPMC Health Plan as a

result of “negotiations” with Highmark, during which Highmark had

agreed to take Community Blue off the market. 

Id. at *9. The court concluded that “these allegations of direct evidence are sufficient to

survive a motion to dismiss on the agreement element.” Id. The court next determined that

the complaint alleged that the conspiracy unreasonably restrained trade:

Here, the complaint alleges that the relevant markets are, on one

hand, the Allegheny County market for specialized hospital services

and, on the other hand, the Allegheny County market for health

insurance. The complaint plausibly suggests that by denying West

Penn capital, the conspiracy caused West Penn to cut back on its

services (including specialized hospital services) and to abandon

projects to expand and improve its services and facilities. The

complaint also plausibly suggests that by shielding Highmark from

competition, the conspiracy resulted in increased premiums and

reduced output in the market for health insurance. These allegations

are sufficient to suggest that the conspiracy produced anticompetitive

effects in the relevant markets.

Id. at *10 (footnote omitted).

The court next considered whether the complaint alleged antitrust injury. West Penn, 2010

WL 4840093 at *10. The court explained that “[a]n antitrust injury is an ‘injury of the type

the antitrust laws were intended to prevent and that flows from that which makes [the]

defendants’ acts unlawful.’” Id. (quoting Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429

U.S. 477, 489 (1977)) (second alteration in original). Plaintiff alleged that “three aspects of
196

the conspiracy caused it antitrust injury.” Id. The court rejected West Penn’s argument that

it was “injured as a result of Highmark’s decision to take a low-cost insurance plan [used by

West Penn, but not by UPMC] off the market because “West Penn participates in the

insurance market not as a consumer or a competitor but as a supplier” and a supplier’s losses

are “merely byproducts of the anticompetitive effects of the restraint.” Id. at *11. The court

also rejected West Penn’s argument that it sustained an anti-trust injurybased on Highmark’s

refusal to refinance a loan it made to West Penn before the alleged conspiracy began. Id.

The court noted that “[b]ecause Highmark was just one of many possible sources of

financing, we conclude that - even if it acted with anticompetitive motives - Highmark’s

refinancing refusals could not have been ‘competition-reducing aspect[s] ... of the

conspiracy, and thus did not give rise to an antitrust injury.’” Id. (quoting Atl. Richfield Co.

v. USA Petroleum Co., 495 U.S. 328, 344 (1990)) (second alteration and emphasis in

original). However, the court then decided that West Penn’s assertion that Highmark

artificially depressed reimbursement rates, resulting in underpayments, did allege an antitrust

injury:

Here, the complaint suggests that Highmark has substantial

monopsony power. It alleges that Highmark has a 60%-80% share of

the Allegheny County market for health insurance, that there are

significant entry barriers for insurers wishing to break into the market

(including UPMC's unwillingness to deal competitively with

non-Highmark insurers), and that medical providers have very few

alternative purchasers for their services. The complaint also alleges

that Highmark paid West Penn depressed reimbursement rates, not as

a result of independent decisionmaking, but pursuant to a conspiracy

with UPMC, under which UPMC insulated Highmark from

competition in return for Highmark’s taking steps to hobble West

Penn. In these circumstances, it is certainly plausible that paying

West Penn depressed reimbursement rates unreasonably restrained

trade. Such shortchanging poses competitive threats similar to those

posed by conspiracies among buyers to fix prices, and other restraints

that result in artificially depressed payments to suppliers - namely,

suboptimal output, reduced quality, allocative inefficiencies, and

(given the reductions in output) higher prices for consumers in the

long run.

Id. at *12 (citations omitted).

The court next considered whether West Penn’s claims were barred by the statute of

limitations. The court explained that a limitations defense may be raised in a Rule 12(b)(6)

motion to dismiss. West Penn, 2010 WL 4840093 at *14, n.13. To prevail, “the plaintiff’s

tardiness in bringing the action must be apparent from the face of the complaint.” Id. The

court decided that West Penn’s case was timely “even though the acts that occurred within

the limitations period were reaffirmations of decisions originally made outside the limitations
197

period.” Id. at *15.

Turning to West Penn’s allegation that “UPMC violated section 2 of the Sherman Act by

attempting to monopolize the Allegheny County market for specialized hospital services,”

the court explained that “[t]he elements of attempted monopolization are (1) that the

defendant has a specific intent to monopolize, and (2) that the defendant has engaged in

anticompetitive conduct that, taken as a whole, creates (3) a dangerous probability of

achieving monopoly power.” Id. at *16. And noted that “anticompetitive conduct can

include a conspiracy to exclude a rival.” Id. at *17. The court concluded that the following

allegations, “viewed as a whole,” plausibly suggested that UPMC had engaged in

anticompetitive conduct:

First, the defendants engaged in a conspiracy, a purpose of which was

to drive West Penn out of business. Second, UPMC hired employees

away from West Penn by paying them bloated salaries. UPMC

admitted to hiring some of the employees not because it needed them

but in orderto injure West Penn; UPMC could not absorb some of the

employees and had to let them go; and UPMC incurred financial

losses as a result of the hiring. .... Relatedly, UPMC tried

unsuccessfully to lure a number of employees away from West Penn;

UPMC could not have absorbed the additional employees, and

although the employees remained with West Penn, they did so only

after West Penn raised their salaries to supracompetitive levels.

Third, UPMC approached community hospitals and threatened to

build UPMC satellite facilities next to them unless they stopped

referring oncology patients to West Penn and began referring all such

patients to UPMC. Nearly all of the community hospitals caved in,

which deprived West Penn of a key source of patients. Moreover,

under pressure from UPMC, several of the community hospitals have

stopped sending any of their tertiary and quaternary care referrals to

West Penn and have begun sending them all to UPMC. Finally, on

several occasions, UPMC made false statements about West Penn's

financial health to potential investors, which caused West Penn to pay

artificially inflated financing costs on its debt.

Id. at 18. 

• Shahin v. Delaware Dep’t. of Transportation, 405 F. App’x 587, No. 10-1699, 2010 WL

4630242 (3d Cir. Nov. 17, 2010) (per curiam) (unpublished). Plaintiff Shahin alleged that

the Delaware Department of Transportation discriminated against her on the basis of her age

and national origin by refusing to employ her. Id. at *1. The Department filed a motion to

dismiss the complaint for failure to state a claim and Shahin did not file a response. Id. The

district court granted the motion without prejudice and gave Shahin thirty days to file an

amended complaint before the dismissal became with prejudice. Id. Shahin did not file an
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amended complaint, but did file a notice of appeal. Id. The Third Circuit affirmed. Id. 

The Third Circuit explained that “[i]n order to state a claim of employment discrimination,

Shahin must allege (1) that she belongs to a protected class; (2) that she applied for a position

for which the employer was seeking applicants and was qualified for that position; (3) she

was rejected; and (4) the employer continued to seek applicants of her qualifications.”

Shahin, 2010 WL 4630242 at *1. Shahin’s claim failed because she “did not identify her

membership in a protected class, any position for which she applied, or her qualifications.

Id. And she did not allege that any application was rejected.” Id. The court rejected

Shahin’s contention that the first two elements were established by her job application and

the complaint procedures at the Departments of Transportation and Labor because these

details were not included in her complaint. Id. at *2. The court noted that Shahin might

have been able to cure these deficiencies, but she chose to not file a response to the motion

to dismiss or an amended complaint. Id. The court concluded that, “[u]nder Iqbal, it is not

sufficient to simply recite the elements of a cause of action and support them with conclusory

statements. Here, Shahin has done even less.” Id. (internal citation omitted).

• Antoine v. Star Ledger of New Jersey, 409 F. App’x 492, No. 10-2588, 2010 WL 4342308

(3dCir. Nov. 3, 2010) (per curiam) (unpublished). Plaintiff Antoine, proceeding pro se, filed

a complaint against the New York Morning Ledger Company, publisher of The Star-Ledger,

and Reporter Brubaker for alleged violations of his First, Fourth, Fifth, and Fourteenth

Amendment rights; and various federal and state laws, regulations and protocols. Id. at *1.

Defendants filed a motion to dismiss pursuant to Rules 12(b)(1) and 12(b)(6). Id. The

District Court granted defendants’ 12(b)(6) motion with respect to Antoine’s federal claims

and declined to exercise supplemental jurisdiction over the remaining state law claims. Id.

Antoine appealed and the Third Circuit affirmed. 

The court explained that “[t]o survive a motion to dismiss, a complaint must contain

sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its

face.” Id. (quoting Iqbal, 129 S.Ct at 1949). The Third Circuit agreed with the district court

that “Antoine failed to sufficiently allege that defendants acted under color ofstate law – an

allegation essential to maintain an action under 42 U.S.C. § 1983.” Id. And also “agree[d]

with the district court’s analyses and conclusions with respect to the remaining federal claims

asserted under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e. et. seq., federal

antitrust law, and the Federal Video Privacy Protection Act, and will not repeat them here.”

Antoine, 2010 WL 4342308 at *1. 

• PA Prison Society v. Cortes, 622 F.3d 215 (3d Cir. 2010), cert. denied, 131 S. Ct. 1808

(2011). Plaintiffs challenged the constitutionality of an amendment to the Constitution of

the Commonwealth of Pennsylvania that altered the voting procedure employed by the

Pennsylvania Board of Pardons to require unanimity in recommending pardons and

commutations for life-sentenced prisoners to the Governor. Id. at 219. The district court

ruled that the amendment violated the Ex Post Facto clause of the United States Constitution

for prisoners sentenced to a term of life imprisonment prior to its effective date. Id. The
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Third Circuit reversed and remanded. Id.

The court first explained the pleading standard from Twombly and Iqbal: 

 “To survive a motion to dismiss, a complaint must contain sufficient

factual matter, accepted as true, to ‘state a claim to relief that is

plausible on its face.’ ” Ashcroft v. Iqbal, --- U.S. ----, 129 S. Ct.

1937, 1949, 173 L. Ed. 2d 868 (2009) (quoting Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 167 L. Ed. 2d 929

(2007)). In deciding a motion to dismiss, a court must determine

whether the complaint “pleads factual content that allowsthe court to

draw the reasonable inference that the defendant is liable for the

misconduct alleged.” Id. “While legal conclusions can provide the

framework of a complaint, they must be supported by factual

allegations.” Id. at 1950.

Plaintiffs alleged that:

The changes in the pardons process effectuated by the Amendment

impose additional punishment on the Prisoner Plaintiffs since there

is distinctly less of an opportunity to obtain a pardon or commutation.

 Plaintiffs also allege that prior to the Amendment, it was distinctly

more likely that the Prisoner Plaintiffs could obtain a pardon or

commutation. However, since the Amendment became law, the

Prisoner Plaintiffs are virtually shut out from that opportunity.

Id. at 233 (quotations and citations omitted). The court found these allegations insufficient:

These allegations fail to state a viable claim as a matter of law

because the legal conclusion that the “Amendment impose[s]

additional punishment” is not supported by any of the factual

allegations in the Second Amended Complaint. The 1997

Amendment does not lengthen the sentences imposed upon the

prisoners represented by the Pennsylvania Prison Society, who have

been sentenced to serve a term of life imprisonment without parole.

Id. The court decided that “[t]here is no ex post facto violation where the retroactively

applied law does not make one’s punishment more burdensome, but merely creates a

disadvantage.” Cortes, 622 F.3d at 233 (quoting Spuck v. Ridge, 347 F. App’x 727, 729 (3d

Cir. 2009).

The court explained that

The Ex Post Facto Clause ofthe Constitution, U.S. Const. art.
200

I §§ 9 and 10, forbids the government from passing any law “which

imposes a punishment for an act which was not punishable at the time

it was committed; or imposes additional punishment to that then

prescribed.” Weaver v. Graham, 450 U.S. 24, 28, 101 S. Ct. 960, 67

L. Ed. 2d 17 (1981) (internal quotation omitted). The Ex Post Facto

Clause is intended to provide fair warning about new punishments

and to discourage arbitrary and oppressive legislation. Weaver, 450

U.S. at 28, 101 S. Ct. 960. To fall within the ex post facto

prohibition, “two critical elements must be present ...: it must be

retrospective, that is, it must apply to events occurring before its

enactment, and it must disadvantage the offender affected by it.” Id.

at 29, 101 S. Ct. 960 (footnotes omitted).

And agreed with defendants that there were “three distinct reasons why Plaintiffs’ ex post

facto claim is not viable.” Id. at 234.

First, the 1997 Amendment is not an ex post facto law “[g]iven the ad

hoc nature of [executive] clemency, the retroactive application of the

amendment cannot, as a matter of law, have any widespread effect on

the period of incarceration for prisoners serving life sentences....” 

Second, “[P]laintiffs cannot show that the passage of the

Amendment has resulted or will result in a longer period of

incarceration for life sentenced prisoners” because a life sentence,

absent the executive grant of a commutation, is still a life sentence

and nothing more. The adoption of the 1997 Amendment did not

increase the punishment. A term of life imprisonment is no less than

and no more than natural life.

Third, the 1997 Amendment does not trigger an ex post facto

inquiry because changes in the law that alter procedures for obtaining

commutation, but do not eliminate the possibility of commutation, are

procedural and thus not ex post facto laws.

Cortes, 622 F.3d at 234 (alterations in original) (internal citations omitted).

• Mayercheck v. Judges of the Pennsylvania Supreme Court, 395 F. App’x 839, No. 09-

3575, 2010 WL 3258257 (3d Cir. Aug. 18, 2010) (per curiam) (unpublished), cert. denied,

131 S. Ct. 945 (2011). Plaintiff Mayercheck, proceeding pro se, sued his former wife and

judges in their divorce proceedings for conspiring to deprive him of his federal constitutional

rights during the divorce proceedings. Id. at *1. Defendants filed motions to dismiss, which

the magistrate recommended that the district court grant, finding that the district court lacked

jurisdiction over Mayercheck’s claims and that, “even if the court did have subject matter

jurisdiction, Mayercheck failed to state a claim for civil rights violations on which relief
201

could be granted under Federal Rule of Civil Procedure 12(b)(6).” Id. The district court

accepted the magistrate’s recommendations. Id. The Third Circuit affirmed. Id. 

With respect to the 12(b)(6) dismissal, the Third Circuit instructed that “[t]o survive

dismissal under Rule 12(b)(6), a complaint must contain more than ‘[t]hreadbare recitals of

the elements of a cause of action, supported by mere conclusory statements.’” Id. at *3

(quoting Iqbal, 129 S. Ct. at 1949) (second alteration in original). The court agreed that

Mayercheck “failed to sufficiently plead a claim against any defendant under the doctrine in

Bivens v. Six Unknown Named Agents of Federal Bureau of Narcotics, 403 U.S. 388 (1971)”

because a Bivens claim must be brought against a federal agent. Mayercheck, 2010 WL

3258257 at *3. Mayercheck made no allegations about a federal agent and thus failed to

plead a plausible claim for relief under Bivens. Id. The Third Circuit also concluded that

Mayercheck failed to plead sufficient facts to allow an inference that the judicial defendants

were not acting within their judicial capacity. Id. 

The court next concluded that Mayercheck failed to state a claim under 42 U.S.C. §§ 1983,

1985, or 1986 because (1) Mayercheck did not show that defendants were acting under color

of state law; (2) Mayercheck’s assertions of conspiracy were “mere conclusory allegations;”

and (3) Mayercheck’s claims under sections 1985 and 1986 were speculative. Id.

• In re Ins. Brokerage Antitrust Litig., 618 F.3d 300 (3d Cir. 2010). Purchasers of

commercial and employee benefit insurance filed numerous federal actions against insurers

and insurance brokers, alleging unlawful schemes to allocate purchasers among particular

groups of insurers. Id. at 308. The private actions were transferred by the Judicial Panel on

Multidistrict Litigation to the District Court of New Jersey for consolidated pretrial

proceedings. Id. at 309. The district court split the actions into two consolidated dockets –

the first pertaining to claims regarding property and casualty insurance (the “Commercial

Case”), and the second pertaining to claims regarding employee benefits insurance (the

“Employee Benefits Case”). Id. Plaintiffs filed amended complaints in each of the

Commercial and Employee Benefits cases. Id. Each complaint alleged violations of the

Sherman Act and the RICO Act, as well as violations of various state-law antitrust statutes

and common law duties. Id. Defendants moved to dismiss the Sherman Act and RICO Act

claims in both cases under Rule 12(b)(6). In re Ins. Brokerage, 618 F.3d at 309. The

district court granted the motions and dismissed the claims without prejudice because “it

found the complaints lacked the requisite factual specificity.” Id. at 310. The Second Circuit

noted that “[i]n granting leave to amend, the District Court instructed plaintiffs to file in each

case a supplemental statement of particularity for their federal antitrust claims and an

amended RICO case statement for their RICO claims.” Id. Plaintiffs did so, and the district

court again granted 12(b)(6) motions to dismiss, and again allowed plaintiffs an opportunity

to amend their pleadings. Id. Plaintiffs filed a Second Amended Complaint and a Revised

Particularized Statement and Amended RICO Case Statement augmenting the Second

Amended Complaint’s allegations. Id. The district court again dismissed the antitrust and

RICO claims, this time with prejudice. Id. It applied the pleading standard set forth in

Twombly, which had been decided after the court’s second dismissal order, and “concluded
202

that plaintiff’s allegations in both the Commercial and the Employee Benefits cases were

insufficient with respect to both the Sherman Act and RICO claims.” In re Ins. Brokerage,

618 F.3d at 310. The Third Circuit affirmed in part, vacated in part, and remanded. While

the Third Circuit agreed that purchasers failed to allege horizontal broker-centered

conspiracies as to claims not involving bid-rigging and as to global conspiracy claims, it

decided that purchasers had alleged horizontal conspiracies, actionable enterprise, and

actionable conduct as to bid-rigging. 

The Third Circuit noted that the complexity of the case:

Plaintiffs’ pleadings are of a substantial volume. The

complaint in each case is more than 200 pages (including attached

exhibits), and to this total must be added the pages in the Revised

Particularized Statements and Amended RICO Case Statements.

Significantly, the District Court allowed discovery to proceed while

the motions to dismiss were pending. Plaintiffs’ amended pleadings

were thus able to draw on documents produced and depositions taken

pursuant to these discovery orders, as well as material unearthed in

the course of the public investigations.

As reflected by the length of this opinion - and of the caption

- this is extraordinarily complex litigation involving a large swath of

the insurance provider and brokerage industries, elaborate allegations

of misconduct, and challenging legal issues. The District Court

skillfully managed the consolidated proceedings. We take particular

note of the court’s thorough treatment of defendants’ motions to

dismiss, which comprised five separate opinions examining three

successive rounds of pleadings. The court's patient and meticulous

analysis has greatly aided our review.

Id. at 311.

The court first examined the legal standards for making a plausible antitrust claim. It

explained that, to state a claim under Section 1 of the Sherman Act, a plaintiff must show (1)

that the defendant was a party to “some form of concerted action” and (2) that the conspiracy

to which the defendant was a party “imposed an unreasonable restraint on trade.” Id. at 315.

There are three standards for determining whether a challenged practice unreasonably

restrains trade: rule of reason, per se, and quick look. See id. at 315-18. The court

explained that the rule of reason was the “usual standard” and required the plaintiff to show

“that the alleged [agreement] produced an adverse, anticompetitive effect within the relevant

geographic market.” Id. at 315 (quoting Gordon v. Lewistown Hosp., 423 F.3d 184, 210 (3d

Cir. 2005)). The per se standard is applicable to practices that “have redeeming competitive

benefits so rarely that their condemnation does not require application of the full-fledged rule

of reason,” such as “horizontal agreements among competitors to fix prices or to divide
203

markets.” Id. at 316. Under the per se standard, “plaintiffs are relieved of the obligation

to define a market and prove market power.” In re Ins. Brokerage, 618 F.3d at 316.

However, the court explained that, if a plaintiff pleads exclusively per se violations and the

court determines that the restraint at issue is “sufficiently different from the per se archetypes

to require application of the rule of reason, the plaintiff’s claims will be dismissed.” Id. at

317. The quick look standard is applied to restraints of trade that are “highly suspicious” yet

“sufficiently idiosyncratic that judicial experience with them is limited..” Id. Under a quick

look analysis, “competitive harm is presumed and the defendant must set forth some

competitive justification for the restraints.” Id. at 317-18 (quoting Gordon, 423 F.3d at 210).

Plaintiffs abjured “a full-scale rule of reason analysis” and claimed that defendant’s behavior

was per se unlawful, or alternatively, that the court should apply a “quick look” analysis. Id.

at 318. “Plaintiffs do not dispute that in order to succeed under either of these approaches,

they need to show the existence of a horizontal agreement, that is, an agreement between

‘competitors at the same market level.’” Id. (quoting In re Pharmacy Benefit Managers

Antitrust Litig., 582 F.3d 432, 436 n.5 (3d Cir. 2009)).

The court determined that, “[i]n the factual context of this case,” a horizontal agreement

means

an agreement among the insurers in the broker-centered conspiracies,

and an agreement among either the brokers or the insurers in the

global conspiracy. Agreements between brokers and insurers, on the

other hand, are vertical and would have to be analyzed under the

traditional rule of reason, which plaintiffs have disclaimed.

In re Ins. Brokerage, 618 F.3d at 318-19. The court then explained that plaintiffs’ obligation

to show the existence of a horizontal agreement “is not only an ultimate burden of proof but

also bears on their pleadings”:

“[A] plaintiff's obligation to provide the ‘grounds’ of his

‘entitle[ment] to relief’ requires more than labels and conclusions,

and a formulaic recitation of the elements of a cause of action will not

do.” Twombly, 550 U.S. at 555, 127 S. Ct. 1955 (quoting FED. R.

CIV. P. 8(a)(2)). Because Federal Rule of Civil Procedure 8(a)(2)

“requires a ‘showing,’ rather than a blanket assertion, of entitlement

to relief,” courts evaluating the viability of a complaint under Rule

12(b)(6) must look beyond conclusory statements and determine

whether the complaint’s well-pled factual allegations, taken as true,

are “enough to raise a right to relief above the speculative level.”

Twombly, 550 U.S. at 555 & n. 3, 127 S. Ct. 1955. The test, as

authoritatively formulated by Twombly, is whether the complaint

alleges “enough fact[ ] to state a claim to relief that is plausible on its

face,” id. at 570, 127 S. Ct. 1955, which is to say, “ ‘enough fact to
204

raise a reasonable expectation that discovery will reveal evidence of

illegal[ity],’ ” Arista Records, LLC v. Doe 3, 604 F.3d 110, 120 (2d

Cir.2010) (quoting Twombly, 550 U.S. at 556, 127 S. Ct. 1955)

(alteration in Arista Records).

As we have recognized, this plausibility standard is an

interpretation of Federal Rule of Civil Procedure 8. Phillips, 515

F.3d at 234; see Twombly, 550 U.S. at 557, 127 S. Ct. 1955 (stating

that the plausibility standard “reflects the threshold requirement of

Rule 8(a)(2) that the ‘plain statement’ possess enough heft to ‘sho[w]

that the pleader is entitled to relief.’ ” (alteration in original)).

In re Ins. Brokerage, 618 F.3d at 319-20 (footnotes omitted) (alterations in original).

The court then noted Twombly’s increased relevance in this case: “Twombly’s importance

to the case before us, however, goes beyond its formulation of the general pleading standard.

Twombly is also an essential guide to the application of that standard in the antitrust context,

for in Twombly the Supreme Court also had to determine whether a Sherman Act claim

alleging horizontal conspiracy was adequately pled.” Id. at 320.

The court examined Twombly and determined that “allegations of conspiracy are deficient

if there are ‘obvious alternative explanation[s]’ for the facts alleged.” Id. at 322-23 (quoting

Twombly, 550 U.S. at 567). The court determined that, “by rejecting the Court of Appeal’s

conclusion that parallel conduct alone was sufficient to plead a § 1 conspiracy,” Twombly

necessarily required plaintiffs who plead conspiracy on the basis of mere parallelism to plead

“plus factors.” Id. at 323 n.22. Plus factors are “circumstances under which ... the inference

of rational independent choice [is] less attractive than that of concerted action.” Id. at 323

(quoting Bogosian v. Gulf Oil Corp., 561 F.2d 434, 446 (3d Cir. 1977)) (alteration in

original).

To determine what kind of allegations would satisfy Twombly’s plausibility standard, the

court examined the shortcomings identified in the Twombly complaint:

The Twombly plaintiffs proffered two basic theories of

anticompetitive collusion. First, they charged that the defendant

regional telephone companies (ILECs) conspired to “inhibit the

growth of upstart” competitors (CLECs). 550 U.S. at 550, 127 S. Ct.

1955. Second, they asserted that the ILECs agreed not to compete

with one another so as to preserve the preexisting regional monopoly

each enjoyed. Id. at 551, 127 S. Ct. 1955.

At the outset of its analysis, the Court remarked that the

complaint’s sufficiency would “turn[ ] on the suggestions raised by

[defendants’ alleged] conduct when viewed in light of common
205

economic experience.” Id. at 565, 127 S. Ct. 1955. Under this lens,

the complaint’s first theory immediately revealed its inadequacy

because “nothing in the complaint intimate[d] that the resistance to

the upstart [CLECs] was anything more than the natural, unilateral

reaction of each ILEC intent on keeping its regional dominance....

[T]here [was] no reason to infer that the companies had agreed among

themselves to do what was only natural anyway....” Id. at 566, 127

S. Ct. 1955. A rudimentary economic analysis also fatally

undermined the complaint’s second charge, namely that the ILECs

agreed not to enter one another’s markets. The Court recognized that

“[i]n a traditionally unregulated industry with low barriers to entry,

sparse competition among large firms dominating separate

geographical segments of the market could very well signify illegal

agreement.” Id. at 567, 127 S. Ct. 1955. But in the

telecommunications industry at issue in Twombly, monopoly had

been “the norm ..., not the exception.” Id. at 568, 127 S. Ct. 1955.

Noting that “[t]he ILECs were born in that world, doubtless liked the

world the way it was, and surely knew the adage about him who lives

by the sword,” the Court found that “a natural explanation for the

noncompetition alleged is that the former Government-sanctioned

monopolists were sitting tight, expecting their neighbors to do the

same thing.” Id. In fact, “the complaint itself” bolstered this

conclusion. Id. Not only did it “not allege that competition [against

other ILECs] as CLECs was potentially any more lucrative than other

opportunities being pursued by the ILECs during the same period,”

but “the complaint [was] replete with indications that any CLEC

faced nearly insurmountable barriers to profitability owing to the

ILECs’ flagrant resistance to the network sharing requirements” of

federal law. Id. In short, both “common economic experience” and

the complaint’s own allegations showed that each defendant ILEC

was independently motivated to behave in the ways alleged.

Accordingly, neither of plaintiffs’ theories successfully pled a § 1

conspiracy because in each case, defendants’ parallel conduct “was

not only compatible with, but indeed was more likely explained by,

lawful, unchoreographed free-market behavior.” Ashcroft v. Iqbal, ---

U.S. ----, ----, 129 S. Ct. 1937, 1950, 173 L. Ed. 2d 868 (2009)

(summarizing Twombly).

In re Ins. Brokerage, 618 F.3d at 325-26 (alterations in original). The court concluded:

Twombly makes clear that a claim of conspiracy predicated on

parallel conduct should be dismissed if “common economic

experience,” or the facts alleged in the complaint itself, show that

independent self-interest is an “obvious alternative explanation” for
206

defendants’ common behavior. 

Id. at 326. The court then examined plaintiffs’ allegations.

Plaintiffs’ “‘broker-centered conspiracies’ are alleged as hub-and-spoke conspiracies, with

the broker as the hub and its insurer-partners as the spokes.” Id. at 327. The court noted that,

with respect to the broker-centered schemes, plaintiffs’ allegations fall into two different

categories:

First, plaintiffs assert that the very nature of the contingent

commission agreements between the broker and each of its

insurer-partners implies an agreement among the brokers. Second,

plaintiffs rely on specific details about the operation of the customer

steering schemes, particularly the “devices” used to ensure that a

particular piece of business was placed with the designated insurer.

Id. The Third Circuit agreed with the district court that most of plaintiffs’ allegations “did

not give rise to a plausible inference of horizontal conspiracy,” but disagreed with respect

to the Marsh-centered commercial conspiracy. Id. The court first considered and rejected

plaintiffs’ assertions that the “very nature” of the contingent agreements between the broker

and each of its insurer-partners implied an agreement: 

Contrary to plaintiffs’ arguments, one cannot plausibly infer

a horizontal agreement among a broker’s insurer-partners from the

mere fact that each insurer entered into a similar contingent

commission agreement with the broker. As the District Court

concluded, the first stage of the alleged broker-centered conspiracies

- the consolidation of the groups of insurers to which each broker

referred business - evinces nothing more than a series of vertical

relationships between the broker and each of its “strategic partners.”

According to the complaints, the defendant brokers decided

to consolidate the pool of insurers to which they referred business in

order to improve efficiency and extract higher commissions from

each of their insurer-partners. As defendants point out, “[o]nce a

broker decided to organize its business in this fashion, each insurer

had sound, independent business reasons to pay contingent

commissions to become and remain a ‘preferred insurer.’ Paying

such commissions helped the insurer to compete for and retain a

larger share of its partners’ business than if it had no such vertical

relationships.” In short, the obvious explanation for each insurer’s

decision to enter into a contingent commission agreement with a

broker that was consolidating its pool of insurers was that each

insurer independently calculated that it would be more profitable to
207

be within the pool than without. The complaints themselves reinforce

this conclusion with their portrait of a concentrated brokerage market,

in which a handful of brokers controlled the majority of client

business, and an unconcentrated, more competitive market of insurers

vying for premium dollars. According to plaintiffs’ own account,

“[t]he Insurer Defendants are thus largely dependent on the Broker

Defendants to assure access to business and protect their market

share.” Given this economic landscape, each insurer had an obvious

incentive to enter into the “strategic partnerships” offered by the

defendant brokers, irrespective of the actions of its competitors.

Refusing to concede this point, plaintiffs argue that the

parallel decisions of insurers to join the broker-centered conspiracies

plausibly imply a horizontal agreement among the insurers because

“an insurer would not pay enormous contingent commissions in order

to access premium volume if its major rivals were getting the same

access for free.” This contention is implausible. Although each

insurer would be motivated to achieve the best deal possible with the

broker - and would doubtless like to obtain terms at least as favorable

as those negotiated by other insurers - the determinative consideration

would be whether the insurer is better off paying contingent

commissions for privileged access to the broker’s clients than it

would be saving those payments and foregoing the broker’s assistance

in winning and retaining business. Especially in light of the market

dynamics alleged by plaintiffs, the obvious explanation for the

decision of the defendant insurers to enter into contingent

commissions agreements with the consolidating brokers is that each

insurer found that the benefits justified the costs. In fact, the

complaints relate incidents in which insurers who were reluctant to

conform to the contingent commission demands of a broker

nonetheless did so when faced with the prospect of losing their

privileged access to the broker's book of business. These anecdotes

only strengthen the obvious conclusion that no horizontal agreement

was necessary to induce the insurers to become “strategic partners.”

Moreover, plaintiffs’ argument proves too much. If the

parallel decisions by several insurers to pay contingent commissions

imply a horizontal agreement, then it is difficult to see why parallel

decisions to pay standard commissions (that is, a fixed percentage of

each policyholder's premium payment) would not also imply an

agreement. For that matter, plaintiffs’ logic would divine a horizontal

agreement from virtually any parallel expenditures for marketing

services, on the mistaken ground that a firm would not pay for

advertising, for example, in the absence of an agreement with its
208

competitors to enter into similar contracts with the advertising

company. Cf. Twombly, 550 U.S. at 566, 127 S. Ct. 1955 (noting that

“resisting competition is routine market conduct,” and that “if

alleging parallel decisions to resist competition were enough to imply

an antitrust conspiracy, pleading a § 1 violation against almost any

group of competing businesses would be a sure thing”). The District

Court correctly found that the brokers’ alleged consolidation of the

insurers with which they did business did not plausibly imply an

agreement susceptible to per se condemnation.

In re Ins. Brokerage, 618 F.3d at 327-28 (alterations in original) (citations and footnotes

omitted). The court next considered plaintiffs’ allegations that “devices” and “techniques”

used to conduct the customer-steering schemes gave rise to a plausible inference of

horizontal conspiracy: 

According to the complaints, several of the devices that

allegedly facilitated the schemes are common to all of the

broker-centered conspiracies. For instance, plaintiffs allege that

brokers often afforded insurer-partners “first looks” and “last looks”

in bidding on policies. Once again, however, the practices identified

by plaintiffs are strictly vertical in nature. On the complaint’s own

account, first and last looks were techniques utilized by brokers to

ensure that a given client’s policy was placed (or remained) with a

designated insurer-partner. The complaints describe “[t]he close

bond between broker and client,” which “gives brokers tremendous

influence, and often decisive control, over the placement of their

clients’ insurance business. Given the high degree of financial

investment and trust placed in their broker, clients will rarely if ever

seek quotes from insurers other than those recommended by the

broker.” In other words, the complaints themselves provide obvious

reasons to conclude that the brokers were able to steer clients to

preferred insurers without the need for any agreement among the

insurers. Whatever the vices of these steering techniques, they do not

give rise to a plausible inference of horizontal conspiracy.

Id. at 334-35. The court then considered allegations of “bid manipulation” and other

strategies used by brokers and insurers and held that these allegations were also insufficient

to allege a horizontal agreement.

Also insufficient are two allegations of certain “bid

manipulation” within the broker-centered conspiracies in the

Employee Benefits Case. In the first example, the complaint asserts

only that a broker unilaterally refused to submit an insurer's bid to the

client. In the second, a broker successfully persuaded one of its
209

insurer-partners not to withdraw a bid the insurer had come to view

as unacceptably low. If the insurer had withdrawn the bid, another,

non-partner insurer would have become a “finalist,” an outcome the

broker wished to avoid. To allay the insurer-partner’s concerns, the

broker assured it that it would not end up winning the contract

because another insurer had submitted an even lower bid. Shortly

afterward, the broker placed a large account with the insurer-partner.

Neither example provides a plausible basis for inferring anything

more than vertical agreements between brokers and individual

insurers.

In the Employee Benefits Case, plaintiffs allege that defendant

insurers used similar strategies to evade their obligation to report

contingent commission payments on Form 5500. But the asserted

fact that the insurers intended to violate their reporting obligations,

and that they all adopted the same deceptive reporting model, does

not plausibly suggest a horizontal agreement. If anything, the

allegations suggest that each insurer would be independently

motivated to evade the requirement, and that each had access to the

same effective model of how to accomplish this deception. The

insurers would be disinclined to expose their competitors' reporting

violations for fear of calling attention to their own self-interested

deception. Cf. Twombly, 550 U.S. at 568, 127 S. Ct. 1955 (finding

that the failure of the defendants to compete in one another's regions

was most plausibly explained by the fact that the defendants “liked

the world the way it was, and surely knew the adage about him who

lives by the sword”).

In re Ins. Brokerage, 618 F.3d at 335 (alteration in original) (citations omitted). 

The court next considered the Marsh-centered commercial conspiracy, in which “plaintiffs

provide detailed allegations of bid rigging by the insurer-partners.” Id. at 336. The court

noted that “Bid rigging - or more specifically, as alleged in this case, bid rotation - is

quintessentially collusive behavior subject to per se condemnation under § 1 of the Sherman

Act.” Id. The court noted that “defendants do not dispute that the bid-rigging allegations

plausibly imply a horizontal agreement among insurers,” however, defendants “contend that

plaintiffs have no standing to challenge this activity because plaintiffs do not assert that the

bids were rigged on any of the policies they purchased.” Id. The court rejected defendants’

argument because it concluded that plaintiffs’ bid-rigging allegations adequately support the

more general allegation of an agreement among the defendant insurers to allocate customers

in the Marsh-centered commercial conspiracy. Id.

The court then considered plaintiffs’ claim of a “global conspiracy” in which the defendant

brokers, “with the complicityof the Defendant Insurers,” agreed “to conceal from the general
210

public and other brokers” the existence of the broker-centered controversies. Id. at 348. The

Third Circuit agreed with the district court that “the complaints’ factual allegations fail to

plausibly imply horizontal non-disclosure agreements among the defendant brokers or

defendant insurers” because none of the plaintiffs’ “plus factors” plausibly implied a

horizontal agreement among the brokers. The court explained why the allegations in the

Commercial complaint failed to state a claim:

The Commercial complaint alleges that the defendant brokers “issued

substantially similar purported ‘disclosure’ statements modeled after

the CIAB’s position statement” advising brokers on how to respond

to questions regarding contingent commissions. According to

plaintiffs, these statements misleadingly disguised the existence and

effect of the contingent commission agreements. But neither

defendants’ membership in the CIAB, nor their common adoption of

the trade group’s suggestions, plausibly suggest conspiracy. Cf.

Twombly, 550 U.S. at 567 n. 12, 127 S. Ct. 1955 (rejecting the

contention that the defendants’ common membership in a trade union,

combined with parallel conduct, plausibly suggests conspiracy);

Elevator Antitrust Litig., 502 F.3d at 51 (finding that allegations that

the defendants used similar contractual language did not plausibly

imply conspiracy because “similar contract language can reflect the

copying of documents that may not be secret”). While these

allegations indicate that the brokers had an opportunity to conspire,

they do not plausibly imply that each broker acted other than

independently when it decided to incorporate the CIAB’s proposed

approach as the best means of protecting its lucrative arrangements

from hostile scrutiny. See Petruzzi’s, 998 F.2d at 1242 n. 15 (“Proof

of opportunity to conspire, without more, will not sustain an inference

that a conspiracy has taken place.” (internal quotation marks

omitted)).

Even if we read the complaint to assert that the defendant

brokers collaborated in crafting these allegedly misleading disclosures

(insofar as these defendants allegedly “control the affairs of ...

CIAB,” which produced the “position statement” allegedly

incorporated into defendants’ disclosures to clients), this still would

be insufficient to show a horizontal agreement not to disclose one

another's contingent commissions. If proven, this allegation would

plausibly show that defendants agreed to work together to determine

the best way of disguising activity in which each engaged. But this

allegation would not plausibly imply that the decision to disguise that

activity (namely, the alleged use of contingent commissions as part

of a scheme to steer customers to particular insurers) was itself the

product of an agreement-not, at least, in the face of the complaint's
211

many allegations showing that each defendant had ample independent

motive to conceal its own contingent commission arrangements. A

contrary holding would be tantamount to finding that any collaborate

effort to refine a “pernicious industry practice,” In re Ins. Brokerage

Antitrust Litig., 2007 WL 2892700, at *24 (so describing the conduct

alleged by plaintiffs), plausibly suggests a conspiracy among all

industry participants not to reveal the fact that other participants

engage in the same practice. Where, as here, the “obvious alternative

explanation” for such an industry practice is that each member of the

industry believes its profits would suffer without the practice, it is not

plausible to infer that each member's decision not to expose its

competitors’ use of the practice - that is, not to engage in mutually

assured destruction - is the product of an agreement.

In re Insurance Brokerage, 618 F.3d at 349-50 (footnotes omitted). 

The court then considered the allegations in the Employee Benefits case and determined that

they also failed to state a claim:

In the Employee Benefits Case, plaintiffs allege that

“Defendants executed substantially similar disclosure policies

regarding contingent compensation matters, including failing to

disclose contingent compensation information to ERISA plan

administrators on Form 5500s, as required by governmental

regulations.” Plaintiffs also allege instances in which defendants

exchanged information about how they accounted for, and reported,

this compensation. These allegations, like the other allegations of

shared information and similar disclosure practices, are insufficient.

They imply only that each defendant had a similar motive to

obfuscate the structure of the brokers’ compensation, and that they

sought the most effective means to achieve this obfuscation. They do

not provide a “reason to infer that the [defendants] had agreed among

themselves to do what was only natural anyway.” Twombly, 550 U.S.

at 566, 127 S. Ct. 1955.

In re Ins. Brokerage, 618 F.3d at 350 (footnote omitted). The court concluded:

Having reviewed the entirety of the Global Conspiracy pleadings, we

concur with the District Court’s conclusion: “While Plaintiffs present

facts to support the possibility of inadequate disclosures by the

brokers to the insureds, the Complaints are bereft of allegations to

demonstrate that this was more than brokers adopting sub-par

disclosure methods to protect their own, lucrative agreements.” 2007

WL 2533989, at *19. Plaintiffs’ attack on the pervasive use of
212

contingent commissions to exploit insurance brokers' power over

their clients - and the use of similar techniques to disguise this

activity - may allege a “pernicious industry practice,” but they do not

plausibly imply an industry-wide conspiracy.

In re Ins. Brokerage, 618 F.3d at 351.

The court next considered whether the defendants’ alleged conduct was exempt from

antitrust regulation under the McCarran-Ferguson Act, and decided that it was not. Id. at

351-61. Because the McCarran-Ferguson Act does not bar plaintiffs’ claims, the court

concluded that the big-rigging allegations should be reinstated, summarizing its “Twombly

analysis” of plaintiffs’ conspiracy claims as follows:

The Supreme Court has made clear that courts confronted with a

motion to dismiss must assess whether the complaint contains

“enough factual matter (taken as true) to suggest that an agreement

was made.” Twombly, 550 U.S. at 556, 127 S. Ct. 1955.

“Determining whether a complaint states a plausible claim to relief

will ... be a context-specific task that requires the reviewing court to

draw on its judicial experience and common sense.” Iqbal, 129 S. Ct.

at 1950; see also Arar v. Ashcroft, 585 F.3d 559, 617 (2d Cir.2009)

(Parker, J., dissenting) (“Plausibility . . . depends on a host of

considerations: The full factual picture presented by the complaint,

the particular cause of action and its elements, and the available

alternative explanations [for the facts alleged].”), cert. denied, ---

U.S. ----, 130 S. Ct. 3409, 177 L. Ed. 2d 349 (2010). Some claims

will demand relatively more factual detail to satisfy this standard,

while others require less.

In the context of claims brought under § 1 of the Sherman Act,

plausibility is evaluated with reference to well-settled antitrust

jurisprudence that “limits the range of permissible inferences from

ambiguous evidence.” Matsushita, 475 U.S. at 588, 106 S. Ct. 1348.

In particular, “when allegations of parallel conduct are set out in order

to make a § 1 claim,” that conduct must be placed in “some setting

suggesting the agreement necessary to make out a § 1 claim.”

Twombly, 550 U.S. at 557, 127 S. Ct. 1955. In other words, the

complaint must allege some “further circumstance,” “something more

than merely parallel behavior,” “pointing toward a meeting of the

minds.” Id. at 557, 560, 127 S. Ct. 1955. If, in the circumstances

alleged, the asserted “parallel conduct ... could just as well be

independent action,” then the complaint has failed to plead a § 1

claim. Id. at 557, 127 S. Ct. 1955.
213

Here, the bid-rigging allegations supply the requisite “further

circumstance.” Because they plausibly suggest an unlawful

horizontal conspiracy not to compete for incumbent business,

plaintiffs have adequately met Rule 8(a)(2)’s requirement for setting

forth a § 1 claim against those defendants in the asserted

Marsh-centered commercial conspiracy who are alleged to have

participated in bid rigging. This agreement to divide the market, if

proven, would be a naked restraint of trade subject to per se

condemnation. See Leegin, 551 U.S. at 886, 127 S. Ct. 2705; In re

Japanese Elec. Prods. Antitrust Litig., 723 F.2d 238, 310-11 (3d Cir.

1983) (observing that “a horizontal agreement to allocate customers”

is “ordinarily ... a per se violation” (citing United States v. Topco

Assocs., 405 U.S. 596, 606-12, 92 S. Ct. 1126, 31 L. Ed. 2d 515

(1972))), rev’d on other grounds sub nom. Matsushita, 475 U.S. 574,

106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986).

With respect to the remaining antitrust claims, however, plaintiffs

have failed to plead facts plausibly supporting their allegations of

horizontal conspiracies to unreasonably restrain trade,

notwithstanding their conclusory assertions of agreement. Given

plaintiffs’ exclusive reliance on a per se or quick look analysis, the

absence of a horizontal agreement is fatal to their § 1 claims.

Accordingly, these antitrust claims must be dismissed, as the District

Court concluded.

Id. at 361-62 (footnotes omitted).

The court then considered plaintiffs’ RICO claims. It explained that “[t]o plead a RICO

claim under § 1962(c), ‘the plaintiff must allege (1) conduct (2) of an enterprise (3) through

a pattern (4) of racketeering activity.’” Id. at 362 (quoting Lum v. Bank of Am., 361 F.3d

217, 223 (3d Cir. 2004)). In the Commercial Case, plaintiffs alleged the existence of one

legal-entity enterprise, the Council of Insurance Agents and Brokers (CIAB), and six

association-in-fact enterprises corresponding to the six broker-centered antitrust conspiracies.

In the Employee Benefits Case, plaintiffs plead five association-in-fact enterprises

corresponding to the broker-centered conspiracies alleged in their antitrust claims. Id.

Defendants argued that “plaintiffs had failed adequately to plead the enterprise and conduct

elements of their § 1962(c) claims, and that they had failed adequately to plead predicate acts

of racketeering.” Id. at 364. The Third Circuit agreed, except with respect to the Marshcentered enterprise alleged in the commercial complaint. Id. at 374. The court relied

extensively on Boyle v. United States, --- U.S. ----, 129 S. Ct. 2237 (2009), which was

decided after the district court dismissed plaintiffs’ claims, and after the Tenth Circuit heard

argument in this appeal. In re Ins. Brokerage, 618 F.3d at 365. It explained: 

With respect to all but the Marsh-centered enterprise alleged
214

in the Commercial complaint, we agree with the District Court that

plaintiffs’ allegations of broker-centered enterprises are fatally

defective. In our analysis of the antitrust claims, we determined that,

with the exception of the alleged Marsh-centered commercial

conspiracy, the facts alleged in the complaints do not plausibly imply

a horizontal agreement among the insurer-partners. In seeking to

establish a “rim” enclosing the insurer-partners in the alleged RICO

enterprises, plaintiffs rely on the same factual allegations we found

deficient in the antitrust context: that each insurer entered into a

similar contingent-commission agreement in order to become a

“strategic partner”; that each insurer knew the identity of the broker’s

other insurer-partners and the details of their contingent-commission

agreements; that each insurer entered into an agreement with the

broker not to disclose the details of its contingent-commission

agreements; that the brokers utilized certain devices, such as

affording “first” and “last looks,” to steer business to the designated

insurer; and that, in the Employee Benefits Case, insurers adopted

similar reporting strategies with regard to Form 5500. As noted,

these allegations do not plausibly imply concerted action-as opposed

to merely parallel conduct-by the insurers, and therefore cannot

provide a “rim” enclosing the “spokes” of these alleged

“hub-and-spoke” enterprises.

Even under the relatively undemanding standard of Boyle,

these allegations do not adequately plead an association-in-fact

enterprise. They fail the basic requirement that the components

function as a unit, that they be “put together to form a whole.” Boyle,

129 S. Ct. at 2244 (internal quotation marks omitted). Because

plaintiffs’ factual allegations do not plausibly imply anything more

than parallel conduct by the insurers, they cannot support the

inference that the insurers “associated together for a common purpose

of engaging in a course of conduct.” Id. (quoting Turkette, 452 U.S.

at 583, 101 S. Ct. 2524); see id. at 2245 n. 4 (stating that “several

individuals” who “engaged in a pattern of crimes listed as RICO

predicates” “independently and without coordination” “would not

establish the existence of an enterprise”); Elsevier, 692 F. Supp. 2d

at 307 (stating that, as with a § 1 Sherman Act claim, a RICO claim

pleading “nothing more than parallel conduct by separate actors” is

insufficient: “there has to be something that ties together the various

defendants allegedly comprising the association in fact into a single

entity that was formed for the purpose of working together-acting in

concert-by means of” racketeering acts); Gregory P. Joseph, Civil

RICO: A Definitive Guide 106 (3d ed. 2010) (stating that a “rimless

hub-and-spoke configuration would not satisfy the ‘relationships’
215

prong of Boyle’s structure requirement”); see also Rao, 589 F.3d at

400 (finding the plaintiff had failed to plead an association-in-fact

enterprise because the “allegations do not indicate how the different

actors are associated and do not suggest a group of persons acting

together for a common purpose or course of conduct”). Were the rule

otherwise, competitors who independently engaged in similar types

of transactions with the same firm could be considered associates in

a common enterprise. Such a result would contravene Boyle’s

definition of “enterprise.” 

In re Ins. Brokerage, 618 F.3d at 375-75.

The court then determined that the bid-rigging allegations in the Commercial complaint

adequately pled the enterprise element fo the RICO claim. Id. at 375. It explained:

As with the antitrust claims, we reach a different conclusion

with respect to the claims alleging bid rigging - the bid-rigging

allegations in the Commercial complaint suffice to plead a

“Marsh-centered enterprise.” AsBoyle clarified, a RICO “enterprise”

must have a structure, but it need not have any particular structural

features beyond “a purpose, relationships among those associated

with the enterprise, and longevity sufficient to permit these associates

to pursue the enterprise's purpose.” Boyle, 129 S. Ct. at 2244. We

think the allegations of bid rigging provide the “rim” to the

Marsh-centered enterprise’s hub-and-spoke configuration, satisfying

Boyle’s requirements. TheCommercial complaint alleges that Marsh

prepared “broking plans” governing the placement of insurance

contracts that came up for renewal. According to plaintiffs, “[t]he

broking plans assigned the business to a specific insurer at a target

price and outlined the coverage. The broking plans also included

instructions as to which preferred Insurers would be asked to provide

alternative [i.e., intentionally uncompetitive, or sham] quotes. If the

incumbent Insurer hit the ‘target,’ it would get the business and then

[Marsh employees] would solicit ‘alternative’ ... quotes from other

members of the conspiracy.” The complaint also alleges the reasons

why the insurers agreed to provide sham bids. For example, it relates

a statement by a former employee of a defendant insurer that his

employer had agreed to “provide[ ] losing quotes” to Marsh in

exchange for, among other things, Marsh’s “getting ‘quotes from

other [insurance] carriers that would support the [employer, at least

when it was the incumbent carrier] as being the best price.’ ” This

statement plausibly evinces an expectation of reciprocity and

cooperation among the insurers.
216

In at least one sense, plaintiffs’ allegations regarding the

“Marsh-centered enterprise” exceed Boyle’s requirements. Boyle

explicitly disavowed the need for any particular organizational

structure. Boyle, 129 S. Ct. at 2245-46. It upheld the conviction of

a “loosely and informally organized” group of bank robbers that

neither “had a leader [n]or hierarchy,” nor “ever formulated any

long-term master plan or agreement”; the group would meet before

each robbery to “assign the roles that each participant would play

(such as lookout and driver).” Id. at 2241. Here, by contrast,

plaintiffs allege a hierarchical structure according to which Marsh, in

accordance with its “broking plan,” decided from which insurer each

sham bid would be requested. Plaintiffs adequately allege a

“common interest” or “purpose,” id. at 2244, namely to increase

profits by deceiving insurance purchasers about the circumstances

surrounding their purchase. The alleged reciprocal bid rigging also

adequately suggests “relationships among” the insurers “associated

with the enterprise[s]”; if proved, it would plausibly demonstrate the

insurers “joined together” in pursuit of the aforementioned common

purpose. Boyle, 129 S. Ct. at 2244 (internal quotation marks

omitted). Finally, the complaint alleges that the bid rigging occurred

over a period of several years, plausibly alleging “that the enterprise

had ‘affairs' of sufficient duration to permit an associate to

‘participate’ in those affairs through ‘a pattern of racketeering

activity.’ ” Id. (quoting § 1962(c)). Accordingly, plaintiffs have

adequately pled the enterprise element of the RICO claims based on

the alleged Marsh-centered commercial enterprise.

In re Ins. Brokerage, 618 F.3d at 375-76 (alterations in original) (footnotes omitted). The

court next considered the “conduct” element of the RICO claims and decided that “plaintiffs

have adequately pled that defendants engaged in activities constituting participation in the

conduct of the enterprise.” Id. at 378. It explained:

[B]ased on the complaint’s allegations, plaintiffs have adequately

pled that defendants engaged in activities constituting participation in

the conduct of the enterprise. The allegations that defendant broker

Marsh directed the placement of insurance contracts and solicited

rigged bids from insurers plausibly imply that Marsh “participated in

the operation or management of the enterprise itself.” Reves, 507

U.S. at 183, 113 S. Ct. 1163. And by allegedly supplying the sham

bids, Marsh’s insurer-partners are also adequately alleged to have

“operated” the enterprise within the meaning of Reves. Cf. id. at 184,

113 S. Ct. 1163 (stating that “[a]n enterprise is ‘operated’ not just by

upper management but also by lower rung participants in the

enterprise who are under the direction of upper management”); e.g.,
217

MCM Partners, Inc. v. Andrews-Bartlett & Assocs., 62 F.3d 967,

978-79 (7th Cir.1995) (finding that two businesses participated in the

conduct of an association-in-fact enterprise “by knowingly

implementing decisions” by the enterprise's managers to commit

crimes). We thus find plaintiffs have sufficiently pled that defendants

in the Marsh-centered enterprise satisfied the “conduct” requirement

set forth in Reves.

Id. at 378-79 (second alteration in original).

The court next addressed Plaintiffs’ allegations in the Commercial Case that the Council of

Insurance Agents and Brokers (CIAB) was a RICO enterprise. Id. at 379. After describing

the “significant questions” it had about whether plaintiffs had adequately pled these claims,

the court vacated the dismissal of the CIAB-based claims because “[n]one of these questions

was squarely addressed by the parties on appeal, and we believe the District Court is best

positioned to decided them in the first instance.” Id. at 383.

• Great Western Mining & Mineral Co. v. Fox Rothschild LLP, 615 F.3d 159 (3d Cir. 2010),

cert. denied, 131 S. Ct. 1798 (2011). Having lost in state court, Great Western Mining and

Mineral Company brought a civil rights action in federal court under 42 U.S.C. § 1983,

alleging deprivations of procedural and substantive due process. Id. at 161-62. 

Great Western’s claims arose out of a Pennsylvania lawsuit and arbitration award. Id. In the

state court litigation, Active Entertainment, Inc. retained Brownstein & Vitale, P.C. (“B&V”)

to represent it against an entity that Active had hired to build a miniature golf course. Id.

Following that litigation, Active brought a malpractice suit against B&V and the individual

lawyers representing him, Brownstein and Vitale. Id. The parties agreed to binding

arbitration before Rutter and his company, ADR Options. Id. “According to the Complaint,

ADR Options is the largest provider of alternative dispute services in Pennsylvania, New

Jersey, and Delaware” and “many of ADR Options’s arbitrators are former federal and state

judges.” Wiley represented Active; Paradise, a partner at Fox Rothschild, represented Vitale.

Id. The arbitration resulted in an award for Brownstein, Vitale, and B&V. Great Western,

615 F.3d at 161-62. Great Western became the assignee of Active’s interest. Id. at 162.

Great Western filed a petition in Pennsylvania state court to vacate the arbitration award on

the ground of improper failure to disclose potential conflicts because the managing partner

at Fox Rothschild, Fryman, was concurrently employed at ADR Options as an arbitrator, and

Paradise maintained a professional relationship with Rutter. Id. The state court ruled against

Great Western and affirmed the arbitration award. Id. The Supreme Court of Pennsylvania

denied Great Western’s petition for allowance of appeal. Id. Great Western filed another

state action against defendants and it was denied as collaterally estopped. Id. Great Western

alleged that, shortly thereafter, defendants’ counsel informed Great Western’s counsel that

“[t]here [was] no way that a Philadelphia court [was] ever going to find against Rutter given

his relationship with the Philadelphia court system.” Great Western, 615 F.3d at 162.
218

In its § 1983 complaint, Great Western alleged that “the Pennsylvania state-court decisions

were corrupted by the improper influence of Defendants, arising both from the Pennsylvania

courts’ reliance on Rutter’s services and from Pennsylvania judges’ prospect of future

employment with ADR Options. Id. The district court granted Defendants’ motion to

dismiss for failure to state a claim, holding that Great Western had not sufficiently alleged

that Defendants acted under color of state law. Id. Great Western filed a motion for

reconsideration and for leave to amend its complaint and attached a draft amended

complaint. Id. at 162-63. Before the court ruled, Great Western filed a second, and then

third, motion for leave to amend, each time seeking to substitute a new amended complaint,

and each time attaching the proposed amended complaint. Id. at 163. In the third motion,

Great Western presented new evidence – Rutter’s admission under oath in another lawsuit

that some of the judges who had ruled against Great Western had already approached Rutter

about the prospect of employment upon leaving the bench. Id. The district court denied the

motion for reconsideration and all three motions for leave to amend. Great Western, 615

F.3d at 163. In ruling on the motion for reconsideration, the district court considered the

second proposed amended complaint, but not the third, because “[t]o allow plaintiff to

repeatedly submit drafts of its complaint while plaintiff’s original motions are still pending

would be prejudicial to defendants.” Id. The Second Circuit affirmed.

With respect to the motion for leave to amend, the court explained that Federal Rule of Civil

Procedure 15(a) instructs that “The court should freely give leave [to amend] when justice

so requires.” Id. at 174. The court relied upon the Supreme Court’s interpretation of 15(a):

In the absence of any apparent or declared reason - such as undue

delay, bad faith or dilatory motive on the part of the movant, repeated

failure to cure deficiencies by amendments previously allowed, undue

prejudice to the opposing party by virtue of allowance of the

amendment, futility of amendment, etc. - the leave sought should, as

the rules require, be “freely given.” Of course, the grant or denial of

an opportunity to amend is within the discretion of the District Court,

but outright refusal to grant the leave without any justifying reason

appearing for the denial is not an exercise of discretion; it is merely

abuse of that discretion and inconsistent with the spirit of the Federal

Rules.

Id. at 174 (quoting Foman v. Davis, 371 U.S. 178, 182 (1962)). And decided that the district

court’s refusal to consider the third proposed amended complaint was erroneous because

allowing Great Western to amend would not prejudice defendants. Id. But it nevertheless

affirmed on the ground that granting leave to amend would have been futile. Id. The Second

Circuit explained that, “[u]nder Rule 15(a), futility of amendment is a sufficient basis to deny

leave to amend. Futility ‘means that the complaint, as amended, would fail to state a claim

upon which relief could be granted.’ Great Western, 615 F.3d at 174-75 (quoting In re

Merck & Co. Sec., Derivative, & ERISA Litig., 493 F.3d 393, 400 (3d Cir. 2007)). In

determining that the substitution of the third proposed amended complaint would have been
219

futile, the court considered the merits of Great Western’s reconsideration and the additional

allegation in the third proposed amended complaint. Id. at 175.

The court explained that “[t]o prevail on a § 1983 claim, a plaintiff must allege that the

defendant acted under color of state law, in other words, that there was a state action.” Id.

at 175-76. And that “acting under color of state law” includes private parties who corruptly

conspire with a judge in connection with an official judicial act. Id. at 176. “Thus, in order

to state a claim under § 1983, Proposed Amended Complaint 3 must have adequately pled

the existence of a conspiracy between Defendants, who are private parties, and the judges of

the Pennsylvania court system.” Id. And “to properly plead an unconstitutional conspiracy,

a plaintiff must assert facts from which a conspiratorial agreement can be inferred.” Id. at

178. The Second Circuit noted that “[t]his holding remains good law following Twombly

and Iqbal, which in the conspiracy context, require ‘enough factual matter (taken as true) to

suggest that an agreement was made,’ in other words, ‘plausible grounds to infer an

agreement.’” Great Western, 615 F.3d at 178 (quoting Twombly, 550 U.S. at 556). The

court then decided that the third proposed amended complaint failed to meet the standard.

Id. In reaching this conclusion, the court, following Iqbal, refused to consider any

conclusory allegations of conspiracy, agreement, or understanding. Id. Instead, it explained

that “Great Western must plead an agreement between the state court judges and Defendants

to rule in favor of ADR Options and Rutter. To properly plead such an agreement, ‘a bare

assertion of conspiracy will not suffice.’” Id. (quoting Twombly, 550 U.S. at 556). 

Great Western’s claim rested on the following factual allegations: “(1) according to [Great

Western’s counsel], on or about March 1, 2006, Tintner stated that there was ‘no way that

a Philadelphia court is ever going to find against Thomas Rutter given his relationship with

the Philadelphia court system’; (2) ADR Options is the largest provider of ADR services in

Pennsylvania, has a large roster of former judges employed as arbitrators, and pays its

arbitrators handsomely; and (3) in May 2009, Rutter testified at a deposition that some of the

judges who had ruled for ADR Options and against Great Western had already approached

him about employment after they leave the bench.” Id. 

The Second Circuit determined that 

At most, Great Western has alleged that Pennsylvania state-court

judges hoped to secure employment with ADR Options after leaving

the bench and thus had an incentive to rule in the company’s favor.

Id. Fatal to this claim, however, Great Western failed to make any

factual contentions concerning conduct by Rutter or any of the other

Defendants. 

Great Western, 615 F.3d at 178. The Second Circuit also noted that “Great Western has not

pleaded any facts that plausibly suggest a meeting of the minds between Rutter and members

of the Pennsylvania judiciary,” but sets forth merely conclusory allegations of agreement.

Id. at 179. And concluded that: “Great Western's Proposed Amended Complaint 3 lacks
220

sufficient factual allegations to create “plausible grounds to infer an agreement,” as is

required by Twombly. Any effort to amend by substituting Proposed Amended Complaint

3 therefore was futile, and we in turn affirm the District Court's denial of leave to amend on

that ground.” Id. (internal citation omitted).

• Bob v. Kuo, 387 F. App’x 134, No. 10-1615, 2010 WL 2825644 (3d Cir. Jul. 20, 2010)

(unpublished) (per curiam). Plaintiff Bob was a detainee at a detention facility operated by

Corrections Corporation of America (“CCA”). Id. at *1. Bob filed a Bivens action against

CCA, the warden (Collins), and a physician who cared for him (Kuo). Id. Bob alleged that

Kuo deliberately disregarded his medical needs by refusing to prescribe Celebrex for his

complaints of swelling, stiffness, and a poor range of motion in his hand due to an old, workrelated injury. Id. According to the complaint, Kuo refused to prescribe Celebrex due to the

risk of serious side effects and instead offered to prescribe two other pain relievers. Id.

When Bob complained that he could not tolerate the alternate medications, Kuo suggested

soaking his hand in warm water. Id. The district court dismissed the complaint, concluding

that “Bob’s ‘allegations demonstrate[d] that Dr. Kuo did not violate his rights under the

Eighth Amendment,’ that Bob ‘made no allegations whatsoever concerning Warden Collins,’

and that Bivens does not provide a cause of action against a private corporation such as

CCA.” Bob, 2010 WL 2825644, at *1.

The Third Circuit affirmed. It held that “[t]here [wa]s nothing in the complaint’s specific

allegations from which [it could] plausibly infer that the defendants were deliberately

indifferent to Bob’s serious medical needs.” Id. at *2. The court noted that “‘claims of

negligence or medical malpractice, without some more culpable state of mind, do not

constitute ‘deliberate indifference.’’” Id. (citation omitted). Because Bob did “not allege

that he was intentionally denied medical treatment for his pain”; “the allegations contained

in the complaint, taken as true, simply assert[ed] inadequate treatment because Dr. Kuo

would not prescribe the specific medication Bob desired”; and “Bob’s own allegations also

reveal[ed] a medical reason for Dr. Kuo’s refusal to prescribe the requested medication,”

Bob’s claims against Kuo could not survive. Id. The court noted that disagreement with a

medical decision is not enough to establish an Eighth Amendment violation. Id. The court

also affirmed the dismissal of the claims against Collins because the complaint contained no

allegations regarding Collins, and under Iqbal, “‘vicarious liability is inapplicable to Bivens

and § 1983 suits, [and] a plaintiff must plead that each Government-official defendant,

through the official’s own individual actions, has violated the Constitution.’” Id. (quoting

Iqbal, 129 S. Ct. at 1948). The court also affirmed dismissal of CCA because the Supreme

Court has refused to extend Bivens actions to private corporations. Bob, 2010 WL 2825644,

at *2 (citation omitted).

• Culinary Serv. of Delaware Valley, Inc. v. Borough of Yardley, 385 F. App’x 135, No. 09-

4182, 2010 WL 2600683 (3d Cir. Jun. 30, 2010) (unpublished). Plaintiff Culinary Services

distributed amusement, arcade, and redemption games to establishments licensed by the

Pennsylvania Liquor Control Board (“PLCB”). Id. at *1. The plaintiffs entered into an

agreement with the Knowles-Doyle American Legion in Yardley, Pennsylvania (“Yardley
221

American Legion”) for the Yardley American Legion to lease two games from Culinary

Services in exchange for fifty-percent of the net revenue from the games. Id. The agreement

contained an automatic termination provision in the event authorities provided notice that

the games were prohibited. Id. Before entering into the agreement, the plaintiffs tried to

obtain opinions from several Pennsylvania regulatory agencies as to the legality of the games,

but received no substantive responses. See id. Before installing the games, one of the

plaintiffs informed the local police chief of his intent to install the games and of the fact that

the plaintiffs had received a “no comment” opinion from the state police’s Bureau of Liquor

Code Enforcement as to the legality of the games. Id. After the plaintiffs installed the

games, the Borough Manager “informed the board of directors of the Yardley American

Legion that the Games had been ‘deemed illegal by Yardley Borough, Yardley Borough

Police Department, and the Pennsylvania State Police.’” Culinary Serv., 2010 WL 2600683,

at *1. Upon official notification of the illegality of the games, the contract between the

plaintiffs and the Yardley American Legion was effectively terminated. Id. at *2. After the

plaintiffs requested further investigation, they were informed by the Borough Solicitor that

“‘The Borough of Yardley [wa]s in no position to make a determination as to the legality of

the[ Games] and the effect of possible use of the [Games] in the [Yardley] American Legion

hall,’” but the Borough continued to refuse to rescind the official notification. Id. (second,

third, and fourth alterations in original). The plaintiffs alleged:

As a consequence of the Borough’s actions, Plaintiffs lost

their only contract in Pennsylvania and have since been unable to

enter into additional contracts. Although several other potential

customers have indicated their willingness to enter into agreements

with Plaintiffs, they have declined to do so because of the Borough’s

assessment of the Games. As a result, Plaintiffs have been unable to

distribute its inventory of fifty-four Games and have been deterred

from manufacturing “hundreds more.”

Id. Based on these allegations, the plaintiffs sued the Borough and several of its officers,

asserting a § 1983 claim for violation of procedural due process against all defendants;

tortious interference with contract against the Borough Manager and the Police Chief;

commercial disparagement against the Borough Manager, the Police Chief, and President of

the Borough Council; and a request for declaratory relief against all defendants that the

games were “‘games of skill that [we]re legal under the laws of the Commonwealth of

Pennsylvania.’” Id. The district court dismissed the complaint, finding that the plaintiffs

failed to identify a protected property or liberty interest to support the § 1983 procedural due

process claim and that the defendants were entitled to qualified immunity on that claim; that

the individual defendants were entitled to statutoryimmunityon the tortious interference and

commercial disparagement claims; and that the plaintiffs failed to join indispensable parties

for the declaratory relief claim. Id. at *3. The district court also denied leave to amend.

Culinary Serv., 2010 WL 2600683, at *3.

On appeal, the court summarized the relevant pleading standards, noting that “[a]t this stage
222

of the litigation, we focus on whether the non-moving party sufficiently pled its claims, not

whether it can prove its claims.” Id. (citing Fowler v. UPMC Shadyside, 578 F.3d 203, 213

(3d Cir. 2009). The Third Circuit agreed with the district court that the plaintiffs failed to

plead a property or liberty interest protected by the Fourteenth Amendment sufficient to

maintain their § 1983 procedural due process claim. The plaintiffs argued that the defendants

“deprived them of their property and liberty interest in the right to engage in a legitimate

business free from arbitrary state deprivation.” Id. at *4. The court explained that

“[e]ntitlements . . . are not established by the Constitution; rather, they are created and

defined by existing rules or understandings that stem from an independent source, such as

state law.” Id. Because the “Plaintiffs cite[d] no statute, regulation, government policy, or

mutually explicitly understanding in their complaint that would demonstrate an entitlement

to pursue their business interests,” and because they had not “cited any source for their

entitlement to th[e] Court,” the court concluded that “Plaintiffs pled only a unilateral

expectation of an interest in operating their business, which is not sufficient to plead an

entitlement to a property interest under the Fourteenth Amendment.” Id. With respect to the

liberty interest, the court noted that it had “recognized a relevant liberty interest—the right

to hold specific private employment and to follow a chosen profession free from

unreasonable government interference,” but explained that “the Constitution only protects

this liberty from state actions that threaten to deprive persons of the right to pursue their

chosen occupation; state actions that exclude a person from one particular job are not

actionable in due process claims.” Id. at *5 (citations omitted). The court further explained

that “it is the liberty interest to pursue a calling or occupation, not the right to a specific job,

that is secured by the Fourteenth Amendment,” and that “Plaintiffs must allege an inability

to obtain employment within the field, not just a particular job or at a specific location or

facility.” Culinary Serv., 2010 WL 2600683, at *5. The court noted that “[a]ssuming

Plaintiffs’ allegations [we]re true, they ha[d] been unable to lease additional Games in

Pennsylvania because of Defendants’ official notification letter . . . [and] several businesses

ha[d] acknowledged their willingness to enter into commercial relationships with Plaintiffs

but for Defendants’ declaration that the machines [we]re illegal.” Id. The court concluded

that “at best, Plaintiffs ha[d] been precluded from distributing only two Games, and counsel

conceded at argument that Plaintiffs [could] sell other Games in other locations,” and that

“[a]s such, Plaintiffs ha[d] only been deprived of the specific job of distributing the Games

in Pennsylvania, but they [could] still engage in the general distribution business, to say

nothing of their ability to lease Games in other states.” Id. (citations omitted). As a result,

the court held that the plaintiffs had “failed to assert a protected property or liberty interest,

an essential element to their procedural due process claim,” and affirmed this holding of the

district court. Id. The court noted that because it had concluded that the plaintiffs did not

identify a protected property or liberty interest, they had not alleged violation of a

constitutional right, and that it could therefore alternatively dismiss the procedural due

process claim based on qualified immunity. Id. at *5 n.5.

With respect to the tort claims, the court noted that the relevant inquiry involved the

applicability of an exception to statutory immunity that applied if an act of the employee

caused the injury and the act constituted a crime, actual fraud, actual malice, or willful
223

misconduct. Id. at *6. The court stated that its “inquiry focuse[d] on whether Plaintiffs pled

sufficient facts to show these Defendants desired the termination of the Agreement or to

cause Plaintiffs to suffer pecuniary loss, or that Defendants knew or should have known that

those results were substantially certain to follow. Culinary Serv., 2010 WL 2600683, at *6

(citations omitted). The court concluded that “[w]ith regard to the tortious interference

claim, Plaintiffs ma[de] bare assertions that Manager Winslade and Chief O’Neill acted

willfully to bring about the termination of the Agreement, which is not sufficient under

Iqbal.” Id. (citing Iqbal, 129 S. Ct. at 1950, 1953). Because the plaintiffs “merely allege[d]

that the Agreement automatically terminated after Defendants notified the Yardley American

Legion that theGames [we]re illegal,” which did “not reveal that Manager Winslade or Chief

O’Neill desired or was substantially certain the Agreement would terminate as a result of his

conduct,” “the allegations fail[ed] to show an entitlement to relief.” Id. With respect to the

commercial disparagement claim, the court explained that the allegations were insufficient

under Iqbal to invoke the exception to statutory immunity:

Plaintiffs allege that President Hunter adopted Manager Winslade’s

and Chief O’Neill’s actions, and that the adoption was published on

the Borough’s website. They further allege that Defendants refused

to rescind the official notification notwithstanding Solicitor

McNamara’s disclaimer of authority. Plaintiffs then make a bare

assertion that Defendants engaged in this conduct to cause, or should

have known their conduct would cause, Plaintiffs to suffer pecuniary

loss. Plaintiffs assert no facts to support this alleged intent and,

therefore, they failed to show an entitlement to relief. [Iqbal, 129 S.

Ct. at 1950, 1953.] Accordingly, we will affirm the dismissal of

Counts II and III.

Id.

With respect to the claim for declaratory relief, the court rejected the argument for

abstention, see id. at *7–8, and concluded that the district court had erred in holding that

certain parties were indispensable, id. at *8–9. As a result, the court vacated the dismissal

of the claim for declaratory relief and remanded for the district court to consider whether it

wished to continue to exercise jurisdiction over this claim and whether it should exercise its

discretion and decline to grant declaratory relief. See Culinary Serv., 2010 WL 2600683, at

*6 & n.6, *9.

In analyzing the motion for leave to amend, the court stated that “[i]f a complaint is subject

to a Rule 12(b)(6) dismissal, a district court must permit a curative amendment, even if the

party does not request leave, unless such an amendment would be inequitable or futile.” Id.

The court agreed with the district court that the proposed amendment was futile, explaining

that “[t]he amended complaint still d[id] not identify a protected liberty or property interest

essential to Plaintiffs’ procedural due process claim” and “the amended complaint still only

ma[de] bare assertions that the conduct of President Hunter, Manager Winslade, and Chief
224

O’Neill constituted willful misconduct.” Id. at *10. The court noted that “Plaintiffs

allege[d] that their new allegations establish[ed] that the conduct was ‘unlawful’ and

‘unreasonable,’ but nothing they allege[d] show[ed] that these Defendants desired the

termination of the Agreement or desired to cause pecuniary loss, or that they were

substantially certain such results would occur.” Id. (citations omitted). The court concluded

that the defendants would “remain entitled to immunity under Pennsylvania law” under the

allegations of the amended complaint, and noted that the claim for declaratory relief was not

included in the amended complaint. Id.

• Brookhart v. Rohr, 385 F. App’x 67, No. 10-1449, 2010 WL 2600694 (3d Cir. Jun. 30,

2010) (unpublished) (per curiam). The case arose out of the foreclosure and Sheriff’s sale

of the plaintiff’s property. Brookhart sued various individuals who were involved in the

foreclosure and Sheriff’s sale, “[a]lleging fraud, conspiracy, bank fraud, and violations of the

Hobbs Act, 18 U.S.C. § 1951, the Racketeer Influenced and Corrupt Organizations Act

(‘RICO’), 18 U.S.C.§§ 1961–1968, and the civil rights statutes, 42 U.S.C. §[§] 1983,

1985(3), and 1986 . . . .” Id. at *1. “Brookhart claimed that Perry County officials conspired

with employees and attorneys of PNC Bank and the purchaser to deprive him of his

property.” Id. After all defendants moved to dismiss, the district court “dismissed the

complaint without leave to amend against the state court judge who presided over a hearing

to resolve a declaratory judgment action involving Brookhart,” reasoning that the judge “did

not act in the clear absence of jurisdiction and thus was immunized from a suit for money

damages.” Id. The district court dismissed the claims against the remaining defendants, but

granted leave to amend “to provide factual allegations in support of [Brookhart’s] claims.”

Id. Brookhart filed a response to the dismissal order “complain[ing] that Judge Rehkamp

should not have been dismissed and . . . [seeking] to clarify each defendant’s role in the

foreclosure and sale of his property . . . [by] contend[ing] that the judgment in the state

mortgage foreclosure action was fraudulent because of the absence of an ‘original wet ink

signature’ on the ‘Note front and back.’” Id. The district court granted the defendants’

renewed motion to dismiss, “reasoning that the fraud claim had not been pled with

particularity as required by Rule 9(b), FED. R. CIV. PRO., and Brookhart’s other allegations

were equally conclusory or speculative.” Brookhart, 2010 WL 2600694, at *1.

Brookhart appealed in forma pauperis. The Third Circuit dismissed the appeal as frivolous,

noting that “the in forma pauperisstatute provides that the Court shall dismiss the appeal at

any time if the Court determines that it is frivolous.’” Id. (citing 28 U.S.C. §

1915(e)(2)(B)(i)). The court explained: “The District Court reasoned, and we agree, that

Brookhart failed to allege any facts from which to infer any kind of fraud or conspiracy in

the foreclosure action and Sheriff’s sale of his property.” Id.

With respect to the claims under § 1983, the court found that “the majority of the defendants

[we]re private citizens and not state actors,” and that while “[l]iability would attach if a

private party conspired with a state actor, . . . the District Court properly concluded that the

vague allegations of a conspiracy to defraud Brookhart of his property did not satisfy the

plausibility standard of Rule 12(b)(6).” Id. at *2 (citing Iqbal, 129 S. Ct. at 1949) (internal
225

citation omitted). The court also held that “[a]s to the remaining defendants—the sheriff and

the court officials— . . . Brookhart’s conclusory allegations that his constitutional rights were

violated fail[ed] to state a plausible claim.” Id. (citing Iqbal, 129 S. Ct. at 1949). The court

also held that “judges are absolutely immunized from a suit for money damages arising from

their judicial acts,” and that “[t]heir orders may not serve as a basis for a civil action for

damages.” Id. (citations and footnote omitted).

With respect to the § 1985 claims, the court concluded that “Brookhart did not allege that he

was a member of a protected class, and his conclusory allegations of a deprivation of his

constitutional rights [we]re insufficient to state a section 1985(3) claim.” Brookhart, 2010

WL 2600694, at *2. In addition, “[b]ecause Brookhart failed to allege a section 1985(3)

violation, he could not assert a cause of action under . . . § 1986,” which requires the

existence of a § 1985 conspiracy. Id.

The court explained that the Hobbs Act claim was properly dismissed because the statute

provided only criminal sanctions, not civil relief. Id. The RICO claim failed because the

statute only “authorize[d] civil suits by any person injured in his business or property by

reason of a violation of 18 U.S.C. § 1962, but Brookhart failed to allege (1) conduct; (2) of

an enterprise; (3) through a pattern; (4) of racketeering activity.” Id. (internal citation

omitted). The court cited a pre-Twombly case to explain that “[c]onclusory allegations of a

pattern of racketeering activity, in this case, a fraudulent scheme, are insufficient to survive

a Rule 12(b)(6) motion.” Id. (citing Lum v. Bank of Am., 361 F.3d 217, 223–24 (3d Cir.

2004)).

• Howard Hess Dental Labs. Inc. v. Dentsply Int’l, Inc., 602 F.3d 237 (3d Cir. 2010). The

appeal involved two related antitrust cases (Hess and Jersey Dental). The plaintiffs in both

cases were two dental laboratories, and one of the defendants in both cases was Dentsply

International, Inc., a manufacturer of artificial teeth sold to the plaintiffs and other labs

through a network of dealers (the “Dealers”). Id. at 244. Several of the Dealers were named

as defendants only in the Jersey Dental case. Id. “In both cases, the Plaintiffs essentially

allege[d] that Dentsply ‘foreclosed its competitors’ access to [D]ealers by explicitly agreeing

with some [D]ealers that they [would] not carry certain competing brands of teeth and by

inducing other [D]ealers not to carry those competing brands of teeth’ and that Dentsply ‘by

agreement [with] its [D]ealers, . . . set[ ] the [D]ealers’ resale prices.’” Id. (omission and

second, third, fifth, sixth, seventh, eighth, and ninth alterations in original) (citation omitted).

The plaintiffs alleged that “Dentsply ‘caused [the] Plaintiffs to purchase Dentsply’s teeth at

artificially high prices and lose profits from unrealized sales of Dentsply’s competitors’

teeth.’” Id. (alteration in original) (citation omitted). “The Plaintiffs brought the Hess suit

against Dentsply in 1999, alleging several antitrust conspiracies and seeking both monetary

and injunctive relief.” Id. The district court granted summary judgment on the damages

claim in favor of Dentsply in Hess, finding that the plaintiffs lacked standing under Illinois

Brick Co. v. Illinois, 431 U.S. 720 (1977). Howard Hess Dental Labs., 602 F.3d at 244. The

plaintiffs brought the Jersey Dental case in 2001 against Dentsply and several of its Dealers,

alleging several antitrust conspiracies, and seeking damages and injunctive relief. Id. The
226

district court dismissed the damages claims based on Illinois Brick and denied leave to

amend because it concluded that amendment would have been futile. Id. In an interlocutory

appeal, the Third Circuit held that the plaintiffs could not recover any damages in Hess and

most damages in Jersey Dental. Id. On remand, the plaintiffs filed an amended complaint

in Jersey Dental, alleging conspiracies to restrain trade in violation of Section 1 of the

Sherman Act and conspiracies to monopolize under Section 2 of the Sherman Act. Id. at

244–45. The district court denied the plaintiffs’ motion for summary judgment in Hess and

granted the defendants’ motions to dismiss in Jersey Dental. Id. at 245. The district court

also denied the plaintiffs’ motion for reconsideration in Hess, and suggested that the parties

enter a stipulation or submit proposed orders to close the Hess case. Howard Hess Dental

Labs., 602 F.3d at 245. The defendants in Hess then moved for dismissal of the complaint.

Id. The plaintiffs opposed the motion to dismiss, but also submitted a proposed order to

dismiss the case with prejudice, to comply with the district court’s request. Id. The district

court dismissed the Hess complaint by approval of the plaintiffs’ proposed order. Id.

On appeal, the Third Circuit affirmed the denial of the plaintiffs’ motion for summary

judgment in the Hess case on the monopolization claims against Dentsply. See id. at 251.

The court also affirmed the denial of the motion for reconsideration in Hess. See id. at 252.

With respect to the district court’s subsequent dismissal of the complaint in Hess, the Third

Circuit stated that “[t]o the extent the Plaintiffs thought that the District Court’s denial of

their summary judgment motion entitled them to pursue their claims any further, they were

mistaken, as a plaintiff asserting antitrust claims does not get to a jury simply by filing a

complaint and hoping for the best.” Howard Hess Dental Labs., 602 F.3d at 252 (citing

Eastman Kodak Co. v. Image Technical Servs., Inc., 504 U.S. 451, 467–69 (1992); Town

Sound & Custom Tops, Inc. v. Chrysler Motors Corp., 959 F.2d 468, 481 (3d Cir. 1992) (en

banc)).

In Jersey Dental, the plaintiffs alleged a conspiracy to monopolize in violation of Section 2

of the Sherman Act and a conspiracy to restrain trade in violation of Section 1. Id. at 253.

The district court dismissed the four counts on various grounds, including that the plaintiffs

did not sufficiently allege specific intent by the Dealers, as required for a Section 2 claim,

and that the plaintiffs failed to allege the agreement element of the Section 1 and Section 2

claims. Id. The Third Circuit noted that “[t]he plaintiffs s[ought] to revive their conspiracy

claims essentially by reference to their allegations that ‘every Dealer agreed to the same

plan—Dealer Criterion 6’; that ‘every Dealer knew that every other Dealer agreed, or would

agree, to this same plan’; and that ‘it . . . was obvious to each Dealer that—only if all of the

other Dealers complied—would the purpose of Dealer Criterion 6 be achieved.’” Id. at 254.

The court noted that Section 1 claims always require an agreement, and that the Section 2

claim here—conspiracy to monopolize—also required an agreement. Id. (alteration in

original). The court stated that “[t]o allege such an agreement between two or more persons

or entities, a plaintiff must allege facts plausibly suggesting ‘a unity of purpose or a common

design and understanding, or a meeting of minds in an unlawful arrangement.’” Id. (quoting

Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 771 (1984) (quotation

omitted)). The court described the allegations of conspiracy:
227

The amended complaint in this case alleges a two-tiered

conspiracy. First, it alleges that the defendants conspired to

“maintain Dentsply’s monopoly of the manufacture of artificial teeth

and/or premium artificial teeth for sale in the United States, to

restrain trade for the sale of artificial teeth and/or premium artificial

teeth in the United States by the implementation of an exclusive

dealing arrangement, and to exclude Dentsply’s competitors from the

markets for such teeth in the United States[.]” Second, it alleges that

the defendants conspired “to sell such teeth to dental laboratories at

anticompetitive prices determined by Dentsply and agreed to by the

Dealer Defendants.” To carry out this conspiracy, Dentsply allegedly

has sold teeth to the Dealers on the condition “that [the Dealers]

restrict their dealings with rival manufacturers[.]” The Dealers, the

Plaintiffs allege, “knew that this exclusive dealing arrangement was

and is an illegal restraint of trade designed to maintain Dentsply’s

monopoly.”

Howard Hess Dental Labs., 602 F.3d at 254 (alterations in original) (internal citations

omitted). The court “understood the Plaintiffs to allege a hybrid of both vertical and

horizontal conspiracies,” which it explained is also called a “hub-and-spoke” conspiracy.

Id. at 254–55. The court found the allegations of agreement insufficient:

Here, even assuming the Plaintiffs have adequately identified

the hub (Dentsply) as well as the spokes (the Dealers), we conclude

that the amended complaint lacks any allegation of an agreement

among the Dealers themselves. The amended complaint states only

in a conclusory manner that all of the defendants—Dentsply and all

the Dealers included—conspired and knew about the alleged plan to

maintain Dentsply’s market position. The amended complaint

alleges, for instance, that “Dentsplymade clear to each . . . dealer that

every other Dentsply dealer was . . . required to agree to the same

exclusive dealing arrangement, and that every other Dentsply dealer

had so agreed.” Iterations of this allegation are sprinkled throughout

the amended complaint. But to survive dismissal it does not suffice

to simply say that the defendants had knowledge; there must be

factual allegations to plausibly suggest as much. See Twombly, 550

U.S. at 564, 127 S. Ct. 1955. There are none here. In other words,

the “rim” connecting the various “spokes” is missing.

Id. at 255 (omissions in original) (internal citations omitted). The court concluded that the

inference suggested by the plaintiffs was not warranted, explaining:

Instead of underscoring factual allegations plausibly

suggesting the existence of an agreement, the Plaintiffs invite us to
228

infer that the Dealers were aware of each other’s involvement in the

conspiracy because, as market participants, they all knew that

Dentsply was the dominant player in the artificial tooth market and

because they all had an economic incentive to create and maintain a

regime in which Dentsply reigned and the Dealers did its bidding. In

that regime, the Plaintiffs tell us, the Dealers would all benefit from

Dentsply’s policies because they would all be able to charge dental

laboratories artificially inflated prices for teeth in their various

regions of operation. We do not disregard the logical appeal of this

argument. Certainly, the objective of many antitrust conspiracies is

to control pricing with an eye to increasing profits. But simply

because each Dealer, on its own, might have been economically

motivated to exert efforts to keep Dentsply’s business and charge the

elevated prices Dentsply imposed does not give rise to a plausible

inference of an agreement among the Dealers themselves. Cf.

Twombly, 550 U.S. at 566, 127 S. Ct. 1955 (noting the “logic” of the

complaint’s allegation of an agreement but finding it insufficient

because it did not suggest actual joint action). Notwithstanding

Twombly’s requirement that an antitrust plaintiff state “enough fact

to raise a reasonable expectation that discovery will reveal evidence

of illegal agreement[,]” id. at 556, 127 S. Ct. 1955 (footnote omitted),

the Plaintiffs’ allegations do not offer even a gossamer inference of

any degree of coordination among the Dealers. Those allegations are

not “placed in a context that raises a suggestion of a preceding

agreement” among the Dealers. Id. at 557, 127 S. Ct. 1955. Instead,

they do no more than intimate “merely parallel conduct that could just

as well be independent action.” Id. As a consequence, the Plaintiffs

have fallen short of their pleading obligations.

Id. at 255–56 (alteration in original) (footnote omitted).

The court also rejected the plaintiffs’ alternative argument that “even if theyha[d] not alleged

an overarching conspiracy between and among Dentsply and all of its Dealers, they at least

ha[d] adequately alleged several bilateral, vertical conspiracies between Dentsply and the

Dealers.” Id. at 256. The court explained that it did not need to decide whether the

alternative theory could legally proceed:

[W]e need not weigh in on the alternative theory the Plaintiffs now

press, for even assuming it is legally viable or even relevant here, the

Plaintiffs cannot pursue it under the circumstances of this case

because the amended complaint cannot be fairly understood to allege

the existence of several unconnected, bilateral, vertical conspiracies

between Dentsply and each Dealer. While pleading in the alternative

is, of course, authorized by the Federal Rules of Civil Procedure, see
229

FED. R. CIV. P. 8(a)(3), we have an obligation to read allegations not

in isolation but as a whole and in context, see Chabal v. Reagan, 822

F.2d 349, 357 (3d Cir.1987); Pace Res., Inc. v. Shrewsbury Twp., 808

F.2d 1023, 1026 (3d Cir. 1987). As we read the amended complaint,

we see no indication of the Plaintiffs’ intention to allege that every

single agreement between Dentsply and each Dealer had

anticompetitive effects. All throughout the amended complaint are

substantially similar variations on the allegation that the “Defendants

have agreed, each with all of the others, to implement an exclusive

dealing arrangement[.]” Indeed, the amended complaint is rife with

additional references to “the conspiracy” between “[t]he Defendants,

. . . each with all of the others[.]” These allegations are just not the

stuff of several mini-agreements lacking a horizontal tether. In other

words, the Plaintiffs simply did not draft their amended complaint to

encompass their alternative legal theory. In short, the Plaintiffs are

bound by the four corners of their amended complaint, which clearly

seeks to allege one conspiracy to which Dentsply and all of the

Dealers, as a collective, were parties. To the extent the Plaintiffs are

recasting their allegations in an effort to circumvent a motion to

dismiss, we must reject that approach. See Leegin Creative Leather

Prods. v. PSKS, Inc., 551 U.S. 877, 907–08, 127 S. Ct. 2705, 168 L.

Ed. 2d 623 (2007); In re New Motor Vehicles Canadian Exp.

Antitrust Litig., 533 F.3d 1, 5 (1st Cir. 2008).

Id. at 256–57 (alterations in original) (internal citations omitted). The court concluded that

“[t]he Plaintiffs ha[d] failed to allege any facts plausibly suggesting a unity of purpose, a

common design and understanding, or a meeting of the minds between and among Dentsply

and all of the Dealers,” and affirmed the determination that the plaintiffs had not adequately

alleged an agreement. Howard Hess Dental Labs., 602 F.3d at 257.

The court also affirmed the district court’s decision to dismissthe conspiracy to monopolize

claims on the alternative ground that they failed to adequately allege specific intent by the

Dealers. Id. at 257–58. The court noted that “[s]pecific intent in the antitrust context may

be inferred from a defendant’s unlawful conduct,” but concluded that the inference was not

warranted in these circumstances:

Here, the Plaintiffs point us to their allegations that the

defendants “have acted with the specific intent to unlawfully maintain

a monopoly[,]”; that “the intended effect of th[e] exclusive dealing

arrangement . . . has been the elimination of any and all

competition[,]”; and that the defendants “knew that this exclusive

dealing arrangement was and is an illegal restraint of trade designed

to maintain Dentsply’s monopoly[,]”. In essence, the Plaintiffs allege

that Dentsply’s pricing policies were unlawful, that the Dealers knew
230

as much, and that they signed on to those policies knowing full well

they were unlawful. But that allegation, in its many iterations, is

conclusory. There are no facts behind it, so it does not plausibly

suggest knowledge of unlawfulness on the Dealers’ part. We could

feasibly infer the Dealers’ specific intent to further Dentsply’s

monopolistic ambitions if the Plaintiffs had stated enough factual

matter to suggest some coordination among the Dealers, something

to suggest that they knew that Dentsply was spearheading an effort to

squash its competitors by pressing the Dealers into its service and

keeping prices artificially inflated. We have already determined,

however, that the Plaintiffs’ allegations that the Dealers conspired

with Dentsply are deficient, so we cannot infer the Dealers’ specific

intent from their mere participation in the conspiracy, as the Plaintiffs

urge. In fact, the only actual conduct the Plaintiffs have alleged on

the part of the Dealers is that each one of them, acting on its own,

signed a bilateral dealing agreement with Dentsply. The only

plausible inference from that conduct is that each Dealer sought to

acquire, retain and/or increase its own business. Significantly, the

antitrust laws do not prohibit such conduct. At bottom, the Plaintiffs’

allegations of specific intent rest not on facts but on conclusory

statements strung together with antitrust jargon. It is an axiom of

antitrust law, however, that merely saying so does not make it so for

pleading-sufficiency purposes. See Twombly, 550 U.S. at 555, 127

S. Ct. 1955 (“[A] plaintiff's obligation to provide the grounds of his

entitlement to relief requires more than labels and conclusions, and

a formulaic recitation of the elements of a cause of action will not

do[.]” (internal quotation marks, alteration and citation omitted)).

Id. at 257–58 (alterations and omission in original) (internal citations and footnote omitted).

The court also held that the coconspirator exception to the Illinois Brick doctrine did not

apply because “the amended complaint d[id] not adequately allege that the Dealers [we]re

members of a conspiracy with Dentsply.” Id. at 258–59. The court explained that “the

Plaintiffs could come within Illinois Brick’s coconspirator exception only if the Dealers were

precluded from asserting claims against Dentsply because their participation in the

conspiracy was ‘truly complete,’” but “the amended complaint d[id] not give rise to a

plausible inference that the Dealers’ involvement in the conspiracy was truly complete.” Id.

at 259. Because the plaintiffs could not come within the coconspirator exception, they were

“in essence . . . asserting their claims against the Dealers as mere middlemen,” which was

prohibited under the relevant case law. See id.

• Mann v. Brenner, 375 F. App’x 232, No. 09-2461, 2010 WL 1220963 (3d Cir. Mar. 30,

2010) (unpublished). The plaintiff appealed the dismissal of his claims under § 1983 against

the City of York, its agents, and York College. Id. at *1. The Third Circuit affirmed. Mann
231

owned a house in York that York College sought to purchase to use for student housing, but

the parties could not agree on a price. Id. Mann’s home was later cited for violation of the

City code and was declared “blighted” by the City. Id. The City began condemnation

proceedings against Mann in the Court of Common Pleas for York County. Id. Mann

stipulated to the blight determination, but argued that the City and York College had

conspired to harass and intimidate him into selling his property for a reduced price. Id. The

Court of Common Pleas found the taking to be proper and concluded that the City had not

acted in bad faith or committed fraud by pursuing condemnation proceedings against Mann.

Mann, 2010 WL 1220963, at *1. At the conclusion of the condemnation proceedings, Mann

was paid $166,000 for his property. Id.

Mann’s district court complaint alleged, under § 1983, that the defendants conspired to

intimidate and harass him into accepting a significantly reduced price for his property. Id.

Mann asserted that “‘[t]heir plan, plainly put, was to drive [me] crazy.’” Id. (alterations in

original). The district court granted the defendants’ motion to dismiss, but granted leave to

amend. Id. Mann filed two amended complaints, and the third version of his complaint was

dismissed and the subject of the appeal. Id. On appeal, Mann argued that the district court

applied the wrong standard to dismiss his complaint, erred in dismissing his complaint under

that standard, and improperly stayed discovery pending ruling on the motions to dismiss.

Mann, 2010 WL 1220963, a t*1.

The Third Circuit held that the district court had applied the correct standard by noting that

motions to dismiss are governed by Rule 12(b)(6) as interpreted in Twombly and Phillips v.

County of Allegheny, 515 F.3d 224, 230 (3d Cir. 2008). Mann, 2010 WL 1220963, at *2.

The court noted that “Mann fail[ed] to cite either Twombly or the ‘plausibility standard it

ushered in, instead choosing to rely on the now defunct ‘no-set-of-facts’ standard of Conley

v. Gibson, which the Supreme Court squarely rejected in Twombly.” Id. at *2 n.3 (internal

citation omitted). The Third Circuit also rejected the argument that the district court

improperly applied the standard.

Mann asserted a First Amendment retaliation claim, asserting that after he defended himself

in court against $2,000 in fines for code violations, one of the City defendants cited him with

another $2,000 in fines in retaliation for his successful defense. Id. The court noted that

“[n]owhere in Mann’s third amended complaint d[id] he allege facts that could reasonably

support the necessary ‘causal link’ between his protected speech (successfully defending the

initial fines) and the unlawful retaliation (an additional $2,000 fine).” Id. The court

explained that “[i]nstead, Mann ma[de] vague and conclusory allegations that he was

assessed some unreasonable fine for some unspecified violation, in retaliation for ‘cho[osing]

to use legal process as a way to protect and extend his rights.’” Id. (third alteration in

original) (citing Iqbal, 129 S. Ct. at 1950). The court held that “[t]hese allegations f[e]ll far

short of what is required to put the defendants on notice of the claims and the bases for

them.” Id. (citations omitted). The court affirmed dismissal of the First Amendment

retaliation claim.
232

Mann also asserted a claim under the Fourth Amendment for malicious prosecution against

certain of the City’s agents, alleging that they cited him with thousands of dollars in fines and

brought other “‘frivolous criminal charges’” against him. Mann, 2010 WL 1220963, at *3.

The Third Circuit concluded that “[e]ven though on its third iteration, Mann’s complaint

wholly fails to allege that the defendants acted without probable cause in citing him for code

violations,” and that “Mann did not allege that he suffered a ‘deprivation ofliberty consistent

with the concept of a seizure’ as a result of the criminal citation proceedings.” Id. (citation

omitted). The court noted that “[t]he only deprivation Mann claims to have suffered is ‘legal

fees, court costs, and interminable inconvenience,’” and explained that “[s]uch deprivations

are insufficient to establish that Mann was the victim of a malicious prosecution under the

Fourth Amendment.” Id. (citing DiBella v. Borough of Beachwood, 407 F.3d 599, 603 (3d

Cir. 2005)). The court affirmed the dismissal of the malicious prosecution claim.

Mann also asserted a substantive due process claim “based on the defendants’ unlawful

agreement ‘to deprive [him] of his rights through the unlawful use of state authority as a way

to coerce him into compliance with their wishes.’” Id. (alteration in original). The court

concluded that the allegation that the plaintiff was unlawfully harassed into a condemnation

proceeding was barred by collateral estoppel, explaining that the “record ma[de] clear that

the identical issue Mann s[ought] to raise on appeal was actually litigated in the state

condemnation proceeding.” Id. at *4 (footnote omitted).

Finally, Mann raised a “class of one” equal protection claim, relying on “general allegations

that ‘he was subjected to unequal and unauthorized mistreatment on a selective basis because

of the defendant[’]s unlawful desire for his property,’ in violation of his right to equal

protection.” Id. (alteration in original). The court noted that “[a]lthough [Mann] allege[d]

that ‘[o]ther citizens are not treated in this fashion, particularly the political leaders of the

City of York,’ Mann fail[ed] to plead that he was treated differently than other similarly

situated individuals, that is, other property owners of blighted structures in the City of York.”

Mann, 2010 WL 1220963, at *4 (third alteration in original) (internal record citation

omitted). The court explained that “[w]hile [Village of Willowbrook v.] Olech[, 528 U.S.

562 (2000) (per curiam)] may not require plaintiffs to ‘identify in the complaint specific

instances where others have been treated differently,’ the complaint [wa]s still deficient.”

Id. (internal citation omitted). The court cited both a post-Twombly case and a pre-Twombly

case to conclude that “[w]ithout any allegation regarding other blighted property owners,

Mann simply [could not] ‘nudge [his] claims across the line from conceivable to plausible.’”

Id. (third alteration in original) (citing Phillips, 515 F.3d at 234 (quoting Twombly, 550 U.S.

at 570); Hill v. Borough of Kutztown, 455 F.3d 225, 239 (3d Cir. 2006) (“‘class of one’ claim

failed because plaintiff, a Borough Manager, did ‘not allege the existence of similarly

situated individuals—i.e., Borough Managers—who [the Mayor] treated differently than he

treated [plaintiff]’”) (alterations in original)). The court found that “Mann’s bald assertions

that the defendants violated his right to equal protection because ‘he was selectively and

vindictively cited and prosecuted by the City in an effort to force him into cooperation with

York College’ ‘amount to nothing more than a ‘formulaic recitation of the elements’ of a

constitutional discrimination claim.’” Id. (quoting Iqbal, 129 S. Ct. at 1951) (citation
 Under 28 U.S.C. § 1915A, “[t]he court shall review, before docketing, if feasible or, in any event, as soon as

20

practicable after docketing, a complaint in a civil action in which a prisoner seeks redress from a governmental entity

or officer or employee of a governmental entity.” 28 U.S.C. § 1915A(a). Subsection (b) provides grounds for dismissal,

including if the complaint “is frivolous, malicious, or fails to state a claim upon which relief may be granted; or . . . seeks

monetary relief from a defendant who is immune from such relief.” Id. § 1915A(b).

233

omitted). The court affirmed dismissal of the equal protection claim.

With respect to Mann’s objection to the district court’s refusal to allow discovery before

deciding the motions to dismiss, the Third Circuit noted that “[i]n certain circumstances it

may be appropriate to stay discovery while evaluating a motion to dismiss where, if the

motion is granted, discovery would be futile.” Id. at *5 (citing Iqbal, 129 S. Ct. at 1954

(“‘Because respondent’s complaint is deficient under Rule 8, he is not entitled to

discovery.’”)). The court found this to be such a case, explaining that “none of Mann’s

claims entitle him to relief.” Id. The court cited a case decided just before Twombly, and

noted that Mann’s contention that “he could have produced ‘a litany of facts’ substantiating

his claims if he had more time to conduct discovery, misses the mark.” Mann, 2010 WL

1220963, at *5 (citing Mitchell v. McNeil, 487 F.3d 374, 379 (6th Cir. 2007)) (internal

citation omitted). The court cited pre-Twombly case law to explain that “[a] motion to

dismiss pursuant to Rule 12(b)(6) tests the legal sufficiency of a claim, and therefore may be

decided on its face without extensive factual development.” Id. (citing Neitzke v. Williams,

490 U.S. 319, 326–27 (1989) (“the purpose of Rule 12(b)(6) is to ‘streamline[ ] litigation by

dispensing with needless discovery and factfinding.’”) (alteration in original); Chudasama

v. Mazda Motor Corp., 123 F.3d 1353, 1367 (11th Cir. 1997) (“‘A motion to dismiss based

on failure to state a claim for relief should . . . be resolved before discovery begins.’”);

Rutman Wine Co. v. E. & J. Gallo Winery, 829 F.2d 729, 738 (9th Cir. 1987) (“the idea that

discovery should be permitted before deciding a motion to dismiss ‘is unsupported and defies

common sense [because t]he purpose of F.R. Civ. P. 12(b)(6) is to enable defendants to

challenge the legal sufficiency of complaints without subjecting themselves to discovery’”)

(alterations in original)). The court concluded that the district court did not abuse its

discretion in staying discovery. Id.

The Third Circuit also noted that the district court did not abuse its discretion in denying

leave to amend, explaining that “[b]ecause Mann was permitted to [amend] twice before the

present motions to dismiss were filed, . . . the District Court was well within its discretion

in finding that allowing Mann a fourth bite at the apple would be futile.” Id. at *5 n.9.

• Franco-Calzada v. United States, 375 F. App’x 217, No. 09-4409, 2010 WL 1141384 (3d

Cir. Mar. 25, 2010) (unpublished) (per curiam). The district court dismissed sua sponte the

plaintiff’s prisoner civil rights complaint for failure to state a claim under 28 U.S.C. §

1915A(b)(1)–(2). Franco-Calzada, 2010 WL1141384, at *1. The Third Circuit dismissed 20
 Section 1915 addresses proceedings in forma pauperis, and subsection (e)(2)(B) provides that a court shall dismiss 21

the case if the action or appeal “is frivolous or malicious; . . . fails to state a claim on which relief may be granted; or .

. . seeks monetary relief against a defendant who is immune from such relief.” 28 U.S.C. § 1915(e)(2)(B).

234

the appeal under 28 U.S.C. § 1915(e)(2)(B). Franco-Calzada fell from a ladder in prison 21

and fractured two fingers. Id. He alleged that the ladder was too small for an adult and that

it caused his fall and injuries. Id. He alleged, on information and belief, that at least two

other inmates had fallen because of the ladder problem, and asserted that the defendants

failed to inspect the ladders and rectify the problem. Id. Franco-Calzada also claimed that

his medical treatment was unnecessarily delayed in deliberate indifference to his serious

medical needs. Id. Specifically, he alleged that the defendants failed to send him to the

emergency room on the night of his fall, that they took no x-rays until the following Monday,

and that they delayed his surgery to fix the fractures for two weeks. Id. He also claimed that

the plaintiffs made him purchase pain medication, after first providing it for free, and that

he suffered permanent stiffness and pain in his fingers. Franco-Calzada, 2010 WL 1141384,

at *1.

The magistrate judge recommended dismissal, finding that “Franco-Calzada had no Bivens

claim because the factual allegation of a thirteen-day delay in obtaining surgery, alone, was

‘inadequate to allege deliberate indifference on the part of any defendant.’” Id. The

magistrate judge also treated the slip-and-fall allegations as a Bivens claim, and concluded

that “Franco-Calzada ‘again fail[ed] to allege any facts that would permit an inference of

deliberate indifference.’” Id. The district court adopted the magistrate judge’s report and

dismissed the complaint. Id.

The Third Circuit concluded that dismissal was appropriate, explaining:

There is nothing in the Complaint’s specific allegations from which

we can plausibly infer that the defendants were deliberately

indifferent to Franco-Calzada’s serious medical needs or to prison

conditions pertaining to the use of an allegedly unsafe ladder in his

cell. The protections afforded prisoners by the Due Process Clause

of the Fourteenth Amendment are not triggered by the mere

negligence of prison officials. See Daniels v. Williams, 474 U.S. 327,

330–31 (1986). Likewise, Eighth Amendment liability requires

“more than ordinary lack of due care for the prisoner’s interests or

safety.” Whitley v. Albers, 475 U.S. 312, 319, 106 S. Ct. 1078, 89 L.

Ed. 2d 251 (1986). Regarding medical mistreatment claims in

particular, “[i]t is well-settled that claims of negligence or medical

malpractice, without some more culpable state of mind, do not

constitute ‘deliberate indifference.’” Rouse v. Plantier, 182 F.3d 192,

197 (3d Cir.1999); see also White v. Napoleon, 897 F.2d 103, 108 (3d

Cir.1990) (concluding that mere medical malpractice cannot give rise

to a violation of the Eighth Amendment). Only “unnecessary and
235

wanton infliction of pain” or “deliberate indifference to the serious

medical needs” of prisoners is sufficiently egregious to rise to the

level of a constitutional violation. White, 897 F.2d at 108–09

(quoting Estelle v. Gamble, 429 U.S. 97, 103, 97 S. Ct. 285, 50 L. Ed.

2d 251 (1976)). Here, the allegations contained in the Complaint,

taken as true, assert a simple negligence claim at most, and thus, do

not state a claim of a constitutional violation under the Eighth

Amendment.

Id. at *2. The Third Circuit noted that the district court did not consider granting leave to

amend, but saw no need to remand because amendment would have been futile. Id. at *3.

The court explained:

Here, no additional allegations would cure the defects in the

Complaint as to the slip and fall claim. Moreover, the BOP’s

grievance responses that Franco-Calzada attached to his Complaint,

lead to the plausible inference that the medical staff treated

Franco-Calzada promptly and without unnecessary delay. The

medical defendants treated . . . him with first-aid and started him on

antibiotics on the day he was injured. The orthopedic specialist

evaluated Franco-Calzada’s injuries on January 6, 2009. After a

pre-operative visit on January 12, Franco-Calzada underwent surgery

on January 15, 2009.

Franco-Calzada, 2010 WL 1141384, at *3. The Third Circuit affirmed dismissal.

• Donnelly v. O’Malley & Langan, PC, 370 F. App’x 347, No. 09-3910, 2010 WL 925869

(3d Cir. Mar. 16, 2010) (unpublished) (per curiam). The plaintiff appealed dismissal of his

legal malpractice claim and other claims asserted against his workers compensation

attorneys. The appellate court affirmed. The defendants represented the plaintiff in a

workers compensation claim that ultimately settled. Id. at *1. The complaint alleged that

the attorneys failed to investigate the plaintiff’s claim before settling, disclosed his letter of

resignation to his employer before settlement, and improperly obtained and disclosed

confidential information about him. Id. After terminating his contract with the defendants,

the plaintiff filed a pro se penalty petition claiming that his employer failed to send him his

settlement check at the proper time. Id. The employer then delivered the check to the

plaintiff’s former attorneys, who allegedly opened it without permission and threw away the

envelope. Id. “Donnelly claimed that the O’Malley defendants deliberately interfered with

the penalty proceedings by destroying the envelope, which, according to him, constituted

material evidence in his case,” and that “when they no longer represented him, the O’Malley

defendants obtained a copy of the settlement hearing transcript and improperly discussed his

case ex parte with an employment attorney, a workers compensation judge, and the

employer’s lawyer.” Id. The pro se district court complaint asserted claims for invasion of

privacy under state law, breach of contract, legal malpractice, and violation of state and
236

federal constitutional rights. Donnelly, 2010 WL 925869, at *1.

The Third Circuit held that to the extent the plaintiff sought to pursue a claim that his privacy

was violated under the Freedom of Information Act (FOIA), the court “agree[d] with the

District Court that the FOIA applies only to the release of government records by the federal

government, and, thus, Donnelly’s claim fail[ed] as a matter of law.” Id. at *1 n.2. The court

also found that Donnelly had “no meritorious claim under the Privacy Act, which protects

individuals from the misuse of identifying information contained in computer information

systems that are maintained by federal agencies.” Id. (internal citation omitted).

The district court dismissed the breach of contract/legal malpractice claim because the

plaintiff failed to file a certificate of merit, as required by a local rule. Id. The district court

also held that Donnelly failed to state an invasion of privacy claim under state law,

“reject[ing] as meritless Donnelly’s claim that the O’Malley defendants invaded his privacy

by obtaining information about him from the Department of Labor & Industry, which was

needed in order to represent him in workers compensation proceedings, and by procuring the

transcript of the workers compensation hearing, a matter of public record.” Id. “As for his

claim of ex parte communications between the O’Malley defendants (whose services had

been terminated) and an employment attorney, a workers compensation judge, and the

employer’s lawyer, the District Court held that Donnelly’s ‘naked assertions’ were

insufficient to show that any private facts had been disseminated to the public or that he was

placed in a false light as a result of such communications.” Id. With respect to the federal

constitutional claim, which the district court treated as a claim under § 1983, the district

court held that Donnelly failed to show that the defendants “acted ‘under color of state law.’”

Donnelly, 2010 WL 925869, at *2. Forsimilar reasons, the district court dismissed the state

constitutional claim, explaining that the relevant provision “‘govern[ed] only the actions of

the state government.’” Id. (citation omitted).

The Third Circuit held that the district court applied the appropriate standard of review to the

complaint and properly dismissed the claims. However, with respect to the dismissal based

on failure to submit a certificate of merit under the relevant local rule, the court found that

involuntary dismissal under that rule is not a dismissal with prejudice, and modified that

dismissal to be without prejudice. Id. The court saw “no need to remand the matter for

amendment of the Complaint regarding Donnelly’s privacy and § 1983 claims because

amendment would be futile,” explaining that “no additional allegations would cure the

defects in the Complaint regarding the state action requirement under § 1983,” and that

“Donnelly relie[d] on pure conjecture . . . and there [wa]s nothing in th[e] record indicating

that he could have amended his Complaint to state a viable invasion of privacy claim.” Id.

at *3 n.3.

• Laffey v. Plousis, 364 F. App’x 791, No. 08-1936, 2010 WL 489473 (3d Cir. Feb. 12, 2010)

(unpublished). Laffeywas a court security officer assigned to a United States courthouse and

employed by MVM, Inc., a private company working under contract with the Marshals

Service. Id. at *1. He was also president of the Security Officers, Police and Guards Union,
237

Local No. 1536, and in that capacity, opposed the transfer of another court security officer

(Torriero) to the plaintiff’s courthouse. Id. Laffey alleged that after he opposed the transfer,

“MVM and the Marshals Service harassed and retaliated against him.” Id. Specifically, he

alleged:

[H]e was told that the Deputy Chief United States Marshal for the

District of New Jersey, Donald Rackley, wanted Torriero to work in

Camden, blamed Laffey for blocking the transfer, and instructed

Laffey’s supervisor “to do something about Officer Laffey or have

something done to him.” In November 2004, Laffey allegedly was

told that “things would get worse and worse until” Rackley, James

Plousis (the United States Marshal for the District of New Jersey),

and MVM “get you.” Laffey also alleged that James Elcik, a

Marshals Service employee who liaised with MVM, told him that

Rackley was “upset with him because he would not allow Torriero to

transfer.” Finally, Laffey claimed that in the fall of 2004, Elcik

criticized him for mishandling CSO time sheets and told him not to

attend security meetings at the Camden courthouse.

In January 2005, Plousis allegedly asked Elcik: “what are we

going to do now” about punishing Laffey? Laffey also alleged that

MVM investigated Laffey’s performance at the request of the

Marshals Service in early January 2005. According to Laffey, “most”

of the charges against him were “not sustained.” Laffey concludes

that this campaign of retaliation resulted in his suspension without

pay for over two weeks in January 2005 and his removal from the LC

SO position by MVM in February 2005.

Id. Based on these allegations, Laffey sued Plousis, Rackley, and Torriero in their individual

capacities under Bivens, alleging violations of his First Amendment rights to freedom of

speech and freedom of association. Id. at *2. The district court granted the defendants’

motion to dismiss, “finding that Laffey’s complaint failed to allege that Plousis, Rackley,

Torriero, or any Marshals Service employee either was directly involved in Laffey’s

suspension and demotion or had the ability to control or influence disciplinary actions taken

by MVM,” and also denied Laffey’s motion to amend the complaint. Laffey, 2010 WL

489473, at *2.

The Third Circuit noted that “Laffey did not allege any specific facts which identif[ied] any

employee of the Marshals Service who was directly involved in Laffey’s demotion or

suspension,” and that he also did not “allege that Plousis, Rackley, or Elcik were able to

intervene in MVM’s internal disciplinary proceedings.” Id. The court noted that under

Iqbal, vicarious liability was inapplicable in Bivens actions, and that “‘a plaintiff must plead

that each Government-official defendant, through the official’s own individual actions, has

violated the Constitution.’” Id. (quoting Iqbal, 129 S. Ct. at 1948). The court found that “the
238

complaint did not allege that the individual defendants were personally and directly involved

in any retaliatory employment actions taken against Laffey, as Iqbal requires.” Id. (citing

Iqbal, 129 S. Ct. at 1948). The court noted that under Iqbal, allegations that are merely

consistent with unlawful conduct are not sufficient:

Laffey did allege that Plousis and Rackley were displeased

with his opposition to Torriero’s transfer request and that they told

Laffey’s supervisor to “do something” to or about Laffey. He also

alleged that Elcik criticized his handling of CSO time sheets and

prevented him from attending courthouse security meetings. Such

allegations are consistent with a conclusion that Plousis, Rackley, and

Elcik sought to retaliate against Laffey. But Iqbal makes clear that

allegations that are “merely consistent with” liability are insufficient

to “state a claim for relief that is plausible on its face” in a Bivens

action. Id. at 1949 (quoting Bell Atlantic Corp. v. Twombly, 550 U.S.

544, 557 (2007)). Under this standard, Laffey’s complaint is deficient

because it fails to allege specific facts suggesting that Plousis,

Rackley, and Elcik actually did—or even could—personally intervene

to cause MVM to discipline Laffey in violation of his First

Amendment rights.

Id. at *3.

The Third Circuit declined to accept Laffey’s suggestion that the court adopt an approach

used by several other circuits in the § 1983 context, in which “one can be held liable for a

constitutional violation by ‘setting in motion’ certain events which he knows or should know

will result in a constitutional violation.” Id. The court was “hesitant to adopt this standard

following Iqbal, a Bivens action in which the Supreme Court emphasized ‘a plaintiff must

plead that each Government-official defendant, through the official’s own individual actions,

has violated the Constitution.’” Laffey, 2010 WL 489473, at *2 (quoting Iqbal, 129 S. Ct.

at 1948). The court noted that “although Laffey argues that Plousis, Rackley, and Elcik

‘pressured’ MVM into disciplining him, his complaint alleges insufficient facts to support

such an inference.” Id.

Laffey sought leave to amend his complaint to allege that he was denied a promotion in

retaliation for his opposition to Torriero’s transfer, and to add Elcik, a Marshals Service

employee, as a defendant. Id. at *4. The Third Circuit held that the district court’s denial

of leave to amend was not an abuse of discretion because “Laffey failed to allege sufficient

facts to show that Elcik or any other Marshals Service employee was directly involved in

MVM’s decision to discipline him[,] . . . [making] any amendment adding Elcik as a

defendant or alleging that MVM denied Laffey a promotion . . . futile.” Id.

• Boring v. Google Inc., 362 F. App’x 273, No. 09-2350, 2010 WL 318281 (3d Cir. Jan. 28,

2010) (unpublished), cert. denied, 131 S. Ct. 150 (2010). The complaint was originally
239

brought in state court and asserted claims against Google for invasion of privacy, trespass,

injunctive relief, negligence, and conversion. Id. at *1. The claims arose from Google’s

“Street View” program, which “offers free access on the Internet to panoramic, navigable

views of streets in and around major cities across the United States.” Id. “To create the

Street View program, representatives of Google attach panoramic digital cameras to

passenger cars and drive around cities photographing the areas along the street.” Id. The

complaint alleged that Google had taken, without permission, colored photographs of the

plaintiffs’ residence, including the pool, from a vehicle in their driveway. Id. The Borings

alleged that their road is marked as “Private Road, No Trespassing,” and that Google invaded

their privacy by driving on the road to take photographs and bymaking them available to the

public. Id.

The case was removed to federal court, the Borings amended their complaint to substitute

an unjust enrichment claim for the conversion claim, and the district court dismissed all of

the claims. Boring, 2010 WL 318281, at *1. With respect to the invasion of privacy claim,

the district court found that “the Borings were unable to show that Google’s conduct was

highly offensive to a person of ordinary sensibilities.” Id. The district court dismissed the

negligence claim, finding that Google did not owe a duty to the Borings. Id. The district

court dismissed the trespass claim because “‘the Borings ha[d] not alleged facts sufficient

to establish that they suffered any damages caused by the alleged trespass.’” Id. The district

court dismissed the unjust enrichment claim because the parties had no contractual

relationship and the Borings did not confer anything of value on Google. Id. Finally, the

district court “held that the Borings had failed to plead a plausible claim for injunctive relief

under Pennsylvania’s ‘demanding’ standard for a mandatory injunction, and dismissed the

punitive damages claim because the Borings failed to ‘allege facts sufficient to support the

contention that Google engaged in outrageous conduct.’” Id. The district court found that

amendment would be futile. Boring, 2010 WL 318281, at *1. On reconsideration, the court

clarified its holding on the trespass claim, stating that “it had dismissed the trespass claim

because the Borings had ‘failed to allege facts sufficient to support a plausible claim that they

suffered any damage as a result of the trespass’ and because they failed to request nominal

damages in their complaint.” Id. at *2.

On appeal, the court explained that while Pennsylvania state law recognizes four invasion

of privacy torts, the two relevant torts were “unreasonable intrusion upon the seclusion of

another” and “unreasonable publicity given to another’s private life.” Id. at *3. The court

cited a pre-Twombly state court case to note that an intrusion upon seclusion claim requires

pleading certain facts: “To state a claim for intrusion upon seclusion, plaintiffs must allege

conduct demonstrating ‘an intentional intrusion upon the seclusion of their private concerns

which was substantial and highly offensive to a reasonable person, and aver sufficient facts

to establish that the information disclosed would have caused mental suffering, shame or

humiliation to a person of ordinary sensibilities.’” Id. (quoting Pro Golf Mfg., Inc. v.

Tribune Review Newspaper Co., 809 A.2d 243, 247 (Pa. 2002)). The court concluded that

“[n]o person of ordinary sensibilities would be shamed, humiliated, or have suffered mentally

as a result of a vehicle entering into his or her ungated driveway and photographing the view
240

from there.” Id. The court explained:

Indeed, the privacy allegedly intruded upon was the external view of

the Borings’ house, garage, and pool—a view that would be seen by

any person who entered onto their driveway, including a visitor or a

delivery man. Thus, what really seems to be at the heart of the

complaint is not Google’s fleeting presence in the driveway, but the

photographic image captured at that time. The existence of that

image, though, does not in itself rise to the level of an intrusion that

could reasonably be called highly offensive.

Id. (footnote omitted). The court found it significant that the Borings did not allege that they

were viewed inside their home. Boring, 2010 WL 813281, at *4. The court cited a preTwombly case to note that “[c]ourts do in fact, decide the ‘highly offensive’ issue as a matter

of law at the pleading stage when appropriate.” Id. The appellate court also rejected the

Borings’ challenge to the district court’s expression of skepticism “about whether the

Borings were actually offended by Google’s conduct in light of the Borings’ public filing of

the present lawsuit,” noting that the district court’s comments were made after it had already

concluded that Google’s conduct would not be highly offensive to a person of ordinary

sensibilities and that the district court had properly applied an objective standard in

determining whether the conduct was highly offensive. Id. The court concluded that the

intrusion on seclusion claim failed as a matter of law. Id. With respect to the claim based

on publicity given to private life, the Third Circuit agreed that “the Borings ha[d] failed to

allege facts sufficient to establish the third element of a publicity to private life claim, i.e.,

that the publicity would be highly offensive to a reasonable person,” and concluded that

“accepting the Borings’ allegations as true, their claim for publicity given to private life

would not be highly offensive to a person of ordinary sensibilities.” Id. at *4–5.

The Third Circuit concluded that the district court had erred in making damages an element

of the trespass claim, although the district court claimed not to have done so. Id. at *5. The

court found that “the Borings ha[d] alleged that Google entered upon their property without

permission” and noted that “[i]f proven, that is a trespass, pure and simple.” Boring, 2010

WL 318281, at *5. The court concluded: “[I]t may well be that, when it comes to proving

damages from the alleged trespass, the Borings are left to collect one dollar and whatever

sense of vindication that may bring, but that is for another day. For now, it is enough to note

that they ‘bear the burden of proving that the trespass was the legal cause, i.e., a substantial

factor in bringing about actual harm or damage’ if they want more than a dollar.” Id.

(internal citation and footnote omitted).

The Third Circuit agreed that “the facts alleged by the Borings provide[d] no basis for an

unjust enrichment claim against Google,” and explained:

The complaint not only fails to allege a void or unconsummated

contract, it does not allege any benefit conferred upon Google by the
241

Borings, let alone a benefit for which the Borings could reasonably

expect to be compensated. The complaint alleges that Google

committed various torts when it took photographs of the Borings’

property without their consent. The complaint does not allege,

however, that the Borings gave or that Google took anything that

would enrich Google at the Borings’ expense. An unjust enrichment

“claim makes sense in cases involving a contract or a quasi-contract,

but not, as here, where plaintiffs are claiming damages for torts

committed against them by [the] defendant[ ].”

Id. at *6 (alterations in original) (citation and footnote omitted).

The court also affirmed the dismissal of the request for injunctive relief, stating:

The District Court held that the complaint failed to set out

facts supporting a plausible claim of entitlement to injunctive relief.

We agree that the Borings have not alleged any claim warranting

injunctive relief. The complaint claims nothing more than a single,

brief entry by Google onto the Borings’ property. Importantly, the

Borings do not allege any facts to suggest injury resulting from

Google’s retention of the photographs at issue, which is unsurprising

since we are told that the allegedly offending images have long since

been removed from the Street View program.

Id. at *7.

Finally, the court affirmed dismissal of the request for punitive damages, explaining:

The Borings’ complaint fails to allege conduct that is

outrageous or malicious. There is no allegation that Google

intentionally sent its driver onto their property or that Google was

even aware that its driver had entered onto the property. Moreover,

there are no facts suggesting that Google acted maliciously or

recklessly or that Google intentionally disregarded the Borings’

rights.

Id. The court rejected the argument that punitive damages must always be determined by a

jury after discovery, and noted that “under the pleading standards we are bound to apply,

there is simply no foundation in this complaint for a demand for punitive damages.” Id.

(citing Iqbal, 129 S. Ct. at 1950; Twombly, 550 U.S. at 556). The court affirmed dismissal

of the claims for invasion of privacy, unjust enrichment, injunctive relief, and punitive

damages; reversed the dismissal of the trespass claim; and remanded to allow the trespass

claim to proceed. Id.
 Although the court concluded that the complaint did not state a “plausible” claim, it appeared to base its decision on 22

the fact that the law did not provide for the relief requested, not based on a lack of plausible facts.

242

• Arango v. Winstead, 352 F. App’x 664, No. 09-3506, 2009 WL 3863335 (3d Cir. Nov. 19,

2009) (unpublished) (per curiam), cert. denied, No. 09-9772, 130 S. Ct. 3331, 2010 WL

1180647 (May 24, 2010). A state prisoner, proceeding pro se, filed a civil rights action

against the prison’s superintendent, alleging that the plaintiff’s civil rights were violated

when prison officials wrongly accused her of sexual harassment, failed to follow proper

procedures in investigating, punished her with a 30-day cell restriction, and removed her

from participating in a Sex Offender Program for six months. Id. at *1. The district court

dismissed the complaint, finding that it was not cognizable under section § 1983 because the

“favorable termination rule” provided that “a § 1983 plaintiff cannot seek damages for harm

caused by actions that implicate the validity of the fact or length of her confinement, unless

she can prove that the sanction has been reversed, invalidated, or called into question by a

grant of federal habeas corpus relief.” Id. “[C]laims that relate only to the conditions, and

not the fact or duration, of incarceration are not subject to the favorable termination rule.”

Id. (citations omitted). The Third Circuit concluded that the district court had erred in

applying the favorable termination rule because the challenged actions did not alter the length

of the plaintiff’s incarceration. Id. at *2. But the court affirmed on another ground, finding

that the complaint did not state a claim for relief. The court explained:

The Supreme Court has recognized that “[a]s long as the conditions

or degree of confinement to which the prisoner is subjected is within

the sentence imposed upon him and is not otherwise violative of the

Constitution, the Due Process Clause does not in itself subject an

inmate’s treatment by prison authorities to judicial oversight.”

Asquith v. Dep’t of Corr., 186 F.3d 407, 410 (3d Cir. 1999) (quoting

Hewitt v. Helms, 459 U.S. 460, 468 (1983)). Due process applies

only where the conditions of confinement impose “atypical and

significant hardship[s] on the inmate in relation to the ordinary

incidents of prison life.” Sandin v. Connor, 515 U.S. 472, 484

(1995). Placement in administrative segregation for days or months

at a time or transfers to more restrictive custody do not implicate a

protected liberty interest. See Torres, 292 F.3d at 150; Fraise v.

Terhune, 283 F.3d 506, 522–23 (3d Cir. 2002). Nor does removal

from a prison program, as restriction from participation in prison

programs is among the conditions of confinement that an inmate may

reasonablyanticipate during her incarceration. See James v. Quinlan,

866 F.2d 627, 629 (3d Cir. 1989). Therefore, Arango’s complaint,

alleging that she was removed from a program and placed in thirty

days restrictive housing, did not state a plausible violation of a

protected liberty interest.22

Id. (alterations in original).
243

• United States ex rel. Lobel v. Express Scripts, Inc., 351 F. App’x 778, No. 09-1047, 2009

WL 3748805 (3d Cir. Nov. 10, 2009) (unpublished). The plaintiff, a former employee of the

defendant pharmacy benefit manager, claimed that the defendant had falsely certified its

compliance with a regulation governing filling prescriptions. Id. at *1. The district court

dismissed under Rule 12(b)(6), and the Third Circuit affirmed. The Third Circuit explained

that to state a claim under the False Claims Act, the plaintiff “must allege that: (1) defendant

violated the regulation; (2) defendant certified its compliance with the regulation to a federal

payor in spite of its violation of the regulation; and (3) defendant’s certification of

compliance was a condition of payment.” Id. (citation omitted). The express certification

claim failed because the complaint did not “identify a single claim submitted by ESI in which

it represented falsely to the Government that it complied with regulations that affect its

eligibility for payment.” Id. The court noted that the case law clearly did not provide a cause

of action without such an identification. See id. The district court also found that the

implied certification claim failed, noting that the plaintiff relied on Conley, which had been

overruled by Twombly. Id. The court concluded: “Lobel’s failure even to cite Twombly and

Iqbal in either of his two briefs is a telling omission. When Lobel’s amended complaint is

analyzed under the more exacting standard established by those cases, it falls well short.”

Id. The court explained that of the seven paragraphs that the plaintiff relied upon to state a

claim, two merely quoted the False Claims Act; four “allege[d] in a conclusory fashion that

[the defendant] violated the False Claims Act by submitting claims for prescriptions filled

in violation of § 1306.05,” and therefore were not presumed to be true under Iqbal, and the

one alleging materiality was “a legal conclusion which the District Court was not obliged to

accept as true.” Lobel, 2009 WL 3748805, at *2 (citing Iqbal, 129 S. Ct. at 1949). The court

also found the allegations legally deficient, noting that “[i]n addition to these factual

deficiencies, . . . we agree with [the defendant] that the violation of § 1306.05 Lobel alleges

cannot, as a matter of law, give rise to liability under the False Claims Act because

compliance with the regulation is not a ‘condition of payment.’” Id. (citation omitted).

• Twillie v. Ohio, 351 F. App’x 596, No. 09-3182, 2009 WL 3683782 (3d Cir. Nov. 6, 2009)

(unpublished) (per curiam). The pro se complaint against various FBI field offices “alluded

generally to ‘retaliation tactics’ and ‘harassment.’” Id. at *1. The claims arose out of

“circumstances that precipitated [the plaintiff’s] arrest for indecent assault in Pennsylvania,

his sentence for the crime, his decision to go to California after his sentencing, and his

subsequent arrest and extradition in Pennsylvania.” Id. The district court construed the

complaint as seeking relief under Bivensfor harassment and retaliation against the FBI, and

dismissed because a Bivens claim cannot be maintained against a federal agency. Id. The

district court denied leave to amend, finding that any amendment to state a Bivens claim

would be futile. Id. On appeal, the Third Circuit found that the district court had “explicitly

and obviously construed Twillie’s claims liberally, affording him the allowances due a pro

se litigant,” and then found, “[s]imilarly construing the complaint liberally,” that “Twillie

presented claims against a federal agency, not against individual officers or agents of a

federal agency,” and that such claims could not “be raised under Bivens.” Id. at *2 (citation

omitted). Although the court found the allegations legally insufficient, it also noted that an

alternative basis for affirming the district court was that the claims were not plausible. See
244

Twillie, 2009 WL 3683782, at *2. The court concluded that the “allegations, rife with

suppositions (he even uses the word ‘guess’ in presenting one aspect of his claim) and

lacking in specificity, are simply not plausible.” Id. The court held that “[t]he facts he

plead[ed], even construed liberally, d[id] not allow [the court] to infer more than the mere

possibility of misconduct, which d[id] not show [the court] that he [wa]s entitled to relief.”

Id. (citing Iqbal, 129 S. Ct. at 1950). The Third Circuit also affirmed the denial of leave to

amend, finding that the FBI could not be sued under Bivens and that “it [wa]s not apparent

how Twillie could transform his implausible claims into plausible claims.” Id. The court

concluded that “[t]o the extent that Twillie makes us aware, through his informal brief, of

claims that he would have wanted to present in an amendment, we note that those claims are

similarly speculative and implausible.” Id.

• Shahin v. Darling, 350 F. App’x 605, No. 09-3298, 2009 WL 3471297 (3d Cir. Oct. 29,

2009) (unpublished) (per curiam), petition for cert. filed, (Mar. 31, 2010) (No. 09-10032).

The pro se complaint asserted claims against nine Delaware judges, two law firms, and two

court reporters, and sought damages for alleged violations of the plaintiff’s federal and

constitutional rights. Id. at *1. The plaintiff alleged that in connection with three lawsuits

she had filed in Delaware state court, the “defendants engaged in coercion, criminal

conspiracy, retaliation, and witness tampering, resulting in rulings against Shahin in all three

actions.” Id. (footnote omitted). The district court dismissed the complaint and denied leave

to amend. The Third Circuit affirmed. With respect to the judges, the court found that they

were absolutely immune from suits for monetary damages, absent allegations of bad faith or

malice, and “there [we]re no facts in the complaint to support inferences that any of the

named judges acted outside the scope of his or her judicial capacity or in the absence of

jurisdiction.” Id. (citing Mireles v. Waco, 502 U.S. 9, 11 (1991)). The claims against the law

firms and the court reporters failed because the “complaint fail[ed] to allege any facts to

support [the plaintiff’s] federal or constitutional claims.” Id. The court explained:

Shahin alleges that during the state proceedings, one lawyer was

substituted for another lawyer, a lawyer filed a motion without

affording her proper notice, and a lawyer engaged in ex parte

communications with the presiding judge. Even taking the

allegations as true, the complaint does not contain any facts that

would allow one to reasonably infer that the defendants violated

federal or constitutional law. Shahin’s conclusory allegations are

insufficient to plausibly demonstrate that any of the defendants

violated Shahin’s civil or constitutional rights. See Iqbal, 129 S. Ct.

at 1949.

Id. (footnote omitted). The Third Circuit agreed that amendment would have been futile,

“[g]iven that . . . there [we]re no facts to infer that any of the defendants violated Shahin’s

federal or constitutional rights . . . .” Id. at *2.

• Merritt v. Fogel, 349 F. App’x 742, No 08-3622, 2009 WL 3383257 (3d Cir. Oct. 22, 2009)
245

(unpublished) (per curiam). The plaintiff, a Pennsylvania state prisoner serving a life

sentence, filed a pro se lawsuit against medical professionals and Department of Corrections

employees under § 1983, asserting that the defendants were deliberately indifferent to the

plaintiff’s medical needs, in violation of the Eighth Amendment, and asserting a state law

claim for medical malpractice. Id. at *1. The complaint alleged that the plaintiff had

Hepatitis C and had been repeatedly refused treatment. Id. The magistrate judge

recommended that the Eighth Amendment claim be dismissed for failure to state a claim, that

the state law claim be dismissed for failure to comply with a state certificate of merit

requirement, and that the motions to amend be denied. Id. at *2. The district court accepted

these recommendations. Id. The Third Circuit first noted that the district court had

improperly dismissed the complaint because it should have construed the plaintiff’s initial

motion for leave to amend as an amended complaint, given that the plaintiff was entitled to

file his first amended complaint as of right, and that the amended complaint would have

rendered the defendants’ motions to dismiss moot. Id. Despite this procedural error, the

Third Circuit considered the merits, and also found that the district court had improperly

dismissed on that basis. Merritt, 2009 WL 3383257, at *3.

With respect to the Eighth Amendment claim, the district court had found that the allegations

of deliberate indifference were inadequate. “Deliberate indifference . . . requires more than

mere malpractice or disagreement with a particular course of treatment,” and “the Magistrate

Judge reasoned that Merritt’s allegations show[ed] that he merely disagree[d] with

defendants’ medical judgment and insist[ed] on the treatment of his choice.” Id. But the

Third Circuit explained that the plaintiff had alleged much more:

If that were all that Merritt alleged, then the Magistrate Judge

would be right. Merritt, however, makes many other specific factual

allegations that the Magistrate Judge did not discuss and that, taken

as true as they must be at this stage, raise an inference of deliberate

indifference. For example, Merritt alleges that one of defendants’

own specialists recommended him for treatment as long ago as 1996

but that defendants fraudulently concealed that information from him

until he finally filed suit. He also alleges that he is within the

protocol for treatment, though various defendants have falsely told

him otherwise. Thus, as Merritt argues, he claimsto seek, not merely

the treatment of his own choice, but treatment that has been

recommended by a specialist and that is called for by the Department

of Corrections protocol.

Moreover, his allegations permit the inference that defendants

may have nonmedical reasons for refusing to provide this treatment.

For example, he alleges that defendant Falor told him both that

medical staff merely “shrug their shoulders, indicating nothing” when

the subject of HCV treatment arises at staff meetings and that Merritt

would not receive treatment though his liver numbers were “all out
246

of wack” and that he should instead “pray.” He also alleges that he

overheard a physician’s assistant admit to having shredded his sick

call requests. Finally, he alleges that has been denied treatment for

at least five different reasons over the years, most of which he alleges

were fabricated.

Taken together, and in light of Merritt’s pro se status, we

believe that these specific factual allegations permit the inference that

at least some defendants have acted with deliberate indifference to

Merritt’s medical needs. Thus, for pleading purposes, Merritt’s

factual allegations have “‘nudged his claim . . . across the line from

conceivable to plausible.’” Iqbal, 129 S. Ct. at 1951 (quoting

Twombly, 550 U.S. at 570). For that reason, the District Court should

not have dismissed Merritt’s complaint without leave to amend and

should not have denied his motions for leave to amend as futile.

Accordingly, we will vacate the dismissal of Merritt’s complaint and

remand with an instruction to allow him to file an amended

complaint.

Id. at *3–4 (footnote omitted).

• Lawson v. Nat’l Continental-Progressive Ins. Co., 347 F. App’x 741, No. 09-2239, 2009

WL 3182930 (3d Cir. Oct. 6, 2009) (unpublished) (per curiam). After the plaintiff’s state

court suit alleging that the defendant had wrongfully terminated an insurance policy held by

the plaintiff’s bus company was dismissed, the plaintiff filed a pro se complaint against the

same defendant insurance company in federal court. Id. at *1. The federal complaint alleged

the same breach of contract claim brought in state court, and asserted claims under the First,

Fourth, Eighth, and Fourteenth Amendments, as well as violations of 42 U.S.C. § 1881,

1855, 1982, 1986, and 1988. Id. The district court dismissed the complaint on the

defendant’s motion, finding that the complaint failed to allege anyfacts to support the federal

and constitutional claims, and that the breach of contract claim was barred by res judicata.

Id. The Third Circuit agreed that the federal and constitutional claims lacked factual support:

We agree with the District Court that Lawson’s complaint fails to

allege any facts to support hisfederal or constitutional claims. While

Lawson alleges that National Insurance denied Nate’s Transportation

insurance coverage and added a premium without reason, the

complaint does not contain any facts that would allow one to

reasonably infer that its actions violated federal or constitutional law.

Lawson’s conclusory allegations are insufficient to plausibly

demonstrate that National Insurance violated Lawson’s civil or

constitutional rights.

Id. at *2. The appellate court also agreed that the breach of contract claim was barred by res
247

judicata. Id. The Third Circuit concluded that leave to amend would be futile, “[g]iven that

. . . Lawson previously litigated th[e] breach of contract claim in New Jersey Superior Court

and there [we]re no facts to infer that National Insurance violated his federal or constitutional

rights . . . .” Lawson, 2009 WL 3182930, at *2.

• Bates v. Paul Kimball Hosp., 346 F. App’x 883 (3d Cir. 2009) (unpublished) (per curiam).

The plaintiff filed suit against Monmouth Ocean Hospital Services Corp. (“Monoc”), the

Jackson Township Police Department (“Jackson Township”), the State of New Jersey (“the

State”), Kimball Medical Center (“Kimball”), and St. Barnabas Health Care System (“St.

Barnabas”), alleging that he was deprived of constitutional rights through his involuntary

civil commitment. Id. at 884. The complaint specified that “‘nine Jackson Township police

cars along with one civilian car with a social worker’ arrived at his residence and requested

that he come with them to Kimball”; “he was taken from his house ‘against [his] will,’”; “he

was detained for eight days at both Kimball and St. Barnabas”; and “he was ‘forced to take

medication, being told all alone [sic], if you resist we will write you up as uncooperative and

you will be here longer.’” Id. (alterations in original). The district court dismissed all of the

claims, either through dismissal on the pleadings or through summary judgment, finding that

the defendants were immune from liability and that Bates failed to allege bad faith on the part

of the defendants and failed to assert any theory of liability against the State. Id. The

appellate court determined that the district court erred by finding the defendants immune

from suit, and evaluated the merits of the claims.

With respect to Monoc, the Third Circuit found “[m]ost persuasive . . . Monoc’s indication

that it is neverspecifically mentioned outside the caption of Bates’ amended complaint.” Id.

at 886. The complaint “refer[red] to Monoc only by implication in describing his transport

from one medical facility to the next, and in complaining that he was unjustly ‘billed for the

ambulance service which delivered [the plaintiff] from Kimball Hospital to St. Barnabas.”

Id. The court found that the allegations “fail[ed] to state a claim of a constitutional violation

that is plausible on its face as against Monoc” because the complaint was “devoid of factual

allegations concerning Monoc that would support a claim under § 1983.” Bates, 346 F.

App’x at 886 (citing Iqbal, 12 S. Ct. at 1949, 1950).

With respect to the claims against Jackson Township, the court found the pleadings

insufficient to survive summary judgment, noting that “[w]hile a municipality may be liable

for establishing a policy or custom that results in a constitutional violation, the allegations

in Bates’ amended complaint do not even imply the existence of such a policy or custom in

Jackson Township.” Id. Bates also “failed to show the existence of a genuine issue of

material fact or that he was entitled to judg[]ment as a matter of law.” Id.

With respect to the claims against the State, the court held that the claims should have been

dismissed because the district court lacked jurisdiction over them based on the Eleventh

Amendment. Id. at 886–87.

With respect to the claims against the Kimball and Barnabas, the court held that “[t]he
 Although the Third Circuit cited Iqbal in its discussion of the standard of review for motions to dismiss, the dismissal 23

appeared to be on the grounds that the law provided no relief for the asserted claims, not that the factual allegations were

implausible. The court did not cite Iqbal in the “discussion” portion of its opinion.

248

allegations in Bates’ amended complaint [we]re wholly insufficient to carry his burden of

demonstrating that the Medical Facilities acted under color of state law [as required to state

a claim under § 1983] in conjunction with his involuntary confinement . . . .” Id. at 887.

• Gelman v. State Farm Mutual Auto. Ins. Co., 583 F.3d 187 (3d Cir. 2009). The plaintiff’s

putative class action complaint alleged that the defendant violated the Fair Credit Reporting

Act (FCRA) by obtaining a copy of the plaintiff’s credit report from a credit reporting agency

and using it to select the plaintiff to receive materials regarding insurance products that the

plaintiff might want. Id. at 188–89. The plaintiff “contend[ed] that the State Farm mailing

[wa]s nothing more than promotional material soliciting him to contact State Farm regarding

its various insurance products and that it [wa]s therefore not the kind of firm offer of

insurance that would legitimize State Farm’s access to his credit report under federal law.”

Id. at 189. The district court dismissed the complaint, holding that “Gelman failed to state

a claim for his false pretenses and permissible purpose claims because State Farm’s mailer

constituted an offer of insurance under the FCRA, and that was a ‘permissible purpose’ for

disclosing Gelman’s credit report.” Id. at 190.

The Third Circuit agreed that the false pretenses and permissible purpose claims failed,

rejecting the plaintiff’s argument that the mailer did not have any value to him and therefore

did not constitute a firm offer of insurance. Id. at 193–94. Besides the fact that the plaintiff

did not “explain what ‘value’ the mailer should have provided him,” the court found that the

statute did “not mention ‘value,’ or anything akin to it.” Gelman, 583 F.3d at 194. The court

also explained that “even assuming arguendo that Congress intended to limit a firm offer to

one that has value pursuant to the analysis in [another case], Gelman’s argument would still

be undermined by subsequent decisions limiting the reach of [that other case] to

circumstances that do not exist here.” Id. The court noted that the statute defined a “firm

offer” as “‘any offer of . . . insurance to a consumer that will be honored if the consumer is

determined, based on information in a consumer report, to meet the specific criteria used to

select the consumer for the offer.’” Id. at 195 (quoting 15 U.S.C. § 1681a(l)). “The mailer

. . . stated that the offer of insurance contained therein would be honored if Gelman met

certain criteria.” Id. The court noted that “Gelman did not allege that he responded to State

Farm’s mailing and was denied insurance even though he satisfied the pre-screening criteria,”

noting that “[t]hat would present a very different scenario that we need not now consider.”

Id. The Third Circuit affirmed the district court’s dismissal. Id. at 196. 23

• Cann v. Hayman, 346 F. App’x 822, No. 08-3032, 2009 WL 3115752 (3d Cir. Sept. 30,

2009) (unpublished) (per curiam), cert. denied, 130 S. Ct. 2411 (2010). A state prison

inmate filed a pro se lawsuit against several prison officials under § 1983, alleging violations

of his civil rights, including First Amendment retaliation, Fourth Amendment unreasonable

search, Eighth Amendment cruel and unusual punishment, and Fourteenth Amendment due
249

process/equal protection claims. Id. at *2. The district court dismissed the complaint for

failure to state a claim; the Third Circuit affirmed and found that granting leave to amend

would be futile. The plaintiff alleged that he had filed a grievance in which he accused

prison officials of tampering with his inmate account. Id. at *1. The plaintiff further alleged

that nearly two months after the grievance was filed, he set off a metal detector three times

and then refused to comply with an officer’s order regarding another search method. Id.

Based on this refusal, the plaintiff was placed in a special cell and subjected to additional

searches, but none of these measures resulted in finding contraband. Id. The plaintiff was

charged with disciplinary infractions for failure to comply with the officer’s order. In

reviewing the complaint, the Third Circuit noted that pro se pleadings are liberally construed.

Id. at *2 (citing Erickson v. Pardus, 551 U.S. 89 (2007)). The court found that the complaint

“lack[ed] facial plausibility because the complained-of actions by the prison officials were

not improper, let alone unconstitutional, given Cann’s ‘triple-triggering’ of the metal detector

in the yard and his subsequent refusal to comply with Martain’s order . . . .” Cann, 2009 WL

3115752, at *2 (internal citation to Iqbal, 129 S. Ct. at 1949, omitted). The court held that

“[t]he responsive actions take[n] by prison officials were rationally related to legitimate

penological interests and goals,” and concluded that the district court had appropriately

dismissed the complaint. Id.

• Miles v. Twp. of Barnegat, 343 F. App’x 841, No. 08-1387, 2009 WL 2840733 (3d Cir.

Sept. 4, 2009) (unpublished) (per curiam). The plaintiffs, siblings who inherited six

contiguous properties in theTownship of Barnegat, alleged that the Township created public

rights of way on their property, approved plans for water drainage from adjacent properties,

and granted easements to private development corporations for water drainage on their

property. Id. at *1. The overflow from detention basins allegedly flooded the plaintiffs’

property, creating a wetland, and the county’s underground storm tunnels allegedly

contributed to the flooding. Id. The plaintiffs also alleged that neighboring landowners

improperly encroached on their property and granted easements to the property; that cable

and electric companies placed utility lines, cables, and telephone wires on their property

without consent; that the surveyor defendants omitted or misstated information to diminish

the plaintiffs’ property value; and that the engineering defendants encroached on their

property by placing detention basins too close to the boundary, causing water runoff to flood

their land. Id. The plaintiffs filed suit under § 1983, alleging violations of their Fifth

Amendment rights under the Takings Clause, violations of procedural due process, and a §

1983 conspiracy to encroach on and diminish the property. Id. The plaintiffs also alleged

that the Township fraudulently changed the boundaries of their property on Township maps.

Id. The district court dismissed the takings claims for lack of jurisdiction because they were

unripe; dismissed the procedural due process claims because New Jersey provided a judicial

mechanism for challenging the Township’s decision to build a road on their property; and

dismissed the remainder of the § 1983 claims for failure to state a plausible claim of state

action by private party defendants. The district court declined to exercise jurisdiction over

the pendant state law claims. Miles, 2009 WL 2840733, at *2. The Third Circuit affirmed.

After describing the pleading standards in Twombly and Iqbal, the Third Circuit concluded
250

that the district court had properly dismissed the procedural due process claims because

“[v]iewing the allegations as true, the factual matter f[ell] far short of permitting [the court]

to infer a plausible connection among the private party defendants and a governmental

agency or official such that their private actions would constitute ‘state action.’” Id. at *3

(citations omitted). “[T]he single-sentence conclusory allegations of a conspiracy contained

in the Amended Complaint [we]re insufficient to allege a plausible conspiracy among the

defendants to deprive the Plaintiffs of their constitutional rights under § 1983.” Id. (citing

Iqbal, 129 S. Ct. at 1949; Kost v. Kozakiewicz, 1 F.3d 176, 185 (3d Cir. 1993)).

• McTernan v. City of York, 577 F.3d 521 (3d Cir. 2009). The complaint alleged that the

plaintiffs have devout religious beliefs, including a belief that their religion requires them to

share their beliefs with others, and that based on these beliefs, they protested against

abortions outside a Planned Parenthood facility (the “Facility”). Id. at 524. The Facility was

next to a public sidewalk and had a ramp leading to its front entrance that ran parallel to the

sidewalk. Id. The plaintiffs alleged that a survey they conducted showed that 2.9 feet of this

ramp were constructed on the public right of way. Id. The plaintiffs also alleged that they

contacted the Commissioner of the city police department to request that the encroaching

portion of the ramp be removed. Id. Because the ramp and a banner allegedly encroached

on the public right of way, the plaintiffs asked a city policy officer if they could go on the

ramp to communicate with clients entering the Facility. Id. The officer refused and stated

that he would arrest the plaintiffs if they entered the ramp. McTernan, 577 F.3d at 524. The

plaintiffs sued the officer, the commissioner of the police department, and the city, claiming

violations of their rights to free exercise of religion, peaceful assembly, and freedom of

speech. Id. The defendants moved to dismiss, relying on regulations under the ADA that

placed certain restrictions on the ramp at issue. Id. at 524–25. The district court denied the

plaintiffs’ request for a preliminary injunction, and dismissed the complaint based on finding

that the ramp was a nonpublic forum and that plaintiffs had not suffered any constitutional

injury. Id. at 525–26. The Third Circuit affirmed.

The Third Circuit rejected the plaintiffs’ argument that the district court was required to

accept as true the statement in the complaint that the ramp was a public forum. Id. at 531.

Relying on Iqbal, the court found that this statement was a legal conclusion that did not need

to be accepted as true. Id. The finding that the ramp was nonpublic was supported by

attachments to the complaint that depicted the ramp and its overlap with the public sidewalk.

McTernan, 577 F.3d at 531. The court concluded that “[i]f Plaintiffs were not excluded from

a public forum, they ha[d] failed ‘‘to state a [First Amendment] claim to relief that [wa]s

plausible on its face.’’” Id. (quoting Iqbal, 129 S. Ct. at 1949).

The Third Circuit also concluded that the claim of a violation of the plaintiffs’ right to free

exercise of religion failed because:

In the complaint, Plaintiffs do not allege that they are treated

differently than others, and instead claim only that “Defendants’

actions target and are intended to chill, restrict, and inhibit Plaintiffs
251

from exercising their religion in this way” and that “Defendants’

actions constituted a substantial burden on Plaintiffs[’] religious

exercise, and Defendants lacked a compelling justification.” App. at

48. Once again, these are merely conclusory allegations, and, as the

Court stated in Iqbal, “[t]hreadbare recitals of the elements of a cause

of action, supported by mere conclusory statements, do not suffice.”

Iqbal, 129 S. Ct. at 1949 (citing Twombly, 550 U.S. at 555, 127 S. Ct.

1955).

Id. at 532 (alterations in original) (footnote omitted).

• Fowler v. UPMC Shadyside, 578 F.3d 203 (3d Cir. 2009). The plaintiff was employed by

UPMC as a janitor at the Shadyside Hospital. She was injured and placed on Family/Medical

Leave and short-term disability, and eventually given a clerical position. Id. at 206. UPMC

eliminated the plaintiff’s clerical position, and the plaintiff alleged that before her position

was eliminated, she applied for a similar job but was never contacted about that position.

Id. The district court dismissed the complaint because the Rehabilitation Act’s two-year

statute of limitations had run, the restriction to sedentary work did not constitute a disability

under the Rehabilitation Act, and the class action allegations were not appropriate claims

under the Rehabilitation Act. Id. The Third Circuit vacated the dismissal and remanded.

The Third Circuit noted that it was “obligated to discuss recent changes in pleading

standards.” Id. at 209. The court stated:

Standards of pleading have been in the forefront of

jurisprudence in recent years. Beginning with the Supreme Court’s

opinion in Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S. Ct.

1955, 167 L. Ed. 2d 929 (2007), continuing with our opinion in

Phillips [v. County of Allegheny, 515 F.3d 224 (3d Cir. 2008)], and

culminating recently with the Supreme Court’s decision in Ashcroft

v. Iqbal, --- U.S. ----, 129 S. Ct. 1937, 1955, 173 L. Ed. 2d 868

(2009), pleading standards have seemingly shifted from simple notice

pleading to a more heightened form of pleading, requiring a plaintiff

to plead more than the possibility of relief to survive a motion to

dismiss.

Id. at 209–10 (emphasis added). The court described Iqbal’s holding:

The Supreme Court’s opinion [in Iqbal] makes clear that the

Twombly “facial plausibility” pleading requirement applies to all civil

suits in the federal courts. After Iqbal, it is clear that conclusory or

“bare-bones” allegations will no longer survive a motion to dismiss:

“threadbare recitals of the elements of a cause of action, supported by

mere conclusory statements, do not suffice.” Iqbal, 129 S. Ct. at
252

1949. To prevent dismissal, all civil complaints must now set out

“sufficient factual matter” to show that the claim is facially plausible.

This then “allows the court to draw the reasonable inference that the

defendant is liable for the misconduct alleged.” Id. at 1948. The

Supreme Court’s ruling in Iqbal emphasizes that a plaintiff must

show that the allegations of his or her complaints are plausible. See

[i]d. at 1949–50; see also Twombly, 550 U.S. at 555, & n.3, 127 S.

Ct. 1955.

Fowler, 578 F.3d at 210. The court continued:

Iqbal additionally provides the final nail-in-the-coffin for the

“no set of facts” standard that applied to federal complaints before

Twombly. See also Phillips, 515 F.3d at 232–33. Before the

Supreme Court’s decision in Twombly, and our own in Phillips, the

test as set out in Conley v. Gibson, 355 U.S. 41, 45–46, 78 S. Ct. 99,

2 L. Ed. 2d 80 (1957), permitted district courts to dismiss a complaint

for failure to state a claim only if “it appear[ed] beyond doubt that the

plaintiff can prove no set of facts in support of his claim which would

entitle him to relief.” Id. Under this “no set of facts” standard, a

complaint effectively could survive a motion to dismiss so long as it

contained a bare recitation of the claim’s legal elements.

The Supreme Court began its rejection of that test in

Twombly, holding that a pleading offering only “labels and

conclusions” or “a formulaic recitation of the elements of a cause of

action will not do.” Twombly, 550 U.S. at 555, 127 S. Ct. 1955;

Phillips, 515 F.3d at 232. In Phillips, we discussed the appropriate

standard for evaluating Rule 12(b)(6) or 12(b)(1) motions in light of

the anti-trust context presented in Twombly, holding that the

acceptable statement of the standard remains: “courts accept all

factual allegations as true, construe the complaint in the light most

favorable to the plaintiff, and determine whether, under any

reasonable reading of the complaint, the plaintiff may be entitled to

relief.” Phillips, 515 F.3d at 233 (internal quotations and citation

omitted). The Supreme Court’s opinion in Iqbal extends the reach of

Twombly, instructing that all civil complaints must contain “more

than an unadorned, the-defendant-unlawfully-harmed-me accusation.”

Iqbal, 129 S. Ct. at 1949.

Therefore, after Iqbal, when presented with a motion to

dismiss for failure to state a claim, district courts should conduct a

two-part analysis. First, the factual and legal elements of a claim

should be separated. The District Court must accept all of the
253

complaint’s well-pleaded facts as true, but may disregard any legal

conclusions. Id. Second, a District Court must then determine

whether the facts alleged in the complaint are sufficient to show that

the plaintiff has a “plausible claim for relief.” Id. at 1950. In other

words, a complaint must do more than allege the plaintiff’s

entitlement to relief. A complaint has to “show” such an entitlement

with its facts. See Phillips, 515 F.3d at 234–35. As the Supreme

Court instructed in Iqbal, “[w]here the well-pleaded facts do not

permit the court to infer more than the mere possibility of

misconduct, the complaint has alleged—but it has not

‘show[n]’—‘that the pleader is entitled to relief.’” Iqbal, 129 S. Ct.

at 1949. This “plausibility” determination will be “a context-specific

task that requires the reviewing court to draw on its judicial

experience and common sense.” Id.

Id. at 210–11 (emphasis added) (alterations in original).

The Fowler court then examined the effect of Twombly and Iqbal on the holding in

Swierkiewicz v. Sorema N.A., 534 U.S. 506 (2002), in which the Supreme Court held that “a

complaint alleging unlawful employment discrimination did not have to satisfy a heightened

pleading requirement.” Fowler, 578 F.3d at 211. The court explained that the continuing

vitality of some of the holdings in Swierkiewicz might be questionable:

The Supreme Court in Swierkiewicz expressly adhered to Conley’s

then-prevailing “no set of facts” standard and held that the complaint

did not have to satisfy a heightened standard of pleading. Id.

Swierkiewicz and Iqbal both dealt with the question of what sort of

factual allegations of discrimination suffice for a civil lawsuit to

survive a motion to dismiss, but Swierkiewicz is based, in part, on

Conley, which the Supreme Court cited for the proposition that Rule

8 “relies on liberal discovery rules and summary judgment motions

to define disputed facts and issues and to dispose of unmeritorious

claims.” 534 U.S. at 512, 122 S. Ct. 992. We have to conclude,

therefore, that because Conley has been specifically repudiated by

both Twombly and Iqbal, so too has Swierkiewicz, at least insofar as

it concerns pleading requirements and relies on Conley.

Id.

The Third Circuit found that the complaint in Fowler had “alleged sufficient facts to state

a plausible failure-to-transfer claim,” noting that “[a]lthough Fowler’s complaint is not as

rich with detail as some might prefer, it need only set forth sufficient facts to support

plausible claims.” Id. at 211–12 (footnote omitted). The court explained:
254

Taking her allegations as true, we find (1) that she was injured

at work and that, because of this injury, her employer regarded her as

disabled within the meaning of the Rehabilitation Act; (2) that there

was an opening for a telephone operator at UPMC, which was

available prior to the elimination of her position and for which she

applied; (3) that she was not transferred to that position; (4) that

UPMC never contacted her about the telephone operator position or

any other open positions; and (5) that Fowler believed UPMC’s

actions were based on her disability. Under the “plausibility

paradigm” . . . , these averments are sufficient to give UPMC notice

of the basis for Fowler’s claim. The complaint pleads how, when,

and where UPMC allegedly discriminated against Fowler. She avers

that she was injured on the job and that her doctor eventually released

her to perform “sedentary work.” She pleads that UPMC gave her a

light-duty clerical position. She also avers that before the elimination

of her light duty clerical position, she applied for a telephone operator

position, but “was never contacted by UPMC regarding that

position.” Fowler further alleges that she contacted “Susan Gaber, a

Senior Human Resources Consultant with the Defendant, UPMC

Shadyside, regarding [a] number of vacant sedentary jobs,” but that

she was “never contacted by UPMC regarding any open positions.”

Fowler’s complaint alleges that UPMC “failed to transfer” her to

another position in September of 2003. Fowler further pleaded that

she was “terminated because she was disabled” and that UPMC

discriminated against her by failing to “transfer or otherwise obtain

vacant and funded job positions” for her. The complaint repeatedly

references the Rehabilitation Act and specifically claims she was

terminated because of her disability. Therefore, she has nudged her

claims against UPMC “across the line from conceivable to plausible.”

Twombly, 550 U.S. at 570. The factual allegations in Fowler’s

complaint are “more than labels and conclusions” or “a formulaic

recitation of the elements of a cause of action.” Twombly, 550 U.S.

at 564, 127 S. Ct. 1955. We have no trouble finding that Fowler has

adequately pleaded a claim for relief under the standards announced

in Twombly and Iqbal, supra.

Id. at 212 (internal citation omitted) (second alteration in original).

The Third Circuit concluded that the district court had erred by relying on Conley in finding

that the plaintiff had insufficiently pleaded that she was disabled, and by relying on a case

(and the cases cited therein) that had disposed of claims either at the summary judgment

stage or at the judgment as a matter of law stage. Id. at 212–13. The court explained that the

standard at these later stages is much more rigid, while “‘[a] well-pleaded complaint may

proceed even if it strikes a savvy judge that actual proof of those facts alleged is improbable
 In a more recent case, the Third Circuit confirmed that the holdings of Twombly and Iqbal apply to employment 24

discrimination complaints. See Guirguis v. Movers Specialty Servs., Inc., 346 F. App’x 774, No. 09-1104, 2009 WL

3041992, at *1 n.6 (3d Cir. Sept. 24, 2009) (unpublished) (“We have applied Twombly and Iqbal’s pleading requirements

to employment discrimination claims, but the quantum of facts that a discrimination complaint should contain must bear

further development.”) (internal citations omitted). The court did not resolve the facts needed for a discrimination

complaint because “[t]h[e] case . . . provide[d] a poor vehicle for that task because Guirguis relie[d] in large measure

upon bare legal conclusions that would likely have been insufficient even under the pre-Twombly pleading standard.”

Id. (citing Papasan v. Allain, 478 U.S. 265, 286 (1986) (“holding, prior to Twombly, that courts were not required to

accept the truth of legal conclusions contained in a plaintiff’s complaint”)). The court concluded that the allegations “that

Guirguis is an Egyptian native of Arab descent, that [the defendant] discharged him, and that his termination occurred

255

and that a recovery is very remote and unlikely.’” Id. at 213 (quoting Twombly, 550 U.S. at

556 (internal quotations omitted)). The court discussed the focus at the pleadings stage:

At this stage of the litigation, the District Court should have

focused on the appropriate threshold question—namely whether

Fowler pleaded she is an individual with a disability. The District

Court and UPMC instead focused on what Fowler can “prove,”

apparently maintaining that since she cannot prove she is disabled she

cannot sustain a prima facie failure-to-transfer claim. A

determination whether a prima facie case has been made, however,

is an evidentiary inquiry—it defines the quantum of proof plaintiff

must present to create a rebuttable presumption of discrimination.

See Powell v. Ridge, 189 F.3d 387, 394 (3d Cir. 1999) (overruled on

other grounds). Even post-Twombly, it has been noted that a plaintiff

is not required to establish the elements of a prima facie case but

instead, need only put forth allegations that “raise a reasonable

expectation that discovery will reveal evidence of the necessary

element.” See Graff v. Subbiah Cardiology Associates, Ltd.[,] No.

08-207, 2008WL2312671 (W.D. Pa. June 4, 2008) [(]citing Phillips,

515 F.3d at 234[)]. Under the Federal Rules of Civil Procedure, an

evidentiary standard is not a proper measure of whether a complaint

fails to state a claim. Powell, 189 [F.3d] at 394.

Fowler, 578 F.3d at 213 (emphasis added). The Third Circuit emphasized that the plaintiff

was not required “at this early pleading stage, to go into particulars about the life activity

affected by her alleged disability or detail the nature of her substantial limitations.” Id.

Instead, the complaint was sufficient because it “identifie[d] an impairment, of which UPMC

allegedly was aware and allege[d] that such impairment constitute[d] a disability under the

Rehabilitation Act.” Id. The court found that the plaintiff’s “alleged limitation to sedentary

work plausibly suggest[ed] that she might be substantially limited in the major life activity

of working.” Id. (citations omitted). The court explained that the plaintiff would of course

ultimately have to prove that she was substantially limited in a major life activity, but that

at the pleadings stage, the allegation regarding disability was sufficient. Id. at 214 (citation

omitted). The court emphasized that “[t]his [wa]s so even after Twombly and Iqbal.” Id.24
in violation of his civil rights,” were “certainly deficient in the post-Twombly era,” and that the last allegation was

“precisely the type of factually unsupported legal conclusion that is inadequate to surmount a Rule 12(b)(6) challenge.”

Id. at *1 n.6, *2. The court noted that “the complaint never intimate[d] in any way why Guirguis believe[d] that national

origin motivated [the termination].” Id. at *2. The court recognized that it had previously reassessed Swierkiewicz in

Fowler, but noted that “Swierkiewicz remains instructive because Guirguis’s complaint contain[ed] significantly less

factual content than the pleading at issue in that case . . . , bolstering [the court’s] conclusion that his claims would not

have survived under the pre-Twombly pleading regime.” Id. at *2 n.7.

256

• Hodges v. Wilson, 341 F. App’x 846, No. 08-4868, 2009 WL 2445114 (3d Cir. Aug. 11,

2009) (unpublished) (per curiam). The plaintiff, an inmate at a prison run by the

Pennsylvania Department of Corrections (the “DOC”), filed a civil rights complaint under

§ 1983, asserting that DOC employees violated his First, Eighth, and Fourteenth Amendment

rights. Id. at *1. The complaint alleged that the plaintiff originally had his own cell because

he had “‘‘Z’ code’” status, but that this status was revoked and the plaintiff then had to share

a cell. Id. The complaint also alleged that the plaintiff’s security status was elevated, which

prevented him from being eligible for certain jobs, and that the defendants changed his

security status in retaliation for the plaintiff stating that he intended to file a lawsuit. Id. The

plaintiff claimed that he suffered psychological and physical harm from sharing a cell and

that his new cell mate assaulted him. Id. The district court adopted the magistrate judge’s

recommendation to dismiss defendant Dr. Saavedra and to grant summary judgment in favor

of the other defendants. Id.

With respect to Dr. Saavedra, the complaint alleged that he “‘supported’ the prison’s decision

to revoke [the plaintiff’s] ‘Z’ code status,” that his “male secretary impersonated him during

[the plaintiff’s] examinations[,] and that Dr. Saavedra allowed prison officials to view [the

plaintiff’s] medical records for the purpose of making a determination about [the plaintiff’s]

cell status.” Hodges, 2009 WL 2445114, at *2. The Third Circuit held that “[a]bsent any

assertion of attendant harm, Hodges’ allegation that an imposter stood in for Dr. Saavedra

d[id] not raise a federal claim,” noting that the plaintiff did “not allege that Dr. Saavedra

failed to provide treatment or disregarded a known risk of harm.” Id. (citations omitted).

With respect to the allegations that Dr. Saavedra conspired with the other defendants to

revoke the plaintiff’s “Z” code status and that he put the plaintiff at risk by allowing others

to access the plaintiff’s psychiatric records, the court found that the plaintiff “fail[ed] to plead

sufficient factual content to allow [it] to ‘draw the reasonable inference that the defendant

[wa]s liable for the misconduct alleged.’” Id. (quoting Iqbal, 129 S. Ct. at 1949). The court

explained:

Hodges never states who was given access to his medical

information, nor does he allege that Dr. Saavedra’s actions put him

at risk of harm from the prison population. He does not specify what

harm he faced, other than the revocation of his “Z code” status. It is

apparent that his claim against Dr. Saavedra hinges upon his belief

that he has a liberty interest in being single-celled. As explained in

greater detail below, Hodges does not have a liberty interest in being
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single-celled. As a result, he does not state a claim against Dr.

Saavedra.

Id. The court also affirmed the district court’s denial of the plaintiff’s motion for leave to

file an amended complaint and his motion to amend the complaint because the proposed

amendment to add a defendant and claim that the defendant “violated his rights by permitting

non-medical prison staff members to review his psychiatric records for the purpose of

reviewing his cell status” was “without merit for the same reasons . . . [explained] with

respect to Dr. Saavedra.” Id. at *1 n.3.

With respect to the other defendants, the plaintiff alleged that they violated the plaintiff’s

Fourteenth Amendment due process rights by revoking his “Z” code status and placing him

in a shared cell. Id. at *2. The court noted that “[i]t [wa]s well-settled that prisoners do not

have a due process right to be single-celled,” and “agree[d] with the District Court that

Hodges ha[d] not been subjected to atypical and significant hardship because his ‘Z’ code

status ha[d] been revoked and he must now share a cell.” Hodges, 2009 WL 2445114, at *2

(footnote omitted). The court also concluded that the allegations of an Eighth Amendment

violation were not supported, “agree[ing] with the District Court that Hodges’ complaints

of depression, paranoia, and physical discomfort d[id] not rise to the level of an Eighth

Amendment violation.” Id. at *3. The court also found that “[t]he single, two year-old

incident with [the plaintiff’s] cell mate that [the plaintiff] assert[ed] d[id] not establish that

prison officials ‘kn[e]w of and disregard[ed] an excessive risk to [his] health or safety.” Id.

(sixth, seventh, and eighth alterations in original). Finally, the Third Circuit agreed with the

district court’s grant of summary judgment on the plaintiff’s retaliation claim “[b]ecause the

uncontested evidence show[ed] that Hodges’ temporary placement in segregated housing and

the change in his work status were the result of his own misconduct . . . .” Id. The court

dismissed the appeal under 28 U.S.C. § 1915(c), denied the plaintiff’s motion for an

injunction to return him to a single cell, and denied the plaintiff’s motion for a return of legal

documents. Id. (footnote omitted).

• Marangos v. Swett, 341 F. App’x 752, No. 08-4146, 2009 WL 1803264 (3d Cir. Jun. 25,

2009) (unpublished) (per curiam). The plaintiff sued his ex-wife, the state judge presiding

over his divorce, and a variety of financial institutions that participated in refinancing the

plaintiff’s home mortgage. Id. at *1. The plaintiff alleged that his ex-wife conspired with

the state judge to obtain favorable rulings in the divorce proceeding, and that she conspired

with the refinancing defendants to obtain the proceeds from the refinanced home. Id. The

plaintiff further alleged that “the refinancing defendants failed to inform him of a lis pendens

[the plaintiff’s ex-wife] had placed on the marital home before he signed a loan agreement

for refinancing, held the refinancing proceeds in escrow instead of giving the money to him,

and ultimately paid out the majority of the proceeds to [the ex-wife] and to the Child Support

Agency with no notice to him.” Id. The plaintiff alleged violations of § 1983, the Federal

Truth in Lending Act (TILA), and civil RICO. Id. The plaintiff also brought state law

claims against all defendants, alleging violations of New Jersey’s Unfair and Deceptive Acts

and Practices Act, intentional and/or negligent infliction of emotional distress, fraud,
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deception, and violation of privacy laws, as well as “‘malicious abuse, misuse, and use of

process’” by his ex-wife and the judge. Id. Finally, the plaintiff alleged “‘Public Employee

Wrongfully Enforcing the Law’” and “‘Continuous Tort’” claims. Id. The district court

dismissed the claims against the judge as barred by absolute immunity, and dismissed the

remaining claims for failure to state a claim. The Third Circuit affirmed.

The Third Circuit found that the plaintiff failed to state a claim under § 1983 as to the title

company, the mortgagor, the loan servicer, and the ex-wife. Marangos, 2009 WL 1803264,

at *2. The court noted that there was no factual content in the complaint showing that the

loan servicer or the mortgager were involved in the divorce proceedings. Id. The only

relevant allegation was that the state judge made two phone calls in chambers during family

court hearings to the title company to confirm the amount held in escrow. Id. The court

concluded that “[v]iewing these allegations as true, the factual matter f[ell] far short of

permitting [the court] to infer a plausible connection among [the title company, the

mortgagor,] and/or [the loan servicer], all private corporations, and a governmental agency

or official such that their private actions would constitute ‘state action.’” Id. (footnote

omitted).

The Third Circuit also concluded that the facts in the complaint were not sufficient to allege

a plausible connection or conspiracy among the defendants to deprive him of his

constitutional rights under § 1983. Id. at *3 (citing Twombly, 550 U.S. at 556–57; Kost v.

Kozakiewicz, 1 F.3d 176, 185 (3d Cir. 1993)). The court also held that the claims that the

plaintiff’s ex-wife used the court system to ruin the plaintiff and that the state judge

unlawfully issued decisions in favor of the plaintiff’s ex-wife failed to state a claim. Id.

(citing Dennis v. Sparks, 449 U.S. 24, 28 (1980) (“noting that ‘merely resorting to the courts

and being on the winning side of a lawsuit does not make a party a co-conspirator or a joint

actor with the judge’”)).

To the extent that the plaintiff sought relief against the title company, the mortgagor, or the

loan servicer under TILA, the court concluded that “Marangos failed to state a claim for

relief that [wa]s plausible on its face” (even assuming the claims were not time-barred)

because TILA requires creditors to meaningfully disclose all credit terms to consumers in

order to avoid the uninformed use of credit, but Marangos did not allege that these

defendants failed to comply with the statute’s disclosure requirements. Marangos, 2009 WL

1803264, at *3.

The Third Circuit also found dismissal of the civil RICO claims appropriate because such

claims require “‘a pattern of racketeering activity that include[s] at least two racketeering

acts,’” and Marangos alleged theft and wire and mail fraud as predicate acts, but the theft

allegations did not constitute predicate acts under RICO, and the mail and wire fraud

allegations required pleading with particularity under Rule 9(b). See id. The court

emphasized that it did not need to accept legal conclusions couched as factual allegations as

true, giving this example from the complaint: “‘Defendants Swett, Land Options, and Judge

Guadagno, are involved in a cover-up and criminal and civil conspiracy to violate Plaintiff’s
259

Due Process and Equal Protection Rights, along with violating his fundamentally secured

Property Rights.’” Id. at *4. The court explained that this statement was “merely a recitation

of legal terms that enjoys no assumption of veracity.” Id. The court noted that the complaint

contained no facts to allow the court to reasonably infer, under Rule 9(b), that the title

company, the mortgagor, and the loan servicer engaged in wire or mail fraud. Id. The court

also noted that the complaint alleged that the judge spoke on the phone with the title

company and had ex parte communications with the ex-wife, but found that “[a]ssuming,

arguendo, that these allegations me[t]the standard of particularity required by Rule 9(b), and

assuming their veracity, [it] agree[d] with the District Court that they [we]re insufficient

under the less rigid pleading standard set forth in Rule 8(a)(2) to permit a plausible inference

of a scheme or an intent to defraud . . . .” Id.

• Lopez v. Beard, 333 F. App’x 685, No. 08-3699, 2009 WL 1705674 (3d Cir. Jun. 18, 2009)

(unpublished) (per curiam). The pro se plaintiff alleged that various officers in the

Pennsylvania Department of Corrections violated his rights under the ADA and the Eighth

and Fourteenth Amendments. Id. at *1. Specifically, the plaintiff alleged that he had

HIV/AIDS, that the prison officials and inmates knew this, that on one occasion his family

was denied a contact visit with him, that on another occasion hisfamilywas erroneously told

that they were not on the visitors list, and that individuals not named as defendants made

disparaging statements about the plaintiff’s medical condition. Id. The magistrate judge

recommended that the claims against four of the defendants be dismissed for failure to allege

any personal involvement; that the claims against the remaining defendants be dismissed

because denial of visitation did not rise to the level of a constitutional violation and the

plaintiff had failed to allege physical injury in connection with his emotional distress; and

that the ADA claims be dismissed for failure to allege any nexus between the denials of

visitation and his disability. Id. The district court allowed the plaintiff to file an amended

complaint, in which he alleged that he was deliberately denied contact with family members

“‘in retaliation and discrimination of plaintiff being HIV-AIDS positive and having a history

of problems with staff, including the filing of numerous complaints against staff.’” Id. at *2.

“The only specific claim [the plaintiff] made with respect to any individually-named

defendant was that Correctional Officer Alvarez made ‘belittling and discriminating remarks

and gestures about plaintiff to his then-girlfriend’ and altered his approved visitors list, thus

preventing his sister and brother-in-law from visiting him.” Id. The amended complaint also

alleged that the prison officials falsified their grievance response “to cover up their bad acts.”

Id. The district court dismissed the complaint, and the Third Circuit affirmed. The Third

Circuit explained:

What Lopez has alleged in his complaint and amended

complaints are theories and conclusions, not facts. While Lopez

claims that he has been subject to “prejudice, discrimination and

retaliation” at the hands of certain defendants, and that Officer

Alvarez made “belittling and discriminating remarks and gestures

about plaintiff to his then-girlfriend,” he does not offer any specifics

about these alleged incidents which would permit a court to reach the
260

conclusion that they were discriminatory. See Iqbal, 129 S. Ct. at

1952 (“He would need to allege more by way of factual content to

‘nudg[e]’ his claim of purposeful discrimination ‘across the line from

conceivable to plausible.’”). Accordingly, we agree that the District

Court properly dismissed his claims of violations of his rights under

the First, Eighth and Fourteenth Amendments of the U.S.

Constitution and Title II of the ADA for failure to state a claim.

Lopez, 2009 WL 1705674, at *3 (footnote omitted) (alteration in original).

Fourth Circuit

• Foster v. Wintergreen Real Estate Company, 363 F. App’x 269, 2010 WL 325959 (4th Cir.

2010) (unpublished) (per curiam). The plaintiffs brought a claim under the Racketeer

Influenced and Corrupt Organizations Act (RICO) against Wintergreen Real Estate Company

(“WREC”), Richard Carroll, Timothy Hess, and Kyle Lynn. Id. at *1. The district court

dismissed the complaint and denied leave to amend, and the Fourth Circuit affirmed. Id. 

The complaint alleged that during a period of three years, the plaintiffs, who were real estate

investors, purchased and sold properties in the Wintergreen Resort (“Resort”) using the

services of WREC and the other defendants. Id. The court stated:

Plaintiffs allege that, during the course of their business

dealings, Defendants made various false statements and/or concealed

material facts, which include, generally: that Defendants are members

of the Multiple Listing Service (“MLS”) and that all of the properties

would be listed on the MLS (hereinafter “MLS scheme”); that WREC

is the dominant real estate company in the Resort; that Carroll is the

top real estate agent at WREC; that WREC engages in an “effective

marketing program”; that Defendants fraudulently assured Plaintiffs

that the Summit House property was the “last piece of developable

multifamily land left at [the] Resort”; that Defendants failed to

disclose that there was a noisy stump grinder operating next to

property Plaintiffs purchased in the Stoney Creek area of the Resort;

and that Defendants violated dual representations restrictions and

other realtor standards of conduct.

Id. (alteration in original) (internal citations and footnotes omitted). The plaintiffs alleged

that at least some ofthese acts were done “through interstate communication via the mail and

wire, and were perpetrated on ‘hundreds’ of other out-of-state clients,” and that “all of these

acts were committed so that Defendants would earn a higher commission, at the expense of

potential profit for Plaintiffs.” Id. The complaint contained the following claims: (1)

conducting or participating in a RICO enterprise; (2) investment of proceeds of racketeering

activity; (3) conspiracy to violate RICO; and (4) false advertisement in violation of the
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Lanham Act. Foster, 2010 WL 325959, at *1. The district court dismissed because the

plaintiffs did not allege facts supporting the RICO claims and did not have standing to assert

the Lanham Act claim. Id. at *2. After the district court dismissed, the plaintiffs moved for

reconsideration and for leave to amend. The court explained the proposed amendments:

The Amended Complaint contained the same basic allegations

made in the Complaint, with greater detail and certain notable

additions: it included additional details about the properties allegedly

involved in the MLS scheme; charged that the MLS scheme took

place for eight years instead of three years and that Defendants

perpetrated the scheme on hundreds of other clients; included the

names and addresses of some of these persons; included allegations

of how each individual Defendant was personally involved in the

scheme; included an affidavit from Wesley C. Boatwright . . . ; and

included an affidavit from Ivo Romanesko . . . , attesting that “the use

of marketing tools, such as including properties in MLS . . . are

essential” and “the standard in the industry.”

Id. (internal citations omitted). The district court denied reconsideration and leave to amend,

finding that the amendment would be futile because “‘the additional allegations [we]re

insufficient to show that the alleged scheme extended beyond the Plaintiffs in scope or

degree adequate to constitute a pattern of racketeering activity.’” Id.

On appeal, the Fourth Circuit noted: “Although Plaintiffs allege[d] multiple instances of mail

and wire fraud over the course of an arguably substantial period of time, ‘we are cautious

about basing a RICO claim on predicate acts of mail and wire fraud because it will be the

unusual fraud that does not enlist the mails and wires in its service at least twice.’” Id. at *4

(citation omitted). The court concluded that the case involved only “‘garden-variety fraud’”

because the plaintiffs alleged that the defendants misrepresented their efforts to market

properties, misrepresented or failed to disclose material facts about specific properties, and

breached fiduciary duties. Id. The court found that “[t]hese [we]re quintessential state law

claims, not a ‘scheme[ ] whose scope and persistence set [it] above the routine.’” Foster,

2010 WL 325959, at *4 (third and fourth alteration in original) (citation omitted). The court

explained:

This conclusion is bolstered by the fact that Plaintiffs failed

to plead with particularity that any other persons were similarly

harmed by Defendants’ alleged fraud, and thus failed to show “a

distinct threat of long-term racketeering activity.” The Complaint

summarily draws the conclusion that other persons were harmed by

the MLS scheme because “a comparison of the MLS listings for

Nelson County with the Nelson County property transfer records

during the relevant period reveals hundreds of properties . . . which

were, on information and belief, listed with Defendants but were not
262

included in MLS.” Based on this fact and the vague reference to

“interview[s] [with] a number of sellers,” Plaintiffs argue that

Defendants “did not obtain those sellers’ consent to the omission of

those properties from MLS.” However, a complaint must plead

sufficient facts to allow a court to infer “more than the mere

possibility of misconduct.” Iqbal, 129 S. Ct. at 1950.

Id. (internal citations omitted). The court concluded that the proposed amended complaint

would not fix these deficiencies:

Plaintiffs attempted to rectify this deficiency in the Amended

Complaint by including lists of properties handled by Defendants that

were not listed on MLS and the names and addresses of the sellers

associated with those properties. However, regardless of these

lengthy exhibits, Plaintiffs nevertheless fail to plead with particularity

that any specific person was defrauded other then themselves, much

less give any particulars of the fraud. Therefore, “[t]hese allegations

lack the specificity needed to show a ‘distinct’ threat of continuing

racketeering activity.” Menasco [Inc. v. Wasserman], 886 F.2d [681,]

684 [(4th Cir. 1989)].

Id. at *5 (first alteration in original). The court held that the case was “‘not sufficiently

outside the heartland of fraud cases to warrant RICO treatment,’” and that “[t]he district

court thus did not err in granting the motion to dismiss.” Id. (citation omitted).

The Fourth Circuit also affirmed dismissal of the Lanham Act claim, noting that “as

consumers, Plaintiffs lack[ed] standing to sue under the Lanham Act . . . .” Id.

Finally, the Fourth Circuit affirmed the denial of leave to amend, explaining that “neither the

Complaint nor the Amended Complaint allege a pattern of racketeering activity sufficient to

support a RICO claim, nor did the Amended Complaint cure Plaintiffs’ lack of standing

under the Lanham Act.” Id. at *6.

• Nemet Chevrolet, Ltd. v. Consumeraffairs.com, Inc., 591 F.3d 250, 2009 WL 5126224 (4th

Cir. Dec. 29, 2009). Defendant Consumeraffairs.com “operate[d] a website that allow[ed]

customers to comment on the quality of businesses, goods, and services.” Id. at *1. The

plaintiff was a company that sold or serviced cars and that received negative reviews on the

defendant’s website. See id. The plaintiff sued for defamation and tortious interference with

a business expectancy, and the defendant moved to dismiss on the basis of section 230 of the

Communications Decency Act of 1996 (the “CDA”), which “precludes plaintiffs from

holding interactive computer service providers liable for the publication of information

created and developed by others.” Id. (footnote and citations omitted). The district court

dismissed the complaint and granted leave to amend. Id. The defendant moved to dismiss

the amended complaint on the basis of section 230 of the CDA, and the district court granted
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dismissal because “‘the allegations contained in the Amended Complaint [did] not

sufficiently set forth a claim asserting that [Consumeraffairs.com] authored the content at

issue,” and because “‘the allegations [we]re insufficient to take th[e] matter outside of the

protection of the Communications Decency Act.’” Id. (record citation omitted). The Fourth

Circuit affirmed.

Section 230 of the CDA “prohibits a ‘provider or user of an interactive computer service’

from being held responsible ‘as the publisher or speaker of any information provided by

another information content provider.’” Nemet, 2009 WL 5126224, at *2 (quoting 47 U.S.C.

§ 230(c)(1)). The court explained that “[a]ssuming a person meets the statutory definition

of an ‘interactive computer service provider,’ the scope of § 230 immunity turns on whether

the person’s actions also make it an ‘information content provider,’” which is defined as

“‘any person or entity that is responsible, in whole or in part, for the creation or development

of information provided through the Internet or any other interactive computer service.’” Id.

(quoting 47 U.S.C. § 230(f)(3)). The court explained that “[t]aken together, these provisions

bar state-law plaintiffs from holding interactive computer service providers legally

responsible for information created and developed by third parties.” Id. (citation omitted).

The court emphasized that it “aim[s] to resolve the question of § 230 immunity at the earliest

possible stage of the case because that immunity protects websites not only from ‘ultimate

liability,’ but also from ‘having to fight costly and protracted legal battles.’” Id. (citation

omitted). The plaintiff acknowledged that Consumeraffairs.com was an interactive computer

service provider, but argued that Consumeraffairs.com was also an information content

provider with respect to the twenty posts at issue in the litigation, and therefore was not

immune from liability under § 230. Id. at *3.

The Fourth Circuit noted that the district court had dismissed the complaint before Iqbal, but

that on appeal, the court was obligated to follow the law as it existed at the time of the

appeal. Id. at *3 n.5 (citation omitted). In examining the appropriate legal standard, the

Fourth Circuit noted that while “a court accepts all well-pled facts as true and construes these

facts in the light most favorable to the plaintiff,” it “conclude[d] from the analysis in Iqbal

that legal conclusions, elements of a cause of action, and bare assertions devoid of further

factual enhancement fail to constitute well-pled facts for Rule 12(b)(6) purposes.” Nemet,

2009 WL 5126224, at *3 (citing Iqbal, 129 S. Ct. at 1949). The court framed the issue

before it: “We must determine, in a post-Iqbal context, whether the facts pled by Nemet, as

to the application of CDA immunity, make its claim that Consumeraffairs.com is an

information content provider merely possible or whether Nemet has nudged that claim

‘across the line from conceivable to plausible.’” Id. at *4 (quoting Iqbal, 129 S. Ct. at 1951).

The court explained the appropriate framework under Iqbal:

Following the example set by the Supreme Court in Iqbal we

begin our analysis by “identifying the allegations” of the amended

complaint that are either extraneous or “not entitled to the assumption

of truth.” 129 S. Ct. at 1951. We then proceed to determine the

plausibility of the factual allegations of Nemet’s amended complaint
264

pertaining to Consumeraffairs.com’s responsibility for the creation or

development of the comments at issue.

Id.

The complaint alleged in the “Development Paragraph”:

Upon information and belief, Defendant participated in the

preparation of this complaint by soliciting the complaint, steering the

complaint into a specific category designed to attract attention by

consumer class action lawyers, contacting the consumer to ask

questions about the complaint and to help her draft or revise her

complaint, and promising the consumer that she could obtain some

financial recovery by joining a class action lawsuit. Defendant is

therefore responsible, in whole or in part, for developing the

substance and content of the false complaint . . . about the Plaintiffs.

Id. (record citation and quotation marks omitted). The plaintiff argued that this paragraph

of its complaint “show[ed] Consumeraffairs.com’s culpability as an information content

provider either through (1) the ‘structure and design of its website,’ or (2) its participation

in ‘the preparation of’ consumer complaints: i.e., that Consumeraffairs.com ‘solict[ed]’ its

customers’ complaints, ‘steered’ them into ‘specific categor[ies] designed to attract attention

by consumer class action lawyers, contact[ed]’ customers to ask ‘questions about’ their

complaints and to ‘help’ them ‘draft or revise’ their complaints, and ‘promis[ed]’ customers

would ‘obtain some financial recovery by joining a class action lawsuit.’” Id. (record citation

omitted) (alterations in original).

The Fourth Circuit first analyzed the plaintiff’s argument that the structure and design of the

website prevented granting immunity to the defendant, explaining that “the facts pled . . .

d[id] not show Consumeraffairs.com developed the content of the posts by the structure and

design of its website.” Id. at *5. In contrast to a case relied on by the plaintiff, Fair Housing

Council v. Roommates.com, LLC, 521 F.3d 1157, 1174 (9th Cir. 2008), which involved a

website that “required users to input illegal content as a necessarycondition of use,” the court

found that the plaintiff here had “merely alleged that Consumeraffairs.com structured its

website and its business operations to develop information related to class-action lawsuits.”

Nemet, 2009 WL 5126224, at *5. The court explained that “there [wa]s nothing unlawful

about developing this type of content; it [wa]s a legal undertaking: Federal Rule of Civil

Procedure 23, for instance, specifically provide[d] for class-action suits.” Id. The court held:

“Even accepting as true all of the facts Nemet pled as to Consumeraffairs.com’s liability for

the structure and design of its website, the amended complaint ‘d[id] not show, or even

intimate,’ that Consumeraffairs.com contributed to the allegedly fraudulent nature of the

comments at issue.” Id. (citing Iqbal, 129 S. Ct. at 1952). The court explained that “as to

these claimed facts in the Development Paragraph, Nemet’s pleading not only fail[ed] to

show it [wa]s plausible that Consumeraffairs.com [wa]s an information content provider,”
265

but it also failed to show “that it [wa]s even a likely possibility.” Id.

The court next analyzed the arguments that Consumeraffairs.com was “an information

content provider because it contacted ‘the consumer to ask questions about the complaint and

to help her draft or revise her complaint.’” Id. (record citation omitted). The court

concluded:

Nemet fails to make any cognizable argument as to how a website

operatorwho contacts a potential user with questions thus “develops”

or “creates” the website content. Assuming it to be true that

Consumeraffairs.com contacted the consumers to ask some unknown

question, this bare allegation proves nothing as to Nemet’s claim

Consumeraffairs.com is an information content provider.

Id. at *6. The court further held:

The remaining claim, of revising or redrafting the consumer

complaint, fares no better. Nemet has not pled what

Consumeraffairs.com ostensibly revised or redrafted or how such

affected the post. “Threadbare recitals of the elements of a cause of

action, supported by mere conclusory statements, do not suffice.”

Iqbal, 129 S. Ct. at 1949. Nemet’s claim of revising or redrafting is

both threadbare and conclusory.

Nemet, 2009 WL 5126224, at *6. The court noted:

Moreover, in view of our decision in Zeran [v. Am. Online,

Inc., 129 F.3d 327, 330 (4th Cir. 1997)], Nemet was required to plead

facts to show any alleged drafting or revision by

Consumeraffairs.com was something more than a website operator

performs as part of its traditional editorial function. See 129 F.3d at

330. It has failed to plead any such facts. “Congress enacted § 230’s

broad immunity ‘to remove disincentives for the development and

utilization of blocking and filtering technologies that empower

parents to restrict their children’s access to objectionable or

inappropriate online material.’ 47 U.S.C. § 230(b)(4). In line with

this purpose, § 230 forbids the imposition of publisher liability on a

service provider for the exercise of its editorial and self-regulatory

functions.” Id. at 331.

We thus conclude that the Development Paragraph failed, as

a matter of law, to state facts upon which it could be concluded that

it was plausible that Consumeraffairs.com was an information content

provider. Accordingly as to the Development Paragraph, the district
266

court did not err in granting the Rule 12(b)(6) motion to dismiss

because Nemet failed to plead facts sufficient to show

Consumeraffairs.com was an information content provider and not

covered by CDA immunity.

Id.

The plaintiff argued that even if the Development Paragraph was insufficient to allow the

case to proceed, “as to eight of the twenty posts, the amended complaint pled other facts

which show[ed] Consumeraffairs.com [wa]s an information content provider.” Id. With

respect to these eight posts, “Nemet pled as to each that ‘[b]ased upon the information

provided in the post, [Nemet] could not determine which customer, if any, this post pertained

to.’” Id. (record citation omitted) (alterations in original). The complaint alleged in the

“Fabrication Paragraph”:

“Because Plaintiffs cannot confirm that the [customer] complaint . .

. was even created by a Nemet Motors Customer based on the date,

model of car, and first name, Plaintiffs believe that the complaint . .

. was fabricated by the Defendant for the purpose of attracting other

consumer complaints. By authoring the complaint . . . the Defendant

was therefore responsible for the substance and content of the

complaint.”

Id. at *7 (footnote omitted) (alteration in original). The Fourth Circuit noted that “Nemet’s

sole factual basis for the claim that Consumeraffairs.com [wa]s the author, and thus an

information content provider not entitled to CDA immunity, [wa]s that Nemet [could not]

find the customer in its records based on the information in the post.” Id. The court

explained:

Because Nemet was unable to identify the authors of these

comments based on “the date, model of car, and first name” recorded

online, Nemet alleges that these comments were “fabricated” by

Consumeraffairs.com “for the purpose of attracting other consumer

complaints.” But this is pure speculation and a conclusory allegation

of an element of the immunity claim (“creation . . . of information”).

47 U.S.C. § 230(f)(3). Nemet has not pled that Consumeraffairs.com

created the allegedly defamatory eight posts based on any tangible

fact, but solely because it (Nemet) can’t find a similar name or

vehicle of the time period in Nemet’s business records. Of course,

the post could be anonymous, falsified by the consumer, or simply

missed by Nemet. There is nothing but Nemet’s speculation which

pleads Consumeraffairs.com’s role as an actual author in the

Fabrication Paragraph.

 
267

Nemet, 2009 WL 5126224, at *7 (internal citation omitted). The court also rejected the

plaintiff’s argument that supporting allegations “show[ed] [that] the Fabrication Paragraph

plead[ed] adequate facts that Consumeraffairs.com [wa]s the author of the eight posts.” Id.

The court explained:

These allegations include (1) that Nemet has an excellent professional

reputation, (2) none of the consumer complaints at issue have been

reported to or acted upon by the New York City Department of

Consumer Affairs, (3) Consumeraffairs.com’s sole source of income

is advertising and this advertising is tied to its webpage content, and

(4) some of the posts on Consumeraffairs.com’s website appeared

online after their listed creation date. Nemet’s allegations in this

regard do not allow us to draw any reasonable inferences that would

aid the sufficiency of its amended complaint.

That Nemet may have an overall excellent professional

reputation, earned in part from a paucity of complaints reported to

New York City’s Department of Consumer Affairs, does not allow us

to reasonably infer that the particular instances of consumer

dissatisfaction alleged on Consumeraffairs.com’s website are false.

Furthermore, Nemet’s allegations in regard to the source of

Consumeraffairs.com’s revenue stream are irrelevant, as we have

already established that Consumeraffairs.com’s development of

class-action lawsuits does not render it an information content

provider with respect to the allegedly defamatory content of the posts

at issue. Finally, the fact that some of these comments appeared on

Consumeraffairs.com’s website after their listed creation date does

not reasonably suggest that they were fabricated by

Consumeraffairs.com. Any number of reasons could cause such a

delay, including Consumeraffairs.com’s review for inappropriate

content. See Iqbal, 129 S. Ct. at 1951.

We are thus left with bare assertions “devoid of further factual

enhancement,” which are not entitled to an assumption of truth. Id.

at 1949. Such conclusory statements are insufficient as a matter of

law to demonstrate Nemet’s entitlement to relief. See id. As recently

emphasized by the Supreme Court, Rule 8 requires “more than

conclusions” to “unlock the doors of discovery for a plaintiff.” Id. at

1950. Viewed in the correct “factual context,” id. at 1954, Nemet’s

stark allegations are nothing more than a “formulaic recitation” of one

of the elements of its claims. Id. at 1951. A plaintiff must offer more

than “[t]hreadbare recitals of the elements of a cause of action” and

“conclusory statements,” however, to show its entitlement to relief.

Id. at 1949.
268

Id. at *7–8 (footnote omitted) (alteration in original). The court noted that the amended

complaint contained allegations regarding several comments made by Consumeraffairs.com

on its website, in which it provided commentary on the other posts, but stated that “[b]ecause

Nemet failed to argue in its opening brief that these comments contributed to the sufficiency

of its amended complaint, [the court] would not consider them in th[e] appeal.” Id. at *8 n.7.

The court concluded:

Viewed in their best light, Nemet’s well-pled allegations

allow us to infer no more than “the mere possibility” that

Consumeraffairs.com was responsible for the creation or development

of the allegedly defamatory content at issue. Nemet has thus failed

to nudge its claims that Consumeraffairs.com is an information

content provider for any of the twenty posts across the line from the

“conceivable to plausible.” As a result, Consumeraffairs.com is

entitled to § 230 immunity and the district court did not err by

granting the motion to dismiss.

Id. at *8 (internal citations omitted).

Judge Jones filed a separate opinion, concurring in part and dissenting in part. Judge Jones

agreed that the complaint was insufficient with respect to the twelve posts that the plaintiff

connected to its customers because “[t]he facts alleged d[id] not show that as to these posts

it [wa]s plausible that Consumeraffairs.com [wa]s an information content provider within

the meaning of the Communications Decency Act.” Id. at *8 (Jones, J., concurring in part

and dissenting in part). But with respect to the other eight posts, Judge Jones disagreed with

the majority’s conclusion, stating that “the allegations of the Amended Complaint adequately

set forth a claim that Consumeraffairs.com was responsible for the eight posts from fictitious

customers.” Nemet, 2009 WL 5126224, at *9 (Jones, J., concurring in part and dissenting

in part). Judge Jones stated:

In the first place, we are required to accept as true, at least at

this stage of the case, Nemet’s allegation that these eight posts did not

represent real customers. Nemet alleged that it documented each

vehicle sale with forms that give the customer’s full name, address,

description of the vehicle sold, and the date of sale, as well as other

information. Each of the eight posts described in the Amended

Complaint gave the first name and hometown of the putative

customer as well as the make and model of the vehicle sold by

Nemet. All of the posts were dated and all but one set forth the

alleged date of the sale. In spite of Nemet’s careful documentation of

each sale and comparison with the information provided in the posts,

Nemet was unable to connect any of these posted complaints with a

real transaction.
269

Moreover, these were not the sole pertinent factual

allegations. Nemet also alleged the following in its Amended

Complaint:

(1) The eight complaints at issue were never reported to the New

York City Department of Consumer Affairs, which, according to

Nemet, is responsible for policing consumer issues where Nemet does

business, and which has recentlypursued highlypublicized consumer

litigation against other car dealers. (Am. Compl. ¶¶ 12-14, J.A. 49.);

(2) Consumeraffairs.com’s website encourages consumers to

complete complaint forms, but the website does not contain a place

for positive reviews. (Am. Compl. ¶ 28, J.A. 53.);

(3) The website “entices visitors with the possibility of participating

in a class-action lawsuit, with the potential for a monetary recovery,”

by promising to have “class action attorneys” review all submitted

complaints. (Am. Compl. ¶ 29, J.A. 53.);

(4) Consumeraffairs.com earns revenue by selling ads tied to its

webpage content, including the content posted by consumers. (Am.

Compl. ¶¶ 21, 22, J.A. 51.);

(5) Consumeraffairs.com wrote derogatory statements about Nemet

on the website in connection with the alleged consumer complaints

. . . .

Id. Judge Jones thought these allegations were sufficient under Iqbal:

While Twombly and Iqbal announced a new, stricter pleading

standard, they did not merge the pleading requirements of Rule 8

with the burden of proof required for summary judgment. In fact, the

Court in Twombly stated that “[a]sking for plausible grounds to infer”

a claim’s existence “does not impose a probability requirement at the

pleading stage.” Twombly, 550 U.S. at 556. The plausibility standard

“simply calls for enough fact to raise a reasonable expectation that

discovery” will lead to information supporting the plaintiff’s claim.

Id. Nemet’s pleading accomplishes this. By stating sufficient factual

assertions, Nemet has created the reasonable inference that

Consumeraffairs.com wrote the eight posts to attract additional

complaints.

It is true that there may be alternative explanations for these
270

poststhat show that they are not attributable to Consumeraffairs.com.

Nemet may have simply overlooked eight actual customers in its

review of the company sales documents. The fictitious posts may

have come from mischief makers unrelated to Consumeraffairs.com,

or from real consumers who wished to remain anonymous by

falsifying the details of their transactions. But I don’t believe that any

of these alternatives are any more plausible than Nemet’s claim.

It cannot be the rule that the existence of any other plausible

explanation that points away from liability bars the claim. Otherwise,

there would be few cases that could make it past the pleading stage.

Indeed, as Iqbal teaches, it is only where there are “more likely

explanations” for the result that the plausibility of the claim is

justifiably suspect. Iqbal, 129 S. Ct. at 1951.

While the present federal pleading regime is a significant

change from the past, it remains true that a plaintiff in federal court

need not allege in its initial pleading all of the facts that will allow it

to obtain relief. Otherwise, the summary judgment process under

Rule 56 would have little meaning. Of course, I don’t know whether

Nemet could have ultimately prevailed on its claim that

Consumeraffairs.com made up the eight posts in question, or even if

it could have withstood a motion for summary judgment, but under

the circumstances it ought to have been allowed to attempt to prove

its case.

Id. at *10 (emphasis added) (alteration in original).

• Francis v. Giacomelli, 588 F.3d 186, 2009 WL 4348830 (4th Cir. Dec. 2, 2009). The mayor

of Baltimore, Martin O’Malley, terminated the employment of the city’s police

commissioner, Kevin Clark, as well as two of Clark’s deputies, Joel Francis and Anthony

Romano. Id. at *1. O’Malley and City Solicitor Ralph Tyler sent members of the police

department to Clark’s offices to retrieve Clark’s, Francis’s, and Romano’s “badges, police

identifications, firearms, computers, and other official property, and to escort them from the

building.” Id. Clark sued O’Malley and the City Council in state court, seeking

reinstatement and damages based on violation of the city’s laws and breach of contract. Id.

“The Maryland Court of Appeals ultimately concluded that, despite Commissioner Clark’s

contract with the Mayor and City Council of Baltimore, which authorized the Mayor to

discharge the Commissioner without cause, Clark had not been discharged in accordance

with Baltimore City Public Local Law, which required cause.” Id. Clark and his deputies

also sued in federal court, “alleging that the Mayor, the City Solicitor, and several members

of the Baltimore City Police Department violated their constitutional rights by seizing

property from the Commissioner and his deputies and by seizing them and removing them

from Police Department offices.” Id. The complaint alleged “that the plaintiffs’ Fourth and
271

Fourteenth Amendment rights were violated insofar as the searches of the plaintiffs’ offices

and the seizures of the plaintiffs and their personal property were not justified by any

criminal charges or any warrant and were, therefore, unreasonable.” Francis, 2009 WL

4348830, at *3. In the second count, “Clark and Francis, who are African-American,

claim[ed] conclusorily that they were removed from their offices and terminated from their

positions because of their race, in violation of 42 U.S.C. § 1981.” Id. In Count III, the

plaintiffs alleged “that they were denied due process insofar as their employment was

terminated without prior notice and a prior hearing,” and “in Count IV, the plaintiffs

allege[d] conclusorily that the defendants conspired to violate their civil rights based on the

acts otherwise alleged, in violation of 42 U.S.C. § 1985.” Id. The district court dismissed

because the complaint did not state plausible claims for relief and because the Mayor was

entitled to qualified immunity with respect to Clark’s allegation that the Mayor denied him

due process. Id. at *1. The Fourth Circuit affirmed.

On appeal, the plaintiffs argued that a motion to dismiss “must be denied unless ‘‘it is clear

that no relief could be granted under any set of facts that could be proved consistent with the

[well-pleaded] allegations’ in the Complaint,’” id. at *3 (quoting Swierkiewicz v. Sorema,

N.A., 534 U.S. 506, 514 (2002)) (alteration in original), but the court noted that “[t]he

standard that the plaintiffs quoted from Swierkiewicz . . . was explicitly overruled in

Twombly,” id. at *3 n.1. The plaintiffs also argued that “it was error to dismiss a complaint

alleging civil rights violations unless it appear[ed] ‘to a certainty that the plaintiff[s] would

not be entitled to relief under any legal theory which might plausibly be suggested by the

facts alleged.’” Francis, 2009 WL 4348830, at *3 (quoting Veney v. Wyche, 293 F.3d 726,

730 (4th Cir. 2002)) (second alteration in original).

In discussing the appropriate legal framework, the Fourth Circuit explained that providing

notice to the defendant is only one of the many purposes of adequate pleadings:

Even though the requirements for pleading a proper complaint

are substantially aimed at assuring that the defendant be given

adequate notice of the nature of a claim being made against him, they

also provide criteria for defining issues for trial and for early

disposition of inappropriate complaints. See 5 CHARLES ALAN

WRIGHT &ARTHUR R.MILLER,FEDERAL PRACTICE AND PROCEDURE,

§ 1202, at 88 (3d ed. 2004). Overlooking the broad range of criteria

stated in the Federal Rules for a proper complaint, some have

suggested that the Federal Rules, when adopted in 1938, simply

created a “notice pleading” scheme, pointing for support to Rule

8(a)(2), which requires only “a short and plain statement of the claim

showing that the pleader is entitled to relief,” and Rule 8(d)(1), which

provides that “[n]o technical form [for stating allegations] is

required.” But the “notice pleading” characterization may itself be

too simplistic, failing to recognize the many other provisions

imposing requirements that permit courts to evaluate a complaint for
 The court explained that “[a] ‘strike suit’ is an action making largely groundless claims to justify conducting extensive 25

and costly discovery with the hope of forcing the defendant to settle at a premium to avoid the costs of the discovery.”

Francis, 2009 WL 4348830, at *4 n.2 (citations omitted).

272

sufficiency early in the process. Rule 8 itself requires a showing of

entitlement to relief. Rule 9 requires that allegations of fraud,

mistake, time, place, and special damages be specific. Rule 11

requires that the pleading be signed and provides that the signature

“certifies” (1) that the claims in the complaint are not asserted for

collateral purposes; (2) that the claims asserted are “warranted”; and

(3) that the factual contentions “have evidentiary support.” And Rule

12(b)(6) authorizes a court to dismiss any complaint that does not

state a claim “upon which relief can be granted.” The aggregation of

these specific requirements reveals the countervailing policy that

plaintiffs may proceed into the litigation process only when their

complaints are justified by both law and fact.

Id. at *4 (first and third emphasis added) (alterations in original). The court noted that “[i]n

recent years, with the recognized problems created by ‘strike suits,’ and the high costs of 25

frivolous litigation, the Supreme Court ha[d] brought to the forefront the Federal Rules’

requirements that permit courts to evaluate complaints early in the process.” Id. (internal

citation to 5AWRIGHT &MILLER, FEDERAL PRACTICE AND PROCEDURE § 1296, at 46 & n.9

omitted).

In evaluating Count I, the Fourth Circuit noted that the complaint “allege[d] that members

of the Baltimore City Police Department, under the direction of Mayor O’Malley and City

Solicitor Tyler, ‘broke into and entered’ the Police Commissioner’s offices, seized personal

property, and ‘detained, held in custody and seized’ the Police Commissioner and his

deputies while ordering them to ‘surrender their weapons, badges, identification cards’ and

similar property—all without the benefit of criminal charges or a warrant,” in violation of

the plaintiffs’ Fourth and Fourteenth Amendment rights. Id. at *5. The court found that no

plausible claim had been stated, explaining:

While the Commissioner and his deputies conclusorily alleged that

the searches and seizures violated their constitutional rights because

no charges had been filed against them, nor had any warrant issued,

their complaint did not allege that the defendants were engaged in a

law-enforcement effort. Indeed, the facts show to the contrary, that

the defendants’ actions against the plaintiffs were employment

actions based on the Mayor’s perceived right to fire the Police

Commissioner without cause, as stated in the Memorandum of

Understanding between Commissioner Clark and Baltimore City.

. . . . 
 The court seemed to rely on the fact that the law did not provide relief for the conduct alleged, rather than a lack of 26

factually specific details.

273

The plaintiffs’ complaint relies on the allegations that no criminal

charges had been filed and no warrant had issued in order to state a

violation of the Fourth Amendment. But this assertion is both

conclusory and erroneous, especially when the complaint itself does

not allege that the searches and seizures were law-enforcement

related. On the contrary, the complaint suggests throughout that the

searches and seizures were taken in furtherance of Mayor O’Malley’s

employment action of firing Commissioner Clark.26

Id. The court noted that “[t]he plaintiffs allege[d] nowhere that these actions were

inconsistent with the Mayor’s efforts to terminate the plaintiffs’ employment,” and that “it

is common practice for an employer to take the employer’s property away from discharged

employees and to deny them access to the place of employment.” Id. The court further noted

that while the City had an interest in protecting the police department’s property and in

removing discharged employees, “the complaint fail[ed] to allege any countervailing privacy

interests that would outweigh the City’s interests,” and instead “relie[d] simply on the

absence of any charges or any warrant, which [wa]s irrelevant in the factual context of th[e]

complaint.” Francis, 2009 WL 4348830, at *6. The court also concluded that the fact that

the state court of appeals had found that the firing was inconsistent with Baltimore’s local

laws did “not alone support the claim that the searches and seizures conducted in connection

with the Mayor’s effort to terminate Clark’s employment violated the Fourth Amendment.”

Id. at *7.

In support of the discrimination claim under section 1981, “the only factual allegations

asserted . . . [we]re (1) that Commissioner Clark and Deputy Francis are African-American

males; (2) that the defendants are all white males; and (3) that the defendants ha[d] never

initiated or undertaken the actions of terminating employment and physically removing the

employee against white members of the Police Department.” Id. The Fourth Circuit found

that “[t]hese allegations [we]re not only conclusory and insufficient to state a § 1981 claim,

see Jordan [v. Alternative Resources Corp., 458 F.3d 332, 345 (4th Cir. 2006)], they [we]re

patently untrue, given that Deputy Romano, who [wa]s not alleged to be within a protected

class, complained of the exact same treatment in every other count of the complaint, belying

any claim of discriminatory treatment.” Id. (footnote omitted). The court held that “[t]he

allegations in this count [we]re nothing more than the sort of unadorned allegations of

wrongdoing to which Twombly and Iqbal [we]re directed,” and that “Count II d[id] not on

its face state a plausible claim for relief.” Id.

With respect to the claim that the plaintiffs’ due process rights were violated, the Fourth

Circuit agreed with the district court that qualified immunity applied, because even though

the state court later determined that the contract “was subservient to the requirements of the
274

Public Local Law of Baltimore City, at the time that Mayor O’Malley fired Commissioner

Clark, no law or decision had determined that the contract between Clark and the City of

Baltimore was not enforceable.” Id. at *8.

With respect to the fourth count, the complaint “allege[d] that the defendants conspired to

violate the plaintiffs’ civil rights, in violation of 42 U.S.C. § 1985,” but made “no other

allegations and contain[ed] no facts to support the conspiracy alleged.” Francis, 2009 WL

4348830, at *8. The court cited pre-Twombly case law to note that pleading a violation of

section 1985 requires “demonstrat[ing] with specific facts that the defendants were

‘motivated by a specific class-based, invidiously discriminatory animus to [ ] deprive the

plaintiff[s] of the equal enjoyment of rights secured by the law to all.’” Id. (quoting Simmons

v. Poe, 47 F.3d 1370, 1376 (4th Cir. 1995)) (second and third alterations in original). The

court held: “Since the allegation in Count IV amounts to no more than a legal conclusion,

on its face it fails to assert a plausible claim.” Id. (citing Iqbal, 129 S. Ct. at 1950; Gooden

v. Howard County, Md., 954 F.2d 960, 969–70 (4th Cir. 1992) (en banc)).

Finally, with respect to the argument that the district court erred in denying leave to amend,

the Fourth Circuit noted that although the plaintiffs concluded their opposition to the motion

to dismiss by stating that if the motion was granted, the plaintiffs requested leave to amend

or to file an amended complaint, they “filed no separate motion, and they attached no

proposed amendment or statement indicating how they might wish to amend their

complaint.” Id. at *9. The plaintiffs had violated a local district court rule which required

a party requesting leave to amend to provide a copy of the proposed amendment, and the

Fourth Circuit held that “[i]n the circumstances, . . . the district court did not abuse its

discretion in failing to give the plaintiffs a blank authorization to ‘do over’ their complaint.”

Id.

• Monroe v. City of Charlottesville, Va., 579 F.3d 380 (4th Cir. 2009), cert. denied, 130 S. Ct.

1740 (2010). The plaintiff sued the city and individual police officers under § 1983, alleging

violations of the Fourth and Fourteenth Amendments, because he was approached at his

home by a police officer and asked to give a DNA sample because he matched the

description of a serial rapist given by victims who described their assailant as “a youthfullooking black male.” Id. at 382. The plaintiff alleged that his equal protection rights were

violated because he was stopped based on his race, and because officers did not perform

similar stops when victims describe an assailant as white. Id. The plaintiff also alleged that

he was subject to an unreasonable seizure when the officer came to his home and when the

plaintiff gave a sample for DNA analysis. Id. The district court concluded that the plaintiff

could not proceed on his equal protection claim based on being stopped on account of his

race because the Equal Protection Clause is not violated when the police limit their

investigation to those matching a victim’s description, but found that the plaintiff could

proceed on the claim that the City did not investigate crimes in the same way when the

assailant is described as white. Id. at 382–83. The district court dismissed the seizure claim

based on the officer coming to the plaintiff’s home because “Monroe failed to state facts

sufficient to show the consensual encounter escalated to a seizure,” but his claim that his
275

bodily fluids were unreasonably seized was allowed to proceed. Id. at 383. The plaintiff

amended his complaint, and the defendant again moved to dismiss. The district court again

dismissed the portion of the equal protection claim asserting that the officers only

approached him based on his race, but allowed the rest of the equal protection claim to

proceed; dismissed the claim that the plaintiff was unreasonably seized because “the newly

alleged facts did not cure the original deficiencies”; and allowed the seizure claim based on

the officer’s taking bodily fluids to proceed. Monroe, 579 F.3d at 383. The plaintiff

appealed the dismissal of his Fourth Amendment claim and the dismissal of his equal

protection claim; the Fourth Circuit affirmed.

On appeal, the plaintiff asserted that the district court improperly“required him to plead facts

sufficient to prove his claim, instead of merely requiring ‘enough facts from which the trial

court could infer a basis for [Monroe’s] claim’ when viewed in conjunction with the

potentially discoverable facts . . . .” Id. at 385 (alteration in original). Citing a pre-Twombly

case, the Fourth Circuit noted that “the court ‘need not accept legal conclusions drawn from

the facts, and [ ] need not accept as true unwarranted inferences, unreasonable conclusions,

or arguments.’” Id. at 385–86 (quoting Jordan v. Alternative Res. Corp., 458 F.3d 332, 338

(4th Cir. 2006)) (alteration in original).

With respect to the seizure claim, the court noted that the plaintiff had alleged that “he ‘was

visited in his home and coerced into giving a DNA sample’”; “[t]he encounter was not

consensual because ‘Monroe had both an objectively and subjectively reasonable belief that

he was not free to decline the officer’s request or otherwise terminate the encounter”; “[t]he

officer was in uniform and did not tell Monroe that he could terminate the encounter”; “[t]he

encounter was at Monroe’s home and he was concerned neighbors would view him ‘as a

snitch’”; “Monroe, based on his and others’ interactions with police, believed he had to

comply with the officers, and the fact that he was approached at his home meant he ‘was not

free to terminate the interaction’”; and “Monroe’s belief that he could not terminate the

encounter was objectively reasonable based on ‘[t]he state of relations between law

enforcement and members of the minority communities.’” Id. at 386 (fourth alteration in

original). The Fourth Circuit noted that “[t]o elevate . . . an encounter to a seizure, a

reasonable person must feel he is not free to disregard the officer and terminate the

encounter,” and that because the inquiry is an objective one, the plaintiff’s subjective beliefs

were irrelevant. Id. The court rejected the plaintiff’s theory that it was enough to plead that

a sufficient proportion of the population shared his beliefs, stating that “[t]o agree that

Monroe’s subjective belief that he was not free to terminate the encounter was objectively

reasonable because relations between police and minorities are poor would result in a rule

that all encounters between police and minorities are seizures.” Id. at 386–87. The court

concluded that “while Monroe’s subjective beliefs may be facts, they are irrelevant facts that

neither plausibly give rise to a right to relief nor suggest there are discoverable facts that may

plausibly give rise to a right to relief.” Monroe, 579 F.3d at 387. The court found that the

remaining allegations in the complaint did not meet the Twombly standard:

The remaining facts in the complaint regarding the alleged
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seizure do not satisfy the Twombly test either. First, Officer

Mooney’s failure to tell Monroe that he could terminate the encounter

has been rejected as a means of establishing a seizure, and does not

imply there are discoverable facts that establish otherwise. Second,

the allegations that Monroe was “coerced,” that his belief was

“objectively reasonable,” and that the encounter “was not [ ]

consensual” are legal conclusions, not facts, and are insufficient. The

remaining two facts—that Officer Mooney was in uniform and he

approached Monroe at his home—merely describe many consensual

encounters, are insufficient to survive a Rule 12(b)(6) motion, and do

not imply there are other discoverable facts that “raise a right to relief

above the speculative level.” Twombly, 550 U.S. at 555, 127 S. Ct.

1955. Thus, the district court did not err in dismissing Monroe’s

Fourth Amendment claim.

Id. (internal citations omitted) (alteration in original).

With respect to the equal protection claim, the Fourth Circuit concluded that the officer did

not approach the plaintiff based on his race, but based on the victims’ descriptions. The

court noted that an equal protection claim requires “‘express racial classification,’ which

occurs when the government distinguishes among the citizenry on the basis of race,” and

concluded that “it [wa]s clear that the officers in this case made no such distinction when

establishing the suspect’s characteristics—any descriptive categorization came from the rape

victims who described their assailant.” Id. at 388. The court found this conclusion supported

by Iqbal, where the Supreme Court “noted that Arab-Muslim men were responsible for the

September 11 attacks, and ‘[i]t should come as no surprise that a legitimate policy directing

law enforcement to arrest and detain individuals because of their suspected link to the attacks

would produce a disparate, incidental impact on Arab Muslims . . . .’” Id. at 389 (quoting

Iqbal, 129 S. Ct. at 1951) (alteration in original).

• Walker v. Prince George’s County, 575 F.3d 426 (4th Cir. 2009). The owners of a pet wolf

initiated suit in state court against the county animal control officer and the county after the

officer seized their pet wolf. The plaintiffs alleged civil trespass, violation of the Maryland

Constitution, and violation of their Fourth Amendment rights under § 1983. Id. at 428. The

defendants removed the case to federal court and moved for summary judgment. Id. The

district court granted the defendants’ motion for summary judgment because the officer was

entitled to qualified immunity and the complaint failed to adequately plead a claim against

the county under Monell v. New York City Department of Social Services, 436 U.S. 658

(1978), by failing to allege the county’s policy, custom, or practice. Walker, 575 F.3d at 428.

 The plaintiffs appealed the grant of the defendants’ motion for summary judgment on the

Fourth Amendment § 1983 claim and the denial of their own motion for summary judgment

on that claim, and also argued that they were entitled to summary judgment. Id. at 428–29.

The Fourth Circuit affirmed.
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In discussing the Monell claim, the Fourth Circuit noted that “a municipality’s liability

‘arises only where the constitutionally offensive actions of employees are taken in

furtherance of some municipal ‘policy or custom,’” id. at 431 (citation omitted), but that the

plaintiffs “‘failed to make any allegations in their complaint in regards to the existence of the

County’s policy, custom, or practice, therefore failing to plead’ a viable Monell claim,” id.

(citation omitted). The court rejected the plaintiffs’ assertion that “a County policy to seize

animals without inquiring whether their owners have valid permits for those animals ‘[could]

be inferred from Officer Jacobs’ testimony’ and that it should be ‘presumed that the County

never checks to see if owners lawfully possess wild or exotic animals before seizing them,’”

because the plaintiffs “fail to explain the basis of their inference or the justification for their

presumption.” Id. The court noted: “Critically lacking is any support for the proposition that

Officer Jacobs’ common practice ‘implemented an official government policy or custom.’”

Id. (citation omitted). The court concluded that the allegations “‘d[id] not permit [it] to infer

more than the mere possibility of misconduct,” Walker, 575 F.3d at 431 (citing Iqbal, 129

S. Ct. at 1950), and “[t]his mere possibility [wa]s inadequate to subject the County to

appellants’ suit for monetary damages,” id.

• Shonk v. Fountain Power Boats, 338 F. App’x 282 (4th Cir. 2009) (unpublished) (per

curiam). The plaintiff brought a breach of warranty case based on defects in a boat he

purchased. Id. at 283. The plaintiff sued Fountain Power Boats (“Fountain”), the

manufacturer of the boat; Yanmar American Corporation (“Yanmar”), the manufacturer of

the boat’s engines; and Mercury Marine (“Mercury”), the manufacturer of the boat’s stern

drives. Id. The complaint asserted breach of warranty under the Magnuson-Moss

Warranty–Federal Trade Commission Improvement Act (the “MMWA”), breach of warranty

under the Maryland Uniform Commercial Code–Sales (the “Maryland UCC”), and unfair or

deceptive trade practices under the Maryland Consumer Protection Act (the “Maryland

CPA”). Id. The district court granted dismissal under Rule 12(b)(6) of the claims against

Yanmar and Mercury, denied leave to amend, and granted summary judgment in favor of

Fountain on the MMWA claim. Id. at 284.

The complaint alleged one count under the MMWA, one count under the Maryland UCC,

and one count under the Maryland CPA, and each count “indiscriminately used the term

‘Defendant.’” Id. After the district court had dismissed the claims against Yanmar and

Mercury, the plaintiff sought to file a Second Amended Complaint, which “newly alleged

that Fountain manufactured the Boat, Yanmar manufactured the Boat’s engines, and Mercury

manufactured the Boat’s stern drives”; “listed Shonk’s claims under the MMWA against

Fountain, Yanmar, and Mercury in separate counts”; and left the remaining claims “lumped

together.” Shonk, 338 F. App’x at 285. In the proposed Second Amended Complaint,

“Shonk’s claims against Yanmar and Mercury under the MMWA, the Maryland CPA, and

the Maryland UCC continued to focus solely upon the Boat.” Id. The district court

overturned the magistrate judge’s decision to allow filing of the Second Amended

Complaint, finding, among other things, that amendment would be futile. Id.

With respect to the claims against Yanmar and Mercury under the MMWA, the district court
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had dismissed “because the Initial Complaint failed to identify a consumer product supplied

or manufactured by Yanmar or Mercury.” Id. at 287. The plaintiff argued on appeal that

“‘when a specific boat is identified, Yanmar and Mercury should be able to determine what

role they played in the manufacture of the specific boat by tracing a serial number or

otherwise.’” Id. The Fourth Circuit rejected this argument:

Shonk’s contention is fatally flawed in two respects. First, it

ignores his burden at the Rule 12(b)(6) stage to allege sufficient

factual matter “to raise a right to relief above the speculative level .

. . .” Twombly, 550 U.S. at 555, 127 S. Ct. 1955. At best, Shonk’s

allegations in the Initial Complaint pertaining to his claims under the

MMWA against Yanmar and Mercury constitute “[t]hreadbare

recitals of the elements of a cause of action, supported by mere

conclusory statements,” which decisively fail to meet his pleading

burden. Iqbal, 129 S. Ct. at 1940. Second, Shonk’s contention

ignores Rule 10(b)’s mandate to state, in a separate count, each claim

founded on a separate transaction or occurrence, “[i]f doing so would

promote clarity.” FED.R.CIV. P. 10(b). Given the fact that Fountain

manufactured the Boat, Yanmar manufactured the Boat’s engines,

and Mercury manufactured the Boat’s stern drives, each claim under

the MMWA against Fountain, Yanmar, and Mercury should have

been stated in a separate count. Accordingly, it cannot be doubted

that the district court properly dismissed Shonk’s claims against

Yanmar and Mercury under the MMWA, as pleaded in the Initial

Complaint. We, therefore, affirm the district court’s dismissal of

those claims.

Id. (alterations in original).

With respect to the claims against Yanmar and Mercury under the Maryland CPA, the Fourth

Circuit noted that the claims “all pertain[ed] to the sale of the Boat,” and that “each violation

of the Maryland CPA alleged by Shonk in the Initial Complaint require[d] that the defendant

have made the untrue representation about a ‘[c]onsumer good [ ].’” Shonk, 338 F. App’x

at 287–88 (second and third alterations in original). The district court dismissed these claims

because “the Initial Complaint failed to identify a consumer good sold to Shonk by Yanmar

or Mercury.” Id. at 288. The Fourth Circuit affirmed, explaining that the complaint could

not “be reasonably read to identify a consumer good sold to Shonk by Yanmar or Mercury.”

Id.

With respect to the breach of warranty claims against Yanmar and Mercury under the

Maryland UCC, the district court dismissed the claims because the complaint “failed to

identify a good warranted by Yanmar or Mercury.” Id. The plaintiff raised the same

argument that Yanmar and Mercury ought to be able to determine their role by tracing a

serial number, but the Fourth Circuit “remain[ed] unimpressed with such arguments and
279

reject[ed] them on the same grounds that [it] previously rejected them in the context of [the

plaintiff’s] claim under the MMWA and the Maryland CPA against Yanmar and Mercury.”

Id.

The Fourth Circuit also affirmed the district court’s denial of leave to amend, even though

“the Proposed Second Amended Complaint [wa]s far more detailed than the Initial

Complaint or the Proposed First Amended Complaint.” Id. at 289. The court explained that

the additional detail did not avoid the futility of the amendment because “Shonk’s claims

against Yanmar and Mercury under the MMWA, the Maryland CPA, and the Maryland UCC

continued to focus solely upon the Boat.” Shonk, 338 F. App’x at 289. The court continued:

For example, although Shonk set forth his breach of warranty claim

against Yanmar under the MMWA in a separate count, he did not

allege that the Boat’s engines were consumer products under the

MMWA. Rather, he alleged that the Boat (which the Proposed

Second Amended Complaint identifies Fountain as having

manufactured and warranted) is a consumer product under the

MMWA. Because neither Yanmar nor Mercury manufactured nor

warranted the Boat (per Shonk’s allegations in the Proposed Second

Amended Complaint), Shonk’s sole focus on the Boat in his claims

against Yanmar and Mercury rendered the Proposed Second

Amended Complaint futile. Accordingly, we uphold, as not an abuse

of discretion, the district court’s refusal to grant Shonk leave to

proceed under the Second Amended Complaint.

Id. The court also affirmed the grant of summary judgment in favor of Fountain. See id. at

289–90.

Fifth Circuit

• Higgenbotham v. Connatser, 420 F. App’x 466, 2011 WL 1239872 (5th Cir. Apr. 4, 2011)

(unpublished) (per curiam). Higgenbotham worked as a sign language interpreter for both

the Clear Creek Independent School District (“CCISD”) and a local government cooperative

for the hearing-impaired (“the Coop”). Her employment was terminated after an incident in

which she allegedly pulled on a student’s blouse, leaving the student exposed.

Higgenbotham filed suit against various officials of CCISD and the Coop, alleging that the

defendants had deprived her of due process by refusing to conduct a hearing at which she

would have an opportunity to clear her name.

The defendants filed a motion to dismiss on the basis of qualified immunity. The district

court denied the motion, concluding that Higgenbotham pleaded sufficient facts to justify

discovery concerning her allegation that was she was deprived of a liberty interest without

due process of law.
280

The Fifth Circuit reversed the district court’s denial of defendants’ motion to dismiss. The

court summarized the allegations of Higgenbotham’s complaint as follows:

[Higgenbotham’s] employment ended following an incident on

March 11, 2009, in which she allegedly pulled on a student's blouse,

exposing part of the student’s breast. On that afternoon, Appellant

Sandra Connatser, the Director of the Coop, asked Higgenbotham to

explain the earlier events. Higgenbotham obliged, telling Connatser

and the Coop’s assistant principal about her contact with the student.

Following Higgenbotham's verbal explanation, Connatser asked her

to write down her version of the events. Later that day, a person from

the CCISD human resources department instructed Higgenbotham

that she would be suspended pending an investigation of the

allegations against her. Connatser then invited Higgenbotham to

amend her written statement, an opportunity Higgenbotham accepted.

CCISD’s investigation concluded with Higgenbotham’s termination

several weeks later.

Id. at *1.

In holding that the motion to dismiss Higgenbotham’s complaintshould be granted, the Fifth

Circuit stated:

The Constitution’s due process clause affords a right to notice

and a hearing following the termination of government employment.

Bd. of Regents v. Roth, 408 U.S. 564, 92 S. Ct. 2701, 33 L.Ed.2d 548

(1972). According to the Supreme Court, “where a person’s good

name, reputation, honor, or integrity is at stake because of what the

government is doing to him, notice and an opportunity to be heard are

essential.” Id. at 573, 92 S. Ct. 2701. The sole fact that the employee

was fired, however, will not suffice to implicate a liberty interest.

The employee’s reputation must have been unfairly impugned as well.

A constitutional violation exists only where a plaintiff can show:

(1) that she was discharged; (2) that stigmatizing

charges were made against her in connection with the

discharge; (3) that the charges were false; (4) that she

was not provided notice or an opportunity to be heard

prior to her discharge; (5) that the charges were made

public; (6) that she requested a hearing to clear her

name; and (7) that the employer refused her request

for a hearing.

Hughes v. City of Garland, 204 F.3d 223, 226 (5th Cir. 2000). A
281

plaintiff must allege facts to support each of these elements in order

to state a claim.

Higgenbotham’s complaint fails to assert facts that would

support several elements listed in Hughes. First, the only direct

statement regarding publication in Higgenbotham’s complaint is

devoid of facts: “Since Plaintiff’s discharge it is believed that the

alleged event has been reported to the offender database and Plaintiff

has been unable to locate and/or secure employment in her chosen

profession as an interpreter in public schools.” This assertion fails to

specify who reported the incident and which “offender database” now

contains a record of it. In particular, the complaint does not allege

that any of the individual Defendants-Appellants had any connection

with the alleged publication.

Furthermore, Appellee cannot rest on the assumption that

CCISD reported her conduct to a publicly available database on the

theory that Texas law requires the disclosure of incidents involving

sexual misconduct toward a minor. CCISD never indicated that it

terminated Higgenbotham for sexual impropriety. The letter

informing Higgenbotham of her termination stated only that “your

conduct was inappropriate toward a student . . . .” This statement

does not raise a presumption that any of the Appellants reported the

details of Higgenbotham’s termination in a publicly available

database. Thus, the complaint has no factual assertions to convince

a court that Higgenbotham’s claim might succeed.

In addition to the complaint’s inadequate treatment of

publication, other elements of the claim are unsupported by facts. In

particular, concerning the linked requirementsthat a plaintiff request

an opportunity to clear her name and that her employer deny such a

request, Higgenbotham’s complaint asserts only that “her respective

employers have refused her request for a meaningful hearing to clear

her name.” Higgenbotham fails to assert a connection between the

denial of a name-clearing hearing and the particular defendants in this

case. Moreover, she does not identify the request for a hearing or its

denial. The allegations in the complaint point toward the opposite

conclusion—that Higgenbotham was able to present her side of the

story both verbally before the assistant principal and in writing.

These facts cast doubt on the fourth element listed in Hughes.

Additional facts would be necessary to establish that Higgenbotham

did not have an opportunity to be heard and that Appellants refused

such a hearing when requested. On several elements, therefore, the

complaint resembles a “formulaic recitation” of elements rather than
282

the fact-based pleading envisioned in Twombly and Iqbal.

Id. at *2. The court concluded that because it had found that “Appellee failed to plead the

factual assertions necessary to ‘allow[ ] the court to draw the reasonable inference that the

defendant is liable for the misconduct alleged,’” it had to “reverse and render the district

court’s denial of Appellants’ motion to dismiss.” Id. at *3 (citing Iqbal, 129 S. Ct. at 1949)

(alteration in original).

• City of Clinton, Ark. v. Pilgrim’s Pride Corp., 632 F.3d 148 (5th Cir. 2010). Defendant

Pilgrim’s Pride Corp. owned a facility in the City of Clinton, Arkansas for growing and

processing poultry. Pilgrim’s had acquired this facility in 2004 from another poultry

processing company, ConAgra. In 2008, Pilgrim’s announced that it would close its facility

and its operations in the City of Clinton. Subsequently, Pilgrim’s filed for bankruptcy relief

under Chapter 11. The closure of the facility caused economic distress for the City of

Clinton, which had difficulty repaying bond debts it had incurred in the construction of a

water purification system designed to meet the needs of Pilgrim’s poultry plant. The City

sued Pilgrim’s, alleging fraud, promissory estoppel, unjust enrichment, and violation of the

Arkansas Deceptive Trade Practices Act. The district court dismissed the City’s complaint

for failure to state a claim.

In support of its claims, the City’s complaint relied entirely upon two oral statements, one

made by an officer of ConAgra, the prior owner of the facility and not a party to the case, and

the other made by a Pilgrim’s officer. The ConAgra officer, Hooper, when asked by a City

councilman in 1985 how the City would repay the 40-year municipal bonds it had issued if

ConAgra “pulled up stakes and left,” allegedly responded, “We will not go off and leave you

holding the bag.” Later, in 2004, the Pilgrim’s officer, Hendrix, allegedly stated at a meeting

that Pilgrim’s would “have a long-term commitment to the City of Clinton” as its

“community partner.” The City alleged that by this statement, Pilgrim’s ratified ConAgra’s

earlier promise.

The Fifth Circuit, while citing the Twombly plausibility standard, stated that “[f]raud claims

must also meet the heightened pleading standard of Rule 9(b).” The court then explained

why the City’s fraud claims did not meet that standard:

First, the City’s amended complaint fails to sufficiently plead

that there has been a false representation of a material fact, because

the statements by Hooper and Hendrix upon which the City relies

simply do not contain any material facts. Because a false statement

is, by definition, material only “if a reasonable person would attach

importance to and be induced to act on the information,” we have

held that statements that are so inherently vague and ambiguous

cannot be material. Shandong Yinguang Chem. Indus. Joint Stock

Co. v. Potter, 607 F.3d 1029, 1033 (5th Cir. 2010). Hooper’s January

1985 statement that ConAgra “will not go off and leave you holding
283

the bag,” even when considered in the context of the meeting at

which it was stated, is inherently vague because it admits of a variety

of interpretations. For example, an equally plausible meaning to the

one the City urges is that ConAgra was promising not to close the

plant right away after the City issued the bonds; indeed, the plant did

not close for over twenty-three years after the statement was allegedly

made. Hendrix’s January 2004 statement that Pilgrim’s would “have

a long-term commitment to the City of Clinton” as its “community

partner” is even more vague—it not only contains no facts on its face,

but also is devoid of context that would link it to the water system

expansion in any way. This court has held similarly vague and

attenuated statements to be insufficient to survive a motion to dismiss

under the standards of Rules 12(b)(6) and 9(b). See, e.g. Potter, 607

F.3d at 1033. (“[Plaintiff] did not plead that [Defendant] presented

any detailed, corroborating information, facts or figures to support the

statement [that the company was in sound financial condition] that

might entice a reasonable person to attach importance to the

statement. Further, the statement is significantly attenuated from the

execution of [the contracts at issue] which occurred, respectively,

seven and ten months later”).

Moreover, theCity does not allege any facts to provide a basis

for its claim that Hendrix’s oral statement constituted a “ratification”

by Pilgrim’s of the oral statement made nineteen years early by

Hooper, as a representative of ConAgra. Indeed, the City does not

allege any facts indicating that Hendrix was even aware that Hooper’s

1985 statement had been made. The City has failed to allege a basis

for holding Pilgrim’s liable for a ConAgra plant manager's alleged

oral “promise” made nineteen years previously.

Even if the context surrounding Hooper’s 1985 statement

could be seen as providing the requisite specificity for the statement,

the City’s fraud claim would still fail because the statements, which

do not purport to be promises at all, in any event wholly relate to

future events, which cannot form the basis of a fraud action. See

Distrib. Co. v. Miller Brewing Co., 366 Ark. 560, 237 S.W.3d 63, 74

(2007). There is an exception to this rule where the plaintiff can

show that the defendant knew the promise was false when made, but

the City has insufficiently alleged that Hooper had any knowledge

that the statement was false at the time it was made. While the City

alleges that “[a]t the time the representation and promise was made,

Mr. Hooper andConAgra intended to ‘leave the City holding the bag’

of indebtedness . . . at the time the poultry processor closed the

plant,” this allegation is meaningless absent any factual allegations
284

concerning any then intent to close the plant, and the allegation is

essentially nothing more than a conclusory statement of the element

of the cause of action, and therefore lacks sufficient specificity. See

Dorsey v. Portfolio Equities, Inc., 540 F.3d 333, 339 (5th Cir. 2008)

(“simple allegations that defendants possess fraudulent intent will not

satisfy Rule 9(b)”). While Rule 9(b) provides that intent and

knowledge “may be alleged generally,” this is not license to base

claims of fraud upon conclusory allegations.

The court did not explicitly state whether the City’s other claims—for promissory estoppel,

unjust enrichment, and violations of the Arkansas Deceptive Trade Practices Act—also were

properly analyzed under Rule 9(b) rather than under Rule 8. In any case, the court affirmed

their dismissal on the basis of the same reasoning quoted above. The court found that “[l]ike

the fraud cause of action, the promissoryestoppel cause of action fails because the statements

by Hooper and Hendrix, upon which the City bases its claims, are impermissibly vague and

ambiguous. Such vague and attenuated statements cannot be considered to be promises that

the defendant would reasonably expect to induce action.” Furthermore, “[b]ecause the

meanings of the statements were vague and ambiguous, and because the statements were so

attenuated from the eventual closure of the facility, they do not amount to a sufficient

‘operative act’” or other circumstance necessary to support an unjust enrichment claim.

Finally, the court affirmed the dismissal of the City’s claims under the Arkansas Deceptive

Trade Practices Act “because the statements by Hooper and Hendrix are too vague and

ambiguous to satisfy the specificity requirements of Rule 12(b)(6). These alleged statements

simply had no capacity to deceive a reasonable consumer, and no facts are alleged which

plausibly suggest otherwise.” (citing Twombly, 127 S. Ct. at 1966.).

• Gentilello v. Rege, 627 F.3d 540, 2010 WL 4868151 (5th Cir. Dec. 1, 2010). Tenured

professor Gentilello brought § 1983 action against supervisors, alleging that he was

wrongfully demoted from two chair positions without due process of law in violation of the

Fourteenth Amendment. Id. at *1 The district court granted supervisors’ motion for

judgment on the pleadings and denied professor leave to file an amended or supplemental

complaint. Id. at *2. The Fifth Circuit affirmed. 

The court first noted that it evaluated a 12(c) motion using the same standard as a 12(b)(6)

motion to dismiss. Id. It next explained that it was undisputed that the tenured professor had

a protected property interest in continuing employment. Id. at *3. But that “the due process

clause does not protect Gentilello’s specific job duties or responsibilities absent a statute,

rule, or express agreement reflecting an understanding that he had a unique property interest

in those duties or responsibilities.” Id.

The court concluded that Gentillelo never identified his alleged property interest in the chair

positions:

Nowhere in Gentilello’s Complaint, filed September 13, 2007,
285

his Amended Complaint, filed October 22, 2007, or his proposed

Supplemental Complaint, filed April 21, 2009, did Gentilello plead

the factual basis for his alleged property interest in the Chair

Positions. In his Amended Complaint, Gentilello alleged the bare

legal conclusion that the Defendants “wrongfully removed Plaintiff

from his [Chair Positions], positions in which Plaintiff had a

constitutionally protected property interest in occupying for a

previously-determined period of time.” He further alleged that

“Defendants’ conduct caused Plaintiff to be deprived of his vested,

constitutionally protected property right in his [Chair Positions],” and

as a result, that he “was not merely deprived of duties and

responsibilities, but rather, was deprived of the economic interests in

and benefits associated with such positions.” Gentilello did not

substantiate these allegations by pointing to any ordinance, official

policy, state or local law, contract, or other enforceable agreement to

support his claim of entitlement to the Chair Positions. Therefore, his

pleadings fail to state a due process claim. See Blackburn v. City of

Marshall, 42 F.3d 925, 940 (5th Cir.1995) (“Because [plaintiff] does

not allege that his property interest ... stems from a state statute or

regulatory scheme, a contract, or any other independent source, we

find that [plaintiff] has failed to allege a property interest protected by

the Due Process Clause of the Fourteenth Amendment.”).

Nor did Gentilello alert the district court to the factual basis

for his claim of entitlement to the Chair Positions in his extensive

briefing in opposition to Defendants’ motion for judgment on the

pleadings. At best, Gentilello asserted that he had a property interest

in the Chair Positions “based upon letters from Defendants,” the

contents of which he has not disclosed to the district court or even

(when we made inquiry at oral argument) to this court. Apparently

as a result of these letters, Gentilello asserted that he had a contract

with UT Southwestern “which was subject to certain rules and

regulations” - which Gentilello has not identified - “that required

‘good cause’ before his chaired positions could be terminated.”

Contrary to Gentilello’s contentions, these “[t]hreadbare recitals of

the elements of a cause of action, supported by mere conclusory

statements, do not suffice” to state a due process claim. Iqbal, 129 S.

Ct. at 1949 (citing Twombly, 550 U.S. at 555, 127 S. Ct. 1955).

Gentilello, 2010 WL 4868151, at *3-4 (alterations in original). The court next determined

that the district court did not err in refusing to allow a second amendment more than a year

after Gentilello initially amended his complaint: “At some point a court must decide that a

plaintiff has had a fair opportunity to make his case; if, after that time, a cause of action has

not been established, the court should finally dismiss the suit.” Id. at *4 (quoting Jacquez
286

v. Procunier, 801 F.2d 789, 792 (5th Cir. 1986)). Finally, the court found that the district

court did not err in denying Gentilello’s request for leave to supplement his pleadings

because Gentilello provided no justification for delaying months after the action giving rise

to his new claim before seeking leave to supplement. Id. at *5.

• Castro ex rel. R.M.G. v. United States, 608 F.3d 266 (5th Cir. 2010) (per curiam), cert.

denied, 131 S. Ct. 902 (2011). The plaintiff, on her own behalf and on behalf of her minor

daughter, filed suit under the Federal Tort Claims Act (FTCA), alleging that the government

negligently caused the wrongful deportation of her daughter, R.M.G., aUnited States citizen.

Id. at 267. The government moved to dismiss under Rule 12(b)(1) or, alternatively, for

summary judgment. Id. at 267–68. The district court held that the government was protected

from suit under the discretionary function exception of the FTCA, dismissed the tort claims

for lack of subject matter jurisdiction, and dismissed the constitutional and injunctive claims

as moot. Id. at 268. A Fifth Circuit panel reversed and remanded, but the court granted

rehearing en banc, vacating the panel opinion. Id.

As explained by Judge Stewart in his dissent, Border Patrol agentstook R.M.G. into custody,

despite knowledge of her United States citizenship, when they arrested her undocumented

father (Gallardo) and detained him for removal. Id. at 270 (Stewart, J., dissenting). Castro,

a United States citizen, pleaded with theBorder Patrol to return her daughter to her and allow

her daughter to remain in the United States. Castro, 608 F.3d at 270 (Stewart, J., dissenting).

“But on the very same day that R.M.G. and Gallardo were detained, and although Gallardo

did not have a custody order in his favor, the Border Patrol deported R.M.G. and Gallardo

to Mexico,” and “Castro could not locate her daughter for the next three years.” Id. On

rehearing, the majority affirmed the district court’s decision to dismiss the FTCA claims for

want of jurisdiction, “essentially for the reasons given by the district court,” and also agreed

with the district court that the constitutional claims and the claim for injunctive relief were

moot. Id. at 268 (majority opinion).

Judge Dennis concurred in the judgment in part and dissented in part. Judge Dennis asserted

that there was federal jurisdiction over the plaintiffs’ claims for abuse of process, assault, and

false imprisonment because the government has waived immunity through the FTCA’s law

enforcement proviso, and that the district court had therefore erred by dismissing those

claims under Rule 12(b)(1) for lack of subject matter jurisdiction. Id. at 269 (Dennis, J.,

concurring in judgment in part and dissenting in part). Because it was not clear whether the

claims for abuse of process and assault would survive a Rule 12(b)(6) motion to dismiss,

Judge Dennis would have remanded those claims. Id. But with respect to the false

imprisonment claim, Judge Dennis would have dismissed under Rule 12(b)(6) because “the

plaintiffs ha[d] clearly failed to state a claim on which relief [could] be granted.” Id. Judge

Dennis asserted that R.M.G. was a baby and could not consent independently, but that her

father could and did consent on her behalf to her remaining with him. Castro, 608 F.3d at

269 (Dennis, J., concurring in judgment in part and dissenting in part). Judge Dennis

concluded that “[b]ecause R.M.G.’s presence in the Border Patrol station was not without

consent, it did not amount to false imprisonment.” Id. With respect to the remaining claims,
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which did not fall within the law enforcement proviso, Judge Dennis agreed with Judge

Stewart that the discretionary function exception to the FTCA “does not encompass actions

by government agents that are ‘unconstitutional, proscribed by statute, or exceed the scope

of an official’s authority.’” Id. (citations omitted). As a result, Judge Dennis believed that

the district court erred by “failing to consider whether the Border Patrol agents’ actions

violated any statutory or constitutional requirements before it decided that the plaintiffs’

claims were barred by the discretionary function exception.” Id. at 269–70. But Judge

Dennis believed that the claims not covered by the law enforcement proviso should have

been dismissed for lack of subject matter jurisdiction because they were barred by the

discretionary function exception, explaining that “[t]he facts as alleged by the plaintiffs d[id]

not disclose any constitutional or statutory violations that would make the discretionary

function exception inapplicable.” Id. at 270. Judge Dennis explained that the Border Patrol

had merely maintained the status quo by allowing Gallardo to keep R.M.G. with him, and

it could not have made a custody decision to transfer the baby to Castro without a court order

or other legal authority. Id.

In Judge Stewart’s dissent, he asserted that Castro plausibly alleged that the Border Patrol

exceeded the scope of its authority under the Immigration and Nationality Act of 1953 (INA)

and the Fourth and Fifth Amendments, and that the majority therefore erred by applying the

discretionary function exception without analyzing whether the Border Patrol agents acted

outside their authority. Castro, 608 F.3d at 271 (Stewart, J., dissenting). Judge Stewart also

asserted that the majority “erroneously applie[d] the principles of Rule 12(b) according to

. . . Twombly . . . and . . . Iqbal . . . , and disregard[ed] the Supreme Court’s instruction to

‘narrowly construe[ ] exceptions to waivers of sovereign immunity . . . in the context of the

sweeping language of the [FTCA].’” Id. at 270 (second and third alterations and fifth

omission in original) (citation omitted). Judge Stewart explained:

The majority acknowledges that we have before us a

Rule 12(b)(1) dismissal, but it erroneously concludes that

Castro has not met her burden under Twombly and Iqbal. To

the contrary, based on the allegations contained in Castro’s

complaint, the Border Patrol agents’ actions in detaining and

deporting R.M.G. implicate both statutory and constitutional

concerns. The facts included in the complaint—in particular

the undisputed fact that the Border Patrol agents knew

R.M.G[.]’s citizenship status and did not doubt that she was

a United States citizen—support a plausible claim that the

Border Patrol agents exceeded the scope of their statutory and

constitutional authority and their actions were therefore

non-discretionary.

Id. at 272–73. Judge Stewart believed that Castro’s complaint alleged a plausible violation

of the Fourth Amendment right to be free from seizure and the Fifth Amendment right to due

process, noting that the complaint alleged:
288

Defendant United States’ detention of Plaintiff R.M.G.

without due process violated her Fourth Amendment constitutional

interest in remaining free from bodily seizure. . . . Detention of

Plaintiff R.M.G. was not due to an act of wrongdoing that warranted

detention nor was detention based on an emergency. The United

States did not and cannot show that seizure of the minor child was

necessary to protect Plaintiff R.M.G.’s health, safety and welfare;

indeed, Defendant United States placed R.M.G. in imminent danger

by deporting her with a man it knew was wanted in connection with

a homicide.

. . . Plaintiff Castro made a claim of citizenship to Defendant

United States on behalf of her minor child, Plaintiff R.M.G. Despite

that claim, and despite Defendant’s recognition of Plaintiff R.M.G.’s

status as a U.S. citizen, Defendant United States intentionally,

maliciously, and recklessly violated Plaintiffs’ right to procedural due

process guaranteed by the Fifth Amendment.

. . . Defendant United States willfully detained R.M.G.

without her consent or the consent of her U.S. citizen parent, and the

detention was without legal authority or justification. . . . From the

moment Defendant United States knew or should have known that

R.M.G. was a U.S. citizen and that a U.S. citizen parent was present

to take possession of her and did not release her, Defendant United

States had no legal authority or justification to continue its detention

of the child.

Id. at 273 (quotation marks omitted) (omissions in original). Judge Stewart further pointed

out that the complaint alleged that “the Border Patrol agents acted outside of their statutory

grant of authority under the INA, averring that ‘[n]o section of [the INA] provides authority

for the United States to detain or remove a U.S. citizen.’” Id. (alterations in original). Judge

Stewart argued that “[d]espite the Border Patrol agents’ conceded knowledge of R.M.G.’s

citizenship and Castro’s plausible allegations of constitutional and statutory violations, the

district court opinion—relied upon by the majority—failed to address whether the Border

Patrol agents exceeded their scope of authority,” and that “[t]his crucial omission in the

district court’s Rule 12(b)(1) analysis allow[ed] any actions taken by the Border Patrol agents

in excess of their authority to nonetheless benefit from the protection of the discretionary

function exception.” Id. at 274. Because “[t]he majority opinion weaken[ed] a critical,

inherent safeguard of the discretionary function exception and neglect[ed] Castro’s patently

plausible allegations of unauthorized actions by the Border Patrol agents in addressing the

12(b)(1) dismissal,” Judge Stewart would have vacated the district court’s order and

remanded for a ruling on whether the Border Patrol agents acted within the scope of their

authority. Id.
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• Shandong Yinguang Chem. Indus. Joint Stock Co. v. Potter, 607 F.3d 1029 (5th Cir. 2010)

(per curiam). Plaintiff Shandong Yinguang Chemical Industries Joint Stock Co., Ltd.

(“Yinguang”) sold explosive chemicals to Beston Chemical Corporation (“Beston”). Id. at

1031. Beston was wholly owned by Michael Potter. Id. After Beston failed to make

payments on two contracts and declared bankruptcy, Yinguang sued Potter for common law

fraud and fraudulent inducement, and sought to pierce the corporate veil. Id. The district

court dismissed the complaint, finding that Yinguang failed to meet Rule 9(b)’s pleading

requirements for the fraud claim and did not have standing to bring the veil-piercing claim.

Id. The Fifth Circuit affirmed.

According to the complaint, Beston and Yinguang entered into eight contracts. Id. Beston

made untimely payments for the first six contracts, but the dispute arose with respect to the

last two contracts. See Yinguang, 607 F.3d at 1031. The complaint alleged that Potter made

two types of misrepresentations during the negotiation of the last two contracts: “First, on

July 20, 2003, Potter represented that Beston was in ‘sound financial condition’ and that

Beston would pay for current and future shipments. Second, Potter represented repeatedly

that Beston would make regular payments on its purchases.” Id. “Despite Potter’s

assurances, he omitted to tell Yinguang that Beston had been unprofitable in 2003,” and

“Beston made no regular payments on either contract.” Id. at 1032. After Beston filed for

bankruptcy and left Yinguang with an unsecured claim, Yinguang sued Potter personally in

federal court, alleging that Potter committed fraud and fraudulent inducement by lying to

Yinguang’s president to entice Yinguang to enter into the contracts. Id. Yinguang also

sought to impose Beston’s contractual liability on Potter by piercing the corporate veil

through allegations that Potter used Beston to perpetrate a fraud by funneling money out of

Beston into other Potter-owned corporate entities. Id.

On appeal, the Fifth Circuit explained that “[t]he court’s task [in ruling on a Rule 12(b)(6)

motion] is to determine whether the plaintiff has stated a legally cognizable claim that is

plausible, not to evaluate the plaintiff’s likelihood of success.” Id. (citing Iqbal, 129 S. Ct.

at 1949). In addition, with respect to the fraud and fraudulent inducement claims, the court

noted that the plaintiff must meet the requirements of Rule 9(b), which requires “‘stat[ing]

with particularity the circumstances constituting the fraud.’” Yinguang, 607 F.3d at 1032.

In considering the fraud claim, the court noted that “Yinguang allege[d] that Potter

committed fraud both by affirmative misrepresentation and by omission,” and “assert[ed] that

Potter’s statement that Beston was in ‘sound financial condition’ was a misrepresentation

because Beston was unprofitable in 2003 and failed to obtain a line of credit.” Id. The court

concluded that “Yinguang’s allegations fail[ed] to meet the pleading requirements of Rule

9(b) as to several of the fraud elements.” Id. at 1033. The court explained that the alleged

statement was “inherently vague and ambiguous,” noting that “Yinguang did not plead that

Potter presented any detailed, corroborating information, facts or figures to support the

statement that might entice a reasonable person to attach importance to the statement”; that

the “statement [wa]s significantly attenuated from the execution of Contract Nos. 7 and 8”;

that “the statement was made during a meeting to assure Yinguang that a late payment on
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Contract No. 6 would be forthcoming”; and that “in the parties’ course of dealing on prior

contracts, Beston’s payments had repeatedly been late although it ‘generally’ met its

obligations to Yinguang.” Id. The court concluded that “[u]nder all of these circumstances,

Yinguang’s bare assertion of materiality r[ang] hollow.” Id. The court also found that

Yinguang failed to properly allege that the statement was false when made, explaining that

the facts “[t]hat Beston was unprofitable for the year 2003 and unable to obtain a line of

credit sometime in 2004 d[id] not support a conclusion [that] Beston was not in ‘sound

financial condition’ in July 2003.” Id. The court rejected Yinguang’s attempt to rely on

statements regarding Beston’s current and future willingness to pay, explaining that the

theory that they were false when made “suffer[ed] from a lack of supporting details from

which an inference of falsity could derive” because “Yinguang offer[ed] no contemporary

financial data undercutting Potter’s assertion about the company’s willingness to pay.”

Yinguang, 607 F.3d at 1033. The court also rejected the alternative theory that Beston had

no intention of paying, explaining that while “‘funneling’ money from one entity to another

could be ‘slight circumstantial evidence of fraud,’ . . . Yinguang’s pleadings d[id] not rise

above the level of a conclusory description,” and “[p]leading standards demand ‘more than

an unadorned, the defendant-unlawfully-harmed-me accusation.’” Id. at 1034 (quoting Iqbal,

129 S. Ct. at 1949). The court further explained that “Rule 9(b) imposes an additional

burden on the plaintiff to detail facts and lay out . . . ‘the who, what, when, where, and how

of a fraud.’” Id. (citation omitted). The court concluded that the allegations were

insufficient under the applicable pleading standards:

That Potter transferred money away from Beston is not,

standing alone, sufficient under Rule 9(b) and Iqbal. Moving money

from one company to another may be consistent with fraud, but it

does not create a reasonable inference that Potter is liable for fraud.

Beston could have had legitimate or illegitimate reasons for

transferring money. Yinguang has alleged no details that would

corroborate a fraudulent scheme, such as when or why Potter moved

the money, how much money was transferred, or whether this action

was inconsistent with the company’s past practices.

Id. (footnote omitted). The court also emphasized that Yinguang pleaded evidence that

contradicted a fraudulent intent not to perform. See id. The court concluded that although

the case might be a close one in light of a Texas Supreme Court case indicating that “slight

circumstantial evidence” of fraud is enough to find fraudulent intent, “given the heightened

pleading requirements of Rule 9(b), and the equipoise, on all the facts pleaded read as a

whole, between an inference of fraud and one of Beston’s business as usual, we conclude that

Yinguang’s allegations do not plausibly plead fraudulent intent not to pay at the time of

Potter’s representations.” Id. at 1035.

The court also rejected Yinguang’s assertion that Potter committed a fraud by omission by

failing to disclose Beston’s financial condition. Yinguang, 607 F.3d at 1035. The court

explained that a duty to disclose arises when a party learns that his previous affirmative
291

statement was false or misleading. Id. (citations omitted). The court concluded that the

statements that Beston was in sound financial condition and that no letter of credit was

needed were not pleaded to be false when made. Id. Although Potter admitted at a later date

that Beston was having financial difficulties, the court stated that “[f]or this statement to

have involved a fraudulent omission, Yinguang would have to assert facts showing its

obvious insufficiency and patent insincerity (amounting to fraudulent intent),” and concluded

that “[v]iewed in the totality of the parties’ dealings—frequent late payments, full eventual

payment on the first six contracts, no relevance to the execution (in February) of Contract

No. 7—and the absence of corroborating financial facts aside from the eventual default, [the

court] [wa]s reluctant to transform this admission into a fraudulent omission claim.” Id.

The court concluded that the veil-piercing claim should be dismissed because Yinguang

failed to allege an actual fraud, and failed to provide a basis for holding Potter personally

liable, as required for a veil-piercing claim under the relevant statute. See id. at 1035–36.

• Burns v. Mayes, 369 F. App’x 526, No. 09-20126, 2010 WL 445629 (5th Cir. Feb. 8, 2010)

(unpublished) (per curiam). The plaintiffs brought claims under § 1983 and various state

torts against a Texas state judge. The lawsuit was commenced after the plaintiff was stopped

by a law enforcement officer for speeding, which led to the discovery of cocaine in the

plaintiff’s possession. Id. at *1. He was charged with possession of a controlled substance,

and his case was assigned to Judge Mayes. Id. Burns pleaded guilty, received deferred

adjudication, and agreed to three years of probation instead of incarceration. Id. Burns

agreed to certain conditions, including that he would not consume alcohol or narcotics and

would submit to monthly urinalyses to verify compliance. Id. The agreed conditions stated

that a diluted urine sample would be presumed to be a violation, and that community

supervision might be revoked as a result. Id. During the following year, two urinalyses

revealed that Burns had violated the terms of his probation. Id. at *2. After the second

violation, Burns was jailed for a week and had to undergo a drug and alcohol treatment

program, and Judge Mayes modified the terms of Burns’s probation by extending the

probation for one year and requiring Burns to participate in a lengthy substance-abuse

recovery program (the “SAP Program”) that Judge Mayes had developed. Burns, 2010 WL

445629, at *2. The terms of the SAP Program provided that a diluted urine sample would

result in immediate jailing. Id. Burns eventually submitted a diluted urine sample, the first

in over a year of urinalysis, and Judge Mayes had Burns arrested and jailed, and ordered him

to refrain from contact with family or friends during his incarceration. Id. In his complaint,

Burns alleged that he was not notified that he would not be able to receive visits or calls from

family and friends during his incarceration, that he was not notified of the standard as to what

would constitute a diluted urine sample, and that he suffered from low creatinine in his urine.

 Id. The state later moved to revoke Burns’s probation and Burns was sentenced to 365 days

in jail, with credit for time served when he was on probation. Id. at *3. Judge Mayes and

the County moved to dismiss Burns’s claims against them, Burns moved to compel

depositions, and upon the defendants’ request, the district court stayed all deadlines. Id. The

district court granted the defendants’ motion to dismiss, but gave Burns the opportunity to

replead the injunctive claims. Burns, 2010 WL 445629, at *3. “Burns instead re-asserted
292

his original claims and added more, without supplementing the original facts alleged,” and

the district court dismissed all claims against Judge Mayes and the County. Id.

In evaluating whether absolute judicial immunity applied, the court noted that Burns failed

to allege facts regarding whether the judge was acting in his judicial capacity and had “utterly

failed to identify even a scintilla of evidence that Judge Mayes’s actions were taken in

anything but his capacity as the judge charged with adjudicating and overseeing the terms of

Burns’s probation as a defendant properly appearing in the court that had jurisdiction over

him and his case.” Id. at *4. The court explained that “Burns’s unsupported, conclusional

assertions that Judge Mayes acted in an ‘administrative’ or ‘ultra vires’ capacity [we]re

therefore unavailing.” Id. (citing Twombly, 550 U.S. at 555). The court also found that “the

very fact that Burns ha[d] served his time and [wa]s no longer chafing against the conditions

of community supervision imposed by Judge Mayes support[ed] the district court’s dismissal

of his claims for declaratory and injunctive relief on grounds of mootness.” Id.

With respect to the claims against the County, the court concluded that “[t]he overwhelming

majority of the facts advanced by Burns firmly establish[ed] that the SAP Program was

designed by Judge Mayes in his capacity as a Texas state judge responsible for one of the

state’s drug-court programs.” Id. The court rejected Burns’s arguments that the SAP

Program was a County policy because “(1) County law enforcement officers carried out

Judge Mayes’s orders, (2) a description of the SAP Program appear[ed] on a County website,

and (3) a description of the SAP Program on Judge Mayes’s website b[ore] the copyrights

of both Judge Mayes and the County.” Burns, 2010 WL 445629, at *4. The court explained

that Burns described “the SAP Program as one ‘created’ by Judge Mayes ‘in the 410th

District Court,’” and concluded that “[a]s a protocol of the 410th Judicial District applicable

to criminal defendants appearing before a judge of the 410th Judicial District, the SAP

Program [wa]s clearly a state judicial policy, not a County policy.” Id. The court also noted

that “[f]or identical reasons, Burns ha[d] not adduced facts which suggest[ed] that the SAP

Program [wa]s a ‘persistent widespread practice’ that may be properly attributed to the

County.” Id. The court concluded: “Burns has not ‘plead[ed] the factual content that allows

the court to draw the reasonable inference that the defendant is liable for the misconduct

alleged.’” Id. at *5 (quoting Iqbal, 129 S. Ct. at 1949).

• Hole v. Tex. A&M Univ., 360 F. App’x 571, No. 09-40311, 2010 WL 148656 (5th Cir. Jan.

13, 2010) (unpublished) (per curiam), cert. denied, 130 S. Ct. 3395 (2010). The plaintiffs

sued Texas A&M University (“TAMU”) and several of its officers under § 1983, seeking to

recover attorneys’ fees and costs they incurred in a state court action that the plaintiffs

initiated and lost. Id. at *1. The district court dismissed the complaint and the Fifth Circuit

affirmed.

The appellees had received a complaint that a TAMU student organization was hazing its

recruits, and the appellees initiated disciplinary proceedings against members of the

organization, including the appellants. Id. Before the disciplinary proceedings were

complete, the appellants filed a state court suit alleging constitutional violations. Id. The
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state court enjoined the appellees from pursuing disciplinary actions and from enforcing any

sanctions, but the state appellate court reversed on the grounds that the suit was not ripe

because no appellant had completed TAMU’s disciplinary process. Id. After the state trial

court’s decision, but before the state appellate court’s reversal, the appellants filed suit in

federal court, seeking injunctive relief under § 1983, compensatory damages under § 1988,

including attorneys’ fees and expenses, and declaratory relief under 28 U.S.C. § 2201. Id.

The district court stayed proceedings until the state appellate court reversed the state trial

court’s judgment. Hole, 2010 WL 148656, at *1. The district court then granted the

defendants’ motion for judgment on the pleadings,finding that the dispute never ripened into

an actual case or controversy, that the appellants had graduated from TAMU, that the state

appellate court’s dismissal made the request for injunctive or declaratory relief moot, and that

because the appellants did not prevail in state court, they could not receive attorneys’ fees

under § 1988. Id.

The Fifth Circuit concluded that the appellants’ attorneys’ fees and costs from the state court

suit did not constitute a legally-cognizable injury to confer standing under § 1983 because

the relevant case law provided that “a party who voluntarily initiates litigation and does not

win a judgment cannot then sue to recover attorney’s fees as a compensable injury.” Id. at

*2. The court also rejected the appellants’ argument that their damages were not limited to

attorneys’ fees and costs because their complaint alleged that their damages “include”

attorneys’ fees and expenses. Id. at *3. The court pointed out that “[a]lthough the Amended

Complaint hint[ed] at other damages—injuries to Appellants’ reputations, liberty interests,

and educations—these hints d[id] not reach the level ofspecificity required in a complaint.”

Id. (citing Iqbal, 129 S. Ct. at 1950). The court also held that because the appellants did not

have an enforceable judgment from their state court action and because they were not the

prevailing party in that action, they were not entitled to recover attorneys’ fees under § 1988.

Id.

• Rhodes v. Prince, 360 F. App’x 555, 2010 WL 114203 (5th Cir. 2010) (unpublished) (per

curiam). The plaintiff sued under § 1983, alleging that the defendants violated his Fourth

Amendment right to be free from false arrest. Id. at *1. The district court dismissed because

the plaintiff failed to allege an arrest under the Fourth Amendment and the defendants were

entitled to qualified immunity. Id.

Rhodes was the civilian crime scene investigator for the Investigative Services Bureau of the

Arlington Police Department (the “Department”), and alleged that after he raised concerns

about the standards, procedures, and personnel in the Department, members of the Crime

Scene Unit conspired to frame him by obtaining his fingerprints and putting them at the

scene of a burglary. Id. Certain of the defendants notified Rhodes that he was a suspect in

the burglary and that Defendant Roach would conduct a criminal investigation. Id. Rhodes

was placed on administrative leave, and internal affairs investigators interviewed him. Id.

The complaint alleged that Rhodes appeared at the police station for questioning, that he was

fingerprinted and palm printed, and that Roach questioned him for two hours, but did not

allege that he appeared involuntarily or that Roach restrained him. Rhodes, 2010 WL
294

114203, at *1.

On appeal, the Fifth Circuit noted that Iqbal had set out a “two-pronged approach” to

determine whether a complaint states a plausible claim and that the task of applying this

approach is “context-specific.” Id. at *2. The court rejected the defendants’ argument that

Rhodes could not have been “seized” under the Fourth Amendment without a formal arrest

because of Rhodes’s employment relationship with the police department. Id. at *3. The

court noted that the objective inquiry into whether a reasonable person in Rhodes’s position

would have believed he was the subject of a criminal or administrative investigation is factintensive. Id. at *4 (citation omitted). The court stated that under Iqbal, its first task was to

determine which allegations in the complaint were entitled to a presumption of truth. Id.

(citing Iqbal, 129 S. Ct. at 1951). The court explained that some of the allegations were legal

conclusions:

Rhodes alleges that Defendant Roach “intentionally and falsely

arrested” him, “when he knew such conduct was a violation of [his]

Fourth Amendment right to be free from unlawful search and

seizures,” and that Defendant Roach did so with the support of the

other Defendants. Because an “arrest” is a legal conclusion under the

Fourth Amendment and a necessary element of a false arrest claim,

Rhodes’s allegation of “arrest” is “nothing more than a ‘formulaic

recitation of the elements’ of a constitutional . . . claim . . . . and [is]

not entitled to be assumed true.” Iqbal, 129 S. Ct. at 1951 (quoting

Twombly, 550 U.S. at 555).

Rhodes describes Defendant Roach’s questioning as an

“interrogation.” “Interrogation” is a word with mixed connotations

in the law, typically used to describe the questioning of a person

while in custody. Rhodes’s use of “interrogation” to describe the

questioning by Defendant Roach does not necessarily equate to an

arrest because, absent facts indicative of a Fourth Amendment

seizure, Rhodes’s description amounts to little more than a matter of

word choice, without additional legal weight. Cf. Iqbal, 129 S. Ct. at

1951.

Id. (alterations and omissions in original) (internal citations omitted). But the court noted

that the factual allegations were entitled to a presumption of truth:

Some of the alleged facts in Rhodes’s Rule 7(a) reply are,

however, entitled to a presumption of truth. Rhodes alleges that on

December 4, 2003, Defendants Krohn, Carroll, and Roach notified

him that he was a suspect in the burglary, and that he asserted his

Fifth Amendment right to remain silent. Defendant Roach advised

Rhodes that he would head a criminal investigation into the matter.
 A court may order a reply to an answer to a complaint under Rule 7(a). See FED. R. CIV. P. 7(a)(7). 27

295

The Department then informed Rhodes that he was subject to an

internal affairs investigation, placed him on administrative leave and

conducted an interview on the matter. Rhodes further alleges that he

was fingerprinted and palm printed “without consent” before

Defendant Roach questioned him. Rhodes alleges that the

questioning lasted approximately two hours. Although it is not clear

from the Rule 7(a) reply, Rhodes’s counsel appears to have been

present during the questioning.

Rhodes, 2010 WL 114203, at *5. The court concluded that “[v]iewing the pleadings in the

light most favorable to Rhodes, . . . he ha[d] not sufficiently pled that he was ‘seized’ under

the Fourth Amendment” because the district court required Rhodes to come forward with

factual allegations in his Rule 7(a) reply to overcome the qualified immunity claim but 27

Rhodes had not met his burden to show that an objective person would not have felt free to

leave the exchange with Roach. Id. The court explained:

Significantly, Rhodes never alleged that he appeared at the

Eastside Police Station involuntarily or felt that he was being

detained. Rhodes also does not allege any show of force by the

police. The taking of fingerprints and palm prints traditionally

accompany an arrest, but standing alone, they do not suffice to

establish an arrest. Rhodes was aware of both the criminal and

administrative investigations and, in his Rule 7(a) reply, Rhodes had

the burden to distinguish between his compliance with workplace

obligations and a show of police force sufficient to demonstrate a

Fourth Amendment arrest. Rhodes failed to do so. Even viewing the

pleadings in the light most favorable to Rhodes, we find that a

reasonable person would have felt free to leave the encounter. Thus,

Rhodes has not sufficiently alleged that he was “seized” under the

Fourth Amendment.

Id. (internal citation omitted). The court affirmed the dismissal of the Fourth Amendment

claim.

• Oceanic Exploration Co. v. Phillips Petroleum Co. ZOC, 352 F. App’x 945 (5th Cir. 2009)

(unpublished) (per curiam), cert. denied, 130 S. Ct. 3278 (2010). The Fifth Circuit affirmed

the district court’s dismissal under Rule 12(c) of a complaint under the Racketeer Influenced

and Corrupt Organizations Act (RICO). In 1974, Oceanic received an exclusive concession

from Portugal to explore for and extract oil and gas in the Timor Gap, a disputed area of

seabed north of Australia and south of the eastern part of the island of Timor. Id. at 947.

The border across surrounding ocean was settled by a treaty between Indonesia and Australia,

but the border between East Timor and Australia was not settled. Id. At the time Oceanic
296

received its exploration rights from Portugal, East Timor was a Portugese colony. Id.

However, “[i]n 1975, Indonesia invaded and annexed East Timor, effectively thwarting

Oceanic’s rights in the Timor Gap.” Id. Although the United Nations refused to recognize

the annexation, Australia and Indonesia collaborated to exploit oil and gas in the Timor Gap.

Id. In 1989, Australia and Indonesia created a “Joint Authority,” which awarded Timor Gap

exploration and extraction rights to ConocoPhillips. Oceanic Exploration, 352 F. App’x at

947–48. According to the complaint, ConocoPhillips had extracted large quantities of oil

and gas from the Timor Gap, and known reserves at the Timor Gap were valued at over $50

billion. Id. at 948. In 1999, East Timor obtained independence from Indonesia, and was

temporarily governed by the United Nations through the United Nations Transitional

Administration of East Timor (“UNTAET”). Id. “UNTAET agreed essentially to step into

Indonesia’s shoes as Australia’s counterpart in administering and receiving revenues from

the Joint Authority.” Id. In 2002, East Timor entered into a treaty with Australia that created

a “Designated Authority” to replace the Joint Authority. Id. (footnote omitted). “One of the

Designated Authority’s first acts was to enter into numerous production sharing contracts

with ConocoPhillips, facilitating ongoing extraction efforts that were predicted to provide

billions of dollars of revenue to East Timor.” Id. According to the complaint, “[t]here was

no bidding or reassessment; all Designated Authority production sharing contracts were

awarded to organizations with previous contracts under the Australian-Indonesian Joint

Authority.” Oceanic Exploration, 352 F. App’x at 948. Oceanic approached officials in East

Timor and sought to implement a different plan. Id. Oceanic’s plan “would have involved

a suit in the International Court of Justice (ICJ), asking the court to declare a border between

East Timor and Australia, such that East Timor would acquire sole rights over lucrative

production areas in the Timor Gap.” Id. The East Timorese officials rejected Oceanic’s

plan, and Australia later withdrew from the maritime boundary jurisdiction of the ICJ. Id.

at 948–49. Oceanic engaged in numerous efforts, explained in the complaint, to obtain rights

to be involved in Timor Gap oil and gas operations, but with no success. See id. at 949.

Oceanic ultimately filed an amended complaint that was not based on historical interests

related to the Portuguese concession, but which “assert[ed]that East Timorese independence

abrogated ConocoPhillips’srightsin the Timor Gap, and that Oceanic was positioned to pull

East Timor away from ConocoPhillips, but that ConocoPhillips prevented this by bribing

East Timorese officials.” Id. Oceanic alleged that “‘East Timorese political leaders,

including [Prime Minister] [Alkatiri], were adamant that East Timor would not recognize any

interest that had been awarded in the Timor Gap while Indonesia occupied East Timor,

including the ConocoPhillips defendants’ production sharing contracts.’” Oceanic

Exploration, 352 F. App’x at 949 (second alteration in original) (footnote omitted).

According to the complaint “ConocoPhillips delivered millions of dollars in cash and goods

to East Timorese officials in secret transactions and transactions disguised as humanitarian

aid. . . . [because] it feared the political transition could upset its lucrative operations in the

Timor Gap.” Id. at 950. The complaint raised seven causes of action, with the following at

issue on appeal: “(1) violation and (2) conspiracy to violate [RICO], (3) violation of the

Robinson-Patman Act, and common law (4) intentional interference with prospective

economic advantage and (5) unfair competition.” Id. (footnote omitted). The district court

dismissed Oceanic’s claims on the pleadings, finding that Oceanic failed to plead proximate
297

causation. Id. The Fifth Circuit affirmed.

The Fifth Circuit explained the district court’s analysis:

The district court below concluded that Oceanic failed to

plead proximate causation because the alleged bribery, assuming it

occurred, could only have caused the alleged harm to Oceanic by

means of a highly improbable series of hypothetical events and

decisions by the affected countries and entities. It determined that in

order for Oceanic to prevail,

[the] facts must be that if ConocoPhillips had not

bribed East Timor: (a) East Timor would have chosen

to abrogate the concessions, (b) Australia would have

acquiesced, (c) East Timor would have reopened

bidding, (d) Oceanic would have been permitted to

bid, (e) Oceanic would have won the bid, and (f)

Oceanic would have correctly developed the

concession so that it was profitable.

2008 WL 1777003[,] at *4. The court concluded that the Complaint

failed to adequately plead any of these circumstances.

Id. at 951 (first alteration in original). The Fifth Circuit agreed that “at least some of these

circumstances [we]re not plausibly pleaded in Oceanic’s Complaint, and conclude[d] that

Oceanic’s failure to properly plead one of them in particular require[d] affirmance.” Id.

(footnote omitted). The court explained that “Oceanic’s claims fail[ed] to rise above the

speculative level, because they fail[ed] to address the interests and influence of Australia.”

Oceanic Exploration, 352 F. App’x at 951. The court continued:

Oceanic repeatedly alleges that, absent bribery of Alkatiri,

Oceanic would have been allowed to bid, and would successfully

have bid, to displace ConocoPhillips’s ongoing, multibillion-dollar

operations in the Timor Gap. In particular, Oceanic claims in

conclusory terms that the East Timor Constitution abrogated

ConocoPhillips’s contracts, and that Alkatiri had unilateral power to

determine whether those contracts would be renewed. These

allegations fail the test of common sense plausibility when considered

together with other allegations in the Complaint concerning Australia.

The quoted portion of the East Timor Constitution merely indicates

that contracts over East Timor’s natural resources were obviated

unless reaffirmed. But, as pleaded in the Complaint, the Timor Gap

is a “gap” because the border between East Timor and Australia is

uncertain—the two countries claim overlapping territory.
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Assuming, absent bribery, that East Timor was willing to

consider replacing ConocoPhillips with Oceanic, the Complaint

presents no reason to believe Australia would have allowed this to

happen. To the contrary, the Complaint describes Oceanic and

Australia as adversaries at every historical stage. It alleges that

Australia defied international opinion and subverted Oceanic’s

Portuguese concession by collaborating with Indonesia after an

illegitimate invasion. It alleges that Oceanic supported an

unsuccessful ICJ suit to declare that Portugal, rather than Indonesia

and Australia, had rights to the Timor Gap. And it alleges, more

recently, that Oceanic tried to convince East Timor to turn its back on

Australia and build a pipeline to East Timor and a liquified natural

gas facility on East Timorese soil, rather than accepting proceeds

from a pipeline leading to a new facility in Australia. The Complaint

provides no plausible grounds to believe Australia would have

desired—or tolerated—disruption of its long-standing, extremely

lucrative collaboration with ConocoPhillips in response to East

Timor, which Oceanic describes as a “new and impoverished island

nation,” replacing Indonesia as its counterpart across the Gap. Thus,

even assuming ConocoPhillips attempted to influence East Timor

through bribery, the Complaint provides no plausible grounds to

conclude that, absent such bribery, Oceanic could have usurped

ConocoPhillips’s operations.

Id. at 951–52 (footnote omitted). The court noted that “the Complaint implicitly

acknowledge[d] that Oceanic had no genuine expectation of disrupting Australia’s

relationship with ConocoPhillips; it instead allege[d] that Oceanic tried to convince East

Timor to start a formal border dispute and claim large portions of the Timor Gap for itself”;

that “Portugal previously tried to assert rights to the Timor Gap in the ICJ, but that the ICJ

rejected the suit because Indonesia did not submit to its jurisdiction”; and that “Oceanic’s

plan involved an ICJ suit against Australia, and that shortly after Oceanic presented the plan,

Australia announced its withdrawal from the jurisdiction of the ICJ maritime boundaries.”

Id. at 952. The court cited a pre-Twombly case to note that it had “often said that a party

cannot state a claim by pleading legal conclusions.” Id. (citing Ferrer v. Chevron Corp., 484

F.3d 776, 780 (5th Cir. 2007)). The court explained that “[i]t t[ook] conclusory pleading to

new levels to have proximate causation rest on a politically disruptive, hypothetical lawsuit

between nations.” Id. The court held: “Because Oceanic fails to plead facts plausibly

demonstrating that it would have had an opportunity to replace ConocoPhillips in the Timor

Gap in the absence of bribery, we conclude that the causal link is ‘overly attenuated,’ and

that the alleged violation did not ‘le[a]d directly to the plaintiff’s injuries.’” Id. (alteration

in original) (internal citations omitted). Because proximate causation was not adequately

alleged, the Fifth Circuit affirmed the grant of the motion for judgment on the pleadings.

Id. at 953.
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• Jebaco, Inc. v. Harrah’s Operating Co., 587 F.3d 314 (5th Cir. 2009). The plaintiff brought

federal antitrust claims against Pinnacle Entertainment, Harrah’s Operating Company, and

several subsidiaries of Harrah’s. The district court dismissed under Rule 12(c), finding the

claims barred by the state action doctrine and Noerr-Pennington petitioning immunity. Id.

at 315–16. The complaint alleged that under a contract with Harrah’s predecessor, the

plaintiff was entitled to receive a portion of the rent at two berths in Lake Charles, Louisiana.

Id. at 316. The rent was a per-patron fee. Id. Harrah’s eventually took over the payment

obligation. Id. After Hurricane Rita damaged one of Harrah’s riverboats docked at the

berths, Harrah’s ceased operating at that location, stopped its per-patron fee payments to the

plaintiff, and solicited bids for two riverboats, the associated gaming licenses, and the real

property associated with the berths. Id. Jebaco placed a bid, but Harrah’s sold to Pinnacle

for $70 million, which Jebaco asserted was greater than the property’s value. Jebaco, 587

F.3d at 316. “Jebaco’s complaint alleged that Harrah’s and Pinnacle violated the Sherman

Act, 15 U.S.C. §§ 1–2, by dividing the Louisiana casino market and by monopolizing,

attempting to monopolize, and conspiring to monopolize that market. Jebaco assert[ed]

[that] this alleged anticompetitive conduct deprived it of both the revenue from a casino

operating at Jebaco’s berths and the ability to purchase Harrah’s assets.” Id. at 317. Jebaco

also asserted state law claims, but the district court declined to exercise supplemental

jurisdiction over those claims after it dismissed the federal claims under Rule 12(c). Id. at

317–18.

The Fifth Circuit did not decide whether the state action doctrine or Noerr-Pennington

petitioning immunity applied, but affirmed the dismissal on the alternate ground that the

complaint did not establish a plausible claim of antitrust standing. Id. at 318 (citing Iqbal,

129 S. Ct. at 1949–50). Notably, “[n]either Pinnacle nor Harrah’s contend[ed] that Jebaco’s

allegations of Sherman Act violations [we]re insufficiently detailed to ‘state a claim to relief

that [wa]s plausible on its face,’” and the Fifth Circuit “assume[d] that Jebaco’s allegations

[we]re legally sufficient under FED. R. CIV. P. 8.” Id. at 318 n.8 (quoting Iqbal, 129 S. Ct.

at 1949). Standing required showing: “1) injury-in-fact, an injury to the plaintiff proximately

caused by the defendants’ conduct; 2) antitrust injury; and 3) proper plaintiff status, which

assures that other parties are not better situated to bring suit . . . .” Id. at 318 (quoting

Doctor’s Hospital of Jefferson, Inc. v. Southeast Med. Alliance, 123 F.3d 301, 305 (5th Cir.

1997)) (quotation marks omitted). With respect to the antitrust injury element, the Fifth

Circuit noted that Jebaco alleged that “Harrah’s and Pinnacle’s alleged market division

deprived Jebaco of the per-patron fee it used to receive before Harrah’s ceased operating at

the Lake Charles berths in which Jebaco had an interest,” and that “Jebaco was deprived of

the opportunity to compete by purchasing Harrah’s Lake Charles assets because only

Pinnacle could provide Harrah’s with the opportunity to engage in anticompetitive conduct.”

Jebaco, 587 F.3d at 319. The Fifth Circuit held that “[n]either allegation fit[] comfortably

within a ‘classical’ antitrust fact pattern, and both fail[ed] to allege antitrust injury.” Id.

The court noted that the first allegation related to Jebaco’s position as a landlord/supplier of

a berth, and that “Jebaco characterize[d] the loss of its per-patron fee ‘interest’ as injury to

its ‘competitive position,’” but stated that “how it was competing or against whom in receipt
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of the fees is a blank.” Id. at 320. The court noted that “[u]nder Twombly, . . . we must

accept Jebaco’s factual allegations but are not bound to its legal conclusions.” Id. The court

found that “[t]he closest, albeit imperfect, market analogies to the Jebaco-casino operator

relationship are those of landlord-tenant or supplier customer,” but that “[t]hose

relationships, when terminated or modified as a byproduct of ‘downstream’ anticompetitive

conduct, have rarely been held to inflict antitrust injury.” Id. (citation omitted). The court

further explained that in the present case, “the market division ha[d] little or nothing to do

with Jebaco’s lost per-patron fees” because “[h]ad Pinnacle remained at Jebaco’s preferred

berths and kept paying the fees, the alleged market division would still have occurred, and

Jebaco would be uninjured.” Id. The court also explained that “[a]lternatively, if a different

firm had purchased Harrah’s assets, it too might have chosen not to operate at Jebaco’s

preferred berths,” and “[n]o antitrust violation would have occurred, but Jebaco would have

suffered the same injury.” Jebaco, 587 F.3d at 320 (citation omitted). The court concluded

that “Pinnacle’s choice to change berths, a choice wholly independent of any antitrust

violation, was the cause of Jebaco’s injury.” Id. The court stated:

The federal antitrust laws protect competition, not competitors. A

lessor’s or supplier’s injury is not injury to competition except, for

instance, where the injury is the direct result of an illegal refusal to

deal or a tying violation. Jebaco did not allege that Pinnacle’s choice

to reposition its licenses in Lake Charles was itself an anticompetitive

act.

Id. at 320–21. Because “Jebaco’s loss of its per-patron fees [wa]s neither the type of injury

antitrust law was designed to prevent, nor did it flow from any anticompetitive conduct of

Harrah’s and Pinnacle[,] . . . Jebaco did not have antitrust standing to sue.” Id. at 321.

Jebaco also “characteriz[ed] itself, in wholly conclusional terms, as a ‘potential competitor’

of Harrah’s and Pinnacle [as] a ‘potential bidder’ for the casino assets,” and “assert[ed] that

their market division conspiracy eliminated its ability to enter the market utilizing its Lake

Charles berthing interest.” Id. The court stated that “[c]ertain theoretical objections” could

be “raised against this claim”:

For instance, potential competitors must meet a threshold of

preparedness to enter a market before they may seek damages from

anticompetitive exclusion. Jayco Systems, Inc. v. Savin Business

Machines Corp., 777 F.2d 306, 313–16 (5th Cir. 1985) (citing Martin

v. Phillips Petroleum Company, 365 F.2d 629, 633 (5th Cir. 1966)).

Such threshold proof is necessary to protect antitrust litigation from

frivolous claims. Following Twombly and Iqbal, it is likely that

Jebaco’s mere allegations of potential competitor status, without any

facts to demonstrate its financial status or its ability to fulfill the

demanding requirements of Louisiana gaming law, are insufficiently

pled. Further, any potential competitor’s antitrust claim would have
301

to be viewed skeptically in a market where entry is fully controlled by

a regulatory body.

Id. (emphasis added). Despite the theoretical objections, the court “assume[d] arguendo that

Jebaco satisfactorily pled its preparedness and ability to compete in the casino operating

market,” Jebaco, 587 F.3d at 321, but still found the allegations insufficient. The court held

that “[e]ven as a potential competitor, . . . Jebaco’s injury did not ‘flow [ ] from’ an antitrust

law violation,” id. (citation omitted) (second alteration in original), because “Jebaco would

have suffered the same harm whether Harrah’s retained its Lake Charles assets or sold them

to any party other than Pinnacle.” Id. The court further held that “Harrah’s selection of

Pinnacle from among a number of bidders [wa]s distinct from the decision to maintain or

reject berths where Jebaco owned an interest, and it [wa]s that interest alone which

support[ed] Jebaco’s status as a potential competitor.” Id. at 322. The court concluded: “Put

differently, any conspiracy between Harrah’s and Pinnacle to dominate the casino market

operated independently of Jebaco’s interest. Jebaco, even as a potential competitor, was at

most a collateral casualty of the Harrah’s-Pinnacle market division agreement.” Id.

• Floyd v. City of Kenner, La., 351 F. App’x 890, 2009 WL 3490278 (5th Cir. 2009)

(unpublished) (per curiam). The plaintiff brought a civil rights action against the City of

Kenner and four police officers. Id. at *1. The plaintiff was the City’s chief administrative

officer and oversaw a center that distributed food and supplies after Hurricane Katrina. Id.

The complaint alleged that in delivering items, the plaintiff ran into then-Chief of Police

Nick Congemi, and the two had a verbal exchange based on Congemi viewing the plaintiff

as a political nemesis. Id. The next day, National Guardsman from the center complained

that the plaintiff was illegally distributing some supplies. Id. One of the National

Guardsman was patrolling the plaintiff’s neighborhood and, together with another defendant,

entered the plaintiff’s property, allegedly in response to a house alarm, and saw relief items

in plain view. Id. Based on this incident, a search warrant was procured, the police seized

the supplies from the plaintiff’s home, and the plaintiff was arrested, but never prosecuted.

Floyd, 2009 WL 3490278, at *1. The plaintiff’s complaint named the City, the then-police

chief of investigations (Caraway), Congemi, the police detective who filed the affidavits in

support of the search and arrest warrants (Cunningham), and the police officer who entered

the plaintiff’s property with the National Guardsman (Deroche). Id. The plaintiff sued the

police officers in both their official and individual capacities, and these defendants asserted

a defense of qualified immunity. Id. at *1–2.

The court noted that in reviewing the claims against the officers, it was “guided both by the

ordinary pleading standard and by a heightened one.” Id. at *2 (citing Schultea v. Wood, 47

F.3d 1427, 1433–34 (5th Cir. 1995) (en banc)). The court “emphasize[d] that this heightened

pleading standard applie[d] only to claims against public officials in their individual

capacities,” explaining that “[t]he Supreme Court’s decision in Leatherman v. Tarrant

County Narcotics and Intelligence Coordination Unit, 507 U.S. 163 (1993), made clear that

a heightened pleading standard was inapplicable to suits against municipalities.” Id. at *2

n.2. The court also noted that “the heightened pleading standard [wa]s inapplicable to claims
302

against public officials in their official capacity,” because “‘official-capacity lawsuits are

typically an alternative means of pleading an action against the governmental entity involved

. . . .’” Id. (quoting Baker v. Putnal, 75 F.3d 190, 195 (5th Cir. 1996)). The court explained

that “once a defendant asserts the defense of qualified immunity, a district court may order

the plaintiff to submit a reply after evaluating the complaint under the ordinary pleading

standard”; that “more than mere conclusions must be alleged”; that “‘a plaintiff cannot be

allowed to rest on general characterizations, but must speak to the factual particulars of the

alleged actions, at least when those facts are known to the plaintiff and are not peculiarly

within the knowledge of defendant’”; and that “‘[h]eightened pleading requires allegations

of fact focusing specifically on the conduct of the individual who caused the plaintiff’s

injury.’” Floyd, 2009 WL 3490278, at *2 (citations omitted).

With respect to Deroche, the district court held that although there was a possible

constitutional violation, qualified immunity applied because the conduct “‘was not

objectively unreasonable in light of clearly established law.’” Id. at *3. The Fifth Circuit

held that the plaintiff adequately responded in his reply to Deroche’s statement in his answer

that Deroche had only responded to an alarm, explaining that the reply “directly challenge[d]

the claim that the alarm created the probable cause for Deroche to go to Floyd’s residence.”

Id. The court rejected the argument that Deroche’s actions had to be considered in light of

the chaos that followed Hurricane Katrina, finding that there may be no support for the

plaintiff’s claims that Deroche took advantage of the chaos, “[b]ut the claim exists.” Id. at

*4. The court noted that in certain cases, it may be appropriate to grant discovery before

dismissing a claim:

In Schultea, we adopted the rationale that, “in some cases,

such as in search cases, probable cause and exigent circumstances

will often turn on facts peculiarly within the knowledge of the

defendants. And if there are conflicts in the allegations regarding the

actions taken by the police officers, discovery may be necessary.”

Schultea, 47 F.3d at 1432 (citing Anderson v. Creighton, 483 U.S.

635, 646 n.6, 107 S. Ct. 3034, 97 L. Ed. 2d 523 (1987)). Here, the

Defendants ask us to accept that Deroche entered the property for the

sole purpose of determining if relief items were present. At the time,

Deroche alleged he entered because of the alarm. Floyd asserts that

Deroche knew that Floyd was not misappropriating relief items;

instead, the entry into the property was all about embarrassing Floyd

because of his past run-ins with then-Chief of Police Congemi.

Id. (emphasis added). The court concluded that “[t]his is the type of conflict that warrants

discovery,” and that “[t]he district court should not have dismissed the claim.” Id.

With respect to Cunningham, the district court held that the complaint did not allege

sufficient facts to support a constitutional violation. Floyd, 2009 WL 3490278, at *5. The

Fifth Circuit concluded that the allegation that “an affiant intentionally acted by way of an
303

omission in order to cause a constitutional violation” was a claim in which “state of mind is

a critical element . . . .” Id. The court held that “[a]t a later stage, Floyd w[ould] be required

to ‘produce specific support for his claim of unconstitutional motive,’” but that “[a]t the

pleading stage, his allegation that Cunningham’s actions were spurred byCongemi’s ill will

suffice[d].” Id. (citation omitted). The court concluded that while some allegations were

insufficient, the allegations as a whole stated a claim against Cunningham:

To be sure, certain portions of Floyd’s Schultea reply are

insufficient to state a plausible claim. Floyd, for example, averred

that Cunningham’s affidavit contained “statements of which he had

no personal knowledge” that were “sworn to by him in reckless

disregard of the truth.” The Supreme Court emphasized in Iqbal that

such “[t]hreadbare recitals of the elements of a cause of action,

supported by mere conclusory statements, do not suffice.” 129 S. Ct.

at 1949.

But viewed in their entirety, Floyd’s pleadings contain more.

The Schultea reply points out that Cunningham’s affidavit stated that

Floyd was observed loading supplies in a City of Kenner truck on

September 19, 2005, at the center, which is located at 2500 Williams

Boulevard. Cunningham’s affidavit also stated that the items seen in

plain view by Deroche at Floyd’s home “were identical to the ones

observed on the bed of the City of Kenner truck” at the center on

September 19. Floyd’s pleadings allege that Cunningham knew this

statement to be false because the center was relocated from 2500

Williams Boulevard on September 17 and 18, so a City of Kenner

truck certainly was not present at 2500 Williams Boulevard on

September 19. Floyd further alleges that Cunningham knew Floyd

was the managing supervisor of the center and that he possessed “full

authority to handle[,] dispose and deliver all hurricane supples.” It is

said that Cunningham nonetheless left this relevant if not critical

information out of his affidavit in order to mislead the magistrate.

Taken as true, these facts are sufficient at least to survive Rule

12(b)(6) dismissal. Floyd’s complaint alleges, with factual

specificity, the type of harm that was found unconstitutional in

Franks [v. Delaware, 438 U.S. 154 (1978)]. Accordingly, the alleged

violation was “clearly established” at the time Cunningham acted. In

addition, Cunningham’s alleged intentional actions were not

objectively reasonable. We therefore reverse the district court’s

dismissal of the claims against Cunningham.

Id. (first and second alterations in original).
304

With respect to Caraway, Floyd alleged that Caraway participated in the applications for the

arrest and search warrants based on facts he knew were false, which resulted in Floyd’s arrest

without probable cause. Id. at *6. Floyd also alleged that Caraway failed to return the items

seized from Floyd’s property. Id. The court noted that “‘[b]ecause vicarious liability is

inapplicable to . . . § 1983 suits, a plaintiff must plead that each Government-official

defendant, through the official’s own individual actions, has violated the Constitution.’”

Floyd, 2009 WL 3490278, at *6 (quoting Iqbal, 129 S. Ct. at 1948). Citing Schultea, a preTwombly case, the court stated it had to “determine whether Floyd alleged the ‘factual

particulars’ necessary to state a valid Fourth Amendment claim against Caraway.” Id. The

court examined Iqbal, noted that “[i]t [wa]s clear, . . . that in the arena of qualified immunity

(but surely not solely in this arena), discovery [wa]s not the place to determine if one’s

speculations might actually be well-founded,” and concluded that “[c]onsistent with [its]

holding in Schultea, the pleadings must have sufficient precision and factual detail to reveal

that more than guesswork is behind the allegation.” Id. at *7 (citing Schultea, 47 F.3d at

1434). The court noted that limited discovery can, at times, be appropriate before ruling on

a defense of qualified immunity, but explained:

The importance of discoveryin such a situation is not to allow

the plaintiff to discover if his or her pure speculations were true, for

pure speculation is not a basis on which pleadings may be filed. Rule

11 requires that any factual statements be supported by evidence

known to the pleader, or, when specifically so identified, “will likely

have evidentiary support” after discovery. FED. R. CIV. P. 11(b)(3)

(emphasis added). There has to be more underlying a complaint than

a hope that events happened in a certain way. Instead, in the “short

and plain” claim against a public official, “a plaintiff must at least

chart a factual path to the defeat of the defendant’s immunity, free of

conclusion.” Schultea, 47 F.3d at 1430. Once that path has been

charted with something more than conclusory statements, limited

discovery might be allowed to fill in the remaining detail necessary

to comply with Schultea. Id. at 1433–34.

Id. (emphasis added). The court concluded that the allegations against Caraway were

insufficient:

Under these standards, Floyd’s allegations against Caraway

amount to nothing more than speculation. The conclusory assertion

that Caraway “participated in, approved and directed” the filing of

false and misleading affidavits is consistent with finding a

constitutional violation, but it needed further factual amplification.

See Iqbal, 129 S. Ct. at 1949. Floyd might not know everything about

what occurred, but the bare allegation does not make it plausible that

he knows anything. Unlike his allegations against Cunningham, this

bare assertion does not provide any detail about what Caraway, as
305

chief of investigations, did to seek to control Cunningham’s filing of

an affidavit. Put differently, the conclusion presents nothing more

than hope and a prayer for relief.

Id. at *8 (emphasis added). The court held that because “Floyd ha[d] shown nothing in his

complaint to indicate a basic plausibility to the allegation[,] . . . [h]is Section 1983 claim

premised on a Fourth Amendment violation . . . fail[ed].” Id. With respect to the allegation

that Caraway had failed to return Floyd’s property, the court concluded that Louisiana

provided a remedy, barring relief under § 1983. Floyd, 2009 WL 3490278, at *8. Because

Floyd “failed to allege specific facts that constitute[d] a deprivation of either his Fourth or

Fourteenth Amendment rights,” the court found that “the district court’s dismissal with

respect to the claims against Caraway was correct.” Id. at *9.

With respect to Congemi, Floyd alleged that Congemi personally directed efforts to have the

false affidavits filed, and that the affidavits led to Floyd’s arrest. Id. at *9. The district court

held, and the Fifth Circuit agreed, that “‘none of the ‘facts’ alleged as to Congemi

amount[ed] to a violation of a clearly established constitutional right.’” Id. The Fifth Circuit

explained:

Floyd has failed to provide sufficient factual detail concerning

Congemi’s alleged attempts at personally directing his subordinate

officers to file misleading affidavits. Other than a general

background of why Congemi would have animosity towards Floyd,

no facts are alleged that reveal any specifics of how Congemi

personally told other officers to conspire against Floyd. Moreover,

Floyd’s sweeping statement that Congemi attempted to persuade the

district attorney to prosecute him, even though Congemi knew that

Floyd was authorized to handle the supplies, does not shed further

light on the subject. The claims against Congemi lack the detail

needed to render them plausible. See Iqbal, 129 S. Ct. at 1949.

Accordingly, they were appropriately dismissed.

Id.

Finally, with respect to the claims against the City, the court concluded that “Floyd ha[d]

alleged no facts that would support an inference that the police offers acted pursuant to a

policy or custom,” and that the claim against the City was properly dismissed. Id.

• Gonzalez v. Kay, 577 F.3d 600 (5th Cir. 2009), cert. denied, 130 S. Ct. 1505 (2010). The

plaintiff alleged that one of the defendants sent him a collection letter that violated the Fair

Debt Collection Practices Act (FDCPA). The district court dismissed the case for failure to

state a claim, but the Fifth Circuit reversed. “Gonzalez asserted in his complaint that the

letter was deceptive in that the Kay Law Firm ‘pretended to be a law firm with a lawyer

handling collection of the Account when in fact no lawyer was handling the Account or
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actively handling the file.’” Id. at 602. The Fifth Circuit explained that “Gonzalez

essentially contends that the Kay Law Firm is not actually a law firm at all but instead is a

debt collection agency that used the imprimatur of a law firm to intimidate debtors into

paying their debts.” Id. at 602–03. The FDCPA, in relevant part, “prohibits ‘[t]he false

representation or implication that any individual is an attorney or that any communication

is from an attorney,’” and “‘[t]he use of any false representation or deceptive means to

collect or attempt to collect any debt or to obtain information concerning a consumer.’” Id.

at 603–04 (citing 15 U.S.C. §§ 1692e(3), 1692e(10)) (alterations in original). There was “no

dispute that Gonzalez [wa]s a ‘consumer’ under the FDCPA and that Kay and the Kay Law

Firm [we]re ‘debt collectors’ under the [FDCPA].” Id. at 604 (citing 15 U.S.C. § 1692a(3),

(6)).

The court discussed the Twombly/Iqbal standard for dismissal in the “standard of review”

section of the opinion, but did not cite those cases later in the opinion. The court examined

the case law regarding letters under the FDCPA, and concluded that “the main difference

between the cases is whether the letter included a clear prominent, and conspicuous

disclaimer that no lawyer was involved in the debt collection at that time.” Id. at 606. The

court explained that some letters were not deceptive as a matter of law, some were so

deceptive and misleading as to violate the FDCPA as a matter of law, and others fell in the

middle. Gonzalez, 577 F.3d at 606–07. The Fifth Circuit concluded that the letter at issue

fell in the middle ground, and that the district court had therefore prematurely dismissed the

complaint. Id. at 607.

Sixth Circuit

• Patterson v. Novartis Pharm. Corp., No. 10-5886, 2011 WL 3701884 (6th Cir. Aug. 23,

2011) (unpublished). Plaintiff Margaret Patterson filed a complaint against defendant

Novartis Pharmaceuticals Corp, a drug manufacturer, alleging that she suffered harm as a

result of infusions of Aredia, a drug manufactured by defendant Novartis. The plaintiff,

invoking the court’s diversity jurisdiction, alleged products liability under Massachusetts

state law. The court of appeals explained:

This case arises out of a series of lawsuits filed by individuals

who developed osteonecrosis of the jaw, a severe bone disease

affecting the jaw, allegedly as a result of taking Zometa and Aredia.

Zometa and Aredia are prescription bisphosphonate drugs produced

by Novartis that are given intravenously, most often to patients with

cancerous conditions. The drugs are effective at preventing

pathological fractures, spinal cord compression, and other bone pains.

Although the Food and Drug Administration approved both drugs,

many individuals claim to have developed osteonecrosis of the jaw as

a result of receiving this medication. Osteonecrosis of the jaw results

in the gums being eaten away until the bone is exposed.
307

Patterson alleges that she developed osteonecrosis of the jaw

as a result of drug infusions she received, and brought suit against

Novartis as well as several pharmaceutical companies that began

marketing generic versions of Aredia after Novartis’s patent

protection expired. In pertinent part, Patterson's complaint states that

she was infused with “Aredia and/or generic Aredia (pamidronate).”

Id. at *1 (footnote omitted).

The district court granted the defendant’s motion to dismiss on the ground that the complaint

did not contain sufficient facts to allege that the plaintiff had taken Aredia manufactured by

Novartis, as distinguished from some generic version of Aredia manufactured by another

company. The district court also denied the plaintiff’s motions for leave to conduct

discovery and leave to amend her complaint.

The Sixth Circuit affirmed the district court’s dismissal of plaintiff’s complaint. The court

of appeals stated:

The district court properly granted Novartis’s motion to

dismiss because Patterson’s complaint does not sufficiently allege

that she received infusions of Aredia manufactured by Novartis.

Massachusetts law requires that a plaintiff suing a manufacturer in a

product-liability action be able to prove that his or her injury can be

traced to that specific manufacturer. Mathers v. Midland–Ross

Corp., 532 N.E.2d 46, 48–49 (Mass. 1989). Here, the complaint

alleges only a possibility that the infusions Patterson received were

of Aredia manufactured by Novartis. The complaint does not allege

when Patterson received these infusions, how many infusions she

received, or any other facts specific to her treatment.

The plausibility pleading standard set forth in Twombly and

Iqbal requires that Patterson have pled enough facts to state a claim

for relief that is plausible on its face. Iqbal, 129 S. Ct. at 1950. A

complaint that allows the court to infer only a “mere possibility of

misconduct” is insufficient to “show” that the complainant is entitled

to relief and fails to meet the pleading requirements of Rule 8. Id.

The assertion that Patterson received “Aredia and/or generic Aredia

(pamidronate)”means that Patterson could have received only Aredia

manufactured by Novartis. Or, she could have received both Aredia

and generic Aredia, which would be sufficient to state a claim against

Novartis. However, as pled, it is also entirely plausible that Patterson

received infusions of only generic Aredia that Novartis did not

manufacture: it is this possibility that is fatal to her complaint.

Because the complaint only permits us to infer the possibility that
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Patterson received infusions of Aredia manufactured by Novartis, it

fails to satisfy the pleading standards set forth in Twombly and Iqbal.

Therefore, the district court properly granted judgment on the

pleadings in favor of Novartis.

In reaching this conclusion we stress that “plausibility,”

however, “is not akin to a probability requirement.” Iqbal, 129 S.

Ct. at 1949. To proceed past the pleading stage a plaintiff need not

establish that the alleged acts actually occurred or likely occurred

with a sufficiently high probability. See Weston Carpet & Floor

Covering, Inc. v. Mohawk Indus., ––– F.3d ––––, Nos. 09–6140,

09–6173, 2011 WL 2462833, *5 (6th Cir. June 22, 2011); Courie,

577 F.3d at 629–30. While Patterson’s complaint strongly suggests

that she received Aredia manufactured by Novartis, she pled herself

out of relief by specifically asserting that she may have received

infusions of only generic Aredia. In this case, it is the “/or” that

prevents Patterson’s claim from proceeding. Although the Supreme

Court has continued to stress that “Rule 8 marks a notable and

generous departure from the hyper-technical, code-pleading regime

of a prior era,” Iqbal, 129 S. Ct. at 1950, we have, to some extent,

crept back towards those earlier standards. However, construing this

complaint in a light most favorable to Patterson, it fails to allege

anything more than a possibility that she received Aredia infusions

and, therefore, does not meet the requirements of Twombly and Iqbal.

Id. at *2 (emphasis added).

The court of appeals also affirmed the district court’s denials of the plaintiff’s motions for

leave to conduct discovery and for leave to amend her complaint. The court reasoned,

Patterson was not entitled to conduct discovery and gather the

facts necessary to cure the defects in her pleading, and the district

court properly refused to consider materials outside the pleadings

when addressing Novartis’s motion to dismiss. Finally, because

Patterson did not request leave to amend her complaint until after the

district court granted Novartis’s motion to dismiss, the district court

did not abuse its discretion by denying permission to amend.

A. Leave to Conduct Discovery.

Patterson is not entitled to discovery to determine whether her

doctors infused her with Aredia manufactured by Novartis. The

Supreme Court’s decisions in Twombly and Iqbal do not permit a

plaintiff to proceed past the pleading stage and take discovery in
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order to cure a defect in a complaint. E.g., Iqbal, 129 S. Ct. at 1950;

see New Albany Tractor, 2011 WL 2448909, at *3 (“The language of

Iqbal, ‘not entitled to discovery,’ is binding on the lower federal

courts.”). Therefore, the district court did not err by denying

Patterson leave to conduct discovery.

B. Reliance on Information Outside the Pleadings.

Patterson argues that her medical records show that she

received Aredia infusions before Novartis’s patent protection expired

and, therefore, Novartis must have manufactured the drug she

received at that time. However, Patterson never requested that

Novartis’s motion to dismiss be converted to a motion for summary

judgment. District courts may only consider matters outside the

pleadings in deciding a motion to dismiss if they treat the motion as

one for summary judgment under Rule 56. Fed.R.Civ.P. 12(d); Jones

v. City of Cincinnati, 521 F.3d 555, 562 (6th Cir. 2008). Therefore,

because the district court did not convert the motion to dismiss into

a motion for summary judgment, it properly ruled on this motion

without considering these other documents.

C. Leave to Amend.

. . . . 

The district court did not abuse its discretion by denying

Patterson’s initial request for leave to amend because that request was

not sufficiently particular. The Rules provide that when requested,

courts “should freely give leave [to amend] when justice so requires.”

FED.R.CIV.P. 15(a)(2). However, a motion for leave to amend must

state with particularity the grounds for amendment. FED. R. CIV. P.

7(b), 15(a)(2); Evans v. Pearson Enters., Inc., 434 F.3d 839, 853 (6th

Cir.2006). In Evans, this Court held that requesting leave to amend

in a single sentence without providing the grounds for the amendment

or a proposed amended complaint was not a sufficiently particular

request, and the district court did not abuse its discretion by denying

the motion. 434 F.3d at 853. Here, Patterson only mentioned the

possibility of amendments in the very last sentence of her opposition

brief to the district court when she stated, “[i]n the alternative,

Plaintiffs request an opportunity to amend the Complaint.” This is

not a sufficiently particular request. Additionally, Patterson also had

not included a proposed amended complaint with this request.

Therefore, because this request was not sufficiently particular, the

district court did not abuse its discretion in denying this request.
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Similarly, the district court did not abuse its discretion by

denying the formal motion to amend that Patterson filed after the

district court had already granted Novartis’s motion to dismiss. This

Court has previously noted that ‘[p]laintiffs [are] not entitled to an

advisory opinion from the district court informing them of the

deficiencies of the complaint and then an opportunity to cure those

deficiencies.” Winget v. JP Morgan Chase Bank, N.A., 537 F.3d 565,

573 (6th Cir. 2008) (alteration in original, citation and internal

quotation marks omitted). After a district court grants a motion to

dismiss, a party may not seek to amend his or her complaint without

first moving to alter, set aside, or vacate the judgment pursuant to

Rule 59 or 60. Benzon v. Morgan Stanley Distribs., Inc., 420 F.3d

598, 613 (6th Cir. 2005). The district court noted that Patterson had

not shown a clear error of law, newly discovered evidence,

intervening change in controlling law, or need to alter the opinion to

prevent manifest injustice. Cf. Roger Miller Music, Inc. v. Sony/ATV

Publ’g, LLC, 477 F.3d 383, 395 (6th Cir. 2007) (requiring that

motion under Rule 59(e) establish a manifest error of law or present

newly discovered evidence). Therefore, the district court did not

abuse its discretion by denying Patterson’s motion to amend.

Id. at *3 (emphasis added).

• Havard v. Wayne Cnty., No. 09-1235, 2011 WL 3648226 (6th Cir. Aug. 19, 2011)

(unpublished). Chelsie Barker, a minor, through her guardian, plaintiff Loraine Havard, filed

a complaint under § 1983 against three employees of the Wayne County Jail—Deputy

Puntuer, Deputy Griffin, and nurse C. Frazier. The complaint alleged that the defendants

were deliberately indifferent to baby Chelsie’s serious medical needs after she was born in

the Wayne County Jail. The court of appeals summarized the allegations of the complaint

as follows:

The complaint alleges that Chantrienes Barker, mother of Chelsie,

was being involuntarily detained in the Wayne County Jail while she

was pregnant. On December 2, 1998, at approximately 3:00 a.m.,

Barker alerted Griffin, the guard on duty, that she was having labor

pains. Griffin told the jail’s nursing station. The nursing station

made Barker remain in her cell to wait until her pre-scheduled

doctor’s appointment, which was more than seven hours away.

Griffin did nothing more. While she waited, Barker was experiencing

contractions. At approximately 9:28 p.m. on December 2, the Wayne

County Jail staff took Barker to Hutzel Hospital, where she was

evaluated by a physician. There she was electronically monitored,

given pain medication, and noted to be dilated to 2 centimeters. At

roughly 11:28 p.m., the physician ordered that Barker be returned to
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the Wayne County Jail. Upon her return to jail, Barker was locked

up. Neither Defendants nor anyone else checked on her, despite the

fact that she was in labor.

Back in her cell, Barker experienced continued contractions.

The other inmates on Barker’s cell block screamed and banged on

toilets and cell bars to alert Defendants that Barker required

immediate medical attention. Defendants did not respond. When they

eventually did, Barker told them that “the baby was coming out.”

Defendants ordered her to stand up, quiet down, and get dressed. 

She told them she could not move because the baby was “coming

out.” Defendants then put Barker into a wheelchair and, at

approximately 1:30 a.m. on December 3, 1998, took Barker to the

nurses’s station. Frazier contacted EMS, but did not perform any

medical assessment or provide any care to Barker, despite the fact she

was in the final stages of labor. EMS did not arrive until

approximately 1:57 a.m.

As soon as EMS arrived, the EMS medical personnel realized

that Barker’s baby “was crowning or had already crowned,” and baby

Chelsie was delivered at the Wayne County Jail. EMS noted that

Chelsie was not breathing, but neither EMS nor the jail had

equipment to resuscitate her. Barker and Chelsie were transported

back to Hutzel Hospital. Chelsie was cyanotic, with no heart rate or

respirations. At the hospital, Chelsie was immediately intubated and

CPR was initiated. Chelsie was later transferred to Children’s

Hospital of Michigan for further care. The amended complaint

alleges that, as a proximate result of Defendants’ deliberate

indifference to Chelsie’s serious medical needs, she sustained serious

injuries, including severe mental retardation and cerebral palsy.

Id. at *1.

The defendants sought judgment on the pleadings on the basis of qualified immunity and on

the grounds that baby Chelsie was a fetus when the injuries to her allegedly occurred, and

therefore not a “person” within the meaning of the Fourteenth Amendment. The district court

denied the defendants’ motion.

The district court analyzed Chelsie’s claims under the Fourteenth

Amendment, reasoning that non-convicted persons have analogous

protections to prisoners under the Due Process Clause of the

Fourteenth Amendment. The court held that “when the injuries

allegedly occurred, the minor child Chelsie was being held in jail

along with her mother and that, therefore, the state actors had a duty
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to protect and care for Chelsie.” The district court then held that

Chelsie was a “person” within the Fourteenth Amendment at the time

her claims accrued, namely at and after her birth.

The district court held that “the complaint states a claim that

Barker’s injuries were sustained during the time period following her

birth, while she was transported to the hospital, and that the cause of

her injuries was the lack of adequate medical care during and

immediately after birth.” The court concluded that the complaint

adequately alleged facts to support a claim for deliberate indifference

to Chelsie’s serious medical needs.

. . . .

The district court also rejected Defendants’ qualified immunity

defense, reasoning that the complaint alleged facts that could be

construed to constitute deliberate indifference to Chelsie’s serious

medical needs. The district court held that a reasonable person would

have known that failing to obtain medical care in that situation

constituted deliberate indifference. The court therefore rejected as

“without merit” Defendants’ argument that they were entitled to

qualified immunity because Chelsie was a fetus at the time of their

actions.

Id. at *2 (citations omitted).

The Sixth Circuit held that the complaint stated a cognizable constitutional claim, that the

district court properly held that the defendants were not entitled to qualified immunity, and

that the complaint adequately stated a claim under § 1983. In reviewing the district court’s

decision to deny judgment on the pleadings, the Sixth Circuit set out the standards for

reviewing a motion to dismiss:

To survive a motion to dismiss, the plaintiff must plead “enough

factual matter” that, when taken as true, “state[s] a claim to relief that

is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544,

556, 570, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007). “A claim has

facial plausibility when the plaintiff pleads factual content that allows

the court to draw the reasonable inference that the defendant is liable

for the misconduct alleged.” Ashcroft, 129 S.Ct. at 1949. Plausibility

requires showing more than the “sheer possibility” of relief but less

than a “probab[le]” entitlement to relief. Id. “Determining whether a

complaint states a plausible claim for relief will . . . be a

context-specific task that requires the reviewing court to draw on its

judicial experience and common sense.” Id. at 1950. However, if “the
313

well-pleaded facts do not permit the court to infer more than the mere

possibility of misconduct,” the complaint has not shown that the

pleader is entitled to relief. Id. (citing FED. R. CIV. P. 8(a)(2)).

We recently explained that:

While recent decisions of the Supreme Court establish

that, to survive a motion to dismiss, plaintiffs must

state “plausible” grounds for relief, the decisions do

not alter the basic rule that plaintiffs must plead only

the basic elements of a claim, not develop all of the

facts necessary to support the claim. See Ashcroft v.

Iqbal, 556 U.S. 662, ––––, 129 S. Ct. 1937, 1949, 173

L. Ed. 2d 868 (2009); Bell Atl. Corp. v. Twombly, 550

U.S. 544, 556–57, 562, 127 S. Ct. 1955, 167 L. Ed. 2d

929 (2007). Nor do Iqbal and Twombly displace the

general rule that we construe all reasonable

inferences, including those related to a plaintiff’s legal

theory, in favor of the claimants. See Beaudry v.

TeleCheck Servs., Inc., 579 F.3d 702, 704 (6th Cir.

2009).

Hebron v. Shelby Cnty. Gov’t, 406 F. App’x 28, 30 (6th Cir. 2010).

At the same time, “to survive a motion to dismiss, the complaint must

contain either direct or inferential allegations respecting all material

elements to sustain a recovery under some viable legal theory.”

Eidson v. State of Tenn. Dep’t of Children's Servs., 510 F.3d 631, 634

(6th Cir. 2007) (citation omitted).

Id. at *6 (emphasis added). The Sixth Circuit concluded that the complaint met this standard

and affirmed the district court’s denial of defendants’ motion for judgment on the pleadings.

The court stated:

Accepting the facts in the First Amended Complaint as true, a

reasonable factfinder could conclude that Chelsie’s imminent birth

was so obvious that any reasonable person would have recognized the

need for her immediate and proper medical attention at birth; that

Defendants actually knew of the risk; and that they were deliberately

indifferent to it. Or as the district court put it:

In the present case, the complaint alleges facts that

could be construed to constitute deliberate indifference

to Chelsie’s serious medical needs. The complaint

alleges that the infant’s mother was in active labor,
314

crying out for help, to the knowledge of the defendants,

and was left by the defendants in her cell for two

hours; that the paramedics did not arrive until the

infant was being delivered and did not have the

equipment to resuscitate the child when she was

delivered; and that all of this resulted in severe injuries

to the infant. These facts establish both the objective

and subjective components of the [deliberate

indifference] test. Thus, the allegations establish a

violation of a constitutional right.

Havard, 600 F. Supp. 2d at 859.

This case is before us upon the district court’s denial of

Defendants’ motion for judgment on the pleadings. We therefore must

construe the complaint in the light most favorable to Plaintiff and

accept her factual allegations as true. Hill v. Blue Cross & Blue Shield

of Mich., 409 F.3d 710, 716 (6th Cir. 2005). Based on those facts,

Defendants are not entitled to dismissal.

Id. at *7.

• Ctr. for Bio-Ethical Reform, Inc. v. Napolitano, 648 F.3d 365, 2011 WL 3330114 (6th Cir.

2011). Plaintiffs are the Center for Bio-Ethical Reform, Inc. (the “CBR”), Gregg

Cunningham, its executive director, and Kevin Murray, a supporter. The CBR is a non-profit

corporation devoted to anti-abortion activities, including displaying large, colorful, and

graphic images of aborted fetuses on trucks and on banners towed behind aircraft. Some of

these images are juxtaposed alongside images and quotations of President Obama. The CBR

also sponsors a traveling exhibit that compares abortion to the Holocaust.

The CBR filed a complaint against defendants Janet Napolitano, Secretary of the Department

of Homeland Security, and Attorney General Eric Holder alleging, among other things, that

the defendants violated the CBR’s constitutional rights under the First Amendment as part of

an Obama Administration policy and practice that targets for disfavored treatment those

individuals and groups deemed to be “right wing extremists” (the “RWE policy”). The

plaintiffs sought damages under Bivens and various forms of injunctive relief.

The district court granted the defendants’ motion to dismiss the complaint under Rule

12(b)(6) for failure to state a claim on which relief could be granted. The district court

explained:

Plaintiffs fail to address affirmative conduct undertaken by the

defendants. They fail to allege any time, place, or manner restrictions

that Defendants have imposed on their speech. They fail to allege that
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Defendants taxed or punished their First Amendment activities. They

fail to allege that Defendants imposed any prior restraint on their

protected speech. They fail to allege any form of retaliation by

Defendants for their exercise of protected speech on identified

occasions.

Id. at *2 (quotation marks omitted) (quoting Ctr. for Bio-Ethical Reform, Inc. v. Napolitano,

No. 09-11441, 2010 WL 1257361, at *3 (E.D. Mich. Mar. 30, 2010)).

The Sixth Circuit affirmed the district court’s dismissal for failure to state a claim. The

court’s opinion examined the complaint and failed to discern anyallegation that could survive

a motion to dismiss. The court reasoned:

We begin with Plaintiffs’ First Amendment claim, which we

evaluate under the framework set forth bythe Supreme Court in Mount

Healthy City School District Board of Education v. Doyle, 429 U.S.

274, 97 S. Ct. 568, 50 L.Ed.2d 471 (1977). See Ctr. for Bio-Ethical

Reform, Inc. v. City of Springboro, 477 F.3d 807, 821 (6th Cir. 2007).

Under Mount Healthy and its progeny, a plaintiff must show that (1)

the plaintiff was participating in a constitutionally protected activity;

(2) the defendant’s action injured the plaintiff in a way likely to deter

a person of ordinary firmness from further participation in that

activity; and (3) the adverse action was motivated at least in part by the

plaintiff’s protected conduct.

. . . .

. . . . [A] First Amendment retaliation claim requires an

“adverse action” by the defendant that “would deter a person of

ordinary firmness from continuing to engage in the kinds of protected

conduct in which [the plaintiff] was engaging.” Id. (internal quotation

marks and citations omitted). Adverse actions that may deter a person

of ordinary firmness from exercising protected conduct may include

“harassment or publicizing facts damaging to a person's reputation.”

Id. at 724 (citing Thaddeus–X, 175 F.3d at 396). . . .

As applied to this case, the operative question is whether

Plaintiffs have adequately pleaded that Defendants’ actions would be

sufficient to deter a citizen of ordinary firmness from participating in

meetings or otherwise criticizing federal officials about matters

relevant to Plaintiffs’ political views. Id. On appeal, Plaintiffs group

their allegations of Defendants’ alleged unconstitutional actions, taken

pursuant to the RWE Policy, into three categories: first, “officially

designating political opponents as dangerous ‘rightwing extremists,’”
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(Pls.’ Br. at 32); second, “conducting intrusive and coercive

investigations and surveillance to dissuade political opposition,” (id.);

and third, “sharing official files and records with political opponents.”

(Id. at 36.)

Consistent with Iqbal, “[w]e begin our analysis by identifying

the [relevant] allegations in the complaint that are not entitled to the

assumption of truth.” Iqbal, 129 S. Ct. at 1951. In this case, those

allegations are numerous.

Most significantly, Plaintiffs have failed to plausibly allege the

existence of the claimed RWE policy pursuant to which they allege

constitutional violations. Indeed, it is altogether unclear what

constitutes the RWE Policy in light of Plaintiffs’ vague and conclusory

allegations and arguments on appeal. As best we can tell, the policy

is alleged to be an Orwellian monsterthat consists ofsome amorphous

combination of a “policy, practice, procedure, and/or custom of

Defendants.” (Am. Compl. ¶ 1; see also Pls.’ Br. at 38 (arguing that

the RWE Policy “takes us a step closer to 1984”).) The Amended

Complaint identifies no document, policy directive, or anything else

that would constitute the RWE Policy. As explored below, even if we

assume arguendo the existence of the RWE Policy, Plaintiffs have

failed to show that any actions taken pursuant to the RWE Policy

would entitle them to relief.

The Amended Complaint alleges that “[a]ccording to the RWE

Policy, Plaintiffs are ‘rightwing extremists’” (Am. Compl. ¶ 20.)

Without any plausible statements as to when, where, in what, or by

whom such a designation was made, this allegation amounts to a

“naked assertion[ ] devoid of further factual enhancement” that is not

entitled to a presumption of truth. Iqbal, 129 S. Ct. at 1949 (internal

quotation marks, citations, and alterations omitted). Cf. Meese v.

Keene, 481 U.S. 465, 107 S. Ct. 1862, 95 L.Ed.2d 415 (1987)

(considering a First Amendment challenge to the federal government’s

official labeling of a movie as “political propaganda” pursuant to a

statute authorizing such a designation).

Next, the Amended Complaint makes numerous conclusory

and bare allegations about law enforcement activities, including

surveillance, that have been directed towards Plaintiffs. (See, e .g.,

Am. Compl. ¶ 31 (“covert surveillance”); id. (“collect data”); id. ¶ 32

(“targeting anti-abortion organizations as potential domestic

terrorists”); id. ¶ 33 (“emerging patter [sic] of abuse”); id. ¶ 35

(“conducting surveillance”); id. (“taking law enforcement actions”);
317

id. ¶ 36 (“conducting surveillance on public events, such as the

national TEA parties and anti-abortion protests and demonstrations”);

id. ¶ 37 (“target of federal and local law enforcement actions”); id. ¶¶

46–48 (“increasing government surveillance and scrutiny”); id. ¶ 51

(“encourag[ing] the reporting of information concerning ‘suspicious’

or ‘criminal’ activity of ‘rightwing extremists’”); id. ¶ 69 (collecting

“personal information”); id. ¶ 76 (“greater target for law enforcement

action” as a result of the “Obama Awareness Campaign”); id. ¶ 81

(“target of surveillance and enforcement actions”); id. ¶ 85 (“increased

government scrutiny, investigation, surveillance, and intimidation”);

id. ¶ 95 (law enforcement “slow to investigate threats to CBR”); id. ¶¶

99, 106 (“government scrutiny, investigation, surveillance, and

intimidation”); id. ¶ 105 (“DHS-sanctioned . . . harass[ment]”).)

None of these bare allegations provide the factual context that

would render them plausible and thus entitle them to a presumption of

truth at this stage in the litigation. See Iqbal, 129 S. Ct. at 1950;

Nagim v. Napolitano, No. 10–CV–00329, 2011 WL 841285, at * 1–2

(D. Colo. Mar. 8, 2011) (dismissing similar challenge to claimed

“rightwing extremist policy”). Unlike Fritz v. Charter Township of

Comstock, where the plaintiff alleged three specific retaliatory phone

calls to her employer, Plaintiffs in this case rely on vague and undated

assertions of law enforcement activities directed at them. See Fritz,

592 F.3d at 723. The Amended Complaint is silent about the location,

manner, duration, extent or timing of the alleged government

harassment, surveillance, and scrutiny.

With regard to information sharing, the Amended Complaint

similarly offers conclusory and bare allegations, which are

consequently not well-pleaded, and “disentitle[d] . . . to the

presumption of truth.” Iqbal, 129 S. Ct. at 1951. (See, e.g., Am.

Compl. ¶ 50 (“share information”); id. ¶ 52 (information is gathered,

and then “it is shared with certain private organizations that are

political adversaries of Plaintiffs”); id. ¶ 57 (“no safeguards for the use

or distribution ofthe information collected pursuant to the policy”); id.

¶ 69 (information “is shared with private organizations . . . such as

SPLC, NAF, and ADL”); id. ¶ 70 (“sharing of information”); id. ¶ 109

(“improper sharing of private information and data”).) Plaintiffs do

not describe the type of information that “is shared,” who shared this

information, or why any claimed “sharing” would operate to chill

their First Amendment rights. The allegations in the Amended

Complaint amount to nothing more than the type of “unadorned, the

defendant-unlawfully-harmed-me” accusations that Iqbal deemed

insufficient. See Iqbal, 129 S. Ct. at 1949. Plaintiffs do not even
318

explain how the alleged information sharing has resulted in any

concrete harm. See Gordon v. Warren Consol. Bd. of Educ., 706 F.2d

778, 781 (6th Cir. 1983) (holding that the plaintiffs’ “subjective fear”

about misuse of information collected pursuant to a law enforcement

operation “is insufficient to establish a First Amendment claim”).

Finally, the Amended Complaint makes numerous conclusory

and bare allegations that Defendants’ actions have had the effect of

chilling Plaintiffs’ speech. (See, e.g., Am. Compl. ¶¶ 88–89, 108

(“negatively affected CBR’s reputation, thereby making it difficult to

recruit volunteers, to raise money, and to obtain permission to engage

in speech activity at public locations, such as college and university

campuses”); id. ¶¶ 91, 108 (“negatively affected CBR’s ability to raise

money through donations to support its anti-abortion speech

activities”); id. ¶ 92 (“negatively affected CBR’s present effort to forge

working relationships with mega-churches, which do not want to be

associated with ‘extremist’ groups of any sort”); id. ¶¶ 100–04

(“Plaintiff Murray is deterred from attending, participating in, or

associating with those who participate in TEA parties . . . [and] those

who engage in anti-abortion protests and activities ... for fear that he

would be denied employment” in the federal government on account

of his expressive activities); id. ¶ 105 (“deterrent effect on political

speech and expressive association”); id. ¶ 106 (“deterrent effect on .

. . activities and . . . rights to freedom of speech and expressive

association”).) These allegations are not well-pleaded, and their

conclusory nature “disentitles them to the presumption of truth.”

Iqbal, 129 S. Ct. at 1951.

Having set aside the conclusoryand unadorned allegations that

are not entitled to a presumption of truth as well-pleaded allegations,

we “consider the [remaining] factual allegations . . . to determine if

they plausibly suggest an entitlement to relief.” Id. To be sure, the

Amended Complaint does contain certain allegations that are relatively

more specific, but none of them give the Amended Complaint the ring

of plausibility as to the second element of a First Amendment

retaliation claim. We consider the remaining allegations in turn.

First, in Paragraphs 28 and 29, the Amended Complaint alleges:

¶ 28. Pursuant to the RWE Policy, on or about March

23, 2009, a confidential directive was issued by FBI

headquarters in Washington, D.C. to each of its 56

field offices, instructing the Special Agent in Charge

(SAC) to verify the date, time, and location of each
319

TEA party within his or her region and to supply that

information to FBI headquarters. The directive

instructed the field office to obtain and confirm the

identity of the individual(s) involved in the actual

planning and coordination of the event in its region.

The directive was tightly controlled.

¶ 29. Pursuant to the RWE Policy, a second directive

was issued by FBI headquarters on or about April 6,

2009. This directive instructed each SAC to

coordinate and conduct, either at the field office level

and/or with the appropriate resident agency, covert

video surveillance and data collection of the

participants of the TEA parties. This information was

to be submitted to Washington, D.C.

These allegations describe Defendants’ actions on certain

dates—March 23, 2009 and April 6, 2009—but fail to adequately

plead that the actions of Defendants were likely to deter a person of

ordinary firmness from further participation in expressive activities.

The allegations refer to “confidential” directives that were “tightly

controlled,” making it implausible that Plaintiffs, or others, were

aware of these directives, in the absence of any allegation that the

directives were publicly disclosed. The “mere presence of an

intelligence data-gathering activity” does not give rise to constitutional

liability. Gordon, 706 F.2d at 781. Without additional allegations

with regard to these “directives,” their mere existence is insufficient

to state a claim.

Second, perhaps related to the above-allegations, the Amended

Complaint alleges in Paragraphs 22 and 24:

¶¶ 22, 24. The DHS Assessment was “leaked” to the

public approximately one week prior to the TEA

(Taxed Enough Already) parties that were scheduled to

be held across the country on April 15, 2009.... The

public release of the DHS Assessment had the intended

and calculated effect of deterring people, such as

Plaintiffs and those who associate with them, from

participating in events such as the national TEA parties

and anti-abortion protests and demonstrations.

Although perhaps more than a bare conclusion, this allegation is

insufficient to plead that Defendants’ action injured Plaintiffs in a way
320

likely to deter a person of ordinary firmness from further participation

in constitutionally protected activity. Plaintiffs allege only that the

DHS Assessment “was leaked,” but make no allegation as to who or

what leaked the document, or whether that person or entity was

affiliated with Defendants, or how and to what degree the information

was disseminated. Moreover, Plaintiffsfail to explain why the release

of the DHS Assessment would deter them from attending “TEA

parties,” or any specific TEA party event that they, or anyone else,

would have otherwise attended.

Third, regarding President Obama’s commencement speech at

the University of Notre Dame in 2009, the Amended Complaint

alleges in Paragraphs 77, 79, and 80:

¶ 77. According to sources within FEMA . . . a

number of violent “right-wing,” anti-abortion

individuals and groups arrived in South Bend, Indiana

in May 2009 to protest President Obama’s participation

in the commencement ceremony at the University of

Notre Dame.

¶¶ 79–80. CBR was one of the “right-wing” groups

that arrived in South Bend, and it deployed its “Obama

Awareness Campaign” to protest the [P]resident and

his policies on abortion. Although there were no

reported acts of violence committed during the

ceremony, the anti-abortion groups that participated in

the protest, such as CBR, were publicly described by

federal officials as “right-wing” and “violent.”

But the Amended Complaint does not allege any action by

Defendants—it merely refers to “federal officials,” who might work

for myriad federal agencies unconnected to Defendants. Moreover,

the Amended Complaint refers only to one action of these “federal

officials,” namely “publicly describ[ing]” anti-abortion groups

protesting at the commencement as “right-wing” and “violent.” The

Amended Complaint does not state when, or by what means, such a

“public” pronouncement was made, nor does the Amended Complaint

allege the identity or activities of the other “anti-abortion groups that

participated in the protest,” rendering it impossible to evaluate the

plausibility of the allegation that any public pronouncement had or was

likely to have had an adverse effect on protected speech. See Brown

v. Matauszak, No. 09–2259, 2011 WL 285251, at *5–6 (6th Cir. Jan.

31, 2011) (dismissing complaint for failure to state a claim, where
321

prisoner alleged that prison[ ] officials improperly withheld court

documents sent to him, but failed to plead facts about the nature of the

withheld documents).

Fourth, the Amended Complaint alleges in Paragraph 81:

¶ 81. CBR and its employees and volunteers have been

detained by agents from the FBI, who described CBR

as a domestic terrorist organization on account of

CBR’s opposition to abortion. The Department of

Justice defended the actions of the FBI, claiming that

the FBI agents reasonably believed that CBR was

involved in domestic terrorism.

This allegation is likewise deficient. The Amended Complaint does

not identity, for example, who the FBI has detained, when or for how

long the FBI did so, whether any charges were filed, and what the

circumstances were surrounding the detentions, including whether a

proper law enforcement purpose was served. The Amended

Complaint also does not allege that any of the individual detentions

were connected to CBR or the individual Plaintiffs in this case. In

fact, the Amended Complaint appears to allege that CBR, a corporate

entity, was somehow itself detained bythe FBI, but provides no further

elaboration. The Amended Complaint makes no allegation, aside from

conclusory statements made throughout, that these arrests had the

effect of chilling their speech, or would reasonably be expected to do

so.

Fifth, with regard to Plaintiff Murray, the Amended Complaint

alleges in Paragraph 103:

¶ 103. . . . To date, Plaintiff has been denied

employment with the U.S. Border Patrol and with the

U.S. Immigration and Customs Enforcement.

But the Amended Complaint makes no allegation that these agencies

denied federal employment to Plaintiff Murray on account of his

expressive associations or activities, or pursuant to any alleged

unconstitutional policy, or that Plaintiff Murray was otherwise

qualified for these positions that he claims to have sought. In fact, the

Amended Complaint contains no allegation that Plaintiff Murray is in

any way connected to CBR.

Accordingly, based on a review of the allegations in the
322

Amended Complaint, we conclude that Plaintiffs have failed to

adequately plead that any of Defendants’ actions injured Plaintiffs in

any way that would deter a person of ordinary firmness from further

participation in constitutionally protected activity.

. . . .

Alternatively, even if Plaintiffs could satisfy the second

element of a First Amendment retaliation claim, we conclude that

Plaintiffs have failed to adequately plead the third element, namely

that any adverse action by Defendants was motivated at least in part by

Plaintiffs’ constitutionally protected activity.

Plaintiffs present nothing more than unadorned allegations

concerningDefendants’ intent and motivation. (See, e.g., Am. Compl.

¶ 40 (“Defendants seek to officially censor, correct, and/or condemn

certain political views and ideas and thereby prescribe what shall be

orthodox in politics, nationalism, religion, and other matters of

opinion”); id. ¶ 41 (“The RWE Policy is designed to deter, prevent,

and preempt activities that government officials deem to be in

opposition to . . . the current administration”); id. (“Defendants seek

to influence domestic public opinion in support of . . . the current

administration”); id. ¶ 42 (“tool of intimidation” to “stifle political

opinion and opposition”); id. ¶ 44 (“deter ‘rightwing extremist’ speech

activities”); id. ¶¶ 51–52 (“in order to deter”); id. ¶ 105 (“silence

political opposition” “marginalize political opponents”; “deter and

diminish political opponents”); id. ¶ 107 (“designed to marginalize

them and their opposition to the policies and practices of the federal

government”).)

These vague and conclusory allegations of nefarious intent and

motivation by officials at the highest levels of the federal government

are not well-pleaded, and are therefore insufficient to “plausibly

suggest an entitlement to relief.” Iqbal, 129 S. Ct. at 1951; see also

Moss v. U.S. Secret Serv., 572 F.3d 962, 970 (9th Cir. 2009) (“The

bald allegation of impermissible motive . . ., standing alone, is

conclusory and is therefore not entitled to an assumption of truth.”).

In Iqbal, the plaintiff alleged that high ranking federal officials

had adopted a policy of unconstitutional detention based on race,

religion and/or national origin. In declining to credit as true the

plaintiff’s allegations of intent, the Supreme Court held that

“conclusory” allegations of intent “without reference to [ ] factual

context” are deficient. See Iqbal, 129 S. Ct. at 1954. In this case,
323

similar to Iqbal, nothing in the Amended Complaint states a plausible

claim that Defendants personally, or through their respective

departments, took any actions on account of Plaintiffs’ constitutionally

protected activities, or that any policy was adopted or enforced on an

improper basis. Nothing in the alleged conduct of relevant federal law

enforcement officers plausibly suggests that they were motivated by

anything other than a proper law enforcement motive.

Indeed, the Amended Complaint makes no plausible allegation

that the relevant actions of law enforcement were not supported by

probable cause, or otherwise taken pursuant to a valid law enforcement

purpose.

The Ninth Circuit confronted a similar claim in Moss v. U.S.

Secret Service, where protestors who were removed by the U.S. Secret

Service claimed that the agency had a policy of removing protestors

who were critical of President George W. Bush in violation of the First

Amendment. 572 F.3d at 962. The Ninth Circuit rejected the claim

on a motion to dismiss, reasoning:

The allegation of systematic viewpoint discrimination

at the highest levels of the Secret Service, without any

factual content to bolster it, is just the sort of

conclusory allegation that the Iqbal Court deemed

inadequate, and thus does nothing to enhance the

plausibility of Plaintiffs’ viewpoint discrimination

claim against the Agents.

Id. at 970. Likewise in this case, and for the reasons discussed herein,

the Amended Complaint fails to adequately plead that any adverse

actions by Defendants were motivated by a desire to discriminate or

retaliate against Plaintiffs on account of their constitutionally protected

expressive activities. See Iqbal, 129 S. Ct. at 1950–51 (stating that the

plaintiff has not “nudged his claims of invidious discrimination across

the line from conceivable to plausible”) (internal quotation marks,

citations, and alterations omitted).

Accordingly, Plaintiffs have failed to adequately plead that any

adverse action by Defendants was motivated at least in part by

Plaintiffs’ constitutionally protected activity.

. . . .

Plaintiffs have failed to state a claim against Defendants, in
324

either their official or individual capacities, under the First

Amendment. To the extent Plaintiffs seek to challenge the

constitutionality of the alleged RWE Policy, Plaintiffs have failed to

plausibly allege the existence of such a policy. And to the extent

Plaintiffs seek to challenge the alleged retaliation by Defendants on

account of Plaintiffs’ protected activities, Plaintiffs’ allegations are

likewise deficient. Plaintiffs have failed to plausibly allege that any

actions by Defendants injured Plaintiffs in a way that would deter a

person of ordinary firmness from further participation in

constitutionally protected activity. Nor have Plaintiffs plausibly

alleged that any adverse action by Defendants was motivated at least

in part by Plaintiffs’ constitutionally protected activity.

Id. at *5–13 (emphasis added) (citations omitted).

• Pulte Homes, Inc. v. Laborers’ Int’l Union, 648 F.3d 295, 2011 WL 3274014 (6th Cir. Aug.

2, 2011). Plaintiff Pulte Homes, Inc., a home building company, filed a complaint against

defendants Laborers’ International Union and two of its officers under the federal Computer

Fraud and Abuse Act (CFAA) for orchestrating an onslaught of phone calls and e-mails on

the plaintiff company’s telephone and e-mail systems. The district court dismissed the

complaint with prejudice on the grounds that the complaint failed to allege facts sufficient to

state a claim under CFAA.

The court of appeals summarized the allegations of plaintiff’s complaint as follows:

Pulte Homes, Inc.’s (Pulte[’s]) complaint stems from an

employment dispute. Pulte alleges that in September 2009 it fired a

construction crew member, Roberto Baltierra, for misconduct and poor

performance. Shortly thereafter, the Laborers’ International Union of

North America (LIUNA) began mounting a national corporate

campaign against Pulte—using both legal and allegedly illegal

tactics—in order to damage Pulte’s goodwill and relationships with its

employees, customers, and vendors.

Just days after Pulte dismissed Baltierra, LIUNA filed an

unfair-labor-practice charge with the National Labor Relations Board

(NLRB). LIUNA claimed that Pulte actually fired Baltierra because

he wore a LIUNA t-shirt to work, and that Pulte also terminated seven

other crew membersin retaliation for their supporting the union. Pulte

maintains that it never terminated any of these seven additional

employees.

Not content with its NLRB charge, LIUNA also began using

an allegedly illegal strategy: it bombarded Pulte’s sales offices and
325

three of its executives with thousands of phone calls and e-mails. To

generate a high volume of calls, LIUNA both hired an auto-dialing

service and requested its members to call Pulte. It also encouraged its

members, through postings on its website, to “fight back” by using

LIUNA’s server to send e-mails to specific Pulte executives. Most of

the calls and e-mails concerned Pulte’s purported unfair labor

practices, though some communications included threats and obscene

language.

Yet it was the volume of the communications, and not their

content, that injured Pulte. The calls clogged access to Pulte’s

voicemail system, prevented its customers from reaching its sales

offices and representatives, and even forced one Pulte employee to

turn off her business cell phone. The e-mails wreaked more havoc:

they overloaded Pulte’ssystem, which limitsthe number of e-mails in

an inbox; and this, in turn, stalled normal business operations because

Pulte’s employees could not access business-related e-mails or send

e-mails to customers and vendors.

Four days after LIUNA started its phone and e-mail blitz,

Pulte’s general counsel contacted LIUNA. He requested, among other

things, that LIUNA stop the attack because it prevented Pulte’s

employees from doing their jobs. When the calls and e-mails

continued, Pulte filed this suit . . . .

Id. at *1.

The Sixth Circuit reversed the district court’s dismissal of the plaintiff’s claim seeking

damages under the CFAA for transmissions that intentionally caused damage to a protected

computer (while affirming the district court’s dismissal of a second, independent claim

asserted by plaintiff under the CFAA). In support of its reversal, the court of appeals

explained:

To state a transmission claim, a plaintiff must allege that the

defendant “knowingly cause[d] the transmission of a program,

information, code, or command, and as a result of such conduct,

intentionally cause[d] damage without authorization, to a protected

computer.” 18 U.S.C. § 1030(a)(5)(A). We assume, because it is not

disputed, that LIUNA’s communications constitute “transmissions,”

see id., and that Pulte’s phone and e-mail systems qualify as “protected

computers,” see id. § 1030(e)(2). According to LIUNA and the

district court, however, Pulte failsto allege that LIUNA “intentionally

caused damage.” We address damages and intent—in that order—and

conclude that Pulte properly alleges both.
326

Pulte describes the effects of LIUNA’s conduct at length in its

complaint. Summarized, the calls impeded access to voicemail,

prevented Pulte’s customers from reaching its sales offices and

representatives, and forced an employee to turn off her cell phone. And

LIUNA’s e-mails—which overloaded Pulte’s system—curtailed

normal business operations because Pulte's employees could not access

and respond to e-mails. The parties dispute whether this constitutes

damage under the CFAA.

To understand “damage,” we consult both the statutory text and

ordinary usage. Under the CFAA, “any impairment to the integrity or

availability of data, a program, a system, or information” qualifies as

“damage.” Id. § 1030(e)(8). Because the statute includes no definition

for three key terms—“impairment,” “integrity,” and

“availability”—we look to the ordinary meanings of these words. . .

. Applying these ordinaryusages, we conclude that a transmission that

weakens a sound computer system—or, similarly, one that diminishes

a plaintiff’s ability to use data or a system—causes damage.

LIUNA’s barrage of calls and e-mails allegedly did just that.

At a minimum, according to the complaint's well-pled allegations, the

transmissions diminished Pulte’s ability to use its systems and data

because they prevented Pulte from receiving at least some calls and

accessing or sending at least some e-mails. Cf. Czech v. Wall St. on

Demand, Inc., 674 F. Supp. 2d 1102, 1117–18 (D. Minn. 2009)

(dismissing a CFAA transmission claim because the plaintiff failed to

allege that the defendant’s text messages stopped her from receiving

or sending any calls or text messages).

The diminished-ability concept that we endorse here is not

novel: several district courts have already adopted it.

Moreover, our interpretation comports with two decisions from

sister circuits. The Third Circuit sustained a transmission conviction

where the defendant “admitted that in using the direct e-mailing

method and sending thousands of e-mails to one inbox, the targeted

inbox would flood with e-mails and thus impair the user’s ability to

access his other ‘good’ e-mails.” United States v. Carlson, 209 F.

App’x 181, 185 (3d Cir. 2006). And the Seventh Circuit, in United

States v. Mitra, upheld the defendant’s transmission conviction

because he impaired the availability of an emergency communication

system when “[d]ata that [he] sent interfered with the way the

computer allocated communications to the other 19 [radio] channels

and stopped the flow of information among public-safety officers.”
327

405 F.3d 492, 494 (7th Cir. 2005). That these decisions involve

criminal prosecutions is irrelevant. See Leocal v. Ashcroft, 543 U.S.

1, 11 n. 8, 125 S. Ct. 377, 160 L.Ed.2d 271 (2004) (“[W]e must

interpret [a] statute consistently, whether we encounter its application

in a criminal or noncriminal context . . . .”). In both cases, the

government proved beyond a reasonable doubt that the transmissions

impaired the availability of the computer equipment; here, Pulte

adequately alleges that result.

Because Pulte alleges that the transmissions diminished its

ability to send and receive calls and e-mails, it accordingly alleges an

impairment to the integrity or availability of its data and systems—i.e.,

statutory damage.

. . . .

Damage alone, however, is not enough for a transmission

claim. A defendant must also cause that damage with the requisite

intent.

The district court found Pulte’s intent allegations deficient: it

dismissed Pulte’s claim because Pulte failed to allege that LIUNA

knew its calls and e-mails would harm Pulte’s computer systems. See

Pulte Homes, Inc. v. Laborers’ Int'l Union, No. 09–13638, 2010 WL

1923814, at *3 (E.D. Mich. May 12, 2010) (“Plaintiff did not inform

Defendants that their conduct was harmful to any of Plaintiff’s

computer systems.”). In other words, Pulte made no allegation that

LIUNA fully grasped the actual consequences of its e-mail campaign.

This is too high a standard.

The transmission subsection prohibits causing damage

“intentionally.” 18 U.S.C. § 1030(a)(5)(A). We turn, again, to

ordinary usage because the CFAA does not define the term. To act

“intentionally” commonly means to act “on purpose”—i.e., with a

purpose or objective. The Third Circuit, for example, sustained a

CFAA transmission conviction where the jury instructions provided

that “[a] person acts intentionally when what happens was the

defendant’s conscious objective.” Carlson, 209 F. App’x at 184–85

(internal quotation marks and citation omitted). Thus, to satisfy its

pleading burden, Pulte must allege that LIUNA acted with the

conscious purpose of causing damage (in a statutory sense) to Pulte’s

computer system—a standard that does not require perfect knowledge.

Pulte met its burden. The following allegations illustrate
328

LIUNA’s objective to cause damage: (1) LIUNA instructed its

members to send thousands of e-mails to three specific Pulte

executives; (2) many of these e-mails came from LIUNA’s server; (3)

LIUNA encouraged its members to “fight back” after Pulte terminated

several employees; (4) LIUNA used an auto-dialing service to generate

a high volume of calls; and (5) some of the messages included threats

and obscenity. And although Pulte appears to use an idiosyncratic

e-mail system, it is plausible LIUNA understood the likely effects of

its actions—that sending transmissions at such an incredible volume

would slow down Pulte’s computer operations. LIUNA’s rhetoric of

“fighting back,” in particular, suggests that such a slow-down was at

least one of its objectives. The complaint thus sufficiently alleges that

LIUNA—motivated by its anger about Pulte’s labor

practices—intended to hurt Pulte’s business bydamaging its computer

systems.

LIUNA attempts—but fails—to justify its conduct. Though it

maintains that the calls and e-mails are “fully consistent with an

ongoing, lawful, organizing campaign” through which it “is attempting

[only] to organize Pulte employees,” LIUNA offers no explanation of

how targeting Pulte’s executives and sales offices—rather than

employees eligible for recruitment—advances its campaign. And an

equally, if not more, plausible explanation is that LIUNA intended to

disrupt Pulte’s business by bogging down its computer systems. Rule

12(b)(6) demands nothing more. See Iqbal, 129 S. Ct. at 1949.

Id. at *4–6 (emphasis added) (citations omitted).

• Watson Carpet & Floor Covering, Inc. v. Mohawk Indus., Inc., 648 F.3d 452, 2011 WL

2462833 (6th Cir. 2011). Plaintiff Watson Carpet & Floor Covering, Inc. was a carpet dealer

in competition with Carpet Den, Inc., and its owner, Rick McCormick. Mohawk Industries,

Inc. was a carpet supplier. Watson sued Carpet Den, McCormick, and Mohawk for conspiring

to restrain trade in violation of section 1 of the Sherman Antitrust Act. The court of appeals

summarized Watson’s allegations as follows:

Watson Carpet alleges that, in 1998, the defendants explicitly

agreed to force Watson Carpet out of business by slandering and

refusing to deal to Watson Carpet. After Mohawk refused to sell

carpet to Watson Carpet the next year, Watson Carpet brought state

claims in state court against all three defendants. Carpet Den and

McCormick settled the state-court action with Watson Carpet in March

2007, and Watson Carpet released all then-existing claims against

those two defendants. While the state-court litigation was ongoing in

2005 and 2006, and in May 2007 after the litigation had ended,
329

Mohawk again refused to sell to Watson Carpet. The 2005, 2006, and

2007 incidents form the basis of the present lawsuit. . . .

. . . .

According to the complaint, in 1998, McCormick met with

Brad Matthaidess, Mohawk’s Vice President and Senior Manager, and

Fred Woods, a Mohawk sales representative. Mohawk is one of two

suppliers that dominate 95% of Nashville's market for

production-homebuilder carpet. Wielding that power, the men

designed a plan to “run [Watson Carpet] out of business.” R. 1

(Compl.¶ 15). To carry out the plan, Mohawk would refuse to sell to

Watson Carpet. Meanwhile, McCormick, Carpet Den, and Woods

“would maliciously make false derogatory accusations about [Watson

Carpet and its owner] to Plaintiff’s customers and potential customers

and others in the industry.” Id. at ¶ 16.

The complaint does not make clear when the defendants began

to follow through on their plan, but between paragraphs about events

in 1998 and 1999, Watson Carpet claims that McCormick and other

Carpet Den and Mohawk agents made “false derogatory accusations”

about the company to potential customers, with the goal of hurting

Watson Carpet’s business. Id. at ¶¶ 16–17. Their accusations

included “that [Watson Carpet’s owner] used drugs, sold drugs,

cheated his customers, slept with his employees, had financial

problems, had trouble with the IRS, and was in the mob.” Id. at ¶¶

18–19. McCormick also “instructed his sales people that if they were

competing with Plaintiff for a sale they should ‘lowball’ the price . .

. to keep Plaintiff from getting the sale, even if it meant losing money

on the sale.” Id. at 20. In 1999, McCormick told the president of

Turnberry Homes, Watson Carpet's client, that Watson Carpet had

stolen money “by pocketing rebates . . . that should have been going

to Turnberry Homes.” Id. at ¶ 21. The attempt to undercut Watson

Carpet’s business did not succeed: the president of Turnberry Homes

believed that McCormick’s accusations were false, and the client

continued to purchase from Watson Carpet.

Watson Carpet had less success that same year when it tried to

purchase Portico carpet from Mohawk to supply Centex Homes.

“Pursuant to and in furtherance of the conspiracy, Defendant Mohawk

refused to sell Plaintiff the Portico carpet needed to service Centex,”

costing Watson Carpet the client, potential profits, and “almost” its

own company. Id. at ¶ 22.
330

Although the complaint omits this fact, Watson Carpet sued

Mohawk, Carpet Den, and McCormick in state court in 1999 for the

Centex incident, alleging “tortious interference with business

relationships and civil conspiracy.” Watson’s Carpet & Floor

Coverings, Inc. v. McCormick, et al., 247 S.W.3d 169, 173 (Tenn. Ct.

App. 2007). A jury found for Watson Carpet on both bases against all

three defendants, awarding $1,384,180 in past damages and $249,314

in future damages. It also awarded $3,750,000 in punitive damages

against Mohawk. On appeal, theTennessee Court of Appeals reversed

the judgment against Mohawk for tortious interference because

Mohawk had a state-law supplier’s privilege to make “decisions on

what companies to deal with and what to sell them.” Id. at 179.

Relying on Mohawk’s privilege, the Tennessee Court of Appeals also

reversed for all defendants on the claim of conspiracy to interfere

tortiously with Watson Carpet’s prospective relationship with Centex.

However, the court upheld the verdicts against Carpet Den and

McCormick for tortiously interfering with Watson Carpet’s

relationship with Mohawk.

The Tennessee Court of Appeals issued its decision in January

2007. In March 2007, Carpet Den and McCormick settled with

Watson Carpet. In exchange, Watson Carpet released the two

defendants “from and against any and all claims . . . which [Watson

Carpet] may have against them whether such claims are contingent or

actual, anticipated or unanticipated, and of whatever kind or nature.”

Settlement at ¶ 1. Rather than settling, Mohawk sought review from

the Tennessee Supreme Court, which denied permission to appeal.

During the course of the state-court litigation, Mohawk had

refused to sell to Watson Carpet for Newmark Homes in 2005 and

Pulte Homes in 2006. After the settlement, in May 2007, Mohawk

refused to fill Watson Carpet’s order for Wieland Homes. According

to the complaint, all three refusals were “[p]ursuant to and in

furtherance of the conspiracy.” R. 1 (Compl. ¶¶ 32, 40, 48).

Id. at *1–3.

The district court granted Mohawk’s motion to dismiss, holding that the complaint failed to

allege adequate particulars to suggest that the 2005–2007 events arose out of the alleged

original conspiracy and were not simply unilateral refusals to sell to a litigious customer. The

district court found that the plaintiff “‘failed to allege facts supporting its conclusory

assertions that actions taken by [Mohawk] were related to or in furtherance of the conspiracy

allegedly formed in 1998,’ or that Carpet Den or McCormick had taken ‘any actionable steps

in furtherance of the alleged conspiracy after the date of the settlement agreement.’” Id. at *3.
331

The Sixth Circuit reversed the district court’s dismissal of the complaint. The court of

appeals held:

Watson Carpet adequately stated a claim for relief. Watson Carpet

specifically alleged both an agreement to restrain trade and later acts

that furthered the conspiracy. In response, Mohawk proffered

alternative explanations for its refusals to sell to Watson Carpet.

However, to survive a motion to dismiss, Watson Carpet needs to

allege only that the defendants' agreement plausibly explains the

refusals to sell, not that the agreement is the probable or exclusive

explanation.

Id. at *1 (emphasis added).

The court of appeals explained:

Section 1 of the Sherman Act forbids conspiracies “in restraint

of trade or commerce among the several States.” 15 U.S.C. § 1. A

Section 1 conspiracy requires more than a manufacturer’s unilateral

refusal to deal. Monsanto Co. v. Spray–Rite Serv. Corp., 465 U.S.

752, 761, 104 S. Ct. 1464, 79 L.Ed.2d 775 (1984). “There must be

evidence that tends to exclude the possibility that the manufacturer and

nonterminated distributors were acting independently.” Id. at 764. For

example, in Twombly, the Supreme Court “[a]cknowledg[ed] that

parallel conduct” between two businesses “was consistent with an

unlawful agreement, [but] nevertheless concluded that it did not

plausibly suggest an illicit accord because it was not only compatible

with, but indeed was more likely explained by, lawful,

unchoreographed free-market behavior.” Ashcroft v. Iqbal, ––– U.S.

––––, 129 S. Ct. 1937, 1950, 173 L.Ed.2d 868 (2009); see Twombly,

550 U.S. at 557. To plead unlawful agreement, a plaintiff may allege

either an explicit agreement to restrain trade, or “sufficient

circumstantial evidence tending to exclude the possibility of

independent conduct.” In re Travel Agent, 583 F.3d at 907 (listing

four circumstantial “plus factors” that can demonstrate “concerted

action”). Under either approach, the facts alleged must “plausibly

suggest [ ],” rather than be “merely consistent with,” an agreement to

restrain trade in violation of the Sherman Act. Id. at 908.

Unlike the plaintiffs in Twombly and In re Travel Agent,

Watson Carpet clearly has alleged an express agreement to restrain

trade. The contentious issue, then, is whether the complaint

adequately alleges that the refusals to sell carpet were undertaken as

part of that agreement, or whether they were independent actions on
332

Mohawk’s part. We hold that the complaint sufficiently alleges a

connection between the original agreement and the later refusals to

sell.

Proof that the conspiracy was ongoing is unnecessary because

conspiracies presumptively are ongoing until the participants achieve

their objective. United States v. Hayter Oil Co., 51 F.3d 1265,

1270–71 (6th Cir. 1995) (stating in a criminal Sherman Act § 1 case

that, “once a conspiracy has been established, it is presumed to

continue until there is an affirmative showing that it has been

abandoned”) (citing United States v. Kissel, 218 U.S. 601, 608, 31 S.

Ct. 124, 54 L.Ed. 1168 (1910)); see also United States v. True, 250

F.3d 410, 424 (6th Cir. 2001) (quoting Hayter Oil). But see United

States v. Therm–All, Inc., 373 F.3d 625, 635–36 (5th Cir.) (reading this

language in Hayter Oil as unpersuasive dicta because other

coconspirators admitted that they had committed overt acts within the

statute-of-limitations period), cert. denied, 543 U.S. 1004, 125 S. Ct.

632, 160 L.Ed.2d 464 (2004). The cases supporting this rule are

criminal ones about the affirmative defense of withdrawal from a

conspiracy, but their logic is equally sensible in the civil context. Cf.

Chiropractic Coop. Ass’n of Mich. v. Am. Med. Ass’n, 867 F.2d 270,

274–75 (6th Cir. 1989) (placing on civil defendants, like criminal

defendants, the burden “to demonstrate withdrawal from the

conspiracy”). Therefore, because conspiracies are presumptively

ongoing, a plaintiff plausibly alleges that defendants acted pursuant to

a conspiracy if the plaintiff alleges both (1) a conspiratorial agreement

and (2) later actions that are consistent with the conspiracy.

We conclude that Watson Carpet’s complaint plausibly alleges

that the 2005, 2006, and 2007 refusals stemmed from Mohawk’s 1998

agreement with Carpet Den. In each count alleged in its complaint,

Watson Carpet asserts that Mohawk “refused to sell” carpet

“[p]ursuant to and in furtherance of the conspiracy.” R. 1 (Compl .¶¶

32, 40, 48). The defendants argue that the phrase “[p]ursuant to and

in furtherance of the conspiracy” is a legal conclusion, which this court

“need not accept as true,” In re Travel Agent, 583 F.3d at 903.

Similarly, the district court determined that Watson Carpet did not

“point to any actual facts that support th[e] conclusory assertion” that

the refusals to sell were pursuant to the 1998 conspiracy. R. 35 (Dist.

Ct. Op. # 1 at 11). There was, however, nothing more for Watson

Carpet to plead. It articulated in detail the facts of the 1998

agreement. That the actions were taken pursuant to the plan is evident

from the fact that the actions were the same ones contemplated as part

of the plan. The agreement called for Mohawk to refuse to sell carpet,
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which is exactly what Mohawk allegedly did. A smoking gun—such as

an email documenting that the conspiracy was ongoing—would aid

Watson Carpet’s case, but its absence does not render implausible that

a business continued to adhere to the conspiratorial plan. The district

court gave improper weight to the absence of reaffirmation. See R. 35

(Dist. Ct. Op. # 1 at 11) (“Watson does not allege the existence of any

meetings between the parties or any overt acts giving rise to an

inference that the parties reaffirmed the conspiracy at any time after

1998.”).

The district court also found Watson Carpet’s allegations

inadequate because the state-court litigation itself was “an eminently

plausible reason for the refusal to deal.” R. 35 (Dist. Ct. Op. # 1 at 11

(citing Zoslaw v. MCA Distributing Corp., 693 F.2d 870, 889–90 (9th

Cir. 1982), cert. denied, 460 U.S. 1085, 103 S. Ct. 1777, 76 L.Ed.2d

349 (1983))). However, Twombly insists that pleadings be plausible,

not probable. Iqbal, 129 S. Ct. at 1949 (“[T]he plausibility standard

is not akin to a probability requirement.”); Twombly, 550 U.S. at 556

(holding that plaintiffs can “proceed even if it strikes a savvy judge

that actual proof of those facts is improbable, and that a recovery is

very remote and unlikely” (internal quotation marks omitted)). Often,

defendants’ conduct has several plausible explanations. Ferreting out

the most likely reason for the defendants’ actions is not appropriate

at the pleadings stage. In this case, the plausibility of Watson Carpet’s

litigiousness as a reason for the refusals to sell carpet does not render

all other reasons implausible. In fact, the litigation arguably renders

Watson Carpet’s theory more plausible than if the parties had been

incommunicado from 1998 to 2005. Whatever reasons Mohawk

originally had to enter the agreement may have remained salient

because of the state-court litigation or been exacerbated by the

litigation.

The passage of time between an agreement and a defendant’s

later actions may affect the plausibility of an inference that the actions

were connected to the agreement. Cf. In re Travel Agent, 583 F.3d at

911 (finding a statement made twenty-five years earlier “too remote in

time to support a plausible inference of agreement” to restrain trade,

although other factors influenced the determination as well). At the

same time, it is not uncommon—and therefore not implausible—for

antitrust conspiracies to last many years. See, e.g., United States v.

Broce, 488 U.S. 563, 580, 109 S. Ct. 757, 102 L.Ed.2d 927 (1989)

(Stevens, J., concurring) (upholding guilty pleas to charges of a single,

twenty-five year conspiracy “among Kansas highway contractors to rig

bids” in violation of the Sherman Act); In re Scrap Metal Antitrust
334

Litig., 527 F.3d 517, 523–24 (6th Cir. 2008) (affirming a judgment for

a class “consisting of all [industrial-scrap] generators who sold scrap

metal to Defendants and/or their co-conspirators” during a period

exceeding seven years because the defendants violated the Sherman

Act by setting prices and rigging bids); Amarel v. Connell, 102 F.3d

1494, 1503 (9th Cir. 1997) (affirming Sherman Act liability for “a

far-reaching, decades-long conspiracy” to shut down independent rice

purchasers and mills); Hayter Oil, 51 F.3d at 1266 (affirming a

conviction for a five-year “conspiracy to control retail gasoline

prices”). Nothing about the parties’ relationship in this case suggests

that a conspiracy would have proceeded more rapidly. The seven years

that elapsed between the defendants’ alleged agreement and the 2005

refusal to sell certainly do not render Watson Carpet’s claims

implausible.

It is not necessary for us to consider Watson Carpet’s argument

that post–1998 facts confirmed the existence of a conspiracy. Because

conspiracies are presumptively ongoing, the complaint plausibly

alleges that Mohawk refused to sell to Watson Carpet in 2005, 2006,

and 2007 as part of the original, ongoing conspiracy.

Id. at *4–6 (emphasis added).

• New Albany Tractor, Inc. v. Louisville Tractor, Inc., 650 F.3d 1046, 2011 WL 2448909 (6th

Cir. 2011). Plaintiff New Albany Tractor, Inc. filed a complaint against defendants Scag

Power Equipment and Louisville Tractor, Inc., alleging violation of the Robinson-Patman Act,

an antitrust statute. The district court granted the defendants’ motion to dismiss with

prejudice. The plaintiff appealed to the Sixth Circuit, arguing that the dismissal should be

vacated or that, at the very least, the dismissal should be made without prejudice and the

plaintiff afforded an opportunity to amend its complaint.

The court of appeals summarized the allegations of the complaint as follows:

The Robinson-Patman Act prohibits, among other things, a seller from

selling the same product to two different buyers at different prices. Its

primary purpose is to stop large buyers from receiving discriminatory

preferences over smaller buyers due to the larger buyers’ greater

purchasing power. Defendant Scag, a Wisconsin corporation,

manufactures mowing equipment that it sells to distributors that in turn

sell to retailers. Defendant, Louisville Tractor, wears two hats: it is the

exclusive wholesale distributor of Scag equipment to retailers in the

Louisville area, and it is also a retailer of Scag equipment in the

Louisville market. Plaintiff, New Albany Tractor, is solely a retailer,

selling Scag mowers as well as other brands in the Louisville area.
335

Scag requires New Albany to buy its Scag product line and parts from

Louisville Tractor, its exclusive distributor in the Louisville area.

Scag will not sell directly to New Albany Tractor (or any other

retailer) and it will not allow New Albany Tractor to purchase Scag

equipment from a Scag distributor outside the Louisville area.

Essentially, New Albany Tractor’s complaint alleges a

discriminatory pricing scheme between defendant Scag, the

manufacturer, and defendant Louisville Tractor, in its role as the

exclusive wholesaler of Scag equipment in the Louisville market, with

the effect of reducing competition. In order to satisfy the requirement

in the language of the Act that the sales must be to “different

purchasers,” plaintiff alleges that Louisville Tractor, which is the only

purchaser of Scag products in the Louisville market due to its

exclusive distributorship, is a “dummy” or strawman operation that is

controlled by Scag so that any sale from Louisville Tractor to plaintiff

is a fiction. Plaintiff alleges that it is Scag, not Louisville Tractor,

selling directly to New Albany Tractor and the other retailers in the

Louisville area. This “dummy” or “strawman” arrangement is known

as “the indirect purchaser doctrine” for purposes of the

Robinson–Patman Act.

Id. at *1.

The court of appeals affirmed the ruling of the district court that plaintiff did not allege

sufficient facts to plausibly suggest that Scag controlled the prices charged by Louisville

Tractor to an extent adequate to render Louisville Tractor amere “dummy” or “strawman” for

Scag for purposes of the indirect purchaser doctrine. The court specifically noted that its

result probably would have been different before Twombly and Iqbal. The court stated:

Two recent decisions have changed the long-standing rule of

Conley v. Gibson, in which the Supreme Court stated, “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 . . . .” 355 U.S. 41, 45–46, 78 S. Ct. 99, 2 L.Ed.2d 80

(1957). In Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.

Ct. 1955, 167 L.Ed.2d 929 (2007), the Supreme Court said that a

plaintiff must allege “enough facts to state a claim to relief that is

plausible on its face.” In Twombly, the Court changed the standard

applicable to Rule 12(b)(6) motions to dismiss Sherman Act claims by

directing that Rule 12(b)(6) must be read in conjunction with Rule

8(a), which requires “a short and plain statement of the claim showing

that the pleader is entitled to relief.” FED. R. CIV. P. 8(a)(2).

Acknowledging that material allegations must be accepted as true and
336

construed in the light most favorable to the nonmoving party, the

Court nevertheless held that complaints in which plaintiffs have failed

to plead enough factual detail to state a claim that is plausible on its

face may be dismissed for failure to state a claim. 550 U.S. at 569–70.

The Court explained that courts may no longer accept conclusory legal

allegations that do not include specific facts necessary to establish the

cause of action.

This new “plausibility” pleading standard causes a

considerable problem for plaintiff here because defendants Scag and

Louisville Tractor are apparently the only entities with the information

about the price at which Scag sells its equipment to Louisville Tractor.

This pricing information is necessary in order for New Albany to

allege that it pays a discriminatory price forthe same Scag equipment,

as required by the language of the Act. This type of exclusive

distribution structure makes it particularly difficult to determine

whether discriminatory pricing exists.

Before Twombly and Iqbal, courts would probably have

allowed this case to proceed so that plaintiff could conduct discovery

in order to gather the pricing information that is solely retained within

the accounting system of Scag and Louisville Tractor. It may be that

only Scag and Louisville Tractor have knowledge of whether Scag

exercises control over the terms and conditions of Louisville Tractor’s

sales to retailers, including the retail operations of Louisville Tractor.

The plaintiff apparently can no longer obtain the factual detail

necessary because the language of Iqbal specifically directs that no

discovery may be conducted in cases such as this, even when the

information needed to establish a claim of discriminatory pricing is

solely within the purview of the defendant or a third party, as it is

here. Ashcroft v. Iqbal, 129 S. Ct. at 1954 (“Because respondent’s

complaint is deficient under Rule 8, he is not entitled to discovery,

cabined or otherwise.”). By foreclosing discovery to obtain pricing

information, the combined effect of Twombly and Iqbal require

plaintiff to have greater knowledge now of factual details in order to

draft a “plausible complaint.” See Arthur R. Miller, From Conley to

Twombly to Iqbal: A Double Play on the Federal Rules of Civil

Procedure, 60 Duke L.J. 1, 105 (2010) (discussing the need for greater

factual information after Twombly). Without discovery, pricing

information or any fact that would support an allegation of illegal

economic collusion becomes far harder to obtain. Under the new

Twomblystandard set forth by the Supreme Court in an antitrust case,

even though a complaint need not contain detailed factual allegations,

its “[f]actual allegations must be enough to raise a right to relief
337

above the speculative level on the assumption that all the allegations

in the complaint are true.” 550 U.S. at 555. In this case that means,

as the district court held, that plaintiff must allege specific facts of

price discrimination even if those facts are only within the head or

hands of the defendants. The plaintiff may not use the discovery

process to obtain these facts after filing suit. The language of Iqbal,

“not entitled to discovery,” is binding on the lower federal courts.

. . . . 

It is a violation of Robinson-Patman for a seller to provide the

same product to two customers at different prices in a manner that

gives one buyer a competitive advantage over the other. To make out

a claim under Robinson–Patman, the plaintiff must allege: (1) two or

more contemporaneous sales by the same seller;(2) at different prices;

(3) of commodities of like grade and quality; (4) the discrimination

had the requisite anticompetitive effect; and (5) the discrimination

caused injury to the plaintiff. Rutledge v. Elec. Hose & Rubber Co.,

511 F.2d 668, 677 (9th Cir. 1975) (citations omitted). To survive a

motion to dismiss, plaintiff’s complaint must allege each of these

elements with sufficient detail “to raise a right to relief above the

speculative level on the assumption that all the allegations in the

complaint are true.” Assoc. of Cleveland Fire Fighters v. City of

Cleveland, Ohio, 502 F.3d 545, 548 (6th Cir.2007) (quoting Twombly,

550 U.S. at 555).

Defendants contend that plaintiff has failed adequately to plead

that there were two sales by the same seller because the complaint

lacks allegations of a contemporaneous sale to two different buyers,

instead alleging only that Scag sold equipment directly to Louisville

Tractor and that Louisville Tractor in turn sold equipment to plaintiff.

To get around this deficiency, plaintiff relies on the “indirect purchaser

doctrine.” As our Court previously explained, “The purpose of the

indirect doctrine is to prevent a manufacturer from insulating itself

from Robinson–Patman liability by using a ‘dummy’ wholesaler to

make sales at terms actually controlled by the manufacturer.”

Barnosky Oils, Inc. v. Union Oil Co. Of Cal., 665 F.2d 74, 84–85 (6th

Cir. 1981) (affirming the District Court’s dismissal of the plaintiff's

Robinson–Patman Act claims for failure to allege with sufficient

factual detail that the manufacturer set or controlled the distributor’s

prices); see also Lewis v. Philip Morris, Inc., 355 F.3d 515, 524 (6th

Cir. 2004) (stating that the indirect purchaser doctrine “considers a

plaintiff who has purchased through a middleman to be a ‘purchaser’

for Robinson–Patman purposes if the supplier ‘sets or controls' the
338

resale prices paid by the plaintiff.”) (citing Barnosky Oils, 665 F.2d at

84). Where themanufacturer’s control of pricing is not clearly alleged,

the complaint should be dismissed. The issue is whether plaintiff

sufficiently pled that Scag actually controls the price of products by

Louisville Tractor to plaintiff so that plaintiff pays a higher price than

another retail purchaser.

Plaintiff must allege that Scag controls Louisville Tractor to

such an extent that Louisville Tractor is reduced to a strawman simply

doing the bidding of Scag in the Louisville market. Plaintiff alleges

that Scag refuses to allow retailers in Louisville’s exclusive sales area

to purchase from any other Scag distributor. This does not show that

Scag controls Louisville Tractor. Merely demonstrating the existence

of an exclusive distributorship in a market area does not violate

Robinson–Patman—or any other antitrust provision. In addition,

plaintiff alleges that Scag “encouraged,” “was aware of” and

“allowed” Louisville Tractor to sell at the prices it did, but this does

not show that Louisville Tractor was selling at a discriminatory price

set by Scag. There is no allegation that it forced Louisville Tractor to

sell at a certain price or that this price was discriminatory.

Plaintiff contends that the affidavit of its president, Richard

Kesselring, alleges that Scag controls the warranty programs for its

products,sets suggested retail prices, and performs and controls some

advertising. The district court found that the allegations did not

demonstrate the requisite control. They showed only that Louisville

Tractor sets it own prices, which are monitored by Scag, but not set by

Scag. Jan. 5, 2010, Order at 2. Plaintiff argues on appeal that the

district court looked at the control issue too narrowly by focusing on

whether Scag set or controlled in some way the prices at which

Louisville Tractor sold Scag equipment. In order to violate the Act,

plaintiff must allege discriminatory pricing set by Scag. To come

within the indirect purchaser doctrine, both a discriminatory price and

control of the price by the manufacturer of the selling price of the

product in the hands of the distributor is necessary. Here we have

insufficient allegations of both price discrimination and control.

Id. at *2–4 (emphasis added).

Finally, the court of appeals affirmed the district court’s decision to dismiss with prejudice

and to deny the plaintiff leave to amend its complaint. The court stated:

As to the leave-to-amend issue, Federal Rule of Civil Procedure 15(a)

authorizes the court to freely grant leave to amend when there is no
339

“undue delay, bad faith, or dilatory motive on the part of the movant.”

Foman v. Davis, 371 U.S. 178, 182, 83 S. Ct. 227, 9 L.Ed.2d 222

(1962). In this case, however, plaintiff never formally requested leave

to amend below and defendant argues that the argument has been

waived. Because plaintiff does not raise the leave-to-amend argument

again in its reply brief, focusing instead on the dismissal with

prejudice, we conclude that plaintiff concedes that it has waived the

issue.

As to the dismissal-with-prejudice issue, we review the district

court’s decision for abuse of discretion, so the bar is high for reversal.

The district court gave the plaintiff substantial additional time to come

up with more specific evidence of control by Scag over Louisville

Tractor or of a differential in price paid between plaintiff and other

retailers. Plaintiff was unable to do so because the facts are

unavailable to plaintiff. Without discovery, the plaintiff may have no

way to find out the facts in the hands of competitors, but Iqbal

specifically orders courts, as quoted above, to refuse to order further

discovery. If the plaintiff should be able to find out the facts it needs

to state a claim, it will have to file another complaint.

Id. at *5 (emphasis added).

• Rondigo, L.L.C. v. Twp. of Richmond, 641 F.3d 673 (6th Cir. Jun. 1, 2011). Plaintiffs

Rondigo, L.L.C. and Dolores Michaels operated a farm in Richmond Township, Michigan.

In 2006, township officials became concerned about composting operations at the farm and

conducted inspections of the farm. The inspections led to regulatory action by the state of

Michigan and then to a state court action brought by the township to prohibit composting at

the farm. Plaintiffs then filed a complaint in federal court asserting, among other claims,

claims under § 1983 against various state and county officials. The district court dismissed

all of the claims against the state and county officials on grounds of qualified immunity, with

one exception. The district court denied defendants’ motion to dismiss the plaintiffs’ claim

of denial of equal protection.

The court of appeals characterized the district court’s refusal to dismiss plaintiffs’ equal

protection claim as follows:

Although the complaint is lengthy, the factual allegations

pleaded specifically in support of plaintiffs’ equal protection claim

under 42 U.S.C. § 1983 are minimal. Plaintiffs allege the state

defendants knew Dolores Michaels is a woman and knew Rondigo is

a woman-owned business. R. 4, Amended Complaint ¶¶ 208–09.

They allege the state defendants took actions “based on considerations

other than those proper to the good faith administration of justice, . .
340

. far outside the scope of legitimate law enforcement or prosecutorial

discretion.” Id. at ¶ 212. These actions were allegedly taken under

color of state law and resulted in the denial of plaintiffs’ right to equal

protection of the law. Id. at ¶ 213. In support of the charge that

defendants’ actions were discriminatory, plaintiffs allege that Rick

Minard, “who operated a similarly situated farm operation which

conducted on-farm composting,” received more favorable treatment

than they did. Id. at ¶¶ 117, 118. Specifically, they allege that

Minard’s compost operations plan was approved without having to

meet new and additional requirements imposed on them, including an

engineered site plan, soil borings and a nutrient management plan. Id.

at ¶ 133.

The district court held these allegations were sufficient:

“Plaintiffs have articulated a cognizable, constitutional claim for

violation of equal protection by alleging that the State Defendants

discriminated against them in investigations/proceedings by gender.”

R. 95, Report and Recommendation pp. 41–42. The court also held the

equal protection right asserted by plaintiffs was clearly established: “It

was clearly established that the Equal Protection Clause prohibited

intentional gender discrimination unless it was substantially related to

a legitimate government objective.” Id. at 42. Accordingly, the

district court rejected defendants’ qualified immunity defense at the

pleading stage.

Id. at 680–81.

The defendants appealed the district court’s refusal to dismiss, on grounds of qualified

immunity, plaintiffs’ equal protection claim. The defendants argued on appeal that the

plaintiffs did not set out a non-speculative basis for relief. The Sixth Circuit agreed, and

reversed the district court’s decision not to dismiss the equal protection claim. The court of

appeals reasoned:

[T]he fundamental question presented in this case is whether plaintiffs’

complaint alleges sufficient facts to make out [a] valid equal

protection claim—i.e., sufficient facts to “raise the right to relief above

the speculative level,” sufficient facts to make out a “plausible claim,”

one beyond the line of “sheer possibility.”

The Equal Protection Clause prohibits discrimination by

government which either burdens a fundamental right, targets a

suspect class, or intentionally treats one differently than others

similarly situated without any rational basis for the difference.

Radvansky v. City of Olmsted Falls, 395 F.3d 291, 312 (6th Cir. 2005).
341

Plaintiffs’ allegations arguably implicate the second and third types of

equal protection claim, alleging Rondigo was discriminated against as

a woman-owned business or was treated differently as a “class of one”

without rational basis. The district court construed the claim solely as

one for gender-based discrimination and held the allegations facially

sufficient without identifying a single fact allegation of gender-based

discriminatory animus by any of the five state defendants. Indeed,

among the 250 paragraphs of the amended complaint, there is no

single allegation of action taken by any of the defendants that hints at

gender-based discriminatory animus. Plaintiffs’ mere allegations that

Dolores Michaels is a woman and Rondigo is a woman-owned

business do not make out a claim for gender-based discrimination

targeting them as members of a suspect class.

In their appellate brief, the Rondigo plaintiffs do not argue

otherwise, but rely on their allegations that Rick Minard was treated

more favorably, despite being similarly situated, as justifying an

inference of unlawful discrimination. That is, plaintiffs now argue that

their allegations make out a valid “class of one” theory of

discrimination. To prevail based on such a theory, plaintiffs must show

that Minard was similarly situated in all relevant respects. See

Ercegovich v. Goodyear Tire & Rubber Co., 154 F.3d 344, 352 (6th

Cir. 1998). In addition, plaintiffs must show that the adverse treatment

they experienced was “so unrelated to the achievement of any

combination of legitimate purposes that the court can only conclude

that the government’s actions were irrational.” Warren v. City of

Athens, 411 F.3d 697, 710–11 (6th Cir. 2005) (quoting Kimel v.

Florida Bd. of Regents, 528 U.S. 62, 84, 120 S. Ct. 631, 145 L.Ed.2d

522 (2000)). This showing is made either by negativing every

conceivable reason for the government’s actions or by demonstrating

that the actions were motivated by animus or ill-will. Id. at 711.

The state defendants contend plaintiffs’ equal protection claim

falls short because their bald allegation that Minard is similarly

situated, without more, is insufficient. Of course, plaintiffs’ allegation

that Minard is similarly situated does not exactly stand alone. Even

though Rule 12(b)(6) scrutinyis limited to the pleadings, the pleadings

in this case include numerous exhibits attached to the complaint, as

well as exhibits attached to defendants’ motion to dismiss that are

referred to in the complaint.

Plaintiffs allege they were subject to less favorable treatment

than Minard in three ways. First, whereas Minard’s 17–page

hand-written compost management plan was approved without any
342

requirements that he provide an engineered site plan, soil boring

results, and a nutrient management plan, plaintiffs’ compost operations

plan was not approved, even though it is more thorough and

professional and meets the additional requirements placed on them. 

Second, Minard’s compost operation, unlike plaintiffs’, has allegedly

not been subject to the scrutiny of repeated site inspections. Third,

Minard’s compost operation has allegedly not been referred by MDA

to MDEQ for investigation of potential pollution.

Yet, even accepting that Minard was not in fact subjected to

any of these various adverse treatments, an inference of discriminatory

animus arises only if the state defendants’ proffered reasons for the

actions are negatived or shown to be irrational. Here, however,

according to exhibits attached to plaintiffs’ own complaint, as

summarized above, the state defendants gave facially legitimate

reasons for their actions. The requirements for an updated site plan,

soil borings and revised nutrient management plan were triggered by

the discoveries, during site inspections, that plaintiffs had stockpiled

large amounts of leaves in an area with a seasonal high water table,

creating potential for groundwater pollution. Plaintiffs’ allegations

neither impugn the genuineness or significance of these discoveries

nor aver that Minard’s composting operation was subject to similar

problems or deficiencies that should have also forestalled MDA

approval of his composting operation.

Second, according to plaintiffs’ own exhibits, defendants’

frequent inspections of their property were precipitated by township

residents’ complaints of odors. Plaintiffs allege these complaints were

false and unsubstantiated, as verified by the site inspections, but this

does not alter the facial legitimacy of the state defendants’ purpose for

conducting the inspections. And again, there is no allegation that

Minard's operation was the subject of neighbors’ complaints, false or

otherwise, that went unheeded by the state defendants.

Third, exhibits attached to the complaint show that the

[plaintiffs’] operation was referred to MDEQ for investigation only

after the Rondigo plaintiffs’ persistent failure to remove leaves

rendered their operation out of compliance with GAAMPs. Plaintiffs

have not alleged that they did in fact remove the leaves and that the

potential for groundwater pollution was remedied. Nor do they allege

that Minard was found to be in compliance with GAAMPs despite

similar deficiencies, or that his operation was not referred to MDEQ

despite a finding that he was similarly out of compliance with

GAAMPs.
343

Although plaintiffs’ amended complaint contains 250

paragraphs and occupies 54 pages, it contains precious little factual

support for the theory that the state defendants’ more favorable

treatment of Minard demonstrates they were victims of unlawful

discrimination. Although plaintiffs conclusorily allege that Minard is

similarly situated, exhibits attached to their complaint substantiate

undisputed and facially legitimate reasons for the state defendants’

complained-of actions in regulating plaintiffs’ compost operation . .

. —reasons that appear to be unique to that property. Although

plaintiffs make various allegations that the state defendants, acting in

concert with Richmond Township and its residents, have been unfairly

demanding in their enforcement of agricultural and environmental

standards, no inference of unlawful discrimination can legitimately

arise where the only asserted comparable, Minard, is shown by

plaintiffs’ own pleadings to be dissimilarly situated in several relevant

respects.

In short, plaintiffs’ allegations that Minard is similarly situated

and that his more favorable treatment by defendants evidences

unlawful discrimination are exposed as little more than “legal

conclusions couched as factual allegations” and need not be accepted

as true under Rule 12(b)(6) scrutiny. See Twombly, 550 U.S. at 555,

127 S. Ct. 1955. Plaintiffs’ factual allegations fail to “raise the right

to relief above the speculative level.” Id. They fail to warrant a

“reasonable inference that [defendants are] liable for the misconduct

alleged.” See Iqbal, 129 S. Ct. at 1949. When the allegations are

viewed in light of the exhibits attached to the complaint, they fall far

short of making out a “plausible claim of entitlement to relief” under

either equal protection theory. See id.

As such, plaintiffs’ “insubstantial” equal protection claim was

ripe for dismissal under the doctrine of qualified immunity at the

earliest possible stage in the litigation. See Pearson, 129 S. Ct. at 815.

The district court’s contrary ruling is based in part on a failure to

apply the Supreme Court’s teaching in Twombly and Iqbal. The

district court expressly recognized the applicability of Twombly,

recognized that legal conclusions need not be accepted as true, and

recognized that the complaint must set forth “some factual basis” for

the claims asserted. Yet, the court accepted plaintiffs’ alleged legal

conclusions that Minard was similarly situated and that they were

treated differently because of gender-based discrimination without

requiring supporting factual allegations. This casual acceptance of

plaintiffs’ conclusoryallegations of unlawful discrimination is at odds
344

with the district court’s earlier determination (in dismissing other

claims against the state defendants) that “there is nothing to suggest

that these Defendants’ actions were not taken in good faith and

pursuant to applicable statutes.” R. 95, Report and Recommendation

at 31–32. In fact, this precise characterization applies to the equal

protection claim as well. Nothing but legal conclusions suggests that

the state defendants acted with unlawful discriminatory animus. By

accepting these legal conclusions as sufficient, the district court failed

to heed the teaching of Iqbal, 129 S. Ct. at 1950 (“[W]here the

well-pleaded facts do not permit the court to infer more than the mere

possibility of misconduct, the complaint has alleged—but it has not

‘shown’—‘that the pleader is entitled to relief.’” (quoting FED.R.CIV.

P. 8(a)(2))).

. . . .

Based on the foregoing analysis, we conclude the district court

erred by denying the state defendants’ motion to dismiss based on

qualified immunity. The factual allegations in the complaint, viewed

in conjunction with the exhibits attached to the complaint, are

insufficient to make out a valid equal protection claim under the

“plausibility standard” prescribed by the Supreme Court in Twombly

and Iqbal.

Id. at 681–84 (emphasis added).

• Williams v. Curtin, 631 F.3d 380 (6th Cir. 2011). Petitioner Michael Anthony Williams, a

state inmate proceeding pro se, alleged that he “was subject to Cruel and Unusual

Punishment” when prison officers used a “chemical agent to disable him and gain his

compliance” in the process of transferring him from one prison unit to another. Williams

alleged that upon being ordered to “pack up” his cell, he responded, “What for, sir?” At that

point, an officer stated, “order you [sic] to leave this cellblock.” Officers then entered the

cellblock with an “assault squad” and released a “chemical agent,” which caused Williams

“to cough” and resulted in a “shortage of oxygen.”

The district court dismissed Williams’s complaint on two grounds. First, the district court

found that Williams’s alleged injuries were de minimis. Second, the district court found that

the prison officers’ conduct was reasonable, since they applied the chemical agent in a goodfaith effort to maintain or restore discipline, not to maliciously or sadistically cause harm.

The district court reasoned that Williams had admitted in his complaint that he was

noncompliant with the officers’ orders.

The Sixth Circuit, citing the Twombly plausibility standard, reversed the dismissal of

Williams’s complaint:
345

With regard to the subjective component of an Eighth

Amendment claim, Petitioner has sufficiently alleged that Respondents

acted with a culpable state of mind. Contrary to the statements of the

district court, Petitioner does not admit that he disobeyed a direct

order. Petitioner alleges that, when instructed to “pack up,” he

inquired, “What for, sir?,” at which point an “assault team” entered the

cell and used a chemical agent on him. These facts, if true, may permit

a finding that the use and/or amount of force was unnecessary, which

may suggest that Respondents’ actions were not taken in good faith

and were perhaps motivated by the malicious purpose of causing harm.

Likewise, with regard to the objective component of an Eighth

Amendment claim, Petitioner has sufficiently alleged that Respondents

inflicted “sufficiently serious” pain. Although the district court found

that Petitioner’s allegations of injury – namely, coughing and shortage

of oxygen—constitute a “de minimus [sic] injury,” this finding is an

insufficient basis upon which to dismiss the Complaint. See Wilkins

[v. Gaddy], 130 S. Ct. [1175,] 1178 [(2010) (per curiam)]. If it were

a sufficient basis, as the Supreme Court has explained, “the Eighth

Amendment would permit any physical punishment, no matter how

diabolic or inhuman, inflicting less than some arbitrary quantity of

injury.” Hudson [v. McMillian], 503 U.S. [1,] 9, 112 S. Ct. 995

[(1992)]. Indeed, the Supreme Court recently reversed a sua sponte

dismissal of a prisoner’s Eighth Amendment claim, where the lower

court did so on the basis of de minimis injury. See Wilkins, 130 S. Ct.

at 1178–80. The Court rejected the argument that the Eighth

Amendment requires a showing of significant injury, holding instead

that the judicial inquiry should focus on “the nature of the force rather

than the extent of the injury.” Id. at 1177.

The district court thus should have considered the degree of

force applied. Here, Petitioner alleges that an “assault squad” used a

“chemical agent to disable” him. Viewing Petitioner's Complaint in the

light most favorable to him—and assuming he can prove that

Respondents acted with a culpable state of mind—his allegations of a

violent extraction, complete with use of a chemical agent that caused

some degree of injury to Petitioner, are adequate to plead that the pain

inflicted was “sufficiently serious.” See id. at 1178–79 (“Injury and

force . . . are only imperfectly correlated, and it is the latter that

ultimately counts. An inmate who is gratuitously beaten by guards

does not lose his ability to pursue an excessive force claim merely

because he has the good fortune to escape without serious injury.”).

Williams, 631 F.3d at 384 (footnote omitted).
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• Fabian v. Fulmer Helmets, Inc., 628 F.3d 278 (6th Cir. 2010). Robert Fabian, suing as a

representative of a putative class, sought recovery from a motorcycle helmet manufacturer for

misrepresenting the safety of its helmets. The district court dismissed the complaint for failure

to state a claim. The complaint alleged that the helmets come in at least two sizes, large and

small. In 2000, the National Highway Traffic Safety Administration (“NHTSA”) tested the

large helmets, which passed each component of the test. In 2002, the NHTSA tested the small

helmets, which failed two components of the test. The helmet company took no action in

response to this 2002 test. The district court held that Fabian failed to state a claim because

he had purchased two large helmets, and only small helmets failed the 2002 test.

The Sixth Circuit reversed the dismissal of the complaint, explaining that in the face of

competing inferences, it had to allow the case to proceed:

In granting the motion to dismiss, the district court used the

following chain of reasoning: (1) NHTSA performed a safety test on

a large AF-50 helmet in 2000, and the helmet passed all components

of the test; (2) NHTSA performed a safety test on a small AF-50

helmet in 2002, and the helmet failed at least one component of the

test; and (3) because Fabian premises his claim on the purchase of

large AF-50 helmets, his claim is implausible on its face given that

Fulmer Helmets passed a 2000 NHTSA test on a large AF-50 helmet.

The problem with this chain of reasoning is that it turns on

potential inferences, not necessary ones. There are at least two

legitimate ways to think about the significance of the NHTSA tests,

and they point in opposite directions when it comes to the merits of

this lawsuit. One is that the difference between the 2000 and 2002 test

results turns on differences between the performance of the small and

large AF-50 helmets. If so, that would support the district court’s

ruling that the disparity between the size of the helmet bought and the

size of the helmet tested is fatal to Fabian’s claims. The other

reasonable inference, however, is that helmets of the same model, even

if differently sized, perform the same. Two differently sized helmets,

for example, may be no more distinct as a matter of performance than

two differently sized pairs of shoes or two differently sized pairs of

pants. If so, the failed 2002 test potentially exposed a defect in all

AF-50 helmets, no matter their size.

In the absence of further development of the facts, we have no

basis for crediting one set of reasonable inferences over the other.

Because either assessment is plausible, the Rules of Civil Procedure

entitle Fabian to pursue his claim (at least with respect to this theory)

to the next stage—to summary judgment or, if appropriate, a trial after

the parties have engaged in any relevant discovery to support one or
347

the other interpretation. So long as we can “draw the reasonable

inference that the defendant is liable for the misconduct alleged,”

Iqbal, 129 S. Ct. at 1949, a plaintiff’s claims must survive a motion to

dismiss. That inference is reasonable here because “common sense,”

id. at 1950, tells us that a mass-manufactured consumer product,

whether it is shoes, pants or helmets, may utilize the same design (and

carry the same flaw) regardless of its size.

Fulmer Helmets stresses that Fabian's large helmet has “passed

all tests” and that the 2002 test is irrelevant. Fulmer Helmets Br. 16.

But that does not necessarily end the inquiry. The company may have

changed its design or manufacturing process for all AF-50s between

2000 and 2002, giving rise to a defect in all of its helmets and negating

the relevance of the successful 2000 test result. Or the same test

conducted on two randomly selected helmets (otherwise exactly the

same) might yield different outcomes due to nothing more than natural

statistical variances. The successful 2000 test thus may reflect an

aberration unrelated to helmet size, while the failed 2002 test may

point to a real flaw in all AF-50s. Because Fabian has “nudged his

claims . . . across the line from conceivable to plausible,” Iqbal, 129

S. Ct. at 1950-51, he deserves a shot at additional factual development,

which is what discovery is designed to give him.

Fabian, 628 F.3d at 280–81 (emphasis added).

• In re NM Holdings Co., 622 F.3d 613 (6th Cir. 2010). Stuart Gold, as the trustee in

bankruptcy for a group of companies collectively known as Venture, alleged that Venture’s

former auditor, Deloitte & Touche LLP (1) negligently performed its audits by failing to

uncover and report unsound related-party transactions entered into by Venture’s sole

shareholder and CEO, and (2) aided and abetted the CEO's breach of his fiduciary duty to

Venture. Id. at 615. Deloitte filed a motion to dismiss pursuant to Rule 12(b)(6). Id. The

district court granted Deloitte’s motion and the Sixth Circuit affirmed. Id.

Gold alleged that, for a number of years before Venture filed for bankruptcy, Winget, the CEO

of Venture and the sole beneficiary of the trust owning Venture, “caused Venture to enter into

a series of transactions with companies that were wholly owned or controlled by Winget.”

Id. at 616. And that “Venture received little or no consideration and/or less than reasonably

equivalent value in these related party transactions.” Id. Gold also alleged that Venture’s

public financial statements “contained false and materially misleading statements and

information about the numerous related party transactions.... Many of the related party

transactions were not disclosed at all, and, as to those that were partially disclosed, the

financial statements falsely stated that the transactions were fair to Venture from a financial

standpoint.” In re NM Holdings Co., 622 F.3d at 616. Gold alleged that Venture’s auditor,

Deloitte, “violated GenerallyAccepted Auditing Standards (GAAS) by failing (1) to properly
348

design its audits in order to determine whether Venture’s financial statements contained false

statements, (2) to utilize appropriate procedures for analyzing related-party transactions, and

(3) to properly qualify its opinions on Venture’s financial statements from 1995 until 2001.”

Id. Gold also alleged that Deloitte “knew of Winget's impropriety in entering into the

related-party transactions.” Id. Finally, Gold alleged that “Deloitte’s auditing failures were

the proximate cause of Venture’s precarious financial situation and ultimate bankruptcy.” Id.

Gold also alleged that “Venture’s independent “Fairness Committee,” which was established

pursuant to one or more of the loan agreements, was similarly unaware of the harmful

transactions and would have acted to stop Winget had it been informed of them..” Id.

With respect to his professional negligence claim, Gold alleged that “Deloitte committed

professional negligence by failing to properly conduct its audits of Venture.” Id. at 618. The

court explained that, to succeed on a professional-negligence claim under Michigan law, Gold

must show: “(1) a duty owed by Deloitte to Venture, (2) a breach of that duty, (3) causation,

and (4) damages.” In re NM Holdings Co., 622 F.3d at 618. The court noted that the third

prong, causation, was the “source of the instant dispute between the parties.” Specifically,

the parties disagreed about whether Venture must prove reliance to establish causation. Id.

The court agreed with the district court that proof of reliance was necessary in this case. Id.

at 618-20. And explained that, in a professional-negligence case:

Proof of causation requires both cause in fact and legal, or proximate,

cause. Cause in fact requires that the harmful result would not have

come about but for the defendant’s negligent conduct. On the other

hand, legal cause or “proximate cause” normally involves examining

the foreseeability of consequences, and whether a defendant should be

held legally responsible for such consequences.

Id. at 618-19 (quoting Haliw v. Sterling Heights, 627 N.W.2d 581 (Mich. 2001)). The court

noted that, while proof of reliance is not per se an element of professional negligence, “proof

of reliance is necessary here in order to show that Deloitte’s allegedly deficient audits were

the cause in fact of Venture’s tenuous financial position and resulting bankruptcy.” Id. at 619.

Having decided that reliance was “a critical part of establishing causation in this professionalnegligence action,” the court next determined that Winget’s knowledge could be imputed to

Venture so as to bar any recovery by Venture. Id. The court explained that, under Michigan

law, the knowledge of a corporate agent can be imputed to the entire corporation:

A corporation can only act through its employees and, consequently,

the acts of its employees, within the scope of their employment,

constitute the acts of the corporation. Likewise, knowledge acquired

by employees within the scope of their employment is imputed to the

corporation. In consequence, a corporation cannot plead innocence by

asserting that the information obtained by several employees was not

acquired by any one individual employee who then would have
349

comprehended its full import. Rather, the corporation is considered to

have acquired the collective knowledge of its employees and is held

responsible for their failure to act accordingly.

In re NM Holdings Co., 622 F.3d at 620 (quoting Upjohn Co. v. N.H. Ins. Co., 476 N.W.2d

392, 400 (Mich. 1991)). But there is an exception where the corporate officer’s actions were

adverse to the corporation’s interests. Id. And there is an exception to the exception, the

“sole actor rule”:

 The sole actor rule is an exception to the adverse interest exception....

The sole actor rule comes into play where the wrongdoer is, in

essence, the corporation (the “sole actor”). Indeed, it has its roots in

cases where the agent and the principal are literally the same person

(literally a “sole actor”) and thus information obtained by a person in

his role as an agent is treated as also being obtained in his role as

principal, even if his activities as agent are contrary to his interests as

a principal. Therefore, where the wrongdoer acts contrary to the

interests of the corporation, under the adverse interest exception the

wrongdoer's conduct would not ordinarily be imputed to the

corporation. But where the wrongdoer is a sole actor, the adverse

interest exception is not applied and his wrongdoing is nevertheless

imputed to the corporation.

Id. at 620-21 (quoting MCA Fin. Corp. v. Grant Thornton, L.L.P., 687 N.W.2d 850, 860

(Mich. 2004)). The court explained that where, for example “a sole shareholder loots the

corporation of its assets [,] the adverse interest exception will not apply” and the knowledge

of the shareholder will be imputed to the corporation. In re NM Holdings, 622 F.3d at 621

(quoting MCA Fin. Corp., 687 N.W.2d at 860.).

Gold alleged that Winget, as the sole beneficiary of a trust owning all of the equity interest

in Venture, used his power to cause Venture to enter into the related-party transactions. Id.

at 615, 622. Gold also alleged that Winget’s transactions were “solely in his own interest and

entirely against the interests of Venture.” Id. at 622. Deloitte argued that Winget was clearly

a “sole actor” so that the adverse interest exception did not apply. Id. The court agreed,

noting that “Gold does not seriously dispute that Winget was the sole actor,” but contends that

the adverse interest exception should apply because “Venture’s creditors and the Fairness

Committee were innocent decision-makers because they had the authority to stop Winget from

entering into the related-party transactions.” Id. And “given the presence of these innocent

parties, Winget cannot be considered to be Venture’s sole actor, ... Winget’s knowledge

should not be imputed to Venture so as to bar any recovery by Venture.” Id. The court noted

that “no Michigan court has thus far adopted the innocent-decision-maker exception,” but

decided that Gold’s claim would be insufficient “even if the Michigan courts would apply the

innocent-decision-maker exception” because Gold did not make a plausible claim of reliance,

which was necessary to satisfy the causation element for a professional-negligence claim. See
350

In re NM Holdings Co., 622 F.3d at 622.

With regard to the reliance by the Fairness Committee via its “sole and independent member,

Maurice Williams,” Gold alleged that 

312. Section 4.12 of [the NBD loan indenture agreement] ... required

the formation of a “Fairness Committee” to review related party

transactions. The Indentures required at least one member of the

Fairness Committee to be independent of Venture and its principals,

which independent member effectively wielded veto power over

related party transactions.

....

320. Not only would timely and proper disclosure of these transactions

have caused NBD, the noteholders and indenture trustees to force

Winget to cease the unfair related party transactions, but ... such

disclosures would have caused the independent member of the

Fairness Committee to act to avoid or at the very least reduce the

corporate injury suffered by Venture as a result of Winget's improper

related party transactions.

321. As required under certain of its indentures and loan agreements

..., Venture maintained a Fairness Committee, which had a sole and

independent member, Maurice Williams, who was empowered to

evaluate and approve or disapprove of any related party transactions

undertaken by Winget. Because Venture was required to retain an

independent member of the Fairness Committee, Mr. Williams ...

could not be terminated at the whim of Winget without placing

Venture in default under various agreements. In this capacity, Mr.

Williams possessed greater corporate power than an officer or director

of Venture, because he had the unilateral and absolute authority to

prevent Winget from undertaking or continuing any unfair related

party transactions. On information and belief, Mr. Williams was

innocent of Winget's misconduct ..., and was able to prevent it had the

misconduct been known.

322. Deloitte was fully aware of the existence and powers of the

Fairness Committee. Deloitte obtained minutes of the meetings of the

Fairness Committee, knew of Mr. Williams' identity and role, and was

fully able to communicate with Mr. Williams about the related party

transactions it was auditing.

Id. at 622-23. The court decided that these allegations were “insufficient in a critical way:

They contain no statement that Williams actually relied on Deloitte’s audits in choosing not
351

to act. Even more fundamental, there is no allegation that Williams ever saw the audits.” Id.

at 623. The court concluded that Gold’s allegations of reliance by the Fairness Committee

were insufficient:

The amended complaint does allege that properly conducted audits

“would have caused the independent member of the Fairness

Committee to act,” but this statement is, at most, a mere “formulaic

recitation” of the causation element of a professional-negligence claim

and is not sufficient to state a claim for relief. See Ashcroft v. Iqbal,

--- U.S. ----, 129 S. Ct. 1937, 1949, 173 L. Ed. 2d 868 (2009) (citation

omitted) (holding that the plaintiff's complaint failed to state a claim

for relief because it contained conclusory allegations that were not

entitled to the assumption of truth). An allegation that Williams in

fact saw and relied on the audits would be the “further factual

enhancement” that is needed to support this “naked assertion.” See id.

(citation omitted). In sum, Gold’s amended complaint can hardly

“contain sufficient factual matter, accepted as true, to state a claim to

relief that is plausible on its face” if it does not even allege that

Williams saw the audits. See id. (citation and internal quotation

marks omitted).

This deficiency is especially glaring in comparison to the explicit

statements regarding creditor reliance. The amended complaint, for

example, alleged that Deloitte “issued certain opinions directly to

NBD Bank and to the noteholders,” that “Venture was obligated to

supply audited financial statements to the noteholders,” and that

Deloitte “directly reported” to Venture’s creditors. In addition, the

amended complaint alleged that Deloitte specifically represented to the

creditors “that it was not aware of any violation of applicable

covenants, including covenants prohibiting Venture from making

distributions to Winget.” Most importantly, the amended complaint

alleged that “the noteholders relied upon Deloitte’s representations in

determining whether Venture was in compliance with the covenants

set forth in the indenture.” These specific allegations of creditor

reliance are in sharp contrast to the allegations regarding the Fairness

Committee.

Particularly striking is the fact that Gold amended his complaint to add

specific examples of creditor reliance. In Gold’s original complaint,

there were no allegations of reliance on the audits by anyone. Deloitte

subsequently filed a motion to dismiss Gold’s original complaint,

arguing that because the complaint did not (and could not) allege that

Venture itself relied on the audits, Gold had failed to state a claim.

Presumably in response to this contention, Gold amended his
352

complaint to add allegations of reliance. These new allegations,

however, related only to reliance by Venture creditors, not by Williams

as the sole member of the Fairness Committee.

Williams, in other words, might or might not be considered an

innocent decision-maker within Venture for the purpose of

overcoming the sole-actor rule. But without any allegations that

Williams relied on Deloitte’s audits, Gold has failed to satisfy the

causation element for a professional-negligence claim even if Williams

were so considered.

Id. at 623-24. The court next examined whether reliance on the audits by Venture’s creditors

would establish causation. Id. The court decided that it could not, adopting the reasoning of

the Fifth Circuit in FDIC v. Ernst & Young, 967 F.2d 166 (5th Cir. 1992):

The FDIC argues that even if neither Woods [, as Western’s sole

shareholder,] nor Western relied upon the audit, [EY’s] alleged

negligence caused the losses because had the audits been accurate,

someone, such as Western’s creditors or government regulators, would

have “rescued” Western. This argument is flawed because it is not an

appropriate argument for Western, or its assignee, to make. Western

cannot claim it should recover from EY for not being rescued by a

third party for something Western was already aware of and chose to

ignore. Neither can Western’s assignee make the claim. The FDIC in

its own capacity or Western’s creditors might be able to make this

claim, but the FDIC brought this suit only on Western’s behalf.

In re NM Holdings, 622 F.3d at 624-25 (alterations in original).

Having decided that Gold’s amended complaint failed to state a claim for professional

negligence, the court turned to Gold’s aiding and abetting claim and agreed with the district

court that this claim was time-barred. Id. at 625. 

• Albrecht v. Treon, 617 F.3d 890 (6th Cir. 2010), cert. denied, 131 S. Ct. 1047 (2011).

Plaintiffs alleged that the defendant coroner’s retention and destruction of their son’s brain,

without their knowledge, deprived them of the right to dispose of the brain, in violation of the

Due Process Clause of the Fourteenth Amendment. Id. at 892. The question of whether the

Plaintiffs had a constitutionally protected property interest in their son’s brain was an issue

of first impression in Ohio, so the district court certified the question to the Ohio Supreme

Court, which decided that there is no protected property interest in human remains retained

by the state of Ohio for criminal investigation purposes. Id. In accordance with this ruling,

the district court held that the Plaintiffs had no property interest in the brain and that

defendants were entitled to judgment on the pleadings. Id. The Sixth Circuit affirmed. Id.

at 893.
353

The court explained that it was analyzing the motion for judgment on the pleadings under the

standard set forth in Iqbal and Twombly:

“Motions for judgment on the pleadings pursuant to Federal Rule of

Civil Procedure 12(c) are analyzed under the same de novo standard

as motions to dismiss pursuant to Rule 12(b)(6).” Sensations, Inc. v.

City of Grand Rapids, 526 F.3d 291, 295 (6th Cir.2008). Courts “must

construe the complaint in the light most favorable to plaintiff,” League

of United Latin Am. Citizens v. Bredesen, 500 F.3d 523, 527 (6th

Cir.2007) (citation omitted), “accept all well-pled factual allegations

as true[,]” id., and determine whether the “complaint states a plausible

claim for relief[,]” Ashcroft v. Iqbal, --- U.S. ----, 129 S. Ct. 1937,

1950, 173 L. Ed. 2d 868 (2009). However, the plaintiff must provide

the grounds for its entitlement to relief, Bovee v. Coopers & Lybrand

C.P.A., 272 F.3d 356, 361 (6th Cir.2001), and that “requires more than

labels and conclusions, and a formulaic recitation of the elements of

a cause of action.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127

S. Ct. 1955, 167 L. Ed. 2d 929 (2007). A plaintiff must “plead [ ]

factual content that allows the court to draw the reasonable inference

that the defendant is liable for the misconduct alleged.” Iqbal, 129 S.

Ct. at 1949. A plaintiff falls short if she pleads facts “merely

consistent with a defendant’s liability” or if the alleged facts do not

“permit the court to infer more than the mere possibility of misconduct

....” Id. at 1949, 1950.

Albrecht, 617 F.3d at 893 (alterations in original). The court then explained that “[f]ederal

law is clear that the states define property rights in their respective jurisdictions.” Id. at 898.

And noted that the “Ohio Supreme Court explicitly delineated the lack of property rights in

this case.” Id. The Sixth Circuit concluded that the Albrechts’ claim “fail[ed] as a matter of

law. ‘[I]f state actors ... do not infringe on the life, liberty, or property of the plaintiffs, there

can be no due process violation.’” Id. (quoting Whaley v. County v. Tuscola, 58 F.3d 1111,

1113 (6th Cir. 1995)). 

• White v. United States, 601 F.3d 545, No. 09-3158, 2010 WL 1404377 (6th Cir. Apr. 9,

2010). The plaintiffs challenged the anti-animal fighting provisions of the Animal Welfare

Act (AWA), in a suit against the United States, the Secretary and Department of Agriculture,

the Attorney General and Department of Justice, and the Postmaster General and the United

States Postal Service. Id. at *1. The district court dismissed for lack of standing and the Sixth

Circuit affirmed.

The plaintiffs sought a declaratory judgment that the AWA’s provisions were unconstitutional

“insofar ‘as they apply to game-fowl or activities and products relating to game-fowl,’ and an

injunction prohibiting enforcement of these provisions.” Id. The relevant subsection
354

“restricted (and continues to restrict) various activities associated with animal fighting that

involve interstate travel and commerce, but did not (and does not) itself prohibit animal

fighting, including cockfighting.” Id. at *2. All fifty states have legislation that prohibits

cockfighting, although it remains legal in some U.S. territories and in Puerto Rico. Id. The

court noted that it would accept the factual basis of the alleged injuries as true because the suit

was dismissed at the pleading stage. Id. (citing Fednav, Ltd. v. Chester, 547 F.3d 607, 614

(6th Cir. 2008)). The plaintiffs each alleged individual injuries, and also alleged “that they

collectively ha[d] suffered and will continue to suffer violations of various constitutional

rights because of the AWA.” White, 2010 WL 1404377, at *3. The court explained the

collective allegations:

First, the plaintiffs argue that the AWA creates an “unconstitutional

impairment of plaintiffs’ Fifth Amendment liberty interests in their

right to travel,” by prohibiting them “from taking the property they

own from a place where they have the right to own, possess, and enjoy

it to another place where they have the right to own, possess, and enjoy

it,” and chilling the right to travel with chickens intended for

non-fighting purposes. Second, the AWA allegedly impinges the

plaintiffs’ First Amendment association rights by making it impossible

for the plaintiffs to travel to the events at which they ordinarily would

associate with like-minded people. Third, the plaintiffs argue that the

AWA inflicts punishment on them and other members of the

gamefowl community without a judicial trial and therefore is a bill of

attainder. Finally, the plaintiffs argue that the AWA violates

principles of federalism embodied, inter alia, in the Ninth, Tenth, and

Eleventh Amendments to the United States Constitution by

impermissibly favoring the domestic policies of those states that have

enacted cockfighting bans over those of states that have not.

Id. The district court “consolidated the injuries into two basic ‘premises’: first, that the

plaintiffs feared false prosecution under § 2156, and second, that they had suffered economic

injuries because of the AWA.” Id. at *4. The district court concluded that “the plaintiffs’ fear

of false prosecution did not constitute an ‘injury in fact’ sufficient to confer constitutional

standing . . . because the ‘[p]ossibility of future harm [was] neither actual nor imminent, but

[was] conjectural at best,’” and therefore “‘[was] not within the purview of disputes that the

federal courts are permitted to adjudicate.’” Id. (first alteration in original) (citation and

additional quotation marks omitted). The district court also concluded that “because

cockfighting is now illegal in all fifty states and in the District of Columbia, there would be

no domestic market for cockfighting even if § 2156 were declared unconstitutional,” and that

“any economic injuries the plaintiffs had suffered were not traceable to the AWA nor

redressable by the declaratory or injunctive relief sought . . . .” Id.

In discussing the standard of review, the Sixth Circuit noted that “[g]eneral factual allegations

of injury may suffice to demonstrate standing, ‘for on a motion to dismiss we presum[e] that
355

general allegations embrace the specific facts that are necessary to support the claim.’” Id.

(quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992) (internal quotation marks

omitted)). But the court cited both a pre-Twombly case and Iqbal to note: “‘[S]tanding cannot

be inferred . . . from averments in the pleadings, but rather must affirmatively appear in the

record,’ Spencer v. Kemna, 523 U.S. 1, 10–11, 118 S. Ct. 978, 140 L. Ed. 2d 43 (1998), nor

will ‘naked assertion[s] devoid of further factual enhancement suffice, Ashcroft v. Iqbal, ---

U.S. ----, ----, 129 S. Ct. 1937, 1949, 173 L. Ed. 2d 868 (2009) (internal quotation marks

omitted).” White, 2010 WL 1404377, at *4 (omission and second alteration in original). The

court confirmed that the plausibility requirement applied to standing allegations by noting that

“the complaint must contain ‘sufficient factual matter, accepted as true, to state a claim to

relief that is plausible on its face.’” Id. (quoting Iqbal, 129 S. Ct. at 1949).

In considering the claims of economic injuries, the court noted that “[t]he plaintiffs argue[d]

that the district court was compelled to accept as true their allegations that there [we]re states

and territories where cockfighting remain[ed] legal . . . .” Id. at *5. But the Sixth Circuit

found that “[c]ontra the plaintiffs’ argument, the district court was not compelled to accept

their legal conclusions as true.” Id. (citing Iqbal, 129 S. Ct. at 1949). The court concluded

that because cockfighting is banned in all fifty states and the District of Columbia, “the

plaintiffs’ alleged economic injuries due to restriction on cockfighting are not traceable only

to the AWA.” Id. (citation omitted). The court also found that “these injuries [would not] be

redressed by the relief plaintiffs s[ought],since the states’ prohibitions on cockfighting would

remain in place notwithstanding any action we might take in regard to the AWA.” Id.

Although “the defendants concede[d] that cockfighting remain[ed] legal in Puerto Rico and

some territories of the United States, this concession d[id] not aid the plaintiffs” because

“[t]he complaint d[id] not allege that the plaintiffs h[ad] ever derived any income from or

engaged in any trade with individuals in Puerto Rico or U.S. territories” and “d[id] . . . not

claim that the plaintiffs ha[d] any intent to do so in the future.” White, 2010 WL 1404377,

at *6. The court concluded that “[a]bsent any allegation that the plaintiffs ha[d] lost or will

lose income because of the AWA’s restrictions on interstate commerce with these locales, the

bald assertion that plaintiffs have suffered economic injury due to the AWA is not sufficient

to confer standing based on the continued legality of cockfighting there.” Id. (citing Bishop

v. Lucent Techs., Inc., 520 F.3d 516, 522 (6th Cir. 2008); Iqbal, 129 S. Ct. at 1949) (footnote

omitted).

With respect to the fear of false prosecution, the court concluded that the injury was too

speculative. Id. The court noted that the district court erred by “emphasiz[ing] that none of

the plaintiffs alleged any intention to engage in conduct prohibited by the AWA,” explaining

that “[w]hether or not the plaintiffs alleged an intention to engage in prohibited conduct [wa]s

not relevant to their allegations that they risk[ed] false prosecution under the AWA even if

they engage[d] only in lawful conduct.” Id. But the court concluded that the allegations were

still too speculative, noting that “[t]he plaintiffs’ allegations of potential false prosecution

amount[ed] to a claim that, if they transport or sell chickens across state lines for non-fighting

purposes and if they are stopped by law enforcement authorities, the authorities may

misinterpret the plaintiffs’ intent and may wrongly prosecute them.” Id. The court found the
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facts similar to a Supreme Court case in which the allegations were found too speculative to

confer standing. See id. (citing O’Shea v. Littleton, 414 U.S. 488 (1974)). The court also

concluded that the alleged “‘chill’ on the plaintiffs’ right of travel, right of association, and

‘right to be free of bills of attainder,’ which the plaintiffs claim[ed] result[ed] from their fear

of false prosecution, [did not] suffice for standing.” White, 2010 WL 1404377, at *7. The

court noted that the law “assume[d] that only the chilling of First Amendment rights may

confer standing,” and that even then, “a subjective fear of chilling will not suffice for standing

absent a real and immediate threat of future harm.” Id. (citations omitted).

The plaintiffs also asserted that “[b]y prohibiting the sale and transportation of chickens for

fighting purposes, the AWA violates (or so the complaint argue[d]) the plaintiffs’ rights of

travel and association, their ‘rights to due process in the deprivation of their rights to property

and liberty,’ and their ‘right to be free from bills of attainder.’” Id. The court agreed with the

plaintiffs that “they need not allege an intention to violate the AWA in order to have standing

based on these alleged violations of their constitutional rights,” but stated that “they still must

demonstrate an injury-in-fact to a legally protected interest that is actual or imminent and that

satisfies the other prongs of the constitutional standing test.” Id. at *8. The court concluded

that “[e]ven if the plaintiffs’ allegations that they would sell chickens for fighting purposes

but for § 2156 [we]re sufficient to demonstrate a significant possibility of future harm, none

of the purported ‘constitutional’ injuries actually implicate[d] the Constitution.” Id. (citation

omitted). The court explained:

[Section] 2156 neither prohibits travel nor prevents individuals from

associating for the purposes of animal fighting in locations where

animal fighting remains legal. Nor does it deprive the plaintiffs of

property or liberty without due process. If the plaintiffs violate the

AWA and are arrested for doing so, there is no reason to think they

will not receive the procedural protections of the federal criminal

justice system. By the same token, because the AWA does not impose

any penalties without a judicial trial, it is not a bill of attainder.

Because none of these alleged injuries actually implicates the

Constitution, none is sufficient to confer standing.

Id. (internal citation omitted).

Finally, the court found the allegation that the AWA “violate[d] the principles of federalism

contained in the Ninth, Tenth, and Eleventh Amendments by favoring the policies of those

states that ban cockfighting in a manner that impose[d] burdens on those states that ha[d] not

enacted such bans,” insufficient to confer standing. White, 2010 WL 1404377, at *8. The

court held that “[e]ven assuming the plaintiffs [we]re correct that a constitutional violation

ha[d] occurred, they d[id] not have standing to challenge it [because] [a] party invoking the

court’s jurisdiction must show that he has ‘personally suffered’ some actual or threatened

injury.” Id. (citations omitted). Because “[a]ny injury . . . [wa]s to the impacted states, and

perhaps to their citizens or the citizens of the United States in general, . . . the plaintiffs [could
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not] be said to have ‘personally suffered’ the alleged federalism violation in a manner that

would confer standing.” Id. (citation omitted).

• Tam Travel, Inc. v. Delta Airlines, Inc. (In re Travel Agent Comm’n Antitrust Litig.), 583

F.3d 896 (6th Cir. 2009), cert. denied, 131 S. Ct. 896 (2011). The plaintiffs were travel

agencies who alleged a § 1 conspiracy under the Sherman Antitrust Act, based on a series of

uniform base commission cuts adopted by the defendants over a seven-year period. Id. at

898–99. The Plaintiffs alleged that one industry leader airline would reduce the commissions

paid to travel agents, that competitor airlines would shortly follow suit, and that this pattern

happened several times until eventually the commissions were reduced to zero. See id. at

899–900. The plaintiffs further alleged that the decision to cut commissions was contrary to

the individual defendants’ economic self-interests, and that the defendants had numerous

opportunities to conspire. Id. at 900. The district court dismissed the complaint, finding that

with respect to some of the defendants, the plaintiffs failed to allege any conduct other than

sporadic parallel conduct; that the plaintiffs failed to allege any parallel conduct as to one of

the defendants; that several of the defendants had emerged from bankruptcy and their claims

were therefore discharged; that the plaintiffs failed to allege sufficient facts to plausibly

suggest an illegal agreement with respect to other defendants; and that the plaintiffs alleged

no facts with respect to a holding company that did not itself pay any commissions. Id. at

900–01. The Sixth Circuit affirmed.

The Sixth Circuit explained that “conscious parallelism” is not prohibited under § 1, and that

“[a] district court’s early assessment of the sufficiency of a § 1 claim under FED. R. CIV. P.

12(b)(6) or FED. R. CIV. P. 12(c) addresses the dilemma of the extensive litigation costs

associated with prosecuting and defending antitrust lawsuits.” Id. at 903–04. The court

rejected the plaintiffs’ attempt to distinguish Twombly, concluding that the allegation of an

agreement was “nothing more than a legal conclusion ‘masquerading’ as a factual allegation.”

Tam Travel, 583 F.3d at 904–05 (citing Eidson v. State of Tenn. Dep’t of Children’s Servs.,

510 F.3d 631, 634 (6th Cir. 2007)). The court also found that the allegations regarding

meetings in which the defendants had the opportunity to conspire did “not necessarily support

an inference of illegal agreement.” Id. at 905. The court noted that with respect to two of the

defendants, the plaintiffs had alleged nothing more than parallel conduct, and that several

other defendants were not even mentioned in the body of the complaint or described as linked

to the conspiracy. Id. The court explained that if these latter defendants “‘[sought] to respond

to plaintiffs’ [ ] allegations in the § 1 context, [they] would have little idea where to begin.’”

Id. (quoting Twombly, 550 U.S. at 564 n.10) (alterations in original).

The Sixth Circuit also rejected the argument that the allegations were sufficient to infer that

discovery would reveal circumstantial evidence to suggest a conspiracy. See id. at 906–08.

The court found that the defendants had asserted a “reasonable, alternative explanation for

their parallel pricing behavior”—specifically, that new, alternate methods for purchasing

airfare provided greater economic incentive to cut commission rates on a trial-and-error basis,

and that it was simple and inexpensive for a leader airline to test the market with cuts and

hope that its competitors would follow. Id. at 908. The court explained:
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We therefore hold that plaintiffs have failed to allege sufficient

facts plausibly suggesting (not merely consistent with) an agreement

in violation of § 1 of the Sherman Act because defendants’ conduct

“was not only compatible with, but indeed was more likely explained

by, lawful, unchoreographed free-market behavior.” Ashcroft v. Iqbal,

129 S. Ct. at 1950. Pursuant to Twombly, district courts must assess

the plausibility of an alleged illegal agreement before parties are forced

to engage in protracted litigation and bear excessive discovery costs.

Twombly, 550 U.S. 558–59. In this regard, we note that the

plausibility of plaintiffs’ conspiracy claim is inversely correlated to the

magnitude of defendants’ economic self-interest in making the cuts.

We are not persuaded by plaintiffs’ argument that defendants would

not seek to reduce base commissions independently, especially during

the late 1990s and into 2002, where changes in the marketplace

provided consumers with alternate ticket-purchasing options. As the

Court stated in Twombly, “there is no reason to infer that [these

defendants] had agreed among themselves to do what was only natural

anyway.” 550 U.S. at 566.

Tam Travel, 583 F.3d at 908–09 (footnotes and additional internal citation omitted) (alteration

in original). The court concluded: “[E]ach defendant’s decision to match a new commission

cut was arguably a reasoned, prudent business decision. Moreover, if each defendant asked

‘itself’ whether it was ‘better off’ paying base commissions (paid by all) or not paying base

commissions (eliminated by all), each defendant would plausibly elect the latter (from a

purely economic standpoint).” Id. at 910. The court also rejected the allegations based on

opportunity to conspire, finding that “[t]he fact that American and Continental gathered at

industry trade association meetings during the seven-year period when defendants reduced

commission rates should not weigh heavily in favor of suspecting collusion,” and noting that

a similar argument had been rejected in Twombly. Id. at 910–11. The court also held that “a

mere opportunity to conspire d[id] not, standing alone, plausibly suggest an illegal agreement

because American’s and Continental’s presence at such trade meetings [wa]s more likely

explained by their lawful, free-market behavior.” Id. at 911 (citing Iqbal, 129 S. Ct. at 1950).

In dissent, Judge Merritt asserted that Twombly and Iqbal had not radically changed pleading

standards:

In the recent Twombly and Iqbal cases, quoted and discussed

at length by my colleagues in their majority opinion, the Supreme

Court has started to modify somewhat, but not drastically, the notice

pleading rules that have reigned under Conley v. Gibson, 355 U.S. 41,

45 (1957) (“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”).

These two cases now require more than simple notice and conclusory
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statements of ultimate facts about the case. Instead plaintiffs must

plead “sufficient factual matter” to state a legal claim or cause of

action that is not only “conceivable” but also “plausible,”

independently of the notice given and the legal conclusions stated—in

short, a set of “well-pleaded factual allegations” that make the cause

of action “plausible.” Iqbal, 129 S. Ct. at 1949–51 (2009). The

Supreme Court majority has made clear that it is not making a major

change in the law of pleading with Twombly and its progeny.

Id. at 911–12 (Merritt, J., dissenting) (footnote omitted) (emphasis added). Judge Merritt

argued that the majority had misapplied the pleading standard:

As with any other new, general legal standard, the nature and

meaning of the newly modified standard can be understood and

followed only by analyzing how the standard is applied in actual cases

like this case. Here my colleagues have seriously misapplied the new

standard by requiring not simple “plausibility,” but by requiring the

plaintiff to present at the pleading stage a strong probability of winning

the case and excluding any possibility that the defendants acted

independently and not in unison. My colleagues are requiring the

plaintiff to offer detailed facts that if true would create a clear and

convincing case of antitrust liability at trial without allowing the

plaintiff the normal right to conduct discovery and have the jury draw

reasonable inferences of liability from strong direct and circumstantial

evidence.

Id. at 912. Judge Merritt explained that “[i]f the Twombly pleading issue was ‘close,’ but

insufficient, based only on similar stand-pat nonfeasance toward each other’s historical

territory, the allegations concerning the in unison, affirmative behavior of the airlines in this

case [we]re obviously sufficient,” and noted that “[t]he factual allegations in this case

create[d] an overwhelming case for the plaintiff to get by a motion to dismiss on the

pleading.” Id. Judge Merritt stated:

To summarize, the complaint alleges that price cuts could not

be made absent unilateral, follow-the-leader action by all of the

defendants. It provides specific times and locations of numerous

meetings attended by the defendants. Finally, and most importantly,

the complaint ties the dates of those meetings with industry-wide

simultaneous rate cuts that followed immediately thereafter. Reading

these allegations as a whole, the complaint clearly satisfies the

Twombly standard. In fact, the Supreme Court in Twombly noted that

multiple competitors making “complex and historically unprecedented

changes in pricing structure . . . for no other discernible reason” would

properly state a claim under § 1 of the Sherman Act. 550 U.S. at 557
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n.4. That appears to be exactly the situation here.

Tam Travel, 583 F.3d at 913 (Merritt, J., dissenting). Judge Merritt expressed concern that

although few antitrust cases had been decided since Twombly and Iqbal, “district court judges

across the country have dismissed a large majority of Sherman Act claims on the pleadings[,]

misinterpreting the standards from Twombly and Iqbal, thereby slowly eviscerating antitrust

enforcement under the Sherman Act.” Id. at 914 (citing In re Hawaiian & Guamanian

Cabotage Antitrust Litig., No. 08-md-1972 TSZ, 2009 WL 2581510 (W.D. Wash. Aug. 18,

2009); Bailey Lumber & Supply Co. v. Ga.-Pac. Corp., No. 1:08CV1394LG-JMR, 2009 WL

2872307 (S.D. Miss. Aug. 10, 2009); Burtch v. Milberg Factors, Inc., No. 07-556-JJF-LPS,

2009 WL 1529861 (D. Del. May 31, 2009)). Judge Merritt further explained that “[t]he

uniformity needed for the rule of law and equal justice to prevail is lacking,” and that “[t]his

irregularity may be attributed to the desire of some courts, like my colleagues here, to use the

pleading rules to keep the market unregulated, while others refuse to use the pleading rules

as a cover for knocking out antitrust claims.” Id. (citations omitted). The dissent elaborated:

There are many, including my colleagues, whose preference for

an unregulated laissez faire market place is so strong that they would

eliminate market regulation through private antitrust enforcement.

Using the new Twombly pleading rule, it is possible to do away with

price fixing cases based on reasonable inferences from strong

circumstantial evidence. As in this case, the proponents of this

strategy propose to require either an express written agreement among

competitors or a transcribed oral agreement to fix prices. Nothing less

will do. Insider testimony, a strong motivation to collude, and

aggressive, lock-step unanimity by competitors in pricing become

insufficient to state a case. Over time, the antitrust laws fall further

into desuetude as the legal system and the market place are

manipulated to benefit economic power, cartels, and oligopolies

capable of setting prices. This case is just one small step in that

direction. But this direction is unlikely to be changed unless the

Supreme Court steps in to make it clear that Twombly may not be

used, as my colleagues propose, as a cover for repealing regulation of

the marketplace through private antitrust enforcement.

Id. at 915.

• Hensley Mfg. v. ProPride, Inc., 579 F.3d 603 (6th Cir. 2009). The plaintiff asserted claims

for trademark infringement and unfair competition under the Lanham Act, common law

trademark infringement, breach of contract against one of the defendants, misappropriation

of trade secrets against two other defendants, and tortious interference with business relations.

Id. at 607. The district court dismissed the trademark infringement and unfair competition

claims, finding that the fair use exception applied; dismissed the breach of contract claim,

finding that it had to be based on a valid claim for trademark infringement; and declined to
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exercise supplemental jurisdiction over the remaining state law claims. Id. at 608.

In analyzing the trademark infringement claim, the Sixth Circuit found there to be insufficient

factual allegations to support finding a likelihood of confusion:

Here, the complaint does not allege facts sufficient to show that

ProPride’s use of the “Hensley” name creates a likelihood of confusion

as to the source ofits products. Hensley Manufacturing does not claim

that ProPride has marked its trailer hitch products with the trademarks

“Hensley,” “Hensley Arrow,” or even “Jim Hensley.” The name of

ProPride’s product, the “Pivot Point Projection Hitch” or “3P Hitch,”

is not even remotely similar to the “Hensley” trademark. Instead, the

complaint challenges ProPride’s use of Jim Hensley’s name in

connection with its advertising of the 3P Hitch. Although Hensley

Manufacturing alleges that this creates “a strong likelihood of

confusion in themarketplace as to the source of origin and sponsorship

of the goods of the Plaintiff and the Defendant,” such a conclusory and

“formulaic recitation” of the elements of a trademark infringement

cause of action is insufficient to survive a motion to dismiss. See

Iqbal, 129 S. Ct. at 1954 (“Rule 8 does not empower respondent to

plead the bare elements of his cause of action . . . and expect his

complaint to survive a motion to dismiss.”).

Id. at 610–11. The court also found that even if the plaintiff had adequately alleged likelihood

of confusion, the claim would fail under the fair use doctrine because “the complaint and

attached exhibits show[ed] that ProPride’s uses of Jim Hensley’s name [we]re descriptive”

and the plaintiff “did not allege facts from which any inference of bad faith c[ould] be drawn

. . . .” Id. at 612. The court also explained that because “the facts Hensley Manufacturing

alleged in its complaint, as well as the attached exhibits, demonstrated that there was no

likelihood of confusion and that the fair use defense conclusively applied as a matter of law,”

dismissal was appropriate. See id. The court found insufficient the plaintiff’s argument that

“‘facts may exist that establish a level of consumer confusion’ and that ‘facts may exist that

establish that ‘Hensley’ is not being used fairly and in good faith,’” because “mere speculation

is insufficient.” Hensley Mfg., 579 F.3d at 613. The court concluded: “Simply put, Hensley

Manufacturing failed to state a claim for relief that is ‘plausible on its face.’” Id. (quoting

Twombly, 550 U.S. at 570; citing Iqbal, 129 S. Ct. at 1949).

• Courie v. Alcoa Wheel & Forged Prods., 577 F.3d 625 (6th Cir. 2009). The plaintiff sued

his employer and his union, alleging that they discriminated against him by settling his union

grievance with an agreement that “branded him a racist.” Id. at 628. The district court

dismissed the complaint and the Sixth Circuit affirmed. Id. The complaint alleged that after

the plaintiff called a fellow employee a derogatory name in front of management, his

employer sent him a warning that it considered the term “‘racially offensive.’” Id. The

plaintiff filed a grievance with his union, “stating that he was not a racist and that other . . .
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employees of various races had also used the term.” Id. The plaintiff sued in federal court,

claiming his employer breached anti-discrimination provisions of the collective bargaining

agreement, and that his union breached its duty of fair representation to him by entering into

a settlement agreement; that the settlement violated Ohio state law; that he was defamed; and

that the defendants were liable under the tort of intentional infliction of emotional distress

when they settled the dispute without his consent. Id. at 629. The plaintiff’s wife alleged loss

of consortium. Courie, 577 F.3d at 629.

In discussing the pleading requirements, the Sixth Circuit noted that “[t]he Supreme Court

recently raised the bar for pleading requirements beyond the old ‘no-set-of-facts’ standard

of Conley . . . that had prevailed for the last few decades.” Id. (citing Iqbal, 129 S. Ct. at

1979; Twombly, 550 U.S. at 555) (emphasis added). The court explained that “Conley itself

had reflected a change away from ‘code pleading’ to ‘notice pleading,’ and the standard it

announced was designed to screen out only those cases that patently had no theoretical hope

of success.” Id. (footnote omitted) (citing Conley, 355 U.S. at 45–46 (“‘In appraising the

sufficiency of the complaint we follow, of course, the accepted rule 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.’”); Iqbal,

129 S. Ct. at 1959 (Souter, J., dissenting) (“observing that ‘[t]he sole exception’ to the Conley

rule was for ‘allegations that [were] sufficiently fantastic to defy reality as we know it; claims

about little green men, or the plaintiff’s recent trip to Pluto, or experiences in time travel’”))

(alterations in original).

In analyzing the complaint at issue, the Sixth Circuit explained that the complaint met the

Iqbal standard with respect to pleading the existence of the settlement agreement, explaining:

The Couries’ legal arguments rest wholly upon the existence

of a “settlement agreement” that possibly does not exist: all we have

is an unsigned proposal from the [union] to [the employer]. Yet a

complaint need only “contain sufficient factual matter” to be

“plausible,” Iqbal, 129 S. Ct. at 1949, and we cannot dismiss for

factual implausibility “even if it [would] strike[ ] a savvy judge that .

. . recovery is very remote and unlikely,” Twombly, 550 U.S. at 556,

127 S. Ct. 1955 (internal quotation marks and citation omitted); see

also Iqbal, 129 S. Ct. at 1950 (“Determining whether a complaint

states a plausible claim for relief will . . . be a context-specific task that

requires the reviewing court to draw on its judicial experience and

common sense.”). Here, Courie has alleged that this settlement

agreement exists and has provided an unsigned settlement proposal as

an exhibit to his complaint in support. For purposes of his motion to

dismiss, that is “sufficient” detail for us to assume that the agreement

existed.

Id. at 630 (third and fourth alterations in original). But the court concluded that the claim that
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the union breached its duty of fair representation failed because “[t]here was . . . nothing

improper about the union negotiating an agreement whereby Courie admitted that he should

not have called his coworker [the derogatory term] in exchange for the warning to be stricken

from his record,” and “[b]argaining for such an exchange was reasonable union action.” Id.

at 631. The court also concluded that the claim that the plaintiff’s employer breached the

collective bargaining agreement failed first because the other half of his hybrid Labor

Management Relations Act claim failed, but also because he could not “prove discrimination

because he [could not] prove that he was singled out for discriminatory treatment considering

that he was the only one who had been warned, and we already know, per his state claim, that

the warning itself was permissible.” Id. The court concluded that “[a]s a result[, the plaintiff]

[could not] point to any similarly situated employee who had been treated better, and settling

his grievance, save something outrageous, was thus permissible.” Courie, 577 F.3d at 631.

The court held that “[t]he district court properly found that Courie has not stated a claim to

relief under § 301 that is plausible on its face.” Id. The remaining claims could not prevail

in light of the court’s conclusion that the settlement agreement was not discriminatory. Id.

at 632. The Sixth Circuit also concluded that the district court did not err in denying leave

to amend because none of the plaintiff’s proposed amendments would have made the claims

viable. See id. at 633.

Seventh Circuit

• Vance v. Rumsfeld, 653 F.3d 591, 2011 WL 3437511 (7th Cir. 2011), rehearing en banc

granted, opinion vacated (Oct. 28, 2011). Plaintiffs Donald Vance and Nathan Ertel were

civilian U.S. citizens working in Iraq for a private Iraqi security firm. The plaintiffs alleged

that they were detained and illegally tortured by U.S. military personnel in Iraq in 2006, and

then released from military custody without ever being charged with a crime. Plaintiffs filed

a Bivens action against former Secretary of Defense Donald Rumsfeld and other unknown

defendants for their roles in creating and carrying out the policies that led to the plaintiffs’

illegal torture.

The court of appeals summarized the detailed allegations of the plaintiffs’ complaint as

follows:

Vance and Ertel, two young American civilians, independently moved

from their homes in Illinois and Virginia to work in Iraq to help

“rebuild the country and achieve democracy” following the beginning

of the current conflict there. See ¶¶ 3, 28. In 2005 and 2006, before

their detention, the two Americans worked for a privately-owned Iraqi

security services company, Shield Group Security, in the “Red Zone”

in Iraq, the area outside the secure “Green Zone” in Baghdad. ¶¶

33–39. Over time, Vance became suspicious that the company was

involved with corruption and other illegal activity. ¶¶ 18, 42. He

noticed, for example, that Shield Group Security officials were making
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payments to Iraqi sheikhs, which he believed was done to obtain

influence. ¶¶ 41–42. While Vance was home in Chicago for his

father’s funeral, he contacted U.S. government officials to report his

suspicions. ¶ 43. He met with an FBI agent, who arranged for Vance

to continue reporting suspicious activity back to Chicago. The FBI

agent also requested that Vance meet U.S. government officials in Iraq

to report his observations. ¶¶ 44–47, 49. Vance told his friend and

colleague Ertel that he had become an informant, and Ertel contributed

information as well. ¶¶ 48–49.

The plaintiffs were frequently in touch with their government

contacts, sometimes multiple times a day. ¶ 45. At the request of a

U.S. government official in Iraq, Vance copied and shared Shield

Group Security documents with U.S. officials. ¶ 47. Vance and Ertel

reported their in-depth observations of individuals closely associated

with Shield Group Security, including U.S. and Iraqi government

officials who were involved with illegal arms trading, stockpiling of

weapons, bribery, and other suspicious activity and relationships. ¶¶

45–104. Their whistleblowing allegedly included the sharing of

sensitive information with the U.S. government, including reports that

their supervisor, who called himself the “Director” of the “Beer for

Bullets” program, traded liquor to American soldiers in exchange for

U.S. weapons and ammunition that Shield Group Security then used

or sold for a profit. ¶ 95.

Shield Group Security officials became suspicious about the

plaintiffs’ loyalty to the firm. On April 14, 2006, they confiscated the

credentials that allowed plaintiffs access to the Green Zone, effectively

trapping them inside the firm’s compound in the Red Zone. ¶¶

107–12, 116–19. Plaintiffs called their U.S. government contacts in

Iraq for help. They were told that they should interpret Shield Group

Security’s actions as taking them hostage, and should barricade

themselves with weapons in a room of the compound. ¶¶ 120,

124–25. They were assured that U.S. forces would come to rescue

them. ¶ 124. U.S. forces came to the compound and took Vance and

Ertel to the U.S. Embassy for questioning. ¶¶ 125–31. Military

personnel seized all of their personal property, including laptop

computers, cell phones, and cameras. ¶ 127. The plaintiffs shared

information about Shield Group Security transactions and were sent to

a trailer to sleep. ¶¶ 130–31.

After two or three hours of sleep, Vance and Ertel, who were

under the impression that they had been rescued by their government,

were in for a shock. They were awakened and arrested, handcuffed,
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blindfolded, and driven to Camp Prosperity, a U.S. military compound

in Baghdad. ¶¶ 131, 138–39. There, plaintiffs allege, they were

placed in a cage, strip-searched, fingerprinted, and issued jumpsuits.

¶ 140. They were instructed to keep their chins to their chests and not

to speak. Theywere threatened that if they did speak, they would have

“excessive force” inflicted on them. ¶ 141. Vance and Ertel were then

taken to separate cells and held in solitary confinement for what they

believe was two days. ¶¶ 142–43.

For those two days, the plaintiffs were held incommunicado in

their cells, and were not permitted to contact their families or lawyers.

They were fed twice a day and allowed to go to the bathroom twice a

day. They each had a thin mat on concrete on which to sleep, but the

lights were kept on 24 hours a day. ¶¶ 142, 161. After two days,

Vance and Ertel were shackled, blindfolded, and transported to Camp

Cropper, a U.S. military facility near Baghdad International Airport.

¶¶ 143–44.

After the plaintiffs were taken to Camp Cropper, they

experienced a nightmarish scene in which they were detained

incommunicado, in solitary confinement, and subjected to physical and

psychological torture for the duration of their imprisonment—Vance

for three months and Ertel for six weeks. ¶¶ 2, 20–21, 146–76, 212.

They allege that all of the abuse they endured in those weeks was

inflicted by Americans, some military officials and some civilian

officials. ¶ 21. They allege that the torture they experienced was of the

kind “supposedly reserved for terrorists and so-called enemy

combatants.” ¶ 2. If the plaintiffs’ allegations are true, two young

American civilians were trying to do the right thing by becoming

whistleblowers to the U.S. government, but found themselves detained

in prison and tortured by their own government, without notice to their

families and with no sign of when the harsh physical and

psychological abuse would end. ¶¶ 1–4, 19, 21, 52–54, 161.

Vance and Ertel allege that after they arrived at Camp Cropper

they were strip-searched while still blindfolded, and issued jumpsuits.

¶ 145. They were then held in solitary confinement, in small, cold,

dirty cells and subjected to torturous techniques forbidden by the Army

Field Manual and the Detainee Treatment Act. ¶¶ 146, 217–18,

242–44, 265. The lights were kept on at all times in their cells, so that

the plaintiffs experienced “no darkness day after day” for the entire

duration of their time at Camp Cropper. ¶¶ 21, 147. Their cells were

kept intolerably cold, except when the generators failed. Id. There

were bugs and feces on the walls of the cells, in which they spent most
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of their time in complete isolation. ¶ 146. Vance and Ertel were

driven to exhaustion; each had a concrete slab for a bed, but guards

would wake them if they were ever caught sleeping. ¶¶ 148, 149. 

Heavy metal and country music was pumped into their cells at

“intolerably-loud volumes,” and they were deprived of mental

stimulus. ¶¶ 21, 146, 149. The plaintiffs each had only one shirt and

a pair of overalls to wear during their confinement. ¶ 152. They were

often deprived of food and water and repeatedly deprived of necessary

medical care. ¶¶ 151, 153–55.

Beyond the sleep deprivation and the harsh and isolating

conditions of their detention, plaintiffs allege, they were physically

threatened, abused, and assaulted by the anonymous U.S. officials

working as guards. ¶ 157. They allege, for example, that they

experienced “hooding” and were “walled,” i.e., slammed into walls

while being led blindfolded with towels placed over their heads to

interrogation sessions. ¶¶ 21, 157. Plaintiffs also claim that they were

continuously tormented by the guards, who would conduct

shake-downs of their cells, sometimes on the false premise that they

had discovered contraband, and who seemed intent on keeping them

off-balance mentally. ¶ 156.

The constant theme of the aggressive interrogations was a

haunting one—if Vance and Ertel did not “do the right thing,” they

would never be allowed to leave Camp Cropper. ¶ 176. Vance and

Ertel were not only interrogated but continuously threatened by guards

who said they would use “excessive force” against them if they did not

immediately and correctly comply with instructions. ¶ 158. The

plaintiffs allege that this treatment lasted for the duration of their

detention at Camp Cropper. ¶¶ 2, 165, 176.

While Vance and Ertel were detained and interrogated, their

loved ones did not know whether they were alive or dead. ¶¶ 1, 161.

Eventually, Vance and Ertel were allowed a few telephone calls to

their families but were not allowed to disclose their location or

anything about the conditions of their detention or the nature of their

interrogations. ¶ 162. When they were not being interrogated, they

were held in almost constant solitary confinement. Vance’s requests

for clergy visits were denied, and plaintiffs were forbidden to

correspond with a lawyer or a court. ¶¶ 163–64.

Vance and Ertel were never charged with any crime or other

wrongdoing, nor were they designated as security threats. ¶¶ 1, 212,

214. Instead, both were eventually released and dropped off at the
367

airport in Baghdad to find their way home. ¶¶ 208, 210. Vance and

Ertel both allege that they were devastated physically and emotionally

by what they endured at the hands of their own government. ¶ 213.

Id. at *2–5 (footnotes omitted).

The district court denied in part defendants’ motion to dismiss, and allowed the plaintiffs to

proceed with their Bivens claims—as Fifth Amendment substantive due process claims—for

torture and cruel, inhuman, and degrading treatment.

The Seventh Circuit affirmed both (1) the district court’s finding that the plaintiffs’ complaint

alleged in sufficient detail facts supporting Secretary Rumsfeld’s personal responsibility for

the alleged torture, and (2) the district court’s finding that Secretary Rumsfeld was not entitled

to qualified immunity on the pleadings. In concluding that the complaint alleged sufficient

facts supporting Secretary Rumsfeld’s personal involvement, the court began its analysis as

follows: 

To proceed with their Bivens claims, plaintiffs must allege

facts indicating that Secretary Rumsfeld was personally involved in

and responsible for the alleged constitutional violations. See Iqbal,

129 S. Ct. at 1948–49; Alejo v. Heller, 328 F.3d 930, 936 (7th

Cir.2003). “Because vicarious liability is inapplicable to Bivens and

§ 1983 suits, a plaintiff must plead that each Government-official

defendant, through the official’s own individual actions, has violated

the Constitution.” Iqbal, 129 S. Ct. at 1948. As the Supreme Court

said in Iqbal, “[t]he factors necessary to establish a Bivens violation

will vary with the constitutional provision at issue.” Id. Unlike in

Iqbal, which was a discrimination case, where the plaintiff was

required to plead that the defendant acted with discriminatory purpose,

the minimum knowledge and intent required here would be deliberate

indifference, as in analogous cases involving prison and school

officials in domestic settings. See Farmer v. Brennan, 511 U.S. 825,

842, 114 S. Ct. 1970, 128 L.Ed.2d 811 (1994) (finding that a prison

official acts with “deliberate indifference” if the “official acted or

failed to act despite his knowledge of a substantial risk of serious

harm”); T.E. v. Grindle, 599 F.3d 583, 591 (7th Cir. 2010) (“When a

state actor’s deliberate indifference deprives someone of his or her

protected liberty interest in bodily integrity, that actor violates the

Constitution, regardless of whether the actor is a supervisor or

subordinate, and the actor may be held liable for the resulting harm.”).

Id. at *6. The court specifically distinguished Iqbal:

The defendants rely heavily on Iqbal, but the case is clearly
368

distinguishable because of the nature of the alleged constitutional

violations. The issue in Iqbal was not what the defendants (Attorney

General Ashcroft and FBI Director Mueller) actually did, but their

subjective purposes—whether they acted on the basis of religious or

ethnic bias or instead acted to fight terrorism. The plaintiff alleged

that the Attorney General and the FBI Director had established and

implemented policies following the attacks of September 11, 2001 that

led to the detention of the plaintiff under harsh conditions separate

from the general prison population, allegedly because of a policy that

kept prisoners separate because of their race, religion, or national

origin. Because there was a legitimate explanation for the policy—the

“nondiscriminatory intent to detain aliens who were illegally present

in the United States and who had potential connections to those who

committed terrorist attacks”—the Court held that personal

responsibility was not pled sufficiently where the complaint provided

no plausible basis for rejecting that legitimate explanation. Iqbal, 129

S. Ct. at 1951–52. In this case, by contrast, the inquiry before us is

whether the plaintiffs have pled sufficiently that defendant Secretary

Rumsfeld personally established the relevant policies that authorized

the unconstitutional torture they allege they suffered. Iqbal did not

disturb the Bivens and section 1983 principles holding that a

supervisor may be liable as an individual for wrongs he personally

directed or authorized his subordinates to inflict.

A similar distinction applies to the Supreme Court’s recent

decision in Ashcroft v. al-Kidd, ––– U.S. ––––, 131 S. Ct. 2074, 179

L.Ed.2d 1149 (2011). There the Supreme Court held that where the

plaintiff's seizure under the federal material witness statute was

objectively reasonable, the plaintiff could not pursue a Bivens claim

on the theory that the seizure was pretextual, based in fact on a

different and unconstitutional subjective purpose. See id. at 2082–83.

Id. at *6 n.5.

The court concluded that the complaint alleged sufficient facts supporting Secretary

Rumsfeld’s personal involvement:

In arguing that the district court erred in holding that qualified

immunity does not protect Secretary Rumsfeld from liability, the

defendants blend both the issue of Secretary Rumsfeld’s personal

responsibility for plaintiffs’ treatment and the doctrine of qualified

immunity. These issues are actually quite distinct, and we treat them

separately. We begin by addressing the defendants’ personal

responsibility arguments, which are primarily about whether the
369

plaintiffs have pled a sufficient level of detail about Secretary

Rumsfeld’s personal responsibility to survive a motion to dismiss

under Rule 12(b)(6) of the Federal Rules of Civil Procedure. We first

examine the applicable pleading requirements. We then summarize

the detailed allegations of Secretary Rumsfeld’s personal responsibility

from the Complaint. Finally, we address the defendants’ specific

concerns about the Complaint.

We conclude that the plaintiffs have sufficiently alleged

Secretary Rumsfeld’s personal responsibility. While it may be unusual

that such a high-level official would be personally responsible for the

treatment of detainees, here we are addressing an unusual situation

where issues concerning harsh interrogation techniques and detention

policies were decided, at least asthe plaintiffs have pled, at the highest

levels of the federal government. We conclude that plaintiffs have

sufficiently alleged that Secretary Rumsfeld acted deliberately in

authorizing interrogation techniques that amount to torture. (Whether

he actually did so remains to be seen.) We differ with the district court

in one respect, though. We think that the plaintiffs’ pleadings, if true,

have sufficiently alleged not only Secretary Rumsfeld’s personal

responsibility in creating the policies that led to the plaintiffs’

treatment but also deliberate indifference by Secretary Rumsfeld in

failing to act to stop the torture of these detainees despite actual

knowledge of reports of detainee abuse.

. . . .

The Federal Rules of Civil Procedure impose no special

pleading requirements for Bivens claims, including those against

former high-ranking government officials. See Swierkiewicz v.

Sorema N.A ., 534 U.S. 506, 513–14, 122 S. Ct. 992, 152 L.Ed.2d 1

(2002). The notice pleading standard under Rule 8 of the Federal

Rules of Civil Procedure applies, and a plaintiff is required to provide

a “short and plain statement of the claim showing that the pleader is

entitled to relief.” FED. R. CIV. P. 8(a). The complaint will survive a

motion to dismiss if it meets the “plausibility” standard applied in

Iqbal and Twombly. See Iqbal, 129 S. Ct. at 1949, quoting Bell

Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 167

L.Ed.2d 929 (2007) (holding that “a complaint must contain sufficient

factual matter, accepted as true, to ‘state a claim to relief that is

plausible on its face.’”). “The plausibility standard is not akin to a

‘probability requirement,’ but it asks for more than a sheer possibility

that a defendant has acted unlawfully.” Id.
370

These pleading rules are meant to “‘focus litigation on the

merits of a claim’ rather than on technicalities that might keep

plaintiffs out of court.” Brooks v. Ross, 578 F.3d 574, 580 (7th Cir.

2009), quoting Swierkiewicz, 534 U.S. at 514. At the same time, “a

defendant should not be forced to undergo costly discovery unless the

complaint contains enough detail . . . to indicate that the plaintiff has

a substantial case.” Limestone Development Corp. v. Village of

Lemont, 520 F.3d 797, 802–03 (7th Cir. 2008). We agree with the

district court’s observation in this case: “Iqbal undoubtedly requires

vigilance on our part to ensure that claims which do not state a

plausible claim for relief are not allowed to occupy the time of

high-ranking government officials. It is not, however, a categorical

bar on claims against these officials.” Vance, 694 F. Supp. 2d at 961.

“When a plaintiff presents well-pleaded factual allegations sufficient

to raise a right to relief above a speculative level, that plaintiff is

entitled to have his claim survive a motion to dismiss even if one of

the defendants is a high-ranking government official.” Id.

. . . .

We agree with the district court that the plaintiffs have alleged

sufficient facts to show that Secretary Rumsfeld personally established

the relevant policies that caused the alleged violations of their

constitutional rights during detention. The detailed Complaint

provided Secretary Rumsfeld sufficient notice of the claims against

him and stated plausible claims that satisfy Rule 8 and Iqbal and

Twombly.

The plaintiffs allege that Secretary Rumsfeld devised and

authorized policies that permit the use of torture in their interrogation

and detention. ¶ 217. They claim that he was “personally responsible

for developing, authorizing, supervising, implementing, auditing

and/or reforming the policies, patterns or practices governing the . . .

treatment . . . [and] interrogation . . . of detainees.” ¶ 26.

Specifically, they allege that in 2002, Secretary Rumsfeld “personally

approved a list of torturous interrogation techniques for use on

detainees” at Guantanamo Bay that, “[c]ontrary to . . . the

then-governing Army Field Manual 34–52 . . . included the use of

20–hour interrogations, isolation for up to 30 days, and sensory

deprivation.” ¶ 232. In 2003, Secretary Rumsfeld allegedly

“rescinded his formal authorization to use those techniques generally,

but took no measures to end the practices which had by then become

ingrained, nor to confirm that the practices were in fact . . .

terminated.” ¶ 233. Instead, he authorized the use of techniques
371

outside of the Army Field Manual if he personally approved them. Id.

 The plaintiffs also allege that in 2003, Secretary Rumsfeld approved

a new set of policies that included isolation for up to 30 days, dietary

manipulation, and sleep deprivation (the “2003 List”). ¶ 234. In

addition to these formal policies, Secretary Rumsfeld also authorized

additional harsh techniques if he approved them in advance. ¶ 235.

The plaintiffs allege that SecretaryRumsfeld then directed that

the techniques in place at Guantanamo Bay also be extended to Iraq.

 ¶¶ 235–39. The plaintiffs claim, for instance, that Secretary

Rumsfeld sent Major General Geoffrey Miller to Iraq in August 2003

to evaluate how prisons could gain more “actionable intelligence”

from detainees. ¶ 236. In September 2003, in response to General

Miller’s suggestion to use more aggressive interrogation policies in

Iraq, and as allegedly “directed, approved and sanctioned” by Secretary

Rumsfeld, the commander of the United States-led military coalition

in Iraq signed a memorandum authorizing the use of 29 interrogation

techniques (the “Iraq List”), which included sensory deprivation, light

control, and the use of loud music. ¶ 238. The commander later

modified the memorandum, but interrogators were still given

discretion to subject detainees to interrogation methods involving

manipulation of lighting, heating, food, shelter, and clothing of the

detainees. ¶ 239.

The plaintiffs also allege that Secretary Rumsfeld was well

aware of detainee abuse because of both public and internal reports

documenting the abuse. ¶¶ 240–41, 252. In May 2003, the

International Red Cross began reporting on the abuse of detainees in

U.S. custody in Iraq. ¶ 240. The plaintiffs allege that then-Secretary

of State Colin Powell confirmed that Secretary Rumsfeld knew of the

reports of abuse and regularly reported them to President Bush

throughout 2003. Id. They also allege that Secretary Rumsfeld also

knew of other investigative reports into detainee abuse in Iraq,

including a report by former Secretary of Defense James Schlesinger.

¶ 241.

Congress took action in response to allegations of detainee

abuse. ¶ 14. First, Congress passed the Ronald W. Reagan National

Defense Authorization Act for Fiscal Year 2005, which reaffirmed the

U.S. prohibition against torture techniques that violate the United

States Constitution and the Geneva Conventions. Pl. Br. at 7. The law

instructed then-Secretary Rumsfeld to take action to stop abusive

interrogation techniques:
372

The Secretary of Defense shall ensure that policies are

prescribed not later than 150 days after the date of the

enactment . . . to ensure that members of the Armed

Forces, and all persons acting . . . within facilities of

the Armed Forces, treat persons detained by the United

States Government in a humane manner consistent

with the international obligations and laws of the

United States and the policies set forth in section

1091(b).

Pub.L. No. 108–375, § 1092, 118 Stat. 1811, 2069–70 (2004), codified

at 10 U.S.C. § 801, stat. note § 1092. The plaintiffs argue that, despite

that specific direction from Congress, Secretary Rumsfeld took no

action to rescind unauthorized interrogation methods before the

plaintiffs were released from custody in 2006. ¶¶ 244, 252.

In 2005, Congress enacted the Detainee Treatment Act, which

limited allowable interrogation techniques to those authorized in the

Army Field Manual, thus specifically outlawing the interrogation

techniques that SecretaryRumsfeld had earlier authorized, and which

the plaintiffs allege in detail they suffered at the hands of U.S. military

personnel in 2006. ¶¶ 242–43. The Detainee Treatment Act stated in

relevant part:

No person in the custody or under the effective control

of the Department of Defense or under detention in a

Department of Defense facility shall be subject to any

treatment or technique of interrogation not authorized

by and listed in the United States Army Field Manual

on Intelligence Interrogation.

Pub.L. 109–148, § 1002(a), 119 Stat. 2680, 2739 (2005), codified at

10 U.S.C. § 801, stat. note § 1002.

The plaintiffs contend that, after the enactment of the Detainee

Treatment Act, Secretary Rumsfeld continued to condone the use of

techniques from outside the Army Field Manual. ¶ 244. They allege

that on the same day that Congress passed the Detainee Treatment Act

in December 2005, Secretary Rumsfeld added ten classified pages to

the Field Manual, which included cruel, inhuman, and degrading

techniques, such as those allegedly used on the plaintiffs (the plaintiffs

refer to this as “the December Field Manual”). Id. The defendants

describe this allegation as speculative and untrue, but we must accept

these well-pled allegations as true at the Rule 12(b)(6) stage of the
373

proceedings.

The plaintiffs also claim that Secretary Rumsfeld, in the face

of both internal reports and well-publicized accusations of detainee

mistreatment and torture by U.S. forces in Iraq, did not investigate or

correct the abuses, despite his actual knowledge that U.S. citizens were

being and would be detained and interrogated using the

unconstitutional abusive practices that he had earlier authorized. ¶

252. The plaintiffs allege that reports of the abusive treatment of

detainees by the U.S. military were widely reported by Amnesty

International, the United Nations Assistance Mission for Iraq, and the

International Committee of the Red Cross. ¶¶ 245–51. The plaintiffs

contend that Secretary Rumsfeld was the “official responsible for

terminating this pattern of abuse and reforming the policies causing

it.” ¶ 252. Instead, the plaintiffs allege, Secretary Rumsfeld took no

action because “this conduct was being carried out pursuant to the

interrogation and detention policies [he] himself created and

implemented.” Id.

. . . .

We see no deficiency in the Complaint that would warrant

dismissal on the issue of personal responsibility. Taking the factual

allegations in the complaint as true, as we must, the plaintiffs have

pled facts showing that it is plausible, and not merely speculative, that

Secretary Rumsfeld was personally responsible for creating the

policies that caused the alleged unconstitutional torture. The

Complaint also alleges that the Secretary was responsible for not

conforming the treatment of the detainees to the standards set forth in

the Detainee Treatment Act. Congress specifically ordered the

Secretary to “ensure” that detainees in custody of the United States

were treated in a “humane manner consistent with the international

obligations and laws of the United States.” See Ronald W. Reagan

National Defense Authorization Act for Fiscal Year 2005, 10 U.S.C.

§ 801, stat. note § 1092.

The plaintiffs have adequately pled the “kind of active and

intentional disregard for their treatment” that the defendants suggest

“would be necessary to establish liability.” First, while Secretary

Rumsfeld did not personally carry out the alleged violations of

plaintiffs’ constitutional rights, the plaintiffs have alleged that he

personally created the policies that authorized and led to their torture.

If adequately pled, that is sufficient at this stage to allege personal

involvement. See, e.g., Doyle v. Camelot Care Centers, Inc., 305 F.3d
374

603, 615 (7th Cir. 2002) (finding under 42 U.S.C. § 1983 that

allegations that agency's most senior officials were personally

“responsible for creating the policies, practices and customs that

caused the constitutional deprivations . . . suffice at this stage in the

litigation to demonstrate . . . personal involvement in [the] purported

unconstitutional conduct”); Steidl v. Gramley, 151 F.3d 739, 741 (7th

Cir.1998) (finding that a warden is “not liable for an isolated failure of

his subordinates to carry out prison policies, however—unless the

subordinates are acting (or failing to act) on the warden’s

instructions”); see also Martin A. Schwartz, Section 1983 Litigation:

Claims and Defenses, § 7.19[C], at 7–239 (4th ed. 2010) (noting that

“supervisory officials who promulgate policies that are enforced by

subordinates are liable if the enforcement of the policy causes a

violation of federally protected rights”); Dodds v. Richardson, 614

F.3d 1185, 1199 (10th Cir. 2010) (concluding after Iqbal that “§ 1983

allows a plaintiff to impose liability upon a defendant-supervisor who

creates, promulgates, implements, or in some other way possesses

responsibility for the continued operation of a policy the enforcement

(by the defendant-supervisor or her subordinates) of which” subjects

plaintiffsto constitutional violations); Richardson v. Goord, 347 F.3d

431, 435 (2d Cir. 2003) (concluding that supervisory liability under §

1983 may be shown, inter alia, by “creation of a policy or custom that

sanctioned conduct amounting to a constitutional violation, or

allowing such a policy or custom to continue.”).

Second, the plaintiffs have adequately alleged that Secretary

Rumsfeld acted with deliberate indifference by not ensuring that the

detainees were treated in a humane manner despite his knowledge of

widespread detainee mistreatment. See Farmer, 511 U.S. at 842

(concluding that it is sufficient if a plaintiff bringing an Eighth

Amendment claim shows that the “official acted or failed to act despite

his knowledge of a substantial risk of serious harm”); Gayton v.

McCoy, 593 F.3d 610, 620 (7th Cir. 2010) (citations omitted) (“Simply

put, an official ‘must both be aware of facts from which the inference

could be drawn that a substantial risk of serious harm exists, and he

must also draw that inference.’”). The plaintiffs have plausibly alleged

Secretary Rumsfeld’s personal responsibility on this theory.

Finally, we reject the defendants’ argument that plaintiffs’

claims rest on “naked assertions” of illegal conduct without factual

development. The defendants seek to poke holes in a number of the

plaintiffs’ allegations, but we do not find their arguments convincing,

at least at the pleading stage under Rule 12(b)(6). The defendants

argue that the plaintiffs’ only “concrete allegations” about detention
375

and interrogation policies relate to policies that did not even apply to

U.S. citizens in Iraq, and were, in any case, rescinded before the

plaintiffs were detained. We are not persuaded by this argument. The

plaintiffs have adequately alleged that Secretary Rumsfeld was

responsible for creating policies that governed the treatment of the

detainees in Iraq and for not conforming the treatment of the detainees

in Iraq to the Detainee Treatment Act.

We also are not persuaded by the defendants’ argument that the

Detainee Treatment Act superseded the policies described in the

Complaint. This argument misunderstands the plaintiffs’ point—that

Secretary Rumsfeld’s policies continued to condone the

unconstitutional practices he had allegedly created even after Congress

mandated otherwise. The plaintiffs’ allegation that Secretary

Rumsfeld secretly sought to add permissible techniques to the Army

Field Manual after Congress passed the Detainee Treatment Act is

plausible and supports their broader allegation that Secretary Rumsfeld

continued to promote and condone unconstitutional treatment of

detainees. It remains to be seen whether plaintiffs can prove this, but

they need not have done so yet.

The defendants also argue that the plaintiffs offer nothing to

link the guards’ threats of excessive force or the denial of medical care

to a particular policy issued by Secretary Rumsfeld. Examining these

particular allegations as part of the totality of allegations and the

program for dealing so harshly with detainees, however, we think they

are sufficiently pled to survive the motion to dismiss. With discovery

of the identities of the individuals involved, we expect plaintiffs to

refine their theories and their allegations concerning the defendants’

individual responsibilities.

Finally, while a supervisor’s mere “knowledge and

acquiescence” is not sufficient to impose liability under Iqbal, 129 S.

Ct. at 1949, we agree with the district court that outside documentation

of detainee abuse, such as reports by international organizations,

provides some support for the plausibility of plaintiffs’ allegations.

Vance, 694 F. Supp. 2d at 964; see also al- Kidd v. Ashcroft, 580 F.3d

949, 976 (9th Cir. 2009) (finding that complaint alleges facts that

might support liability where it alleges that “‘abuses occurring . . .

were highly publicized in the media, congressional testimony and

correspondence, and in various reports by governmental and

non-governmental entities,’ which could have given [the defendant]

sufficient notice to require affirmative acts to supervise and correct the

actions of his subordinates”), rev’d on other grounds, ––– U.S. ––––,
376

131 S. Ct. 2074, 179 L.Ed.2d 1149 (2011). In sum, we hold that the

plaintiffs have sufficiently and plausibly pled Secretary Rumsfeld's

personal responsibility.

Id. at *6–12 (emphasis added and footnotes omitted).

In concluding, for purposes of qualified-immunity analysis, that the complaint alleged

sufficient facts showing the violation of a clearly-established constitutional right, the court

reasoned: 

To resolve the qualified immunity defense, we use the two-step

sequence that the Supreme Court articulated in Saucier v. Katz, 533

U.S. 194, 200–01, 121 S. Ct. 2151, 150 L.Ed.2d 272 (2001). We first

determine whether “[t]aken in the light most favorable to the party

asserting the injury . . . the facts alleged show the [defendants’]

conduct violated a constitutional right.” Id. at 201. Second, we

determine if the right was “clearly established” at the time of the

relevant events. Id. While the Court has since decided that applying

the Saucier test sequentially is not mandatory, it is still “often

appropriate.” Pearson, 129 S. Ct. at 818. See, e.g., al- Kidd, ––– U.S.

––––, 131 S. Ct. 2074, 179 L.Ed.2d 1149 (deciding both constitutional

merits and qualified immunity); Hanes v. Zurick, 578 F.3d 491 (7th

Cir. 2009) (same). Here it makes sense to apply both steps of the

Saucier test, just as the district court did.

We agree with the district court that plaintiffs have articulated

facts that, if true, would show the violation of a clearly established

constitutional right. In fact, the defendants’ argument to the contrary

evaporates upon review. The plaintiffs have pled that they were

subjected to treatment that constituted torture by U.S. officials while

in U.S. custody. On what conceivable basis could a U.S. public

official possibly conclude that it was constitutional to torture U.S.

citizens? See, e.g., 18 U.S.C. § 2340A (statute criminalizing overseas

torture); Convention Against Torture and Other Cruel, Inhuman, or

Degrading Treatment or Punishment, S. Treaty Doc. No. 100–20

(1988), 1465 U.N.T.S. 85, 113 (1984), at Art. 2 (“No exceptional

circumstances whatsoever, whether a state of war or a threat of war,

internal political instability or any other public emergency, may be

invoked as a justification of torture.”); Siderman de Blake v. Republic

of Argentina, 965 F.2d 699, 717 (9th Cir. 1992) (concluding that “it

would be unthinkable to conclude other than that acts of official

torture violate customary international law. And while not all

customary international law carries with it the force of a jus cogens

norm, the prohibition against official torture has attained that status”).
377

The wrongdoing alleged here violates the most basic terms of

the constitutional compact between our government and the citizens

of this country. The defendants seem to agree, and go so far as to

state:

We do not argue that well-pled, factually-supported

and concrete allegations of, for instance, persistent

exposure to extreme cold, sustained failure to supply

food and water, sustained sleep deprivation, and the

failure to furnish essential medical care, if of sufficient

severity and duration, would not state a violation of

substantive due process in the context of military

detention in a war zone.

Def. Br. 50. We concur with that view. Viewing the complaint in the

light most favorable to the plaintiffs, as we must at this stage, this is

exactly what the plaintiffs have pled. There can be no doubt that the

deliberate infliction of such treatment on U.S. citizens, even in a war

zone, is unconstitutional.

. . . . 

If the plaintiffs’ allegations of torture are true, there was a

violation of their constitutional right to substantive due process. 

“Substantive due process involves the exercise of governmental power

without reasonable justification. . . . It is most often described as an

abuse of government power which ‘shocks the conscience.’” Tun, 398

F.3d at 902, quoting Rochin v. California, 342 U.S. 165, 172, 72 S. Ct.

205, 96 L.Ed. 183 (1952). The physical or mental torture of U.S.

citizens, as the district court concluded, is a paradigm of conduct that

“shocks the conscience.” Vance, 694 F. Supp. 2d at 966. The

Supreme Court “has long held that certain interrogation techniques,

either in isolation or as applied to the unique characteristics of a

particular suspect, are so offensive to a civilized system of justice that

they must be condemned under the Due Process Clause.” Miller v.

Fenton, 474 U.S. 104, 109, 106 S. Ct. 445, 88 L.Ed.2d 405 (1985);see

also Wilkerson v. Utah, 99 U.S. 130, 136, 25 L.Ed. 345 (1878)

(concluding that “it is safe to affirm that punishments of torture . . . are

forbidden by . . . the Constitution”). The defendants do not argue that

the plaintiffs’ allegations, if pled correctly, do not amount to a

violation of a constitutional right. See Def. Br. at 50–51. Doing so

would be futile.
378

The defendants instead argue that plaintiffs have not alleged

more than “vague, cursory, and conclusory references to [their]

conditions of confinement, without sufficient factual information from

which to evaluate their constitutional claim.” This argument, which

is more of a pleading argument to extend Iqbal and Twombly than an

argument about qualified immunity, is not persuasive. The defendants

argue, for example, that while the plaintiffs allege that their cells were

extremely cold, they provide no “factual context, no elaboration, no

comparisons.” At this stage of the case, we are satisfied with the

description of the cells as “extremely cold.” Cf. FED. R. CIV. P. 84

and Forms 10–15 (sample complaints that “illustrate the simplicity and

brevity that these rules contemplate”).

The defendants also suggest that the plaintiffs did not detail in

their Complaint whether they sought and were denied warmer clothing

or blankets. Even if it was not necessary, the plaintiffs actually

specified the clothing and bedding that was available to each of

them—a single jumpsuit and a thin plastic mat. The defendants also

argue that plaintiffs did not specify how long they were deprived of

sleep. That level of detail is not required at this stage, but a fair

reading of this Complaint indicates that the sleep deprivation tactics

were a constant for the duration of their detention, as was the physical

and psychological abuse by prison officials.

As the defendants acknowledge, a substantive due process

inquiry requires “an appraisal of the totality of the circumstances rather

than a formalistic examination of fixed elements.” See Armstrong v.

Squadrito, 152 F.3d 564, 570 (7th Cir. 1998) (reversing summary

judgment for defendants). The plaintiffs have alleged sufficient

details to conclude at this stage of the proceedings that, if true, their

treatment, when considered in the aggregate, amounted to torture in

violation of their right to substantive due process.

Though Vance and Ertel were never charged with, let alone

convicted of, any crime, our precedents concerning the abuse of

convicted criminals help guide our thinking about whether the alleged

abuse violated a constitutional right. As the Supreme Court concluded

recently, “[p]risoners retain the essence of human dignity inherent in

all persons. Respect for that dignity animates the Eighth Amendment

prohibition against cruel and unusual punishment. The basic concept

underlying the Eighth Amendment is nothing less than the dignity of

man.” Brown v. Plata, ––– U.S. ––––, ––––, 131 S. Ct. 1910, 1928,

179 L.Ed.2d 969 (2011) (citations omitted); see also Estelle v.

Gamble, 429 U.S. 97, 102, 97 S. Ct. 285, 50 L.Ed.2d 251 (1976)
379

(concluding that the Eighth Amendment “embodies broad and

idealistic concepts of dignity, civilized standards, humanity, and

decency . . . against which we must evaluate penal measures”)

(citations omitted). It is important to keep these fundamental concepts

in mind as we focus on the claims before us. See Forrest v. Prine, 620

F.3d 739, 744 (7th Cir. 2010) (borrowing Eighth Amendment

standards to analyze pre-trial detainee’s claim).

Examining the plaintiffs’ claims against the backdrop of the

Supreme Court’s decisions on prison conditions of confinement and

prison treatment cases, we remember that abuse in American prisons

was once authorized and even thought of as part of the punishment of

prisoners. See, e.g., Hope v. Pelzer, 536 U.S. 730, 122 S. Ct. 2508,

153 L.Ed.2d 666 (2002) (detailing authorized state practice of chaining

inmates to one another and to hitching posts in the hot sun); Hutto v.

Finney, 437 U.S. 678, 682 nn. 4–5, 98 S. Ct. 2565, 57 L.Ed.2d 522

(1978), citing Talley v. Stephens, 247 F. Supp. 683 (E.D. Ark. 1965)

(describing the lashing of inmates with a “wooden-handled leather

strap five feet long and four inches wide” as part of authorized

corporal punishment program) and Jackson v. Bishop, 268 F. Supp.

804 (E.D. Ark. 1967) (describing the use of a “Tucker telephone,” a

hand-cranked instrument “used to administer electrical shocks to

various sensitive parts of an inmate’s body” in prison that authorized

the use of a strap to punish prisoners), remanded with orders for

broader relief, 404 F.2d 571 (8th Cir. 1968) (Blackmun, J.).

Today, the idea that a prisoner in a U.S. prison might be abused

in such a manner and not have judicial recourse is unthinkable. While

the Constitution “does not mandate comfortable prisons, . . . neither

does it permit inhumane ones.” Farmer, 511 U.S. at 832 (citations

omitted) (noting that the Eighth Amendment requires that prison

officials “ensure that inmates receive adequate food, clothing, shelter,

and medical care, and . . . ‘take reasonable measures to guarantee the

safety of the inmates’”). If a prisoner in a U.S. prison had his head

covered and was repeatedly “walled,” or slammed into walls on the

way to interrogation sessions, we would have no trouble

acknowledging that his well-pled allegations, if true, would describe

a violation of his constitutional rights. See, e.g., Hudson v. McMillian,

503 U.S. 1, 112 S. Ct. 995, 117 L. Ed. 2d 156 (1992) (concluding that

the use of excessive physical force against a prisoner may constitute

cruel and unusual punishment even where prisoner is not seriously

injured).

If a prisoner was kept awake as much as possible, kept in
380

insufferably cold conditions, and not given sufficient bedding or

clothing, we would likewise believe that there could well have been a

violation of his constitutional rights. See, e.g., Wilson v. Seiter, 501

U.S. 294, 304, 111 S. Ct. 2321, 115 L. Ed. 2d 271 (1991) (clarifying

that “[s]ome conditions of confinement may establish an Eighth

Amendment violation ‘in combination’ when each would not do so

alone, but only when they have a mutually enforcing effect that

produces the deprivation of a single, identifiable human need such as

food, warmth, or exercise—for example, a low cell temperature at

night combined with a failure to issue blankets”). If a U.S. prisoner

with a serious medical condition is denied medical attention or has

necessary medicine withheld, that too can violate the prisoner’s

constitutional rights. See Estelle, 429 U.S. at 104 (concluding that

deliberate indifference to serious medical needs states a claim under

the Eighth Amendment); Board v. Farnham, 394 F.3d 469, 480–81

(7th Cir. 2005) (holding that allegations of dental problems constitute

objectively serious harm under the Eighth Amendment). The plaintiffs

in this case, detained without charges, have pled in detail allegations

of such severe conditions and treatment, the likes of which courts have

held unconstitutional when applied to convicted criminals in U.S.

prisons. The allegations of abuse state claims for violations of the

constitutional right not to be deprived of liberty without substantive

due process of law.

Id. at *12–15 (emphasis added).

• Atkins v. City of Chicago, 631 F.3d 823 (7th Cir. 2011). Plaintiff Atkins alleged that he was

so badly treated at Stateville state prison that he was deprived of liberty without due process

of law. The district court dismissed the complaint for failure to state a claim. 

The Seventh Circuit discussed Atkins’s four successive complaints at some length:

The complaint alleges that when [Atkins] arrived at Stateville

he was wearing a diamond stud in one of his ears. He swallowed it “to

prevent the defendants from stealing his property.” He was then

“placed in a cell naked without a mattress, sheets, blankets, or water

until [he] defecated his earring.” We haven’t been told why the prison

wanted the earring, but probably prisoners are forbidden to wear

jewelry, as it would invite theft and brawls, and jewelry often has

sharp edges or a sharp pin and so can be used as a weapon. Rowland

v. Jones, 452 F.2d 1005, 1006 (8th Cir. 1971) (per curiam). The

complaint does not question the proprietyof the defendants’ insistence

on recovering the earring, only the indignities allegedly inflicted on

Atkins in the four days that he spent in a “dry cell” before the earring
381

emerged.

The most serious indignities alleged—the only ones that might

state a claim of constitutional magnitude—are that he was “denied

drinking water and/or food for several days.” Depriving a person of

food for four days would impose a constitutionally significant

hardship, Reed v. McBride, 178 F.3d 849, 853–54 (7th Cir. 1999);

Foster v. Runnels, 554 F.3d 807, 814–15 and n. 5 (9th Cir. 2009);

Simmons v. Cook, 154 F.3d 805, 808 (8th Cir. 1998); depriving him of

all liquids for four days would be far worse. “A human can be

expected to survive for weeks without food, but a thirsty person

deprived of water would last [only] a matter of days.”

Although “several days” could as a semantic matter be more

than four, the allegation that Atkins was “placed in a cell naked

without a mattress, sheets, blankets, or water until [he] defecated his

earring” (emphasis added) implies that these deprivations would end

when the earring finally emerged, and that, the complaint alleges, was

on the fourth day. The complaint also alleges that Atkins “agreed to

drink milk to cause the defecation, though he was lactose intolerant,”

so he was not denied liquids for four days; his complaint contains an

internal contradiction. If he defecated on the fourth day, he must have

drunk milk earlier that day, or on a previous day.

The allegation that he was deprived of food and water for

several days is not inconceivable, which is the traditional standard for

rejecting factual allegations in a complaint out of hand and dismissing

the suit, as illustrated by Best v. Kelly, 39 F.3d 328, 330 n. 3 (D.C. Cir.

1994), which approved the dismissal of a claim that a “Branch of the

Government, took my Face off of my Head, went into my Scull & Put

a Computer Chip of some kind & a Camera System which makes me

Project Images or Pitchers, many Feet in Front of me.” And in Lee v.

Clinton, 209 F.3d 1025, 1025 (7th Cir.2000), we upheld the dismissal

of “two insane complaints charging the United States and China with

a conspiracy to ‘bio-chemically and biotechnologically infect and

invade’ various people including Lee with a mind reading and mental

torture device that Lee calls ‘Mind Accessing and Torturing via

Remote Energy Transferring (MATRET).’ To elude MATRET, Lee

claims to have developed a variety of space technologies, oddly

including an email system and nanny services, that will enable the

victims of MATRET to relocate to MATRET-free planets.” The

claims described in Best and Lee fall into the category of the

“essentially fictitious,” a category of claims that does not engage the

jurisdiction of the federal courts. Bailey v. Patterson, 369 U.S. 31, 33,
382

82 S. Ct. 549, 7 L. Ed. 2d 512 (1962); see Hagans v. Levine, 415 U.S.

528, 536–37, 94 S. Ct. 1372, 39 L. Ed. 2d 577 (1974). It would be

strange to think that such cases could not be dismissed without putting

the parties to the burden of further pleading, of discovery, and perhaps

even of trial (though such trials would be fun).

The allegation about Atkins’s being deprived of food and water

for four days is not in that class. It is not impossible; it is merely

implausible. But it is highly implausible. Remember that the

indignities to which the prison guards allegedly subjected Atkins are

said to have been incidental to their desire to recover his earring.

Deprivation of food and liquids would retard rather than accelerate the

fulfillment of that desire. And we know that he was not denied all

liquids, which is the pertinent category (not water), because the

complaint alleges that he drank milk. In addition there is no allegation

that he incurred any physical injury from the alleged deprivations.

All three amended complaints imply, fantastically, that Atkins

was forced to remain naked for the entire 37 days of his incarceration,

for they state that the defendants violated his civil rights by “forcing

him to remain naked in a cell” (emphasis added). But even if all that

is meant is that he was intermittently forced to remain naked, this is

hard to believe. Nor is the nakedness alleged merely incidental to the

conducting of frequent strip searches, for that is a separate allegation,

and the allegation that he was forced to remain naked is bracketed with

an allegation that the defendants “den[ied] him clothes.”

There is also a curious evolution of allegations in successive

iterations of the complaint. The initial complaint, though it alleged that

Atkins had been denied drinking water until he defecated his earring,

did not mention any deprivation of food but instead alleged that “for

the first couple of days at Statesville [sic], [he] did not eat because the

defendants wrongfully desired to obtain [his] earring.” This suggests

that any deprivation of food was short-lived and self-inflicted.

The four successive complaints are riddled with contradictions.

And they are not pro se complaints. They were drafted by the

plaintiff’s lawyer. We have noted that the original complaint didn’t

mention deprivation of food by the prison as distinct from Atkins’s

refusing to eat for two days. The first amended complaint dropped all

reference to deprivation of food or drink, while the second amended

complaint restored the claim that Atkins had been “denied drinking

water” but said nothing about food. Not until the third amended

complaint do we read that Atkins was denied “food and/or water,”
383

which still leaves unclear whether it was one or both. And the

response to the defendants’ motion to dismiss that complaint muddied

the waters further by stating that the defendants had “deprived him of

water and/or food for several days and [made] him drink milk.” Milk

is not water, but it is a substitute for water. The plaintiff’s final

submission to the district court listed all the ways in which the

“defendantsforced [Atkins] to endure unconstitutional mistreatment”

but did not include in the list deprivation of food or water.

Atkins, 631 F.3d at 829–31(internal citations omitted).

After detailing the requirements set out in Iqbal and Twombly, the court continued:

When the Court said in Iqbal “we do not reject these bald

allegations on the ground that they are unrealistic or nonsensical,” id.

at 1951, it didn’t mean that nonsensical allegations can survive a

motion to dismiss; that wasn't the rule even before Twombly and

Iqbal. The point was rather that the allegations in Iqbal, though

somewhat paranoid, were not nonsensical; nevertheless the Court

ordered dismissal.

After Twombly and Iqbal a plaintiff to survive dismissal “must

plead some facts that suggest a right to relief that is beyond the

‘speculative level.’” In re marchFIRST Inc., 589 F.3d 901, 905 (7th

Cir. 2009). And (another rule that antedates Twombly and Iqbal) he

can plead himself out of court by pleading facts that show that he has

no legal claim. Hecker v. Deere & Co., 556 F.3d 575, 588 (7th Cir.

2009); Tamayo v. Blagojevich, 526 F.3d 1074, 1086 (7th Cir. 2008);

EEOC v. Concentra Health Services, Inc., 496 F.3d 773, 777 (7th Cir.

2007); Orthmann v. Apple River Campground, 757 F.2d 909, 915 (7th

Cir. 1985); Trudeau v. FTC, 456 F.3d 178, 193 (D.C. Cir. 2006). So

suppose some of the plaintiff’s factual allegations are unrealistic or

nonsensical and others not, some contradict others, and some are

“speculative” in the sense of implausible and ungrounded. The district

court has to consider all these features of a complaint en route to

deciding whether it has enough substance to warrant putting the

defendant to the expense of discovery, Bell Atlantic Corp. v. Twombly,

supra, 550 U.S. at 558–59; Francis v. Giacomelli, 588 F.3d 186, 193

and n. 2 (4th Cir. 2009), or, in a case such as this (like Iqbal itself),

burdening a defense of immunity. Ashcroft v. Iqbal, supra, 129 S. Ct.

at 1953–54; Smith v. Duffey, 576 F.3d 336, 339–40 (7th Cir. 2009);

Amore v. Novarro, 624 F.3d 522, 529–30 (2d Cir. 2010); Fletcher v.

Burkhalter, 605 F.3d 1091, 1095–96 (10th Cir. 2010).
384

We are left in darkness as to whether the plaintiff is actually

alleging that Atkins was denied food or water for four days, or for a

lesser, but still constitutionally significant, length of time. The

plaintiff’s lawyer has had four bites at the apple. Enough is enough.

United States ex rel. Garst v. Lockheed-Martin Corp., 328 F.3d 374,

378–79 (7th Cir. 2003).

Id. at 832 (emphasis added).

Judge Hamilton concurred in part and concurred in the court’s judgment, but his opinion did

not address the majority’s Twombly/Iqbal discussion.

• In re Text-Messaging Antitrust Litigation, 630 F.3d 622 (7th Cir. 2010), cert. denied, 131

S. Ct. 2165 (2011). The plaintiffs brought a class action suit, consolidated for pretrial

proceedings in the district court, charging the defendants with conspiring to fix prices of text

messaging services in violation of federal antitrust law. The district court allowed the

plaintiffs to file a second amended complaint, and declined to dismiss that complaint for

failure to state a claim. The district court granted the defendants’ request to certify, for

interlocutory appeal under 28 U.S.C. § 1292(b), the question of the adequacy of the second

amended complaint. The Seventh Circuit granted the application for interlocutory appeal.

The Seventh Circuit affirmed the district court’s refusal to dismiss the complaint. The court

reasoned: 

The complaint in Twombly alleged that the regional telephone

companies that were the successors to the Bell Operating Companies

which AT & T had been forced to divest in settlement of the

government’s antitrust suit against it were engaged in “parallel

behavior.” Bluntly, they were not competing. But section 1 of the

Sherman Act, under which the suit had been brought, does not require

sellers to compete; it just forbids their agreeing or conspiring not to

compete. So as the Court pointed out, a complaint that merely alleges

parallel behavior alleges facts that are equally consistent with an

inference that the defendants are conspiring and an inference that the

conditions of their market have enabled them to avoid competing

without having to agree not to compete. The core allegations of the

complaint in Twombly were simply that “In the absence of any

meaningful competition between the [defendants] in one another’s

markets, and in light of the parallel course of conduct that each

engaged in to prevent competition from [other carriers] within their

respective local telephone and/or high speed internet services markets

and the other facts and market circumstances alleged above, Plaintiffs

allege upon information and belief that [the defendants] have entered

into a contract, combination or conspiracy to prevent competitive entry
385

in their respective local telephone and/or high speed internet services

markets and have agreed not to compete with one another and

otherwise allocated customers and markets to one another.” Id. at 551.

Our defendants contend that in this case too the complaint

alleges merely that they are not competing. But we agree with the

district judge that the complaint alleges a conspiracy with sufficient

plausibility to satisfy the pleading standard of Twombly. It is true as

the defendants contend that the differences between the first amended

complaint, which the judge dismissed, and the second, which he

refused to dismiss, are slight; but if his refusal to dismiss the second

complaint is properly described as a reconsideration of his ruling on

the first, so what? Judges are permitted to reconsider their rulings in

the course of a litigation.

The second amended complaint alleges a mixture of parallel

behaviors, details of industry structure, and industry practices, that

facilitate collusion. There is nothing incongruous about such a

mixture. If parties agree to fix prices, one expects that as a result they

will not compete in price—that’s the purpose of price fixing. Parallel

behavior of a sort anomalous in a competitive market is thus a

symptom of price fixing, though standing alone it is not proof of it;

and an industry structure that facilitates collusion constitutes

supporting evidence of collusion. An accusation that the thousands of

children who set up makeshift lemonade stands all over the country on

hot summer days were fixing prices would be laughed out of court

because the retail sale of lemonade from lemonade stands constitutes

so dispersed and heterogeneous and uncommercial a market as to

make a nationwide conspiracy of the sellers utterly implausible. But

the complaint in this case alleges that the four defendants sell 90

percent of U.S. text messaging services, and it would not be difficult

for such a small group to agree on prices and to be able to detect

“cheating” (underselling the agreed price by a member of the group)

without having to create elaborate mechanisms, such as an exclusive

sales agency, that could not escape discovery by the antitrust

authorities.

Of note is the allegation in the complaint that the defendants

belonged to a trade association and exchanged price information

directly at association meetings. This allegation identifies a practice,

not illegal in itself, that facilitates price fixing that would be difficult

for the authorities to detect. The complaint further alleges that the

defendants, along with two other large sellers of text messaging

services, constituted and met with each other in an elite “leadership
386

council” within the association—and the leadership council’s stated

mission was to urge its members to substitute “co-opetition” for

competition.

The complaint also alleges that in the face of steeply falling

costs, the defendants increased their prices. This is anomalous

behavior because falling costs increase a seller's profit margin at the

existing price, motivating him, in the absence of agreement, to reduce

his price slightly in order to take business from his competitors, and

certainly not to increase his price. And there is more: there is an

allegation that all at once the defendants changed their pricing

structures, which were heterogeneous and complex, to a uniform

pricing structure, and then simultaneously jacked up their prices by a

third. The change in the industry’s pricing structure was so rapid, the

complaint suggests, that it could not have been accomplished without

agreement on the details of the new structure, the timing of its

adoption, and the specific uniform price increase that would ensue on

its adoption.

A footnote in Twombly had described the type of evidence that

enables parallel conduct to be interpreted as collusive: “Commentators

have offered several examples of parallel conduct allegations that

would state a [Sherman Act] § 1 claim under this standard . . .

[namely,] ‘parallel behavior that would probably not result from

chance, coincidence, independent responses to common stimuli, or

mere interdependence unaided by an advance understanding among the

parties’ . . . [;] ‘conduct [that] indicates the sort of restricted freedom

of action and sense of obligation that one generally associates with

agreement.’ The parties in this case agree that ‘complex and

historically unprecedented changes in pricing structure made at the

very same time by multiple competitors, and made for no other

discernible reason’ would support a plausible inference of conspiracy.”

Bell Atlantic Corp. v. Twombly, supra, 550 U.S. at 557 n. 4 (citations

omitted). That is the kind of “parallel plus” behavior alleged in this

case.

What is missing, as the defendants point out, is the smoking

gun in a price-fixing case: direct evidence, which would usually take

the form of an admission by an employee of one of the conspirators,

that officials of the defendants had met and agreed explicitly on the

terms of a conspiracy to raise price. The second amended complaint

does allege that the defendants “agreed to uniformly charge an

unprecedented common per-unit price of ten cents for text messaging

services,” but does not allege direct evidence of such an agreement;
387

the allegation is an inference from circumstantial evidence. Direct

evidence of conspiracy is not a sine qua non, however. Circumstantial

evidence can establish an antitrust conspiracy. Monsanto Co. v.

Spray-Rite Service Corp., 465 U.S. 752, 764, 104 S. Ct. 1464, 79 L.

Ed. 2d 775 (1984); Miles Distributors, Inc. v. Specialty Construction

Brands, Inc., 476 F.3d 442, 449 (7th Cir. 2007); In re High Fructose

Corn Syrup Antitrust Litigation, 295 F.3d 651, 661–62 (7th Cir. 2002);

Craftsmen Limousine, Inc. v. Ford Motor Co., 363 F.3d 761, 771 (8th

Cir. 2004); Lantec, Inc. v. Novell, Inc., 306 F.3d 1003, 1028 (10th Cir.

2002); Rossi v. Standard Roofing, Inc., 156 F.3d 452, 465 (3d Cir.

1998); Johnson v. Hospital Corp. of America, 95 F.3d 383, 392 (5th

Cir. 1996). We need not decide whether the circumstantial evidence

that we have summarized is sufficient to compel an inference of

conspiracy; the case is just at the complaint stage and the test for

whether to dismiss a case at that stage turns on the complaint’s

“plausibility.”

The Court said in Iqbal that the “plausibility standard is not

akin to a ‘probability requirement,’ but it asks for more than a sheer

possibility that a defendant has acted unlawfully.” 129 S. Ct. at 1949.

This is a little unclear because plausibility, probability, and possibility

overlap. Probability runs the gamut from a zero likelihood to a

certainty. What is impossible has a zero likelihood of occurring and

what is plausible has a moderately high likelihood of occurring. The

fact that the allegations undergirding a claim could be true is no longer

enough to save a complaint from being dismissed; the complaint must

establish a nonnegligible probability that the claim is valid; but the

probability need not be as great as such terms as “preponderance of

the evidence” connote.

The plaintiffs have conducted no discovery. Discovery may

reveal the smoking gun or bring to light additional circumstantial

evidence that further tilts the balance in favor of liability. All that we

conclude at this early stage in the litigation is that the district judge

was right to rule that the second amended complaint provides a

sufficiently plausible case of price fixing to warrant allowing the

plaintiffs to proceed to discovery.

In re Text Messaging, 630 F.3d at 627–29 (emphasis added).

• Bausch v. Stryker Corp., 630 F.3d 546 (7th Cir. 2010), cert. denied, --- S. Ct. ----, No.

10A1019, 2011 WL 3047772 (Oct. 31, 2011). Plaintiff Bausch alleged that she was injured

by a medical device—a hip replacement system called “the Trident”—allegedly manufactured

in violation of federal law. She brought state common law claims, for strict product liability
388

and negligence, against the manufacturer, distributor, and seller of the Trident. The district

court granted a motion to dismiss under Rule 12(b)(6), holding that Bausch’s state claims

were preempted by federal law. The district court did not allow Bausch a requested

opportunity to amend her complaint, but instead immediately entered final judgment

dismissing the action with prejudice. The district court then denied Bausch’s motion to vacate

the judgment and for leave to file an amended complaint. The district court reasoned, among

other things, that the amended complaint was futile on the merits because its claims would

still be preempted.

 The Seventh Circuit reversed the district court’s finding that Bausch’s state claims were

preempted. The court also ruled that Bausch’s claim was sufficiently pleaded. The court

emphasized that when the plaintiff lacks access to the relevant information, discovery must

be allowed before requiring more detailed pleading: 

In applying [the Twombly/Iqbal] standard to claims for

defective manufacture of a medical device in violation of federal law,

. . . district courts must keep in mind that much of the product-specific

information about manufacturing needed to investigate such a claim

fully is kept confidential by federal law. Formal discovery is

necessary before a plaintiff can fairly be expected to provide a

detailed statement of the specific bases for her claim. Accordingly,

the district court erred in this case by dismissing plaintiff's original

complaint and by denying her leave to amend her complaint.

. . . .

According to the original complaint, the defendants

manufacture the Trident brand ceramic-on-ceramic hip replacement

system. It is a Class III medical device subject to the authority of the

FDA. Plaintiff had right total hip replacement surgery on March 21,

2007, in which a Trident device was implanted. The original

complaint alleged that the Trident product was unreasonably

dangerous, causing plaintiff to suffer an unstable right hip, pain,

suffering, disability, and what is euphemistically called “revision”

surgery—in Bausch’s case a second major operation in which the

Trident product was removed and replaced with a different product.

The original complaint also alleged facts indicating that

defendants knew, or at least should have known, before plaintiff’s

original surgery that the Trident implanted in her was defective.

According to the original complaint, by early 2005, the defendants

received complaints that the Trident was failing after it was implanted.

Defendants recalled a batch of Trident components in March 2006

because of “dimensional anomalies.” The FDA conducted an
389

inspection at the defendants’ Ireland manufacturing facility from

October 31 to November 3, 2006, and, following the inspection,

informed the defendants of “numerous deficiencies [in the Trident]

manufacturing and inspection processes.” Six days before plaintiff

Bausch’s surgery, “after several months of inadequate response to the

FDA findings by the defendants,” the FDA issued a letter to

defendants on March 15, 2007 warning that the Trident was

“adulterated due to manufacturing methods . . . not in conformity with

industry and regulatory standards.” A device, bearing the same

catalogue number as the device allegedly not in compliance with

regulations, was then implanted in Bausch’s body the next week. The

device in Bausch's body failed and the same device was later recalled.

The original complaint served the purposes of Rule 8 of giving

the defendants fair notice of the nature of the claim against them and

of stating a claim for relief that was “plausible on its face” as required

by Iqbal and Twombly. In deciding whether a complaint can survive

a motion to dismiss, we have consistently said: “As a general rule . .

. notice pleading remains the standard.” Windy City Metal

Fabricators & Supply, Inc. v. CIT Tech. Financial Services, 536 F.3d

663, 667 (7th Cir. 2008). Pursuant to Rule 8, pleading is meant to

“‘focus litigation on the merits of a claim’ rather than on

technicalities that might keep plaintiffs out of court.” Brooks v. Ross,

578 F.3d 574, 580 (7th Cir. 2009), quoting Swierkiewicz v. Sorema

N.A., 534 U.S. 506, 514, 122 S. Ct. 992, 152 L. Ed. 2d 1 (2002). We

give the plaintiff “the benefit of imagination, so long as the hypotheses

are consistent with the complaint.” Bissessur v. Indiana Univ. Bd. of

Trs., 581 F.3d 599, 603 (7th Cir. 2009), quoting Sanjuan v. American

Bd. of Psychiatry and Neurology, Inc., 40 F.3d 247, 251 (7th Cir.

1994). “Together, these rules ensure that claims are determined on

their merits rather than on pleading technicalities.” Christensen v.

County of Boone, 483 F.3d 454, 458 (7th Cir. 2007).

We do not see a fatal defect in the original complaint that

would have justified its dismissal, let alone entry of a final judgment

dismissing the action with prejudice. The onlysignificant issue we see

with the original complaint is that it alleges not only violations of

“regulatory” standards, but also violations of “industry” standards. To

the extent that the claims are based upon violations of “industry

standards” that are different from or in addition to the federal

regulatory standards (which have the force oflaw), those claims would

be preempted under section 360k. Yet complaints that combine

legally valid and invalid claims are common. When a complaint

asserts claims that are legally valid and those that are not, the correct
390

judicial response is not to dismiss the complaint, let alone with

prejudice. It’s not even necessary to require a plaintiff to file a

“cleaner” amended complaint. The case may proceed under the

original complaint, with the understanding, provided by the court if

necessary, as to the proper scope of claims that can survive the legal

challenge.

Defendants object that the original complaint does not specify

the precise defect or the specific federal regulatory requirements that

were allegedly violated. Although the complaint would be stronger

with such detail, we do not believe the absence of those details shows

a failure to comply with Rule 8 of the Federal Rules of Civil

Procedure or can support a dismissal under Rule 12(b)(6). First, Rule

9(b) does not impose any special requirement that such a claim be pled

with particularity, as it does for fraud claims, for example.

Second, the victim of a genuinely defective product—for

example, an air bag that fails to inflate in a serious automobile

collision, or an implantable cardiac defibrillator that delivers powerful

electric shocks to a heart that is functioning normally—may not be

able to determine without discovery and further investigation whether

the problem is a design problem or a manufacturing problem. It is

common, for example, for injured plaintiffs to plead both defective

manufacture and defective design and to pursue discovery on both

theories, as occurred in Riegel itself, for example. 552 U.S. at 320–21;

accord, e.g., Gardner v. Tristar Sporting Arms, Ltd., 2010 WL

3724190 (S.D. Ind. Sept. 15, 2010) (granting summary judgment for

defendant on design defect claim but denying summary judgment on

manufacturing defect claim); Show v. Ford Motor Co., 697 F. Supp.

2d 975 (N.D. Ill. 2010) (granting summary judgment for defendant on

both design defect and manufacturing defect claims); Gaskin v. Sharp

Electronics Corp., 2007 WL 2819660 (N.D. Ind. Sept. 26, 2007)

(granting summary judgment for defendant on design defect claim but

denying summary judgment on manufacturing defect claim); In re Air

Crash Disaster at Sioux City, Iowa, 781 F. Supp. 1307 (N.D. Ill. 1991)

(in airliner crash case, denying motions for summary judgment for

defendants on plaintiffs’ claims of manufacturing and design defects

against different defendants); see generally, e.g., Bennett v. Schmidt,

153 F.3d 516, 519 (7th Cir. 1998) (“Litigants are entitled to discovery

before being put to their proof”).

Third, in the context of Class III medical devices, much of the

critical information is kept confidential as a matter of federal law.

The specifications of the FDA’s premarket approval documents, for
391

example, are confidential, and there is no public access to complete

versions of these documents. An injured patient cannot gain access to

that information without discovery. See 21 C.F.R. § 814.9; Medtronic

Leads, 623 F.3d at 1211, n. 7 (Melloy, J., dissenting). If the problem

turns out to be a design feature that the FDA approved, section 360k

will protect the manufacturer. Riegel, 552 U.S. at 330. But if the

problem turns out to be a failure to comply with the FDA’s legally

enforceable conditions for approval of the device, section 360k will

not protect the manufacturer.

As noted earlier, one of the only two other circuits to examine

the application of Riegel to medical device preemption is the Eighth

Circuit in Medtronic Leads, where the majority concluded that the

plaintiffs had waived discovery early in the proceedings. The majority

upheld the district court’s refusal to grant the plaintiffs discovery to

respond to the motion to dismiss. There the court acknowledged the

plaintiffs’ argument that the district court held them to an “impossible

pleading standard” because the FDA’s premarket approval application

was accessible only to the FDA and the manufacturer. The court

found that “this argument—which focuses on the timing of the

preemption ruling—would have considerable force in a case where a

specific defective Class III device injured a consumer, and the plaintiff

did not have access to the specific federal requirements in the

[premarket approval application] prior to commencing the lawsuit.”

Medtronic Leads, 623 F.3d at 1206. That is exactly the situation in

this case. Here, there has not yet been an opportunity for discovery,

and Bausch never waived discovery. For her to plead with any more

detail that her claims were “based entirely on a specific defect in the

Trident that existed outside the knowledge and regulations of the

FDA,” she would need access to the confidential materials in the

premarket approval application setting forth the medical device’s

specifications. This is simply not possible without discovery. It is also

unreasonable to expect that Bausch could have pled more specifically

without access to the failed Trident itself, but accessing the Trident

outside of a discovery process would risk charges of spoliation of

evidence, as Bausch’s counsel acknowledged at oral argument. As

Judge Melloy noted in Medtronic Leads: “If plaintiffs must allege that

the defendant violated a particular FDA-approved specification before

discovery, then it is difficult to appreciate how any plaintiff will ever

be able to defeat a Rule 12(b)(6) motion.” Id. at 1212 (Melloy, J.,

dissenting). We think Judge Melloy said it well in suggesting that, in

analyzing the sufficiency of pleadings, “a plaintiff’s pleading burden

should be commensurate with the amount of information available to

them.” Id. Here, Bausch pled sufficiently given the amount of
392

information to which she had access.

Bausch, 630 F.3d at 558–61 (emphasis added).

• Reynolds v. CB Sports Bar, Inc., 623 F.3d 1143, 2010 WL4137569 (7th Cir. 2010). Plaintiff

Reynolds alleged that two other bar patrons, Brenda Russell and Casey Carson, induced her

to become intoxicated in Jerzey’s, a bar owned by CB Sports Bar, Inc., and attempted to take

her back to their apartment for “sexual exploitation.” Id. Reynolds escaped, but was injured

when she was struck by a car. Id. Reynolds sued CB Sports Bar for negligence. Id. She

alleged in her second amended complaint that the bar, through its bartenders, knew of Russell

and Carson’s plans and negligently failed to protect her from the attack. Id. The district court

dismissed the negligence count against CB Sports Bar for failure to state a claim, finding that

CB Sports’s duty to protect its business invitees did not extend “to such distances or

circumstances as are involved in this case,” and that “there is no reason CB Sports could have

reasonably foreseen that there was a danger that one of their patrons would be hit by a vehicle

while escaping from criminal activity by another Jerzey’s patron after leaving the bar-or any

other harm of that general nature.” Id. at 1-2. The Seventh Circuit concluded that Reynolds’s

claim was broad enough to encompass a viable theory of negligence against CB Sports Bar,

and reversed and remanded. CB Sports, 2010 WL 4137569 at *1.

Reynolds complaint alleged:

That Defendant Jerzey’s at least knew or should have known

that Defendants Russell and Carson were getting Plaintiff Loretta

Reynolds intoxicated for the purpose of sexual exploitation. At worst,

Defendant Jerzey’s and its employ/agent bartender was an active

accomplice in the attempt to ensnare Plaintiff Loretta Reynolds into an

unsavory and unwelcome sexual situation.

Id. She also alleged that CB Sports Bar knew or should have known that she would try to

escape and that CB Sports Bar “had a duty to protect the welfare of its customers, including

Plaintiff Loretta Reynolds from situations such as that being plotted by Defendants Russell

and Carson.” Id. 

The Seventh Circuit first explained that, although the Illinois Dram Shop Act “does not

provide a cause of action for injuries sustained by the intoxicated person himself,” it “does

not give a bar immunity for tortious conduct; the Act preempts actions based on the provision

of alcohol. A plaintiff may still bring a cause of action against a bar for acts that are

independent of alcohol.” Id. at *2-3. 

Next, the court turned to the issue of whether Reynolds could supplement her complaint on

appeal with facts that she did not include in her complaint. Id. The court noted that “[p]rior

to Iqbal and Twombly, it was clear that ‘a plaintiff [was] free on appeal to give us an

unsubstantiated version of the events, provided it is consistent with the complaint, to show
393

that the complaint should not have been dismissed.’” Id. (quoting Dawson v. General Motors

Corp., 977 F.2d 369, 372 (7th Cir. 1992)). And then concluded that Iqbal and Twombly,

“while raising the bar for what must be included in the complaint in the first instance, did not

eliminate the plaintiff’s opportunity to suggest facts outside the pleading, including on appeal,

showing that a complaint should not be dismissed.” CB Sports, 2010 WL 4137569 at *3.

Therefore, once a plaintiff pleads sufficient factual material to state a plausible claim,

“nothing in Iqbal or Twombly precludes the plaintiff from later suggesting to the court a set

of facts, consistent with the well-pleaded complaint, that shows that the plaintiff should not

be dismissed.” Id. The court noted that Reynolds made the following allegations: (1) that

the bartender refused to help her get a taxicab and told her she would have to get a ride back

to her hotel from another patron, (2) that the bartender assisted Russell and Carson in getting

Reynolds intoxicated knowing their ill intentions, (3) that CB Sports Bar “at least knew or

should have known that Defendants Russell and Carson were getting Plaintiff Loretta

Reynolds intoxicated for the purpose of sexual exploitation,” and (4) “that Defendant [CB

Sports Bar] had a duty to protect the welfare of its customers...from situations such as that

being plotted by Defendants Russell and Caron.” Id. It found “these allegations sufficient to

raise a plausible claim of negligence against CB Sports.” Id. at *4. Because Reynolds made

a “sufficient showing in the first instance,” the Seventh Circuit decided that she was “free on

appeal to suggest additional facts that would demonstrate to [the court] why her complaint

should not be dismissed for failing to state a claim.” Id. The court therefore considered the

“additional factual allegations that Reynolds has raised on appeal, including the allegation that

the bartenders told her that it would be safe for her to ride home with Russell and Carson.”

Id.

The court applied Illinois substantive law because jurisdiction was based on diversity of

citizenship. CB Sports, 623 F.3d at *4. The court explained, that, to state a claim for

negligence under Illinois law:

‘[A] plaintiff must plead a duty owed by a defendant to that plaintiff,

a breach of that duty, and injury proximately caused by the breach of

duty.’ Bell v. Hutsell, 931 N.E.2d 299, 302 (2010). There is normally

no duty to protect someone from criminal attacks by third parties.

However, a landowner will have a duty to protect lawful entrants

against criminal attacks on the premisesif the parties stand in a special

relationship-such as between a business invitor and invitee- and the

criminal attack was reasonably foreseeable.

....

Even if there is a special relationship and the criminal attack is

foreseeable, courts must still decide whether to impute a duty to

protect against the attack. Courts will consider a number of factors

in deciding whether to impose a duty on someone to protect another,

including ‘(1) the reasonable foreseeability of the injury; (2) the

likelihood of the injury; (3) the magnitude of the burden of guarding
394

against the injury; and (4) the consequences of placing that burden on

the defendant.’ Marshall v. Burger King Corp., 856 N.E.2d 1048,

1057 (2006).

CB Sports, 623 F.3d at *4. (internal citations omitted) (emphasis in original). 

After accepting as true Reynolds’ allegation that CB Sports “at least knew or should have

known that Defendants Russell and Carson were getting Plaintiff Loretta Reynolds intoxicated

for the purpose of sexual exploitation,” the court concluded that “the subsequent unrealized

criminal attack on Reynolds was reasonably foreseeable to CB Sports.” Id. at *8.

Having decided that the attack was reasonably foreseeable, the court turned to whether the bar

had a duty to protect Reynolds against the attack. Id. And examined “the likelihood of any

injury, the burden on the defendant of guarding against the injury, and any consequences of

placing the burden to protect on the bar.” Id. First, it noted that “[t]he likelihood of injury

under these circumstances was very high.” Id. Then it decided that was it not “overly

burdensome to require a bar to protect against criminal attacks of the kind in this case if it

knows they will be perpetrated.” Id. Finally, it noted that “two limiting principles, drawn

from Illinois courts’ decisions ... make imposing a more limited duty on CB Sports consistent

with established Illinois law.” CB Sports, 623 F.3d at *8. The two limitations were that (1)

the bar was under no duty to investigate the plans or intentions of its patrons and (2) the bar

had a duty to protect against only those criminal attacks occurring far from its physical

premises that it knew would occur. Id. The court concluded 

Reynolds has sufficiently pled that CB Sports owed her a duty to

protect her against the criminal attack by Russell and Carson if it

actually knew oftheir alleged plan to sexually exploit her off premises.

She also has sufficiently pled the remaining elements of her negligence

claim. Thus, we need not (and should not) decide at this stage of the

litigation what CB Sports could have done to discharge its duty, nor

whether CB Sports’s inaction (such as failing to warn her or give her

a phone book) or action (such as telling her to get a ride from someone

at the bar or vouching for Russell and Carson) breached that duty.

Id. at *9. 

Judge Ripple dissented because he did not agree with the majority’s application of Illinois law

on business invitor liability. Id. at *10 (Ripple, J., dissenting).

• Bonte v. U.S. Bank, N.A., 624 F.3d 461, 2010 WL 4068952 (7th Cir. 2010). The Bontes

alleged that U.S. Bank succeeded a mortgage lender that violated the Truth in Lending Act

(“TILA”) by misstating certain charges related to the Bontes’ mortgage and sought mortgage

rescission. Id. The district court granted U.S. Bank’s motion to dismiss after concluding that

the Bontes failed to respond to U.S. Bank’s contention that none of the misstatements
395

identified in the complaint were “material,” as required by TILA for mortgage rescission. Id.

The Seventh Circuit affirmed.

The court explained that, to assert a claim for rescission under TILA, the Bontes’ “must

demonstrate that the lenderfailed to make a required ‘material’ disclosure.” Id. at *2. TILA’s

implementing regulation, Regulation Z, identifies eighteen pieces of information to be

disclosed to borrowers in credit transactions such as the Bontes’ mortgage. Id. The court

noted that “[o]f these eighteen disclosures, the following five qualify as ‘material’ so as to

support rescission for up to three years: (1) the annual percentage rate; (2) the finance charge;

(3) the amount financed; (4) the total of payments; and (5) the payment schedule.” Id. The

court acknowledged that the Bontes alleged that the disclosure statement misstated the finance

charge, annual percentage rate, and amount finance, but pointed out that “the Bontes never

explain how the ten allegedly misstated charges are related to the finance charge, the APR,

and the amount financed.” Bonte, 2010 WL 4068952 at *2. After reviewing U.S. Bank’s

arguments, the court concluded that “none of the ten errors are in fact related to the amount

financed, the finance charge, and the applicable APR, notwithstanding the Bontes’

unsupported legal statement to the contrary.” Id. at *3-4. Applying Iqbal, the court

determined that the complaint did not “plausibly give rise to an entitlement to relief.” Id.

And concluded that Bontes’ failure to respond to U.S. Bank’s characterization of the ten

errors was a concession that the charges identified in their complaint are not “material”

disclosures that would warrant rescission under TILA. Id. at *5.

• Swanson v. Citibank, N.A., 614 F.3d 400 (7th Cir. 2010). Swanson, proceeding pro se, sued

lender (Citibank), appraiser (PCI Appraisal Services), and appraiser’s employee (Lanier), for

discriminating against her on the basis of her race when Citibank denied her application for

a home-equity loan. Id. at 402. The district court dismissed her complaint for failure to state

a claim. Id. at 403. The Seventh Circuit affirmed in part and reversed in part, agreeing that

Swanson failed to state a fraud claim, but holding that Swanson stated a claim for racial

discrimination under the FHA. 

The court first explained the pleading standards:

It is by now well established that a plaintiff must do better than putting

a few words on paper that, in the hands of an imaginative reader,

might suggest that something has happened to her that might be

redressed by the law. Cf. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.

Ct. 99, 2 L. Ed. 2d 80 (1957), disapproved by Bell Atlantic Corp. v.

Twombly, 550 U.S. 544, 563, 127 S. Ct. 1955, 167 L. Ed. 2d 929

(2007) (“after puzzling the profession for 50 years, this famous

observation [the ‘no set of facts’ language] has earned its retirement”).

The question with which courts are still struggling is how much higher

the Supreme Court meant to set the bar, when it decided not only

Twombly, but also Erickson v. Pardus, 551 U.S. 89, 127 S. Ct. 2197,

167 L. Ed. 2d 1081 (2007), and Ashcroft v. Iqbal,--- U.S. ----, 129 S.
396

Ct. 1937, 173 L. Ed. 2d 868 (2009). This is not an easy question to

answer, as the thoughtful dissent from this opinion demonstrates. On

the one hand, the Supreme Court has adopted a “plausibility” standard,

but on the other hand, it has insisted that it is not requiring fact

pleading, nor is it adopting a single pleading standard to replace Rule

8, Rule 9, and specialized regimes like the one in the Private Securities

Litigation Reform Act (“PSLRA”), 15 U.S.C. § 78u-4(b)(2).

Critically, in none of the three recent decisions—Twombly,

Erickson, or Iqbal—did the Court cast any doubt on the validity of

Rule 8 of the Federal Rules of Civil Procedure. To the contrary: at all

times it has said that it is interpreting Rule 8, not tossing it out the

window. It is therefore useful to begin with a look at the language of

the rule:

(a) Claim for Relief. A pleading that states a claim for relief

must contain:

* * *

(2) a short and plain statement of the claim showing that the

pleader is entitled to relief....

FED. R. CIV. P. 8(a)(2). As one respected treatise put it in 2004,

all that is necessary is that the claim for relief be stated

with brevity, conciseness, and clarity.... [T]his portion

of Rule 8 indicates that a basic objective of the rules is

to avoid civil cases turning on technicalities and to

require that the pleading discharge the function of

giving the opposing party fair notice of the nature and

basis or grounds of the pleader's claim and a general

indication of the type of litigation that is involved....

5 Charles A. Wright & Arthur R. Miller, Federal Practice and

Procedure § 1215 at 165-173 (3d ed. 2004).

Nothing in the recent trio of cases has undermined these broad

principles. As Erickson underscored, “[s]pecific facts are not

necessary.” 551 U.S. at 93, 127 S. Ct. 2197. The Court was not

engaged in a sub rosa campaign to reinstate the old fact-pleading

system called for by the Field Code or even more modern codes. We

know that because it said so in Erickson: “the statement need only give

the defendant fair notice of what the ... claim is and the grounds upon
397

which it rests.” Id. Instead, the Court has called for more careful

attention to be given to several key questions: what, exactly, does it

take to give the opposing party “fair notice”; how much detail

realistically can be given, and should be given, about the nature and

basis or grounds of the claim; and in what way is the pleader expected

to signal the type of litigation that is being put before the court?

This is the light in which the Court’s references in Twombly, repeated

in Iqbal, to the pleader’s responsibility to “state a claim to relief that

is plausible on its face” must be understood. See Twombly, 550 U.S.

at 570, 127 S. Ct. 1955; Iqbal, 129 S. Ct. at 1949. “Plausibility” in

this context does not imply that the district court should decide whose

version to believe, or which version is more likely than not. Indeed,

the Court expressly distanced itself from the latter approach in Iqbal,

“the plausibility standard is not akin to a probability requirement.”

129 S. Ct. at 1949 (quotation marks omitted). As we understand it, the

Court is saying instead that the plaintiff must give enough details

about the subject-matter of the case to present a story that holds

together. In other words, the court will ask itself could these things

have happened, not did they happen. For cases governed only by Rule

8, it is not necessary to stack up inferences side by side and allow the

case to go forward only if the plaintiff’s inferences seem more

compelling than the opposing inferences. Compare Makor Issues &

Rights, Ltd. v. Tellabs Inc., 513 F.3d 702, 705 (7th Cir.2008) (applying

PSLRA standards).

The Supreme Court’s explicit decision to reaffirm the validity of

Swierkiewicz v. Sorema N.A., 534 U.S. 506, 122 S. Ct. 992, 152 L. Ed.

2d 1 (2002), which was cited with approval in Twombly, 550 U.S. at

556, 127 S. Ct. 1955, indicates that in many straightforward cases, it

will not be any more difficult today for a plaintiff to meet that burden

than it was before the Court’s recent decisions. A plaintiff who

believes that she has been passed over for a promotion because of her

sex will be able to plead that she was employed by Company X, that

a promotion was offered, that she applied and was qualified for it, and

that the job went to someone else. That is an entirely plausible

scenario, whether or not it describes what “really” went on in this

plaintiff's case. A more complex case involving financial derivatives,

or tax fraud that the parties tried hard to conceal, or antitrust

violations, will require more detail, both to give the opposing party

notice of what the case is all about and to show how, in the plaintiff’s

mind at least, the dots should be connected. Finally, as the Supreme

Court warned in Iqbal and as we acknowledged later in Brooks v.

Ross, 578 F.3d 574 (7th Cir.2009), “abstract recitations of the
398

elements of a cause of action or conclusory legal statements,” 578 F.3d

at 581, do nothing to distinguish the particular case that is before the

court from every other hypothetically possible case in that field of law.

Such statements therefore do not add to the notice that Rule 8

demands.

Swanson, 614 F.3d at 403-05. The court then analyzed Swanson’s Fair Housing Act and

fraud claims against Citibank. Id. at 405. It explained that “[t]he Fair Housing Act prohibits

businesses engaged in residential real estate transactions, including ‘[t]he making ... of loans

or providing other financial assistance ... secured by residential real estate,’ from

discriminating against any person on account of race.” Id. (quoting 42 U.S.C. § 3605(a),

(b)(1)(B)). And concluded that Swanson adequately alleged an FHA claim against Citibank:

Swanson’s complaint identifies the type of discrimination that she

thinks occurs (racial), by whom (Citibank, through Skertich, the

manager, and the outside appraisers it used), and when (in connection

with her effort in early 2009 to obtain a home-equity loan). This is all

that she needed to put in the complaint. 

Id. The court then considered Swanson’s fraud claim against Citibank. And explained that

the fraud claim must satisfy Rule 9(b) and “plead actual damages arising from [Swanson’s]

reliance on a fraudulent statement.” Id. at 406. The court decided that the district court

properly dismissed Swanson’s fraud claim against Citibank: 

Swanson asserts that Citibank falsely announced plans to make federal

funds available in the form of loans to all customers, when it actually

intended to exclude African-American customers from those who

would be eligible for the loans. Swanson relied,she says, on that false

information when she applied for her home-equity loan. But she never

alleged that she lost anything from the process of applying for the loan.

We do not know, for example, whether there was a loan application

fee, or if Citibank or she covered the cost of the appraisal. This is the

kind of particular information that Rule 9 requires, and its absence

means that the district court was entitled to dismiss the claim.

Id. 

The court then turned to Swanson’s claims against the appraiser (PCI) and its employee

(Lanier). Swanson, 614 F.3d at 406. It explained that the FHA makes it “unlawful for any

person or other entity whose business includes engaging in residential real estate-related

transactions to discriminate against any person in making available such a transaction, or in

the terms or conditions of such a transaction, because of race....” Id. (quoting 42 U.S.C. §

3605(a)). And that the statute defined the term “residential real estate-related transaction” to

include “the selling, brokering, or appraising of residential real property.” Id. (quoting 42
399

U.S.C. § 3605(b)(2)).

Swanson alleged that the appraisal defendants “skew[ed] their assessment of her home

because of her race.” Id. The court decided that this was enough to survive a Rule 12(b)(6)

motion. Id. at 406-07. The court then considered Swanson’s common-law fraud claim

against Lanier and PCI and concluded that: “[s]he has not adequately alleged that she relied

on their appraisal, nor has she pointed to any out-of-pocket losses that she suffered because

of it.” Id. at 407.

Judge Posner dissented, concluding that Swanson’s “hypothesis of racial discrimination does

not have substantial merit; it is implausible.” Swanson, 613 F.3d at 407. (Posner, J.,

dissenting in part). He argued that the majority’s decision not to dismiss Swanson’s FHA

claims was inconsistent with Iqbal, that this case was “even stronger for dismissal” than Iqbal,

and that this case would have been dismissed even before Twombly and Iqbal:

This case is even stronger for dismissal because it lacks the

competitive situation-man and woman, or white and black, vying for

the same job and the man, or the white, getting it. We had emphasized

this distinction, long before Twombly and Iqbal, in Latimore v.

Citibank Federal Savings Bank, 151 F.3d 712 (7th Cir.1998), like this

a case of credit discrimination rather than promotion. “Latimore was

not competing with a white person for a $51,000 loan. A bank does

not announce, ‘We are making a $51,000 real estate loan today; please

submit your applications, and we'll choose the application that we like

best and give that applicant the loan.’” Id. at 714. We held that there

was no basis for an inference of discrimination. Noland v. Commerce

Mortgage Corp., 122 F.3d 551, 553 (8th Cir.1997), and Simms v. First

Gibraltar Bank, 83 F.3d 1546, 1558 (5th Cir. 1996), rejected

credit-discrimination claims because there was no evidence that

similar applicants were treated better, and Boykin v. Bank of America

Corp., 162 Fed. Appx. 837, 840 (11th Cir. 2005)(per curiam), rejected

such a claim because “absent direct evidence of discrimination, there

is no basis for a trier of fact to assume that a decision to deny a loan

was motivated by discriminatory animus unless the plaintiff makes a

showing that a pattern of lending suggests the existence of

discrimination.”

There is no allegation that the plaintiff in this case was

competing with a white person for a loan. It was the low appraisal of

her home that killed her chances for the $50,000 loan that she was

seeking. The appraiser thought her home worth only $170,000, and

she already owed $146,000 on it (a first mortgage of $121,000 and a

home-equity loan of $25,000). A further loan of $50,000 would thus

have been undersecured. We must assume that the appraisal was a
400

mistake, and the house worth considerably more, as she alleges. But

errors in appraising a house are common because “real estate appraisal

is not an exact science,” Latimore v. Citibank Federal Savings Bank,

supra, 151 F.3d at 715 - common enough to have created a market for

“Real Estate Appraisers Errors & Omissions” insurance policies. See,

e.g., OREP (Organization of Real Estate Professionals), “E&O

Insurance,” www. orep. org/ appraisers- e& o. htm (visited July 11,

2010). The Supreme Court would consider error the plausible

inference in this case, rather than discrimination, for it said in Iqbal

that “as between that ‘obvious alternative explanation’ for the [injury

of which the plaintiff is complaining] and the purposeful, invidious

discrimination [the plaintiff] asks us to infer, discrimination is not a

plausible conclusion.” Ashcroft v. Iqbal, supra, 129 S. Ct. at 1951-52,

quoting Twombly, 550 U.S. at 567, 127 S. Ct. 1955.

Even before Twombly and Iqbal, complaints were dismissed

when they alleged facts that refuted the plaintiffs’ claims. See, e.g.,

Tierney v. Vahle, 304 F.3d 734, 740 (7th Cir.2002); Thomas v. Farley,

31 F.3d 557 (7th Cir.1994); Lightner v. City of Wilmington, 545 F.3d

260, 262 (4th Cir.2008). Under the new regime, it should be enough

that the allegations render a claim implausible. The complaint alleges

that Citibank was the second bank to turn down the plaintiff's

application for a home-equity loan. This reinforces the inference that

she was not qualified. We further learn that, subject to the appraisal,

which had not yet been conducted, Citibank had approved the $50,000

home-equity loan that the plaintiff was seeking on the basis of her

representation that her house was worth $270,000. But she didn't think

it was worth that much when she applied for the loan. The house had

been appraised at $260,000 in 2004, and the complaint alleges that

home values had fallen by “only” 16 to 20 percent since. This implies

that when she applied for the home - equity loan her house was worth

between $208,000 and $218,400 - much less than what she told

Citibank it was worth.

Swanson, 614 F.3d at 408-09 (Posner, J., dissenting in part). Judge Posner noted that “Iqbal

establishes a general requirement of ‘plausibility’ applicable to all civil cases in federal

courts.” Id. at 410. He explained:

It does so, however, in opaque language: “The plausibility standard is

not akin to a ‘probability requirement,’ but it asks for more than a

sheer possibility that a defendant has acted unlawfully.” 129 S. Ct. at

1949. In statistics the range of probabilities is from 0 to 1, and

therefore encompasses “sheer possibility” along with “plausibility.” 

It seems (no stronger word is possible) that what the Court was driving
401

at was that even if the district judge doesn’t think a plaintiff's case is

more likely than not to be a winner (that is, doesn't think p > .5), as

long as it is substantially justified that’s enough to avert dismissal. Cf.

Equal Access to Justice Act, 28 U.S.C. § 2412(d)(1)(A). But when a

bank turns down a loan applicant because the appraisal of the security

for the loan indicates that the loan would not be adequately secured,

the alternative hypothesis of racial discrimination does not have

substantial merit; it is implausible.

Id. Judge Posner then highlighted the concern about discovery burdens underlying Twombly

and Iqbal and the possible effect of those burdens on this case:

Behind both Twombly and Iqbal lurks a concern with

asymmetric discovery burdens and the potential for extortionate

litigation (similar to that created by class actions, to which Rule 23(f)

of the civil rules was a response, Isaacs v. Sprint Corp., 261 F.3d 679,

681 (7th Cir.2001); Blair v. Equifax Check Services, Inc., 181 F.3d

832, 834-35 (7th Cir.1999); Newton v. Merrill Lynch, Pierce, Fenner

& Smith, Inc., 259 F.3d 154, 162-65 (3d Cir.2001); Vallario v.

Vandehey, 554 F.3d 1259, 1263 (10th Cir.2009); FED.R.CIV. P. 23(f)

Committee Note) that such an asymmetry creates. Ashcroft v. Iqbal,

supra, 129 S. Ct. at 1953; Bell Atlantic Corp. v. Twombly, supra, 550

U.S. at 557-59, 127 S. Ct. 1955; Cooney v. Rossiter, 583 F.3d 967, 971

(7th Cir.2009); Beck v. Dobrowski, 559 F.3d 680, 682 (7th Cir.2009);

Kendall v. Visa U.S.A., Inc., 518 F.3d 1042, 1046-47 (9th Cir.2008).

In most suits against corporations or other institutions, and in both

Twombly and Iqbal - but also in the present case - the plaintiff wants

or needs more discovery of the defendant than the defendant wants or

needs of the plaintiff, because the plaintiff has to search the

defendant's records (and, through depositions, the minds of the

defendant's employees) to obtain evidence of wrongdoing. With the

electronic archives of large corporations or other large organizations

holding millions of emails and other electronic communications, the

cost of discovery to a defendant has become in many cases

astronomical. And the cost is not only monetary; it can include, as

well, the disruption of the defendant's operations. If no similar costs

are borne by the plaintiff in complying with the defendant's discovery

demands, the costs to the defendant may induce it to agree early in the

litigation to a settlement favorable to the plaintiff.

It is true, as critics of Twombly and Iqbal point out, that district

courts have authority to limit discovery. E.g., Griffin v. Foley, 542

F.3d 209, 223 (7th Cir. 2008); Searls v. Glasser, 64 F.3d 1061, 1068

(7th Cir.1995); Deitchman v. E.R. Squibb & Sons, Inc., 740 F.2d 556,
402

563 (7th Cir.1984); Mwani v. bin Laden, 417 F.3d 1, 17 (D.C. Cir.

2005). But especially in busy districts, which is where complex

litigation is concentrated, the judges tend to delegate that authority to

magistrate judges. And because the magistrate judge to whom a case

is delegated for discovery only is not responsible for the trial or the

decision and can have only an imperfect sense of how widely the

district judge would want the factual inquiry in the case to roam to

enable him to decide it, the magistrate judge is likely to err on the

permissive side. “One common form of unnecessary discovery (and

therefore a ready source of threatened discovery) is delving into ten

issues when one will be dispositive. A magistrate lacks the authority

to carve off the nine unnecessary issues; for all the magistrate knows,

the judge may want evidence on any one of them. So the magistrate

stands back and lets the parties have at it. Pursuit of factual and legal

issues that will not matter to the outcome of the case is a source of

enormous unnecessary costs, yet it is one hard to conquer in a system

of notice pleading and even harder to limit when an officer lacking the

powerto decide the case supervises discovery.” Frank H. Easterbrook,

“Discovery as Abuse,” 69 B.U. L. REV. 635, 639 (1989); see also

Milton Pollack, “Discovery-Its Abuse and Correction,” 80 F.R.D. 219,

223 (1979); Virginia E. Hench, “Mandatory Disclosure and Equal

Access to Justice: The 1993 Federal Discovery Rules Amendments

and the Just, Speedy and Inexpensive Determination of Every Action,”

67 TEMPLE L. REV. 179, 232 (1994).

This structural flaw helps to explain and justify the Supreme

Court’s new approach. It requires the plaintiff to conduct a more

extensive precomplaint investigation than used to be required and so

creates greater symmetry between the plaintiff’s and the defendant’s

litigation costs, and by doing so reduces the scope for extortionate

discovery. If the plaintiff shows that he can’t conduct an even

minimally adequate investigation without limited discovery, the judge

presumably can allow that discovery, meanwhile deferring ruling on

the defendant's motion to dismiss. Miller v. Gammie, 335 F.3d 889,

899 (9th Cir.2003) (en banc); Coss v. Playtex Products, LLC, No. 08

C 50222, 2009 WL 1455358 (N.D. Ill. May 21, 2009); Edward A.

Hartnett, “Taming Twombly, Even After Iqbal,” 158 U. PA. L. REV.

473, 507-14 (2010); Suzette M. Malveaux, “Front Loading and Heavy

Lifting: How Pre-Dismissal Discovery Can Address the Detrimental

Effect of Iqbal on Civil Rights Cases,” 14 LEWIS &CLARK L.REV. 65

(2010). No one has suggested such a resolution for this case.

Swanson, 614 F.3d at 411-12 (Posner, J., dissenting). Judge Posner concluded: 
403

The plaintiff has an implausible case of discrimination, but she

will now be permitted to serve discovery demands that will compel

elaborate document review by Citibank and require its executives to

sit for many hours of depositions. (Not that the plaintiff is capable of

conducting such proceedings as a pro se, but on remand she may -

indeed she would be well advised to - ask the judge to help her find a

lawyer.) The threat of such an imposition will induce Citibank to

consider settlement even if the suit has no merit at all. That is the

pattern that the Supreme Court’s recent decisions are aimed at

disrupting.

Id. at 412.

• Walton v. Walker, 364 F. App’x 256, 2010 WL 376322 (7th Cir. 2010) (unpublished order).

“In a sprawling, 82-page complaint naming 24 defendants, Walton alleged that Chicago police

officers colluded with prosecutors to falsely arrest and convict him in retaliation for filing a

previous civil-rights suit against prison officials.” Id. at *1. He also alleged that once he was

in prison, “a variety of prison officials—from the state Director of the Department of

Corrections down to individual prison guards—engaged in a broad conspiracy to kill him or

encourage other prisoners to kill him.” Id. He alleged other conspiracies regarding false

disciplinary charges, interference with mail, lack of access to legal materials, and arbitrary

handling of his grievances and disciplinary hearings. Id. The plaintiff brought the complaint

under § 1983, and the district court screened the complaint under 28 U.S.C. § 1915A, and

dismissed it as frivolous. Id. The Seventh Circuit affirmed.

On appeal, Walton argued that dismissal was “inappropriate because the district court

improperly rejected his allegations as fantastic [and] . . . erred by not construing his

allegations of conspiracy in a more favorable light.” Id. The Seventh Circuit “agree[d] with

the district court that Walton’s allegations [we]re not backed by sufficient factual

development to make them plausible enough to state a claim.” Walton, 2010 WL 376322, at

*2. The court held that “Walton’s complaint—and the 184 pages of exhibits that

accompan[ied] it—contain[ed] nothing more than unsupported allegations that a wide variety

of state and local officials over many months conspired to violated his rights.” Id. The

complaint made only “‘[t]hreadbare recitals of the elements of a cause of action, supported

by mere conclusory statements,’ Iqbal, 129 S. Ct. at 1949, and these [we]re just the sort of

‘naked assertions’ that the SupremeCourt has counseled are not sufficient to avoid dismissal,

see Brooks v. Ross, 578 F.3d 574, 581 (7th Cir. 2009).” Id. (first alteration in original). The

court noted that the district court was “entitled to draw upon its familiarity with Walton’s

prior meritless litigation (again describing sprawling conspiracies) to conclude that his

complaint consisted only of ‘claims describing fantastic or delusional scenarios, claims with

which federal district judges are all too familiar.’” Id. (quoting Neitzke v. Williams, 490 U.S.

319, 328 (1989)).

• Kaye v. D’Amato, 357 F. App’x 706, 2009 WL 4546948 (7th Cir. 2009) (unpublished order).
404

The plaintiff alleged that the defendants violated the Racketeer Influenced and Corrupt

Organizations Act (RICO) and the corresponding state law, the Wisconsin Organized Crime

Control Act (WOCCA). Id. at *1. The plaintiff, who was an attorney and real estate

developer, alleged that “he was wrongfully denied the opportunity to purchase a certain parcel

of land owned by the City of Milwaukee because of Defendants’ participation in an illicit land

swap agreement” and “that Defendants conspired to rig a neighborhood association election

in order to maintain control over decisions regarding the development of land in Milwaukee’s

East Village Neighborhood.” Id. The complaint asserted that the defendants were board

members of entities that handled decisions regarding city-owned real estate. Id. The plaintiff

allegedly attempted to purchase a city-owned property called Kane Place, but several of the

entities handling the city’s real estate allegedly refused to sell him the property because the

land had been promised to the commissioner of one of these entities, even though the

plaintiff’s bid was $500 higher than the commissioner’s. Id. The plaintiff also alleged that

at the same time it sold Kane Place, the City Planning Commission sold another city-owned

property to a company owned by the commissioner of another entity that controlled the city’s

real estate for $10,000, “despite the existence of a $250,000 bid from a competing developer

who had already secured financing and invested money in redevelopment plans.” Id. at *2.

The complaint alleged that the plaintiff complained publicly about the involvement of one of

the defendants in selling city-owned land to one of the commissioners, and that this defendant

then publicly announced at a park dedication that the plaintiff was “blacklisted” from buying

city property in the future. Kaye, 2009 WL 4546948, at *2. The complaint separately alleged

that “Defendants engaged in misconduct stemming from the enactment of a zoning ordinance

in the East Village Neighborhood.” Id. One of the defendants allegedly removed a sign from

the lawn of the spokesperson for the group opposing a proposed zoning ordinance and called

the spokesperson to tell her that her employer was looking for the person who posted the sign.

Id. The complaint further alleged that in connection with the next board election for the East

Village Association (“EVA”), the defendants “schemed via email to have their own

candidates elected over the objection of the majority.” Id. “The alleged scheme was executed

by changing the voting method from the simple majority vote required by the EVA bylaws,

to a single transferable voting method.” Id. The change in voting procedures was allegedly

carried out through an email stating: “‘We need to vote in this order for At Large nominations:

1. Mark, 2. Todd, 3. Ginger, 4. Norbert—do not deviate from that order. DO NOT vote for

anyone else.’” Id. At the new neighborhood association’s inaugural meeting, three

Milwaukee police officers and the son of one of the directors of the EVA “allegedly stood at

the entrance of the building in order to keep unidentified ‘disfavored citizens’ from entering

the meeting.” Kaye, 2009 WL 4546948, at *3.

The district court dismissed the complaint and imposed sanctions on the plaintiff. Id. On

appeal, the Seventh Circuit declined to hear the appeal for lack of jurisdiction. On remand,

the plaintiff filed an amended complaint. The district court dismissed again, “finding (1) that

Kaye had pleaded only two predicate acts which amounted to isolated events; and (2) that the

two events did not demonstrate the continuity necessary to establish a pattern of racketeering.”

Id.
405

In discussing the applicable pleading standards, the Seventh Circuit noted that “[w]hile

dismissal of a RICO claim is appropriate if the plaintiff fails to allege sufficient facts to state

a claim that is plausible on its face, the adequate number of facts varies depending on the

complexity of the case.” Id. (citing Limestone Dev. Corp v. Vill. of Lemont, Il., 520 F.3d 797,

803 (7th Cir. 2008)). The court noted that a RICO plaintiff must prove: “(1) conduct; (2) of

an enterprise; (3) through a pattern; (4) of racketeering activity.” Id. at *4 (citation omitted).

The plaintiff alleged that the city entities in charge of the city’s real estate amounted to

enterprises, but the Seventh Circuit noted that “[n]one of these by itself amount[ed] to a

separate RICO enterprise, which requires both interpersonal relationships and a common

interest.” Id. (citation omitted). The court explained that “[a]lthough Kaye label[ed] each of

these organizations an enterprise, none of the allegations in his amended complaint

suggest[ed] the organizations themselves had any interest in Defendants’ misconduct,” and

that “his allegations merely establish[ed] that the Defendants, though associated with these

organizations, operated collectively in their individual capacities.” Kaye, 2009 WL 4546948,

at *4. However, because the court was “required to make all reasonable inferences in Kaye’s

favor, and because there [we]re clearer reasons Kaye’s claims fail[ed], [the court] generously

infer[red] from his allegations an association-in-fact among Defendants.” Id.

With respect to predicate acts, the court noted that the allegations included extortion, bribery,

and fraud. Id. at *5. The alleged extortion included: “(1) [Defendant] D’Amato’s public

‘blacklisting’ of Kaye from future real estate dealings with the City; (2) Milwaukee police

officers’ threats to arrest ‘disfavored citizens’ who tried to enter a public neighborhood

association meeting; and (3) D’Amato’s removal of Jill Bondar’s yard sign and follow-up

phone message.” Id. The first allegation met “Wisconsin’s extortion definition because it

plausibly could involve the threat of financial injury to Kaye, made by a defendant with the

intent to prevent Kaye from engaging in lawful criticism of a public official.” Id. As to the

second alleged act of extortion, the Seventh Circuit “believe[d] the district court was

excessively generous” in inferring that “D’Amato was responsible even though he was not

personally present at the meeting, because one of his aides was a witness to the event.” Id.

The court explained:

In order to find a predicate act of extortion from these allegations, we

must infer not only that D’Amato was responsible from his aide’s

presence, but also that the officers actually barred someone from

entering. Kaye alleged in his complaint that “disfavored citizens”

were barred from the meeting, but he did not identify a single person

who was actually barred. While we are required to make all

reasonable inferences in Kaye’s favor, the complaint does not contain

facts to support these inferences, and without them the claim is not

plausible. See Iqbal, 129 S. Ct. at 1944.

Kaye, 2009 WL 4546948, at *5. However, the court concluded that because the RICO claim

failed for other reasons, it would assume that banning unnamed citizens constituted a
406

predicate act. Id. Finally, the court stated that it did “not see how removing an illegally

posted sign, and leaving a message requesting information about the identity of the person

who posted it, m[et] the statutory definition of extortion.” Id. at *6.

The complaint also alleged that two of the defendants “steered the sales of city-owned Kane

Place and Humboldt Boulevard to one another as part of an illicit agreement,” and that “this

constitute[d] two acts of bribery” under Wisconsin law. Id. The court found that the

allegations were insufficient to support this allegation:

The district court found, and we agree, that Kaye’s bribery

allegations lack the factual support to constitute sufficiently alleged

predicate acts. Kaye fails to allege even a single communication

between Fowler and Kohler or any other fact which would support a

reasonable inference of an illicit agreement or that one sale was

compensation for the other. Kaye asked the court to infer such an

agreement based on his allegations that he offered a “better proposal

and higher bid” on Kane Place and that another developer offered a bid

twenty-five times higher than what Fowler paid for Humboldt

Boulevard, but the district court concluded that the city sold Kane

Place to Kohler because her proposed project would be more

beneficial to city development and tax revenues, and sold Humboldt

Boulevard to Fowler because he was the only bidder.

Id. The court concluded that “Kaye’s bribery accusations were wholly unsupported by factual

allegations sufficient to meet the Twombly standard,” and that the district court appropriately

took judicial notice of public records regarding the sales. Id. at *7. The court concluded:

“Without additional factual allegations—at a minimum, an allegation of some communication

between Fowler and Kohler indicating an agreement to ‘swap’ the land—Kaye ha[d] not

‘nudged his claims . . . across the line from conceivable to plausible.’” Kaye, 2009 WL

4546948, at *7 (quoting Iqbal, 129 S. Ct. at 1952).

With respect to the fraud allegation, the Seventh Circuit agreed with the district court that

“Kaye ha[d] not alleged a situation in which anyone was misled or fraudulently induced to

engage in activity to their detriment.” Id. at *8. The court continued:

Although Kaye’s allegations, if true, may amount to

questionable conduct on the part of Defendants, “[n]ot all conduct that

strikes a court as sharp dealing or unethical conduct is a ‘scheme or

artifice to defraud’” as those terms are used in the mail and wire fraud

statutes. Kaye’s allegation of wire fraud is supported by a single

e-mail sent to supporters of the new voting method, and contained no

misrepresentations or false statements. This is not enough to

sufficiently allege a predicate act of wire fraud. Kaye also alleges

various acts of honest services fraud relating several transactions
407

surrounding the alleged land swap. However, the allegations fail to

meet Federal Rule of Civil Procedure 9(b)’s heightened pleading

standard. Specifically, Kaye failed to allege facts including who, what,

when, where, and how, for each of his honest services fraud

allegations.

Id. (internal citations omitted) (alteration in original).

The Seventh Circuit assumed that two predicate acts had been adequately alleged, but

concluded that the plaintiff had failed to show continuity, as required for a RICO claim. Id.

The court explained that demonstrating “closed-ended continuity,” required alleging “‘a series

of related predicates extending over a substantial period of time,’” id. at *9 (citation omitted),

and that “Kaye ha[d] not satisfied closed-ended continuity because he ha[d] only sufficiently

pleaded two predicate acts, the duration of which was onlyabout seven months,” and the court

had “repeatedly found this and greater periods of time insufficient,” id. at *10. The court

noted that “[a]ll of the acts alleged by Kaye were wrapped up in one general scheme to control

the sale and development of specific city-owned land,” and that “[o]nce this was

accomplished, the scheme would have ended, and so his allegations d[id] not meet RICO’s

continuity requirement.” Id. The court concluded that “[b]ecause [Kaye] failed to show

continuity[,] the district court correctly dismissed Kaye’s complaint.” Id. Finally, the court

noted that “the real victim of the alleged land swap would [have] be[en] the City of

Milwaukee, not Kaye,” because “Kaye [could ]not demonstrate that the city would have sold

him the Kane Place property had they not decided to sell it to Kohler.” Kaye, 2009 WL

4546948, at *10. The Seventh Circuit also affirmed the imposition of sanctions, noting that

the “well-established fact [that Congress enacted RICO to target long-term criminal activity,

not as a means of resolving routine criminal disputes] should have been clear to any attorney,

including Kaye, after minimal research.” Id. at *11.

• Cooney v. Rossiter, 583 F.3d 967 (7th Cir. 2009), cert. denied, 130 S. Ct. 3322, 2010 WL

342184 (2010). The plaintiff lost custody of her two sons after a state court found that she

suffered from “Munchausen syndrom by proxy.” Id. at 969. She sued the state court judge

(Judge Nordquist), the court-appointed representative for the children (Bischoff), the courtappointed psychiatrist for the children (Rossiter), the children’s therapist (Klaung), and her

ex-husband’s attorney (Cain), alleging constitutional violations. The complaint alleged that

“Bischoff ‘orchestrated’ a court order appointing defendant Rossiter as the children’s

psychiatrist and began a ‘witch hunt’ against Cooney by telling Rossiter that ‘this may be a

situation of Munchausen syndrome (on the part of the Mother).’” Id. The psychiatrist later

completed his report and concluded that the plaintiff was showing signs of Munchausen

syndrome by proxy, and Judge Nordquist granted the petition for protection of the children

and temporarily transferred custody to the children’s father. Id. at 969–70. The complaint

alleged that “‘numerous other conspiratorial acts occurred,’” including that Klaung “‘made

false statements’” to the Department of Children and Family Services that led to a finding that

the plaintiff committed child abuse. Id. at 970. The Seventh Circuit concluded that Judge

Nordquist was entitled to absolute immunity, and that Rossiter and Bischoff were also entitled
408

to absolute immunity because the acts the plaintiff complained about all occurred in the

course of Rossiter’s and Bischoff’s court-appoint duties, and the plaintiff did not allege that

“Rossiter or Bischoff engaged in misconduct outside that course . . . .” Id. at 969, 970.

The court explained that because Cain and Klaung were private persons, the plaintiff could

only sue them under § 1983 by alleging that they agreed with a state officer to deprive her of

her constitutional rights. Cooney, 583 F.3d at 970. The court examined the proper means of

pleading such an agreement:

Even before Bell Atlantic Corp. v. Twombly, 550 U.S. 554,

570 (2007), and Ashcroft v. Iqbal, --- U.S. ----, ----, 129 S. Ct. 1937,

1953, 173 L. Ed. 2d 868 (2009), a bare allegation of conspiracy was

not enough to survive a motion to dismiss for failure to state a claim.

E.g., Loubser v. Thacker, 440 F.3d 439, 443 (7th Cir. 2006); Walker

v. Thompson, 288 F.3d 1005, 1007–08 (7th Cir. 2002); Boddie v.

Schneider, 105 F.3d 857, 862 (2d Cir. 1997); Young v. Biggers, 938

F.2d 565, 569 (5th Cir. 1991). It was too facile an allegation. But it

was a narrow exception to the notice-pleading standard of Rule 8 of

the civil rules—a rare example of a judicially imposed requirement to

plead facts in a complaint governed by Rule 8.

In Bell Atlantic the Supreme Court went further, holding that

in complex litigation a complaint must, if it is to survive dismissal,

make plausible allegations. In Iqbal the Court extended the rule of

Bell Atlantic to litigation in general. Brooks v. Ross, 578 F.3d 574,

2009 WL 2535731, at *5 (7th Cir. Aug. 20, 2009); Hensley Mfg., Inc.

v. ProPride, Inc., 579 F.3d 603, 2009 WL 2778220, at *8 n.4 (6th Cir.

Sept. 3, 2009); Fowler v. UPMC Shadyside, 578 F.3d 203, 2009 WL

2501662, at *4 (3d Cir. Aug. 18, 2009); Moss v. U.S. Secret Service,

572 F.3d 962, 969 n.7 (9th Cir. 2009).

Id. at 970–71 (emphasis added). That court explained that the “specific concern in Bell

Atlantic was with the burden of discovery imposed on a defendant by implausible allegations

perhaps intended merely to extort a settlement,” and that in Iqbal, the Court was concerned

that “allowing implausible allegations to defeat a motion to dismiss” would make “inroads

into the defense of official immunity—which is meant to protect the officer from the burden

of trial and not merely from damages liability.” Id. at 971 (citing Smith v. Duffey, 576 F.3d

336, 339–40 (7th Cir. 2009)). The Seventh Circuit explained that “as the Court said in Iqbal,

‘determining whether a complaint states a plausible claim for relief will . . . be a

context-specific task that requires the reviewing court to draw on its judicial experience and

common sense.’” Id. (citing Iqbal, 129 S. Ct. at 1950; Courie v. Alcoa Wheel & Forged

Products, 577 F.3d 625, 2009 WL 2497928, at *2 (6th Cir. Aug. 18, 2009)).

The Seventh Circuit emphasized that the level of pleading required depends on the context:
409

In other words, the height of the pleading requirement is

relative to circumstances. We have noted the circumstances

(complexity and immunity) that raised the bar in the two Supreme

Court cases. This case is not a complex litigation, and the two

remaining defendants do not claim any immunity. But it may be

paranoid pro se litigation, arising out of a bitter custody fight and

alleging, as it does, a vast, encompassing conspiracy; and before

defendants in such a case become entangled in discovery proceedings,

the plaintiff must meet a high standard of plausibility.

Even before the Supreme Court’s new pleading rule, as we

noted, conspiracy allegations were often held to a higher standard

than other allegations; mere suspicion that persons adverse to the

plaintiff had joined a conspiracy against him or her was not enough.

The complaint in this case, though otherwise detailed, is bereft of any

suggestion, beyond a bare conclusion, that the remaining defendants

were leagued in a conspiracy with the dismissed defendants. It is not

enough (and would not have been even before Bell Atlantic and Iqbal)

that the complaint charges that “Bischoff and Dr. Lyle Rossiter, with

the aid of Judge Nordquist, Dan Cain, and Brian Klaung continued

the ongoing violations of Plaintiff, Deborah’s Constitutional rights.”

That is too vague. With regard to Cain, the only specific allegations in

the complaint are that he encouraged Bischoff to tell Rossiter to

complete his report “expeditiously”; that he received Rossiter’s report

before Cooney did; and that he “took control” of the meeting in

camera in which all the attorneys discussed the report with Judge

Nordquist. The only specific allegation regarding Klaung is that he

reported Cooney to the child welfare authority several months after she

lost custody of the children. No factual allegations tie the defendants

to a conspiracy with a state actor.

Id. (citations omitted) (emphasis added). The Seventh Circuit affirmed dismissal of the

complaint.

• Brooks v. Ross, 578 F.3d 574 (7th Cir. 2009). The plaintiff was a member of the Illinois

Prison Review Board who voted in favor of parole for Harry Aleman, was indicted for

misconduct and wire fraud in connection with the parole hearing, and was later acquitted. Id.

at 577–78. The plaintiff filed suit under § 1983 and state law against various officials

involved in the criminal action against him. Id. at 578. The district court dismissed the

complaint for failure to state a claim, and the Seventh Circuit affirmed. Id. In analyzing the

§ 1983 due process claim, the Seventh Circuit examined the recent pleading decisions and

concluded that notice pleading remains intact:
410

We begin with Rule 8, which states in relevant part: “A pleading that

states a claim for relief must contain: . . . a short and plain statement

of the claim showing that the pleader is entitled to relief.” FED. R.

CIV.P. 8(a). The Rule reflects a liberal notice pleading regime, which

is intended to “focus litigation on the merits of a claim” rather than on

technicalities that might keep plaintiffs out of court. Swierkiewicz v.

Sorema N.A., 534 U.S. 506, 514, 122 S. Ct. 992, 152 L. Ed. 2d 1

(2002).

In Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S. Ct. 1955,

167 L. Ed. 2d 929 (2007), the Court turned its attention to what was

required of plaintiffs at the pleading stage. It concluded that plaintiffs’

“[f]actual allegations must be enough to raise a right to relief above the

speculative level.” Id. at 555, 127 S. Ct. 1955. The Court was careful

to note that this did not impose a probability requirement on plaintiffs:

“a well-pleaded complaint may proceed even if itstrikes a savvy judge

that actual proof of those facts is improbable, and that a recovery is

very remote and unlikely.” Id. at 556, 127 S. Ct. 1955. The Court did

require, however, that the plaintiffs’ claim be “plausible.” In other

words, “it simply calls for enough facts to raise a reasonable

expectation that discovery will reveal evidence” supporting the

plaintiff’s allegations. Id.

Id. at 580–81 (emphasis added)(alteration in original). The court concluded that any concern

that Twombly had repudiated notice pleading “was put to rest two weeks later, when the Court

issued Erickson v. Pardus, 551 U.S. 89, 93, 127 S. Ct. 2197, 167 L. Ed. 2d 1081 (2007).” Id.

at 581. The court elaborated:

Erickson reiterated that “[s]pecific facts are not necessary; the

statement need only give the defendant fair notice of what the . . .

claim is and the grounds upon which it rests” (internal quotation marks

omitted) (omission in original). This court took Twombly and

Erickson together to mean that “at some point the factual detail in a

complaint may be so sketchy that the complaint does not provide the

type of notice of the claim to which the defendant is entitled under

Rule 8.” Airborne Beepers & Video, Inc. v. AT & T Mobility LLC, 499

F.3d 663, 667 (7th Cir. 2007).

This continues to be the case after Iqbal. That case clarified

that Twombly’s plausibility requirement applies across the board, not

just to antitrust cases. In addition, Iqbal gave further guidance to

lower courts in evaluating complaints. It noted that a court need not

accept as true “legal conclusions[, or t]hreadbare recitals of the

elements of a cause of action, supported by mere conclusory
411

statements.” We understand the Court in Iqbal to be admonishing

those plaintiffs who merely parrot the statutory language of the claims

that they are pleading (something that anyone could do, regardless of

what may be prompting the lawsuit), rather than providing some

specific facts to ground those legal claims, that they must do more.

These are the plaintiffs who have not provided the “showing”

required by Rule 8.

So,what do we take away from Twombly, Erickson, and Iqbal?

First, a plaintiff must provide notice to defendants of her claims.

Second, courts must accept a plaintiff’s factual allegations as true, but

some factual allegationswill be so sketchy orimplausible that they fail

to provide sufficient notice to defendants of the plaintiff’s claim.

Third, in considering the plaintiff’s factual allegations, courts should

not accept as adequate abstract recitations of the elements of a cause

of action or conclusory legal statements.

Brooks, 578 F.3d at 581 (emphasis added) (alterations in original). The court concluded that

allegations that the defendants produced investigative reports, gave interviews, and were

present and assisted in interviews were “just as consistent with lawful conduct as [they were]

with wrongdoing,” and that “[w]ithout more, [the plaintiff’s] allegations [were] too vague to

provide notice to defendants of the contours of his § 1983 due process claim.” Id. at 581–82

(emphasis added).

The Seventh Circuit examined another paragraph in the complaint, which it concluded

actually contained allegations of wrongdoing, but only in the form of conclusions. The

paragraph from the complaint stated:

Plaintiff is informed, believes and alleges that the Defendants while

acting in concert with other State of Illinois officials and employees of

the Attorney General’s Office, Department of Corrections and Prisoner

Review Board did knowingly, intentionally and maliciously prosecute

Plaintiff and Ronald Matrisciano in retaliation for Plaintiff and the said

Ronald Matrisciano exercising rights and privileges under the

Constitutions and laws of the United States and State of Illinois.

Id. at 582 (quotation marks omitted). The court concluded that although this paragraph

adequately pleaded personal involvement and unlawful conduct, it failed under Iqbal “because

it [wa]s merely a formulaic recitation of the cause of action and nothing more,” and “[i]t

therefore d[id] not put the defendants on notice of what exactly they might have done to

violate Brooks’s rights under the Constitution, federal law, or state law.” Id. (emphasis

added).

• Smith v. Duffey, 576 F.3d 336 (7th Cir. 2009). The plaintiff sold a controlling interest in his
412

company to a closely-held corporation (Dade Behring, Inc.), in exchange for, among other

things, options to purchase 20,000 shares of Dade Behring’s common stock at $60 a share.

Id. at 336. The plaintiff also became an employee of the company, but his employment ended

with the signing of an agreement in which “he received $1.4 million in cash and retained his

stock options with their $60 exercise price, although the appraised value ofthe stock was only

$11.” Id. at 336–37. Dade Behring declared bankruptcy a few months later, and the

plaintiff’s stock options were extinguished in the reorganization. Id. at 337. The plaintiff

sued the officers of Dade Behring who had negotiated the agreement with him, asserting that

they knew about the impending bankruptcy that would propose cancelling his stock options

and had a duty to disclose this to him. Id. The plaintiff alleged two theories: (1) that had he

been told that the company was going to declare bankruptcy and that his stock options would

be extinguished, he would have required more money to sign the termination agreement; and

(2) that he was entitled to the value of the shares in the reorganized company that he would

have owned had he been issued stock options in the reorganized company on the same terms

as before the reorganization. Id. The Seventh Circuit found the latter theory “preposterous,”

and explained: “The company was broke, and the extinction of equity interests is the usual

consequence of bankruptcy. Smith could not have enforced his options once bankruptcy was

declared, and he had no right to receive stock and options in the reorganized company and

would not have had that right even if he had continued as an employee.” Id. With respect to

the first theory, the court described it as the “only remotely plausible argument,” but

concluded that it was unlikely the plaintiff would have succeeded in receiving more cash

because “[h]ad the defendants told him the company was about to declare bankruptcy, he

would have realized, if he didn’t already, that his bargaining position was weak, because in

bankruptcy he probably would get nothing at all.” Smith, 576 F.3d at 337. The court

explained that “the likeliest explanation of why the defendants did not tell Smith about the

bankruptcy is that they assumed, and assumed he assumed, that the parlous state of the

company—known to all and symbolized by the disparity between the appraised value of the

stock ($11) and the exercise price of the stock options ($60)—made his retention of the stock

options of no conceivable significance.” Id. at 338.

The Seventh Circuit explained that it did not need to rely on Twombly or Iqbal to decide that

the complaint was insufficient:

In our initial thinking about the case, however, we were reluctant to

endorse the district court’s citation of the Supreme Court’s decision in

Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S. Ct. 1955, 167 L.

Ed. 2d 929 (2007), fast becoming the citation du jour in Rule 12(b)(6)

cases, as authority for the dismissal of this suit. The Court held that

in complex litigation (the case itself was an antitrust suit) the

defendant is not to be put to the cost of pretrial discovery—a cost that

in complex litigation can be so steep as to coerce a settlement on terms

favorable to the plaintiff even when his claim is very weak—unless the

complaint says enough about the case to permit an inference that it

may well have real merit. The present case, however, is not complex.
413

Were this suit to survive dismissal and proceed to the summary

judgment stage, it would be unlikely to place on the defendants a

heavy burden of compliance with demands for pretrial discovery. . .

. 

But Bell Atlantic was extended, a week after we heard oral

argument in the present case, in Ashcroft v. Iqbal, --- U.S. ----, 129 S.

Ct. 1937, 173 L. Ed. 2d 868 (2009)—over the dissent of Justice

Souter, the author of the majority opinion in Bell Atlantic—to all

cases, even a case (Iqbal itself) in which the court of appeals had

“promise[d] petitioners minimally intrusive discovery.” Id. at 1954.

Yet Iqbal is special in its own way, because the defendants had

pleaded a defense of official immunity and the Court said that the

promise of minimally intrusive discovery “provides especially cold

comfort in this pleading context, where we are impelled to give real

content to the concept of qualified immunity for high-level officials

who must be neither deterred nor detracted from the vigorous

performance of their duties.” Id. (emphasis added).

So maybe neither Bell Atlantic nor Iqbal governs here. It

doesn’t matter. It is apparent from the complaint and the plaintiff’s

arguments, without reference to anything else, that his case has no

merit. That is enough to justify, under any reasonable interpretation

of Rule 12(b)(6), the dismissal of the suit.

Id. at 339–40 (emphasis added) (alteration in original).

• Hecker v. Deere & Co., 569 F.3d 708 (7th Cir. 2009), cert. denied, 130 S. Ct. 1141 (2010).

The plaintiffs were employees who alleged that their employer, and a 401(k) plan trustee and

investment advisor, breached fiduciary duties under the Employee Retirement and Income

Security Act (ERISA). On rehearing of its order affirming the district court’s dismissal of the

complaint, the court explained that the fact that the Iqbal opinion had been issued since its

original decision did not change the result:

Applying the pleading standards enunciated in Bell Atlantic Corp. v.

Twombly, 550 U.S. 544, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007),

we concluded [in the original opinion] that these plaintiffs failed to

state a claim for the kind of fiduciary misfeasance the Secretary

describes. At the time we wrote, the Court had not yet handed down

Ashcroft v. Iqbal, --- U.S. ---, 129 S. Ct. 1937, 173 L. Ed. 2d 868

(2009). Iqbal reinforces Twombly’s message that “[a] claim has facial

plausibility when the plaintiff pleads factual content that allows the

court to draw the reasonable inference that the defendant is liable for

the misconduct alleged.” Id. at 1949. The Court explained further that
414

“where the well-pleaded facts do not permit the court to infer more

than the mere possibility of misconduct, the complaint has

alleged—but it has not ‘show[n]’—‘that the pleader is entitled to

relief.’ FED. RULE CIV. PROC. 8(a)(2).” Id. at 1950.

Id. at 710–11 (second and third alterations in original). The court concluded that: “this

complaint, alleging that Deere chose this package of funds to offer for its 401(k) Plan

participants, with this much variety and this much variation in associated fees, failed to state

a claim upon which relief can be granted.” Id. at 711.

• Brown v. JP Morgan Chase Bank, 334 F. App’x 758, 2009 WL 1761101 (7th Cir. 2009)

(unpublished order). The plaintiff sued under § 1985(3), asserting that the defendant creditors

conspired to violate his civil rights based on his race. The claims were based on the creditors

moving in state court to vacate a foreclosure decree seven months after a bankruptcy

dismissal, claiming they had just discovered that the automatic stay was in effect at the time

of the foreclosure action. Id. at *1. The district court dismissed for failure to state a claim

and the Seventh Circuit affirmed. The Seventh Circuit explained:

Brown’s complaint does not allow a plausible inference that

the defendants are liable under § 1985. As is relevant here, a claim

under § 1985 requires a racially motivated conspiracy to violate or

interfere with a plaintiff’s federally protected rights. Brown has not

explained how either Chase’s allegedly false statement or its unsigned

certificate of service in its request to vacate the foreclosure decree,

both filed several months after the bankruptcy action ended, violated

or interfered with any federal right.

Brown’s grievance that Chase violated his civil rights by not

dismissing the foreclosure action in August 2005 also does not state

a claim. We have not held that the automatic stay imposes on creditors

an affirmative duty to dismiss pending lawsuits, though at least one

other circuit has so held. But in any case Brown’s complaint does not

“contain any factual allegation to plausibly suggest [that defendants

had] discriminatory state of mind.” See Iqbal, 129 S. Ct. at 1952. In

Iqbal, the plaintiff filed a Biven[]s action against government officials

claiming that they detained and abused him after the terrorist attacks

of September 11, 2001, “on account of his religion, race, and/or

national origin and for no legitimate penological interest.” Id. at 1954

(internal quotation marks omitted). The Court held that Iqbal’s barebones allegations were legal conclusions and therefore insufficient to

state a claim for discrimination. Id. Brown’s claim is at least as

deficient: He gives us no “factual context,” see Iqbal, 129 S. Ct. at

1954, or reasons to support his unexplained legal conclusion that

Chase discriminated against him because of his race when, consistent
415

with the stay, it refrained from moving ahead with its foreclosure

action and merely neglected to dismiss it.

Id. at *2 (first alteration in original) (internal citations omitted).

Eighth Circuit

• Reynolds v. Dormire, 636 F.3d 976, 2011 WL 561982 (8th Cir. 2011). Missouri prison

inmate Jack Reynolds brought a complaint under § 1983, pleading various violations of the

Eighth Amendment. Reynolds alleged that two Northeast Correctional Center correctional

officers (“COs”) refused to remove his restraints during a day-long journey to Jefferson City

Correctional Center (“JCCC”) for a medical appointment and refused his requests to use the

restroom without restraints. He also alleged that five JCCC COs were deliberately indifferent

to his safety by parking the prison van too close to a sally port pit (a trench that serves as a

secure entryway into a prison) and by failing to help him exit the van, which resulted in his

falling approximately five feet into the pit and sustaining injuries. Finally, Reynolds claimed

that Dave Dormire, the warden of JCCC, violated his Eighth Amendment rights by failing to

eliminate the obviously hazardous nature of the sally port pit and failing to better train his

subordinates.

The district court dismissed the complaint, before service, for failure to state a claim. The

Eighth Circuit affirmed the dismissal as to five of the seven COs and as to the warden, but

reversed the dismissal of the complaint as to the remaining two COs. The Eighth Circuit

reasoned as follows:

We conclude that Reynolds failed to state an Eighth

Amendment claim with regard to his allegations against the two

Northeast Correctional Center COs. His pleadings are devoid of any

allegation suggesting that the two COs acted with deliberate

indifference to his safety in restraining him throughout the day. Also,

to the extent that Reynolds alleged that the restraints prevented him

from relieving himself, his complaint acknowledged that he could have

used the bathroom, albeit with some difficulty, at any time during his

sojourn at JCCC.

As to the Eighth Amendment claims arising from his fall at the

sally port, we conclude that Reynolds failed to state a claim against

three of the five JCCC COs . . . who, according to Reynolds’s

complaint, violated his constitutional rights simply by being on duty

in the vicinity of his accident at the time he injured himself. See

Martin v. Sargent, 780 F.2d 1334, 1338 (8th Cir. 1985) (holding that,

in order for a claim to be cognizable under § 1983, plaintiff must

allege that the defendant “was personally involved in or had direct

responsibility for incidents that injured him”).
416

Reynolds’s claims against the remaining two JCCC COs,

defendants King and John Doe I, are a different matter, however. King

was tasked with transporting prisoners within JCCC and, according to

Reynolds’s complaint, parked the van too close to the sally port pit.

John Doe I was the CO on duty at the sally port supervising the

prisoners exit[ing] the van when Reynolds fell. As an initial matter,

there appears to be no dispute that Reynolds made sufficient factual

allegations that a substantial risk to his safety existed. The only

question is whether his pleadings could support an inference that the

defendants manifested deliberate indifference to that risk. Although

“naked assertion[s]” that King and John Doe I “knew . . . that in all

probability plaintiff would back-up and fall” do not state a claim to

relief that is plausible on its face, see Iqbal, 129 S. Ct. at 1949

(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557, 127 S. Ct.

1955, 167 L. Ed. 2d 929 (2007)), Reynolds’s complaint and attached

copies of grievances he had submitted contain sufficient allegations to

withstand dismissal. The complaint alleged that King parked

“approximately three feet” from the edge of the sally port pit. The

complaint then alleged that Reynolds, his legs shackled and his arms

secured by a “black box,” was obliged to back out of the van, using a

stool to descend from the vehicle. As Reynolds exited the van, John

Doe I allegedly “started backing away” rather than assisting him, at

which point Reynolds lost his footing and fell into the pit.

While such allegations, standing alone, appear to support a

finding of mere negligence, Reynolds’s complaint also alleged that

“[f]urther, investigation will more than likely show that plaintiffs [sic]

falling into this pit is not an isolated incident.” In his grievance

attached to the complaint, Reynolds elaborated that “the JCCC

corrections personel [sic] knew about the hazard of this JCCC

sally-port pit, as one other person had already, that very same day, fell

[sic] into this very same JCCC sally-port pit.” Moreover, the

grievance also alleged that, immediately following the accident, an

unnamed correctional officer said, “I warned you people[ ] that this

would happen, if you parked so close to the sally-port pit.” Taking all

these allegations as true and drawing all reasonable inferences in the

plaintiff’s favor, we conclude that Reynolds sufficiently alleged that

King and John Doe I were aware of the substantial risk to his safety

and that they recklessly disregarded that risk by parking the van too

close to the sally port pit (in King’s case) and by failing to help

Reynolds descend from the van (in John Doe I’s case).

Finally, we conclude that the district court properly dismissed

Reynolds’s claims against JCCC’s Warden Dormire. With regard to
417

Reynolds's claim against the warden in his individual capacity, the

complaint first alleged that the warden neglected to eliminate or warn

of the hazardous conditions at the sally port. It is settled, however,

that “a warden’s general responsibility for supervising the operations

of a prison is insufficient to establish personal involvement.” Ouzts v.

Cummins, 825 F.2d 1276, 1277 (8th Cir. 1987) (per curiam). And to

the extent Reynolds pleaded that Warden Dormire personally failed to

rectify the sally port conditions, he made no allegation permitting an

inference that the warden himself knew of, but recklessly disregarded,

the risk of accident. The claim that the warden inadequately trained his

staff also was properly dismissed; as above, Reynolds alleged no facts

suggesting that the risk of serious harm due to the negligence of the

personnel on duty at the sally port was so obvious to the warden that

he acted in a deliberately indifferent manner by failing to better train

them.

Reynolds, 2011 WL 561982, at *2–3 (footnotes and internal citations omitted)

• Ritchie v. St. Louis Jewish Light, 630 F.3d 713 (8th Cir. 2011). Lisa Ritchie, a former

employee of the St. Louis Jewish Light hospital filed a complaint against the hospital and her

supervisor under the Fair Labor Standards Act (FLSA), alleging that her employment was

terminated in retaliation for her insisting on recording her overtime work. The district court

dismissed her complaint on the ground that the FLSA makes unlawful only retaliation for

formal complaints raised under the FLSA, and does not cover informal FLSA complaints

made to one’s employer. 

The Eighth Circuit affirmed on the ground that Ritchie’s complaint failed to state a claim,

even assuming that the FLSA does make it unlawful for an employer to retaliate against an

employee for raising purely informal FLSA complaints.

Ritchie’s complaint, as summarized by the Eighth Circuit, alleged that:

7. Starting on or about May orJune 2009, [Ritchie’ssupervisor] Levin

asked Ritchie to perform work (“Work”) [formerly] performed by two

employees by herself which Ritchie commenced to do.

8. Levin asked Ritchie to perform the Work without recording

overtime.

9. The Work required that Ritchie perform overtime hours (more than

40 hours in a week) (“Overtime”) which Ritchie recorded.

10. Levin complained to Ritchie about her recording the Overtime and

again requested that she perform the Work without recording overtime.
418

11. When Ritchie continued to record the Overtime, she was

terminated by Levin . . . . 

Ritchie, 630 F.3d at 716 (quotation marks omitted).

The court explained its decision to affirm dismissal as follows:

Even assuming that informal complaints are sufficient to

trigger the anti-retaliation provision of the FLSA, a legal conclusion

we do not make, Ritchie failed to allege sufficient facts to indicate that

she made even an informal complaint to either Levin or St. Louis

Jewish Light. The only complaining asserted in her pleading goes the

other way—Levin complaining to Ritchie. Ritchie asserts that she

complained pursuant to the FLSA when she gave “Levin notice that

she believed Levin's instructions were a violation of the law because

she, in fact, recorded the overtime hours in writing despite his orders

not to record them.” In fact, rather than constituting an affirmative

complaint that would trigger the anti-retaliation provision of the

FLSA, her recording of her overtime could be nothing more than mere

insubordination, she having been instructed to the contrary.

Insubordination is not protected under the FLSA, and insubordination

is not sufficient to trigger the anti-retaliation provision in 29 U.S.C. §

215(a)(3). As appellees’ counsel noted at oral argument, if merely

recording one’s overtime is a “complaint” that triggers the

anti-retaliation provision of the FLSA, an employer would not be able

to discipline an employee for working unauthorized overtime so long

as the employee recorded the overtime.

As the Supreme Court has recently said, the plausibility

standard, which requires a federal court complaint “to state a claim to

relief that is plausible on its face, . . . asks for more than a sheer

possibility that a defendant has acted unlawfully.” Iqbal, 129 S. Ct. at

1949 (internal quotation marks omitted). “[W]here the well-pleaded

facts do not permit the court to infer more than the mere possibility of

misconduct, the complaint has alleged—but it has not ‘show[n]—that

the pleader is entitled to relief.’” Id. at 1950 (quoting FED. R. CIV. P.

8(a)(2)).

To establish a prima facie case of retaliation under the FLSA,

Ritchie would have to show that she participated in statutorily

protected activity, that the appellees took an adverse employment

action against her, and that there was a causal connection between

Ritchie’s statutorily protected activity and the adverse employment
419

action. See Grey v. City of Oak Grove, 396 F.3d 1031, 1034–35 (8th

Cir. 2005). The facts pleaded in Ritchie’s complaint do not permit us

to infer more than the mere possibility of misconduct. Thus, Ritchie’s

complaint merely alleged, but did not show, that Ritchie is entitled to

relief.

Id. at 716–17 (footnote and internal citations omitted).

• Hamilton v. Palm, 621 F.3d 816 (8th Cir. 2010). Plaintiff Hamilton filed a diversity

negligence action against the Palms, alleging that he fell and was seriously injured while

doing construction work on the Palms’s property. Id. at 817. The Palms moved to dismiss,

arguing that Hamilton could not recover on his claim as an independent contractor based on

the inherently-dangerous-activity theory of landowner liability. Id. Hamilton responded that

he was not suing as an independent contractor and that his complaint alleged that he was

“employed” by the Palms. Id. The Palms replied that Hamilton did not adequately plead a

master-servant relationship necessary to establish employer liability. Id. The district court

agreed and dismissed the complaint because Hamilton “merely alleges generally that he was

Defendants’ employee and has not alleged facts to plausibly support such a conclusion.” Id.

The Eighth Circuit reversed, finding that “this was an unwarranted extension of the pleading

standards of [Twombly] and [Iqbal].” The Eighth Circuit explained:

Rule 8(a)(2) of the Federal Rules of Civil Procedure requires a “short

and plain statement of the claim showing that the pleader is entitled to

relief.” Twombly and Iqbal did not abrogate the notice pleading

standard of Rule 8(a)(2). Rather, those decisions confirmed that Rule

8(a)(2) is satisfied “when the plaintiff pleads factual content that

allows the court to draw the reasonable inference that the defendant is

liable for the misconduct alleged.” Iqbal, 129 S. Ct. at 1949; see

Erickson v. Pardus, 551 U.S. 89, 93, 127 S. Ct. 2197, 167 L. Ed. 2d

1081 (2007). However, “to survive a motion to dismiss, a complaint

must contain sufficient factual matter, accepted as true, to state a claim

for relief that is plausible on its face.” Iqbal, 129 S. Ct. at 1949

(quoting Twombly, 550 U.S. at 570, 127 S. Ct. 1955). A pleading that

merely pleads “labels and conclusions,” or a “formulaic recitation” of

the elements of a cause of action, or “naked assertions” devoid of

factual enhancement will not suffice. Id., (quoting Twombly).

Determining whether a claim is plausible is a “context-specific task

that requires the reviewing court to draw on its judicial experience and

common sense.” Id. at 1950.

Hamilton, 621 F.3d at 817-18. The court then instructed that: “[u]nder Missouri law, to

establish a common law claim of employer liability, Hamilton must prove that the Palms

negligently breached the employer’s duty to maintain a safe workplace, and that this

negligence was the direct and proximate cause of Hamilton’s injuries.” Id. at 818. And
420

determined that the only element of the claim at issue was “whether Hamilton’s complaint

sufficiently alleged that the Palms were his employers.” Id. Then the court explained that it

“need look no further” than Rule 84 of the Federal Rules of Civil Procedure and Form 13.

Rule 84 provides that: “The forms in the Appendix suffice under these rules.” Id. And Form

13 in the Appendix to the Federal Rules of Civil Procedure, entitled, “Complaint for

Negligence Under the Federal Employers’ Liability Act,” includes the allegation that: “During

this work, the defendant, as the employer, negligently put the plaintiff to work....” Id. The

court decided that “[a]s incorporated by Rule 84, Form 13 makes clear that an allegation in

any negligence claim that the defendant acted as plaintiff’s ‘employer’ satisfies Rule 8(a)(2)’s

notice pleading standard for this element.” Id. The court determined that, even without Rule

84, the result would be the same because “[c]ommon sense and judicial experience counsel

that pleading this issue does not require great detail or recitation of all potentially relevant

facts in order to put the defendant on notice of a plausible claim.” Id. at 819. The court then

addressed defendant’s argument that plaintiff’s allegations showed he was an independent

contractor and decided that it did not matter: “Hamilton’s complaint raised plausible

inferences of both employee and independent contractor status. Which inference will prove

to be correct is not an issue to be determined by a motion to dismiss.” Hamilton, 621 F.3d

at 819.

• Detroit General Retirement System v. Medtronic, Inc., 621 F.3d 800 (8th Cir. 2010).

Plaintiffs, Detroit General Retirement System (DGRS), alleged that Medtronic, Inc. engaged

in securities fraud by misleading investors as to the seriousness of the problem with the

Fidelis Lead, a Food and Drug Administration (FDA)-approved device wire that connects an

internally implanted defibrillator to a patient’s heart and delivers electricity if a shock is

needed. Id. at 803-04. Medtronic responded with a Rule 12(b)(6) motion to dismiss for

failure to state with particularity a legitimate basis for the claims of fraud. Id. at 804. The

district court dismissed the case and the Eighth Circuit affirmed. Id.

Medtronic designed, manufactured, marketed and sold the Fidelis lead, which “quickly

became the most popular defibrillator lead on the market” and was implanted in more than

260,000 patients by 2007. Id. at 803. In February 2007, a doctor informed Medtronic that he

was concerned about the failure rate of the Fidelis leads at his heart clinic and provided

Medtronic with a study he and his colleagues had completed at the clinic, which he planned

to publish in a prominent medical journal. Id. The study found that Fidelis leads “were prone

to early failure because of a tendency to fracture.” Medtronic, 621 F.3d at 803. And

“recommended against use of the device.” Id. Medtronic subsequently filed an application

with the FDA to modify the design of the Fidelis lead, but continued to sell the Fidelis lead

until October 2007. Id. at 803-04. After Medtronic recalled the Fidelis lead, its stock price

dropped just over 11%.

The court explained that Plaintiffs’ claims must satisfy heightened pleading standards:

The [Private Securities Litigation] Reform Act provides that, to

survive a motion to dismiss, a securities plaintiff must satisfy two
421

heightened pleading standards. 15 U.S.C. § 78u-4(b)(3). First, the

plaintiff must plead falsity by specifying each allegedly misleading

statement and the reasons why each statement is misleading. 15

U.S.C. § 78u-4(b)(1). If falsity is alleged based upon information and

belief, the complaint must state with particularityall facts on which the

belief is formed. Id. In addition, the plaintiff must plead scienter by

“stat[ing] with particularity facts giving rise to a strong inference that

the defendants acted with the required state of mind.” 15 U.S.C. §

78u-4(b)(2).

Id. at 805 (quoting In re Cerner Corp. Sec. Litig., 425 F.3d 1079, 1083 (8th Cir.2005).) And

that “[i]n order to satisfy the Reform Act's falsity pleading standard, a complaint may not rest

on mere allegations that fraud has occurred. Instead the complaint must indicate why the

alleged misstatements would have been false or misleading at the several points in time in

which it is alleged they were made. In other words, the complaint's facts must necessarily

show that the defendant’s statements were misleading.” Id.

DGRS argued that Medtronic “materially misled” investors via the“dear doctor letter” it sent

in March 2007:

Dear Doctor,

Medtronic has received reports from a limited number of implanting

physicians indicating they have experienced higher than expected

conductor fracture rates in their centers with Sprint Fidelis leads.

While current overall Sprint Fidelis performance is consistent with

other leads, Medtronic is actively investigating these reports, has

reviewed them with our Independent Physician Quality Panel, and

would like to share what we know at this time.

Through detailed assessment of reported fractures, we have identified

two primary locations where conductor fractures have occurred: 1)

distal portion of the lead and 2) near the anchoring sleeve tie down.

The distal conductor fractures affect the anode (ring electrode) and

fractures that occur around the anchoring sleeve affect the cathode

(helix tip electrode). Fractures at both locations appear to present

clinically as over-sensing, increased interval counts and inappropriate

shocks. Medtronic has worked closely with physicians who have

experienced fractures and conducted significant bench testing in an

attempt to reproduce the fractures and identify a root cause. At this

point, our investigation suggests that variables within the implant

procedure may contribute significantly to these fractures.

For distal conductor fractures, our investigation has identified severe
422

bending or kinking of the distal end of the lead over the lead body

while passing through tortuous vasculature as a significant

contributing factor ... Medtronic recommends avoiding severe bending

or kinking of the lead during implantation. If you encounter excessive

resistance resulting in severe bending or kinking while advancing the

lead, please remove the lead and return it to Medtronic.

For conductor fractures that occur around the suture sleeve, our

preliminary investigation suggests that under certain implant

techniques, the lead appears to be exposed to severe bending or

kinking in the pectoral area ... Medtronic recommends the lead be

re-sutured and/or pocket reassembled per guidelines in the Medtronic

lead implant manual. In addition, positioning the anchoring sleeve

against or near the vein may be helpful.

Sprint Fidelis lead model 6949, 6948, 6931, and 6930 were market

released in the U.S. and internationally in September and October

2004. Performance of model 6949, the Sprint Fidelis lead currently

followed in our System Longevity Study, indicated survival is 98.9%

at two years. Sprint Fidelis 6949 performance based upon return

products analysis shows 99.86% chronic fracture-free survival at two

years. Both evaluation methods suggest performance is in line with

other Medtronic leads and consistent with lead performance publicly

reported by other manufacturers.

Id. at 805-06. DGRS alleged that this letter “falsely reassured investors that the damage was

due to doctor error and that the Fidelis model failure rate was in line with that of other leads.”

Medtronic, 621 F.3d at 806. The court rejected this argument because “[i]t is difficult to see

how a letter disclosing a possible problem and an investigation into that problem was

materially misleading.” Id. DGRS also alleged that “Medtronic had a duty to disclose other

information on the Fidelis fracture rates, the exclusion of which rendered the statements in

the letter materially misleading.” Id. But the court pointed out that “DGRS fail[ed] to allege

facts showing Medtronic possessed the information at the time the supposedly inconsistent

statements were made” and “even if Medtronic was aware of the information, the information

itself is not inconsistent with Medtronic’s statements to the public and to investors.” Id. 

The court then agreed with the district court’s finding that “Medtronic’s failure to disclose

statistically insignificant information could not have been misleading in light of the

information disclosed in the letter” because “DGRS has failed to allege any facts proving the

omitted information would have put investors on notice at that time that either doctor error

was not a significant contributing factor in the device failures or the overall failure rate of the

device was higher than that of other devices.” Id. at 807.

The court then addressed DGRS’s remaining allegations and found them all insufficient to
423

show that Medtronic “materially misled” investors because “DGRS has not alleged facts

sufficient to show there was a problem with the Fidelis leads at the time those statements were

made.” Id. at 808. And “most of the statements DGRS lists are from product advertising

materials and are so vague that an investor could not reasonably rely on them for any

information related to the soundness of the investment.” Medtronic, 621 F.3d at 808. The

court then addressed scienter, and decided that, because DGRS did not show that the

statements were false, it also failed to show that Medtronic or its officers knew the statements

to be false. Id.

Having decided that DGRS failed to sufficiently plead material falsity or scienter, the court

turned to whether it should have been given an opportunity to amend its complaint. Id. at 809.

DGRS sought to amend its complaint to allege that “Medtronic failed to disclose that there

were actually four, instead of two, ways in which the devices had been reported to fracture.”

Id. But the court noted that, even if this was true, it would have “no bearing on the material

question, which is whether Fidelis devices were known to exceed acceptable failure rates

overall.” Id. DGRS also requested leave to amend the complaint “to include the allegation

that 40% of the fractures in Medtronic’s returned products data involved a hardware

malfunction resulting in a break that could affect electrical performance of the lead.” Id. But

the court determined that this allegation would not cure the complaint’s deficiencies: “The

number of expected failures that result from mechanical problems is not relevant to the overall

performance of the device. Even if 100% of the returned devices were mechanical failures,

Fidelis would still be a viable product as long as the number of returned devices were within

the acceptable failure rate.” Medtronic, 621 F.3d at 809. Finally, the court decided that

adding allegations that “Medtronic requested permission from the FDA to modify the design

of the Fidelis leads during the class period” would not cure the complaint’s deficiencies

because it “would not solve the fatal defect in the complaint,” which was the lack of an

allegation that “Medtronic was aware that the physical failure was causing fractures in higher

than acceptable numbers across the market.” Id. at 810.

• C.N. ex rel. J.N. v. Willmar Public Sch., Indep. Sch. Dist. No. 347, 591 F.3d 624 (8th Cir.

2010). The lawsuit arose out of actions taken by school officials while C.N. was in

elementary school. After undergoing testing, C.N. was “designated as developmentally

delayed with speech and language impairment.” Id. at 627. As a result, “C.N. had an

individualized education program (IEP) geared toward addressing her special needs,” which

“included a behavior intervention plan (BIP), which authorized the use of restraint holds and

seclusion when C.N. exhibited various target behaviors.” Id. After C.N. exhibited behavioral

problems, the district had her examined by an outside evaluator, and the evaluation resulted

in the district transferring her to another school (Lincoln) and revising her IEP and BIP. Id.

at 627–28. C.N.’s mother, J.N., allegedly objected to the BIP’s continued authorization of

restraint holds and seclusion. Id. at 628. During her time at Lincoln, C.N. worked with a

special education teacher (Lisa Van Der Heiden). Id. The complaint alleged that Van Der

Heiden misused the techniques authorized in C.N.’s BIP and mistreated C.N. C.N., 591 F.3d

at 628. The complaint specified that:
424

Van Der Heiden allegedly made C.N. sit at a “thinking desk” and hold

a physical posture for a specified time, or else face restraint or

seclusion. Van Der Heiden also allegedly yelled and shouted at C.N.,

demeaned and belittled C.N., once pulled C.N.’s hair when she would

not hold a posture at the thinking desk and once denied C.N. use of the

restroom, causing an accident. C.N. also reported to J.N. that Van Der

Heiden “choke[d] her and that the restraints hurt her very much.”

Id. When C.N. was in third grade, a paraprofessional reported Van Der Heiden to the

Minnesota Department of Education’s (MDE) Maltreatment of Minors Division based on Van

Der Heiden’s mistreatment of C.N. Id. After learning of this report and two other reports

against Van Der Heiden, J.N. filed a complaint with the MDE’s Accountability and

Compliance Division. Id. “[A]ccording to the complaint, the MDE investigations concluded

that Van Der Heiden violated a number of C.N.’s rights as a child with a disability and also

maltreated C.N. by denying her access to the restroom.” Id. The school district also

conducted its own investigation of allegations that Van Der Heiden mistreated C.N. and

another student. Id. The school district allegedly had conducted two previous investigations,

but had found no misconduct. C.N., 591 F.3d at 628. “This time, the District found evidence

that Van Der Heiden denied C.N. access to the restroom, but attributed the incident to a lapse

in judgment.” Id. “Thus, Van Der Heiden was never disciplined by the District for any

maltreatment allegations.” Id. (footnote omitted). J.N. requested that the school district’s

superintendent notify her if Van Der Heiden returned to Lincoln, but the superintendent

responded that she had no obligation to provide that information. Id. at 629. J.N. later

withdrew C.N. from Lincoln and enrolled her in a private school for the rest of the year. Id.

C.N. requested an administrative hearing and “filed a complaint with the MDE, challenging

the adequacy of the educational services provided by the District,” but the Administrative Law

Judge dismissed the request because C.N. was no longer enrolled in the district and had

transferred to another district without requesting a hearing. Id. C.N. appealed to the district

court and asserted federal and state claims against the district, the district board chairman in

his official capacity, and Van Der Heiden, the superintendent, Lincoln’s principal, and the

supervisor of special education programming, in both their individual and official capacities.

C.N., 591 F.3d at 629. The relevant federal claimsincluded claims under the Individuals with

Disabilities Education Act (IDEA), section 504 of the Rehabilitation Act, and § 1983 for

violations of the Fourth and Fourteenth Amendments. Id. The district court dismissed the

IDEA claim because C.N. did not request a hearing before leaving the school district,

dismissed the remaining federal claims for failure to state a claim, and declined to exercise

jurisdiction over the state law claim. Id. The Eighth Circuit affirmed.

On appeal, the Eighth Circuit affirmed the dismissal of the IDEA claim, noting that under the

relevant case law, the claim could not proceed because C.N. did not request an administrative

hearing until after she had left the district. See id. at 631. The court rejected the argument

that the claim should be allowed to proceed notwithstanding C.N.’s failure to request a

hearing before leaving the district, noting that “[a]pplying our prior precedents in this case,

[the court was] likewise bound to affirm dismissal of C.N.’s IDEA claim.” Id. at 632. The
425

court also affirmed dismissal of the Rehabilitation Act claim because the same exhaustion

requirements that IDEA requires applied and because C.N. had only “broadly assert[ed] that

the district court erred in dismissing this claim for failure to exhaust, but limit[ed] her

remaining arguments to her constitutional claims.” Id. at 631 n.7.

The constitutional claims alleged violations of C.N.’s Fourth Amendment right to be free

from unreasonable seizures and her Fourteenth Amendment right to substantive due process.

C.N., 591 F.3d at 632. “The district court dismissed those claims as to the District after

concluding the complaint failed to identify an unconstitutional District policy or custom that

caused the alleged injuries.” Id. The district court also found that “the individual defendants

were entitled to qualified immunity because C.N. failed to allege either a Fourth Amendment

or a substantive due process violation.” Id. The Eighth Circuit found no error in these

conclusions and affirmed. Id.

With respect to the Fourth Amendment claim against the individual defendants, “[t]he district

court concluded C.N. failed to allege a Fourth Amendment violation because C.N.’s IEP

authorized the use of restraints and seclusion to manage her behavior and thus, even if such

actions amounted to seizures, they were not constitutionally unreasonable.” Id. at 632–33.

Applying the relevant Fourth Amendment case law, the Eighth Circuit explained that the

dismissal was proper:

Assuming C.N. was seized within the meaning of the Fourth

Amendment when Van Der Heiden employed those methods, we agree

with the district court that any such seizures were not unreasonable.

We have held that an authorized professional’s treatment of a disabled

person within the state’s care is reasonable if his or her actions are

“not a substantial departure from accepted professional judgment,

practice, or standards.” Heidemann v. Rother, 84 F.3d 1021, 1030 (8th

Cir. 1996). Here, C.N.’s IEP authorized the use of restraints and

seclusion and we agree with the district court that the IEP “set the

standard for accepted practice.” And although J.N. contends she

objected to the use of those methods, she did not request a hearing to

challenge those methods while C.N. attended school in the District.

Because C.N.’s IEP authorized such methods, Van Der Heiden’s use

of those and similar methods like the thinking desk, even if

overzealous at times and not recommended by [the outside evaluator],

was not a substantial departure from accepted judgment, practice or

standards and was not unreasonable in the constitutional sense.

Indeed, as the Tenth Circuit recently observed, we would place

educators in a very difficult position if we did not allow them “to rely

on a plan specifically approved by the student’s parents and which they

are statutorily required to follow.” For these reasons, the district court

correctly concluded Van Der Heiden’s use of those procedures did not

violate C.N.’s Fourth Amendment rights.
426

Id. at 633 (footnote and internal citation omitted). The Eighth Circuit also rejected C.N.’s

argument that “the district court ignored her abuse allegations in concluding she failed to

allege a Fourth Amendment violation,” as well as C.N.’s suggestion that “those allegations

state[d] a claim for excessive force.” C.N., 591 F.3d at 634. The Eighth Circuit explained

that it had “generally analyzed claims alleging excessive force by public school officials under

the rubric of substantive due process, . . . and not the Fourth Amendment,” and concluded

that the district court had properly found that C.N. failed to allege a Fourth Amendment

violation and that the individual defendants were entitled to qualified immunity. Id.

In analyzing the substantive due process claim, the Eighth Circuit noted that C.N. “must

allege actions by a government official which ‘violated one or more fundamental

constitutional rights’ and were ‘shocking to the contemporary conscience.’” Id. (citation

omitted). The Eighth Circuit explained that the standard for alleging substantive due process

was high. Id. C.N. argued that she met this high standard, “pointing again to her allegations

that Van Der Heiden physically and verbally abused the disabled children in her care, and the

other individual defendants failed to stop that conduct.” Id. The Eighth Circuit explained that

these allegations were not sufficient:

As the Supreme Court has recently reiterated, however, “[a]

pleading that offers [merely] ‘labels and conclusions’” or “‘naked

assertion[s]’ devoid of ‘further factual enhancement’” does not

plausibly establish entitlement to relief under any theory. Ashcroft v.

Iqbal, --- U.S. ----, 129 S. Ct. 1937, 1949, 173 L. Ed. 2d 868 (2009)

(third alteration in original) (quoting Twombly, 550 U.S. at 555, 557,

127 S. Ct. 1955). Judged against these standards, C.N.’s complaint

does not state a viable substantive due process claim. Some of the

abuse allegations do not even identify C.N. as the victim of the alleged

mistreatment—rather, the complaint simply asserts that on unspecified

dates and under circumstances not described, Van Der Heiden

allegedly mistreated unidentified disabled children in a variety of

ways. Such vague allegations neither provide the Appellees with fair

notice of the nature of C.N.’s claims and the grounds upon which

those claims rest nor plausibly establish C.N.’s entitlement to any

relief. Twombly, 550 U.S. at 555 n. 3, 570, 127 S. Ct. 1955; see also

id. at 565 n.10, 127 S. Ct. 1955 (disapproving of factual allegations

which fail to mention times, places, or persons involved in the

specified events, and noting that a defendant seeking to respond to

such “conclusory” allegations “would have little idea where to

begin.”). And even those allegations that are specific to C.N. are little

more than general assertions of harm, lacking elaboration as to the

context of the alleged incidents or resulting injuries. “[T]he scope of

substantive due process is carefully circumscribed,” Flowers [v. City

of Minneapolis], 478 F.3d [869,] 875 [(8th Cir. 2007)], and the

pleading standard established by Federal Rule of Civil Procedure
427

8(a)(2) “dema n d s m o r e t h a n an u n a d o rned,

the-defendant-unlawfully-harmed-me accusation.” Iqbal, 129 S. Ct.

at 1949. The vague allegations set forth in C.N.’s complaint do not

plausibly state a claim for a violation of her substantive due process

rights, and the individual defendants are entitled to qualified immunity

on this claim as well.

Id. at 634–35 (emphasis added) (first second and third alteration in original). The court

sympathized with the plaintiff’s difficulty in pleading, explaining:

We are not unsympathetic to C.N.’s arguments that her ability

to provide additional factual allegations has been hampered by her

communicative problems and the fact she has not been provided

complete access to the District’s records. We are, however, bound by

the Supreme Court’s directive that a complaint must contain “enough

facts to state a claim to relief that is plausible on its face.” Twombly,

550 U.S. at 570, 127 S. Ct. 1955. C.N.’s vague allegations fall far

short of that standard.

C.N., 591 F.3d at 635 n.11 (emphasis added).

With respect to the § 1983 claim, the court noted that “[t]he touchstone of the § 1983 action

against a government body is an allegation that official policy is responsible for a deprivation

of rights protected by the Constitution . . . .” Id. at 635 (citation and internal quotation marks

omitted). The court concluded that “[b]ecause C.N. ha[d] not alleged a violation of her

constitutional rights, it follow[ed] that the District [could not] be liable under § 1983.” Id.

(citations omitted).

The Eighth Circuit affirmed the dismissal, but noted that C.N. could “of course, proceed with

her state claims, which were dismissed without prejudice by the district court.” Id.

Judge Colloton concurred, noting that Minnesota law had changed since the relevant

case—Thompson ex rel. Buckhanon v. Board of the Special School District No. 1, 144 F.3d

574 (8th Cir. 1998)), stating that an IDEA claim failed when a due process hearing was not

requested before leaving the district—had been decided. C.N., 591 F.3d at 636 (Colloton, J.,

concurring). Judge Colloton noted that the new statute “provide[d] that a due process hearing

must be conducted by the State rather than by the school district in which the student is

enrolled,” and that “[t]o the extent that Thompson rested on the lack of authority for a new

school district to order relief from a former school district, that rationale likely ha[d] been

superseded by statute and rule.” Id. Judge Colloton explained, however, that the court’s

opinion had correctly noted that Thompson’s rationale of providing notice to the school

district of a problem was still applicable. Id. C.N. had argued that even if the rationale of

Thompson still applied, there should be an exception to the notice requirement if “continued

enrollment in the school district likely would result in physical harm or serious emotional
428

harm to the student.” Id. at 636–37. Judge Colloton agreed with the court’s decision that

such an exception should not apply in this case:

I agree with the court, on this record, that no exception to Thompson

is warranted, because C.N. has not pleaded facts that plausibly support

a reasonable inference that continued enrollment at the Willmar school

during the course of a due process hearing under the IDEA was likely

to result in physical harm or serious emotional harm. See ante, at 632

n.8; Ashcroft v. Iqbal, --- U.S. ----, 129 S. Ct. 1937, 1949–50, 173 L.

Ed. 2d 868 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555–57,

127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007). The court’s decision,

however, deals only with the facts of this action, ante, at 632 n.8, and

does not foreclose the recognition of an equitable exception to the

judicially-created Thompson rule on an appropriate set of facts.

Id. at 637.

• Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, No. 08-3798, 2009 WL 4062105 (8th Cir.

Nov. 25, 2009). The plaintiff was a Wal-Mart employee and a participant in Wal-Mart’s

employee retirement plan (the “Plan”). The plaintiff sought to bring a class action against

Wal-Mart and its executives involved in managing the Plan, alleging that the defendants

violated fiduciary duties imposed by the Employee Retirement Income Security Act (ERISA).

Id. at *1. The district court dismissed the complaint because it concluded that the plaintiff

lacked constitutional standing to assert claims based on breaches of fiduciary duty before he

first contributed to the Plan and that he failed to state a plausible claim for relief. Id. The

Eighth Circuit reversed and remanded. Id.

The complaint contained 5 causes of action, and “[t]he gravamen of the complaint [wa]s that

[the defendants] failed adequately to evaluate the investment options included in the Plan.”

Id. Specifically, the complaint asserted that “the process by which the mutual funds were

selected was tainted by [the defendants’] failure to consider trustee Merrill Lynch’s interest

in including funds that shared their fees with the trustee,” and that “[t]he result of these

failures . . . [wa]s that some or all of the investment options included in the Plan charge[d]

excessive fees.” Id. The court explained that the factual allegations were detailed:

Braden alleges extensive facts in support of these claims. He

claims that Wal-Mart’s retirement plan is relatively large and that

plans of such size have substantial bargaining power in the highly

competitive 401(k) marketplace. As a result, plans such as

Wal-Mart’s can obtain institutional shares of mutual funds, which,

Braden claims, are significantly cheaper than the retail shares generally

offered to individual investors. Nonetheless, he alleges that the Plan

only offers retail class shares to participants. Braden also avers that

seven of the ten funds charge 12b-1 fees, which he alleges are used to
429

benefit the fund companies but not Plan participants.

Braden alleges further that the relatively high fees charged by

the Plan funds cannot be justified by greater returns on investment

since most of them underperformed lower cost alternatives. In support

of this claim, he offers specific comparisons of each Plan fund to an

allegedly similar but more cost effective fund available in the market.

In comparison to an investment in index funds, Braden estimates that

the higher fees and lower returns of the Plan funds cost the Plan some

$140 million by the end of 2007.

Finally, the complaint also alleges that the mutual fund

companies whose funds were included in the Plan shared with Merrill

Lynch portions of the fees they collected from participants’

investments. This practice, sometimes called “revenue sharing,” is

used to cover a portion of the costs of services provided by an entity

such as a trustee of a 401(k) plan, and is not uncommon in the

industry. Braden alleges, however, that in this case the revenue

sharing payments were not reasonable compensation for services

rendered by Merrill Lynch, but rather were kickbacks paid by the

mutual fund companies in exchange for inclusion of their funds in the

Plan. The Plan’s trust agreement requires appellees to keep the

amounts of the revenue sharing payments confidential.

Braden, 2009 WL 4062105, at *2. The claims included: (1) a claim for breach of fiduciary

duty; (2) a claim that the defendants failed to adequately monitor those responsible for

managing the Plan; (3) a claim for breach of the “duty of loyalty by failure to inform Plan

participants of certain information relating to the fees charged by the Plan funds, as well as

the amounts of the revenue sharing payments made to Merrill Lynch”; (4) a claim that the

defendants with oversight responsibility were liable for the breaches of their cofiduciaries; and

(5) a claim that the revenue-sharing payments were prohibited under ERISA. See id.

The Eighth Circuit concluded that the district court erred in finding that the plaintiff lacked

standing, explaining that the plaintiff had “alleged injury in fact that [wa]s causally related to

the conduct he s[ought] to challenge on behalf of the Plan.” See id. at *3–5. The court then

turned to evaluating the sufficiency of the complaint, and explained that “the complaint

should be read as a whole, not parsed piece by piece to determine whether each allegation, in

isolation, is plausible.” Id. at *6 (citing Vila v. Inter-Am. Inv. Corp., 570 F.3d 274, 285 (D.C.

Cir. 2009)). The court also emphasized that evaluating a complaint is “‘a context-specific

task.’” Id. (quoting Iqbal, 129 S. Ct. at 1950). With respect to the breach of fiduciary duty

claim, the Eighth Circuit noted that only the issue of breach was disputed. Id. “[T]he district

court found the complaint inadequate because it did not allege sufficient facts to show how

[the defendants’] decision making process was flawed.” Braden, 2009 WL 4062105, at *7.

The Eighth Circuit found that the district court improperly applied Rule 8 because, accepting
430

the factual allegations as true, the plaintiff had stated a claim for breach of fiduciary duty. Id.

The Eighth Circuit explained that the district court erred by “ignor[ing] reasonable inferences

supported by the facts alleged” and by “d[rawing] inferences in [the defendants’] favor,

faulting Braden for failing to plead facts tending to contradict those inferences.” Id. The

court noted that “[e]ach of these errors violate[d] the familiar axiom that on a motion to

dismiss, inferences are to be drawn in favor of the non-moving party,” id. (citing Northstar

Indus. v. Merrill Lynch & Co., 576 F.3d 827, 832 (8th Cir. 2009)), and that “Twombly and

Iqbal did not change this fundamental tenet of Rule 12(b)(6) practice,” id. The court

explained:

The first of these errors stems from the mistaken assumption

that Braden was required to describe directly the ways in which

appellees breached their fiduciary duties. Thus, for example, the

district court faulted the complaint for making “no allegations

regarding the fiduciaries’ conduct.” Rule 8 does not, however, require

a plaintiff to plead “specific facts” explaining precisely how the

defendant’s conduct was unlawful. Erickson v. Pardus, 551 U.S. 89,

93 (2007) (per curiam). Rather, it is sufficient for a plaintiff to plead

facts indirectly showing unlawful behavior, so long as the facts pled

“‘give the defendant fair notice of what the claim is and the grounds

upon which it rests,’” id. (quoting Twombly, 550 U.S. at 555)

(alteration omitted), and “allow[ ] the court to draw the reasonable

inference” that the plaintiff is entitled to relief. Iqbal, 129 S. Ct. at

1949.

Braden has satisfied these requirements. The complaint alleges

that the Plan comprises a very large pool of assets, that the 401(k)

marketplace is highly competitive, and that retirement plans of such

size consequently have the ability to obtain institutional class shares

of mutual funds. Despite this ability, according to the allegations of

the complaint, each of the ten funds included in the Plan offers only

retail class shares, which charge significantly higher fees than

institutional shares for the same return on investment. The complaint

also alleges that seven of the Plan’s ten funds charge 12b-1 fees from

which participants derive no benefit. The complaint states that

appellees did not change the options included in the Plan despite the

fact that most of them underperformed the market indices they were

designed to track. Finally, it alleges that the funds included in the Plan

made revenue sharing payments to the trustee, Merrill Lynch, and that

these payments were not made in exchange for services rendered, but

rather were a quid pro quo for inclusion in the Plan.

Id. (alteration in original) (footnote omitted). The court noted that the reasonable inferences

drawn from the facts alleged supported a viable claim:
431

The district court correctly noted that none of these allegations

directly addresses the process by which the Plan was managed. It is

reasonable, however, to infer from what is alleged that the process was

flawed. Taken as true, and considered as a whole, the complaint’s

allegations can be understood to assert that the Plan includes a

relatively limited menu of funds which were selected by Wal-Mart

executives despite the ready availability of better options. The

complaint alleges, moreover, that these options were chosen to benefit

the trustee at the expense of the participants. If these allegations are

substantiated, the process by which appellees selected and managed

the funds in the Plan would have been tainted by failure of effort,

competence, or loyalty. Thus the allegations state a claim for breach

of fiduciary duty.

Braden, 2009 WL 4062105, at *8 (citation and footnotes omitted). The court further

explained:

These are of course only inferences, and there may well be

lawful reasons [the defendants] chose the challenged investment

options. It is not Braden’s responsibility to rebut these possibilities in

his complaint, however. The district court erred by placing that burden

on him, finding the complaint inadequate for failing to rule out

potential lawful explanations for appellees’ conduct. It stated that [the

defendants] “could have chosen funds with higher fees for any number

of reasons, including potential for higher return, lower financial risk,

more services offered, or greater management flexibility.” That may

be so, but Rule 8 does not require a plaintiff to plead facts tending to

rebut all possible lawful explanations for a defendant’s conduct.

Id. (emphasis added). The court stated that “a plaintiff may need to rule out alternative

explanations in some circumstances in order to survive a motion to dismiss,” noting that the

Iqbal case had provided such circumstances. See id. The court explained that “[i]t is in this

sort of situation—where there is a concrete, ‘obvious alternative explanation’ for the

defendant’s conduct—that a plaintiff may be required to plead additional facts tending to rule

out the alternative.” Id. (quoting Iqbal, 129 S. Ct. at 1951; citing Twombly, 550 U.S. at 566).

But the court explained that “[s]uch a requirement [wa]s neither a special rule nor a new one.”

Id. “It [wa]s simply a corollary of the basic plausibility requirement. An inference pressed

by the plaintiff is not plausible if the facts he points to are precisely the result one would

expect from lawful conduct in which the defendant is known to have engaged.” Id. The court

further explained:

Not every potential lawful explanation for the defendant’s

conduct renders the plaintiff’s theory implausible. Just as a plaintiff

cannot proceed if his allegations are “‘merely consistent with’ a
432

defendant’s liability,” id. at 1949 (quoting Twombly, 550 U.S. at 557),

so a defendant is not entitled to dismissal if the facts are merely

consistent with lawful conduct. And that is exactly the situation in this

case. Certainly appellees could have chosen funds with higher fees for

various reasons, but this speculation is far from the sort of concrete,

obvious alternative explanation Braden would need to rebut in his

complaint. Requiring a plaintiff to rule out every possible lawful

explanation for the conduct he challenges would invert the principle

that the “complaint is construed most favorably to the nonmoving

party,” Northstar Indus., 576 F.3d at 832, and would impose the sort

of “probability requirement” at the pleading stage which Iqbal and

Twombly explicitly reject. See Iqbal, 129 S. Ct. at 1949–50.

To recognize that the pleading standard established by Rule 8

applies uniformly in “all civil actions,” id. at 1953 (quoting FED. R.

CIV.P.1), is not to ignore the significant costs of discovery in complex

litigation and the attendant waste and expense that can be inflicted

upon innocent parties by meritless claims. See Twombly, 550 U.S. at

558–60. Here, however, we must be attendant to ERISA’s remedial

purpose and evident intent to prevent through private civil litigation

“misuse and mismanagement of plan assets.”

Braden, 2009 WL 4062105, at *9 (footnotes and citation omitted) (emphasis added). The

court noted that the Secretary of Labor had submitted an amicus curiae brief that “expressed

concern over the erection of ‘unnecessarily high pleading standards’ in ERISA cases.” Id. at

*9 n.8.

The court found it important that the plaintiff had limited access to information supporting

his claims:

No matter how clever or diligent, ERISA plaintiffs generally lack the

inside information necessary to make out their claims in detail unless

and until discovery commences. Thus, while a plaintiff must offer

sufficient factual allegations to show that he or she is not merely

engaged in a fishing expedition or strike suit, we must also take

account of their limited access to crucial information. If plaintiffs

cannot state a claim without pleading facts which tend systemically to

be in the sole possession of defendants, the remedial scheme of the

statute will fail, and the crucial rights secured by ERISA will suffer.

These considerations counsel careful and holistic evaluation of an

ERISA complaint’s factual allegations before concluding that they do

not support a plausible inference that the plaintiff is entitled to relief.

Id. at *9 (emphasis added). The court concluded that the plaintiff adequately pleaded his
433

breach of fiduciary duty claim, noting that “the district court erred in dismissing [that claim]

because it misapplied the pleading standard of Rule 8, most fundamentally by failing to draw

reasonable inferences in favor of the non-moving party as is required.” Id.

The Eighth Circuit also found that the plaintiff had adequately pleaded his claim for breach

of the duty of loyalty because “he ha[d] alleged sufficient facts to support an inference that

nondisclosure of details about the fees charged by the Plan funds and the amounts of the

revenue sharing payments would ‘mislead a reasonable [participant] in the process of making

an adequately informed decision regarding’ allocation of investments in the Plan.” Id. at *12

(citation omitted) (second alteration in original).

With respect to the claim that the revenue-sharing payments were prohibited under ERISA,

the Eighth Circuit noted that the district court “concluded . . . that Braden’s claims failed

because he had not pled facts raising a plausible inference that the payments were

unreasonable in relation to the services provided byMerrill Lynch and thus had failed to show

they were not exempted by § 1108.” Id. The Eighth Circuit explained that “[t]his was wrong

because the statutory exemptions established by § 1108 are defenses which must be proved

by the defendant,” and that “Braden d[id] not bear the burden of pleading facts showing that

the revenue sharing payments were unreasonable in proportion to the services rendered . . .

.” Braden, 2009 WL 4062105, at *12. The Eighth Circuit noted that its conclusion was

supported by the language of the statute, which “is plain, and . . . allocates the burdens of

pleading and proof,” and was “in keeping with traditional principles of trust law, which

inform . . . interpretation of ERISA.” Id. at *13. The court noted that “Braden could not

possibly show at this stage in the litigation that the revenue sharing payments were

unreasonable in proportion to the services rendered because the trust agreement between WalMart and Merrill Lynch required the amounts of the payments to be kept secret,” and that “[i]t

would be perverse to require plaintiffs bringing prohibited transaction claims to plead facts

that remain in the sole control of the parties who stand accused of wrongdoing.” Id. at *14

(emphasis added).

Because the district court did not consider the merits of the second and fourth claims, having

dismissed them as derivative of other claims, the Eighth Circuit remanded those claims for

the district court to consider. Id.

• McAdams v. McCord, 584 F.3d 1111 (8th Cir. 2009). The plaintiffs sued several executives

of a provider of mortgage lending and brokerage services (UCAP) and UCAP’s outside

auditor, claiming that the defendants fraudulently induced them to invest in UCAP by

misrepresenting UCAP’s financial situation. Id. at 1113. The district court dismissed the

complaint, finding that the investors did not meet the heightened pleading required under Rule

9 and the Private Securities Litigation Reform Act of 1995 (PSLRA). On appeal, the Eighth

Circuit agreed that the investors failed to state a claim for federal securities fraud. Claims

under the relevant securities statutes required “(1) a material misrepresentation or omission,

(2) scienter, i.e., a wrongful state of mind, (3) a connection with the purchase or sale of a

security; (4) reliance, (5) economic loss, and (6) loss causation.” Id. Rule 9 and the PSLRA
434

require stating with particularity the circumstances of the alleged fraudulent statement, and

“[t]he complaint must also ‘state ‘with particularity’ facts giving rise to a ‘strong inference’

that the defendant acted with the scienter required for the cause of action.’” Id. (citation

omitted). The district court dismissed the complaint because it failed to plead with

particularity the circumstances of the alleged fraud and the facts giving rise to a strong

inference of scienter. Id. The only issue on appeal was whether the investors stated a claim

against the auditor for federal securities fraud.

With respect to the auditor, the court noted that while the complaint made numerous

allegations of false statements by UCAP’s executives and alleged that the auditor assisted the

executives in distorting UCAP’s financial statements, the statute only imposed liability on

those who make misstatements or omissions, not those who aid in making misstatements or

omissions. Id. at 1114. The court further noted that the complaint alleged two misstatements

by the auditor—that the audit was conducted in accordance with generally accepted

accounting principles and that UCAP’s financial statements fairly presented UCAP’s financial

condition. McAdams, 584 F.3d at 1114. The court also noted that the complaint alleged that

the auditor “issued ‘clean’ audit opinions when it knew UCAP’s financial statements were not

accurate,” and that the auditor therefore “allegedly made false statements with scienter.” Id.

But the court found that it did not need to decide whether the complaint adequately alleged

with particularity facts giving rise to a strong inference of scienter because the complaint

failed to adequately plead loss causation. Id. “To adequately plead loss causation, the

complaint must state facts showing a causal connection between the defendant’s

misstatements and the plaintiff’s losses.” Id. (citation omitted). The court held that the

plaintiffs failed to adequately plead loss causation:

The complaint alleges that McAdams invested over $3 million

in UCAP, that Homm invested over $6 million, and that Smyth

invested $2 million. The complaint then broadly alleges that “as a

direct and proximate result of Defendants’ fraudulent

misrepresentations and omission of material facts, Plaintiffs have been

damaged in amounts to be determined at trial but which exceed $10

million.” This threadbare, conclusory statement does not sufficiently

allege loss causation. It does not specify how two statements by [the

auditor], as compared to the complaint’s long list of alleged

misrepresentations and omissions by the executives, proximately

caused the investors’ losses.

The complaint alleges that the investors suffered damages

because they purchased stock at “artificially inflated prices.” This

allegation is insufficient under Dura [Pharm., Inc. v. Broudo, 544 U.S.

336, 341–42 (2005)]. Specifically, a stock’s subsequent loss in value

can reflect a variety of factors other than the earlier misstatement. The

complaint states that the truth about UCAP’s financial position was

revealed on April 23, 2004, when UCAP announced that it would need
435

to restate several financial statements. However, the complaint does

not state the value of UCAP’s stock when the investors made their

investments, or its value right before, or right after, the need for the

restatement was announced.

Without these facts, the complaint does not show that the

investors’ losses were caused by MSF’s misstatements. This failure

is revealing because UCAP’s financial troubles were public knowledge

before the announcement of the need for a restatement in April 2004.

Specifically, in November 2003, UCAP disclosed in an 8-K

announcement that its wholly-owned, principal operating subsidiary

was in imminent danger of losing its only line of credit and that UCAP

had sold a controlling share of its stock to avoid the subsidiary’s

bankruptcy. The complaint’s lack of specific allegations of the value

of UCAP stock defeats the plausibility of the investors’ claim that

MSF’s audit opinions in January 2002 and 2003 caused their losses.

Id. at 1115 (internal citation and footnote omitted).

Ninth Circuit

• U.S. v. Corinthian Colleges, 655 F.3d 984, 2011 WL 3524208 (9th Cir. 2011). Qui tam

relators Nyoka Lee and Talala Mshuja filed a complaint on behalf of the U.S. government

against defendants Corinthian Colleges, a company that operates for-profit vocational schools

throughout the nation; seven individual defendants who are members of Corinthian’s board

of directors; and Ernst and Young (“EY”), an accounting firm that served as Corinthian’s

independent auditor. One relator was a former employee of Corinthian, the other relator a

former independent contractor of Corinthian. The relators alleged that the defendants falsely

certified to the U.S. Department of Education Corinthian’s compliance with the Higher

Education Act’s (HEA) ban on recruiter-incentive compensation. Such compliance is a

prerequisite for the receipt of federal education funds. By virtue of this false certification,

according to relators, defendants violated the False Claims Act (FCA).

The court of appeals summarized the background of the case and the allegations of the

relators’ complaint as follows:

The federal government distributes funds under Title IV of the

HEA, 20 U.S.C. § 1094, in order to assist with the costs of secondary

education. In order to receive federal funds under the HEA, schools

must enter with the DOE [Department of Education] into a Program

Participation Agreement, in which they agree to abide by a host of

statutory, regulatory, and contractual requirements. Among these

requirements is a recruiter-incentive compensation ban, which
436

prohibits institutions from paying recruiters “incentive payments”

based on the number of students they enroll. More specifically, this

ban prohibits schools from “provid[ing] any commission, bonus, or

other incentive payment based directly or indirectly on success in

securing enrollments or financial aid to any persons or entities engaged

in any student recruiting or admission activities or in making decisions

regarding the award of student financial assistance.” 20 U.S.C. §

1094(a)(20). “This requirement is meant to curb the risk that recruiters

will ‘sign up poorly qualified students who will derive little benefit

from the subsidy and may be unable or unwilling to repay federally

guaranteed loans.’” Hendow, 461 F.3d at 1168–69 (citation omitted).

In 2002, the DOE amended its previous regulations and created

a “safe harbor” provision interpreting and clarifying this ban on

recruiter-incentive compensation. The regulation provides that an

educational institution may, without violating the ban on incentive

compensation, provide “payment of fixed compensation, such as a

fixed annual salary or a fixed hourly wage, as long as that

compensation is not adjusted up or down more than twice during any

twelve month period, and any adjustment is not based solely on the

number of students recruited, admitted, enrolled, or awarded financial

aid.” 34 C.F.R § 668.14(b)(22)(ii)(A) (2010) (“Safe Harbor

Provision”). Both the ban on incentive compensation and the Safe

Harbor Provision were in effect when this suit was filed.

. . . .

. . . . On February 25, 2009, the United States gave notice it

would not intervene in the action. As relevant here, the allegations in

the Complaint are as follows.

Corinthian receives billions of dollars from the federal

government under Title IV of the HEA. Despite the HEA’s ban on

incentive compensation, Corinthian, “as a matter of corporate

practice,” “pay[s] recruiters bonuses amounting to 2.5% to 10% of

their base pay based on the number of students they recruit.” More

specifically:

As a matter of corporate practice since at least July

2005, recruiters have been required to meet a certain

enrollment quota, depending on their salary grade and

title. Those recruiters that exceed their quotas receive

raises of 2.5% to 10% of their base salary, every six

months, depending on the number of new recruits they
437

sign up. The bonus criteria are set forth in a matrix

designed by Corinthian. Employees failing to meet

their quotas are disciplined, demoted, or terminated.

The promotion guidelines applicable to Corinthian recruiters are

presented in a document entitled Corinthian Admissions

Representative Compensation Program (“Compensation Program”),

which is attached to the Complaint as Exhibit A. Defendants do not

contest the authenticity of this document.

According to the Complaint, Corinthian and the Individual

Defendants are liable to the United States under the FCA because of

their “use of false statements to obtain HEA, Title IV loan funds.

Specifically, in requesting and receiving approximately

one-half-billion dollars annually, [Corinthian and the Individual

Defendants] falsely represented that Corinthian complied with HEA’s

prohibitions against using incentive payments for recruiters, which is

a core prerequisite to receive any HEA Title IV funds.”

The Complaint also alleges that EY “falsely certified that

Corinthian was in compliance with recruiter compensation

prohibitions.” EY allegedly “rubber stamped the information provided

to it by Corinthian” and “issued its compliance audits and financial

statement audit opinions knowing them to be false and/or in reckless

disregard of the truth or falsity of the information provided to the

United States.” EY thereby “fraudulently caused the United States to

pay Title IV, HEA Program funds to Corinthian by such false and

fraudulent compliance audit and financial statement audit opinions.”

In essence, then, Relators allege that Corinthian and the

Individual Defendants violated the HEA by firing admissions

representatives who failed to enroll a minimum number of students,

and by compensating admissions representatives based on the number

of studentsthey enrolled. Relators additionally allege that Defendants

certified to the DOE Corinthian’s compliance with the HEA ban on

incentive compensation in order to collect federal funds for which they

were ineligible, in violation of 31 U.S.C. § 3729(a)(1), (2), (3), and (7)

(current version at 31 U.S.C. § 3729(a)(1)(A), (B), (C), (G)).

Id. at *1–3 (footnote and citations omitted).

The district court granted the defendants’ motions to dismiss the complaint, with prejudice,

under rule 12(b)(6). The district court found that the relators had failed to adequately allege

a false statement and scienter, two required elements of an FCA claim. The district court
438

explained that Corinthian’s program for recruiter compensation, as alleged, fell within the

HEA’s “safe harbor provision,” precluding a finding of a false statement or scienter. Id. at

*1. “The district court held that the Complaint failed to allege that Corinthian’s

Compensation Program violated the HEA, that is, that Corinthian made any false statement

to the United States government in certifying their compliance with that statute. The district

court reasoned that the challenged recruiter Compensation Program falls within the DOE Safe

Harbor Provision because, under its guidelines, increases in recruiter salaries are not awarded

‘solely’ on the basis of the number of new enrollees that the recruiter achieved. The court also

reasoned that, because Corinthian reasonably relied upon the Safe Harbor Provision, it could

not have acted with scienter as required by the FCA. Because the district court held the FCA

claims against the Individual Defendants and EY were ‘contingent upon Corinthian Collages’

liability,’ it also dismissed with prejudice the claims against these parties.” Id. at *3.

The Ninth Circuit upheld the district court’s conclusion that the complaint, as drafted, did not

state a claim under the False Claims Act. But the Ninth Circuit vacated the district court’s

decision to dismiss the complaint with prejudice, and remanded to the district court with

instructions that relators be given an opportunity to amend their complaint and plead

additional facts.

The Ninth Circuit reasoned as follows with regard to the district court’s conclusion that the

complaint did not adequately plead allegations that defendant Corinthian Colleges made a

false statement within the meaning of the False Claims Act:

Defendants argue that the Complaint does not allege that

Corinthian made a false statement under the FCA, because, as a matter

of law, the alleged Compensation Program falls within the DOE Safe

Harbor Provision and therefore does not violate the HEA.

As stated above, Relators allege that Corinthian falsely

certified compliance with the HEA's prohibition against paying “any

commission, bonus, or other incentive payment based directly or

indirectly on success in securing enrollment or financial aid to any

persons or entities engaged in student recruiting or admissions

activities. . . .” The Complaint contains two factual allegations to

support the purported violation of the HEA. First, the Complaint

states that, “as a matter of corporate practice,” Corinthian recruiters

receive a 2.5% to 10% salary increase every six months for exceeding

certain enrollment quotas. It also states that employees who fail to

meet their enrollment quotas are “disciplined, demoted, or

terminated.” We consider these allegations in reverse order.

. . . .

Relators allege that employees were “disciplined, demoted, or
439

terminated” on the basis of their recruitment numbers. This does not

state a violation of the incentive compensation ban. Even as broadly

construed, the HEA does not prohibit any and all employment-related

decisions on the basis of recruitment numbers; it prohibits only a

particular type of incentive compensation. Thus, adverse employment

actions, including termination, on the basis of recruitment numbers

remain permissible under the statute’s terms. The Complaint’s

allegation that Corinthian imposes adverse employment consequences

on the basis of recruitment quotas does not, therefore, state a violation

of the HEA incentive compensation ban, and also does not support the

claim that a false statement was made.

To support an FCA false statement, the Complaint also alleges

that Corinthian awards salary increases on the basis of recruitment

numbers, in violation of HEA’s incentive compensation ban.

Defendants argue that Corinthian’s recruiter compensation policy, as

alleged, falls within the DOE Safe Harbor Provision and does not as

a matter of law violate the HEA. As discussed above, the Safe Harbor

Provision allows institutions to pay semi-annual salary increases to

recruiters only if “any adjustment is not based solely on the number of

students recruited, admitted, enrolled, or awarded financial aid.” 34

C.F.R § 668.14(b)(22)(ii)(A) (emphasis added).

The Complaint does not expressly use the word “solely” in

alleging that Corinthian awards promotion salary increases on the basis

of recruitment numbers. Nonetheless, it does allege that the increases

in salary are “based on” and “depend on” the number of students that

the recruiter “signs up.” It then refers to the Corinthian Compensation

Program, which is attached to the Complaint as Exhibit A. The

Program can be summarized as follows:

1. Only those employees with a rating of at least

“Good” are eligible for promotions.

2. Assuming that an employee is eligible for a

promotion, the salary increase for which the employee

is eligible is determined by the greater of (1) the

minimum of the salary range for the position to which

they are being promoted (“category 1”); and (2) a

percentage salary increase related to how successful

that recruiter has been in the previous six-month period

(“category 2”).

3. The category 2 increase that corresponds to a
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particular employee is determined by the number of

“net starts” achieved in that six-month period,

combined with his overall performance rating (“Good”

or “Excellent”) for that period.

At first glance, then, it appears that Corinthian’s promotion and

salary increase system does not rely “solely” on recruitment numbers,

but also takes into account whether the employee receives an overall

performance rating of “Good” or “Excellent.” On this basis,

Corinthian argues that its method of awarding salary increases does

not violate the HEA.

The mere inclusion of this performance rating in Corinthian’s

Compensation Program, however, does not allow us to conclusively

determinewhether itsmethod of awarding salary increases falls within

the Safe Harbor Provision. At this stage, we have no information as

to the basis on which a “Good” versus “Excellent” performance rating

is assigned to a Corinthian recruiter. Without an understanding what

an employee must do to achieve a rating of “Good,” we cannot

determine whether the rating is based upon substantive requirements

that are separate and distinct from recruitment numbers. If, for

example, recruiter performance ratings are awarded on the basis of the

number of students that a recruiter enrolls, then this rating system

would not in fact provide an additional basis on which compensation

decisions are made. Under such a system, Corinthian would, in

essence, make adjustments to recruiter salaries based “solely” on the

number of students enrolled by that recruiter. Interpreting the Safe

Harbor Provision so that it covers such a system would directly

undermine the HEA express prohibition on “incentive payment based

directly or indirectly on success in securing enrollments,” see 20

U.S.C. § 1094(a)(20).

Moreover, “[w]hen construing a statute or regulation, we look

to the whole law, and to its object and policy, not simply to a single

sentence or member of a sentence.” Owner–Operator Indep. Drivers

Ass’n, Inc. v. Swift Transp. Co., Inc., 632 F.3d 1111, 1115 (9th Cir.

2011) (internal quotation marks and citation omitted). “The plain

language of a regulation . . . will not control if clearly expressed

administrative intent is to the contrary or if such plain meaning would

lead to absurd results.” Webb v. Smart Document Solutions, LLC, 499

F.3d 1078, 1085 (9th Cir. 2007) (internal quotation marks and citation

omitted). If the performance rating of at least “Good” requires an

employee merely to fulfill basic performance requirements that are

expected of any employee (such as showing up on time), then
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construing the Safe Harbor Provision so that these ratings serve as an

independent basis for compensation increases would lead to an

“absurd result.” Under such a system, educational institutions could

entirely circumvent the HEA incentive compensation ban by simply

formalizing, through a performance rating system, the basic

requirements expected of any employee, that is, the requirements of

employment itself. Allowing the Safe Harbor Provision to shield such

a program from HEA’s recruiter compensation requirements would

render meaningless the “purpose or objective” of the statute.

Owner–Operator Indep. Drivers Ass’n, 632 F.3d at 1115.

Relators do not allege any facts regarding the meaning or basis

of the “Good” versus “Excellent” performance ratings included in the

Compensation Program attached to the Complaint. As a result, while

it is certainly possible that Corinthian’s Compensation Program falls

outside the Safe Harbor Provision (thereby rendering false

Corinthian’s certification of HEA compliance), the Complaint falls

short of stating a plausible claim for relief. This deficiency, however,

can readily be cured, and Relators are therefore entitled to amend.

. . . .

Although Relators did not seek leave to amend before the

district court, the court expressly contemplated whether amendment

was appropriate. Because the court concluded that the Compensation

Program falls within the Safe Harbor Provision as a matter of law, it

held that leave to amend was unwarranted.

Because the issue was expressly addressed and decided by the

district court, raised on appeal, and fully briefed by both parties, it is

subject to review by this court.

The trial court’s denial of leave to amend a complaint is

reviewed for an abuse of discretion. See Johnson v. Buckley, 356 F.3d

1067, 1077 (9th Cir. 2004). “When reviewing a district court’s

decision for abuse of discretion, ‘[w]e first look to whether the trial

court identified and applied the correct legal rule to the relief

requested. Second, we look to whether the trial court’s resolution of

the motion resulted from a factual finding that was illogical,

implausible, or without support in inferences that may be drawn from

the facts in the record.’” City of Los Angeles v. San Pedro Boat

Works, 635 F.3d 440, 454 (9th Cir. 2011) (quoting United States v.

Hinkson, 585 F.3d 1247, 1263 (9th Cir. 2009) (en banc)).
442

“The standard for granting leave to amend is generous.”

Balistreri, 901 F.2d at 701. The court considers five factors in

assessing the propriety of leave to amend—bad faith, undue delay,

prejudice to the opposing party, futility of amendment, and whether

the plaintiff has previously amended the complaint. Johnson, 356 F.3d

at 1077. Here, there is no evidence of delay, prejudice, bad faith, or

previous amendments. Therefore, leave to amend turns on whether

amendment would be futile.

Under futility analysis, “[d]ismissal without leave to amend is

improper unless it is clear, upon de novo review, that the complaint

could not be saved by any amendment.” Krainski v. Nevada ex rel.

Bd. of Regents of NV. System of Higher Educ., 616 F.3d 963, 972 (9th

Cir. 2010) (internal citation and quotation marks omitted); see also

Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir. 2000) (noting that a

court should permit amendment “unless it determines that the pleading

could not possibly be cured by the allegation of other facts” (internal

quotation marks and citation omitted)); Balistreri, 901 F.2d at 701

(noting that leave to amend should be granted when a court can

“conceive of facts” that would render the plaintiff’s claim viable). 

Leave to amend is warranted if the deficiencies can be cured with

additional allegations that are “consistent with the challenged

pleading” and that do not contradict the allegations in the original

complaint. Reddy v. Litton Indus., Inc., 912 F.2d 291, 296–97 (9th

Cir. 1990).

Here, we can conceive of additional facts that could, if

formally alleged, support the claim that Corinthian made false

statements to the DOE. As previously discussed,Relators could allege

that the Corinthian employee performance rating system is merely a

proxy for employee recruitment numbers, or that the system is based

merely on those basic requirements that any employee would be

required to meet.

In addition, Relators repeatedly insist in their briefs that, in

practice, Corinthian recruiters were expected to meet enrollment

quotas and understood that this was the basis on which they would

receive promotional salary increases. Relators could additionally or

alternatively allege that, despite the Compensation Program’s

purported or documented reliance on something other than recruitment

numbers, these salary increases are in practice determined on the sole

basis of recruitment numbers. It is Corinthian’s implementation of its

policy, rather than the written policy itself, that bears scrutiny under

the HEA, and such allegations would require additional discovery.
443

Thus, to the extent that the Complaint insufficiently alleges a

false statement, Relators could provide additional allegations that

would render plausible their claims against Corinthian. Although the

district court correctly identified the permissive standard for granting

leave to amend, it dismissed with prejudice the Complaint without

considering whether additional facts could cure any deficiencies. We

conclude that the court abused its discretion and that amendment of the

Complaint should have been permitted.

Id. at *4–7 (footnotes and citations omitted).

The Ninth Circuit reasoned as follows with regard to the district court’s conclusion that the

complaint did not adequately plead allegationsthat defendant Corinthian Colleges acted with

scienter within the meaning of the False Claims Act:

Defendants alternatively argue that, even if Relators did or

could allege a false statement, Corinthian’s reliance on the Safe

Harbor Provision negates scienter, another element of the FCA. The

district court agreed. 

Under Rule 9(b), “circumstances constituting fraud or mistake”

must be stated with particularity, but “malice, intent, knowledge, and

other conditions of a person’s mind,” including scienter, can be alleged

generally. See FED. R. CIV. P. 9(b); see also Zucco Partners, LLC v.

Digimarc Corp., 552 F.3d 981, 990 (9th Cir. 2001). Under the False

Claims Act’s scienter requirement, “innocent mistakes, mere negligent

misrepresentations and differences in interpretations” will not suffice

to create liability. Hendow, 461 F.3d at 1174 (internal citations,

quotation marks, and alterations omitted). Instead, Relators must

allege that Corinthian knew that its statements were false, or that it

was deliberately indifferent to or acted with reckless disregard of the

truth of the statements. U.S. ex rel. Hochman v. Nackman, 145 F.3d

1069, 1074 (9th Cir. 1998) (“Absent evidence that the defendants

knew that the . . . Guidelines on which they relied did not apply, or that

the defendants were deliberately indifferent to or recklessly

disregardful of the alleged inapplicabilityof those provisions, no False

Claims Act liability can be found.”).

In order for Relators to sufficiently plead that Corinthian acted

with fraudulent intent, therefore, they must allege that (1) Corinthian

knew, or acted with reckless disregard of the fact, that its

Compensation Program did not fall within the DOE Safe Harbor

Provision when it certified to the United States government that it was
444

compliant with the HEA; or, alternatively, (2) even if it believed that

its written Compensation Program fell under the Safe Harbor

Provision, it knew or acted with reckless disregard of the fact that, in

reality, recruiter compensation decisions were made solely on the basis

of recruitment numbers.

In the operative Complaint, Relators allege that Corinthian

requested federal grant money from the DOE although it “knew it was

not eligible to receive such funds based on its recruiting compensation

practices, including awarding bonuses based on the number of students

a recruiter signs up.” Relators also allege, in reciting the FCA counts

raised in the Complaint, that Defendants acted “knowingly” or “in

deliberate ignorance or reckless disregard.” The Complaint, therefore,

does allege that Corinthian acted with scienter. It does not, however,

clearly allege sufficient facts to support an inference or render

plausible that Corinthian acted while knowing that its Compensation

Program fell outside of the Safe Harbor Provision on which it was

entitled to rely. See U.S. ex rel. Oliver v. Parsons Co., 195 F.3d 457,

464 (9th Cir. 1999) (holding that “a [government] contractor relying

on a good faith interpretation of a regulation is not subject to [FCA]

liability . . . because the good faith nature of his or her action

forecloses the possibility that the scienter requirement is met.”).

Nonetheless, these relatively minor deficiencies can be cured

through amendment. Relators repeatedly argue that Corinthian

certified compliance with the HEA while knowing that it was in fact

compensating recruiters based solely on their recruitment numbers.

Realtors further describe how the federal government dispenses HEA

funds to educational institutions in accordance with the number of

students they enroll and the degree to which Corinthian depends on

such funding. These facts, if formally alleged, would certainly support

an inference that Corinthian acted with fraudulent intent and did not,

in good faith, rely upon the Safe Harbor Provision.

Under the liberal standards for amending complaints, Relators

should be permitted to plead additional facts that could cure the

Complaint’s deficiencies as to the allegations that Corinthian made a

false statement and acted with the requisite scienter.

Id. at *8–9.

The court of appeals similarly vacated the dismissal with prejudice of the complaint as to the

seven individual defendants, explaining:
445

The Complaint’s allegations as to the Individual Defendants do

not currently meet the heightened pleading requirements of Rule 9.

“Rule 9(b) does not allow a complaint to merely lump multiple

defendants together but requires plaintiffs to differentiate their

allegations when suing more than one defendant and inform each

defendant separately of the allegations surrounding his alleged

participation in the fraud.” Swartz v. KPMG LLP, 476 F.3d 756,

764–65 (9th Cir. 2007) (internal citations, quotations marks, and

alterations omitted). “In the context of a fraud suit involving multiple

defendants, a plaintiff must, at a minimum identify the role of each

defendant in the alleged fraudulent scheme.” Id. (internal citations,

quotation marks, and alterations omitted).

The Complaint fails to set forth each individual’s alleged

participation in the fraudulent scheme. The Complaint asserts

generally that “Corinthian and its co-defendants are liable to the

United States under the FCA because of the company’s use of false

statements to obtain HEA, Title IV loan funds.” The only supporting

factual allegation involving the Individual Defendants is that they

“monitored and approved of the illegal recruiter compensation

practices as a means to obtain targeted enrollment levels for the

respective Corinthian campuses.” The Complaint provides no

additional detail as to the nature of the Individual Defendants’

involvement in the fraudulent acts, but simply attributes wholesale all

of the allegations against Corinthian to the Individual Defendants.

Rule 9(b) undoubtedly requires more.

Furthermore, the Complaint fails to allege that the Individual

Defendants had any role in making a false statement to the United

States government. While it does assert that the individuals monitored

Corinthian’s recruiter compensation practices, it does not allege that

the Individual Defendants participated in certifying HEA compliance

to the DOE for the purpose of receiving federal funds.

Nonetheless, because Relators could amend their Complaint to

sufficiently state an FCA claim against Corinthian, we cannot

conclude that amendment as to the Individual Defendants would be

entirely futile. Additional facts could render plausible an inference

that one or more of Corinthian’s Board of Directors oversaw or

actively participated in the alleged fraudulent scheme, including

making false statements to the United States government. Relators

should have at least one opportunity to add any such facts to the

Complaint. As with Corinthian, the district court dismissed the

Individual Defendants because of the Complaint’s purported failure to
446

state a false claim, but it failed to consider whether additional facts

could cure any deficiencies. Amendment should have been permitted.

Id. at *9–10.

The court of appeals similarly vacated the dismissal with prejudice of the complaint as to

defendant Ernst and Young, explaining:

Relators allege that EY submitted “false statements” regarding

Corinthian’s compliance with the HEA via two types of

reports—compliance reports (“HEA Compliance Reports” or

“Compliance Reports”) and financial statement audit reports

(“Financial Statement Reports”).

. . . .

In the Complaint, Relators allege that EY “falsely certified that

Corinthian was in compliance with the recruiter compensation

prohibitions” and “failed to perform the legally required evaluation to

determine if Corinthian’s recruiter compensation practices were legal.”

The Complaint further states that EY “issued its compliance audits and

financial statement audit opinions knowing them to be false and/or in

reckless disregard of the truth or falsity of the information provided to

the United States.” It then provides details as to the particular

information that EY omitted from its financial reports. Finally, the

Complaint alleges that EY “fraudulently caused the United States to

pay Title IV, HEA Program funds to Corinthian by such false and

fraudulent compliance audit and financial statement audit options.”

Assuming that the Complaint is amended to sufficiently allege

that a false statement was made to the United States government, we

conclude that Relators have met their burden under Rule 12(b)(6) and

Rule 9(b) as to EY. Relators have alleged all four elements of the

FCA with respect to the company. Moreover, citing to financial

accounting standards, the Complaint provides details as to what

practices are being challenged, namely the omission of information

related to Corinthian’s compliance with the HEA, and what practices

should have been used in their place. See In re Integrated Res. Real

Estate Ltd. P’ships Sec. Litig., 815 F. Supp. 620, 669 (S.D.N.Y. 1993).

The Complaint therefore sets forth EY’s alleged fraudulent act in a

“particularized manner.”

The Complaint also sufficiently alleges scienter as to EY. The

Complaint expressly states that EY issued reports “knowing them to
447

be false and/or in reckless disregard of the truth or falsity of the

information provided to the United States.” It additionally alleges that

EY had knowledge of the amount of money Corinthian received from

HEA funds and the manner in which this money was spent on recruiter

compensation. These facts, taken together, support a “plausible”

inference that the company acted with fraudulent intent. Cf. Tellabs,

Inc. v. Makor Issues & Rights, Ltd., 551 U .S. 308, 322–23 (2007)

(noting that, under the heightened scienter requirements of the Private

Securities Litigation Reform Act of 1995, court must consider whether

all facts, considered collectively, give rise to a strong inference of

scienter).

Assuming that they amend their Complaint to sufficiently

allege a false statement, we conclude that Relators have sufficiently

pled an FCA violation as to EY.

Id. at *10–11.

• Lacey v. Maricopa Co., 649 F.3d 1118, 2011 WL 2276198 (9th Cir. 2011), rehearing en banc

granted, --- F.3d ----, 2011 WL 5506073 (9th Cir. Nov. 10, 2011). The plaintiffs were two

executives of an Arizona alternative weekly newspaper, The Phoenix New Times, which has

for many years published articles and editorials highly critical of Maricopa County Sheriff Joe

Arpaio. Plaintiff’s lawsuit arose from the controversial late-night arrests, and subsequent

release, of these two executives. They filed a complaint alleging violation of their

constitutional rights under § 1983 against, among others, Sheriff Arpaio and a special

prosecutor named by the Maricopa County Attorney, Phoenix lawyer Dennis Wilenchik.

The court of appeals summarized the allegations of the complaint as follows:

The particular article that set in motion the events relevant to

this litigation was published in 2004 and criticized a series of

commercial land transactions involving Arpaio. In particular, the

article challenged Arpaio’s motives for removing his personal

information from a number of public records that detailed his

commercial land holdings. After the article, Arpaio justified the

removal by claiming he had received death threats and therefore did

not want his personal address available to the public. Plaintiffs printed

a follow-up article contending Arpaio’s explanation was implausible

since a number of government and political party websites already

contained Arpaio’s personal information. To show this, the paper

published in both its print and online versions Arpaio’s home address,

which Plaintiffs claimed they obtained from the government and

political websites.
448

After publication of the second article, Arpaio considered

criminal charges against the Plaintiffs because he believed they had

violated an Arizona statute that prohibited the dissemination of

personal information of law enforcement officers on the world wide

web. Rather than filing a contemporaneous complaint with the county

attorney, however, Arpaio waited until an upcoming election, when

Andrew Thomas, a political ally, was elected the new county attorney.

Arpaio met with Thomas immediately after the election to

discuss his concerns regarding Plaintiffs, but not until April 2005, ten

months after the publication of his personal information and two

months after Thomas took office, did he request Thomas to investigate

The Phoenix New Times. Thomas’s staff reviewed the charges but

concluded the case was weak, and in an internal report in August 2005

recommended Thomas decline to prosecute.

By this time, The Phoenix New Times had begun to publish

articles critical of Thomas’s own “ethical irregularities.” [R., Doc. 4

at ¶ 56.] Recognizing a conflict of interest were he to prosecute the

paper, Thomas referred the investigation to a neighboring jurisdiction,

the Pinal County Attorney’s Office. Arpaio began pressuring Pinal

County to prosecute Plaintiffs. Although the sheriff sent several letters

strongly urging a prosecution, the Pinal CountyAttorney’s Office took

no action for nearly two years. Then, in 2007, it declined to prosecute

and returned the matter back to Thomas.

With the case back in Maricopa County, Thomas, still

recognizing his own potential conflict of interest, decided to appoint

a Phoenix lawyer, Dennis Wilenchik, as special prosecutor. Wilenchik

was Thomas’s former law partner. He agreed to the appointment, the

County approved it, and on June 26, 2007, Wilenchik took over The

Phoenix New Times investigation.

In late August 2007, before a grand jurywas sworn for the case

and as part of his investigation into prosecuting The Phoenix New

Times for violating the privacy statute, Wilenchik issued two

subpoenas to Plaintiffs to produce information and documents about

its operations. Arizona law requires prosecutors either (1) to present

subpoenas to a grand jury for approval before issuing them, or (2) if a

prosecutor issues a subpoena without receiving prior approval from a

grand jury, to report the issuance to a grand jury and to the court

within ten days. ARIZ. REV. STAT. § 13–4071(C). Wilenchik did

neither.
449

The subpoenas requested information about a broad variety of

subjects—including data about readers, editors, and reporters—related

to any story critical of Arpaio. Plaintiffs filed a motion to quash the

subpoenas, but in late September, before they had responded to the

subpoenas and while their motion was pending, Plaintiffs also

published a story critical of Wilenchik’s investigation. In response,

the very next day, Wilenchik issued a third subpoena seeking

documents and information relating to that story. He issued this third

subpoena again without adhering to the requirements of Arizona law.

Around the time of the third subpoena, Wilenchik also attempted to

arrange an ex parte meeting with the state court judge presiding over

motions to quash. The judge held a closed hearing on October 11,

2007 and called Wilenchik’s attempt “absolutely inappropriate.” [R.,

Doc. 4 at ¶ 91.]

After this hearing, and weeks after they received the

subpoenas, Plaintiffs decided to publish a story that included the

subpoenas’ demands. Doing so was seemingly in violation of ARIZ.

REV. STAT. § 13–2812(A), which prohibits the publication of the

nature or substance of grand jury proceedings. Plaintiffs do not allege

they knew the subpoenas lacked any connection with a grand jury

when they published the story exposing them.

The same day, after seeing the publication of the subpoenas,

Wilenchik filed a motion in state court for an Order to Show Cause

demanding Plaintiffs explain their actions. The motion requested the

state court hold The Phoenix New Times in contempt, issue arrest

warrants for Plaintiffs and their lawyers, and fine Plaintiffs $90 million

for publishing the contents of the subpoenas.

That night, however, without waiting for the court’s decision,

Wilenchik advised the police to send members of the County’s

Selective Enforcement Unit in unmarked, black vehicles to the homes

of Michael Lacey and Jim Larkin, the publishers of The Phoenix New

Times. The police did so and arrested the publishers, who were

booked and held in county jail overnight. After a public outcry in

response to the arrests, Thomas withdrew Wilenchik’s appointment

and disavowed involvement in the subpoenas, court proceedings, or

arrests. Both Wilenchik and Arpaio have also denied ordering the

arrests.

Id. at *1–3 (footnotes omitted).

The district court dismissed the plaintiffs’ § 1983 allegations against both defendants Arpaio
450

and Wilenchik on the basis of qualified immunity. The Ninth Circuit affirmed in part, and

reversed in part, the district court’s dismissal. Much of the Ninth Circuit’s ruling does not

focus on issues of pleading under Twombly and Iqbal and is not recounted here.

The court of appeals affirmed, by a 2-1 vote, the district court’s dismissal, on grounds of

qualified immunity, of the plaintiffs’ fourteenth amendment selective prosecution claim

against Wilenchik. The plaintiffs’ contention was that Wilenchik had violated the equal

protection clause by singling them out for investigation and arrest. The court of appeals

reasoned:

We have emphasized that the “standard for demonstrating a

violation of equal protection is a demanding one.” United States v.

Arenas–Ortiz, 339 F.3d 1066, 1068 (9th Cir. 2003) (internal quotation

marks omitted). We also have emphasized, however, that the “showing

necessary to obtain discovery is somewhat less: the defendant must

produce some evidence that similarly situated defendants . . . could

have been prosecuted, but were not.” Id. at 1069 (internal quotation

marks omitted). Under this standard, Plaintiffs had to allege that

multiple publishers of Arpaio’s address information were similarly

culpable. See United States v. Armstrong, 517 U.S. 456, 466, 116 S.

Ct. 1480, 134 L.Ed.2d 687 (1996). Plaintiffs have failed to do this.

Plaintiffs were required to show that other publishers were

similarly situated to The New Times regarding both elements of

Arizona’s privacy statute: (1) knowingly making available a public

official’s personal information on the world wide web, if (2) the

dissemination of the information poses an “imminent and serious

threat to the [public official’s] safety or the safety of that person’s

immediate family and the threat is reasonably apparent to the person

making the information available on the world wide web to be serious

and imminent.” ARIZ. REV. STAT. § 13–2401(c). Plaintiffs have

plainly shown that multiple websites published Arpaio’s personal

information. But regarding the second element, Plaintiffs have

completely failed to allege that the various publishers posed similar

threats to Arpaio and his family.

Plaintiffs offer no facts to support the idea that publication of

Arpaio’s information on a political party register or county real estate

roll posed the same threat as its publication in connection with

aggressive allegations of public corruption. The Amended Complaint

states only: “There was no evidence that Arpaio was then, or ever,

under any credible threat or ‘imminent harm’ as a result of the

publication of his home address on The New Times website. After all,

his home address and personal information [were] widely available on
451

other websites prior to the article.” [First Am. Compl.¶ 41.] The

Lebowitz memorandum attached to the Amended Complaint provides

greater detail—it lists the websites that published Arpaio's information

and singles out The New Times as having an anti-Arpaio agenda—but

it still offers no facts suggesting that multiple publications of Arpaio’s

address posed similar threats. This is important because, as the

privacy statute implicitly recognizes, highlighting a controversial

public figure’s address—and no one else’s—is fundamentally very

different than burying his address in an organizational list potentially

containing scores of entries. Thus, the mere fact that multiple websites

published Arpaio’s address does not mean every website posed similar

threats.

In sum, although distinguishing between publications on the

basis of whether they were pro- or anti-Arpaio would have been

improper, distinguishing them on the basis of whether they posed a

threat to Arpaio—an element of the Arizona statute—was legitimate.

Plaintiffs have simply failed to allege any facts suggesting that all

websites that published Arpaio’s address posed the same threat to

Arpaio and his family. Thus, we have no basis to infer that “similarly

situated defendants . . . could have been prosecuted, but were not.”

Arenas–Ortiz, 339 F.3d at 1068 (quotation marks omitted). Finally,

we note that Plaintiffs knew of threats made to Arpaio when they

published his address information. Plaintiffs do not allege that other

publishers had similar information.

Id. at *12.

The Ninth Circuit also affirmed, by a 2-1 vote, the district court’s dismissal of the § 1983

claims against defendant Arpaio for his alleged participation in the plaintiffs’ arrests. The

court majority reasoned:

Plaintiffs’ allegations regarding Arpaio’s involvement in the arrests are

too insubstantial to sustain a § 1983 claim. Under § 1983, Arpaio can

be liable for the actions of his subordinates only if (1) he was

personally involved in a constitutional violation, or (2) there was a

“sufficient causal connection” between his wrongful conduct and the

constitutional violation. Hansen v. Black, 885 F.2d 642, 645–46 (9th

Cir. 1989); see also Starr v. Baca, 633 F.3d 1191, 1194 (9th Cir. 2011)

(supervisors are “individually liable in § 1983 suits when culpable

action . . . is directly attributed to them”). Sufficient personal

involvement could include “culpable action or inaction in the training,

supervision, or control of . . . subordinates, . . . acquiescence in the

constitutional deprivations of which the complaint is made, or conduct
452

that showed a reckless or callous indifference to the rights of others.”

Starr, 633 F.3d at 1195.

The district court correctly determined Plaintiffs failed to meet

this standard in their original complaint and gave them an opportunity

to amend. In their amended complaint, Plaintiffs again failed to allege

facts showing Arpaio personally knew the subpoenas could not

support a violation of the grand jury secrecy statute, and, despite that

knowledge, was personally involved in ordering or carrying out the

latenight arrests. Indeed, the amended complaint, even taken in the

light most favorable to Plaintiffs, does not demonstrate a sufficient

causal connection between Arpaio’s actions and constitutional

deprivations.

For example, the amended complaint makes only general

allegations that Arpaio abused his power[, First Am. Compl. ¶ 19];

indirectly prompted Wilenchik to issue improper subpoenas and order

the arrests[, id. ¶ 21]; and conducted the arrests via the “Selective

Enforcement Unit” [ id. ¶ 111]. Plaintiffs say Arpaio did all of this

with “improper and unconstitutional motives.” [Id. ¶ 114]. Nowhere,

however, do Plaintiffs set forth facts suggesting that Arpaio, rather

than one of his colleagues or associates, was closely connected to the

arrests—or that he lacked probable cause to carry out any of the

arrests. Indeed, the allegations are long on conjecture but short on the

factual nexus necessary to sustain a claim. See Barren v. Harrington,

152 F.3d 1193, 1194 (9th Cir. 1998) (to sustain a § 1983 claim, “[a]

plaintiff must allege facts, not simply conclusions, that show that an

individual was personally involved in the deprivation of his civil

rights”). Through confusing and misleading “and/or” formulations,

the amended complaint has forced the district court and this court on

appeal to try to figure out who did what. Especially in the immunity

context, such bare assertions do not meet our minimal pleading

standards. See Moss v. U.S. Secret Serv., 572 F.3d 962, 970–72 (9th

Cir. 2009). Even with generous pleading standards, we agree with the

district court that the amended complaint did not cure the deficiencies

identified in the court’sinitial order dismissing the original complaint.

Thus, the amended complaint’s allegations regarding Arpaio

are conclusory and devoid of “sufficient factual matter” to suggest his

actions infringed clearly established constitutional rights. See Iqbal,

129 S. Ct. at 1949. Plaintiffs simply do not provide enough “factual

content” to allow us to draw a “reasonable inference” that Arpaio

knew of the infirmities of the subpoenas and arrests. Id. According

to the Supreme Court, “a court considering a motion to dismiss can
453

choose to begin by identifying pleadings that, because they are no

more than conclusions, are not entitled to the assumption of truth.” Id.

at 1950. And that is, at most, what we find here—conclusions not yet

entitled to the assumption of truth. Without sufficiently specific

factual allegations, Plaintiffs cannot overcome Arpaio’s claims to

qualified immunity, and the district court was correct to dismiss the

claims against him.

Id. at *13–14 (emphasis added).

Judge Bybee, who concurred in part and dissented in part, disagreed with the majority’s

conclusion that the complaint did not state a claim for selective prosecution against

Wilenchik, overcoming qualified immunity. Judge Bybee stated:

I also respectfully dissent from the majority’s conclusion that Special

Prosecutor Wilenchik is not liable for selective prosecution, because

the complaint shows that Wilenchik targeted the Phoenix New Times

for publicizing Arpaio’s home address while deliberately disregarding

the fact that numerous other websites had done the same.

Id. at *16 (Bybee, J., dissenting). Judge Bybee continued:

I disagree . . . with the majority’s conclusion that Plaintiffs are barred

from pursuing their claim for selective prosecution under the

Fourteenth Amendment against Wilenchik.

To make a claim for selective prosecution, Plaintiffs must

establish (1) that similarly situated persons were not prosecuted, and

(2) that the defendants were motivated by a discriminatory purpose.

See Rosenbaum v. City & Cnty. of S.F., 484 F.3d 1142, 1152–53 (9th

Cir. 2007). For Plaintiffs to proceed past a motion to dismiss on this

claim, they need only produce “some evidence that similarly situated

defendants ... could have been prosecuted, but were not.” United

States v. Arenas–Ortiz, 339 F.3d 1066, 1068 (9th Cir. 2003) (internal

quotation marks omitted). Here, the complaint alleges that other

websites that published Arpaio’s home address, such as the websites

of Maricopa County and the local Republican Party, were similarly

situated to the Phoenix New Times, but were not prosecuted. First

Amd. Compl. at 11–12, 33.

The majority faults the Plaintiffs because the complaint fails to

allege that publication on the other websites “posed similar threats to

Arpaio and his family.” Maj. Op. at 7644. But this factor would be

relevant only if we accept the Wilenchik’s factual assertion that
454

publication on the Phoenix New Times’s website posed an “imminent

and serious threat” to Arpaio or his family in the first place. In the

complaint, which we must accept as true, Plaintiffs repeatedly

emphasize that there was never any evidence suggesting that the

publication of Arpaio’s address—by either the Phoenix New Times or

by any of the other websites which had published the same

information—ever posed an “imminent and serious threat” to Arpaio.

See First Amd. Compl. at 10 (“There was no evidence that Arpaio was

then, or ever, under any credible threat of ‘imminent harm’ as a result

of the publication of his home address on The New Times web site.”);

id. at 11 (“Arpaio, himself, obviously did not feel any ‘imminent’

threat from the . . . article, because he was content to wait for many

months before requesting any investigation. . . . In fact, Arpaio has

continued, to this day, to publicize and publish his home address to

citizens and the public at large.”). Because we can reasonably infer

from Plaintiffs’ well-pleaded facts that publication of Arpaio’s address

by both the Phoenix New Times and the other websites never posed

any threat to Arpaio, Plaintiffs do not need to allege that publication

by the other websites posed an “imminent and serious threat” in order

to show that the other websites were similarly situated.

Even worse, the majority takes it upon itself to decide not only

that the Phoenix New Times posed a threat to Arpaio and his family,

but that the other websites did not pose a threat. Thus, the majority

finds for itself (on an appeal from a motion to dismiss) that

“highlighting a controversial figure’s address—and no one else's—is

fundamentally very different than burying his address in an

organizational list potentially containing scores of entries.” Maj. Op.

at 7645. The majority concludes, again on its own authority, that “the

mere fact that multiple websites published Arpaio’s address does not

mean every website posed similar threats.” Id. Finally, the majority

applauds the very First Amendment deprivation claimed by the

plaintiffs: the majority finds that the Phoenix New Times “posed an

especially serious threat to [Arpaio’s] safety” precisely because it had

used “inflammatory, insulting, [and] vituperative” language in its

articles criticizing Arpaio. Id. at 7645 n.8 (quoting Arpaio’s director

of legal affairs, Ron Lebowitz). Accordingly, the majority concludes,

it was proper for Wilenchik to prosecute the Phoenix New Times alone

because it alone “posed a threat to Arpaio.” Id. at 7646. In my view,

the majority’s analysis only confirms that Plaintiffs should have their

opportunity to prove that publication of Arpaio’s address posed no

imminent threat to him and that Wilenchik’s decision to single out the

Phoenix New Times was a poorly disguised effort to silent Arpaio’s

critics.
455

Since I believe Plaintiffs have adequately alleged that

Wilenchik failed to prosecute similarly situated entities and did so

with discriminatory purpose, I would reverse the district court’s grant

of qualified immunity as to this claim.

Although the Supreme Court has retired the liberal no-set-of-facts standard that we

traditionally applied when considering motions to dismiss, see Iqbal, 129 S. Ct. at

1944; Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 562–63, 127 S. Ct. 1955, 167

L.Ed.2d 929 (2007) (abrogating Conley v. Gibson, 355 U.S. 41, 78 S. Ct. 99, 2

L.Ed.2d 80 (1957)), that does not give us license to disregard factual allegations in

a complaint as we see fit. But in dismissing Plaintiffs’ selective prosecution claim

against Wilenchik, the majority relies on a version of the facts that is contrary to the

factual allegations in the complaint. The majority also ignores the Supreme Court’s

admonishment in Iqbal against requiring plaintiffs to plead “detailed factual

allegations” in order to proceed past a motion to dismiss. 129 S. Ct. at 1949 (“[T]he

pleading standard Rule 8 announces does not require ‘detailed factual allegations,’ but

it demands more than an unadorned, the-defendant-unlawfully-harmed-me

accusation.” (quoting Twombly, 550 U.S. at 555)).

Id. at *19–20 (emphasis added).

Judge Bybee also disagreed with the majority’s conclusion that the complaint did not state a

claim against Arpaio, overcoming qualified immunity.

This case concerns an investigation initiated by “America’s

toughest sheriff,” Joseph Arpaio, against his political enemies in the

local news media. In the words of Arpaio’s own director of legal

affairs, Arpaio had targeted the Phoenix New Times because the paper

had been “historically anti-Arpaio.” Arpaio’s excuse for demanding

prosecution of the Phoenix New Times was that its decision to post

Arpaio’s home address on its website allegedly violated an obscure

Arizona statute that prohibits dissemination of a law enforcement

officer’s “personal information,” if doing so would pose an “imminent

and serious threat” to the officer or his family, and such threat is

“reasonably apparent” to the publisher. ARIZ. REV. STAT. §

13–2401(A). Never mind that Arpaio’s address was already publicly

available through numerous other websites, including the websites of

Maricopa County and the local Republican Party. Despite this and the

fact that no one had ever been prosecuted under the statute, Arpaio

used his considerable political clout in an attempt to pressure various

prosecutors into charging the Phoenix New Times. After years of

investigation, two different County Attorneys found no grounds for

prosecution and refused to cave into Arpaio’s demands. Undeterred,
456

Arpaio eventually managed to persuade Maricopa County Attorney

Andrew Thomas to appoint Dennis Wilenchik as special prosecutor to

investigate the Phoenix New Times. When Wilenchik issued

subpoenas to the Phoenix New Times, the paper responded by

publicizing the content of the subpoenas. Arpaio obliged by ordering

the arrest, without a warrant, of Phoenix New Times publishers

Michael Lacey and Jim Larkin for violating Arizona’s grand jury

secrecy laws. The only problem was that no grand jury had ever been

empaneled. Thus, the subpoenas were invalid ab initio.

Accepting the Plaintiffs’ version of the facts—which at this

stage of the litigation we must—this is a sordid tale of abuse of public

office. Nevertheless, despite the complaint's detailed allegations of

reprehensible conduct, the majority concludes that Arpaio is entitled

to qualified immunity on the grounds that Plaintiffs failed to

adequately plead that Arpaio was personally involved in the arrests.

Since the complaint details Arpaio’s extensive involvement in the

alleged violations of Plaintiffs’ clearly established constitutional

rights, I respectfully dissent from the majority’s conclusion that Arpaio

is entitled to qualified immunity. . . .

The majority concludes that the complaint’s allegations are

“too insubstantial to sustain a § 1983 claim” under the First, Fourth,

and Fourteenth Amendments. Maj. Op. at 7646. At this stage of the

proceedings, however, Plaintiffs need not prove anything to overcome

Arpaio's assertion of qualified immunity. They need only “plead

sufficient factual matter to show that” Arpaio acted “for the purpose

of” violating Plaintiffs’ constitutional rights. Ashcroft v. Iqbal, 556

U.S. 652, 662, 129 S. Ct. 1937, 1948–49, 173 L. Ed. 2d 868 (2009).

We must accept all factual allegations in Plaintiffs’ complaint as true

and construe the complaint in the light most favorable to Plaintiffs.

Shanks v. Dressel, 540 F.3d 1082, 1084 n.1 (9th Cir. 2008). The

action may proceed if the facts in the complaint “allows the court to

draw the reasonable inference that the defendant is liable for the

misconduct alleged.” Iqbal, 129 S. Ct. at 1949.

Although the factual allegations in the complaint are quite

detailed, the remainder of the complaint was not drafted in anticipation

of Iqbal. Nevertheless, even under Iqbal, Plaintiffs have alleged

sufficient facts to sustain their claims. First, the complaint makes clear

that Arpaio never had grounds for investigating Plaintiffs for violation

of the Arizona privacy statute. Although Plaintiffs had published

Arpaio’s home address on its website, the statute prohibits publication

only when it is “reasonably apparent” that doing so would pose an
457

“imminent and serious threat” to Arpaio or his immediate family.

ARIZ. REV. STAT. § 13–2401(A). The complaint plainly alleges that

Arpaio’s home address was already publicly available, and that

therefore it could not have been “reasonably apparent” to Plaintiffs

that publicizing the address on the Phoenix New Times’s website

would pose any additional threat to Arpaio or his family. Plaintiffs

further point out that Arpaio himself never felt imminently threatened

by publication of his address, because he waited nearly one year before

asking prosecutors to investigate. First Amd. Compl. at 11–12. The

complaint also cites various reports from prosecutors in the Pinal

County Attorney's office noting that the case lacked merit precisely

because there was no evidence that publication posed an “imminent

and serious threat” to Arpaio. Id. at 12–13.

Second, the complaint plainly charges that Arpaio had no basis

for ordering Plaintiffs’ arrest. Plaintiffs were never charged or arrested

for violating the Arizona privacy statute. Instead, they were arrested

for publicizing the content of subpoenas issued as part of Special

Prosecutor Wilenchik’s investigation. Although it is a misdemeanor

in Arizona to publicize the contents of a grand jury proceeding,

including subpoenas, see ARIZ. REV. STAT. § 13–2812(A), no grand

jury had ever been empaneled, and, as Wilenchik and Arpaio knew,

the subpoenas were therefore never valid.

Despite these detailed factual allegations, the majority

remarkably concludes that Plaintiffs’ claims fail for want of “specific

factual allegations,” Maj. Op. at 7648, including “facts suggesting that

Arpaio . . . was closely connected to the arrests,” id. at 7647. In

particular, the majority emphasizes that the complaint “failed to allege

facts showing Arpaio personally knew the subpoenas could not

support a violation of the grand jury secrecy statute.” Id. I question

whether the majority’s conclusion is well-grounded in either law or

fact. As to law: The majority’s focus on whether Plaintiffs pled

specifics about Arpaio’s internal thought processes on the subpoenas

effectively demands that plaintiffs in § 1983 officer suits plead with a

heightened level of specificity—a demand that neither we nor the

Supreme Court have ever imposed. As the Supreme Court stated in

Iqbal, all that is required at the pleading stage is sufficient facts to

permit us “to draw the reasonable inference that the defendant is

liable for the misconduct alleged.” 129 S. Ct. at 1949. Nowhere has

the Supreme Court or this court ever referred to the majority’s

undefined “specificity” standard.

The majority correctly lists the two avenues under Hansen v.
458

Black, 885 F.2d 642 (9th Cir. 1989), through which a supervisory

officer may be liable in a § 1983 suit: (1) if the officer was

“personal[ly] involve[d] in the constitutional deprivation,” or (2) if

there exists “a sufficient causal connection between the supervisor’s

wrongful conduct and the constitutional violation.” Id. at 646. But

after erroneously concluding that there was no “personal involvement”

by Arpaio in the episode, the majority fails to offer any analysis of why

Arpaio is not liable under the second prong.

As to fact: Applying the Iqbal and Hansen standards to

Arpaio’s conduct, Plaintiffs have pled sufficient facts to permit us to

infer that Arpaio was personally involved, and that his conduct set into

motion a chain of events that he should have known would lead to the

wrongful arrests. Plaintiffs allege that Arpaio had demanded that the

County Attorney prosecute the Phoenix New Times despite no cause

for believing that Plaintiffs had violated the Arizona privacy statute.

First Amd. Compl. at 9–11. Attached to the complaint is a letter

written by Arpaio’s own legal director, Ron Lebowitz, acknowledging

that Arpaio was targeting the Phoenix New Times, but not the other

websites that had also publicized Arpaio’s home address, because the

paper had been “historically anti-Arpaio,” had the “purpose [of]

destroy[ing] the Sheriff’s career,” and had published “articles against

the Sheriff, using language that is inflammatory, insulting,

vituperative, and the like.” First Amd. Compl., Ex. 1, at 8. Plaintiffs

further allege that after failing to persuade the Pinal County Attorney

to prosecute the case, Arpaio managed to persuade Maricopa County

Attorney Andrew Thomas to hire Wilenchik as special prosecutor.

First Amd. Compl. at 15, 18. Although Arpaio denied ordering the

arrests, Wilenchik “has publicly claimed the arrests were conducted,

authorized, approved, and/or directed by Arpaio and/or his aides.” Id.

at 24–25. Further, “Wilenchik’s staff admits that they advised the

Sheriff with respect to the arrests.” Id. at 25. Finally, “Wilenchik’s

former partner, William French, . . . confirmed that Wilenchik did

indeed authorize and advise Arpaio to conduct the arrests.” Id.

The existence of such substantial factual disputes should

normally weigh against granting a motion to dismiss. Instead, the

majority expresses frustration with the dueling narratives cited in the

complaint, complaining that Plaintiffs “ha[ve] forced . . . this court .

. . to try to figure out who did what.” Maj. Op. at 7648. But that is

beside the point. Our job at this stage of the litigation is not to engage

in factfinding or to determine whose version of the facts to believe.

That is the purpose of discovery and trial. For now, we must accept

Plaintiffs' version of the facts as true. See Shanks, 540 F.3d at 1084
459

n.1.

Reading the facts in the light most favorable to Plaintiffs, it is

more than reasonable to infer that Arpaio had acted with intent to

violate Plaintiffs’ constitutional rights. Even if Arpaio did not

physically participate in Plaintiffs’ arrests, there surely is an allegation

of “a sufficient causal connection between [Arpaio’s] wrongful

conduct and the constitutional violation.” Hansen, 885 F.2d at 646.

I would allow the action to proceed against Arpaio.

Id. at *16–19 (emphasis added) (footnotes omitted).

• Cafasso v. General Dynamics C4 Sys., Inc., 637 F.3d 1047, 2011 WL1053366 (9th Cir. Mar.

24, 2011). Plaintiff Mary Cafasso filed a qui tam action under the False Claims Act against

her employer, General Dynamics C4 Systems, Inc. (“GDC4S”), a government contractor.

Cafasso claimed that GDC4S defrauded the government by withholding disclosure of new

inventions which, by contract with GDC4S, the government had rights to use and license.

The district court dismissed the complaint, granting the defendant’s motion for judgment on

the pleadings. The plaintiff then sought to file a 733-page second amended complaint, which

the district court rejected for failure to state a short and plain statement of the claim as

required by Rule 8. The district court denied the plaintiff’s further motion to amend her

pleading.

The Ninth Circuit affirmed the dismissal of the complaint. The court summarized the

plaintiff’s allegations:

Cafasso worked as the chief scientist/technologist at GDC4S,

a technology company that services the military, and was so employed

at the predecessor-company that was acquired by General Dynamics

in 2001. As a participant in the Advanced Telecommunications &

Information Distribution Research Program (“ATIRP”), GDC4S’s

predecessor-company had contracted with the Army to assign to the

United States certain rights to “subject inventions” developed in

performance of military contracts. Specifically, ATIRP gives the

government “license to practice or have practiced for or on behalf of

the United States the subject invention throughout the world,” and the

right to require GDC4S to license the invention to anyone “upon terms

that are reasonable under the circumstances.” In other words, ATIRP

grants the government the royalty-free right to use or have used on its

behalf subject inventions, as well as the right to require GDC4S to

license the inventions to another party (such as a competing

contractor) on reasonable terms.
460

ATIRP also requires timely disclosure of applicable new

inventions to the government. Once it discloses a new invention,

GDC4S may opt to retain title to the invention, subject to the

government’s right to use or have used on its behalf, and to require

licensing of, the invention. If GDC4S chooses not to retain title to the

invention, the government may assume title. Cafasso worked in the

office that identified, documented, and protected GDC4S’s intellectual

property. Her responsibilities included ensuring that GDC4S complied

with ATIRP’s requirements by, among other things, disclosing new

inventions to the Army.

In early 2004, Cafasso became aware of what she believed was

a scheme to deprive the United States of its ATIRP rights to a new

invention. GDC4S had applied for a patent for an invention known as

GE04582, but the United States Patent and Trademark Office had

preliminarily rejected that application subject to a response from

GDC4S. Rather than responding to the Patent Office—and telling the

government so that it could protect its rights in the invention by

preparing its own response—GDC4S instead opted to abandon the

patent application and, according to Cafasso, delayed before notifying

the government in order to deprive it of the opportunity to prepare a

response.

Cafasso alleges that by refusing to prosecute its patent

application, GDC4S had “claim[ed] ownership of . . . [the new]

technology as [its] own trade secret,” and had denied the United States

an opportunity to protect its interest in the invention. Further, because

GDC4S had not disclosed its newly invented technology to the

government, competing contractors would not know to ask the

government for permission to use the technology when bidding on

later contracts. According to Cafasso, the government might therefore

pay GDC4S or another contractor to invent technologies like GE04582

that either already had been invented or with respect to which the

government already had the right to authorize its contractors to use

free of charge. In other words, Cafasso alleges that the United States

could potentially pay twice for the same technologies.

Id. at *2–3.

The court of appeals affirmed the district court’s dismissal of the complaint, explaining:

Until now, we have not had occasion explicitly to confirm that

Iqbal’s plausibility requirement applies to claims subject to Rule 9(b).

We have, however, said that “complaints alleging fraud must comply
461

with both [Federal Rules of Civil Procedure] 8(a) and 9(b).” Wagh v.

Metris Direct, Inc., 363 F.3d 821, 828 (9th Cir. 2003), overruled on

other grounds by Odom v. Microsoft Corp., 486 F.3d 541, 551 (9th

Cir. 2007) (en banc). Because Rule 8(a) requires the pleading of a

plausible claim, Iqbal, 129 S. Ct. at 1949–50, we hold that claims of

fraud or mistake—including FCA claims—must, in addition to

pleading with particularity, also plead plausible allegations. That is,

the pleading must state “enough fact[s] to raise a reasonable

expectation that discovery will reveal evidence of [the misconduct

alleged].” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 556, 127 S.

Ct. 1955, 167 L. Ed. 2d 929 (2007).

We next consider whether the qui tam claim stated in Cafasso’s

complaint is sufficiently particularized and plausible to avert

dismissal. “It seems to be a fairly obvious notion that a False Claims

Act suit ought to require a false claim.” United States ex rel. Aflatooni

v. Kitsap Physicians Serv., 314 F.3d 995, 997 (9th Cir. 2002). “[T]he

[FCA] attaches liability, not to the underlying fraudulent activity or to

the government’s wrongful payment, but to the ‘claim for payment.’”

United States v. Rivera, 55 F.3d 703, 709 (1st Cir. 1995). As we have

said, “[A]n actual false claim is ‘the sine qua non of a[n FCA]

violation.’” Aflatooni, 314 F.3d at 1002 (quoting United States ex rel.

Clausen v. Lab. Corp. of Am., 290 F.3d 1301, 1311 (11th Cir. 2002)).

. . . .

Cafasso’s complaint alleges no false claim. While her pleading

alleges that GDC4S’s non-disclosure of new inventions deprived the

United States of lower-cost services by third-party entities, it does not

allege that GDC4S falsely asserted an entitlement to obtain or retain

government money or property. It does not allege that GDC4S made

a demand for payment, fraudulently used a receipt, participated in an

unauthorized purchase of government property, or used a false record

or statement.

We consider whether, in the absence of pleading false claims,

the complaint warrants an inference that false claims were part of the

scheme alleged. Ebeid, 616 F.3d at 998–99. In assessing the

plausibility of an inference, we “draw on [our] judicial experience

and common sense,” Iqbal, 129 S. Ct. at 1950, and consider “‘obvious

alternative explanation[s],’” id. at 1952 (quoting Twombly, 550 U.S.

at 567, 127 S. Ct. 1955). According to her complaint, Cafasso had

worked in the office tasked with ensuring ATIRP compliance since the

predecessor-company’s acquisition in 2001. Even after she began to
462

suspect fraud, she was responsible for reviewing ATIRP-related

documents to conclude GDC4S’s participation in the contract. Despite

access to GDC4S records, as detailed in her complaint, she does not

identify a single “false or fraudulent claim for payment,” § 3729(a)(1),

“false record or statement,” § 3729(a)(2), (7), “document certifying

receipt of property,” § 3729(a)(5), or any other qualifying false claim.

Assuming the truth of Cafasso’s factual averments, an “obvious

alternative explanation” of GDC4S’s conduct is that it withheld

disclosure of new inventions so it could continue to use them as trade

secrets, which might be a breach of contract but not a fraudulent claim.

In light of Cafasso’s failure to identify any particular false claims or

their attendant circumstances, as well as the “obvious alternative

explanation” that no false claims occurred, we will not draw the

unwarranted and implausible inference that discovery will reveal

evidence of such false claims.

Cafasso tries to save her complaint by arguing that GDC4S

may have charged the government directly for use of intellectual

property that the government already had the right to use free of

charge. But Cafasso’s pleading contains none of the “circumstances”

attendant to this alleged fraudulent conduct. FED.R.CIV. P. 9(b). As

the district court correctly observed, “The pleading does not allege . .

. when GDC4S ‘charged’ the government for previously-purchased

technology, which contracts the charges related to, whether the reuse

of technology actually inflated the charge, or if the government even

paid the charges.” Indeed, the pleading does not point to a single

invention for the use of which GDC4S charged the United States.

This type of allegation, which identifies a general sort of

fraudulent conduct but specifies no particular circumstances of any

discrete fraudulent statement, is precisely what Rule 9(b) aims to

preclude. See Bly–Magee, 236 F.3d at 1018 (“Rule 9(b) serves not

only to give notice to defendants of the specific fraudulent conduct

against which they must defend, but also to deter the filing of

complaints as a pretext for the discovery of unknown wrongs, to

protect defendants from the harm that comes from being subject to

fraud charges, and to prohibit plaintiffs from unilaterally imposing

upon the court, the parties and society enormous social and economic

costs absent some factual basis.” (internal quotation and alterations

omitted)).

None of the remaining qui tam allegations levied in Cafasso’s

complaint are cognizable under the FCA. Cafasso’s allegations that

GDC4S did not comply with ATIRP’s disclosure requirements, and
463

that GDC4S received payment from the United States pursuant to

ATIRP, in essence fault GDC4S for allegedly breaching its contractual

obligations. But “breach of contract claims are not the same as

fraudulent conduct claims, and the normal run of contractual disputes

are not cognizable under the [FCA].” United States ex rel. Wilson v.

Kellogg Brown & Root, Inc., 525 F.3d 370, 383 (4th Cir. 2008). To be

sure, Cafasso’s complaint alleges unsavory conduct. But unsavory

conduct is not, without more, actionable under the FCA. Given

Cafasso’s failure to plead a false claim, we affirm the district court's

dismissal of Cafasso’s complaint.

Id. at *4–6 (emphasis added) (footnotes and citations omitted).

The court of appeals also affirmed the district court’s denial of the plaintiff’s motion to amend

the complaint:

GDC4S brought its Rule 12(c) motion after nearly two years of

discovery. Given that late stage of litigation, the district court

suggested that Cafasso, rather than opposing the motion, instead seek

to amend her pleading to cure the deficiencies identified in the motion.

Acting on this suggestion, Cafasso moved to amend and tendered a

733–page proposed amended complaint. The district court denied

Cafasso’s motion for failure to comply with Rule 8(a), among other

deficiencies.

Normally, when a viable case may be pled, a district court

should freely grant leave to amend. Lipton v. Pathogenesis Corp., 284

F.3d 1027, 1039 (9th Cir. 2002). However, “liberality in granting leave

to amend is subject to several limitations.” Ascon Props., Inc. v. Mobil

Oil Co., 866 F.2d 1149, 1160 (9th Cir. 1989) (citing DCD Programs,

Ltd. v. Leighton, 833 F.2d 183, 186 (9th Cir. 1987)). Those limitations

include undue prejudice to the opposing party, bad faith by the movant,

futility, and undue delay. Id. Further, “[t]he district court’s discretion

to deny leave to amend is particularly broad where plaintiff has

previously amended the complaint.” Id. (citing Leighton, 833 F.2d at

186; Mir v. Fosburg, 646 F.2d 342, 347 (9th Cir. 1980)).

The district court was well within its discretion to deny leave to

amend for several reasons. First, amendment would have been futile

considering the proposed pleading’s extraordinary prolixity. Rule 8(a)

requires that a complaint contain “a short and plain statement of the

claim showing that the pleader is entitled to relief.” FED. R. CIV. P.

8(a)(2). Although normally “verbosity or length is not by itself a basis

for dismissing a complaint,” Hearns v. San Bernardino Police Dep’t,
464

530 F.3d 1124, 1131 (9th Cir. 2008), we have never held—and we

know of no authority supporting the proposition—that a pleading may

be of unlimited length and opacity. Our cases instruct otherwise.

While “the proper length and level of clarity for a pleading cannot be

defined with any great precision,” Rule 8(a) has “been held to be

violated by a pleading that was needlessly long, or a complaint that

was highly repetitious, or confused, or consisted of incomprehensible

rambling.” 5 CHARLES A. WRIGHT & ARTHUR R. MILLER, FEDERAL

PRACTICE & PROCEDURE § 1217 (3d ed.2010). Our district courts are

busy enough without having to penetrate a tome approaching the

magnitude of War and Peace to discern a plaintiff’s claims and

allegations.

Second, a 733–page pleading prejudices the opposing party and

may show bad faith of the movant, both valid grounds to deny leave to

amend. See Ascon Prop., 866 F.2d at 1160. Rather than

straightforwardly stating her claims and allegations, Cafasso would

burden her adversary with the onerous task of combing through a

733–page pleading just to prepare an answer that admits or denies such

allegations, and to determine what claims and allegations must be

defended or otherwise litigated. See McHenry, 84 F.3d at 1178 (“[T]he

very prolixity of the complaint ma[kes] it difficult to determine just

what circumstances were supposed to have given rise to the various

causes of action.”); Mendez v. Draham, 182 F. Supp. 2d 430, 433

(D.N.J. 2002) (“Only through superhuman patience, effort, and insight,

could any attorney review the allegations of the Complaint and make

paragraph-by-paragraph responses.”). . . .

. . . .

. . . . Under these extraordinary circumstances, a district court

has ample discretion to deny amendment. We affirm the district court’s

denial of Cafasso’s motion to amend.

Id. at *7–8 (emphasis added) (citations omitted).

• Cook v. Brewer, 637 F.3d 1002, 2011 WL 902111 (9th Cir. 2011). Plaintiff Cook, an Arizona

prisoner scheduled for execution, filed suit under § 1983 against the governor of Arizona and

several high-level Arizona correctional officials. He alleged that the defendants’ intent to use

in his execution a foreign-manufactured substance that was not FDA-approved created a

substantial and unnecessary risk that he would suffer unconstitutional pain. He further alleged

that use of this substance would constitute deliberate indifference to his constitutional right to

be free from cruel and unusual punishment.
465

The district court granted the defendants’ motion to dismiss the plaintiff’s claims. The Ninth

Circuit affirmed the dismissal:

Underlying Cook’s claims is the fact that Arizona has obtained

sodium thiopental from a foreign source, rather than from the United

States. In his reply brief, Cook summarizes the five allegations raised

in his Complaint, which he asserts we must take as true. First, he

alleges that the ADC [the Arizona Department of Corrections] “lacks

the appropriate safeguards to ensure the imported substance it obtained

is not contaminated, is viable, and is actually sodium thiopental.”

Second, “the substance was obtained in violation of federal law.”

Third, “a foreign-manufactured drug was produced in an environment

such that the drug may not be effective, and that the drug could be

contaminated or compromised.” Fourth, “drugs from foreign countries

do not have the same assurance of safety as drugs actually regulated by

the FDA, due to the risk that counterfeit or unapproved drugs will be

sent to consumers and also because without regulation of repackaging,

storage conditions, and many other factors, drugs delivered to the

American public from foreign countries may be very different from

FDA approved drugs with respect to formulation, potency, quality, and

labeling.” Fifth, “this substance will cause Cook to suffer pain if the

drug is contaminated, compromised, or substandard, which in turn will

cause excruciating pain when the next two drugs are administered.”

Cook contends that the district court erred in granting

Defendants’ motion to dismiss for two reasons. First, he argues that the

foreign manufactured non-FDA approved sodium thiopental may be

“contaminated, compromised, or otherwise ineffective, such that it will

not properly anesthetize him” or “might not actually be sodium

thiopental at all” and that “using an unapproved substance from an

unknown manufacturer in an execution gives rise to a substantial risk

of unconstitutional pain” in violation of the Eighth Amendment.

Second, Cook contends that the administration of “an unapproved

substance from an unknown manufacturer in an execution by medical

professionals constitutes deliberate indifference” to his right to be free

from cruel and unusual punishment in violation of the Eighth

Amendment.

At issue for both of these claims is whether Cook has

sufficiently satisfied, to survive a motion to dismiss, Rule 8(a)’s

pleading requirements to state facially plausible claims that the drug the

ADC has obtained is “sure or very likely to cause serious illness and

needless suffering” in violation of his Eighth Amendment right to be

free from cruel and unusual punishment. See Baze, 553 U.S. at 50, 128
466

S. Ct. 1520; see also Iqbal, 129 S. Ct. at 1949 (pleading standard). We

conclude that Cook’s allegations fail to meet this standard.

While the pleading standard for Rule 8(a) is liberal, the

“[f]actual allegations must be enough to raise a right to relief above the

speculative level.” Twombly, 550 U.S. at 555, 127 S. Ct. 1955. In

Iqbal, the Court noted that “[t]o survive a motion to dismiss, a

complaint must contain sufficient factual matter, accepted as true, to

‘state a claim to relief that is plausible on its face.’” Iqbal, 129 S. Ct.

at 1949 (quoting Twombly, 550 U.S. at 570, 127 S. Ct. 1955).

Cook’s allegations that foreign manufactured non-FDA

approved drugs “may not be effective,” “could be contaminated or

compromised,” and “may be very different from FDA approved drugs

with respect to formulation, potency, quality, and labeling” are all

speculative and overly generalized claims applicable to every drug

produced outside the United States. Cook does not make any specific

allegations about the manufacturing process, formulation, potency,

quality, or labeling of the drug at issue here. Cook also fails to allege

any facts to support his claim that the drug might not actually be

sodium thiopental or that it could be contaminated, compromised, or

otherwise substandard such that it may not effectively anesthetize him

and cause him unconstitutional pain when the next two drugs are

administered. Id. Cook’s allegation that the ADC lacks appropriate

safeguards to ensure the sodium thiopental it obtained “is not

contaminated, is viable, and is actually sodium thiopental” is also

conclusory and without any supporting factual allegations. Moreover,

Cook’s assertion that “the substance was obtained in violation of

federal law” is again speculative and Cook has not made a sufficient

showing that the lack of FDA approval of the sodium thiopental at issue

here makes it sufficiently likely that the sodium thiopental is either not

what it purports to be, or is otherwise adulterated. Rather, Cook relies

on his allegations that Arizona’s sodium thiopental is imported and not

approved by the FDA. But Landrigan, --- U.S. ----, 131 S. Ct. 445, 178

L.Ed.2d 346 [(2010)], advises that these facts are not sufficient to state

a plausible Eighth Amendment claim. Like the instant case, Landrigan

involved an Arizona death row inmate challenging Arizona’s use of

imported, non-FDA-approved sodium thiopental. Reversing the Ninth

Circuit, the Supreme Court held that the district court abused its

discretion in granting Landrigan’s motion for a preliminary injunction

to stay his execution.

We express no view as to whether the sodium thiopental was

obtained in violation of federal law. The actual legality of importing
467

this drug is not at issue here, we are only concerned with the

constitutionality of its use on Mr. Cook.

Cook distinguishes Landrigan on the grounds that it involved

a preliminary injunction, whereas the instant case involves a motion to

dismiss. Thus, while Landrigan had to provide enough evidence to

make success on his claim “likely,” Cook only needs to allege enough

facts to make his claim “plausible.” Nevertheless, the Court in

Landrigan found “no evidence in the record to suggest that the drug

obtained from a foreign source is unsafe.” Id. This statement clearly

implies that the facts that Arizona’s sodium thiopental is imported and

non-FDA approved do not themselves constitute evidence of danger.

Thus, in this case, Cook’s bare allegations that the sodium thiopental

is imported and non-FDA approved, even taken as true, do not

plausibly suggest that the drug is “ sure or very likely to cause serious

illness and needless suffering” or otherwise creates a “substantial risk

of serious harm” in violation of Cook’s Eighth Amendment right to be

free from cruel and unusual punishment sufficient to survive a motion

to dismiss. Baze, 553 U.S. at 50, 128 S. Ct. 1520; see also Iqbal, 129

S. Ct. at 1949.

We also reject any claim Cook makes that the administration of

the allegedly incorrect, diluted or adulterated drug would cause him

excruciating pain when the other two drugs are administered. We have

recently upheld Arizona’s lethal injection protocol in Dickens, when we

stated that “the protocol’s safeguards are adequate under the Baze

standard.” 631 F.3d at 1141. We noted the following facts about the

administration of the sodium thiopental:

After the sodium thiopental is administered, the

[Members of the Medical Team (“MTMs”)] confirm

that the inmate is unconscious by “sight and sound”

using the camera and microphone, and an MTM enters

the execution chamber to physically confirm

unconsciousness. If the inmate is conscious, the

Director of the [ADC] may order the [Special

Operations Team (“SOT”)] members to administer an

additional dose of sodium thiopental, and the MTMs go

through the same steps to verify unconsciousness. The

SOT members cannot administer the pancuronium

bromide until the MTMs have confirmed that the inmate

is unconscious and at least three minutes have elapsed

from the commencement of the administration of the

sodium thiopental. The IV lines are flushed with
468

heparin/saline between each injection, to ensure that

they are clean and functioning properly.

Id. at 1143.

Nothing in Cook’s Complaint suggests that, even if he were to

receive a substance that was not sodium thiopental, or was diluted or

adulterated and failed to properly anesthetize him, Arizona’s protocol

would fail to identify the problem and halt the process to prevent the

administration of the pancuronium bromide and potassium chloride.

Cook’s reliance on speculative and conclusory allegations is

insufficient to state a facially plausible claim that the sodium thiopental

the ADC has obtained is “sure or very likely to cause serious illness

and needless suffering” in violation of his Eighth Amendment right to

be free from cruel and unusual punishment. See Baze, 553 U.S. at 50,

128 S. Ct. 1520; see also Iqbal, 129 S. Ct. at 1949. We therefore affirm

the district court as to Cook’s first claim.

Cook’s second claim is dependent on the sufficiency of his first

claim. Cook argues that the medical professionals who would

administer the foreign-manufactured non-FDA approved substance

would know that administering this drug involves substantial risks and

that by administering the drug they would demonstrate deliberate

indifference to his medical needs. However, because Cook fails to

make a facially plausible claim that the sodium thiopental at issue here

is “ sure or very likely to cause serious illness and needless suffering,”

or otherwise creates a “substantial risk of serious harm” he cannot show

that the medical officials administering the drug would be medically

indifferent. Id.

Id. at *2–5 (emphasis added) (footnotes omitted).

• Cook v. Brewer, 649 F.3d 915, 2011 WL 1213095 (9th Cir. 2011) (per curiam), cert. denied,

131 S. Ct. 2465 (2011). Plaintiff Cook, an Arizona prisoner scheduled for execution (the same

plaintiff as in the previous case in this memo—Cook v. Brewer, 637 F.3d 1002, 2011 WL

902111 (9th Cir. Mar. 16, 2011)), filed an amended complaint under § 1983 against the same

defendants in the previous case, the governor of Arizona and several high-level Arizona

correctional officials. Cook’s amended complaint contained four new factual allegations. The

district court dismissed Cook’s amended complaint, holding that it, like Cook’s first complaint,

failed to state a claim upon which relief could be granted.

The Ninth Circuit, once again, affirmed the district court’s dismissal of Cook’s complaint. The

court explained:
469

Cook raises four new factual allegations to support his claim

that the sodium thiopental is sure or very likely to cause

unconstitutional pain. He asserts that the sodium thiopental which

Arizona plans to use in his execution: (1) “[h]as officially reported

issues with lack of efficacy in the United Kingdom”; (2) is made for

animal use, not human use; (3) “[h]as documented reports of problems

in its use in three executions in the United States”; and (4) was

unlawfully “imported in a manner nearly identical to the process used

in Georgia—a process that has resulted in the Drug Enforcement

Administration seizing Georgia’s supply of the substance.” The district

court concluded that, under Rule 8(a)’s pleading standard, Cook’s new

factual allegations still failed to state a facially plausible claim that the

use of sodium thiopental at issue here is “sure or very likely to cause

serious illness and needless suffering.” We agree.

First, Cook alleges that the United Kingdom’s counterpart to the

FDA reported that there have been “twelve adverse drug reaction

reports” concerning sodium thiopental in the past two years, “five of

which related to the efficacy of the substance,” including one involving

the same batch number of the sodium thiopental at issue here. Cook,

however, provides no information as to what the adverse reactions

were, whether any of the twelve instances of adverse reactions, or the

one adverse reaction specific to the batch of sodium thiopental at issue

here, is statistically or medically significant, or the nature or extent of

the lack of efficacy. Thus, the new allegations do not, by themselves,

state a facially plausible claim.

Second, Cook alleges that this batch of sodium thiopental was

manufactured for use in animals, not for human use, and asserts that,

therefore, the use of this drug will “fail to properly anesthetize” him or

will “cause him severe pain.” However, Cook alleges no facts

supporting his inference that there is some difference between sodium

thiopental manufactured for humans and the drug manufactured for

animals, and no facts supporting the assertion that the administration of

sodium thiopental manufactured for animals would cause him

unconstitutional pain.

Third, Cook alleges that the sodium thiopental at issue here

caused problems in three executions by lethal injection in the United

States. Specifically, he alleges that the ADC used a larger dose than

called for in its lethal injection protocol for the execution of Jeffrey

Landrigan and that, in three executions involving lethal injections

which used sodium thiopental, including Landrigan’s execution, the

prisoners’ eyes remained open throughout the execution. Cook claims
470

that prisoners do not keep their eyes open when domestically

manufactured sodiumthiopental is used in executions. In support of his

claims, he attached several affidavits to his complaint from

non-medical professionals, stating that prisoners executed by lethal

injection typically have their eyes closed.

Again, Cook’s newly discovered allegations do not state a

facially plausible claim that the sodium thiopental will cause him

needless pain. Even if Landrigan received a larger dose of sodium

thiopental than was called for in Arizona’s lethal injection protocol,

such a fact does not inherently reflect a problem with the drug.

Likewise, assuming that the three prisoners all kept their eyes open

during their executions, and assuming that this is atypical, we have no

medical or scientific basis for concluding that open eyes reflect a

problem with the sodium thiopental or indicate the presence of severe

pain.

Moreover, there is no basis in the complaint to question the

numerous safeguards in Arizona’s lethal injection protocol that ensure

an inmate’s unconsciousness after the administration of the sodium

thiopental. See Cook, 637 F.3d at 1007–08. Indeed, we have noted

that, “[a]fter the sodium thiopental is administered, the [Members of the

Medical Team (“MTMs”)] confirm that the inmate is unconscious by

‘sight and sound’ using the camera and microphone, and an MTM

enters the execution chamber to physically confirm unconsciousness.”

Dickens v. Brewer, 631 F.3d 1139, 1143 (9th Cir. 2011). Cook’s

complaint does not plausibly suggest that, despite these safeguards,

Arizona would inject a conscious man with painful lethal drugs.

Fourth, Cook asserts that this action must be remanded because

the district court did not address his claim that the substance was

obtained unlawfully. However, in our prior opinion, we stated, “[t]he

actual legality of importing this drug is not at issue here[;] we are only

concerned with the constitutionality of its use on Mr. Cook.” Cook, ---

F.3d at 1007, n.3. Cook offers no new evidence or authority that alters

our perspective.

Because Cook’s four new allegations do not support the

drawing of any non-speculative conclusions, Cook has failed to state a

facially plausible claim that Arizona’s planned execution is “ sure or

very likely to cause . . . needless suffering.” Baze, 553 U.S. at 50, 128

S. Ct. 1520 (internal quotation marks omitted). 

Id. at *1–3 (citations omitted).
471

• Starr v. Baca, 652 F.3d 1202, 2011 WL 2988827 (9th Cir. 2011). Plaintiff Dion Starr brought

an action under § 1983 for damages resulting from a violent attack he allegedly suffered while

an inmate in the Los Angeles County Jail. Starr’s complaint alleged that on or about January

27, 2006, a group of inmates gathered at his cell door and threatened to inflict physical harm

on him. He yelled for the deputies guarding the jail to come to his aid. Instead of protecting

him, a deputy opened Starr’s cell gate in order to allow the group of inmates to enter. The

inmates entered the cell and repeatedly stabbed Starr and his cellmate with knife-like objects.

They stabbed Starr 23 times while Starr screamed for help and protection. After the attacking

inmates left the cell, several deputies went to Starr. Starr lay on the floor of his cell, seriously

injured, bleeding and moaning in pain. One deputy yelled at him using derogatory language

and kicked his face, nose, and body numerous times, causing pain, bleeding and a nose

fracture. Other deputies allegedly stood by and watched. The deputy who kicked Starr

allegedly interfered with Starr’s ability to obtain medical treatment for his injuries. Starr

alleged that he continued to suffer from and receive treatment for his injuries.

Starr’s complaint named as defendants the prison deputies directly involved in the attack as

well as Los Angeles County Sheriff Leroy Baca. Starr’s claims against the deputies were not

at issue in the appeal. Against Sheriff Baca, Starr alleged supervisory liability on a theory of

deliberate indifference to unconstitutional conditions of confinement. He alleged that Sheriff

Baca was liable in his individual capacity because he knew or should have known about the

dangers in the Los Angeles County Jail, and that he was deliberately indifferent to those

dangers.

After giving Starr several chances to plead his claim against Sheriff Baca, the district court

dismissed the claim with prejudice under Rule 12(b)(6). The district court held that Starr’s

allegations against Sheriff Baca were insufficient to state a claim for supervisory liability

because the complaint’s recital of prior incidents and accompanying allegations did not

sufficiently state a causal connection between Sheriff Baca’s action and inaction and the

alleged injury to Starr. The district court explained that Starr “does not allege that Baca

himself directly participated in any way in the January 27, 2006 incident or that he was

involved in any review or investigation of it.” The district court also held that Starr did not

allege any specific policy implemented by Sheriff Baca that caused the violation.

The Ninth Circuit, in a 2-1 decision, reversed the dismissal of Starr’s complaint against Sheriff

Baca. The court gave the following account of the relevant allegations set out in Starr’s

complaint:

Starr claims that Sheriff Baca failed to act to protect inmates

under his care despite his knowledge that they were in danger because

of culpable acts of his subordinates and despite his ability to take

actions that would have protected them. That is, to use language from

our prior opinions, Starr claims that Sheriff Baca “knowingly refused

to terminate a series of acts by others, which he knew or reasonably

should have known would cause . . . constitutional injury.” Dubner,
472

266 F.3d at 968. Or, to state it slightly differently, Starr claims that

Sheriff Baca is “liable in his individual capacity for his own culpable

action or inaction in the training, supervision, or control of his

subordinates[.]”

It is somewhat tedious to recount the many allegations in the

complaint detailing what SheriffBaca knew or should have known, and

what Sheriff Baca did or failed to do. But given our colleague’s

conclusion that Starr’s complaint has not satisfied Rule 8(a), we feel

obliged to do so.

In paragraph 36, Starr alleges that the United States Department

of Justice (“DOJ”) initiated an investigation into conditions at Los

Angeles County Jails in June 1996. On September 5, 1997, the DOJ

“gave BACA, then a supervisor, clear written notice in a ‘findings

letter’ of a continued and serious pattern and practices of constitutional

violations including[ ] abuse of inmates by sheriff’s deputies working

in the jail and inmate on inmate violence.”

In paragraph 37, Starr alleges that Sheriff Baca receives “weekly

reports from his subordinates responsible for reporting deaths and

injuries in the jails,” and receives “ongoing reports of his Special

Counsel and Office of Independent Review.”

In paragraph 38, Starr alleges that in 1999, “under threat of a

lawsuit by the DOJ, BACA and the COUNTY submitted to a

Memorandum of Understanding (“MOU”) with the DOJ which required

BACA and the COUNTY to address and correct the continuous

constitutional violations to which inmates were being subjected,

particularly inmates suffering from mental problems. BACA personally

signed the MOU. However, after years of monitoring the County Jail

system, under the authority of the MOU, in 2006, the DOJ experts

issued a report which still found noncompliance with many of its

recommendations regarding the abuse of inmates and the deficiencies

which continue at county jails[.]”

In paragraph 39, Starr alleges that on July 6, 2002, “Ramon

Gavira was severely beaten by a female deputy and later . . . was killed

in his cell at [the] county jail. Deputies and staff testified that they were

not investigated nor disciplined for lapses in supervision of Mr. Gavira

and allegations that Mr. Gavira had been physically abused by deputies.

BACA was personally advised of the failure to investigate and no

discipline being imposed[.]”
473

In paragraph 40, Starr alleges that on March 23, 2003, “BACA

was . . . again made aware of Hispanic inmate gangs attacking African

Americans and the failure to provide reasonable security when the

COUNTY and LASD [Los Angeles County Sheriff's Department]

approved a settlement in a civil action where Ahmad Burrell, Rory

Fontanelle, and Aaron Cunningham were attacked over a three day

period, sustaining serious injuries. Although the deputies had known

that Hispanic gangs were going to attack African Americans, . . . the

deputies failed to provide reasonable security and Burrell was attacked

in the housing dormitory and the attackers were able to stab him

twenty-four (24) times, some causing serious and permanent injury to

his abdomen and head.”

In paragraph 41, Starr alleges that on October 21, 2003, “inmate

Ki Hong was killed by three inmates who entered the dayroom where

Hong was housed.... Notice of numerous violations showing deputies

failing to provide reasonable security and abandoning their duties, their

lax discipline and failure to supervise were given to BACA by his

in-house lawyers, yet the inmate on inmate violence continued. This

was the first of five inmate-on-inmate killings that occurred in the jail

system over a six-month period.”

In paragraph 42, Starr alleges that on December 6, 2003,

“Inmate Prendergast was beaten periodically over several hours from

about 6:00 p.m., to early next morning by . . . two of his three

cellmates. . . . Again, notice of numerous violations showing deputy

failing to provide reasonable security to the entire cell block, lax

discipline and failure to supervise were presented to BACA, yet the

inmate on inmate violence continued.”

In paragraph 43, Starr alleges that on December 9, 2003,

“inmate Mario Alvarado . . . was killed in a holding cell. . . . Deputies

responsible for providing reasonable security failed to . . . do so, and the

inmates who beat Alvarado had so much time they [were able to]

conceal[ ] his dead body under clothes and trash. . . . Again, notice of

numerous violations showing deput[ies] failing to provide reasonable

security to the holding cell, lax discipline and failure to supervise were

presented to BACA[.]”

In paragraph 44, Starr alleges that on December 13, 2003, a

deputy falsified the contents of a statement by a pre-trial detainee, Jose

Beas, so that the falsified statement recounted that Beas had admitted

to inappropriate touching of a minor. Beas was classified as an inmate

who should be kept away from the general prison population, and was
474

“given a wrist band that identified him as such,” but he was placed in

a holding tank with “general population inmates.” “Beas was

immediately beaten by the other inmates and suffered brain damage.

BACA was named as a defendant in that civil case and knew of the

allegations of failure to provide reasonable security to the holding cell,

lax discipline and failure to supervise[,] and [he] approved the

settlement[.]”

In paragraph 45, Starr alleges that on January 12, 2004, “inmate

Kristopher Faye was stabbed to death by several inmates with jail-made

knives. . . . Fay[e] was African American and the attackers were

Hispanic. Deputies responsible for keeping the cell gates in the housing

module close[d] allowed all the cell gates in the module to remain open

which increased the danger of violence and was in violation of LASD

policy. . . . Numerous violations showing errors in classification,

placing highly dangerous inmates with histories of violence with

nonviolent inmates presenting low security risk, deput[ies] failing to

provide reasonable security to the holding cell, lax discipline and

failure to supervise were again presented to BACA in official

reports[.]”

In paragraph 46, Starr alleges that on April 20, 2004, “inmate

Raul Tinajero was killed in his cell in the jail, by inmate Santiago

Pineda. Pineda had a history of prior misconduct in the jail[.] . . .

Tinajero was to be a witness in a criminal case against Pineda. . . . Due

to the monitoring failures of the deputies and inadequate procedures

with regard to the escorting of inmates, Pineda was able to enter

Tinajero’s cell unchallenged by the deputies responsible for providing

reasonable security, kill Tinajero undetected, [and] remain in Tinajero’s

cell for five hours undetected by deputies. Numerous violations

showing errors in classification, deputies failing to provide reasonable

security to the housing cells, lax discipline and failure to supervise were

again presented to BACA in official reports[.]”

In paragraph 47, Starr alleges that on May 23 or 24, 2004,

inmate Antonio Fernandez was killed by other inmates in the dormitory.

“The deputy that was assigned to monitor the dormitory had abandoned

her duties and left her post unattended, and the post was vacant for

approximately 20 minutes during which time the assault occurred. . . .

[T]he failure to provide reasonable security to [the] housing area, lax

discipline and failure to supervise were again presented to BACA[.]”

In paragraph 48, Starr alleges, “BACA received notice from The

Special Counsel to the Los Angeles County Sheriff’s Department, in the
475

17th Semiannual Report (February 2004) and the 18th Semiannual

Report (August 2004) of increasing levels of inmate violence in the

jails.”

In paragraph 49, Starr alleges that in “February 2005 BACA

received notice from The Special Counsel to the Los Angeles County

Sheriff’s Department, in the 19th Semiannual Report that his

deputies[’] conduct was . . . costing county tax payers millions of

dollars annually in payments of civil judgments and settlements, in

cases where the internal investigations had found no wrong doing. In

all, BACA was notified by his Special Counsel that . . . of twenty-nine

(29) cases involving police misconduct [that] settled for $100,000 or

more over the past five years, only eight resulted in any type of

discipline to the involved officers or policy change in the Department.”

In paragraph 50, Starr alleges that on February 3, 2005, Special

Counsel Merrick Bobb presented to BACA a finding of inmate abuse,

contained in a report to the Los Angeles County Board of Supervisors.

The report found “that ‘Los Angeles County’s largest jail is so

outdated, understaffed and riddled with security flaws that it

jeopardizes the lives of guards and inmates.’ The Special Counsel's

report criticized the County Jail in downtown Los Angeles for ‘failing

to prevent dangerous inmates from being housed with lower-risk

inmates. . . .’ The report concluded that Men[’]s[ ] Central Jail ‘is

nightmarish to manage’ and suffers from 'lax supervision and a

long-standing jail culture that has shortchanged accountability for

inmate safety and security.’”

In paragraph 52, Starr alleges that on October 24, 2005,

Chadwick Shane Cochran was booked into county jail for a nonviolent

misdemeanor. Due to mental health difficulties, Cochran was classified

to be placed in a mental health facility located within the jail. “Due to

errors by staff his protective housing was terminated and he was sent to

general population on November 16, 2005, where he was beaten to

death a few hours later that day. Deputies compounded the error of

removing Cochran from protective status and left a red color

identification card which led the attacking inmates to believe that he

was a ‘snitch’ or informant. The deputies responsible for the safety of

inmates abandoned their post and supervision of the locked day room

in which 40 other inmates, some of whom were classified as violent

‘high risk’ accused murderers and gang members, and known violent

offenders. Cochran was screaming and many other inmates were

yelling for them to stop, but no deputy resumed their responsibility to

provide reasonable securityuntil the inmates had grown tired of beating
476

Cochran and hid his body under clothing and food trays. The numerous

errors in classification, deputies failing to provide reasonable security

to the day room housing cells, lax discipline and failure to supervise

were again presented to BACA in official reports[.]”

In paragraphs 13 through 19, Starr alleges that he was attacked

three months after Cochran was killed. . . .

In paragraph 32, Starr alleges that Sheriff “BACA knew or

reasonabl[y] could have known[ ] of his subordinates’ ongoing

constitutional violations . . ., of the failure to provide reasonable

security at the jail, failure to prevent inmate on inmate violence, failure

to monitor inmates, lax or no supervision by his subordinate

supervisors, use of excessive force on inmates, failure to investigate

incidents . . . involving inmate on inmate violence, failure to protect,

failure to implement indicated policies and procedures regarding,

including but not limited to[,] the use of inmates as trustees[.] BACA

failed to act to prevent his subordinates[’] ongoing unconstitutional

conduct [;] . . . he acquiesced, condoned or ratified a custom, practice

or policy of ongoing misconduct by his subordinate deputies and

supervisors.” In paragraph 35, Starr alleges that “Sheriff BACA . . .

became aware, or should have become aware, and should have taken

corrective actionsto prevent repeated incidents” of derelictions of duty

by his subordinates.

Starr, 2011 WL 477094, at *6–9 (internal citation omitted)

The Ninth Circuit went on to conclude that these allegations, read together, were adequate to

satisfy the standard of Rule 8(a):

The juxtaposition of Swierkiewicz and Erickson, on the one

hand, and Dura, Twombly, and Iqbal, on the other, is perplexing. Even

though the Court stated in all five cases that it was applying Rule 8(a),

it is hard to avoid the conclusion that, in fact, the Court applied a higher

pleading standard in Dura, Twombly and Iqbal. The Court in Dura and

Twombly appeared concerned that in some complex commercial cases

the usual lenient pleading standard under Rule 8(a) gave too much

settlement leverage to plaintiffs. That is, if a non-specific complaint

was enough to survive a motion to dismiss, plaintiffs would be able to

extract undeservedly high settlementsfrom deep-pocket companies. In

Iqbal, by contrast, the Court was concerned that the usual lenient

standard under Rule 8(a) would provide too little protection for

high-level executive branch officials who allegedly engaged in

misconduct in the aftermath of September 11, 2001. To the extent that
477

we perceive a difference in the application of Rule 8(a) in the two

groups of cases, it is difficult to know in cases that come before us

whether we should apply the more lenient or the more demanding

standard.

But whatever the difference between these cases, we can at least

state the following two principles common to all of them. First,

allegations in a complaint or counterclaim must be sufficiently detailed

to give fair notice to the opposing party of the nature of the claim so

that the party may effectively defend against it. Second, the allegations

must be sufficiently plausible that it is not unfair to require the

opposing party to be subjected to the expense of discovery.

. . . .

Viewed in the light of all of the Supreme Court’s recent cases,

we hold that the allegations of Starr’s complaint satisfy the standard of

Rule 8(a). We do not so hold merely because Starr’s complaint, like

the complaint in Erickson, alleges deliberate indifference in violation

of the Eighth and Fourteenth Amendments. Rather, we so hold because

his complaint complies with the two principles just stated.

First, Starr's complaint makes detailed factual allegations that

go well beyond reciting the elements of a claim of deliberate

indifference. These allegations are neither “bald” nor “conclusory,” and

hence are entitled to the presumption of truth. Iqbal, 129 S. Ct. at 1951.

Starr specifically alleges numerous incidents in which inmates in Los

Angeles County jails have been killed or injured because of the

culpable actions of the subordinates of Sheriff Baca. The complaint

specifically alleges that Sheriff Baca was given notice of all of these

incidents. It specifically alleges, in addition, that Sheriff Baca was

given notice, in several reports, of systematic problems in the county

jails under his supervision that have resulted in these deaths and

injuries. Finally, it alleges that Sheriff Baca did not take action to

protect inmates under his care despite the dangers, created by the

actions of his subordinates, of which he had been made aware. These

allegations are neither “bald” nor “conclusory.” Iqbal, 129 S. Ct. at

1951. Rather, they are sufficiently detailed to give notice to Sheriff

Baca of the nature of Starr’s claim against him and to give him a fair

opportunity to defend against it.

Second, the factual allegations in Starr's complaint plausibly

suggest that Sheriff Baca acquiesced in the unconstitutional conduct of

his subordinates, and was thereby deliberately indifferent to the danger
478

posed to Starr. There is no “obvious alternative explanation,” within

the meaning of Iqbal, for why Sheriff Baca took no action to stop his

subordinates' repeated violations of prisoners' constitutional rights

despite being repeatedly confronted with those violations, such that the

alternative explanation requires us to conclude that Starr's explanation

“is not a plausible conclusion.” Iqbal, 129 S. Ct. at 1951, 1952. If there

are two alternative explanations, one advanced by defendant and the

other advanced by plaintiff, both of which are plausible, plaintiff's

complaint survives a motion to dismiss under Rule 12(b)(6). Plaintiff's

complaint may be dismissed only when defendant's plausible alternative

explanation is so convincing that plaintiff's explanation is implausible.

The standard at this stage of the litigation is not that plaintiff's

explanation must be true or even probable. The factual allegations of

the complaint need only “plausibly suggest an entitlement to relief.” Id.

at 1951. As the Court wrote in Twombly, Rule 8(a) “does not impose

a probability requirement at the pleading stage; it simply calls for

enough fact to raise a reasonable expectation that discovery will reveal

evidence” to support the allegations. Twombly, 550 U.S. at 556

(emphasis added). Starr's complaint satisfies that standard.

Id. at *13–14 (emphasis added).

Judge Trott dissented from the majority’s ruling, stating that he would affirm the district

court’s dismissal of Starr’s complaint for the reasons stated by the district court. Judge Trott

explained: 

In the main, [Starr’s] complaint has all the hallmarks of an attempted

end run around the prohibition against using the vicarious liability

doctrine of respondeat superior to get at the boss.

. . . Yes, we have held that “acquiescence or culpable indifference”

may suffice to show that a supervisor “personally played a role in the

alleged constitutional violations,” Menotti v. City of Seattle, 409 F.3d

1113, 1149 (9th Cir. 2005); but simply alleging generally that the

Sheriff is “answerable for the prisoner's safekeeping” doesn't cut it. Id.

Plaintiff’s complaint does nothing more than allege raw legal

conclusions with insufficient facts to support them. Starr’s complaint

runs afoul of our Circuit’s rule that to establish a claim for individual

supervisory liability, a plaintiff must allege facts, not simply

conclusions; and those facts must show that the individual sued was

personally involved in the alleged deprivation of the plaintiff’s civil

rights. Barren v. Harrington, 152 F.3d 1193, 1194 (9th Cir. 1998).

Otherwise, the action fails for failure to state a viable claim. Id. Even

if Judge Fletcher is correct that “supervisory liability” survives Iqbal,
479

a plaintiff must still allege facts to get into court.

Here, I pause for a moment to underscore and to highlight a

critical aspect of the causation aspect of this issue that too often is lost

in the undertow of the jailhouse activities of which the plaintiff

complains: this part of Starr’s case is a claim not under Monell for an

actionable governmental policy or custom or practice, but a claim for

individual responsibility—not agency or department or political unit

responsibility, but individual responsibility. It follows as night the day

that the individual under scrutiny must have personally engaged in

identifiably actionable behavior. . . .

. . . .

When we cease to look at the Los Angeles Sheriff’s Department

(LASD) as an abstraction and look at the reality, we see good reasons

for requiring facts before permitting lawsuits against the Sheriff

himself: the agency is gigantic. The LASD is the largest Sheriff’s

Department in the world. It covers 3,171 square miles, 2,557,754

residents, and by contract 42 of the 88 incorporated cities in Los

Angeles County. The Department employs 8,400 law enforcement

officers and 7,600 civilians and is responsible for 48 courthouses and

23 substations. The Men’s Central Jail alone houses a revolving

population of 5,000 inmates. In addition, the Department operates the

Twin Towers Correctional Facility, the Mira Loma Detention Facility,

the Pitchess Detention Center, and the North County Correctional

Center. Persons charged with or convicted of crimes are in over one

hundred different locations. The layers of administration and

management between what happens in a jail are many and they are

complex. To infer that specific incidents which occur in a jail are

necessarily known by the Sheriff is to engage in fallacious logic. None

of this complexity absolves the Department of responsibility for

respecting the constitutional rights and general well-being of its

charges, but it does show how inappropriate it is to sue the Sheriff

individually unless in terms of causation the Sheriff can be personally

tied to the actionable behavior at issue. Just being a disappointing or

even an insufficiently engaged public servant is not enough. Those

issues are for the ballot box and the County Board of Supervisors, not

the courts.

. . . .

Another concession appeared when counsel said, “We’re still at

the pleading stage where we are just saying do we have a right to go to
480

Mr. Baca and do discovery and try to prove our case.” Counsel’s

statement here collides with what the Supreme Court said in Ashcroft

v. Iqbal, --- U.S. ----, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009): “Rule

8 . . . does not unlock the doors for a plaintiff armed with nothing more

than conclusions.” Id. at 1949–50.

. . . .

Judge Fletcher’s Opinion, with all respect, is difficult to

reconcile with Iqbal. . . .

. . . .

Although Iqbal puts considerable meat on this wise rule’s

bones, it is not new. In 1988, for example, we said in Taylor v. List, a

failed lawsuit against Nevada’s Attorney General and the Director of

the Nevada State Prison alleging their “knowledge of and failure to

prevent the alleged constitutional violations by their subordinates,” the

following:

Liability under section 1983 arises only upon a showing

of personal participation by the defendant. A supervisor

is only liable for constitutional violations of his

subordinates if the supervisor participated in or directed

the violations, or knew of the violations and failed to act

to prevent them.

880 F.2d 1040, 1043, 1045 (9th Cir. 1989) (emphasis added) (internal

citation omitted).

The days of pleading conclusions without factual support

accompanied by the wishful hope of finding something juicy during

discovery are over. Wisely, we have moved up judgment day to the

complaint stage rather than bog down the courts and parties with

pre-summary judgment combat.

Id. at *14–19 (Trott, J., dissenting) (emphasis added).

• Hebbe v. Pliler, 627 F.3d 338, 2010 WL 4673711 (9th Cir. 2010). Hebbe, a prisoner

proceeding pro se, sued the California State Prison-Sacramento C-Facility (“CSP”); Pliler,

Warden of the CSP; and Vance, Correctional Captain of the CSP, under 42 U.S.C. § 1983. Id.

at *1. Hebbe alleged that prison officials (1) violated his constitutional right of court access

because they denied him use of the prison law library without providing any alternative means

of legal research assistance during the limited time period in which he was permitted to appeal
 The only significant change in the Amended Opinion relates to Twombly and Iqbal. In the July 29, 2010 opinion, the 28

court declined to apply the Iqbal standard for reviewing complaints to a complaint filed by a pro se prisoner. Hebbe v.

Pliler, 611 F.3d 1202, 1205 (2010). The court reasoned that “Because Iqbal incorporated the Twombly pleading

standard and Twombly does not alter courts’ treatment of pro se filings, we continue to construe pro se filings liberally.”

Id. The court clarified, in the Amended Opinion, that it was applying the Iqbal standard, but that Iqbal did not alter a

court’s obligation to give pro se filings the “benefit of the doubt”: “Iqbal incorporated the Twombly pleading standard

and Twombly did not alter courts’ treatment of pro se filings; accordingly, we continue to construe pro se filings liberally

when evaluating them under Iqbal. While the standard is higher, our ‘obligation’ remains, ‘where the petitioner is pro

se, particularly in civil rights cases, to construe the pleadings liberally and to afford the petitioner the benefit of any

doubt.’” Hebbe, 2010 WL 4673711, at *3 (quoting Bretz v. Kelman, 773 F.2d 1026, 1027 n.1 (9th Cir. 1985) (en banc))

(footnote omitted).

481

his state criminal court conviction and (2) that prison officials violated his Eighth Amendment

right to be free from cruel and unusual punishment because they forced him to choose between

two constitutional rights, his right to exercise and his right of court access, by allowing him out

of his cell only two hours per day, four days per week, for a period of eight months. Id. The

district court dismissed his complaint under Federal Rule of Civil Procedure 12(b)(6). Id. The

Ninth Circuit reversed and remanded. Id.

In an amended opinion , the Ninth Circuit applied the plausibility standard from 28

Twombly/Iqbal, noting that, post-Iqbal, courts treatment of pro se filings remained unchanged:

Because Hebbe is an inmate who proceeded pro se, his complaint “must

be held to less stringent standards than formal pleadings drafted by

lawyers,” as the Supreme Court has reaffirmed since Twombly. See

Erickson v. Pardus, 551 U.S. 89, 94, 127 S. Ct. 2197, 167 L. Ed. 2d

1081 (2007) (per curiam). Iqbal incorporated the Twombly pleading

standard and Twombly did not alter courts’ treatment of pro se filings;

accordingly, we continue to construe pro se filings liberally when

evaluating them under Iqbal. While the standard is higher, our

“obligation” remains, “where the petitioner is pro se, particularly in

civil rights cases, to construe the pleadings liberally and to afford the

petitioner the benefit of any doubt.” Bretz v. Kelman, 773 F.2d 1026,

1027 n. 1 (9th Cir. 1985) (en banc).

Id. at *3 (footnote omitted).

Applying this standard, the court determined that Hebbe sufficiently alleged an access claim.

Id. at *3. The court explained:

In 1977 the United States Supreme Court held that “the

fundamental constitutional right of access to the courts requires prison

authorities to assist inmates in the preparation and filing of meaningful

legal papers by providing prisoners with adequate law libraries or

adequate assistance from persons trained in the law.” Bounds v. Smith,
482

430 U.S. 817, 828 (1977). Nineteen years later, in Lewis v. Casey, the

Court reiterated that penal institutions have a duty to afford prisoners

“a reasonably adequate opportunity to present claimed violations of

fundamental constitutional rights to the courts.” 518 U.S. 343, 351

(1996) (citing Bounds, 430 U.S. at 825). However, the Lewis Court

narrowed the scope of Bounds by holding that there is no “abstract,

freestanding right to a law library or legal assistance. [A]n inmate ...

must ... demonstrate that the alleged shortcomings in the library or legal

assistance program hindered his efforts to pursue a legal claim.” Id. at

351, 353 n. 3.

The Court explained that its “actual injury” requirement meant

that the state was not required to provide library access to “enable the

prisoner to discover grievances” that might be aired, id. at 354

(emphasis in original), but rather was required to provide such access

to facilitate the prisoner's pursuit of a certain “type of frustrated legal

claim,” such as “direct appeals from the convictions for which [he]

w[as] incarcerated” or “actions under 42 U.S.C. § 1983 to vindicate

‘basic constitutional rights.’” Id. (citing Wolff v. McDonnell, 418 U.S.

539, 579 (1974)). Thus, the “tools” that Lewis and Bounds “require[ ]

to be provided are those that the inmates need in order to attack their

sentences, directly or collaterally, and in order to challenge the

conditions of their confinement.” Id. at 355. Hebbe’s claim that he

was frustrated in his desire to use the law library facilities to research

the pro se brief that he wished to file on direct appeal of his state court

conviction plausibly alleges exactly the type of “actual injury”

discussed in Lewis. Hebbe did not wish to go on a “fishing expedition”

to discover grievances, rather he wished simply to appeal his

conviction, as was his fundamental right.

Hebbe, 2010 WL 4673711, at *3 (alterations in original). The court also concluded that

Hebbe’s Eighth Amendment claim survived: “[f]orcing a prisoner to choose between using the

prison law library and exercising outdoors is impermissible because ‘an inmate cannot be

forced to sacrifice one constitutionally protected right solely because another is respected.’”

Id. at *4 (quoting Allen v. City and County of Honolulu, 39 F.3d 936, 940 (9th Cir. 1994)).

Judge Friedman concurred to point out that, in order to recover damages in his § 1983 suit,

Hebbe “would have to show that, had it not been for the two alleged constitutional violations

to which he was subjected, he probably would have succeeded in overturning his conviction.”

Hebbe, 2010 WL 4673711 at *5 (Friedman, J., concurring). Judge Friedman noted that “[i]t

seems unlikely that he could make that showing.” Id. at *6.

• Telesaurus VPC, LLC v. Power, 623 F.3d 998 (9th Cir. 2010), cert denied, --- S. Ct. ----, No.

10-1248, 2011 WL 4530142 (Oct. 3, 2011). Telesaurus alleged that Radiolink, a private
483

mobile service provider, violated provisions of the Federal Communications Act of 1934

(“FCA”), and was also liable for conversion, unjust enrichment, and intentional interference

with prospective economic advantage under Arizona law. Id. at 1002. Radiolink filed a

motion to dismiss for failure to state a claim under Rule 12(b)(6), arguing that the FCA

provides a private cause of action only against “common carriers,” not against private mobile

service providers such as Radiolink. Id. The district court held that Radiolink was not a

common carrier as a matter of law, dismissed Telesaurus’s complaint with prejudice, and

denied Telesaurus’s motion for leave to amend. Id. The court further held that Radiolink’s

state-law claims were expressly preempted by the FCA. Id. The Ninth Circuit affirmed in part,

reversed in part and remanded.

First, the court held that the district court properly disposed of Telesauraus’s FCA claims

because Radiolink was not a common carrier. Id. at 1003. The Ninth Circuit explained:

The FCA’s general definition of “common carrier” appears in §

153(10), which defines the term as: “any person engaged as a common

carrier for hire, in interstate or foreign communication by wire or radio

or interstate or foreign radio transmission of energy....” 47 U.S.C. §

153(10). Despite this general definition, a mobile service such as

Radiolink is a common carrier only if it meets the more specific

definition of “common carrier” set forth in § 332(c)(1). This section

provides that “[a] person engaged in the provision of a service that is a

commercial mobile service shall, insofar as such person is so engaged,

be treated as a common carrier” for purposes of the FCA. Id. §

332(c)(1)(A). Any mobile service “that is not a commercial mobile

service or the functional equivalent of a commercial mobile service” is

defined as a “private mobile service,” and therefore not a common

carrier for purposes of the FCA. Id. §§ 332(c)(2), (d)(3); see In re

Implementation of Sections 3( n) and 332 of the Communications Act

Regulatory Treatment of Mobile Services: Second Report and Order,

9 F.C.C.R. 1411, 1425-1454 (Mar. 7, 1994) (FCC regulations further

defining these terms). The FCA defines “commercial mobile service”

as “any mobile service ... that is provided for profit and makes

interconnected service available (A) to the public or (B) to such classes

of eligible users as to be effectively available to a substantial portion of

the public, as specified by regulation by the Commission....” 47 U.S.C.

§ 332(d)(1). “Interconnected service,” in turn, is defined as “servicethat

is interconnected with the public switched network ... or service for

which a request for interconnection is pending....” 47 U.S.C. §

332(d)(2). In sum, a mobile service provider such as Radiolink

qualifies as a “common carrier” under the FCA only to the extent it is

“engaged in the provision of a service” that is: (1) for profit; (2)

interconnected (or pending interconnection) with the public switched

network; and (3) available to the public or other specified users. Id. §§
484

332(d)(1)-(2).

Telesaurus, 623 F.3d at 1004. 

With respect to Radiolink’s common carrier status, Telesaurus’s complaint alleges: (1) that

“Radiolink as a common carrier, knowingly violated 47 U.S.C. §§ 308 and 309, and other

section[s of] the Communications Act”; (2) that Radiolink “used the Converted Frequencies

for commercial, common-carrier (as defined by the FCC) two-way radio service involving

charging various customers for use of mountain-top and other high radio repeater sites to

provide wireless communications in the greater Phoenix region”; and (3) that Radiolink

“carried on this for-profit common carrier[ ] wireless service” for many years. Id. at 1004.

The Ninth Circuit concluded that Telesaurus “failed to make a plausible allegation that

Radiolink is [a common] carrier.” Id. at 1005. The court explained:

We do not assume the truth of the complaint’s bare legal conclusion

that Radiolink is a common carrier, Iqbal, 129 S. Ct. at 1950, but

instead consider whether the complaint’s well-pleaded facts are

sufficient to state a claim. Telesaurus’s complaint plausibly alleges that

Radiolink is a for-profit endeavor, thus satisfying one of the elements

required to meet the definition of a common carrier. See 47 U.S.C. §

332(d)(1)-(2). But the complaint does not adequately allege that

Radiolink’s service is interconnected or pending interconnection, as

defined in § 332(d)(2), or that it is provided to the public or the other

users specified in § 332(d)(1). Id. As such, we lack “sufficient factual

matter, accepted as true” to establish that Radiolink is a common

carrier. Iqbal, 129 S. Ct. at 1949.

Telesaurus argues that Radiolink must be deemed to be a common

carrier because it was using the VPC Frequencies, which the FCC

designated for use only by commercial mobile services. We reject this

tautology. As explained above, the definition of “commercial mobile

services” does not turn on the nature of the frequencies being used, but

rather on whether the service being provided meets certain criteria. See

47 U.S.C. § 332(d)(1)-(2); see also S.W. Bell Tel. Co. v. FCC, 19 F.3d

1475, 1481 (D.C. Cir.1994) (“Whether an entity in a given case is to be

considered a common carrier or a private carrier turns on the particular

practice under surveillance.”).

Telesaurus, 623 F.3d at 1004-05. But the Ninth Circuit concluded that the district court abused

its discretion by denying Telesaurus leave to amend. Id. at 1005. The district court denied

leave to amend because it concluded that the “Regulatory Status: PMRS” notation on

Radiolink’s license was a determination by the FCC, entitled to Chevron deference, that

Radiolink was not a common carrier for purposes of Telesaurus’s suit. Id. The Ninth Circuit
485

pointed out that the parties had not identified any authority that the FCC’s notation constitutes

an interpretation entitled to Chevron deference. Id. The court also noted that there was an

“absence of any reasoned analysis by the FCC explaining the ‘PMRS notation,’” and that “it

is far from clear that the bare notation ‘PMRS’ on Radiolink’s license, without more, even

represents the FCC’s considered judgment that Radiolink is a ‘private mobile service’ for

purposes of Telesaurus’s suit.” Id. at 1006. “Because the district court’s basis for denying

leave to amend was incorrect, and Radiolink has not identified any other reason that

amendment would be futile, we conclude that the district court abused its discretion by denying

Telesauraus leave to amend.” Id.

• Market Trading, Inc. v. AT & T Mobility, LLC, 388 F. App’x 707, 2010 WL 2836092 (9th

Cir. 2010) (unpublished). The class action complaint against AT & T alleged that AT & T

breached its contract with Market Trading and violated California’s Unfair Competition Law,

“based on the allegation that, if Market Trading shifted from its present cell phone plan to one

providing fewer monthly minutes of service, AT & T would not permit the transfer of all of

the ‘rollover minutes’ that Market Trading had accumulated under its present plan.” Id. The

complaint alleged that Market Trading had accumulated 10,000 rollover minutes. Id. The

district court dismissed the complaint and the Ninth Circuit affirmed. The Ninth Circuit

explained that the district court’s dismissal was appropriate:

The district court dismissed the amended complaint, as it had

the original complaint, for failing to plead factual allegations from

which one could reasonably infer that AT & T had caused Market

Trading to suffer actual harm, a requisite element of the stated claims.

The district court calculated from the original complaint that, to

accumulate 10,000 rollover minutes, Market Trading had been using its

cell phone an average of 17 minutes per day. If it changed from its

850-minute monthly plan to AT & T’s smallest 450-minute monthly

plan, Market Trading would have to increase its regular cell phone

usage immensely in order to make any use of accumulated rollover

minutes. The complaint contained no factual allegations supporting

such an increase of use. The complaint accordingly did not present a

plausible claim of harm.

We agree with the district court. Other than the bare allegation

that Market Trading “was preparing to significantly increase the

monthly number of [minutes it] used,” no facts are alleged in the

complaint that make it plausible that Market Trading would increase its

average monthly usage 26-fold, from 17 minutes to more than 450

minutes, the point at which it would have tapped its supply of rollover
 The court had earlier noted that the district court calculated that Market Trading had been using its cell phone an

29

average of 17 minutes per day, not per month. If that was the case, then presumably Market Trading would still have

exceeded the 450-minute monthly plan even without an increase in its usage and would have a use for at least some of

the rollover minutes. The district court’s opinion appears to have concluded that to have accumulated 10,000 rollover

minutes, Market Trading would have only used an average of 17 minutes per month.

486

minutes. “To survive a motion to dismiss, a complaint must contain 29

sufficient factual matter, accepted as true, to ‘state a claim to relief that

is plausible on its face.’” Iqbal, 129 S. Ct. at 1949 (quoting Twombly,

550 U.S. at 570). “Threadbare recitals of the elements of a cause of

action,” such as those in the amended complaint, “supported by mere

conclusory statements, do not suffice.” Id. (citing Twombly, 550 U.S.

at 555). Accordingly, the district court properly dismissed the amended

complaint.

Id. at *1 (alteration in original) (footnote omitted). The court also concluded that the district

court did not err in refusing to grant leave to amend because “[t]he factual allegations in the

proposed second amended complaint, like the allegations in the previous complaints, [could

not] support a reasonable inference that, as Market Trading argues on appeal, the ‘injury

suffered was forfeiture of its accumulate [sic] roll over minutes.’” Id. (third alteration in

original) (footnote omitted). The court explained that the amendment would have been futile

because “[t]he factual allegations in the proposed complaint [we]re in all material respects

identical to those in the complaint it purport[ed] to amend,” and “Market Trading ha[d] placed

three successive complaints before the district court without stating a plausible claim for

relief.” Id.

• Caviness v. Horizon Cmty. Learning Ctr., 590 F.3d 806 (9th Cir. 2010). The district court

had held that defendant Horizon Community Learning Center (“Horizon”) and its executive

director (Lawrence Pieratt), were not functioning as state actors under § 1983 when they took

negative employment actions against the plaintiff, an employee at the defendants’ charter

school. Id. at 808. On appeal, the court affirmed “[b]ecause the allegations in Caviness’s

complaint [we]re insufficient to raise a reasonable inference that Horizon was a state actor and

thus acted under color of state law in taking the alleged actions after Caviness was terminated.”

Id.

The complaint alleged that Caviness was a high school physical education teacher, health

teacher, and track coach at Horizon for six years. Id. at 810 (footnote omitted). After a student

filed a complaint against Caviness alleging that “the student-teacher boundary had been

crossed,” Horizon put Caviness on administrative leave and began an investigation. Id. After

the investigation, Horizon’s board determined that Caviness had used questionable judgment

in his personal communications with the student, kept him on paid administrative leave

through the school year, and did not renew his contract. Id. Pieratt allegedly wrote a letter to

Caviness and sent copies to the board members and the Arizona Department of Education,

which allegedly “‘contained numerous false and defamatory statements and private information
487

which Pieratt misused to purposely place . . . Caviness in a bad light.’” Caviness, 590 F.3d at

810 (omission in original). When Caviness tried to apply for a teaching and coaching position

in the Mesa School District, Pieratt refused to provide an evaluation, and Mesa decided not to

hire Caviness. Id. Caviness alleged that the Pieratt’s statement to Mesa was “‘purposely false

and incomplete and was intended to harm’ Caviness, since Pieratt ‘knew that Caviness had an

excellent 6-year record as a teacher and coach and it was reasonable and appropriate for

[Pieratt] to respond accordingly rather than decline to provide information.’” Id. at 810–11

(alteration in original).

Caviness filed a complaint under § 1983 against Horizon, alleging:

Horizon, acting under color of state law, deprived Caviness of his

liberty interest in finding and obtaining work without due process by

making “several false statements about” him “in connection with his

employment, which . . . cause[d]serious damage to Caviness’s standing

and associations in [the] community or, alternatively, imposed on

Caviness a stigma . . . that has . . . interfered with his freedom to take

advantage of other employment opportunities,’ without providing

Caviness with notice or a name-clearing hearing.”

Id. at 811 (alterations and omissions in original). “Caviness also alleged that Horizon violated

his First Amendment right to freedom of association ‘by ordering him not to freely associate

at certain public events.’” Id. (footnote omitted). The district court dismissed the complaint,

rejecting the “arguments that Horizon was a state actor because of its statutory characterization

as a ‘public school,’ and because it performed a public function in providing public education.”

Id. “Because there was ‘no evidence, with respect to [Caviness’s] specific employment claims,

that Horizon acted in concert or conspired with state actors, was subject to government

coercion or encouragement, or was otherwise entwined or controlled by an agency of the

State,’ the district court held that Horizon was not functioning as a state actor in executing its

employment decisions regarding Caviness.” Caviness, 590 F.3d at 811 (alteration in original).

On appeal, the Ninth Circuit noted the “special situation of a private nonprofit corporation

running a charter school that is defined as a ‘public school’ by state law,” and explained that

because the conduct of a private corporation was at issue, the question of whether there was

a close nexus between the state and the challenged action required examining the specific

conduct at issue. Id. at 812 (citation omitted). The court stated that the complaint “object[ed]

to Horizon’s failure to instruct its employees to cease making statements about Caviness’s

performance as a teacher, and its refusal to provide him with a name-clearing hearing,” as well

as “to Horizon’s order forbidding Caviness from having contact with students during the paid

administrative leave period.” Id. at 813. Because “[a]ll these actions were taken by Horizon

in connection with its role as Caviness’s employer, . . . the relevant inquiry in this case [wa]s

whether Horizon’s role as an employer was state action.” Id. (citation omitted).

In determining whether the factual allegations “‘plausibly g[a]ve rise to an entitlement to
488

relief,’” the court noted that the “complaint allege[d] only that Horizon [wa]s a non-profit

corporation, ‘an Arizona charter school[,] and [an] Arizona public school operating in

Maricopa County,’ and that Pieratt was acting as president, CEO, or executive director of

Horizon.” Id. (second and third alterations in original). The court noted that Caviness did not

argue that the facts in his complaint made Horizon a state actor, but instead argued that under

Arizona law, all charter schools are state actors. Id. The court held that the Arizona statute’s

characterization of charter schools as public schools did not answer the question because

private entities can be state actors for some purposes but not for others. Caviness, 590 F.3d

at 814.

The court next rejected the argument that Horizon was a state actor because it provided a

public education, a function usually performed by the state, finding the argument foreclosed

by a relevant Supreme Court case. See id. at 814–16. The court noted that Caviness did not

“expressly argue that Horizon [wa]s a state actor by virtue of ‘public entwinement in the

management and control of ostensibly separate trusts or corporations,’” but that “[s]uch an

argument in this case would fail, as the complaint [wa]s devoid of allegations that any state

actors were involved in Horizon’s governing board, or that Horizon’ssponsor played any role

in the employment decisions of the school.” Id. at 816 n.6. The court also rejected the

argument that Horizon was a state actor because Arizona regulated personnel matters at charter

schools, finding that under the relevant case law, “‘the mere fact that a business is subject to

state regulation does not by itself convert its action into that of the State.’” Id. at 816 (citation

omitted).

The court also rejected the argument made for the first time on appeal that Caviness was a

tenured certified teacher who was entitled to certain due process rights set out in state statutes.

Id. at 816 n.7. The court noted that the complaint did not include an allegation regarding

Caviness’s status as a tenured certified teacher, and that Caviness asked the court to “infer that

he held this status from the allegations in the complaint stating that he had an employment

contract with a specified term, he was given a hearing by Horizon, and he was placed on paid

administrative leave after the hearing—requirements that are also mandated under Arizona law

for tenured certified teachers.” Id. The court concluded that “[t]he fact that Horizon

implemented certain employment procedures in Caviness’s case does not, without more, give

rise to the inference that Caviness had a state-recognized status that gave him legal and

constitutional entitlements to such procedures, or to further the inference that Horizon was

legally obligated to provide them.” Caviness, 590 F.3d at 816 n.7. The court cited Iqbal to

conclude that it would not make the requested inference. Id. (citing Iqbal, 129 S. Ct. at 1949).

The court also rejected the argument that Horizon was a state actor because charter schools are

permitted to participate in the state’s retirement system under state law, noting that the relevant

case law permitted the state to subsidize operating and capital costs of a private entity without

turning those acts into state action. See id. at 817 (citation omitted).

The fact that Horizon’s sponsor had the authority to approve and review the school’s charter

did not constitute state action because the relevant case law provided that approval or
489

acquiescence by the state was not sufficient. Id. at 817–18.

The court noted that the complaint did not allege that the state was involved in the employment

actions, and concluded that “Horizon’s actions and personnel decisions were ‘made by

concededly private parties, and turn[ed] on judgments made by private parties without

standards established by the State.’” Id. at 818 (alteration in original).

The court held that “[b]ecause the allegations in Caviness’s complaint [we]re insufficient to

raise a reasonable inference that Horizon was a state actor and thus acted under color of state

law in taking the alleged actions after Caviness was terminated,” it was proper to affirm the

dismissal. Id.

• William O. Gilley Enters., Inc. v. Atlantic Richfield Co., 588 F.3d 659, 2009 WL 4282014

(9th Cir. 2009) (per curiam). The district court dismissed an antitrust claim based on section

1 of the Sherman Act, “holding that 1) Aguilar v. Atlantic Richfield Co., 24 P.3d 493 (Cal.

2001), preclude[d] the allegations made in the operative pleading; 2) Defendants’ exchange

agreements c[ould] not be aggregated to establish market power and anticompetitive effect; and

3) even if the exchange agreements could be aggregated, the absence of a conspiracy to limit

supply and raise prices eliminate[d] a causal connection between the exchange agreements and

anticompetitive effect.” Id. at *1. The Ninth Circuit affirmed.

The plaintiff brought a class action lawsuit “on behalf of himself and other wholesale

purchasers of CARB gasoline in the state of California.” Id. CARB gas was a cleaner-burning

fuel, and the only gas that could be sold in California since 1996. Id. “The complaint alleged

that Defendants-Appellees, major oil producers, violated § 1 of the Sherman Act by entering

into a conspiracy to limit the supply of CARB gasoline and to raise prices.” Id. The case was

stayed pending resolution of a similar state court case (Aguilar), which alleged violation of the

Cartwright Act, California’s equivalent to the Sherman Act. Id. After the court in Aguilar

granted summary judgment to the defendants because there was insufficient evidence to find

a conspiracy to limit supply and raise prices among the gas companies, the defendants in the

federal action sought summary judgment on the basis of collateral estoppel. William O. Gilley,

2009 WL 4282014, at *1. The plaintiff filed an amended complaint, which the district court

deemed insufficient, but the court granted leave to amend. Id. The district court then granted

summary judgment on the next amended complaint, “holding that Gilley was precluded by

Aguilar from relitigating whether a conspiracy existed to limit supply and raise prices,” but

granted further leave to amend “to allege that ‘each of the bilateral agreements, entered into

independently between various defendant gasoline companies, ha[d] anticompetitive effects

and therefore violate[d] the Sherman Act.’” Id. at *2. The plaintiff filed another amended

complaint, “alleging that forty-four bilateral exchange agreements had the effect of

unreasonably restraining trade in violation of § 1 of the Sherman Act and in violation of CAL.

BUS.&PROF.CODE § 17200.” Id. The district court granted the defendants’ motion to dismiss

with prejudice, “explain[ing] that[, with respect to the section 1 claim,] Gilley had not alleged

any theory as to how any individual exchange agreement, which account[ed] for a small

percentage of the relevant market, [wa]s able to inflate the price of CARB gasoline.” Id. The
490

Ninth Circuit reversed and remanded, finding that the plaintiff should have been given leave

to amend to cure the newly identified deficiencies. Id. The plaintiff thereafter filed the Second

Amended Complaint, which the district court dismissed because the plaintiffs “failed to allege

that the exchange agreements, when considered individually, would be capable of producing

significant anticompetitive effects.” William O. Gilley, 2009 WL 4282014, at *2. The appeal

concerned this last dismissal.

In considering collateral estoppel, the Ninth Circuit noted that “[t]he core of the plaintiff’s

claims in Aguilar was a per se claim based on an alleged unlawful conspiracy among

petroleum companies.” Id. at *3. The court noted that one portion of Aguilar held “that the

plaintiff had failed to demonstrate the existence of a conspiracy that was per se illegal under

the Sherman Act.” Id. The Ninth Circuit agreed with the district court’s reading of the Second

Amended Complaint “as not alleging that the bilateral agreements ‘violate[d] the anti-trust

laws due to their anti-competitive effect,’ but rather that the agreements facilitate[d]

coordinated action by the defendants that unlawfully restrain[ed] trade.” Id. at *5. The court

explained:

This distinction is critical. If the bilateral agreements in

themselves have an illegal effect on competition (when aggregated),

then the bilateral agreements constitute the “contract, combination or

conspiracy” required for a claim under § 1 of the Sherman Act. If,

however, the bilateral agreements only facilitate coordinated activity,

then to maintain a claim under § 1 of the Sherman Act, Gilley must

show some meeting of the minds, some “contract, combination or

conspiracy,” between those defendants whom Gilley alleges

coordinated their actions. Although a plaintiff might well be able to do

so in the abstract, here, Gilley is precluded by Aguilar from asserting

that the defendants so conspired.

Id. The court noted that “[t]he Second Amended Complaint implicitly, if not explicitly,

assert[ed] a conspiracy.” Id. The court quoted two paragraphs from the complaint:

Chevron’s intent and purpose in entering into these exchange

agreements was to limit refining capacity for CARB gas and/or to keep

CARB gas out of the spot market and away from unbranded marketers.

Through the use of these exchange agreements, coupled with

its own refining capacity and that of its contracting partners,

Chevron has obtained sufficient market power to limit the supply of

CARB gas to unbranded marketers and to raise the price at which it

sells CARB gas in Northern California to supracompetitive levels.

These agreements have had the effect of raising CARB gas prices in

Northern California above competitive levels, without any

countervailing procompetitive benefit.
491

William O. Gilley, 2009 WL 4282014, at *6 (quoting the Second Amended Complaint)

(quotation marks omitted). The court noted that “[t]hese paragraphs reveal[ed] how Gilley

propose[d] to meet the market power requirement for a claim under § 1 of the Sherman Act,

but they l[eft] the reader uninformed as to how the individual exchange agreements allegedly

violated the Sherman Act ‘without a conspiracy to control supply or to set prices.’” Id. The

court concluded: “In sum, the [Second Amended Complaint], plainly and fairly read, is not

limited to alleging that bilateral exchange agreements are themselves restraints of trade.

Instead, its broad allegations encompass conspiracy claims that are precluded by Aguilar.” Id.

at *7. The court noted that “[t]he breadth of the [Second Amended Complaint] [wa]s

inconsistent with the spirit of Twombly.” Id. The court explained that in Twombly,

[t]he Supreme Court reaffirmed its earlier decisions holding that

“something beyond the mere possibility of loss causation must be

alleged, lest a plaintiff with a largely groundless claim be allowed to

take up the time of a number of other people with the right to do so

representing an in terrorem increment of the settlement value,” and that

“when the allegations in a complaint, however true, could not raise a

claim of entitlement to relief, this basic deficiency should . . . be

exposed at the point of minimum expenditure of time and money by the

parties and the court.”

Id. (emphasis added). The court “read the [Second Amended Complaint] as not asserting that

the bilateral agreements, in themselves, restrain[ed] trade, but that they facilitate[d] or ma[d]e

it easier for the defendants to coordinate their actions to restrain trade.” Id. at *8. The Ninth

Circuit relied on the district court’s explanation:

Even if a single defendant and all of the defendants who

contracted with that defendant cumulatively had sufficient market

power to substantially impair competition, Plaintiffs would need to

make the further showing that all of these defendants worked together

through the use of the exchange agreements and strategic shutdowns or

decreased production to stabilize the spot market and avoid the

depression of gasoline prices . . . .

William O. Gilley, 2009 WL 4282014, at *8 (quotation marks omitted). The court found that

“[t]his is the type of ‘in terrorem increment of the settlement value’ that the Supreme Court

mentioned in Twombly.” Id. The court held that “when viewed in the light of the preclusive

effect of Aguilar, the [Second Amended Complaint] simply ‘d[id] not raise a claim of

entitlement to relief.’” Id. (citation omitted). The court explained:

There can be little doubt that the broad scope of the [Second

Amended Complaint] was intentional. Gilley has known since 2002

that following Aguilar, he was precluded from alleging a conspiracy.

Nonetheless, he has thrice been given the opportunity to amend his
492

complaint to limit it to a claim based solely on the alleged

anti-competitive effect of the individual exchange agreements absent

a conspiracy, and has thrice proffered amended complaints that

continue to assert, albeit ever more subtly, the existence of a

conspiracy. It might be possible for Gilley to allege an antitrust claim

limited to issues that are not precluded by Aguilar, but he has declined

to do so. Accordingly, the district court properly struck the [Second

Amended Complaint].

Id. The Ninth Circuit also found that “the district court’s final denial of leave under the

circumstances of this case was not an abuse of discretion,” noting that “assuming Gilley could,

in the abstract, amend his complaint to state a claim that [wa]s not precluded by Aguilar, his

repeated failure to do just that suggest[ed] that it would be futile to offer him another chance

to do so.” Id. at *8 & n.8 (footnote omitted).

The court summarized its holdings as follows:

Gilley, in order to state a § 1 claim, must plead “a contract . . . by which

the persons or entities intended to harm or restrain trade.” Despite its

length and detail, the [Second Amended Complaint] does not clearly

assert which individual agreement or agreements constitute in

themselves a “contract . . . by which the persons or entities intended to

harm or restrain trade.” Rather, the [Second Amended Complaint] is

fairly read as alleging the existence of a network of exchange

agreements that arguably allowed the defendants to unlawfully

coordinate their production and output. But given the preclusive effect

of Aguilar, Gilley cannot show such coordination. The [Second

Amended Complaint] is not saved by the argument that it could be read

to encompass a claim that the individual agreements in themselves

constitute a restraint of trade because the [Second Amended Complaint]

does not provide the defendants fair notice of such a claim and the

grounds upon which it rests. See Twombly, 550 U.S. at 555, 127 S. Ct.

1955. Moreover, aggregation does not save the [Second Amended

Complaint] because it does not show that the defendants’ adjustments

of CARB production were part of any agreement or conspiracy, rather

than independent efforts to maximize profits. See Twombly, 550 U.S.

at 566, 127 S. Ct. 1955. Forthese reasons, we affirm the district court’s

dismissal of the Second Amended Complaint without leave to amend,

and we affirm the court’s dismissal of Plaintiffs’ state law claim

brought pursuant to CAL. BUS. & PROF. CODE § 17200.

Id. (omissions in original).

• Siracusano v. Matrixx Initiatives, Inc., 585 F.3d 1167 (9th Cir. 2009), aff’d, 131 S. Ct. 1309,
 The Supreme Court’s opinion is discussed earlier in this memo, under “Supreme Court Update.” 30

493

2011 WL 977060 (Mar. 22, 2011). The complaint alleged that Matrixx, a pharmaceutical 30

company that sold Zicam Cold Remedy (“Zicam”) through a wholly-owned subsidiary, made

material misrepresentations regarding Zicam’s safety, in violation of federal securities laws.

The class action complaint sought relief against Matrixx and three of its executives (Johnson,

Hemelt, and Clarot) under the Private Securities Litigation Reform Act of 1995 (PSLRA). The

complaint asserted that Matrixx and its executives failed to disclose that Zicam causes

anosmia—a loss of the sense of smell. Id. at 1169–70. The district court dismissed the

complaint, and the Ninth Circuit reversed and remanded. Id. at 1170.

Chief among the allegations was the assertion that Matrixx filed a November 12, 2003 Form

10-Q report that stated that the company “may incur significant costs resulting from product

liability claims.” Id. at 1172 (quoting the complaint) (quotation marks and emphasis omitted).

The plaintiff alleged that the statements in the 10-Q “were materially false and misleading

because [the defendants] ‘failed to disclose that a lawsuit alleging that Zicam caused anosmia

had already been filed and, given the findings of the researchers at the University of Colorado

[that zinc sulfate caused loss of smell,] it was highly likely that additional suits would be filed

in the future.’” Id. (quoting the complaint). Matrixx later filed a Form 8-K on February 19,

2004, stating “that it had ‘convened a two-day meeting of physicians and scientists to review

current information on smell disorders,’” and that “‘[i]n the opinion of the panel, there [wa]s

insufficient scientific evidence at th[e] time to determine if zinc gluconate, when used as

recommended, affect[ed] a person’s ability to smell.’” Id. at 1174 (first alteration in original).

In a later Form 10-K, filed March 19, 2004, Matrixx acknowledged that “‘numerous suits

alleged that its Zicam product(s) caused anosmia had been filed.’” Siracusano, 585 F.3d at

1175. The complaint alleged that “‘[a]ccording to Matrixx’s own SEC filings, from late 2003

through October 2004 Matrixx ha[d] been sued by approximately 284 individuals in 19

different lawsuits alleging that Zicam caused damage to their sense of smell,’ and included in

the complaint a table detailing the lawsuits.” Id. (first alteration in original). The plaintiff

“alleged that the financial information contained in Matrixx’s Form 10-Q filed on November

12, 2003, was false and misleading and violated SEC rules and the Generally Accepted

Accounting Principles (‘GAAP’) promulgated by the Financial Accounting Standards Board

(‘FASB’).” Id. The complaint further alleged that the materially misleading statements led

to artificially inflated prices. Id. at 1176. The complaint alleged that the defendants acted with

scienter:

[D]efendants acted with scienter in that defendants knew that

the public statements or documentsissued or disseminated in the name

of the Company were materially false and misleading; knew that such

statements or documents would be issued or disseminated to the

investing public; and knowingly and substantially participated or

acquiesced in the issuance or dissemination of such statements or

documents as primary violations of the federal securities laws. As set
494

forth elsewhere herein in detail, defendants, by virtue of their receipt of

information reflecting the true facts regarding Matrixx, their control

over, and/or receipt and/or modification of the Company’s alleged

materially misleading misstatements and/or their associations with the

Company which made them privy to confidential proprietary

information concerning Matrixx, participated in the fraudulent scheme

alleged herein.

Defendants were aware since at least September of 2003, that

numerous users of their Zicam product had experienced a rare condition

known as anosmia or loss of smell. Findings of post treatment anosmia

were reported by Dr. Bruce Jafek, Miriam R. Linschoten and Bruce W.

Morrow of the University of Colorado School of Medicine, Department

of Otolaryngology at a medical conference in September of 2003. At

the time, Dr. Jafek had reported 10 cases of anosmia after Zicam use.

As of April of 2004, Dr. Jafek had evaluated over 100 such cases. On

September 12, 2003, over one month before the start of the Class

Period, Matrixx informed Dr. Jafek that “as a legal matter” he did “not

have their permission to use their company name or product

trademarks” in the poster reporting Dr. Jafek’s research. In order to

avoid threatened legal action from the Company, Dr. Jafek deleted any

reference to Zicam or Matrixx from the poster which he used to present

his research at a medical conference.

Id. (quoting the complaint) (quotation marks and footnote omitted) (alteration in original). The

district court “dismissed the complaint without prejudice, reasoning . . . that the allegations of

user complaints were not material because they were not statistically significant . . . [and] that

[the plaintiffs] had failed sufficiently to allege scienter.” Id. at 1177. The district court “stated

that any amendment would be futile ‘[a]bsent allegations Defendants knew there was a

definitive and statistically significant link between Zicam and anosmia during the Class Period

that was ‘sufficiently serious and frequent to affect future earnings.’” Siracusano, 585 F.3d

at 1177 (alteration in original).

On appeal, the Ninth Circuit noted that to allege a claim under Rule 10b-5, “‘a plaintiff must

[allege] ‘(1) a material misrepresentation or omission of fact, (2)scienter, (3) a connection with

the purchase or sale of a security, (4) transaction and loss causation, and (5) economic loss,’’”

id. (alteration in original) (citation omitted), but because the district court dismissed based on

the first two elements, the Ninth Circuit would only address those two as well, id. The Ninth

Circuit held that “the district court erred in relying on the statistical significance standard to

conclude that [the plaintiffs] failed adequately to allege materiality.” Id. at 1178. The court

explained:

In relying on the statistical significance standard to determine

materiality, the district court made a decision that should have been left
495

to the trier of fact. Instead, we agree with the approach of the court in

In re Pfizer Inc. Securities Litigation, 584 F. Supp. 2d 621 (S.D.N.Y.

2008), where the United States District Court for the Southern District

of New York rejected the defendant pharmaceutical company’s

argument that the plaintiffs failed to plead materiality, which was based

on the contention that three studies revealing adverse effects of the

company’s drug were not statistically significant. The court reasoned

that it “cannot determine as a matter of law whether such links were

statistically insignificant because statistical significance is a question

of fact.” Id. at 635–36.

Id. at 1179. The Ninth Circuit listed the numerous statements from the complaint that showed

that Matrixx was aware of a possible link between Zicam and anosmia, and found that they

were “sufficient to meet the pleading requirement under the PSLRA, which require[d] that .

. . ‘the complaint . . . specify each statement alleged to have been misleading, the reason or

reasons why the statement is misleading, and, if an allegation regarding the statement or

omission is made on information or belief, . . . state with particularity all facts on which that

belief is formed.’” Id. at 1179–80 (quoting 15 U.S.C. § 78u-4(b)(1)). The court also found the

allegations sufficient “as well, to ‘nudge[ ] [the plaintiffs’] claims across the line from

conceivable to plausible.’” Siracusano, 585 F.3d at 1180 (first alteration in original).

With respect to scienter, the court explained that it first had to “‘determine whether any of the

plaintiff’s allegations, standing alone, [we]re sufficient to create strong inference of scienter,’”

and if not, it would then “‘conduct a ‘holistic’ review of the same allegations to determine

whether the insufficient allegations combine[d] to create a strong inference of intentional

conduct or deliberate recklessness.’” Id. (citation omitted). The Ninth Circuit concluded that

the complaint adequately alleged scienter:

The district court here concluded that the [complaint] failed to

allege the requisite scienter because it “fail[ed] to allege any motive or

state of mind with relation to the alleged omissions.” In order

adequately to allege scienter, [the plaintiffs] rely on their allegations

that [the defendants] knew about the problems with Zicam but chose

not to reveal them. [The plaintiffs] also argue that the importance of

Zicam to Matrixx’s business supports the inference that [the

defendants] intentionally withheld information of the link between

Zicam and anosmia. [The plaintiffs] also point to the revelations

following the close of the class period that, contrary to their statements

during the class period, Matrixx actually did not know if Zicam caused

anosmia and decided to conduct studies after they had already vouched

for the safety of Zicam.

Matrixx’s first allegedly misleading statement was its October

22, 2003, press release, announcing the 163% net sales increase,
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attributed to Zicam, and stating that the Zicam brand was “poised for

growth.” The second statement was the conference call on October 23,

2003, again attributing the company’s positive results to Zicam and

projecting further growth. By the time of the press release and the

conference call, [the Neurological Director of the Smell & Taste

Treatment and Research Foundation, Ltd. (Linschoten)] had called the

customer service line regarding one patient, Clarot had spoken with [a

researcher at the University of Colorado Health Sciences Center]

regarding customer complaints, Jafek had presented his report of eleven

patients, and the first lawsuit against Matrixx had been filed. [The

defendants] accordingly were aware of at least fourteen complaints

regarding Zicam and anosmia at the time they made these statements.

In addition, [the defendants] alleged that Clarot told Linschoten in the

September 2002 phone call that “Matrixx had received customer

complaints of loss of smell as early as 1999.” [The plaintiffs] then

alleged that the November 12, 2003, Form 10-Q was misleading

because it spoke of the risk of product liability actions against the

company without revealing that a lawsuit already had been filed.

Id. at 1180–81 (footnote omitted). The court explained that “the passage in the Form 10-Q

sp[oke] about the risks of product liability claims in the abstract, with no indication that the

risk ‘may already have come to fruition’”; that the complaint “allege[d] facts sufficient for a

jury to find that Clarot was aware of the potential anosmia problem”; and that “the inference

that high-level executives such as Johnson, Hemelt, and Clarot would [have] know[n] that the

company was being sued in a product liability action [wa]s sufficiently strong to survive a

motion to dismiss.” Id. at 1181. Although the plaintiffs did not allege that the defendants

“engaged in unusual or suspicious stock sales at the same time that they were attempting to

downplay the reports of anosmia, . . . ‘the absence of a motive allegation [wa]s not fatal.’” Id.

at 1182 (quoting Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 324 (2007)). The

court also concluded that it was appropriate to view the complaint as a whole in determining

whether the allegations were sufficient:

On a holistic review of the [complaint], the following picture is

alleged. Matrixx received some customer complaints about Zicam and

anosmia from 1999 to 2002. In 2002, Clarot was sufficiently concerned

that he called Linschoten about one of her patients who had complained

and then called to ask if she would participate in studies. In September

2003, Matrixx knew that Jafek and his colleagues were presenting

findings about ten or eleven patients who developed anosmia after

Zicam use and did not allow Jafek to use Matrixx’s or Zicam’s name

in the presentation. In October 2003, Matrixx touted the potential for

growth and profitability of Zicam in a press release and an earnings

conference call. A lawsuit alleging anosmia in one Zicam user was

filed in October 2003. In November 2003, Matrixx filed a Form 10-Q,
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but did not disclose the lawsuit in the section entitled “Risk Factors.”

More lawsuits were filed in December 2003 and January 2004.

On February 2, 2004, Matrixx issued a press release responding

to the January 30, 2004, Dow Jones report that the FDA was

investigating Zicam and anosmia. This press release called the report

“completely unfounded and misleading” and asserted that clinical trials

had established the safety of zinc gluconate. On February 6, 2004,

Good Morning America reported on the possible link between Zicam

and anosmia, and Matrixx issued another press release asserting that

zinc gluconate’s safety was well established in clinical trials, even

though it was subsequently reported that Matrixx had not conducted

such studies. In a February 19, 2004, filing with the SEC, Matrixx

stated that it had convened a panel of physicians and scientists to

review the information and asserted that there was insufficient evidence

to determine whether zinc gluconate affected the sense of smell. On

March 4, 2004, a news article reported that Matrixx would begin

studies to determine if Zicam caused anosmia.

Viewing the [complaint] as a whole, the inference of scienter is

“cogent and at least as compelling” as any “plausible non-culpable

explanation [ ]” for [the defendants’] conduct. Tellabs, 551 U.S. at

324, 127 S. Ct. 2499. Withholding reports of adverse effects of and

lawsuits concerning the product responsible for the company’s

remarkable sales increase is “an extreme departure from the standards

of ordinary care” and “presents a danger of misleading buyers or

sellers.” We therefore conclude that the inference that [the defendants]

withheld the information intentionally or with deliberate recklessness

is at least as compelling as the inference that [the defendants] withheld

the information innocently.

Id. at 1182–83 (footnote and internal citation omitted) (third alteration in original).

• Al-Kidd v. Ashcroft, 580 F.3d 949 (9th Cir. 2009), reversed and remanded on other grounds,

131 S. Ct. 2074 (2011). Al-Kidd and his wife were the subjects of FBI surveillance as part of

a broad anti-terrorism investigation allegedly aimed at Arab and Muslim men. Id. at 952. In

connection with the indictment of a different man (Sami Oman Al-Hussayen) by a federal

grand jury for visa fraud and making false statements to U.S. officials, the U.S. Attorney’s

Office submitted an application to arrest al-Kidd as a material witness. Id. The application

was supported by an affidavit executed by an FBI agent, which asserted that al-Kidd had

received “‘in excess of $20,000’” from Al-Hussayen, that al-Kidd had “‘met with AlHussayen’s associates’” after returning from a trip to Yemen, that al-Kidd had contacts with

officials of the Islamic Assembly of North America (which Al-Hussayen was affiliated with),
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and that “‘[d]ue to Al-Kidd’s demonstrated involvement with the defendant . . . he is believed

to be in possession of information germane to this matter which will be crucial to the

prosecution.’” Id. at 952–53 (alteration and omission in original). The affidavit also asserted

that al-Kidd was scheduled to take a one-way, first class flight to Saudi Arabia, and that the

United States government was concerned about securing his appearance at trial if he traveled

to Saudi Arabia. Id. at 953. In fact, al-Kidd had a round-trip coach ticket to study Arabic and

Islamic law on a scholarship at a Saudi university. Id. at 952–53. Based on the affidavit, a

material witness warrant was issued and al-Kidd was arrested at the airport before he left on

his trip to Saudi Arabia. Al-Kidd, 580 F.3d at 953. Al-Kidd was detained for 16 days at a

variety of detention centers, transfer centers, and jails, was allegedlystrip searched on multiple

occasions, confined to high-security units, handcuffed and shackled during transfers between

facilities, only allowed out of his cell one to two hours per day, and kept in a cell that was lit

24 hours a day. Id. After petitioning to the court, al-Kidd was released on the conditions that

he live at his in-laws’ home in Nevada, limit his travel to Nevada and three other states, report

regularly to his probation officer and consent to home visits, and give up his passport. Id. AlKidd allegedly lived under these conditions for almost a year before being allowed to obtain

his own residence. Id. Three months later he was fully released at the end of Al-Hussayen’s

trial. Id. Al-Kidd was never called as a witness in the Al-Hussayen trial. Id. Al-Kidd alleged

that he separated from his wife, lost his job due to denial of security clearance from his arrest,

and was unable to find steady employment. Id. at 954.

Al-Kidd asserted that Ashcroft, as Attorney General, “developed and promulgated a policy by

which the FBI and DOJ would use the federal material witness statute as a pretext ‘to arrest

and detain terrorism suspects about whom they did not have sufficient evidence to arrest on

criminal charges but wished to hold preventatively or to investigate further.’” Al-Kidd, 580

F.3d at 954 (footnote omitted). Al-Kidd’s complaint relied on Ashcroft’s statement at a press

conference that: “‘Today, I am announcing several steps that we are taking to enhance our

ability to protect the United States from the threat of terrorist aliens. These measures form one

part of the department’s strategy to prevent terrorist attacks by taking suspected terrorists off

the street . . . Aggressive detention of lawbreakers and material witnesses is vital to

preventing, disrupting or delaying new attacks.’” Id. (omission in original) (citation omitted)

(emphasis added in complaint). The complaint also cited internal Department of Justice (DOJ)

memoranda quoted in a report by the DOJ’s Office of the Inspector General and public

statements of DOJ and White House officials stating that suspects were held under material

witness warrants to investigate the suspects. Id. at 954–55. The complaint also alleged “that

the policies designed and promulgated by Ashcroft ha[d] caused individuals to be

‘impermissibly arrested and detained as material witnesses even though there was no reason

to believe it would have been impracticable to secure their testimony voluntarily or by

subpoena,’ in violation of the terms of § 3144.” Id. at 955. The complaint also cited FBI

Director Robert Mueller’s statements, made in testimony before Congress, that listed “‘major

successes’ in the FBI’s efforts toward ‘identifying and dismantling terrorist networks,’”

including the arrest of al-Kidd. Id. Finally, the complaint alleged a policy of mistreatment of

material witnesses and that Ashcroft “‘knew orreasonablyshould have known of the unlawful,

excessive, and punitive manner in which the federal material witness statute was being used,’
499

and that such manner ‘would also foreseeably subject’ detainees ‘to unreasonable and unlawful

use of force, to unconstitutional conditions of confinement, and to punishment without due

process.’” Id.

Al-Kidd sued, among others, Ashcroft, the United States, the FBI agents named in the affidavit

used to support Al-Kidd’s arrest, and government agencies and officers in their official

capacities. Al-Kidd, 580 F.3d at 955. The complaint sought damages under Bivens, alleging

violations of al-Kidd’s Fourth and Fifth Amendment rights, and alleging a direct violation of

the material witness statute. Id. at 956. The district court denied Ashcroft’s Rule 12(b)(2)

motion, finding that there were sufficient facts to establish personal jurisdiction over Ashcroft

in Idaho, and denied Ashcroft’s Rule 12(b)(6) motion, rejecting claims of absolute and

qualified immunity. Id. Ashcroft appealed, and the Ninth Circuit affirmed in part and reversed

in part.

In denying Ashcroft’s claim of absolute prosecutorial immunity, the Ninth Circuit stated:

We hold, therefore, that when a prosecutor seeks a material

witness warrant in order to investigate or preemptively detain a suspect,

rather than to secure his testimony at another’s trial, the prosecutor is

entitled at most to qualified, rather than absolute, immunity. We

emphasize that our holding here does not rest upon an unadorned

assertion of secret, unprovable motive, as the dissent seems to imply.

Even before the Supreme Court’s decision in Bell Atlantic v. Twombly

and Ashcroft v. Iqbal, it was likely that conclusory allegations of

motive, without more, would not have been enough to survive a motion

to dismiss. See, e.g., Sprewell v. Golden State Warriors, 266 F.3d 979,

988 (9th Cir. 2001) (facts pled must be accepted as true, but conclusory

allegations need not be). Twombly’s general requirement that “[f]actual

allegations must be enough to raise a right to relief above the

speculative level,” 550 U.S. 555, applies with equal force to allegations

that a prosecutor’s actions served an investigatory function. In this

case, however, al-Kidd has averred ample facts to render plausible the

allegation of an investigatory function . . . .

Id. at 963 (emphasis added) (alteration in original) (footnote omitted).

In analyzing Ashcroft’s claim of qualified immunity with respect to the alleged Fourth

Amendment violations, the Ninth Circuit concluded that al-Kidd had adequately pled

violations of his Fourth Amendment rights:

Al-Kidd alleges that he was arrested without probable cause

pursuant to a general policy, designed and implemented by Ashcroft,

whose programmatic purpose was not to secure testimony, but to

investigate those detained. Assuming that allegation to be true, he has
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alleged a constitutional violation. Contrary to the dissent’s alarmist

claims, we are not probing into the minds of individual officers at the

scene; instead, we are inquiring into the programmatic purpose of a

general policy . . . , and finding that the purpose of the policy alleged in

al-Kidd’s first amended complaint is impermissible under the Fourth

Amendment.

Id. at 969. The Ninth Circuit concluded that “al-Kidd’s right not to be arrested as a material

witness in order to be investigated or preemptively detained was clearly established in 2003.”

Id. at 973.

In considering the alleged violation of the material witness statute, the Ninth Circuit discussed

the plausibility standard set out in Twombly and extended by Iqbal:

Prior to Bell Atlantic Company v. Twombly, 550 U.S. 544, 127

S. Ct. 1955, 167 L. Ed. 2d 929, we held that a plaintiff “does not need

to show with great specificity how each defendant contributed to the

violation of his constitutional rights. Rather, he must state the

allegations generally so as to provide notice to the defendants and alert

the court as to what conduct violated clearly established law.” Ashcroft

argues that al-Kidd’s allegations as to Ashcroft’s personal involvement

in the § 3144 Claim amount simply to “sheer speculation,” and are

insufficient to state a claim under Twombly.

In Twombly, the Supreme Court held that an allegation of

parallel conduct by competitors, without more, does not suffice to plead

an antitrust violation under 15 U.S.C. § 1. While the Court expressly

disclaimed any intention to require general “heightened fact pleading

of specifics,” and reaffirmed the holding of Swierkiewicz v. Sorema

N.A., 534 U.S. 506, 122 S. Ct. 992, 152 L. Ed. 2d 1 (2002) (rejecting a

fact pleading requirement for Title VII employment discrimination), it

stated that, to avoid dismissal under Federal Rule of Civil Procedure

12(b)(6), a plaintiff must aver “enough facts to state a claim to relief

that is plausible on its face.”

Since the argument and initial briefing in this case, the Supreme

Court, in Ashcroft v. Iqbal, --- U.S. ----, 129 S. Ct. 1937, 173 L. Ed. 2d

868 (2009), has clarified Twombly’sreach to cases such as these. Iqbal

concerned claims against a number of defendants, including FBI

Director Mueller and Attorney General Ashcroft, made by Javaid Iqbal,

a Muslim Pakistani who was part of the mass roundup of Muslim aliens

on immigration charges following the September 11 attacks. Iqbal

claimed that Mueller and Ashcroft were responsible for selectively

placing detainees in their restrictive conditions on account of their race
501

and religion. The Supreme Court found the allegations in the complaint

insufficient to state a discrimination claim under the above-discussed

Twombly “plausibility” standard. The Court held that a pleading “that

offers ‘labels and conclusions’ or ‘a formulaic recitation of the elements

of a cause of action’” is insufficient to state a claim under Rule 8 of the

Federal Rules of Civil Procedure.

Al-Kidd, 580 F.3d at 974 (internal citations omitted). The court found that unlike the

complaint in Iqbal, al-Kidd’s complaint alleged sufficient facts for his claim alleging violation

of the material witness statute to survive:

In reviewing the complaint in Iqbal, the Court noted that the

complaint did not contain any factual allegations claiming that Mueller

or Ashcroft may have intentionally discriminated on the basis of race

or religion. The Court concluded that bare assertions regarding an

invidious policy were not entitled to the assumption of truth because

they amounted to “nothing more than a ‘formulaic recitation of the

elements’ of a constitutional discrimination claim.” The Court noted

that the alleged facts, even if accepted as true, were more compatible on

their face with lawful conduct.

Here, unlike Iqbal’s allegations, al-Kidd’s complaint “plausibly

suggest[s]” unlawful conduct, and does more than contain bare

allegations of an impermissible policy. While the complaint similarly

alleges that Ashcroft is the “principal architect” of the policy, the

complaint in this case contains specific statements that Ashcroft himself

made regarding the post-September 11th use of the material witness

statute. Ashcroft stated that enhanced tactics, such as the use of the

material witness statute, “form one part of the department’s

concentrated strategy to prevent terrorist attacks by taking suspected

terrorists off the street,” and that “[a]ggressive detention of lawbreakers

and material witnesses is vital to preventing, disrupting or delaying new

attacks.” Other top DOJ officials candidly admitted that the material

witness statute was viewed as an important “investigative tool” where

they could obtain “evidence” about the witness. The complaint also

contains reference to congressional testimony from FBI Director

Mueller, stating that al-Kidd’s arrest was one of the government’s

anti-terrorism successes—without any caveat that al-Kidd was arrested

only as a witness. Comparatively, Iqbal’s complaint contained no

factual allegations detailing statements made by Mueller and Ashcroft

regarding discrimination. The specific allegations in al-Kidd’s

complaint plausibly suggest something more than just bare allegations

of improper purpose; they demonstrate that the Attorney General

purposefully used the material witness statute to detain suspects whom
502

he wished to investigate and detain preventatively, and that al-Kidd was

subjected to this policy.

Further, unlike in Twombly and Iqbal, where the plaintiffs

alleged a conspiracy or discriminatory practice in the most conclusory

terms, al-Kidd does not rely solely on his assertion that Ashcroft

ordered, encouraged, or permitted “policies and practices [whereby]

individuals have also been impermissibly arrested and detained as

material witnesses even though there was no reason to believe it would

have been [im]practicable to secure their testimony voluntarily or by

subpoena.” His complaint notes “one account” of material witness

practices stating that “nearly fifty percent of those detained in

connection with post-9/11 terrorism investigations were not called to

testify.” In a declaration filed in another proceeding well before

al-Kidd’s arrest, a DOJ official admitted that, of those detained as

material witnesses, “it may turn out that these individuals have no

information useful to the investigation.”

Id. at 974–75 (first, second, and third alterations in original) (internal citations and footnote

omitted). The court concluded that the complaint did not merely contain bare allegations that

Ashcroft knew of the policy, but instead contained “allegations that plausibly suggest[ed] that

Ashcroft purposely instructed his subordinates to bypass the plain reading of the statute,” and

that the allegations “clearly ‘nudge[d]’ al-Kidd’s claim of illegality ‘across the line from

conceivable to plausible.’” Id. at 976 (quoting Iqbal, 129 S. Ct. at 1952). The court explained

that the facts pleaded were more than sufficient to support the claim of illegal use of the

material witness statute:

[A]l-Kidd pleads facts that go much further than merely showing that

he was detained under the material witness statute and did not testify.

The pleadings show that Ashcroft explicitly stated that enhanced

techniques such as the use of the material witness statute “form one part

of the department’s concentrated strategy to prevent terrorist attacks by

taking suspected terrorists off the street.” Other top DOJ officials

stated that the material witness statute was viewed as an important

“investigative tool,” and that al-Kidd’s arrest was touted as one of the

government’s anti-terrorism successes, without any mention that he was

being held as a material witness. We disagree with the dissent, and

hold that al-Kidd has plead[ed] that Ashcroft’s “concerted strategy” of

misusing the material witness statute plausibly led to al-Kidd’s

detention.

Id. at 977. The Ninth Circuit did note that “[p]ost-Twombly, plaintiffs face a higher burden of

pleading facts, and courts face greater uncertainty in evaluating complaints,” explaining that

Rule 8 “‘does not unlock the doors of discovery for a plaintiff armed with nothing more than
503

conclusions,’” id. (quoting Iqbal, 129 S. Ct. at 1950), and that “[t]his concern applie[s] with

great force in the civil rights context, where ‘[t]he basic thrust of the qualified-immunity

doctrine is to free officials from the concerns of litigation, including ‘avoidance of disruptive

discovery,’” id. (third alteration in original) (quoting Iqbal, 129 S. Ct. at 1953), but concluded

that “al-Kidd has met his burden of pleading a claim for relief that is plausible, and that his suit

on the § 3144 claim should be allowed to proceed,” al-Kidd, 580 F.3d at 977 (citing Iqbal, 129

S. Ct. at 1950). The court emphasized that the result might be different on summary judgment:

Twombly and Iqbal do not require that the complaint include all facts

necessary to carry the plaintiff’s burden. “Asking for plausible grounds

to infer” the existence of a claim for relief “does not impose a

probability requirement at the pleading stage; it simply calls for enough

fact to raise a reasonable expectation that discovery will reveal

evidence” to prove that claim. Twombly, 550 U.S. at 556, 127 S. Ct.

1955. In this case, we hold that al-Kidd has pled “enough facts to state

a claim to relief that is plausible on its face.” Id. at 570.

Id.

With respect to al-Kidd’s claim that he was mistreated while confined, the court concluded that

the claim failed because it contained only conclusory allegations, similar to those rejected in

Iqbal. The court explained:

[A]l-Kidd claims here that Ashcroft promulgated and approved the

unlawful policy which caused al-Kidd “to be subjected to prolonged,

excessive, punitive, harsh, unreasonable detention or post-release

conditions.” Contrary to the § 3144 claim, however, the complaint does

not allege anyspecific facts—such as statements from Ashcroft or from

high ranking officials in the DOJ—establishing that Ashcroft had

personal involvement in setting the conditions of confinement.

Id. at 978. Although the complaint alleged that media reports and courts had noted the harsh

conditions of confinement for material witnesses, the Ninth Circuit found that “[w]hile it is

possible that these reports were sufficient to put Ashcroft on notice by spring of 2003 that there

was a systemic problem at the DOJ with respect to its treatment of material witnesses, the nonspecific allegations in the complaint regarding Ashcroft’s involvement fail to nudge the

possible to the plausible, as required by Twombly.” Id. at 978–79. The court differentiated the

pleadings with respect to the material witness statute, stating that “[u]nlike the § 3144 Claim,

which specifically avers facts which could sustain the inference that Ashcroft ‘set[ ] in motion

a series of acts by others which the actor knows or reasonably should know would cause others

to inflict the constitutional injury’ regarding the illegal use of the material witness statute, the

complaint’s more conclusory allegations regarding Ashcroft’s involvement in settling the harsh

conditions of confinement (which are very similar to the allegations in Iqbal), are deficient

under Rule 8.” Id. at 979 (alteration in original) (internal citation omitted). The Ninth Circuit
The Ninth Circuit subsequently denied rehearing en banc. See Al-Kidd v. Ashcroft, 598 F.3d 1129, No. 06-36059, 31

2010 WL 961855 (9th Cir. Mar. 18, 2010), reversed and remanded, 131 S. Ct. 2074 (2011). Judge Smith concurred

in the denial of rehearing, and concluded that “the holding [of the panel] fully complies with the Court’s instruction in

Ashcroft v. Iqbal, that ‘a plaintiff must plead that each Government-official defendant, through the official’s own

individual actions, has violated the Constitution.’” Id. at *7 (Smith, J., concurring) (quoting Iqbal, 129 S. Ct. at 1937).

Judge Smith noted that “[u]nder Iqbal, al-Kidd had to ‘plead sufficient factual matter to show that [Ashcroft] adopted

and implemented the detention policies at issue’ not for some neutral, lawful reason but for an unlawful purpose.” Id.

(alteration in original) (citing Iqbal, 129 S. Ct. at 1948–49). Judge Smith explained:

The complaint claims Ashcroft created, adopted and implemented a policy

of using the material witness statute for an unlawful end. The complaint contains

numerous factual allegations supporting that theory, specifically referring to

Ashcroft’s liability for his own personal involvement with creating, implementing,

and enforcing the alleged policy at issue in this case. The complaint also contains

statements made by Ashcroft himself in support of such a policy, including his

statements that law enforcement was to use “every available law enforcement tool”

to arrest persons “who participate in, or lend support to, terrorist activities,” that it

was the government's policy “to use . . . aggressive arrest and detention tactics in

the war on terror,” and that “[a]ggressive detention of lawbreakers and material

witnesses [was] vital to preventing, disrupting or delaying new attacks.” Thus,

al-Kidd’s § 3144 claim is not based upon allegations that Ashcroft simply knew or

should have known that federal agents were actually violating or had the potential

to violate the material witness statute in connection with the alleged policy; rather

the complaint is based upon allegations of Ashcroft’s own misconduct in

sanctioning and promulgating a nationwide policy that systematically authorized the

misuse of the material witness statute to arrest and detain suspected terrorists for

whom the government had insufficient evidence of any wrongdoing.

Id. (alterations in original). Judge Smith noted that because the case came to the court on a Rule 12(b)(6) motion, the

court had an obligation to assume the allegations in the complaint were true, “whether discovery would bear them out

or not.” Id. (citing Twombly, 550 U.S. at 556).

In a dissent by Judge O’Scannlain, joined by Judges Kozinski, Kleinfeld, Gould, Tallman, Callahan, Bea, and

504

held that “al-Kidd ha[d] not alleged adequate facts to render plausible Ashcroft’s personal

involvement in setting the harsh conditions of his confinement, and ha[d] therefore failed to

state a claim for which relief c[ould] be granted.” Id.

Judge Bea concurred in part and dissented in part. Judge Bea would have held that qualified

immunity protected Ashcroft from al-Kidd’s claim of constitutional violations because there

was no Fourth Amendment violation, and even if there was, “al-Kidd’s right not to be arrested

on an objectively valid, but pretextual arrest warrant was not ‘clearly established’ in March

2003 . . . .” Al-Kidd, 580 F.3d at 983 (Bea, J., dissenting). With respect to al-Kidd’s claim that

his detention violated the Fourth Amendment and the terms of the material witness statute

because of material misrepresentations and omissions in the affidavit supporting the warrant

application, Judge Bea would have held that “as with his claim that Ashcroft is liable for the

claimed wretched conditions of al-Kidd’s confinement, as to which all of us agree his claim

fails—al-Kidd has failed to allege facts sufficient to establish Ashcroft’s personal liability for

such conduct.” Id. (citing Iqbal, 129 S. Ct. 1937).31
Ikuta, Judge O’Scannlain noted that al-Kidd did not “allege that Ashcroft personally swore any false testimony,” and

that “it was Ashcroft’s subordinates who provided the testimony that al-Kidd allege[d] was false.” Id. at *11

(O’Scannlain, J., dissenting). Judge O’Scannlain stated that “[i]n light of Iqbal’s holding that ‘each Government official,

his or her title notwithstanding, is only liable for his or her own misconduct,’ al-Kidd’s complaint fails to allege facts

sufficient to establish a cause of action against Ashcroft.” Al-Kidd, 2010 WL 9611855, at *11 (O’Scannlain, J.,

dissenting) (internal citation omitted). Judge O’Scannlain noted that al-Kidd did not allege that Ashcroft encouraged

prosecutors to lie in the applications for material witness warrants and that al-Kidd did not claim that Ashcroft knew that

his subordinates were submitting false affidavits. Id. at *12. Judge O’Scannlain concluded that “[a]t most, al-Kidd

claim[ed] that Ashcroft’s policies encouraged his subordinates to use material witness warrants to detain individuals

within the maximum extent authorized by law,” and argued that “[b]y permitting al-Kidd’s claim that Ashcroft has

violated Franks [v. Delaware, 438 U.S. 154 (1978),] to proceed, the majority permit[ted] al-Kidd to seek damages from

Ashcroft for his subordinates’ alleged misconduct, a result indisputably at odds with Iqbal.” Id. (citing Iqbal, 129 S. Ct.

at 1949).

The Supreme Court recently reversed the Ninth Circuit’s opinion and remanded, but did not mention Iqbal’s

discussion of pleading standards.

505

• Delta Mech., Inc. v. Garden City Group, Inc., 345 F. App’x 232, No. 08-15429, 2009 WL

2610796 (9th Cir. Aug. 26, 2009) (unpublished memorandum). The district court dismissed

the plaintiff’s complaint because it found that the plaintiff was not a third-party beneficiary to

a settlement agreement, and therefore was not entitled to bring a lawsuit for alleged breach of

that agreement. Id. at *1. The Ninth Circuit found this to be error because “[t]he evidentiary

record on this issue [of whether the plaintiff was a third-party beneficiary] demonstrate[d] at

this early stage of the case that whether Delta was or was not a third-party beneficiary [wa]s

a genuine issue of material fact that might survive summary judgment.” Id. The Ninth Circuit

held that “[t]he factual content of the complaint and reasonable inferences therefrom [we]re

plausibly suggestive of a claim entitling Delta to relief.” Id. (citing Moss v. U.S. Secret Serv.,

No. 07-36108, 2009 WL 2052985, at *1–2 (9th Cir. July 16, 2009) (citing Twombly, 550 U.S.

544)).

Judge Ikuta dissented, stating that Iqbal requires applying a two-step process of identifying

conclusions in the pleadings that are not entitled to an assumption of truth and then considering

whether the factual allegations plausibly suggest entitlement to relief, and that under that test,

there were not sufficient facts alleged to survive a motion to dismiss. Id. at *3 (Ikuta, J.,

dissenting) (citing Iqbal, 129 S. Ct. at 1950, 1951). Judge Ikuta elaborated:

Setting aside Delta’s conclusory legal allegation that it is an

intended third-party beneficiary of the Class Action Settlement

Agreement, the essence of Delta’s factual allegations is that 1)

defendants failed to issue certificates to eligible class members, 2)

such failure was a breach of the Settlement Agreement, and 3) as a

result, Delta was not compensated. See Settlement Agreement,

Section 8.2.3. Because Delta does not allege that the Settling

Defendants agreed in the Settlement Agreement to incur an obligation

to Delta, the complaint’s factual allegations do not allow the court to

draw the reasonable inference that Delta was an intended third-party
506

beneficiary of the Settlement Agreement or that the defendants are

liable to Delta for a breach of that agreement. The language in

Section 8 of the Settlement Agreement quoted by the majority does

not “plausibly give rise to an entitlement to relief.” Iqbal, 129 S. Ct.

at 1950. Accordingly, the district court did not err in dismissing

Delta’s complaint.

Id. at *3.

• Moss v. U.S. Secret Serv., 572 F.3d 962 (9th Cir. 2009). The plaintiffs alleged that two

Secret Service Agents violated their First Amendment rights by ordering that a demonstration

critical of then President George W. Bush be relocated. Id. at 964. The plaintiffs sued under

Bivens, alleging violations of their First, Fourth, and Fifth Amendment rights. According to

the complaint, anti-Bush protesters assembled in front of an inn where President Bush was

expected to visit, and just before the President’s arrival, state and local police cleared the

alleyway behind the inn and began restricting the movements of some of the demonstrators.

Id. at 965. The complaint alleged that at the same time, police allowed hotel guests and

diners to remain inside the inn without conducting a security screening. Id. A pro-Bush

demonstration assembled one block west of the anti-Bush demonstration and one block

immediatelywest of the inn. Id. The Secret Service Agents allegedly directed state and local

law enforcement to clear the street in front of the inn—where the plaintiffs were

protesting—and move the people in that area east of the street on the east side of the inn. See

id. The Agents stated that this was to ensure that nobody came within handgun or explosive

range of the President. Id. The anti-Bush demonstrators were pushed by state and local

police to the east side of Fifth Street, more than a block away from the inn (and farther than

instructed by the Agents). See id. The plaintiffs alleged that the police used violent means

to move the demonstrators, and that the pro-Bush demonstration continued without

disruption. Moss, 572 F.3d at 965–66. The plaintiffs alleged that “the Agents’ treatment of

the anti-Bush demonstration in Jacksonville was but one instance of an officially authorized,

sub rosa Secret Service policy,” and that the Secret Service’s guidelines and rules prohibiting

discrimination based on protestors’ views was an attempt to hide the actual policy from

review. Id. at 966. The defendants moved to dismiss on the basis of qualified immunity, but

the district court denied their motion to dismiss and the defendants filed an interlocutory

appeal. The Ninth Circuit concluded that the complaint failed under the Twombly/Iqbal

standards, but ruled that the plaintiffs should have a chance to replead under those standards.

The Ninth Circuit first discussed “recent developments in the Supreme Court’s pleading

jurisprudence, first in Twombly, then the Court’s clarification of that holding in Iqbal.” Id.

at 968. The court explained that in Twombly, “[t]he Court cautioned that it was not outright

overruling Conley v. Gibson, the foundational ‘notice pleading’ case construing Federal

Rule of Civil Procedure 8(a)(2), but explained that Conley’s oft-cited maxim 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, read literally, set the bar too low.” Id. (emphasis added) (footnote and internal
507

citation omitted). Under these principles, the Ninth Circuit framed the question before it to

be “whether Plaintiffs’ allegation that the Agents ordered the relocation of their

demonstration because of its anti-Bush message is plausible, not merely possible.” Id. at

970. The Ninth Circuit explained the two-step process set out in Iqbal, and used that process

to evaluate the complaint. See id.

The court concluded that several of the allegations were conclusory and not entitled to a

presumption of truth, including the allegation of the Agents’ impermissible motive, the

allegation that “the Agents acted in conformity with an officially authorized sub rosa Secret

Service policy of suppressing speech critical of the President,” and the allegation of

systematic viewpoint discrimination. Moss, 572 F.3d at 970. The court explained that “[t]he

allegation of systematic viewpoint discrimination at the highest levels of the Secret Service,

without any factual content to bolsterit, is just the sort of conclusory allegation that the Iqbal

Court deemed inadequate, and thus does nothing to enhance the plausibility of Plaintiffs’

viewpoint discrimination claim against the Agents.” Id. Turning to the factual allegations,

the Ninth Circuit noted that the plaintiff had pleaded that the Agents ordered the relocation

of the anti-Bush demonstrators but not of the pro-Bush demonstrators, and that the guests in

the inn were not subjected to security screening or asked to leave, despite their proximity to

the President. Id. at 971. The court found that these assertions did not amount to a plausible

claim:

The complaint alleges that the Agents instructed state and

local police to move “all persons” between Third and Fourth streets

to the east side of Fourth Street, a position roughly the same distance

from the Inn’s patio dining area as the Pro-Bush demonstration, and

that in issuing that order, the Agents explained their desire to ensure

that no protesters remained in handgun or explosive range of the

President. If the Agents’ motive in moving Plaintiffs away from the

Inn was—contrary to the explanation they provided to state and local

police—suppression of Plaintiffs’ anti-Bush message, then

presumably, they would have ensured that demonstrators were moved

to an area where the President could not hear their demonstration, or

at least to an area farther from the Inn then the position that the

pro-Bush demonstrators occupied. Instead, according to the

complaint, the Agents simply instructed state and local police to

move the anti-Bush protestors to a location situated a comparable

distance from the Inn as the other demonstrators, thereby establishing

a consistent perimeter around the President. This is not a plausible

allegation of disparate treatment.

Plaintiffs allege that they were ultimately driven more than

three blocks away from the Inn, surrounded, and subjected to abusive

police tactics, but nowhere does their complaint allege, or even imply,

that [the Secret Service Agents] had anything to do with how the
508

local police carried out the initial order. Without any allegation

tying the Agents to the actions of the local police, we may not assume

that either did anything beyond ordering Plaintiffs moved to the east

side of Fourth Street. See Sprewell v. Golden State Warriors, 266

F.3d 979, 988 (9th Cir. 2001) (stating that courts are not required to

make “unreasonable inferences” or “unwarranted deductions of fact”

to save a complaint from a motion to dismiss).

Plaintiffs’ allegation that the diners and guests inside the Inn

were allowed to remain in close proximity to the President without

security screening does not push their viewpoint discrimination claim

into the realm of the plausible. Again, the crux of Plaintiffs’

complaint is that the differential treatment of similarly situated

pro-Bush and anti-Bush demonstrators reveals that the Agents had an

impermissible motive—suppressing Plaintiffs’ anti-Bush viewpoint.

The differential treatment of diners and guests in the Inn, who did not

engage in expressive activity of any kind and were not located in the

public areas outside of the Inn, however, offers little if any support

for such an inference. See Menotti v. City of Seattle, 409 F.3d 1113,

1130 (9th Cir. 2005) (holding that security zone exceptions

permitting shoppers and employees, but not protestors, to enter a

restricted area did not amount to discrimination on the basis of

viewpoint because the two groups were not similarly situated).

We conclude that Plaintiffs’ complaint fails to plead facts

plausibly suggesting a colorable Bivens claim against the Agents.

The facts do not rule out the possibility of viewpoint discrimination,

and thus at some level they are consistent with a viable First

Amendment claim, but mere possibility is not enough. The factual

content contained within the complaint does not allow us to

reasonably infer that the Agents ordered the relocation of Plaintiffs’

demonstration because of its anti-Bush message, and it therefore fails

to satisfy Twombly and Iqbal.

Id. at 971–72 (emphasis added) (original emphasis and internal record citations omitted).

Although the Ninth Circuit concluded that the complaint was insufficient, it held that the

plaintiffs should have the opportunity to amend their complaint, noting that pleading

standards had recently changed. The court explained that:

Prior to Twombly, a complaint would not be found deficient if it

alleged a set of facts consistent with a claim entitling the plaintiff to

relief. See Conley, 355 U.S. at 45–46, 78 S. Ct. 99. Under the

Court’s latest pleadings cases, however, the facts alleged in a
509

complaint must state a claim that is plausible on its face. As many

have noted, this is a significant change, with broad-reaching

implications. See, e.g., A. Benjamin Spencer, Plausibility Pleading,

49 B.C. L. REV. 431, 433 (2008) (characterizing Twombly as an

abrupt and significant departure from the long-standing tradition of

liberal notice pleading in the federal courts). Having initiated the

present lawsuit without the benefit of the Court’s latest

pronouncements on pleadings, Plaintiffs deserve a chance to

supplement their complaint with factual content in the manner that

Twombly and Iqbal require.

Id. at 972.

Tenth Circuit

• Winne v. City of Lakewood, No. 10-1568, 2011 WL 3562921 (10th Cir. Aug. 15, 2011)

(unpublished). Plaintiff Terry Winne filed a complaint against the City of Lakewood,

Colorado, alleging that the City terminated him in violation of his rights under the Family

and Medical Leave Act (FMLA). The Tenth Circuit summarized the allegations of his

complaint as follows:

In 1999, Winne began working for the City of Lakewood as

an emergency dispatcher. In 2005, he was injured in an automobile

accident, requiring that he take medication for headaches. A change

in his medication in January 2008 caused him to “suffer cognitive

problems,” Aplt. App. at 1, and he was placed on intermittent FMLA

leave throughout “the spring and summer,” id. at 2.

On August 11, 2008, the City transferred Winne to the police

department’s records section after a psychiatrist found him unfit for

his dispatcher duties. Roughly two weeks later, the City fired Winne

“even though he still had available FMLA leave.” Id. at 2. The City

stated “that the termination was because of his attendance.” Id.

Id. at *1.

The district court dismissed the plaintiff’s complaint for failure to state a claim under the

FMLA, “noting that it lacked allegations sufficient to identify which FMLA theory Winne

was pursuing, and that there was no allegation set forth in his complaint that Winne was

actually on approved FMLA leave when he was fired.” Id. “Further, the district court

observed that the City’s approval of leave ‘for a serious health condition during the spring

and summer of 2008 does not, without further allegations, protect him from being terminated

for missing work for reasons unrelated to that condition, and [Winne’s] complaint is silent
510

regarding the nature and circumstances of his attendance issues.’” Id. (alteration in original).

The Tenth Circuit affirmed the district court’s dismissal of plaintiff’s complaint. The court

explained:

We review de novo a district court’s dismissal for failure to

state a claim under Federal Rule of Civil Procedure 12(b)(6). 

Sunrise Valley, LLC v. Kempthorne, 528 F.3d 1251, 1254 (10th Cir.

2008). “To survive a motion to dismiss, a complaint must contain

sufficient factual matter, accepted as true, to state a claim to relief that

is plausible on its face.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949

(2009) (quotation omitted). “A claim has facial plausibility when the

plaintiff pleads factual content that allows the court to draw the

reasonable inference that the defendant is liable for the misconduct

alleged.” Id. Although the complaint need not recite “detailed

factual allegations, . . . the factual allegations must be enough to raise

a right to relief above the speculative level.” Christy Sports, LLC v.

Deer Valley Resort Co., 555 F.3d 1188, 1191 (10th Cir. 2009)

(quotation omitted).

“Despite the liberality of modern rules of pleading, a

complaint still must contain either direct or inferential allegations

respecting all the material elements necessary to sustain a recovery

under some viable legal theory.” Bryson v. Gonzales, 534 F.3d 1282,

1286 (10th Cir. 2008) (alteration and quotation omitted). Winne’s

complaint does not indicate which of the two possible theories of

FMLA liability he is pursuing. Under a “retaliation or discrimination

theory,” it is “unlawful for any employer to discharge or in any other

manner discriminate against any individual for opposing any practice

made unlawful by this subchapter.” DeFreitas v. Horizon Inv. Mgmt.

Corp., 577 F.3d 1151, 1160 (10th Cir. 2009) (quotation omitted).

Under the “interference theory,” it is “unlawful for any employer to

interfere with, restrain, or deny the exercise of or the attempt to

exercise, any right provided under this subchapter.” Id. (quotation

omitted). Winne’s complaint fails to allege the material elements

necessary for either FMLA theory.

To state a prima facie case under a retaliation/discrimination

theory, Winne must allege that (1) he engaged in a protected activity;

(2) a reasonable employee would have found the City’s action

materially adverse; and (3) there is a causal connection between the

protected activity and the City’s adverse action. Metzler v. Fed.

Home Loan Bank of Topeka, 464 F.3d 1164, 1171 (10th Cir. 2006).

 But Winne’s complaint does not allege that he was engaged in a
511

protected activity, such as exercising his right to take FMLA leave,

or that the City fired him because of such activity. Rather, the

complaint only alleges that Winne had been “approved for

intermittent leave” “[d]uring the spring and summer,” and that when

he was fired “because of his attendance . . . he still had available

FMLA leave.” Aplt. App. at 2.

Even if the complaint could be read as indicating that Winne’s

actual use of intermittent FMLA leave was the focus of his complaint,

the complaint is still deficient in failing to relate his use of

intermittent FMLA leave to his termination. Indeed, “intermittent

leave” is defined as “FMLA leave taken in separate blocks of time

due to a single qualifying reason,” 29 C.F.R. § 825.202(a), and may

include leave of periods from an hour or more to several weeks,” id.

§ 825.202(c)(1). Thus, Winne’s use of FMLA [leave] could be so

separated from the termination as to not even raise an inference of

retaliation. See Metzler, 464 F.3d at 1171 (stating that “temporal

proximity between protected conduct and termination [i]s relevant

evidence of a causal connection sufficient to justify an inference of

retaliatory motive (quotation omitted)). Moreover, the fact that the

City fired Winne even though he had available FMLA leave does not

mean the City fired him because of the use of FMLA leave. Rather,

the City could have fired him because of his use of non-FMLA leave.

Winne argues that “[e]ven if [he] omitted some necessary fact

from [the] complaint,” it contains enough plausible inferences to

withstand dismissal. Aplt. Br. at 11. He contends that one such

inference is that he did not take any non-FMLA leave because “an

employee, who is taking leave for medical reasons, would not want

to push his luck with his employer by taking additional leave for

nonmedical reasons.” Id. at 11–12. We are not persuaded by such an

overly speculative generalization. Cf. Bell Atlantic Corp. v.

Twombly, 550 U.S. 544, 557 n.5 (2007) (indicating that “to enter the

realm of plausible liability,” the plaintiff must cross the line “between

the factually neutral and the factually suggestive”). Further, Winne

states that the necessary causal connection can be inferred from the

timing of his termination. But as discussed earlier, the complaint fails

to set out a temporal relationship between his use of FMLA leave and

his termination.

We conclude that although the complaint could be read as

suggesting the possibility that Winne used FMLA leave at a relevant

time and that he wasfired for taking that leave, “the mere possibility

of misconduct” will not sustain a claim for relief. Iqbal, 129 S. Ct.
512

at 1950. Thus, Winne failed to allege a viable FMLA

retaliation/discrimination claim.

To state a prima facie interference claim, Winne must allege:

“(1) that he was entitled to FMLA leave, (2) that some adverse action

by the City interfered with his right to take FMLA leave, and (3) that

the City’s action was related to the exercise or attempted exercise of

his FMLA rights. Campbell v. Gambro Healthcare, Inc., 478 F.3d

1282, 1287 (10th Cir. 2007). Even assuming that Winne’s complaint

adequately alleges the first two elements of an interference claim,

there is no allegation of “a causal connection between h[is]

termination and h[is] exercise of FMLA rights,” Metzler, 464 F.3d at

1181. As we discussed above in the retaliation/discrimination

context, Winne's complaint does not connect any use of FMLA leave

to his termination. Thus, Winne has failed to “state a claim to relief

that is plausible on its face.” Twombly, 550 U.S. at 570.

Id. at *1–3 (emphasis added).

• Gee v. Pacheco, 627 F.3d 1178, 2010 WL 4909644 (10th Cir. 2010). Gee, a state prisoner

proceeding pro se, filed a 42 U.S.C. § 1983 claim against Wyoming State Penitentiary (WSP)

officials alleging that they violated his First, Eighth, and Fourteenth Amendments. Id. at *1.

Defendants moved to dismiss the complaint under Rules 12(b)(1) and 12(b)(6). Id. The

district court granted the motion and dismissed the complaint with prejudice, concluding that

Gee had failed to state a claim upon which relief could be granted and that his complaint was

frivolous. Id. The Tenth Circuit affirmed the dismissal with prejudice of several claims

because they were barred by the statute of limitations or claim preclusion, but it reversed the

dismissal of other claims because “[s]ome of the allegations sufficiently alleged § 1983

claims and should have been allowed to proceed” and defects in other claims might be cured

by amendment. Id. 

With respect to his First Amendment claims, Gee alleged that Defendants:

 (1) had violated his right to communicate with persons outside the

prison; (2) had violated his right to access the courts by (a)

confiscating his legal files and hindering his access to them, (b)

hindering his communications with a jailhouse lawyer and denying

access to a law library, (c)reviewing his legal files, and (d) interfering

with his legal mail; and (3) had violated his right to be free from

retaliation for having exercised his First Amendment rights.

Gee, 2010 WL 4909644, at *1.

With respect to his Eighth Amendment Claims, Gee alleged that Defendants:
513

(1) had transferred him to out-of-state prisons where he suffered

conditions amounting to cruel and unusual punishment; (2) had

subjected him to inhumane transport and cell conditions in Wyoming,

including the denial of basic necessities; (3) had denied him medical

treatment or rendered inadequate medical treatment for various

conditions, including a sleepwalking disorder; and (4) had assaulted

him while transferring him within the prison. 

Id.

And with respect to his Fourteenth Amendment Claims, Gee alleged that Defendants:

(1) challenged Defendants' decisions (a) to transfer him to prisons in

other states, (b) to place him in an isolation cell and in segregation at

WSP, and (c) to place information in his file and classify him at

certain levels; (2) challenged particular disciplinary actions and

hearings; (3) alleged that he had been deprived of property; and (4)

alleged that he had been subjected to harassment, discrimination, and

equal-protection violations.

Id.

The Tenth Circuit first discussed the pleading standard announced in Twombly:

 For many years the federal courts followed the rule that a claim can

be dismissed only if “it appears beyond doubt that the plaintiff can

prove no set of facts in support of his claim which would entitle him

to relief.” Conley, 355 U.S. at 45-46. In 2007, however, the Supreme

Court retired the Conley standard, stating that “Conley’s ‘no set of

facts’ language has been questioned, criticized, and explained away

long enough.” Twombly, 550 U.S. 544, 562(2007). “The phrase is

best forgotten as an incomplete, negative gloss on an accepted

pleading standard: once a claim has been stated adequately, it may be

supported by showing any set of facts consistent with the allegations

in the complaint.” Id. at 563, 127 S. Ct. 1955. Although restating the

fundamental rule that the court, on a motion to dismiss, must assume

that all factual “allegations in the complaint are true (even if doubtful

in fact),” id. at 555, 127 S. Ct. 1955, it said the plaintiff must provide

“more than labels and conclusions [or] a formulaic recitation of the

elements of a cause of action,” and “[f]actual allegations must be

enough to raise a right to relief above the speculative level,” id. The

Court suggested that the test is one of plausibility....

Gee, 2010 WL 4909644, at *2. The court then repeated the Supreme Court’s holding in
514

Iqbal that the “plausibility” standard should also be applied to prisoner complaints:

To survive a motion to dismiss, a complaint must contain sufficient

factual matter, accepted as true, to state a claim to relief that is

plausible on its face. A claim has facial plausibility when the plaintiff

pleads factual content that allows the court to draw the reasonable

inference that the defendant is liable for the misconduct alleged. The

plausibility standard is not akin to a probability requirement, but it

asks for more than a sheer possibility that a defendant has acted

unlawfully. Where a complaint pleads facts that are merely consistent

with a defendant's liability, it stops short of the line between

possibility and plausibility of entitlement to relief.

Id. at *4 (quoting Iqbal, 129 S. Ct. at 1949) (internal quotation and citations omitted). The

court then discussed the application of the plausibility standard to prisoner civil-rights

claims:

Iqbal establishes the importance of context to a plausibility

determination. The allegations in Iqbal’s complaint had to be read in

light of the events of September 11. Nowhere in the law does context

have greater relevance to the validity of a claim than prisoner civilrights claims. Prisons are a unique environment, and the Supreme

Court has repeatedly recognized that the role of the Constitution

within their walls is quite limited. Government conduct that would

be unacceptable, even outrageous, in another setting may be

acceptable, even necessary, in a prison. Consequently, a prisoner

claim will often not be plausible unless it recites facts that might well

be unnecessary in other contexts. For example, as we will discuss

more fully below, a prisoner claim may not be plausible unless it

alleges facts that explain why the usual justifications for the

complained-of acts do not apply. When everyprison places legitimate

restrictions on prisoner mail, a First Amendment claim of interference

with mail ordinarily is not plausible absent factual allegations

showing at least that the alleged interference violated prison rules or

that the applicable rule was invalid, either generally or in the specific

context of the claim. Without such further allegations, the prisoner’s

First Amendment claim is no more plausible than an antitrust claim

based solely on allegations of parallel conduct.

Gee, 2010 WL 4909644, at *4. The court noted that one of the chief concerns of critics of

the plausibility standard is that plaintiffs will be denied proper access to the courts if not able

to engage in discoverywhere there is “asymmetry of information, with the defendants having

all of the evidence.” Id. at *5. It explained that this concern rarely applies to prisoners

claiming constitutional violations: “Not only do prisoners ordinarily know what has
This case was originally decided on October 26, 2010. See Gee v. Pacheco, 624 F.3d 1304 (10th Cir. 2010). The 32

December opinion is largely unchanged, but did add this sentence: “Of course, if the complaint alleges that the prisoner

received no explanation in the grievance process (or was coerced into not pursuing a grievance), the claim that an

officer’s conduct lacked justification may become plausible.” Gee, 2010 WL 4909644, at *5.

515

happened to them; but they will have learned how the institution has defended the challenged

conduct when they pursue the administrative claims that they must bring as a prerequisite to

filing suit.” Id. But the court explained that “if the complaint alleges that the prisoner

received no explanation in the grievance process (or was coerced into not pursuing a

grievance), the claim that an officer’s conduct lacked justification may become plausible.

To be sure, a pro se prisoner may fail to plead his allegations with the skill necessary to state

a plausible claim even when the facts would support one. But ordinarily the dismissal of a

pro se claim under Rule 12(b)(6) should be without prejudice” Id.32

The court then considered the question of what materials can be reviewed on motions under

Rule 12(b)(6). Id. And decided that the district court improperly relied upon documents

Defendants used to support their motion to dismiss. Id. But the court explained that this was

not reversible error: “[t]he failure to convert a 12(b)(6) motion to one for summary judgment

where a court does not exclude outside materials is [not] reversible error [if] the dismissal

can be justified without considering the outside materials.” Gee, 2010 WL 4196034, at *6

(quoting GFF Corp. v. Associated Wholesale Grocers, Inc., 130 F.3d 1381, 1384 (10th Cir.

1997)).

The Tenth Circuit first addressed Gee’s claims that sufficiently alleged a constitutional

violation. With respect to his First Amendment claims, the court explained that, in

accordance with Turner v. Safley, 482 U.S. 78, 89 (1987): “when a prison regulation

impinges on inmates’ constitutional rights, the regulation is valid if it is reasonably related

to legitimate penological interests.” Gee, 2010 WL 4909644, at *6. To state an adequate

First Amendment claim under Iqbal and Turner, the court decided that Gee “must include

sufficient facts to indicate the plausibility that the actions of which he complains were not

reasonably related to legitimate penological interests.” Id. Stated another way, “[i]t is

sufficient that he plead facts from which a plausible inference can be drawn that the action

was not reasonably related to a legitimate penological interest.” Id. The court found that

Gee’s allegations that “Defendant Lopez intentionally, and for the purpose of harassing him,

confiscated and destroyed letters sent to him by persons outside the prison ‘under the guise’

of sticker and perfume violations” stated “plausible claims of violations of Gee’s First

Amendment Rights” because “there is no legitimate penological reason to restrict mail

simply to harass inmates or to confiscate mail that complies with prison policy.” Id. at *7.

The court also found that Gee’s allegation that “Defendants Lopez returned to him outgoing

letters that had ‘appropriate postage affixed ... without reason for not sending [them] to the

Post Office’ for mailing” stated “plausible claims” of First Amendment violations because

Defendant Lopez gave no reason for not processing his mail. Id. The court then consider

Gee’s allegations regarding mail from his sister. Id. Gee alleged that while he was “in an

isolation cell on incommunicado status, during which he was not allowed to send out or
516

receive personal mail,” a letter from his estranged sister was given to him and then

confiscated because of his incommunicado status, before he court read it. Gee, 2010 WL

4196034, at *7. The letter was never returned to Gee. Id. The court noted that “[t]here are

certainly legitimate penological reasons for isolating a prisoner for limited periods of time,

but it is not apparent why a prisoner should be permanently deprived of a letter from an

estranged familymember solelybecause it arrived during such temporary isolation.” Id. The

court concluded that “[a]lthough Mr. Gee did not allege that prison officials provided no

reason for the permanent confiscation of his sister’s letter, we think that such confiscation

is on its face sufficiently problematic that the claim deserves to proceed beyond the pleading

stage.” Id. Gee also alleged that Defendants retaliated against him for exercising him First

Amendment Rights. Id. at *8. The Tenth Circuit agreed with the district court that most of

the retaliation claims failed to state a claim, but also decided that some of the allegations

stated a First Amendment retaliation claim by:

(1) indentify[ing] constitutionally protected activity in which Mr. Gee

engaged (filing specific grievances against Defendants and filing a

particular habeas petition with the court); (2) describ[ing] a

responsive action that would ‘chill a person of ordinary firmness from

continuing to engage in that activity’ (transfer to an out-of-state

supermax prison); and (3) recit[ing] facts indicating that the action

‘was substantially motivated as a response to [his] exercise of

constitutionally protected conduct.’ (that Defendants were aware of

his protected activity, that his protected activity complained of

Defendants’ actions, and that the transfer was in close temporal

proximity to the protected activity).

Id. (quoting Shero v. City of Grove, 510 F.3d 1196, 1203 (10th Cir. 2007)).

The court then considered Gee’s Eighth Amendment Claim. Gee alleged that “as he was

being transported between prisons, he informed Pacheco and Everett that he had not had food

or water for more than 24 hours, but Everett said “‘he didn’t care,’ and both Defendants

restrained him with a stun belt, belly chains, handcuffs, and a black box covering the

handcuffs, which prevented him from accessing the food and water provided to the other

prisoners being transported.” Gee, 2010 WL 4196034, at *8. The court decided that Gee

“allege[d] sufficient facts to establish both elements of an Eighth Amendment claim - the

objective prong of sufficiently serious deprivation and the subjective prong of deliberate

indifference.” Id. Defendants argued that this claim should nevertheless be dismissed

because it was filed two days after the four-year statute of limitations had run. Id. at *9.

The Tenth Circuit noted that Gee contended that he was entitled to equitable tolling and

decided that, “given that the delay was only two days past the statutory deadline, the claim

should not have been dismissed without giving Mr. Gee an opportunity to describe with

greater specificity why equitable tolling should apply” and remanded to the district court to

determine whether Gee’s allegations justified equitable tolling. Id.
517

The court next explained why some of the allegations in Gee’s complaint were insufficient

to state a claim. It disposed of Gee’s First Amendment allegations concerning treatment

imposed when he was not in Defendants’ physical custody, but in an out-of-state prison,

because Gee did not allege “sufficient facts to show that Defendants should be liable for his

treatment at the hands of non-Defendants.” Id. The court also decided that Gee’s “bare

allegations (1) of brief delays in mailing or receiving his correspondence and (2) of denial

of his right to communicate with persons outside the prison when he was placed in isolation

for approximately 25 hours on February 28, 2002, do not rise to the level of constitutional

violations.” Id. “As for his complaints that one letter was censored and that Defendants

withheld and forced him to dispose of magazines to which he subscribed, such restrictions

are sufficiently commonplace in the prison setting, that his claim is not plausible absent

allegations showing that the restrictions were imposed in violation of prison regulations or

that the regulations invoked were unconstitutional in the circumstances. And Mr. Gee's

allegation that Defendants transferred him to Nevada to prevent him from communicating

with outside persons (because Nevada does not provide stamps to indigents) is too

conclusory and speculative to satisfy Iqbal standards.” Id. (internal citation omitted). 

The court also disposed of some of Gee’s access claims. Gee, 2010 WL 4909644, at *10.

Gee alleged “that Defendants engaged in confiscating, reviewing, and hindering access to his

legal files, hindering his communications with a jailhouse lawyer, denying him access to a

law library, and interfering with his legal mail.” Id. The Tenth Circuit agreed with the

district court’s holding that “a prisoner must demonstrate actual injury from interference with

his access to the courts - that is, that the prisoner was frustrated or impeded in his efforts to

pursue a nonfrivolous legal claim concerning his conviction or his conditions of

confinement.” Id. And held that Gee had failed this test. Id. The court also disposed of

allegations that “did not connect a deprivation to an injury at all” and allegations that were

“vague and conclusory.” Id.

The court next determined that some of Gee’s Eighth Amendment allegations failed to state

a claim. Id. The court decided that some of the complaint’s allegations “contain insufficient

factual information to conclude that a constitutional violation is plausible, rather than merely

possible.” Gee, 2010 WL 4196034, at *11. These allegations included paragraphs

“describ[ing] Defendants’ confiscating Mr. Gee’s canteen items, depriving him of hygiene

items for approximately 25 hours, and incarcerating him for four weeks in an isolation cell

with limited outdoor recreation and lack of access to hygiene items.” Id. The Tenth Circuit

agreed with the district court’s observation that, with respect to Gee’s allegations concerning

Dr. Coyle, “some allegations indicate not a lack of medical treatment, but a disagreement

with Dr. Coyle's medical judgment in treating a condition with certain medications rather

than others. For example, Mr. Gee alleges that he was not given the medications he desired

for his headaches; but he admits being given other medications, so his complaint amounts

to merely a disagreement with Dr. Coyle’s medical judgment concerning the most

appropriate treatment.” Id. The court explained that “[d]isagreement with a doctor’s

particular method of treatment, without more, does not rise to the level of an Eighth

Amendment violation.” Id. The court disposed of the other claims against Dr. Coyle as
518

insufficient or “vague and conclusory.” Id. The Tenth Circuit also decided that Gee’s

allegation “that he was assaulted while being transported within WSP” was not “sufficiently

specific to identify an Eighth Amendment violation” because he did not explain what

Defendants allegedly did and might have been complaining about a “mere unwelcome

touching.” Id. at *12. 

The court decided that all of Gee’s allegations of violations of the Fourteenth Amendment

failed to state a claim. Gee, 2010 WL 4196034, at * 12. Some of these allegations were

time-barred. Id. And with regard to Gee’s allegations of being deprived of liberty without

due process, the court determined that Gee failed to establish the existence of a protected

liberty interest:

As a matter of law, he has no liberty interest in being incarcerated in

a particular institution, see Meachum v. Fano, 427 U.S. 215,

223-25(1976), or in discretionary classification decisions by prison

officials, see Cardoso v. Calbone, 490 F.3d 1194, 1197-98 (10th Cir.

2007). Nor does he have a liberty interest in his conditions of

confinement (including placement in isolation and segregation),

unless the facts show that the conditions “impose[ ] atypical and

significant hardship on the inmate in relation to the ordinary incidents

of prison life.” Sandin v. Conner, 515 U.S. 472, 484 (1995); see also

Cosco v. Uphoff, 195 F.3d 1221, 1224 (10th Cir.1999) (applying

Sandin to regulations concerning prison conditions). In most

instances, Mr. Gee pleaded no facts to support a claim of atypical and

significant deprivation, and in the few instances when he did plead

any facts, he did not plead enough facts to make it plausible that he

suffered an atypical and significant hardship. Finally, with regard to

his allegations of false information in his base file, it is not enough to

allege that a government agency or official has published false or

defamatory information. See Paul v. Davis, 424 U.S. 693, 712

(1976). Rather, to establish a constitutional violation, a plaintiff must

show that an additional action taken on the basis of the information

deprived him of a liberty or property interest. See id. Mr. Gee does

not plead facts that meet this standard.

Gee, 2010 WL 4909644, at *12. Gee also failed to “plead sufficient facts to state a claim of

deprivation of property without due process, because he does not allege the lack of an

adequate state remedy for that deprivation.” Id. at *13. The court explained: 

[A]n unauthorized intentional deprivation of property by a state

employee does not constitute a violation of the procedural

requirements of the Due Process Clause of the Fourteenth

Amendment if a meaningful postdeprivation remedy for the loss is

available,” and “the state's action is not complete until and unless it
519

provides or refuses to provide a suitable postdeprivation remedy.” 

Id. (quoting Hudson v. Palmer, 468 U.S. 517, 533 (1984)). The Tenth Circuit agreed with

the district court’s determination that Gee’s claims regarding disciplinary proceedings in

March and April 2002 failed because they were adjudicated in another lawsuit, and therefore

barred by claim preclusion. Id. Next, the court rejected Gee’s complaint that officials

violated his Fourteenth Amendment rights by not allowing Gee to observe the search of his

cell because “he does not have a Fourteenth Amendment right to observe his cell search” and

“he did not allege any injury from being able to watch the cell search.” Id. Then the court

rejected Gee’s “remaining allegations of racism, discrimination, equal-protection violation,

and retaliation” as “entirely conclusory.” Gee, 2010 WL 4909644, at * 13.

Finally, the court determined that the district court should not have dismissed the entire

complaint without prejudice, and remanded to give Gee “an opportunity to seek leave to file

an amended complaint that satisfied Twombly and Iqbal, except for those claims that are

barred by preclusion or the statute of limitations so that amending those claims would be

futile. Id.

• United States ex rel. Lemmon v. Envirocare of Utah, Inc., 614 F.3d 1163 (10th Cir. 2010).

Former employees of a government contractor, Envirocare, brought qui tam claims under

False Claims Act (FCA), alleging that Envirocare repeatedly violated its contractual and

regulatory obligations by improperly disposing of hazardous waste and falsely representing

to the government that it had fulfilled its obligations. Id. at 1165-66. The district court

dismissed three of Plaintiffs’ complaints without prejudice and with leave to file an amended

complaint. Id. at 1166. In the third dismissal, “the district court provided an extensive

analysis of the deficiencies of Plaintiffs’ (second amended) complaint and gave guidance for

filing legally sufficient claims.” Id. Responding to the district court’s analysis, Plaintiffs

filed a third amended complaint, reducing the number of claims and adding substantial

factual allegations. Id. The district court dismissed the third amended complaint with

prejudice “for substantially the same reasons” it dismissed the second amended complaint.

Id. at 1167. The district court stated that Plaintiffs “may well have pleaded various

regulatory violations,” but because Plaintiffs did not allege that the regulations require

complete regulatory compliance before certification for payment,” Plaintiffs failed to tie

those allegations to an identifiable, plausible ‘false claim’ within the meaning of the False

Claims Act. Lemmon, 614 F.3d at 1167 (internal quotations omitted). The Tenth Circuit

reversed and remanded.

Plaintiffs asserted claims under § 3729(a)(1) and (2) fo the FCA and alleged that Envirocare

breached its obligations by

(1) ignoring its reporting, recording, regulatory, and maintenance

requirements, (2) violating the contractual and regulatory disposal

requirements pertaining to location and size of buried debris, (3)

violating the contractual and regulatory disposal requirements
520

pertaining to exposed waste materials, (4) failing to remediate and

report waste spills, (5) disposing of waste without proper work

orders, (6) violating disposal requirements regarding the construction

and maintenance of waste-containing cells, and (7) failing to report

the improper mixing of waste.

Id. at 1166. 

The court explained that, under the FCA:

[L]iability can attach when a government payee submits either a

legally or factually false request for payment. Claims arising from

factually false requests generally require a showing that the payee has

submitted “‘an incorrect description of goods or services provided or

a request for reimbursement for goods or services never provided.’”

United States ex rel. Conner v. Salina Reg’l Health Ctr., Inc., 543

F.3d 1211, 1217 (quoting Mikes v. Straus, 274 F.3d 687, 697 (2d

Cir.2001)). Claims arising from legally false requests, on the other

hand, generally require knowingly false certification of compliance

with a regulation or contractual provision as a condition of payment.

See id.

Lemmon, 614 F.3d at 1168. The court noted that Plaintiffs asserted FCA claims based on

both implied and express false-certification theories and explained that: 

Claims under an express-false-certification theory arise when

a payee “falsely certifies compliance with a particular statute,

regulation or contractual term, where compliance is a prerequisite to

payment.” Conner, 543 F.3d at 1217 (quoting Mikes, 274 F.3d at

698). The payee’s “certification” need not be a literal certification,

but can be any false statement that relates to a claim. Id.; see, e.g.,

United States ex rel. Hendow v. Univ. of Phoenix, 461 F.3d 1166,

1172 (9th Cir.2006) (“So long as the statement in question is

knowingly false when made, it matters not whether it is a

certification, assertion, statement, or secret handshake; False Claims

liability can attach.”).

While express-false-certification claims may presumably arise

under any subsection of § 3729(a), we have held that

implied-false-certification claims can arise under § 3729(a)(1) but not

under § 3729(a)(2). Shaw, 213 F.3d at 531-32. In so finding, we

recognized that § 3729(a)(1) requires “only the presentation of a false

or fraudulent claim for payment or approval” without the additional

§ 3729(a)(2) requirement of a “false record or statement.” Id.
521

(internal quotation marks and citations omitted). Thus, claims under

an implied-false-certification theory do not require courts to examine

a payee’s statements to the government. Rather, “the analysis focuses

on the underlying contracts, statutes, or regulations themselves to

ascertain whether they make compliance a prerequisite to the

government's payment.” Conner, 543 F.3d at 1218. “If a contractor

knowingly violates such a condition while attempting to collect

remuneration from the government, he may have submitted an

impliedly false claim.” Id.

In this circuit, the nature of claims advanced under an

implied-false-certification theory has been addressed most directly in

Shaw. 213 F.3d at 531-33. In Shaw, and later in Conner, we

recognized that the key attribute of implied-false-certification claims

- and what most clearly differentiates them from

express-false-certification claims - is that the payee’s request for

payment lacked an express certification. Id. Thus, we found that the

pertinent inquiry for such claims is not whether a payee made an

“affirmative or express false statement,” but whether, through the act

of submitting a claim, a payee knowingly and falsely implied that it

was entitled to payment. Id. at 532-33; see also Conner, 543 F.3d at

1218.

Though implied claims differ from express claims, they

nonetheless share some common elements, including a materiality

requirement. This requirement necessitates showing that the false

certification was “material to the government's decision to pay out

moneys to the claimant.” Conner, 543 F.3d at 1219 (internal

quotation marks and citations omitted). Thus, a false certification -

regardless of whether it is implied or express - is actionable under the

FCA only if it leads the government to make a payment which, absent

the falsity, it may not have made. Id.

Id. at 1168-69.

The court decided that the third amended complaint contained sufficient factual allegations

to support Plaintiffs’ implied-false-certification claims:

First, they documented a series of instances in which they personally

observed Envirocare violate its contractual and statutory obligations.

For the alleged violations, Plaintiffs detailed the violative activity, the

regulation or contractual provision violated, the date on which the

alleged violation occurred, and the Plaintiff that witnessed or, at

Envirocare's direction, participated in the activity. Next, Plaintiffs
522

explained how Envirocare was aware of the violations, listing specific

instances in which Plaintiffs documented and/or informed their

superiors of the violations. With regard to government payments,

Plaintiffs provided the dates, numbers, and amounts of Envirocare’s

requests for payment under its contracts with the government.

Plaintiffsstated that they had reviewed “all” of Envirocare’s requests

for payment during the pertinent period and that none disclosed any

violations of Envirocare’s contractual or regulatory obligations.

Plaintiffs further alleged that each request for payment submitted

during the pertinent time period was paid in full by the government.

Finally, addressing the materiality requirement, Plaintiffs cited

specific contractual provisions under which the government, had it

been aware of the violations, may have refused or reduced payment

to Envirocare. Plaintiffs also showed that the violations undercut the

purpose of the contracts-the safe and permanent disposal of waste.

Based on the contractual provisions, Plaintiffs contended that, had it

been aware of the violations, the government may not have paid in

full.

Viewing Plaintiffs’ allegations, it is difficult to discern the purported

Rule 12(b)(6) deficiencies. As noted above, the district court did not

mention the implied-false-certification claims. Instead, the district

court’s order faulted Plaintiffs for not “tying the alleged incidents

with an identifiable certification of regulatory compliance.” As

explained above, implied-false-certification claims do not involve -

let alone require - an explicit certification of regulatory compliance.

The district court found that Plaintiffs failed to allege that the state

and federal regulations “require complete regulatory compliance

before certification for payment.” Yet Plaintiffs' third amended

complaint makes clear that the alleged regulatory violations also

constituted material breaches of Envirocare's contractual obligations.

Even if Plaintiffs failed to state a claim arising directly from

Envirocare's regulatory obligations, Plaintiffs' allegations provided

more than enough factual detail to support their contract-based

claims.

Id. at 1169-70 (internal citations omitted).

The court next considered Plaintiffs’ express-false-certification claims, and found that they

were also sufficiently alleged:

Plaintiffs’ third amended complaint sufficiently alleges that

Envirocare knowinglysubmitted legally false requests for payment to
523

the government and that the government paid the requests. Thus, in

order to sustain their express-false-certification claims, Plaintiffs need

only to have alleged - with sufficient factual basis - that the requests

contained a false statement and that the statement was material to the

government's decision to pay. Plaintiffs’ third amended complaint

addresses the false-statement requirement by pointing to the payment

requests’ certification that “the payments requested were only for

work performed in accordance with the specifications, terms and

conditions of the contract....” Because Envirocare’s work was not

performed in accordance with the contractual requirements, Plaintiffs

allege, the certifications were false.

Id. at 1170-71.

The court then explained that Plaintiffs were also required to comply with Rule 9(b): 

Rule 9(b) supplements 8(a) in setting forth the pleading requirements

under the FCA. Rule 9(b) states that “[i]n alleging fraud or mistake,

a party must state with particularity the circumstances constituting

fraud or mistake. Malice, intent, knowledge, and other conditions of

a person's mind may be alleged generally.” Our pre-Twombly cases

required plaintiffs pursuing claims under the FCA to plead the “who,

what, when, where and how of the alleged [claim].” This language

has been read to require plaintiffs to identify the time, place, content,

and consequences of the fraudulent conduct. Though Twombly and

Iqbal clarified 9(b)’s requirements, the Rule’s purpose remains

unaltered. Namely, “to afford defendant fair notice of plaintiff's

claims and the factual ground upon which [they] are based....” Thus,

claims under the FCA need only show the specifics of a fraudulent

scheme and provide an adequate basis for a reasonable inference that

false claims were submitted as part of that scheme.

Id. at 1171 (internal citations omitted). The court concluded that Plaintiffs’ FCA claims were

sufficient because they “provid[ed] factual allegations regarding the who, what, when, where

and how of the alleged claims:” 

 With regard to the who, Plaintiffs alleged the names and positions of

E n v i r o c are employ ees w ho observe d the

contract-and-regulation-breaching activity, the names of the

Envirocare supervisors to whom they reported, and the names of the

Envirocare employees responsible for submitting the false claims to

the Government. Addressing the what, Plaintiffs alleged a series of

contractual and regulatory breaches, pointing to specific obligations

that Envirocare breached. For contractual violations, Plaintiffs listed
524

the contracts that were purportedly violated. They also listed

payment requests submitted, including the date of submission, the

amount sought, and where applicable the language of the express

certification contained in each request. In pleading the when,

Plaintiffs documented the dates on which specific violations took

place and the dates on which payment requests were submitted. For

the where, Plaintiffs provided the location of the waste disposal site

for the alleged violations-including, at times, the specific site area

where the violations occurred. Finally, with regard to the how,

Plaintiffs included extensive factual detail regarding how the

violations occurred, adding, in many instances, the conduct that led

to the violation, the reason the result constituted a violation, and a

description of the effect of the violation. Plaintiffs also offered a

detailed description of Envirocare’s alleged efforts to conceal the

violations, including, for example, the names of the Envirocare

supervisors who instructed one Plaintiff to stop documenting

violations.

Id. at 1172 (internal citations omitted). 

• Mecca v. United States, 389 F. App’x 775, 2010 WL 2893617 (10th Cir. 2010)

(unpublished). Plaintiff Mecca pleaded claims under the Federal Tort Claims Act (FTCA)

and Bivens. Id. at *1. The district court dismissed the case. Id. at *2. It ruled that it lacked

subject matter jurisdiction over the FTCA claims because “the FTCA imposes liability in

accordance with state law, but the complaint cited no source of substantive state liability.”

Id. The court also noted that the FTCA civil conspiracy claim failed to state a claim absent

any facts “suggesting a meeting of the minds between defendants as to the object of the

conspiracy.” Id. And that the Bivens claim was deficient under Rule 12(b)(6) because it

failed to allege a constitutionally recognized property or liberty interest. Id. The Tenth

Circuit affirmed the district court’s judgment, but remanded the case with instructions to

modify dismissal of the FTCA claims to be without prejudice. Mecca, 2010 WL 2893617

at *1.

Dr. Mecca worked under contract as a civilian radiologist at an army hospital. Id. A year

after obtaining staff privileges, Mecca misdiagnosed a patient. Id. Starkey, Chief of

Radiology, advised Mecca that “he could resign without adverse consequences or face

investigation, suspension, and referral to the National Practitioners Data Bank and state

licensing authorities.” Id. Mecca resigned, but Starkey nevertheless went ahead with

proceedings to hold his privileges in abeyance pending the outcome of an investigation and

peer review. Id. Mecca was then notified that his privileges had been suspended because

he resigned during the investigation. Id. Following the suspension, Dr. Mecca sued because

was unable to find a new job. Id.

With respect to the FTCA claims, the court noted that the FTCA granted a limited waiver of
525

sovereign immunity for claims against the government which included only state law claims.

Mecca, 2010 WL 2893617 at *2. Because Plaintiff claimed only violations of federal

regulations, which “cannot impose liability under the FTCA,” the court held that the claims

were not within the scope of the FTCA’s waiver of sovereign immunity and thus Plaintiff

failed to invoke the court’s jurisdiction. Id. 

The court then turned to Plaintiff’s civil conspiracy claim and held that it also failed. Id. at

*3. The court explained that, in Colorado, the elements of a civil conspiracy claim are “(1)

an object to be accomplished; (2) an agreement by two or more persons on a course of action

to accomplish that object; (3) in furtherance of that course of action, one or more unlawful

acts which were performed to accomplish a lawful or unlawful goal, or one or more lawful

acts which were performed to accomplish an unlawful goal; and (4) damages to the plaintiff

as a proximate result.” Id. Plaintiffs’ complaint did not plead “enough facts to state a claim

to relief that is plausible on its face,” (quoting Twombly, 550 U.S. at 570) because it “alleges

nothing to plausibly suggest defendants agreed on an object of the putative conspiracy.” Id.

The complaint generally claims that defendants “agreed, by words or conduct, to accomplish

an unlawful goal or accomplish a goal through unlawful means.” Id. But the court decided

that this was a mere “formulaic recitation of Colorado’sminimum pleading standard for civil

conspiracy claims.” Mecca, 2010 WL 2893617 at *3 (citations omitted). The court pointed

to Plaintiff’s “strongest allegation” – that Defendants “caused adverse action to be taken

against him in furtherance of the goal of revoking his privileges” – and explained that it

failed to suggest a meeting of the minds. Id. “At most, this might suggest the suspension

was unlawful, but we cannot inferfrom defendants’independent acts an agreement to realize

that goal.” Id.

The court then turned to the nature of the dismissal of Plaintiff’s claims. Id. at *4. It

explained that where an action is dismissed for lack of jurisdiction, “the dismissal must be

without prejudice.” Id. (quoting Brereton v. Bountiful City Corp., 434 F.3d 1213, 1216 (10th

Cir. 2006)). The court thus remanded with instructions to enter dismissal of the FTCA

claims without prejudice.

With respect to the Bivens claims. The court first addressed the due process claim and

explained that 

A successful procedural due process claim requires a plaintiff to show

(1) the deprivation of a liberty or property interest and (2) the absence

of due process. Stears v. Sheridan Cnty. Mem’l Hosp. Bd. of Trs.,

491 F.3d 1160, 1162 (10th Cir.2007). Protected property interests

require “a legitimate claim of entitlement,” created not by the

Constitution but by independent sources such as statute, municipal

ordinance, or contract. Nichols v. Bd. of County Comm’rs, 506 F.3d

962, 969-70 (10th Cir.2007) (quotation omitted). “However, if an

employee voluntarily relinquishes a property interest, then no

procedural due process violation has occurred.” Narotzky v. Natrona
526

Cnty. Mem’l Hosp., 610 F.3d 558, 2010 WL2510659, at *5 (10th Cir.

June 23, 2010).

Id. The court noted that Plaintiff “does not contend his contract created a property interest.”

Id. at *5. Instead, he contended that a federal regulation conditioning the government’s

authority to alter his staff privileges on unsatisfactory patient care “constitute[d] a protected

property interest because they restrict the Army’s ability to adversely affect his privileges.”

Mecca, 2010 WL 2893617 at *5. The court rejected this argument because Plaintiff did not

plead these allegations in his amended complaint. Id. 

The court also held that dismissal of Plaintiff’s liberty interest claim was proper. Id. The

court explained that, to show a deprivation of one’s liberty interest in professional reputation,

a plaintiff must demonstrate “(1)‘statements [that] impugn the good name, reputation, honor,

or integrity of the employee’; (2) ‘the statements [were] false’; (3) the ‘statements ...

occur[red] in the course of terminating the employee or must foreclose other employment

opportunities’; and (4) ‘the statements [were] published.’” Id. (quoting Watson v. Univ. of

Utah Med. Ctr., 75 F.3d 569, 579 (10th Cir.1996)) (alterationsin original). Plaintiff’s claim

was that “hospitals decline[d] to hire him when they learn[ed] of his suspension and he

[could not] find work due to defendant’s actions.” Id. The court found that this allegation

did not meet Twombly’s plausibility standard, which requires “factual content that allows the

court to draw the reasonable inference that the defendant is liable for the misconduct

alleged,” because there was no indication who published the information about Plaintiff’s

suspension. Id. (quoting Iqbal, 129 S. Ct. at 1949). “Vague allegations against the entire

Army do not suffice.” Mecca, 2010 WL 2893617 at *5.

• Mink v. Knox, 613 F.3d 995, 2010 WL 2802729 (10th Cir. 2010). The court addressed

whether the complaint’s allegations plausibly stated the violation of an established

constitutional right that would prevent the application of qualified immunity. Plaintiff

Thomas Mink was a student at the University of Northern Colorado when he created a

fictional character named “Junius Puke” for the editorial column of his internet-based

journal. Id. at *1. The column allegedly contained altered photographs of Junius Peake, a

professor at the University, and contained language that Peake would have been unlikely to

use. Id. Peake contacted the police, who began investigating whether the publication

violated Colorado’s criminal libel statute. Id. The detective in charge prepared an affidavit

to obtain a search warrant and presented it to Susan Knox, the defendant and deputy district

attorney. Id. After the affidavit and matching warrant were approved by a magistrate judge,

the police searched Mink’s home and confiscated his personal computer and written

materials referencing his online publication. Id. After Mink sued various officials and

obtained a temporary restraining order, the district attorney issued a “no file” decision,

concluding that the statements in Mink’s publication could not be prosecuted under the state

criminal libel statute. Mink, 2010 WL 2802729, at *1. The district court originally granted

Knox’s motion to dismiss the complaint based on absolute immunity, but that decision was

reversed by the Tenth Circuit. Id. at *1–2. On remand, the district court again dismissed the

complaint based on qualified immunity. Id. at *2. The Tenth Circuit reversed and remanded.
527

The Tenth Circuit noted, without substantial discussion, that Iqbal’s plausibility standard

applied and that in reviewing a decision on a motion to dismiss, it accepted all factual

allegations as true and drew all reasonable inferences in favor of the nonmoving party. Id.

The court first examined whether the complaint adequately alleged the requisite causal

connection between Knox’s actions and the alleged violation of Mink’s constitutional rights.

“Mr. Mink alleged that Ms. Knox caused the issuance of a search warrant that lacked

probable cause and particularity, thereby causing a violation of his Fourth Amendment

rights.” Id. at *3. The court concluded that the district court erred by construing the

complaint as failing to allege direct participation in the constitutional violation. Id. The

court explained that § 1983 liability does not require direct participation, and that a “plaintiff

may demonstrate causation by showing an affirmative link between the constitutional

deprivation and the officer’s exercise of control or discretion.” Mink, 2010 WL 2802729,

at *4. The court noted that in Iqbal, the Supreme Court had held that “‘each Government

official . . . is only liable for his or her own misconduct,’” and that the dissenters in Iqbal

“viewed this pronouncement as ‘eliminating . . . supervisory liability entirely.’” Id. at *4 n.5

(omissions in original) (citations omitted). Although both views had “‘generated significant

debate about the continuing vitality and scope of supervisory liability, not only in Bivens

actions, but also in § 1983 suits,’” the court found it unnecessary to take a position because

“Mink ha[d] pled sufficient facts to state a facially plausible claim that Ms. Knox’s input into

and advice concerning the affidavit and warrant directly caused the purportedly

unconstitutional search of his house.” Id. (quoting Lewis v. Tripp, 604 F.3d 1221, 1227 n.3

(10th Cir. 2010)). The court also rejected the district court’s “sua sponte conclusion that the

complaint should be dismissed because it did not specifically allege that Ms. Knox reviewed

the warrant as well as the affidavit,” noting that the affidavit and the search warrant were

both attached to the complaint and Knox’s own affidavit indicated that she had reviewed the

warrant. Id. at *4. The court explained that the complaint’s allegations sufficiently alleged

a causal connection between Knox’s actions and the alleged constitutional violations:

More importantly, taking Mr. Mink’s allegations as true,

viewing them in the light most favorable to him, and making all

reasonable inferences in his favor, as we are required to do, persuades

us that the amended complaint plausibly asserted the requisite casual

connection between Ms. Knox’s conduct and the search and seizure

that occurred at Mr. Mink’s home. The amended complaint not only

alleged that Ms. Knox “reviewed and approved the affidavit

submitted to the state district court in support of the warrant to search

. . . Mink’s home,” it also alleged that she “authorized and caused an

unlawful search[,]” that “[a] reasonable prosecutor would have

known that the warrant failed to meet the particularity requirement

of the Fourth Amendment[,]” (emphasis added), and that “[a]

reasonable prosecutor would have known that the affidavit failed to

establish probable cause to search and seize the items described in the

warrant.” (emphasis added). These allegations, coupled with the
528

attachment of the warrant and affidavit to the complaint, support the

reasonable factual inference that Ms. Knox reviewed the warrant as

well as the affidavit, and that her approval set in motion a series of

events that she knew or reasonably should have known would cause

others to deprive Mr. Mink of his constitutional rights.

Id. (alterations in original) (internal record citations omitted).

After concluding that the complaint adequately alleged causation, the court concluded that

the allegations, if true, established a constitutional violation by adequately alleging issuance

of the warrant without probable cause and without the requisite particularity. See id. at

*5–12. The court analyzed the relevant First Amendment precedents and held that

“[b]ecause a reasonable person would not take the statements in the editorial column as

statements of facts by or about Professor Peake, no reasonable prosecutor could believe it

was probable that publishing such statements constituted a crime warranting search and

seizure of Mr. Mink’s property.” Mink, 2010 WL 2802729, at *11. The court also

concluded that Mink had alleged that the warrant lacked particularity as required under the

Fourth Amendment, noting that “[t]he warrant authorized the search and seizure of all

computer and non-computer equipment and written materials in Mr. Mink’s house, without

any mention of any particular crime to which they might be related, essentially authorizing

a ‘general exploratory rummaging’ through Mr. Mink’s belongings for any unspecified

‘criminal offense.’” Id. at *12 (citations omitted). The court held: “[V]iewing the amended

complaint in the light most favorable to the nonmoving party, Mr. Mink, and drawing all

reasonable inferences in his favor, we conclude the complaint plausibly alleged that Ms.

Knox violated Mr. Mink’s constitutional right not to be served with an overbroad warrant

lacking any particularity.” Id. (internal citation omitted). Because the court also concluded

that the law was clearly established at the time of the alleged violations, it held that qualified

immunity was not an appropriate basis for dismissal. See id.

• Glover v. Mabrey, 384 F. App’x 763, 2010 WL 2563032 (10th Cir. 2010) (unpublished).

Glover Construction Company and its owner filed suit under § 1983 against the Oklahoma

Department of Transportation (“ODOT”) Commissioners and six department officials,

alleging that the defendants retaliated against Glover in violation of its First and Fourteenth

Amendment rights. Id. at *1. The district court denied the defendants’ motion to dismiss

and rejected their affirmative defenses based on absolute and qualified immunity. Id. The

Tenth Circuit affirmed in part, reversed in part, and remanded.

The complaint alleged that Glover had contracted with ODOT to perform construction work

for nearly 30 years and that it was a prequalified bidder. Id. Over the years, Glover and

ODOT had various disagreements, including a contentious dispute over the construction of

Highway 64. Id. After Glover was awarded the contract for the construction of Highway 64,

various problems with the project led to a dispute between Glover and ODOT that was

widely publicized. Id. ODOT allegedly revoked Glover’s prequalification status despite a

court order enjoining revocation. Glover, 2010 WL 2563032, at *1. The complaint alleged
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the following counts:

Count I, retaliation for the exercise of First Amendment rights to

petition for the redress of grievances; Count II, retaliation for the

exercise of Fourteenth Amendment rights to due process and a First

Amendment right to speak on matters of public importance; Count III,

violation of Glover’s Fourteenth Amendment right to equal

protection; and Count IV, retaliation for Glover’s exercise of First

Amendment right to free speech.

Id. The district court denied the defendants’ motion to dismiss, stating that it was a “close

call,” but that Glover had alleged sufficient facts to support its claims. Id. at *2. The district

court also found that the defendants were not entitled to qualified immunity because

retaliation for exercising First Amendment rights is a clearly established constitutional

violation, and denied absolute immunity because the record was not sufficiently developed.

Id.

On appeal, the Tenth Circuit began by discussing the relevant pleading standards. The court

explained that “[t]he purpose of this ‘plausibility’ requirement [in Twombly] is ‘to weed out

claims that do not in the absence of additional allegations have a reasonable prospect of

success [and ] inform the defendants of the actual grounds of the claim against them.’” Id.

at *3 (second alteration in original) (quoting Robbins v. Okla. ex. rel. Dep’t of Soc. Servs.,

519 F.3d 1242, 1248 (10th Cir. 2008) (emphasis added)). The court emphasized that “[t]he

necessary degree of specificity is highly dependent on the context and type of case.” Id.

(emphasis added) (citing Robbins, 519 F.3d at 1247). The court stated that “[t]he complaint

‘must contain either direct or inferential allegations respecting all the material elements

necessary to sustain a recovery under some viable legal theory.’” Glover, 2010 WL 2563032,

at *3 (quoting Bryson v. Gonzales, 534 F.3d 1282, 1286 (10th Cir. 2008) (quotations

omitted)). The court stated that it would disregard some of the statements in the complaint

under the Iqbal framework:

Many allegations in Glover’s complaint are conclusory statements

providing no concrete way of identifying what actions were taken,

when, or in some instances by whom. A number of allegations refer

generally to “ODOT,” “ODOT officials,” and “top executives,” or “an

ODOT executive.” Without more, these allegations provide no

indication which defendant must defend against the charge. In

addition, other allegations provide no dates or other information with

which one might put the alleged activities in some sort of temporal

context. We will not consider these general and/or conclusory

allegations. See Iqbal, 129 S. Ct. at 1950 (“a court . . . can . . . begin

by identifying pleadings that . . . are not entitled to the assumption of

truth”). We consider whether the remaining factual allegations are

sufficient to “nudge [these] claims across the line from conceivable
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to plausible.” Twombly, 550 U.S. at 570.

Id. at *4 (alteration and omissions in original) (internal record citations omitted).

With respect to the claim of First Amendment retaliation for public criticism, the court

explained that under the relevant legal framework, Glover had to allege that its speech

involved a matter of public interest. Id. at *5. “Glover allege[d] its comments to the media

blamed the increased costs of the Highway 64 project on ODOT’s faulty design . . . [and]

claim[ed] the speech concerned ‘when and how a public roadway fail[ed] . . . [and] relate[d]

to the expenditure of tax funds by government officials.’” Id. (fourth, fifth, and sixth

alterations and second omission in original) (citation omitted). The court concluded that

“Glover sufficiently alleged its public comments regarding ODOT’s poor design of Highway

64 was protected speech.” Id. (citation omitted). With respect to the second factor under the

relevant legal framework—that the employee’s interest in the expression outweighs the

government employer’s interest in regulating the speech—the court noted that ODOT had

“not argued it ha[d] an overriding interest in limiting Glover’s protected speech,” and that

“[w]ithout more from ODOT, the asserted public interest in learning the true cause of

possibly inefficient or wasteful public expenditures would normally outweigh ODOT’s

interest in suppressing these comments.” Id. With respect to the third factor—whether the

speech was a substantial factor driving the challenged governmental action—the court

considered the allegations with respect to each of the individual defendants separately. Id.

The court first considered the claim that ODOT investigator Skip Nicholson initiated an

investigation against Glover in violation of ODOT policy. Glover, 2010 WL 2563032, at *6.

The complaint alleged:

Nicholson encouraged [ODOT general counsel] Hill to seek a search

warrant for Glover’s “home and/or office” knowing there was no

probable cause; Nicholson encouraged law enforcement officers to

subpoena records from hotels where Mr. Glover stayed on vacation;

Nicholson investigated insurance claim allegations unrelated to

ODOT; Nicholson once called an environmental agency because trash

was burned on Mr. Glover’s property and; Nicholson and Hill caused

Glover to be audited by the IRS.

Id. The court explained that these allegations were not enough to meet the requirement that

the claim assert specific injuries caused by the individual defendants:

Other than the IRS audit, Glover does not allege Nicholson’s (or

Hill’s) actions actually caused a third party to take any action against

it. The complaint does not allege Nicholson’s “encouragement” led

to the issuance of a warrant or subpoena or a response from the

(unknown) environmental agency. It does not allege Nicholson’s

insurance investigation involved contact with Glover or resulted in
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harm. The complaint does not claim these activities had any impact

on the report recommending Glover’s debarment. Merely

“encouraging” or engaging in action is not an actionable

constitutional violation unless it results in some harm to the plaintiff.

Id. The court cited both a pre-Twombly case and a post-Twombly case to support the rule that

“[a] claim must assert specific injuries-in-fact caused by the individual defendants.” Id.

(citing Pignanelli v. Pueblo Sch. Dist. No. 60, 540 F.3d 1213, 1219 (10th Cir. 2008); Loving

v. Boren, 133 F.3d 771, 772–73 (10th Cir. 1998)). With respect to the IRS audit, the court

noted that although Glover stated that Nicholson, Hill, and other defendants unlawfully

caused the audit, he did not state when or how this was done. Id. The court held that even

assuming the cost and time spent complying with an audit could satisfy the injury-in-fact

requirement, the complaint did “not allege the IRS investigation was without cause—a

necessary element of his claim.” Id. The court cited Hartman v. Moore, 547 U.S. 250

(2006), for the proposition that when the defendant is a nonprosecutor, but is an official who

may have influenced the prosecutorial decision, “a plaintiff must plead and prove ‘that the

nonprosecuting official acted in retaliation, and must also show that he induced the

prosecutor to bring charges that would not have been initiated without his urging.’” Glover,

2010 WL 2563032, at *7 (quoting Hartman, 547 U.S. at 262). The court further explained:

“In other words, ‘[s]ome sort of allegation . . . is needed both to bridge the gap between the

nonprosecuting government agent’s motive and the prosecutor’s action, and to address the

presumption of prosecutorial regularity.’” Id. (omission in original) (quoting Hartman, 547

U.S. at 263). After explaining that Hartman had previously been extended to circumstances

similar to the facts of this case, the court concluded that “[t]he authority of the IRS to—and

its decision to in fact—conduct an audit triggers the multi-layered causation pleading

requirements,” and that Glover had to “allege (and ultimately prove) that the officials who

undertook the allegedly adverse action, IRS agents, lacked cause to do so.” Id. The court

held that “[t]he blanket allegation of ‘unlawfully caus[ing]’ does not allege with sufficient

specificity that the IRS lacked cause to conduct any audit which took place,” and that

“[b]ecause the complaint fail[ed] to allege Nicholson’s investigation caused harm to Glover,

the First Amendment retaliation claim against Nicholson fail[ed] to state a constitutional

violation.” Id. (second alteration in original).

The court next considered the claim that ODOT engineer Darren Saliba “‘adopted an

arbitrary and unreasonable policy of never approving any claims by [Glover], no matter how

reasonable, after [Glover] had been awarded a contract with ODOT.’” Id. (citation omitted).

The complaint contained two examples and alleged that Saliba’s actions “were in retaliation

for Glover’s claim ODOT had poorly designed defective roads . . . .” Id. The court

explained that “[w]hile Glover is not required to prove its case the pleadings, the complaint

must allege facts which plausibly support the allegation that Saliba’s alleged actions involved

a retaliatory motive.” Glover, 2010 WL 2563032, at *8. The court explained that the

allegations were insufficient:

The complaint alleges that each defendant acted “in concert”
532

with each other, presumably to link the commissioners’ and other

defendants’ retaliatory intent to Saliba. However, there are no factual

allegations connecting Saliba to the commissioners or any other

defendant. For instance, there are no allegations Saliba regularly

works with the ODOT commissioners, Hill, Ridley or Evans or that

he speaks with one or more of them with any regularity. It does not

allege he has ever worked in proximity to them. “A claim has facial

plausibility when the plaintiff pleads factual content that allows the

court to draw the reasonable inference that the defendant is liable for

the misconduct alleged.” Iqbal, 129 S. Ct. at 1949. If it were

reasonable to assume Saliba worked in concertwith these defendants,

it would also be reasonable to assume any employee from any of the

twenty-seven Central Office Divisions . . . or any of the eight field

divisions from across the state . . . also worked in concert with them.

Such an assumption strains credulity.

Even assuming the complaint alleges a plausible connection

between Saliba and these defendants, it fails to allege any level of

temporal proximity between Saliba’s alleged policy against Glover

and Glover’s public speech. While it is safe to assume the two

contract disputes occurred after the public fight over Highway 64, we

have no indication ofwhether Saliba’s actionstook place within days,

weeks, or even years of Glover’s public statements. The complaint

provides nothing which actually ties the Highway 64 comments and

Saliba’s actions together except the categorical statement that Saliba

“took [his] course of action in retaliation for [Glover] seeking redress

in court and because Glover published [derogatory comments on

Highway 64].” In sum, as the complaint is worded, it contains no

allegation of a connection between Saliba’s work and the

commissioners or even an explanation of how Saliba’s decisions

related to Glover’s public comments. The facts—two alleged

contract disputes—do not rule out the possibility of retaliatory

motive, “and thus at some level they are consistent with a viable First

Amendment claim, but mere possibility is not enough.” Moss v. U.S.

Secret Serv., 572 F.3d 962, 971–72 (9th Cir. 2009). Glover fails to

“nudge[ ][his] claims across the line from conceivable to plausible.[”]

Twombly, 550 U.S. at 570.

Id. (first, second, third, and fourth alterations in original) (internal record citations omitted).

The court then considered the claim that ODOT construction engineer George

Raymond—who had discretionary power to award contracts and recommend termination of

certificates to do business with ODOT—became hostile, recommended that Glover be

suspended from ODOT contracts, and stated that Glover would not get a contract with
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ODOT in the future. Id. at *9. The court concluded that this claim failed for reasons similar

to those that caused the claim against Saliba to fail. Id. The court explained:

Most importantly, the complaint contained no allegation Raymond’s

actions were based on Glover’s public criticism of ODOT[;] instead

it alleged Raymond’s statements were the result of his frustration with

Glover’s litigiousness. . . . Even inferring a dual motive on

Raymond’s part, there is no allegation regarding the time frame or the

recipient of any “recommendations” made by Raymond. Critically,

there is no allegation that Raymond was involved in the report to the

Commissioners or took any actions based on his alleged statements.

There is no allegation connecting Raymond to Glover’s loss of a

certificate to do business with ODOT due to his public comments on

ODOT’s performance. In other words, Glover has failed to allege

Raymond was personally involved in any violation of Glover’s First

Amendment rights.

Id.

Finally, the court considered the claim that ODOT CEO Gary Ridley, ODOT Director Gary

Evans, and ODOT general counsel Hill prepared a report that recommended that Glover be

designated as an “irresponsible bidder” and suspended from obtaining work from ODOT

because of Glover’s comments to the media regarding the Highway 64 project. Id. The

complaint alleged that “‘a large portion of the report was concerning an investigation of

Highway 64 wherein ODOT was being blamed for poor design.’” Glover, 2010 WL

2563032, at *9 (footnote and citation omitted). The court concluded that “[t]his allegation,

while tenuous, connects Glover’s statements to the media during the Highway 64 dispute to

Ridley, Evans and Hill’s motivation to recommend Glover’s debarment in an official report.”

Id. The court further noted that the complaint “allege[d] the ODOT Commissioners

unanimously adopted this report even though ‘it listed lawfully protected acts’ as a basis for

suspension,” and concluded that although it did “not know precisely what ‘lawfully protected

acts’ were listed, [it could] reasonably infer Glover’s public criticism was among them.” Id.

The court held: “Thus construed, the complaint alleges Ridley, Evans and Hill authorized the

report in retaliation for Glover’s speech and the Commissioners, knowing the retaliatory

basis for the recommendation, approved the recommendation and suspended Glover from

working for ODOT. These allegations are sufficient to state a claim for retaliation in

violation of Glover’s First Amendment right of freedom of speech.” Id.

With respect to the claim of retaliation for filing petitions for redress, the complaint

“allege[d] the report specifically referred to Glover’s prior judicial and administrative

challenges (Glover’s petitions for redress) as ‘a primary factor’ for its recommendation

Glover be disqualified from bidding.” Id. at *10. Noting a split of authority, the court

agreed with the Eighth Circuit’s approach that required a public employee’s claim for

retaliation based on a right to petition to state that the petition involved a matter of public
534

concern. Id. at *10–11. The court held that because “Glover allege[d] only private contract

disputes with ODOT based on the terms of its contracts . . . [and] allege[d] nothing which

may elevate the issues to a matter of public concern[,] it . . . failed to state a claim on which

relief [could] be granted.” Glover, 2010 WL 2563032, at *11.

With respect to the claim of retaliation for exercising due process, the court concluded that

“[t]o the extent Glover argue[d] retaliation for his past petitions for redress, this [wa]s simply

an attempt to dress First Amendment claims in Fourteenth Amendment garb,” and the court

declined to readdress the First Amendment issues in this new context. Id. at *12. To the

extent Glover was claiming a due process violation in the debarment proceedings, the court

noted that the case law required a liberty or property interest in the outcome of the

proceedings, that there was no protected property interest when the government official has

complete discretion over the outcome, and that the relevant Oklahoma law provided that the

prequalified bidder determination was within the Commission’s sole discretion. Id. The

court also rejected Glover’s reliance on an Oklahoma case that Glover asserted held that a

contractor has a property interest if it has or should have been accepted as the lowest possible

bidder, explaining that “Glover’s claims concern[ed] the removal of prequalified status” and

Oklahoma law provided that prequalification to bid on contracts does not constitute a license

essential in the pursuit of a livelihood. Id.

With respect to the equal protection claim, the complaint alleged a “class of one” theory that

the “‘defendants singled out [Glover] for disparate treatment from others similarly situated

for no rational reason . . . [other than] their personal animosity against [Glover]’ in violation

of the Fourteenth Amendment’s guaranty of equal protection.” Id. at *13 (alterations in

original). The court concluded that this claim failed because “Glover . . . failed to allege, as

it must, the identity or characteristics of other similarly situated contractors and how those

similarly situated contractors were treated differently.” Id. at *14 (citation omitted). The

court elaborated on the deficiencies of the claim, stating:

Glover does not identify any contractor who was treated differently.

The complaint contains no instance where Saliba granted similar

requests made by other contractors, no similar circumstances where

another contractor was not investigated, and no specific action taken

by top executives that would not have been taken by supervisors. Nor

does it identify a single similarly-situated contractor which did not

lose its prequalification status after numerous legal challenges or

statements to the media. Without additional information, Glover’s

class-of-one equal protection claim fails to state a claim as to any

defendant.

Glover, 2010 WL 2563032, at *14.

Finally, the court concluded that the defendants were not entitled to qualified immunity,

explaining that “Glover alleged the report, the recommendation and the Board’s adoption of
535

the recommendation were in retaliation for its protected speech,” and “freedom from

retaliation for protected activity was clearly established when the defendants acted and they

[we]re not entitled to qualified immunity.” Id.

The court affirmed in part and reversed in part, and remanded for further proceedings. With

respect to the claims that the court deemed properly dismissed, it directed the district court

to address whether to grant leave to amend on remand. Id. at *14 n.11.

• Barrett v. Orman, 373 F. App’x 823, 2010 WL 1499586 (10th Cir. 2010) (unpublished).

A state inmate filed a pro se complaint under § 1983 against David Orman, the mailroom

administrator at the Oklahoma State Penitentiary; Marty Sirmons, the warden; Debbie L.

Morton, the director’s designee of the Oklahoma Department of Corrections (“ODOC”); and

Max Williams, the director of the Oregon Department of Corrections, alleging violations of

his free speech rights under the First Amendment and his due process rights under the

Fourteenth Amendment, when his mail was rejected without notice and an opportunity to be

heard. Id. at *1. Defendants Orman, Sirmons, and Morton moved to dismiss, arguing that:

the violation of prison procedure alone does not constitute a

constitutional violation; Mr. Barrett allegedly tried to extort a

settlement; the complaint did not personally link Defendants Sirmons

and Morton to the alleged constitutional violation; Mr. Barrett

allegedly tried to extort a settlement; the complaint did not personally

link Defendants Sirmons and Morton to the alleged constitutional

violation; and Defendants were entitled to immunity under the

Eleventh Amendment.

Id. Williams moved to dismiss based on lack of personal jurisdiction and his lack of any

personal participation. Id. The district court granted both motions to dismiss, finding that

the complaint failed to allege any personal participation by Williams and failed to state a

claim against the other defendants. Id. The district court had concluded that the complaint

only alleged that the defendants failed to follow a prison regulation, and that “‘violation of

a prison regulation cannot rise to the level of a constitutional violation.’” Id. The district

court denied leave to amend. Barrett, 2010 WL 1499586, at *1.

On appeal, the Tenth Circuit held that “[a]lthough a violation of a prison regulation is not

automatically a constitutional violation, Mr. Barrett nonetheless stated a valid constitutional

claim even without the liberal pleading standards typically accorded to pro se litigants.” Id.

at *2 (footnote and internal citation omitted). The court explained that the complaint “clearly

and repeatedly couched [Barrett’s] claim in terms of constitutional violations,” and that

“[n]either the original nor the amended complaint ever mentioned a violation of prison

regulations.” Id. The court emphasized that pro se pleadings should be construed liberally

and that pro se litigants should be given a reasonable opportunity to remedy any problems

in their pleadings. See id. at *2 n.2. The court pointed out that “[o]f course, even under the

more stringent Twombly/Iqbal pleading standard, Mr. Barrett did not need to cite specific
536

cases in his complaint to survive a Rule 12(b)(6) motion,” but that instead “a complaint’s

facts must state a plausible claim.” Id. (citing Twombly, 550 U.S. at 570). The court

concluded that “[t]he alleged facts in Mr. Barrett’s complaints—that specific incoming mail

was being rejected without any notice, statement of reasons, or opportunity to be heard—at

least stated a plausible claim” under the relevant Supreme Court case addressing prisoners’

right to receive uncensored correspondence. Id. The court held that “the facts alleged

‘nudged’ [Barrett’s] claim against Defendants Orman, Workman, and Morton ‘across the line

from conceivable to plausible.’” Barrett, 2010 WL 1499586, at *2 (quoting Twombly, 550

U.S. at 570).

In contrast, the court determined that there were insufficient facts to sustain a claim against

Williams, stating:

The amended complaint alleges Mr. Williams’s position as director

of the Oregon Department of Corrections and recites his personal

participation in and liability for the constitutional violations. Such a

“pleading that offers labels and conclusions or a formulaic recitation

of the elements of a cause of action will not do.” Iqbal, 129 S. Ct. at

1949 (internal quotation marks and citation omitted). Allegations of

Mr. Williams’s involvement are no more than “naked assertion[s].”

Twombly, 550 U.S. at 557. Because the allegations against Mr.

Williams do not show an affirmative link between the constitutional

deprivation and his personal participation, Mr. Barrett failed to state

a claim on which relief could be granted against Mr. Williams.

Id. at *3 (alteration in original) (internal citations omitted).

The Tenth Circuit held that the district court did not abuse its discretion in denying leave to

amend because the motion for leave did not comply with the local rules. Id. The court

affirmed the grant of Williams’s motion to dismiss, affirmed the denial of the plaintiff’s

motion to amend, and reversed the grant of the motion to dismiss by Orman, Workman, and

Morton. Id.

• Arocho v. Nafziger, 367 F. App’x 942, 2010 WL 681679 (10th Cir. 2010) (unpublished) (per

curiam). The plaintiff brought a prisoner civil rights action alleging that he was denied

recommended treatment for a Hepatitis C infection that was damaging his liver and causing

him pain. Id. at *1. The district court dismissed the claims on the pleadings, “holding that

the complaint (1) failed to establish the court’s personal jurisdiction over defendant Harley

G. Lappin (‘BOP Director Lappin’), and (2) failed to state a constitutional claim against

defendants Steven Nafziger (‘Clinical Director Nafziger’) and Ron Wiley (‘Warden Wiley’),

entitling them to qualified immunity from damages in their individual capacities and

precluding injunctive relief against them in their official capacities.” Id. The Tenth Circuit

reversed the dismissal of the claim against Lappin, affirmed the dismissal of the claim

against Wiley, and modified the dismissal of the claim against Nafziger to a dismissal
537

without prejudice. Id.

According to the complaint, Arocho had Hepatitis C, and blood tests ordered by Clinical

Director Nafziger recommended treatment with Interferon/Ribavirin. Id. Arocho underwent

psychological evaluation and was found mentally stable and thus able to take the

recommended medication, which had a possible side effect of depression. Id. Several

months later, Arocho asked Nafziger about the treatment, but received no response. Arocho,

2010 WL 681679, at *1. After another inquiry several more months later, Nafziger said he

was waiting for approval of the medication from the BOP in D.C. Id. Arocho alleged that

he continuously requested his medication, but never received it, and that this resulted in pain

and suffering and exposure to life-threatening liver damage that may render him unable to

respond to future treatment. Id.

The Eighth Amendment claim against BOP Director Lappin alleged that there was no doubt

when the medication request was sent to Lappin that Arocho’s situation was serious, and that

Lappin still refused treatment. Id. The complaint also asserted that “Lappin ‘fail[ed] to

intervene and correct’ the situation after receiving a copy of an administrative grievance Mr.

Arocho filed at Florence in November 2007, and ‘ignored his duty imposed by his authority

. . . to stop plaintiff[’s] pain suffering, to prevent and correct the violations, [and] to enforce

the institutional rules, regulations, and policy . . . and constitutional mandates . . . [for]

medical care and treatment.’” Id. (alterations and omissions in original).

The Eighth Amendment claim against Nafziger alleged that he “‘failed to act for immediate

treatment of plaintiff[’s] condition with deliberate indifference,’ put off Mr. Arocho’s

repeated follow-up inquiries, sometimes telling him ‘to be patient’ and on other occasions

simply ‘ignor[ing] [his] complaints and request[s],’ and ‘did nothing to prevent’ the delay

and denial of proper treatment.” Id. at *2 (alterations in original). The complaint did “not

specify what it is that Nafziger could and should have done to secure the treatment he had

recommended, given BOP Director Lappin’s alleged refusal to approve it.” Id.

The Eighth Amendment aspect of Arocho’s claim against Warden Wiley was that:

Wiley allegedly (1) knew of Nafziger’s denial of treatment but

ignored his duty as warden to intervene “to enforce the rules,

regulations, program statement and institutional policy that include

pain assessment[,] prescribed medication and proper treatment in a

timely manner”; and (2) responded to an administrative grievance

from Mr. Arocho regarding the recommended Interferon/Ribavirin

treatment by incorrectly stating that “it will be schedule[d] as soon as

the Clinical Director[’s] patient load allow[s].”

Arocho. 2010 WL 681679, at *2 (alterations in original). The claim against Wiley also

contained an equal protection aspect, alleging that “‘other inmates have received the

treatment with my same situation in [a] timely manner’” and that “Wiley ‘violate[d]
538

plaintiff[’s] rights and the Equal Protection [C]lause that prohibits . . . selectively denying

the plaintiff proper health care, medical treatment, [and] medication.’” Id. (alterations in

original).

The complaint requested an injunction requiring the defendants to provide the recommended

treatment; compensatory and punitive damages for pain, suffering, and irreparable harm

caused by lack of treatment; and transfer to prison in Puerto Rico. Id. The district court

concluded that it lacked personal jurisdiction over Lappin, but the Tenth Circuit disagreed.

In considering personal jurisdiction, the Tenth Circuit noted that “the more specific thrust

of Mr. Arocho’s claim against BOP Director Lappin is that he was actively and directly

responsible for the denial of the medical treatment recommended for Mr. Arocho by prison

medical personnel,” and that “[t]his [wa]s simply not a situation where an official is being

haled into an out-of-state court merely because he has a remote supervisory relationship to

the parties or the subject matter of the case.” Id. at *3. The court stated that it did not

“necessarily take issue with th[e] general principle” used by the district court (citing both a

pre-Twombly and a post-Twombly case) that “an official’s supervisory responsibility over

operations and facilities in other states does not, standing alone, constitute a sufficient basis

for personal jurisdiction with respect to injuries resulting therefrom,” id., and noted that

“given a recent Supreme Court pronouncement, the basic concept of § 1983 or Bivens

supervisory liability itself may no longer be tenable,” id. at *3 n.4 (citing Iqbal, 129 S. Ct.

at 1949). The court also noted that “[a]fter Iqbal, circuits that had held supervisors liable

when they knew of and acquiesced in the unconstitutional conduct of subordinates have

expressed some doubt over the continuing validity of even that limited form of liability.”

Arocho, 2010 WL 681679, at *3 n.4. The court concluded that Arocho had pleaded

sufficient facts to establish personal jurisdiction over Lappin:

The complaint alleges that BOP Director Lappin refused to

approve the medication recommended for Mr. Arocho’s Hepatitis C

infection by his treating physician. Whether or not that decision is

ultimately found to have violated Mr. Arocho’s Eighth Amendment

rights, it is clearly pled as an intentional act. And it was aimed at the

forum state: Lappin did not allegedly issue some generalized

prohibition on Interferon/Ribavirin treatment in federal prisons; he

denied a specific treatment request by a Colorado prison physician,

precluding use of the requested medication to an inmate in the federal

facility in Florence, Colorado. Finally, under the circumstances, it

can hardly be denied that Lappin knew the brunt of the injury would

be felt in Colorado.

Id. at *5. The court explained that “[o]f course, the question of personal jurisdiction [could]

always be revisited at a post-pleading stage of the proceedings, where the evidence [might]

show that the relevant facts [we]re other than they ha[d] been pled,” but concluded that “for

present purposes, the requisite ‘purposeful direction’ [wa]s more than adequately pled in the

complaint.” Id. After analyzing the other relevant factors, the Tenth Circuit held that the
539

district court erred by dismissing the action against Lappin on the basis of lack of personal

jurisdiction. Id. at *7.

In considering the possibility of dismissal of the claim against Lappin based on failure to

state a claim, the court rejected the argument that “‘there was no allegation that Defendants

Wiley or Lappin—who are not doctors—knew that Mr. Arocho required access to this

specific treatment [i.e., Interferon/Ribavirin], and on an emergency basis, or that failure to

approve that treatment would seriously and irreparably harm him.’” Id. (alteration in

original). The court explained:

On the contrary, as our prior review of the complaint shows, the crux

of the claim against Lappin is that he knew the serious disease Mr.

Arocho suffers from and knew that Clinical Director Nafziger

recommended treatment of the condition with Interferon/Ribavirin,

and yet refused to approve the treatment. The facts alleged make out

a plausible case of deliberate indifference. That Lappin is not a

doctor does not undermine such a claim; rather it only focuses the

claim on a long-recognized scenario of deliberate indifference: acts

by lay officials that prevent access to treatment recommended or

prescribed by medical personnel.

Of course, Lappin may still attempt to show that he had a

constitutionally legitimate justification for denying treatment. But,

at this stage, Mr. Arocho has stated a plausible claim of deliberate

indifference against him. Factual challenges to that claim must be

pursued through summary judgment.

Id. (emphasis added) (internal citations and footnote omitted). The court also noted that the

district court erred by considering an affidavit submitted by the defendants because “it is

improper to decide a motion to dismiss on the basis of evidence submitted by the

defendant—that is what summary judgment is for.” Arocho, 2010 WL 681679, at *7 n.12.

With respect to Nafziger, the Tenth Circuit noted that the allegationsin the complaint would

tend to show that Nafziger was not liable, but that there were less explicit allegations that

warranted further examination:

The general theme of the complaint, attributing primary

responsibility for the denial of treatment to Lappin, appears to supply

Nafziger with grounds for exoneration rather than liability: Nafziger

discovered the immediate threat posed by the Hepatitis C, concluded

that Interferon/Ribavirin treatment was appropriate, and

recommended that Lappin approve the treatment. As the district

court concluded, this “does not evidence the degree of neglect

sufficient to find that Defendant Nafziger was deliberately indifferent
540

to Plaintiff's medical needs. Indeed, it evidences no neglect at all.”

But there is a second, counter-theme evident, though less

prominent, in the claim directed specifically at Nafziger. Mr[.]

Arocho attributes the continuing delay in obtaining the recommended

treatment, at least in part, to Nafziger’s own inaction and

indifference. He alleges that since his favorable psychological

assessment for the treatment in September 2007, he has “contact[ed]

. . . the health care service, S. Nafsinger [sic], requesting the

treatment—medication—status of his case and complaint about

symptoms of the Hepatitis C as pain and other symptoms and they

answered to be patient and in other oc[c]asions have ignored [his]

complaints and request[s]—intentionally—with deliberate

indifference.” And, though Nafziger recommended the

Interferon/Ribavirin regimen, he then “failed to act for plaintiff's

im[m]ediate treatment” and is at least partially responsible for the

subsequent delay, which he “did nothing to prevent.”

Id. at *8 (second, third, fourth, fifth, and sixth alterations and omission in original) (internal

citations omitted). The court concluded that the factual allegations were not sufficient:

These are factually thin allegations. Indeed, the only facts

stated concern the insensitive response given to Mr. Arocho’s

inquiries about the status of his recommended treatment. But

complaints about poor patient-communication do not, at least

standing alone, evince deliberate indifference to a serious medical

need. So long as Nafziger adequately pursued the treatment

recommended for Mr. Arocho’s medical condition, an Eighth

Amendment claim cannot be made out on the basis that he simply

neglected to keep Mr. Arocho fully apprised of the status of the

recommendation. Of course, Mr. Arocho also considers Nafziger

partly to blame for the delay and ultimate denial of the recommended

treatment, as the more general allegations quoted above reflect. But

he offers no suggestion, much less a plausible factual specification,

as to what Nafziger failed to do in making and medically supporting

his recommendation or in prompting a more appropriate response to

its exigency.

“[T]he pleading standard Rule 8 [of the Federal Rules of Civil

Procedure] announces does not require detailed factual allegations,

but i t d e m a n d s m o re tha n an unador ned,

the-defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal,

129 S. Ct. 1937, 1949 (2009) (internal quotation omitted). A

complaint must include “factual content that allows the court to draw
541

the reasonable inference that the defendant is liable for the

misconduct alleged,” and where its allegations “are merely consistent

with a defendant’s liability, it stops short of the line between

possibility and plausibility of entitlement to relief.” Id. (internal

quotations omitted). Here, the most that can be said about Nafziger’s

alleged actions—recommending the Interferon/Ribavirin treatment

upon discovering that Hepatitis C was damaging Mr. Arocho’s liver,

and then waiting on approval of the treatment by the authorities—is

that they do not necessarily preclude his liability for the alleged delay

and denial of medical treatment. But such liability is nothing more

than a theoretical possibility in the absence of other, unnamed acts

about which the court can only speculate at this point. We therefore

agree with the district court that Mr. Arocho has not stated a claim for

relief against Nafziger.

Id. (emphasis added) (alterations in original). Although the court found the facts pleaded as

to Nafziger insufficient, it nonetheless found that the case’s unique factual background

warranted maintaining the claim against Nafziger for the time being:

But there are additional considerations here, particularly given

our reinstatement of the case against BOP Director Lappin, that weigh

in favor of providing Mr. Arocho an opportunity to cure this pleading

deficiency. While the conclusory allegations regarding Nafziger’s

role in the delay/denial of treatment fall short of stating a claim,

when viewed in light of the litigation position espoused by BOP

Director Lappin, they nevertheless warrant the exercise of some

caution in foreclosing the possibility of liability on Nafziger’s part.

The claims against these two defendants are to some degree in direct

opposition, creating a “zero-sum game” of liability: the stronger the

claim that Nafziger failed to properly support or press for treatment,

the weaker the claim that Lappin should be held liable for not

approving it; conversely, the more Nafziger did to satisfy his duty to

secure the necessary treatment, the stronger the claim against Lappin

for denying it. And the litigation positions separately advanced by

these defendants do seem to exploit (however innocently) this

situation. Nafziger notes that he recommended Interferon/Ribavirin

and insists his “efforts to gain approval of this medication for Mr.

Arocho are not indicative of negligence, but rather of diligence.” But,

as we have seen, Lappin’s position is that he was not aware that this

particular treatment was needed, or that the need for treatment was

urgent, or that Mr. Arocho could suffer serious and irreparable harm

if Lappin failed to approve it. All of which begs the crucial question:

what did Nafziger convey to Lappin about Mr. Arocho’s condition,

the need for Interferon/Ribavirin, and the harm involved if the
542

treatment was denied or delayed?

Id. at *9 (emphasis added) (internal citations omitted). The court emphasized that the

plaintiff did not have the relevant information to plead further details:

Obviously, the facts known to and alleged by Mr. Arocho

cannot settle that question. He knows only what he has experienced

and what he has been told by defendants, i.e., that Hepatitis C is

causing him pain and damaging his liver, that Nafziger recommended

he be treated with Interferon/Ribavirin, and that Lappin refused to

approve the treatment. The nature and extent of the exchange

between Nafziger and Lappin, which may exonerate one (or both)

while implicating the other (or both), is known only by defendants.

In such circumstances, to dismiss the claim against Nafziger without

one more chance at amendment following the reinstatement of the

claim against Lappin could lead to a real injustice: after the

dismissal, Lappin could oppose the claim against him by submitting

evidence on summary judgment indicating that all of the fault lay,

rather, with Nafziger who, having been dismissed with prejudice from

the case, could not be brought back in to answer for his

now-demonstrated liability.

Id. (emphasis added). The court concluded: “Under the unique circumstances here, and

particularly given our reinstatement of the case against BOP Director Lappin, we deem it

appropriate to afford Mr. Arocho an opportunity to amend his pleadings on remand to state

a claim, if possible, against Nafziger.” Id.

With respect to the claim against the warden, the court concluded that it was appropriately

dismissed with prejudice. Arocho, 2010 WL 681679, at *10. The court explained that the

“allegation that Wiley erroneously denied a grievance [Arocho] had filed regarding his

Hepatitis C treatment d[id] not state an actionable claim” because the relevant case law held

that denial of such grievances was not sufficient to establish personal participation. Id. The

court noted that “the complaint fail[ed] to allege the grounds on which Warden Wiley could

be held responsible for the medical decisions involved here.” Id. The court concluded that

the allegation that Wiley failed to properly supervise the medical facility was inadequate

because “[t]he traditional standard for supervisory liability in this circuit ‘requires allegations

of personal direction or of actual knowledge and acquiescence’ in a subordinate’s

unconstitutional conduct,” and “the Supreme Court’s recent discussion of supervisory

liability [in Iqbal] casts doubt on the continuing vitality of even this limited form of such

liability.” Id. (citation omitted). The court explained:

In any event, Mr. Arocho’s allegations do not satisfy our extant

standard. His claim here is that “warden [Wiley] was in the position

to correct plaintiff[’s] rights violation and fail[ed] to do so.” To the
543

extent the rights violation was a function of BOP Director Lappin’s

decision, Lappin is obviously not Wiley’s subordinate and any

allegation that Wiley was in a position to “correct” Lappin’s decision

would be facially implausible. With respect to Nafziger, there are no

facts alleged to suggest that Wiley knew of and acquiesced in any act

of deliberate indifference by Nafziger, who had tested Mr. Arocho,

recommended treatment, and was simply waiting for approval. The

complaint bespeaks nothing more than a warden’s reasonable reliance

on the judgment of prison medical staff, which negates rather than

supports liability.

Id. at *11 (alterations in original) (internal citation omitted). The court also concluded that

the equal protection claim against Wiley failed:

Mr. Arocho’s claim that Wiley violated his right to equal protection

is patently deficient. The sole allegation in this respect is: “Other

inmate’s [sic] have received the treatment [presumably

Interferon/Ribavirin] with my same situation in [a] timely manner.”

In addition to its utterly conclusory nature, this allegation does not

remotely suggest a plausible factual basis for attributing such

differential treatment to the warden of the prison, who is not

responsible for the recommendation of medical treatment or the

approval of such treatment.

Id. (alterations in original) (internal citation omitted).

The court reversed the dismissal of the claims for injunctive relief because the district court’s

basis for dismissal—that Arocho failed to state a claim against any of the defendants—had

been altered by the Tenth Circuit’s holdings. Arocho, 2010 WL 681679, at *11. The court

noted that “[i]njunctive relieffrom Lappin [wa]s obviously no longer legally foreclosed, and

the dismissal of the claim for injunctive relief against Nafzigershould be without prejudice.”

Id.

• Bixler v. Foster, 596 F.3d 751 (10th Cir. 2010). Minority shareholders of Mineral Energy

and Technology Corp. (“METCO”) sued the company’s directors and lawyers, alleging

violations of the RacketeerInfluenced and Corrupt Organizations Act (RICO) by the transfer

of METCO’s assets to an Australian corporation. Id. at 754. The district court dismissed for

failure to state a claim, and the Tenth Circuit affirmed because “(1) the plaintiffs lacked

standing under RICO to assert shareholder derivative claims; (2) allegations of securities

fraud do not establish predicate acts under RICO; and (3) the ‘continuity’ requirement of

RICO [wa]s not satisfied by the allegations in the complaint.” Id.

The complaint alleged that the defendants, as directors and majority shareholders of

METCO, traded METCO’s uranium mining claims to subsidiaries of Uranium King, Ltd.
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(“UKL”), for which several of the defendants also served as directors. Id. at 755. UKL then

merged with Monaro Mining NL (“Monaro”). Id. The complaint alleged that the agreement

provided for METCO to receive $6.5 million and stock in UKL, which would be distributed

pro rata to the shareholders. Id. The plaintiffs alleged that after METCO transferred its

uranium claim deeds to UKL, UKL never paid the money or transferred the UKL stock, and

as a result, the plaintiffs lost the value of their investment in METCO. Bixler, 596 F.3d at

755. The complaint further alleged that the defendants were highly compensated for

arranging the transaction. Id. The plaintiffs alleged that “the defendants defrauded them of

their share of the UKL stock and rendered their METCO investment virtually worthless,” and

that “the UKL-Monaro merger was a fraudulent means of transferring the mining claims to

a third entity.” Id. The complaint further asserted that the attorney defendants represented

the other defendants in order to file frivolous lawsuits against the plaintiffs to keep them

from pursuing claims to METCO’s assets. Id. The plaintiffs asserted a conspiracy to deprive

them of their value of METCO shares by predicate acts, in violation of RICO. Id. “The

district court held that plaintiffs did not have standing to bring RICO claims on METCO’s

behalf and that the Private Securities Litigation Reform Act (PSLRA) precluded RICO

claims based on securities fraud.” Id.

The Tenth Circuit agreed that the plaintiffs lacked RICO standing, explaining that “the law

is that conduct which harms a corporation confers standing on the corporation, not its

shareholders,” and that this rule “‘is a longstanding equitable restriction that generally

prohibits shareholders from initiating actions to enforce the rights of the corporation unless

the corporation’s management has refused to pursue the same action for reasons other than

good-faith business judgment.’” Bixler, 596 F.3d at 756–57 (footnote omitted) (citing

Franchise Tax Bd. of Cal. v. Alcan Aluminum Ltd., 493 U.S. 331, 336 (1990)). The court

noted that there was an exception for shareholders with a direct, personal interest in the cause

of action, but found that the “allegations . . . merely assert[ed] the minority shareholders

suffered a diminution in value of their corporate shares without receiving the same monetary

compensation the majority shareholders received.” Id. at 757. The court explained that

“[s]uch an injury is not direct and personal for RICO purposes but is, rather, an injury to the

corporation.” Id. The plaintiffs argued that they were personally injured because the

defendants diluted the plaintiffs’ proportionate corporate ownership and pursued abusive

litigation against the plaintiffs. Id. The court concluded that the plaintiffs had not shown

that their proportionate ownership was diluted under the relevant case law because they

“ha[d] made no showing that more shares were issued or that the value of the majority

shareholders’ shares increased more than theirs,” instead relying on the allegation that the

majority shareholders were compensated for the transactions. Id. at 757–58. The court

rejected the argument that the plaintiffs could have amended their complaint to omit the

allegations of securities fraud and insider trading, explaining that “amendment would have

been futile because withdrawing the specific allegations of securities fraud and insider

trading would not have altered the essential nature of plaintiff’s claims, which were based

on their status as minority METCO shareholders whose shares lost value.” Id. at 758

(footnote and citation omitted). The court also held that the abusive litigation claim did not

state a RICO predicate act because the court “ha[d] refused to ‘recogniz[e] abusive litigation
545

as a form of extortion [because doing so] would subject almost any unsuccessful lawsuit to

a colorable extortion (and often a RICO) claim.’” Bixler, 596 F.3d at 758 (second and third

alterations in original) (citing Deck v. Engineered Laminates, 349 F.3d 1253, 1258 (10th Cir.

2003)). The court concluded that “[b]ecause plaintiffs’ injuries were based on the diminution

of the value of their METCO shares, and not on direct injury to them, . . . their claims [we]re

derivative of the corporation’s,” and held that the plaintiffs did not have RICO standing. Id.

at 758–59. The court also held that the plaintiffs’ claims fell within the PSLRA, which

barred the alleged actions from constituting predicate acts for RICO purposes. Id. at 759–60.

The court also concluded that dismissal was also appropriate because the complaint did not

state a claim of “continuity” of the RICO scheme. Id. at 760. The court noted that the

“complaint allege[d] that defendants engaged in a single scheme to accomplish the discrete

goal of transferring METCO’s uranium mining interests to another corporation (UKL, which

then allegedly transferred them to Monaro),” and concluded that “‘[t]he facts as alleged

fail[ed] to show any threat of ‘future criminal conduct,’’” and that “the complaint was subject

to dismissal for failing to ‘allege[ ] the type of activity that RICO was enacted to address.’”

Id. at 761 (fourth alteration in original) (citation omitted).

The plaintiffs also claimed that the district judge was biased against them, in part because

the district court dismissed the case “at the pleading stage, in part, so as not to ‘force

defendants to go through the burden and expense of conducting discovery before they [we]re

afforded their first real opportunity to seek the dismissal of groundless claims.’” Id. at 762.

The Tenth Circuit noted that “Twombly recognized that discovery can be expensive, and that

‘the problem of discovery abuse cannot be solved by careful scrutiny of evidence at the

summary judgment stage,’” and that Iqbal stated that “‘[t]he question presented by a motion

to dismiss a complaint for insufficient pleadings does not turn on the controls placed upon

the discovery process.’” Bixler, 596 F.3d at 762 (citations omitted). The court concluded

that “[t]he district court’s consideration of discovery expenses and abuses does not support

a claim of judicial bias,” and that “[t]o the extent plaintiffs argue that bias was shown by the

district court’s failure to invite them to file an amended complaint, [the Tenth Circuit had

concluded] that amendment would have been futile.” Id.

• Phillips v. Bell, 365 F. App’x 133, 2010 WL 517629 (10th Cir. 2010) (unpublished). The

complaint was brought under Bivens and alleged that employees of the Federal Bureau of

Alcohol, Tobacco, Firearms, and Explosives (“ATF”) violated the Fourth Amendment and

Title III of the Omnibus Crime Control and Safe Streets Act of 1968 (the “Federal Wiretap

Act”). Id. at *1. The complaint alleged that ATF agents arrested Ronald Young under an

outstanding Colorado warrant, that Young consented to searches in four locations, and that

in conducting those searches the ATF agents seized recorded telephone conversations

between Young and Phillipsthat Young had recorded without Phillips’s permission. Id. The

complaint further alleged that the ATF agents released copies of the seized recordings to

numerous state and federal law enforcement officers; that an ATF agent in Arizona (Agent

Bell) disclosed the contents of the recordings to other law enforcement officers who

identified the voices in the recordings as Young’s and Phillips’s; that Agent Bell caused the
546

contents of the recordings to be disclosed and used in a search warrant for Phillips’s home

and in the supporting affidavits; and that Agent Bell participated in the search of Phillips’s

home. Id. The parties later explained that the contents of the recordings revealed that

Phillips agreed to pay Young to murder her ex-husband and that the timeliness of her

payments was disputed, but the court noted that the complaint did not contain these

allegations. Id. Phillips also alleged that Agent Bell assisted an ATF public affairs employee

(Lluberes) in disclosing the contents of the conversations to the media, and that Agent Bell

disclosed the contents of the conversations in an interview with an unidentified private

citizen. Id. at *2. Based on these facts, Phillips asserted that Agent Bell and Lluberes

violated her rights under the Fourth Amendment and the Federal Wiretap Act. Phillips, 2010

WL 517629, at *2. The district court dismissed the Fourth Amendment claim because

Phillips possessed alternative claims for damages under the Federal Wiretap Act, but denied

the defendants’ request to dismiss the claim under the Federal Wiretap Act because “it was

not evident whether the Act’s ‘one-party consent’ exception foreclosed [the plaintiff’s]

claims because it was not clear if Mr. Young had a criminal or tortious purpose in making

the recordings and if Appellants knew of that purpose.” Id. On appeal, the defendants

argued that Phillips’s allegations that Young recorded the conversations with a criminal or

tortious purpose were not plausible and offered other noncriminal and nontortious reasons

as to why Young may have recorded the conversations. Id.

In discussing the pleading standards, theTenthCircuit noted that “[i]n the past, we ‘generally

embraced a liberal construction of [the] pleading requirement [in Rule 8(a)(2)],’ and held ‘a

complaint containing only conclusory allegations could withstand a motion to dismiss unless

its factual impossibility was apparent from the face of the pleadings . . . .’” Id. at *4 (citation

omitted). But the court noted that “the Supreme Court has recently ‘clarified’ this standard,

stating that ‘to withstand a motion to dismiss, a complaint must contain enough allegations

of fact ‘to state a claim to relief that is plausible on its face.’’” Id. (quoting Robbins v. Okla.,

519 F.3d 1242, 1247 (10th Cir. 2008)). But the court noted that “[o]n the other hand, [it]

ha[d] also held [that] ‘granting a motion to dismiss is a harsh remedy which must be

cautiously studied, not only to effectuate the spirit of the liberal rules of pleading but also to

protect the interests of justice.’” Id. (quoting Dias v. City and County of Denver, 567 F.3d

1169, 1178 (10th Cir. 2009)).

Phillips alleged that Young recorded their conversations “‘for the purpose of committing a

criminal or tortious act, including without limitation, invasion of privacy, extreme and

outrageous conduct, intentional infliction of emotional distress, defamation of character,

and/or improper recording of private communications for improper use and disclosure.’”

Phillips, 2010 WL 517629, at *7. The court concluded that “[o]ther than providing the

essential elements of the [Federal Wiretap] Act by claiming Mr. Young committed a

‘criminal or tortious act’ and citing a string of possible scenarios in a conclusory fashion, it

is evident the complaint offers little in terms of factual allegations or ‘further factual

enhancement.’” Id. The court found that “as in Iqbal, [it was] provided ‘a ‘formulaic

recitation of the elements’ of a . . . claim’ where the allegations are ‘conclusory’ and

therefore ‘not entitled to be assumed true.’” Id. (omission in original) (quoting Iqbal, 129
547

S. Ct. at 1951). In addition, the court found that the claims were not plausible:

However, even if we view the facts in Ms. Phillips’s

complaint as true and, thus, in a light most favorable to her, the

complaint also fails to meet the plausibility requirement. Ms.

Phillips’s recitation of the statutory elements and string of possible

reasons for Mr. Young’s recording of their conversations is “so

general that [it] encompass[es] a wide swath of conduct,” Robbins,

519 F.3d at 1247, and lacks the necessary factual enhancements to get

it from the “possibility” of misconduct to a “plausibility” of such

misconduct required for relief. Twombly, 550 U.S. at 557. This is

because disclosure of the recordings’ contents for the purposes Ms.

Phillips claims, while possible, would have clearly inculpated Mr.

Young in the crime of murdering her ex-husband. As a result, it is

fairly implausible he would use such self-damning information for the

purposes she contends, including invading her privacy, intentionally

inflicting emotional distress, or defaming her character.

As the government points out, more plausible reasons exist

for Mr. Young making the recordings, including to protect himself

against any future conduct by Ms. Phillips in implicating him alone

in her husband’s murder. In the event Ms. Phillips did implicate him

or he was later arrested, it is also plausible he sagaciously made the

recordings to provide himself leverage with the government for a

reduced sentence if he assisted in proving Ms. Phillips’s participation

in the murder. It is also possible he made the recordings for the

purpose of ensuring she paid him for the murder he committed,

which, admittedly, amounts to extortion or other criminal conduct,

but which is not alleged in the complaint. Thus, while Ms. Phillips’s

complaint mentions certain possible reasons for Mr. Young making

the recordings, none of her alleged facts take us beyond pure

speculation to plausibility. Considering the circumstances another

way, we are provided no additional factual allegations to support Ms.

Phillips’s contention Mr. Young made the recordings to invade her

privacy, intentionally inflict emotional distress, or defame her

character, so we are without sufficient “fact[s] to raise a reasonable

expectation that discovery will reveal evidence of” the type of

misconduct for which she requests relief. Twombly, 550 U.S. at 556.

Id. at *7 (alterations in original) (emphasis added). The court also noted that the complaint

failed to allege sufficient facts to show that the defendants disclosed the conversations with

knowledge or reason to know the communication was illegally intercepted, and cited a preTwombly case:
548

Even if we assume Mr. Young made the recordings “for the purpose

of committing a criminal or tortious act,” the Act requires that those,

such as the Appellants, who intentionally disclose or use the contents

of any such illegally intercepted communication, do so “knowing or

having reason to know” the communication was intercepted in

violation of the Act. 18 U.S.C. § 2511(1)(c) and (d) (emphasis

added). We have said that in asserting the material elements under

these provisions a complaint must allege the defendants knew: “(1)

the information used or disclosed came from an intercepted

communication, and (2) sufficient facts concerning the circumstances

of the interception such that the defendant[s] could, with presumed

knowledge of the law, determine that the interception was prohibited

in light of” the Act. Thompson v. Dulaney, 970 F.2d 744, 749 (10th

Cir. 1992) (emphasis added).

Id. at *8 (alteration in original). The court explained:

In this case, Ms. Phillips alleges that “[b]y virtue of their employment

as special agents with the ATF Bureau, [Appellants] knew or had

reason to know that the seized recordings of [her] oral

communications had been improperly and illegally intercepted” by

Mr. Young under the Federal Wiretap Act. However, like the

allegations in Iqbal that one of the defendants was “the principle

architect of [an] invidious policy” and another was “instrumental in

adopting and executing it,” 129 S. Ct. at 1951, this allegation is

conclusory because Ms. Phillips points to no fact other than the

Appellants’ positions of employment for the proposition they knew

or should have known of Mr. Young’s alleged misconduct or of the

“circumstances of the interception.” Thompson, 970 F.2d at 749.

Nothing in the complaint indicates either Agent Bell, who was

located in Arizona, or Mr. Lluberes, who was located in Washington,

D.C., were involved in Mr. Young’s Florida arrest and interview, or

the Broward County search of four locations resulting in discovery of

the tapes. Merely because one holds a law enforcement position does

not establish he knew the criminal intent of someone he has never

met or investigated. The complaint similarly provides no additional

material facts concerning the circumstances of the interception to

conclude Appellants could somehow determine Mr. Young recorded

the conversations for the purpose of “committing a criminal or

tortious act.” Instead, given the plausibility that Mr. Young would

not incriminate himself with the recordings, we cannot agree with Ms.

Phillips’s contention Appellants, merely because of their positions

with ATF, knew orshould have known that Mr. Young recorded their

conversations for the purpose of “committing a criminal or tortious
549

act.”

Id. (alterations in original) (internal citations omitted). The Tenth Circuit reversed the denial

of the motion to dismiss and remanded.

• Williams v. Sirmon, 350 F. App’x 294 (10th Cir. 2009) (unpublished). An Oklahoma state

prisoner filed a pro se civil rights complaint under § 1983 against the Warden and the

Director of the Oklahoma Department of Corrections (“ODOC”), and in amending his

complaint, added ten additional employees of the ODOC as defendants in their official

and/or individual capacities. Id. at 296 (footnote omitted). The district court dismissed the

complaint and the Tenth Circuit affirmed.

The complaint alleged that “the Defendants violated [the plaintiff’s] constitutional rights by

subjecting him to ‘racial discrimination, deliberate indifference treatment and cruel and

unusual punishment.’” Id. The complaint asserted three claims:

(1) Defendants pursued frivolous misconduct violations against [the

plaintiff] in reprisal for his exercise of the ODOC grievance

procedures; (2) Defendants conspired to have bodily injury inflicted

upon [the plaintiff] in retaliation for his exercise of the ODOC

grievance procedures; and (3) Defendants denied him adequate and

prompt medical treatment and falsified his medical records to conceal

injuries he sustained. Williams said he sought administrative relief

but the ODOC employees “refuse[d] to adhere to [ODOC regulations]

in order to impede administrative exhaustion.”

Id. (third and fourth alterations in original). The district court dismissed the complaint

because the plaintiff had failed to exhaust his claims, as required by the Prison Litigation

Reform Act. See id. at 297. The Tenth Circuit affirmed the finding that the plaintiff failed

to exhaust administrative remedies, noted that the pro se complaint would be read liberally,

and concluded that “[e]ven charitably read, Williams’ complaint fail[ed] to meet” the

standard in Twombly and Iqbal. See id. at 296 n.1, 299. The court also noted that the

complaint “fail[ed] to ‘plead that each Government-official defendant, through [his] own

individual actions, ha[d] violated the Constitution,’ which is a requirement under Iqbal.” Id.

at 299 (second alteration in original) (citation omitted).

• Hall v. Witteman, 584 F.3d 859 (10th Cir. 2009). The plaintiff alleged that his rights were

violated when he paid a local newspaper to run an advertisement opposing the election of a

local judge twice, but the newspaper only ran the advertisement once. Id. at 862. Instead of

running the plaintiff’s ad a second time, the newspaper ran an ad supporting the judge (the

“Responsive Ad”), paid for by a group of attorneys, including the county attorney

(Witteman). Id. The plaintiff’s suit asserted claims against the newspaper, the judge, the

attorneys submitting the Responsive Ad, and a few others. Id. The complaint asserted

claims under §§ 1983 and 1985 and federal RICO, as well as state law claims. Id. “The
550

heart of the allegations in the complaint’s 153 paragraphs [wa]s that after Mr. Hall placed

his advertisement, the defendants unlawfully convinced the paper’s publisher to pull the

second running of his advertisement in favor of their own, which contained defamatory

remarks about him.” Id. The plaintiff alleged that the defendant’s actions violated his free

speech rights under the First Amendment, as applied to the states through the Fourteenth

Amendment, and his Fourteenth Amendment right to equal protection. Hall, 584 F.3d at

862. The district court dismissed the federal claims for failure to state a claim, denied leave

to amend, and declined to exercise supplemental jurisdiction over the state-law claims.” Id.

The Tenth Circuit affirmed, finding that the “civil-rights claims fail[ed] because [the

plaintiff] did not allege state action, and [the] RICO claims fail[ed] because he did not allege

a threat of continuing racketeering activity.” Id.

With respect to the § 1983 claim, the court noted that a plaintiff must “‘show that the alleged

deprivation [of rights secured by the Constitution and the laws of the United States] was

committed by a person acting under color of state law,’” and that “[i]n the context of § 1983

claims based on violations of the Fourteenth Amendment, . . . the under-color-of-state-law

requirement in § 1983 is equivalent to the Fourteenth Amendment’s state-action

requirement.” Id. at 864. The court noted that “Mr. Hall appear[ed] to concede that his §

1983 claim depend[ed] entirely on Mr. Witteman’s involvement in the defendant’s actions.”

Id. The court found that the relevant allegations “fail[ed] to describe any use of

governmental power by Mr. Witteman (or anyone else),” and that “[a]ll the complaint

contain[ed] in that regard [we]re conclusory allegations, such as ‘Defendant[s] decided to use

the power of Witteman’s Kansas State Office as Coffey County Attorney,’ and ‘Witteman

using and misusing the power of his offices . . . , impermissibly interfering with Plaintiff’s

right to publish a second time . . . .’” Id. at 865 (omissions and fifth alteration in original)

(internal record citations omitted). The court emphasized that “the paragraph of the

complaint alleging how the defendants ‘coerced’ the newspaper (through defendant Faimon,

apparently the editor or publisher) not to run Mr. Hall’s second ad does not include any

allegation of abuse of the power of Mr. Witteman’s government position.” Hall, 584 F.3d

at 865. The court explained that “Mr. Hall’s essential concern about Mr. Witteman’s official

position [wa]s not that Mr. Witteman was exercising any of his official powers, but that his

official title gave him prestige that would influence voters reading the Responsive Ad,” and

that “[t]his is not the stuff of which state action is made.” Id. at 866. The court concluded

that the complaint did not allege state action:

In the case before us, there is no allegation of any act by Mr.

Witteman in which he abused, or even used, any power that he

possessed by virtue of state law. In particular, there is no allegation

that he threatened or hinted at any possibility of his future action as

county attorney if The Republican ran Mr. Hall’s second ad or did not

run the Responsive Ad. Mr. Hall’s complaint does allege that the

Responsive Ad had particular clout because a voter would believe

that “‘if Doug (Witteman) our County Attorney thinks [the judge] is

ok, that is good enough for me to vote for Fromme also.” But this is
551

not a claim of use of state power. Exploiting the personal prestige of

one’s public position is not state action absent at least some

suggestion that the holder would exercise governmental power. No

reader of the Responsive Ad could reasonably believe that Mr.

Witteman was threatening to use the power of his office against those

who did not vote for [the judge].

Id. at 866–67 (internal citations omitted). The court concluded that the section 1985 claim

“suffer[ed] from the same defect as his § 1983 claim in that § 1985(3) d[id] not offer

protection against the type of private conspiracy alleged in [the] complaint.” Id. at 1987

(citations omitted). The court held that “[l]ike his § 1983 claim, Mr. Hall’s § 1985 claim

fail[ed] because of the absence of well-pleaded factual allegations that Mr. Witteman’s

alleged misconduct was state action.” Id.

With respect to the RICO claim, the court held that the complaint did “not adequately allege

a ‘pattern’ of racketeering activity because it fail[ed] to allege sufficient continuity to sustain

a RICO claim.” Id. The court agreed with the district court’s analysis:

At best, what plaintiff alleges is a closed-ended series of predicate

acts constituting a single scheme to accomplish a discrete goal

[publication of the Responsive Advertisement in lieu of Plaintiff’s

Advertisement] directed at only one individual [the plaintiff] with no

potential to extend to other persons or entities.

Id. at 867–68 (alterations in original) (quoting the district court) (quotation marks omitted).

The Tenth Circuit found no abuse of discretion in the district court’s denial of leave to amend

because the plaintiff failed to attach a proposed amendment and “nowhere explained how a

proposed amendment would cure the deficiencies identified by the district court,” and

because district courts are not required “‘to engage in independent research or read the minds

of litigants to determine if information justifying an amendment exists.’” Id. at 868 (citation

omitted).

Eleventh Circuit

• Mamani v. Berzain, 654 F.3d 1148, 2011 WL 3795468 (11th Cir. 2011). The plaintiffs,

citizens and residents of Bolivia, were the relatives of people killed in Bolivia in 2003. The

plaintiffs filed a complaint under the Alien Tort Statute (ATS) against former high-level

leaders of Bolivia, seeking damages for decisions these former leaders allegedly made in

2003 that led to these deaths. The court of appeals explained:

Plaintiffs’ claims arise out of a time of severe civil unrest and

political upheaval in Bolivia—involving thousands of people, mainly
552

indigenous Aymara people—which ultimately led to an abrupt change

in government. Briefly stated, a series of confrontations occurred

between military and police forces and protesters. Large numbers of

protesters were blocking major highways, preventing travelers from

returning to La Paz, and threatening the capital’s access to gas and

presumably other needed things. Over two months, during the course

of police and military operations to restore order, some people were

killed and more were injured. The President ultimately resigned his

responsibilities, and defendants withdrew from Bolivia. . . .

Plaintiffs filed suit in federal district court against the

President and Defense Minister personally but on account of their

alleged acts as highest-level military and police officials. Plaintiffs

do not contend that defendants personally killed or injured anyone. In

their corrected amended consolidated complaint (“Complaint”),

plaintiffs brought claims under the ATS, asserting that defendants

violated international law by committing extrajudicial killings; by

perpetrating crimes against humanity; and by violating rights to life,

liberty, security of person, freedom of assembly, and freedom of

association. Plaintiffs sought compensatory and punitive damages.

Id. at *1.

The district court held that neither the political question doctrine nor the act-of-state doctrine

barred court resolution of the lawsuit, and that the defendants were not immune from suit.

The district court granted the defendants’ motion to dismiss some of the plaintiffs’ claims

for failure to plead facts sufficient to state a claim. But the district court denied the

defendants’ motion to dismiss as to many of the plaintiffs’ claims, holding that as to those

claims, the plaintiffs pleaded sufficient facts to state a claim.

The Eleventh Circuit, applying Iqbal in the context of the Alien Tort Statute, reversed the

district court’s refusal to dismiss many of the plaintiffs’ claims, and held that the complaint

should be dismissed in its entirety for failure to state a claim. The court explained:

The ATS is no license for judicial innovation. Just the

opposite, the federal courts must act as vigilant doorkeepers and

exercise great caution when deciding either to recognize new causes

of action under the ATS or to broaden existing causes of action. See

Sosa v. Alvarez–Machain, 124 S. Ct. 2739, 2764 (2004). “[C]ourts

should require any claim based on the present-day law of nations to

rest on a norm of international character accepted by the civilized

world and defined with a specificity comparable to [violation of safe

conduct, infringement of the rights of ambassadors, and piracy].” Id.

at 2761–62 (emphasis added). This standard is a high one.
553

For a violation of international law to be actionable under the

ATS, the offense must be based on present day, very widely accepted

interpretations of international law: the specific things the defendant

is alleged to have done must violate what the law already clearly is.

High levels of generality will not do.

To determine whether the applicable international law is

sufficiently definite, we look to the context of the case before us and

ask whether established international law had already defined

defendants’ conduct as wrongful in that specific context. See id. at

2768 n.27. Claims lacking sufficient specificity must fail. See id.

at 2769 (“Whatever may be said for the broad principle [the plaintiff]

advances, in the present, imperfect world, it expresses an aspiration

that exceeds any binding customary rule having the specificity we

require.”).

We do not look at these ATS cases from a moral perspective,

but from a legal one. We do not decide what constitutes desirable

government practices. We know and worry about the foreign policy

implications of civil actions in federal courts against the leaders (even

the former ones) of nations. And we accept that we must exercise

particular caution when considering a claim that a former head of

state acted unlawfully in governing his country’s own citizens. “It is

one thing for American courts to enforce constitutional limits on our

own State and Federal Governments’ power, but quite another to

consider suits under rules that would go so far as to claim a limit on

the power offoreign governments over their own citizens, and to hold

that a foreign government or its agent has transgressed those limits.”

Id. at 2763. Although “modern international law is very much

concerned with just such questions, and apt to stimulate calls for

vindicating private interests in [ATS] cases,” the Supreme Court

instructs us that federal courts are to exercise “great caution” when

deciding ATS claims. Id.

Broadly speaking, this Court has decided that “crimes against

humanity” and “extrajudicial killings” may give rise to a cause of

action under the ATS. See, e.g., Romero v. Drummond Co., 552 F.3d

1303, 1316 (11th Cir. 2008) (stating that an extrajudicial killing is

actionable under the ATS where it is committed in violation of

international law); Cabello v. Fernandez–Larios, 402 F.3d 1148,

1151–52 (11th Cir. 2005) (affirming judgment under the ATS for

extrajudicial killing and crimes against humanity). But general

propositions do not take us far in particular ATS cases. Allegations

amounting to labels are different from well-pleaded facts, and we
554

must examine whether what this Complaint says these defendants

did—in non-conclusory factual allegations—amounts to a violation

of already clearly established and specifically defined international

law.

To state a claim for relief under the ATS, a plaintiff must (1)

be an alien (2) suing for a tort (3) committed in violation of the law

of nations. Sinaltrainal v. Coca–Cola Co., 578 F.3d 1252, 1261

(11th Cir. 2009). To avoid dismissal of an ATS claim, a “complaint

must contain sufficient factual matter, accepted as true, to ‘state a

claim to relief that is plausible on its face.’” See Ashcroft v. Iqbal,

129 S. Ct. 1937, 1949 (2009) (quoting Bell Atlantic Corp. v.

Twombly, 127 S. Ct. 1955, 1974 (2007)).

Stating a plausible claim for relief requires pleading “factual

content that allows the court to draw the reasonable inference that the

defendant is liable for the misconduct alleged”: this obligation

requires “more than a sheer possibility that a defendant has acted

unlawfully.” Id. While plaintiffs need not include “detailed factual

allegations,” they must plead “more than an unadorned,

the-defendant-unlawfully-harmed-me accusation.” Id.

“Where a complaint pleads facts that are ‘merely consistent

with’ a defendant’s liability, it ‘stops short of the line between

possibility and plausibility of entitlement to relief.’” Id. (quoting

Twombly, 127 S. Ct. at 1966).

Following the Supreme Court’s approach in Iqbal, we begin

by identifying conclusory allegations in the Complaint. See id. at

1950. Legal conclusions without adequate factual support are entitled

to no assumption of truth. See id.; Randall v. Scott, 610 F.3d 701,

709–10 (11th Cir. 2010).

In their “Preliminary Statement,” plaintiffs begin the

Complaint by alleging that defendants “order[ed] Bolivian security

forces, including military sharpshooters armed with high-powered

rifles and soldiers and police wielding machine guns, to attack and

kill scores of unarmed civilians.” Then, plaintiffs go on to allege in

a conclusory fashion many other things: that defendants “exercised

command responsibility over, conspired with, ratified, and/or aided

and abetted subordinates in the Armed Forces . . . to commit acts of

extrajudicial killing, crimes against humanity, and the other wrongful

acts alleged herein”; that defendants “met with military leaders, other

ministers in the Lozada government to plan widespread attacks
555

involving the use of high-caliber weapons against protesters”; that

defendants “knew or reasonably should have known of the pattern

and practice of widespread, systematic attacks against the civilian

population by subordinates under their command”; and that

defendants “failed or refused to take all necessary measures to

investigate and prevent these abuses, or to punish personnel under

their command for committing such abuses.”

These allegations sound much like those found insufficient by

the Supreme Court in Iqbal: statements of legal conclusions rather

than true factual allegations. Formulaic recitations of the elements of

a claim, such as these, are conclusory and are entitled to no

assumption of truth. See Iqbal, 129 S. Ct. at 1951 (describing as

conclusory allegations that “petitioners ‘knew of, condoned, and

willfully and maliciously agreed to subject [him]’ to harsh conditions

of confinement ‘as a matter of policy, solely on account of [his]

religion, race, and/or national origin’” and that one defendant was a

“principal architect” of and another was “‘instrumental’ in adopting

and executing” the policy at issue (internal citations omitted)).

Plaintiffs here base their claims on allegationsthat defendants

knew or should have known of wrongful violence taking place and

failed in their duty to prevent it. Easy to say about leaders of nations,

but without adequate factual support of more specific acts by these

defendants, these “bare assertions” are “not entitled to be assumed

true.” Id. See also Sinaltrainal, 578 F.3d at 1268.

Next, we “consider the factual allegations in [the plaintiffs’]

complaint to determine if they plausibly suggest an entitlement to

relief.” Iqbal, 129 S. Ct. at 1951. Defendants were facing a situation

where many of their opponents in Bolivia were acting boldly and

disruptively (for example, blocking major highways to the nation’s

capital and forcing the Defense Minister out of at least one town), not

merely holding—or talking about—political opinions. Plaintiffs

pleaded facts sufficient to show that the President, in the face of

significant conflict and thousands of protesters, ordered the

mobilization of a joint police and military operation to rescue trapped

travelers; authorized the use of “necessary force” to reestablish public

order; and authorized an executive decree declaring the transport of

gas to the capital city to be a national priority.

Plaintiffs also pleaded facts sufficient to show that the

Defense Minister, in the face of significant conflict and thousands of

protestors, ordered the mobilization of a joint police and military
556

operation to rescue trapped travelers; directed military personnel;

authorized an executive decree declaring the transport of gas to the

capital city to be a national priority; and, at times, accompanied

military personnel in a helicopter from which shots were fired and

directed them where to fire their weapons. Plaintiffs do not allege

that a connection exists between the Defense Minister’s directing of

where to fire weapons and the death of plaintiffs’ decedents.

We must determine whether these facts, taken as a whole and

drawing reasonable inferences in favor of plaintiffs, are sufficient to

make out a plausible claim that these defendants did things that

violated established international law and gave rise to jurisdiction

under the ATS. We do not accept that, even if some soldiers or

policemen committed wrongful acts, present international law

embraces strict liability akin to respondeat superior for national

leaders at the top of the long chain of command in a case like this

one. But before we decide who can be held responsible for a tort, we

must look to see if an ATS tort has been pleaded at all.

We look first to plaintiffs’ claims of extrajudicial killing,

relying—as did plaintiffs—on the TVPA definition for guidance.

Briefly stated, the TVPA states that an extrajudicial killing must be

“a deliberated killing not authorized by a previous judgment

pronounced by a regularly constituted court affording all the judicial

guarantees which are recognized as indispensable by civilized

peoples.” TVPA § 3(a), 28 U.S.C. § 1350.

The district court “conclude[d] that seven of the plaintiffs . .

. stated claims for extrajudicial killings by alleging sufficient facts to

plausibly suggest that the killings were targeted.” D. Ct. Order 25.

Facts suggesting some targeting are not enough to state a claim of

extrajudicial killing under already established and specifically defined

international law. But even if the Complaint includes factual

allegations that are consistent with a deliberated killing by someone

(for example, the actual shooters), not all deliberated killings are

extrajudicial killings.

Plaintiffs allege no facts showing that the deaths in this case

met the minimal requirement for extrajudicial killing—that is, that

plaintiffs’ decedents’ deaths were “deliberate” in the sense of being

undertaken with studied consideration and purpose. On the contrary:

even reading the well-pleaded allegations of fact in the Complaint in

plaintiffs’ favor, each of the plaintiffs’ decedents’ deaths could

plausibly have been the result of precipitate shootings during an
557

ongoing civil uprising.

Given these pleadings, alternative explanations (other than

extrajudicial killing) for the pertinent seven deaths easily come to

mind; for instance, the alleged deaths are compatible with accidental

or negligent shooting (including mistakenly identifying a target as a

person who did pose a threat to others), individual motivations

(personal reasons) not linked to defendants, and so on. For

background, see Iqbal, 129 S. Ct. at 1950–51. Plaintiffs have not

pleaded facts sufficient to show that anyone—especially these

defendants, in their capacity as high-level officials—committed

extrajudicial killings within the meaning of established international

law. See generally Belhas v. Ya’alon, 515 F.3d 1279, 1293 (D.C. Cir.

2008) (Williams, J., concurring) (“[Plaintiffs] point to no case where

similar high-level decisions on military tactics and strategy during a

modern military operation have been held to constitute ...

extrajudicial killing under international law.”).

Nor have plaintiffs pleaded facts sufficient to state a claim for

a crime against humanity pursuant to established international law.

“[T]o the extent that crimes against humanity are recognized as

violations of international law, they occur as a result of ‘widespread

or systematic attack’ against civilian populations.” Aldana, 416 F.3d

at 1247 (quoting Cabello, 402 F.3d at 1161).

The scope of what is, for example, widespread enough to be

a crime against humanity is hard to know given the current state of

the law.

The Complaint’s factual allegations show that defendants

ordered military and police forces to restore order, to rescue trapped

travelers, to unblock roads (including major highways), and to ensure

the capital city’s access to gas and presumably to other necessities

during a time of violent unrest and resistance. According to

plaintiffs, the toll—one arising from a significant civil

disturbance—was fewer than 70 killed and about 400 injured to some

degree, over about two months. The alleged toll is sufficient to cause

concern and distress. Nevertheless, especially given the mass

demonstrations, as well as the threat to the capital city and to public

safety, we cannot conclude that the scale of this loss of life and of

these injuries is sufficiently widespread—or that wrongs were

sufficiently systematic, as opposed to isolated events (even if a series

of them)—to amount definitely to a crime against humanity under

already established international law.
558

Allowing plaintiffs’ claimsto go forward would substantially

broaden, in fact, the kinds of circumstances from which claims may

properly be brought under the ATS. As we understand the

established international law that can give rise to federal jurisdiction

under the ATS, crimes against humanity exhibit especially wicked

conduct that is carried out in an extensive, organized, and deliberate

way, and that is plainly unjustified. It is this kind of hateful conduct

that might make someone a common enemy of all mankind. But

given international law as it is now established, the conduct described

in the bare factual allegations of the Complaint is not sufficient to be

a crime against humanity under the ATS.

The possibility that—if even a possibility has been alleged

effectively—these defendants acted unlawfully is not enough for a

plausible claim. And the well-pleaded facts in this case do not equal

the kind of conduct that has been already clearly established by

international law as extrajudicial killings or as crimes against

humanity. Plaintiffs “would need to allege more by way of factual

content to ‘nudg[e]’ [their claims] . . .‘across the line from

conceivable to plausible.’” Iqbal, 129 S. Ct. at 1952 (quoting

Twombly, 127 S. Ct. at 1974). The Complaint does not state a

plausible claim that these defendants violated international law, and

these claims must be dismissed.

. . . .

The Complaint in this case has all of the flaws against which

Iqbal warned. In addition, the case runs into the limitations that Sosa

set for ATS cases: judicial creativity is not justified. See Sosa, 124

S. Ct. at 2763. For ATS purposes, no tort has been stated.

Plaintiffs, through their claims, seek to have us broaden the

offenses of extrajudicial killings and crimes against humanity. Given

the context, the pleadings are highly conclusory; and the

international law applicable to the specific circumstances is not

clearly defined. As we see it, the criteria to judge what is lawful and

what is not lawful, especially for national leaders facing thousands of

people taking to the streets in opposition, is largely lacking.

In a case like this one, judicial restraint is demanded. See id.

at 2762. The ATS is only a jurisdictional grant; it does not give the

federal courts “power to mold substantive law.” Id. at 2755. Because

the pertinent international law is not already clear, definite, or

universal enough to reach the alleged conduct (especially after the
559

pleadings are stripped of conclusory statements), we decline to

expand the kinds of circumstances that may be actionable under the

ATS to cover the facts alleged in this case. 

Id. at *2–7 (emphasis added).

• Henderson v. J.P. Morgan Chase Bank, No. 10-13286, 2011 WL 3362682 (11th Cir. Aug.

4, 2011) (per curiam) (unpublished). Plaintiff Sherrance Henderson filed a complaint under

various statutes alleging that she was discriminated against on the basis of her race by

defendant J.P. Morgan Chase Bank in connection with a home loan. The district court

dismissed the complaint for failure to state a claim. The Eleventh Circuit affirmed.

The court of appeals summarized the complaint’s allegations as follows:

Henderson alleged that she applied for, and was pre-qualified for, a

home loan. After she located a home, Chase began presenting

varying loan options which did not reflect the loan terms that formed

the basis of the pre-qualification, including higher interest rates and

additional loan terms. After Henderson provided Chase with certain

requested financial information, Chase told Henderson that she

needed to buy an annuity to generate income because Chase did not

consider the interest generated by one of her existing investments to

be income. Henderson purchased the annuity. At closing,

Henderson’s lawyer told her that Chase’s loan terms and conduct

were improper. So, Henderson rejected the loan terms; and Chase

later denied the loan application. Henderson paid cash for the home.

Id. at *1.

The court of appeals affirmed the district court’s dismissal of the complaint, explaining:

On appeal, Henderson argues that the district court imposed

a heightened pleading standard on her complaint that was inconsistent

with Supreme Court precedent in Bell AtlanticCorp. v. Twombly, 127

S. Ct. 1955 (2007), and Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949

(2009). In Twombly, the Supreme Court addressed the previously

accepted standard governing “a complaint’s survival,” and rejected

that standard in favor of a plausibility standard. 127 S. Ct. at 1969;

see also Iqbal, 129 S. Ct. at 1953 (using the Twombly standard to

analyze the complaint at issue and validating that standard as “the

pleading standard for ‘all civil actions’”). This standard says that to

survive a motion to dismiss, a plaintiff must file a complaint

containing fact allegations that are plausible on their face: a claim has

“facial plausibility when the plaintiff pleads factual content that
560

allows the court to draw the reasonable inference” that defendant is

liable for the misconduct alleged. Iqbal, 129 S. Ct. at 1949.

A complaint attacked by a Rule 12(b)(6) motion to dismiss

need not contain detailed factual allegations, but “a plaintiff's

obligation to provide the grounds of [her] entitlement to relief

requires more than labels and conclusions, and a formulaic recitation

of the elements of a cause of action will not do.” Twombly, 127 S.

Ct. at 1964–65 (citations, quotations, and alteration omitted). We

recognize the Twombly standard as controlling. See James River Ins.

Co. v. Ground Down Eng’g Inc., 540 F.3d 1270, 1274 (11th Cir.

2008) (stating that a complaint should be dismissed if the allegations

do not plausibly suggest a right to relief). Here, the court imposed no

“heightened” pleading standard in evaluating Henderson’s

complaint; instead, the court articulated and applied properly the

standard from Twombly and Iqbal to all of Henderson’s claims.

Henderson argues that the court erred in dismissing her fair

housing, civil rights, and credit claims for failure to make a prima

facie case: she maintains that the elements of a prima facie

discrimination case are not rigid and that the court applied too strict

of a standard. The burden-shifting analysis used for employment

discrimination cases relying on circumstantial evidence under Title

VII of the Civil Rights Act, 42 U.S.C. § 2000e–2(a)—which is

predicated on the establishment of a prima facie case—is applicable

to Henderson’s discrimination claims brought pursuant to the federal

statutes.

A complaint in an employment discrimination case need not

contain specific facts establishing a prima facie case under the

evidentiary framework for such cases to survive a motion to dismiss.

Swierkiewicz v. Sorema N.A., 122 S. Ct. 992, 997–98 (2002). But

complaints alleging discrimination still must meet the “plausibility

standard” of Twombly and Iqbal. See Edwards v. Prime, Inc., 602

F.3d 1276, 1300 (11th Cir. 2010) (noting that to state a hostile work

environment claim post-Iqbal, employee “was required to allege” five

prima facie elements). So, Henderson’s complaint had to contain

“sufficient factual matter” to support a reasonable inference that

Chase engaged in racial discrimination against Henderson in relation

to her loan. She could have met this standard by alleging facts

showing that similarly-situated loan applicants outside her racial class

were offered more favorable loan terms. See Maynard v. Bd. of

Regents, 342 F.3d 1281, 1289 (11th Cir. 2003) (explaining, in the

employment context, that a plaintiff fails to establish a prima facie
561

discrimination case if she fails to show that she was treated less

favorably than a similarly-situated person outside her protected class).

As the district court concluded, Henderson alleged no such

facts. She alleged only that she was black, she was pre-qualified for

a loan, the terms of the loan changed through the application process,

and she ultimately rejected the loan after her lawyer told her the terms

were improper. Nothing in her complaint raises a plausible inference

that Chase discriminated against Henderson based on her race.

Even under a liberal construction, Henderson’s allegations of race

discrimination are conclusory and insufficient under the Twombly

pleading standard to survive a motion to dismiss.

Id. at *2–3 (emphasis added) (citations omitted).

The plaintiff also challenged on appeal the district court’s denial of her “motion for denial

of stay of leave to amend.” The court of appeals affirmed, stating as follows:

The magistrate, after recommending that Henderson’s

complaint be dismissed, afforded Henderson the opportunity, within

15 days of the recommendation, to file an amended complaint that

presented “each claim for relief with such clarity as to permit [Chase]

to discern her claims and frame a responsive pleading.” The

magistrate explained that “[f]ailure to file an amended complaint as

permitted herein will result in the recommendation that this action be

terminated” with prejudice. Henderson filed no amended complaint

but, instead, objected to the magistrate’s report and asked the district

court to stay leave to amend in the event that the court agreed with the

magistrate.

That Henderson had the opportunity to amend her complaint

is plain. Henderson chose not to avail herself of this opportunity,

instead disagreeing that her complaint suffered anyinadequacies. We

see no abuse in the district court’s decision not to allow her leave to

amend after the court agreed with the magistrate that the complaint

should be dismissed. Although dismissing a case for failure to

comply with pleading rules is a “severe sanction, its imposition is

justified when a party chooses to disregard the sound and proper

directions of the district court,” such as choosing not to amend when

given the opportunity. Friedlander v. Nims, 755 F.2d 810, 813 (11th

Cir. 1985).

Id. at *3.
562

• Jacobs v. Tempur-Pedic Int’l, Inc., 626 F.3d 1327, 2010 WL 4880864 (11th Cir. 2010).

Mattress purchaser brought antitrust action against Tempur-Pedic North America, Inc.

(“TPX”) alleging that TPX created an “unreasonable restraint on trade” in violation of the

Sherman Act, 15 U.S.C. § 1, in two ways: “by enforcing the vertical retail price maintenance

agreements with its distributors and by engaging with its distributors in horizontal price

fixing.” Id. at *1. The district court dismissed for failure to state a claim and denied leave

to amend. Id. The Eleventh Circuit affirmed. Id.

TPX manufactures and sells eighty to ninety percent of the visco-elastic foam mattresses

sold in the United States. Id. It sets the minimum retail prices distributors can charge for its

mattresses and adheres to those minimum prices in the sales it makes through its website.

Id. Jacobs purchased a TPX mattress from a distributor at a price equal to or above the

minimum price set by TPX and then brought this action. Id.

The court explained the standard for reviewing a motion to dismiss an antitrust claim:

As the Supreme Court instructed in Bell Atlantic Corp. v. Twombly,

550 U.S. 544, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007), in a case

brought under § 1 of the Sherman Act, we must determine whether

the complaint, in asserting a conspiracy or agreement in restraint of

trade, contains “allegations plausibly suggesting (not merely

consistent with) [a conspiracy or] agreement,” that is, whether the

complaint “possess[es] enough heft to show that the pleader is

entitled to relief.” Id. at 557, 127 S. Ct. at 1966 (quotations and

alteration omitted). Plausibility is the key, as the “well-pled

allegations must nudge the claim ‘across the line from conceivable to

plausible.’ ” Sinaltrainal v. Coca-Cola Co., 578 F.3d 1252, 1261

(11th Cir.2009) (quoting Twombly, 550 U.S. at 570, 127 S. Ct. at

1974). And to nudge the claim across the line, the complaint must

contain “more than labels and conclusions, and a formulaic recitation

of the elements of a cause of action will not do.” Twombly, 550 U.S.

at 555, 127 S. Ct. at 1965. “[T]he tenet that a court must accept as

true all of the allegations contained in a complaint is inapplicable to

legal conclusions. Threadbare recitals of the elements of a cause of

action, supported by mere conclusory statements, do not suffice.”

Ashcroft v. Iqbal, 556 U.S. ----, 129 S. Ct. 1937, 1949 (2009) (citing

Twombly, 550 U.S. at 555, 127 S. Ct. at 1964-65).

Jacobs, 2010 WL 4880864, at *1. 

The court explained that “Section One plaintiffs must define both (1) a geographic market

and (2) a product market. ” Id. at *4. It first explained how the relevant product market is

determined:
563

Defining the relevant product market involves identifying

producers that provide customers of a defendant firm (or firms) with

alternative sources for the defendant's product or services. The

market is composed of products that have reasonable

interchangeability. Most importantly, we should look to the uses to

which the product is put by consumers in general.

A relevant product market can exist as a distinct subset of a

larger product market. The Supreme Court has provided “practical

indicia” that can determine the contours of the submarket, such as

industry or public recognition of the submarket as a separate

economic entity, the product’s peculiar characteristics and uses,

unique production facilities, distinct customers, distinct prices,

sensitivity to price changes, and specialized vendors. A court should

pay particular attention to evidence of the cross-elasticity of demand

and reasonable substitutability of the products, because if consumers

view the products as substitutes, the products are part of the same

market.

Id. at *4-5 (omitting internal quotations and footnotes). And decided that Jacobs had not

sufficiently pled that“visco-elastic foam mattresses” were a “separate relevant product

submarket”: 

The district court relied on Cellophane in its product market

analysis, holding that because visco-elastic foam mattresses and

traditional innerspring mattresses are both “product[s] on which

people sleep,” the two products are interchangeable parts of the larger

mattress market, a market as to which Jacobs did not allege any

anticompetitive effects. Jacobs correctly points out that unlike this

case, Cellophane was based on a voluminous record, detailed in

several published appendices, from which the Court could draw data

on market share and substitutability of goods. 351 U.S. 405-12, 76

S. Ct. 1012-16. Here, because the district court dismissed his

complaint based on its legal insufficiency, Jacobs argues that he did

not have the chance to add facts in discovery which would have

established visco-elastic foam mattresses as a separate relevant

product submarket.

We cannot accept this argument, however, because it would

absolve Jacobs of the responsibility under Twombly to plead facts

“plausibly suggesting” the relevant submarket's composition.

Jacobs’s skimpy allegations of the relevant submarket do not meet

this obligation. The complaint alleges, without elaboration, that

“[v]isco-elastic foam mattresses comprise a relevant product market,
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or sub-market, separate and distinct from the market for mattresses

generally, under the federal antitrust laws.” This conclusional

statement merely begs the question of what, exactly, makes foam

mattresses comprise this submarket. The complaint provides no

factual allegations of the cross-elasticity of demand or other

indications of price sensitivity that would indicate whether consumers

treat visco-elastic foam mattresses differently than they do mattresses

in general. Consumer preferences for visco-elastic foam mattresses

versus traditional innerspring mattresses, and the costs associated

with their sale, may vary widely, may vary little, or may not vary at

all. Jacobs’s complaint, however, gives no indication of which of

these is the case. The allegations that visco-elastic foam mattresses

are more expensive than traditional innerspring mattresses and that

visco-elastic foam mattresses have “unique attributes” are similarly

of little help. They do not indicate the degree to which consumers

prefer visco-elastic foam mattresses to traditional mattresses because

of these unique attributes and differences in price. Would, for

example, a consumer whose innerspring mattress was due for

replacement be more likely to purchase another innerspring mattress

or substitute a visco-elastic foam model for it? Are visco-elastic

foam mattresses put to different uses (as luxury goods, such as in fine

hotels and within higher income brackets) than are traditional

mattresses? These types of questions, which our precedent makes

clear are crucial to understanding whether a separate market exists, go

unanswered in the complaint.

Moreover, “the broader economic significance of a submarket

must be supported by demonstrable empirical evidence.” U.S.

Anchor, 7 F.3d at 998. While we acknowledge that Jacobs did not

have the chance to undertake extensive discovery because this case

was dismissed on a Rule 12(b)(6) motion, he nevertheless had the

obligation under Twombly to indicate that he could provide evidence

plausibly suggesting the definition of the alleged submarket. Such an

indication is conspicuously lacking here; in its place is the

unsupported assertion that visco-elastic foam mattresses constitute a

distinct submarket of the larger mattress market.

Jacobs, 2010 WL 4880864, at *5. 

The court next determined that the complaint failed to allege actual or potential harm to

competition. Id. at *6. The court explained that actual harm “is indicated by a factual

connection between the alleged harmful conduct and its impact on competition in the

market,” and “the plaintiff claiming it should point to the specific damage done to consumers

in the market.” Id. (internal quotation omitted). And decided that Jacobs “did not provide
565

allegations plausibly suggesting actual harm to competition”: “beyond the bald statement

that consumers lost hundreds of millions of dollars, there is nothing establishing the

competitive level above which TPX’s allegedly anticompetitive conduct artificially raised

prices.” Id.

Turning to whether Jacobs sufficiently alleged potential harm, the court explained that “in

addition to having failed to allege the relevant product market (as explained above), Jacobs

has failed to establish the connection between TPX’s power in the visco-elastic foam

mattress market and harm to competition in that market.” Id.

The court next decided that Jacobs’s allegations of horizontal price fixing were not plausible

under Twombly:

We noted earlier that under the pleading standards of

Twombly and Iqbal, plausibility is the key. Given this standard,

Jacobs had the burden to present allegations showing why it is more

plausible that TPX and its distributors - assuming they are rational

actors acting in their economic self-interest - would enter into an

illegal price-fixing agreement (with the attendant costs of defending

against the resulting investigation) to reach the same result realized

by purely rational profit-maximizing behavior. Put another way, the

potential costs of fixing prices with its distributors would outweigh

any benefits that TPX would realize by doing so, particularly where

independent economic activity would yield the same benefits with

none of the costs.

In fact, the pleading standard enunciated in Twombly built

upon the Court’s rejection of an argument similar to the one Jacobs

makes. The Twombly plaintiffs’ complaint against incumbent local

exchange long-distance carriers did not survive a motion to dismiss

because any actions those carriers took to resist incursion by upstart

carriers was “fully explained” by their “own interests in defending

[their] individual territory.” Twombly, 550 U.S. at 552, 127 S. Ct. at

1963 (quotations omitted) (approving the district court’s dismissal of

the complaint because “allegations of parallel business conduct, taken

alone, do not state a claim under § 1”). The plaintiffs’ complaint led

to competing inferences of conscious parallelism and independent

business judgment, and the Court held that more allegations were

required at the motion to dismiss stage ....

Here, like the Twombly Court, we fail to find in the complaint “facts

that are suggestive enough to render a § 1 conspiracy plausible,” id.

at 556, 127 S. Ct. at 1965, when the inference of conspiracy is

juxtaposed with the inference of independent economic self-interest.
566

See Matsushita, 475 U.S. at 596-97, 106 S. Ct. at 1361 (“[I]f [the

defendants] had no rational economic motive to conspire, and if their

conduct is consistent with other, equally plausible explanations, the

conduct does not give rise to an inference of conspiracy.”).

Moreover, even if tacit collusion were, in fact, the more plausible

inference, tacit collusion is “not in itself unlawful.” Brooke Group,

509 U.S. at 227, 113 S. Ct. at 2590. Jacobs would have had to

provide further allegations that, in addition to tacitly colluding, TPX

and its authorized distributors somehow signaled each other on how

and when to maintain or adjust prices. See id. at 227-28, 113 S. Ct.

at 2590. The complaint contains no such allegations. There is no

indication, for example, of dates on which distributors moved prices

together, or the amounts by which the prices moved, if in fact they

did.

Jacobs, 2010 WL 4880864, at *9-10. The court next decided that the district court did not

err in denying Jacobs leave to amend his complaint. Id. at *11.

Judge Ryscamp dissented, arguing that the majority “goes too far in its application of

Twombly and essentially requires Jacobs to prove his case in his complaint.” Id. (Ryscamp,

J., dissenting).

 

• Speaker v. U.S. Dep’t. of Health & Human Servs. Centers for Disease Control &

Prevention, 623 F.3d 1371, 2010 WL 4136634 (11th Cir. 2010). Plaintiff Speaker alleged

that the United States Department of Health and Human Services Centers for Disease

Control and Prevention (CDC) violated the Privacy Act by disclosing his identity and

confidential medical information relating to the treatment of his tuberculosis. Id. at *1. The

CDC filed a motion for summary judgment, arguing that (1) Speaker failed to satisfy the

elements of a PrivacyAct claim and (2) under Eleventh Circuit precedent, Speaker could not

recover non-pecuniary damages under the Privacy Act. Id. at *3. The CDC attached a

“statement of material facts about which there is no genuine dispute” and various exhibits,

including the CDC's statements at press conferences and the contents of newspaper articles.

Id. In response, Speaker filed a motion opposing the summary judgment and supplied a

“statement of material facts” and a “response to defendant's statement of facts,” along with

a Rule 56(f) affidavit requesting discovery. Id. The district court conducted a telephonic

status conference with counsel for the parties. Id. at *4. The CDC relied on Twombly and

Iqbal as a rationale to denySpeaker’s Rule 56(f) discovery request. Id. The CDC contended

that Speaker had not properly alleged the statutory elements of a Privacy Act violation, nor

had he identified the nature of the wrongful disclosure. Speaker, 2010 WL 4136634 at *4.

The district court denied Speaker's request for discovery and temporarily stayed the case. Id.

The court, however, allowed Speaker the option of filing an amended complaint to add the

factual specificity necessary to survive a Rule 12(b)(6) motion under the pleading standards

set forth in Twombly and Iqbal. Id. Speaker filed an amended complaint, and the CDC filed

a motion to dismiss or, in the alternative, a motion for partial summary judgment. Id. Along
567

with its motion to dismiss, the CDC attached another “statement of material facts about

which there is no dispute,” in addition to essentially the same exhibits that were attached to

its earlier motion for summary judgment. Id. The district court granted the CDC's motion

to dismiss Speaker’s Amended Complaint under Rule 12(b)(6) for failure to state a claim.

Id. The court denied the CDC's other motions as moot. Speaker, 2010 WL 4136634 at *4.

The Eleventh Circuit reversed and remanded.

 

Plaintiff Speaker first tested positive for tuberculosis in March 2007. Id. at *1. In April

2007, after undergoing tests and treatments, Speaker received a preliminary susceptibility test

result suggesting an elevated diagnosis of multidrug-resistant tuberculosis (“MDR-TB”). Id.

During the course of Speaker’s treatment, CDC employees became aware of hisintention to

travel to Europe in May 2007 for his wedding and honeymoon. Id. CDC officials were also

aware that Speaker’s doctor at the Fulton County Health Department Tuberculosis Program

was advising further care at the National Jewish Medical and Research Center in Denver

upon Speaker’s return from Europe. Id. While Speaker was in Europe, the CDC lab

received test results indicating increased resistance to drug treatments and reclassified

Speaker’s tuberculosis as extensively drug-resistant tuberculosis (“XDR-TB”). Id. Speaker

was contacted in Europe by the CDC about the change in test results, but informed that,

while his treatment options would change, he remained non-contagious. Speaker, 2010 WL

4136634 at *1. Nevertheless, the CDC forbade Speaker from flying on a commercial

airliner, but also informed him that the CDC did not have money in its budget to pay for a

charter flight. Id. Faced with the prospect of indefinite detainment in Italy, and relying upon

the statements of health officials that he was not contagious, Speaker elected to disregard the

CDC's travel instructions and booked a flight to Montreal on a commercial airliner. Id.

Speaker then crossed the border by car into the United States, notifying the CDC of his

whereabouts. Id. Speaker followed the CDC’s instruction to check himself into Bellevue

Hospital in New York City, where Speaker was served with a federal quarantine order, the

first imposed on a United States citizen since 1963. Id. After he was hospitalized, Speaker

alleges that “the CDC caused personally identifiable information about [him] to be

improperly disclosed without his consent to law enforcement officials, the news media, and

the general public as a result of the deliberate actions of the CDC and its employees or

agents.” Id. at *2. Ultimately, Speaker's XDR-TB diagnosis proved erroneous, and his

tuberculosis was downgraded back to MDR-TB. Speaker, 2010 WL 4136634 at *2.

The Eleventh Circuit set out the pleading standard under Twombly and Iqbal:

In Conley v. Gibson, 355 U.S. 41, 78 S. Ct. 99, 2 L. Ed. 2d 80 (1957),

the United States Supreme Court instructed 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.” Id. at 45-46, 78 S. Ct. at

102. In 2007, the Supreme Court in Bell Atlantic Corporation v.

Twombly, 550 U.S. 544, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007),

retired Conley’s “no set of facts” test in favor of a new formulation
568

of Rule 12(b)(6)'s pleading standard. Id. at 562-63, 127 S. Ct. at

1969.

In Twombly, the Supreme Court distinguished “plausible” claims

from allegations that were merely “conceivable,” and stated that the

Court “[did] not require heightened fact pleading of specifics, but

only enough facts to state a claim to relief that is plausible on its

face.” Id. at 570, 127 S. Ct. at 1974. The Supreme Court explained

that a complaint “does not need detailed factual allegations,” but the

allegations “must be enough to raise a right to relief above the

speculative level.” Id. at 555, 127 S. Ct. at 1964-65. Furthermore, “a

well-pleaded complaint may proceed even if it strikes a savvy judge

that actual proof of those facts is improbable, and that a recovery is

very remote and unlikely.” Id. at 556, 127 S. Ct. at 1965 (quotation

marks omitted).

Subsequently, in Iqbal the Supreme Court clarified that “[a] claim has

facial plausibility when the plaintiff pleads factual content that allows

the court to draw the reasonable inference that the defendant is liable

for the misconduct alleged.” Id. at 1949; see also Watts v. Fla. Int’l

Univ., 495 F.3d 1289, 1295-96 (11th Cir. 2007) (“The Court has

instructed us that the rule ‘does not impose a probability requirement

at the pleading stage,’ but instead ‘simply calls for enough fact to

raise a reasonable expectation that discovery will reveal evidence of’

the necessary element.”) (quoting Twombly, 550 U.S. at 556, 127 S.

Ct. at 1965). 

Speaker, 2010 WL 4136634 at *5-6.

With respect to Speaker’s claim under the Privacy Act, the Eleventh Circuit explained that

he must establish these four elements: (1) the CDC failed to fulfill its record-keeping

obligation, (2) it did so deliberately; (3) Speaker suffered an adverse effect from this

disclosure; and (4) Speaker suffered actual damages. Id. at *7 (applying test set out in Fanin

v. U.S. Dep’t of Veterans Affairs, 572 F.3d 868, 872 (11th Cir. 2009)). In addition, to satisfy

the pleading standards announced in Twombly and Iqbal, “Speaker must do more than recite

these statutory elements in conclusory fashion. Rather, his allegations must proffer enough

factual content to ‘raise a right to relief above the speculative level.’” Id. (quoting Twombly,

550 U.S. at 555).

The Eleventh Circuit decided that Speaker’s allegations satisfied elements two, three and

four and then did a detailed analysis of the first element. Id. at *8. The court explained that,

under 5 U.S.C. § 552a(b) (outlining the CDC’s record-keeping obligation), the CDC did not

fulfill its record-keeping obligation if it disclosed:
569

(a) any item, collection, or grouping of information (b) that contains

(and is retrievable by) Speaker's name or an identifying number,

symbol, or other identifying particular assigned to Speaker (c) within

its system of records (d) by any means of communication (e) to any

person or agency.

Id. (footnote omitted). Speaker made the following allegations: (1) that the CDC disclosed

an “item, collection, or grouping of information” about Speaker; (2) that the CDC disclosed

his confidential medical history; and (3) that “the Defendant CDC maintained a system of

documents and records containing sensitive private information, including medical history

and other protected health information, identifiable to specific individuals including

[Speaker].” Id. at *9 (emphasis added in opinion). Speaker also alleged that the

unauthorized disclosures were made to “person[s],” particularly, “law enforcement officials,”

“members of the media,” and “the general public.” Speaker, 2010 WL 4136634 at *9. The

court rejected the CDC’s “main argument . . . that Speaker’s Amended Complaint

impermissibly equivocated on the issue of whether the CDC itself disclosed his name,”

deciding that the CDC was reading the amended complaint “far too narrowly.” Id. The

CDC’s argument was based on the Speaker’s allegation that “the CDC caused personally

identifiable information about Mr. Speaker to be improperly disclosed.” Id. (emphasis in

opinion). The court disagreed with the district court’s statement that “[w]hat is clear from

the allegation itself is that Speaker’s identity was not disclosed by the CDC,” because the

statement “does not fully take into account the instances throughout theAmended Complaint

in which Speaker alleges a direct disclosure by the CDC.” Id. The court explained that

Speaker’s allegations satisfied Twombly:

Plaintiff Speaker has pleaded enough factual content to “nudge[ ]

[his] claims across the line from conceivable to plausible.” Twombly,

550 U.S. at 570, 127 S. Ct. at 1974. Importantly, Speaker's

allegations are not barren recitals of the statutory elements, shorn of

factual specificity. See id. at 555, 127 S. Ct. at 1964-65 (stating that

“a plaintiff's obligation to provide grounds of his entitlement to relief

requires more than labels and conclusions, and a formulaic recitation

of the elements of a cause of action will not do” (quotation marks and

brackets omitted)).

Rather, Speaker alleges what the CDC disclosed; namely, “personally

identifiable information,” including information relating to his

“medical history and his testing and treatment for tuberculosis.”

Moreover, he alleges when the CDC disclosed this information:

namely, “during the time frame of said public press conferences.”

Speaker's Amended Complaint narrows the time frame of the CDC's

initial disclosures to a short period in late May 2007. Speaker also

expressly identifies one news organization to whom disclosure was

made; namely, the Associated Press, which he claims received the
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leaked information between May 29 and May 31. Id. Importantly,

Speaker has also alleged with factual specificity how the CDC came

into possession of this information. Even the CDC does not dispute

that it had the information that Speaker alleges was impermissibly

disclosed. And there is no doubt that some entity, or its employees,

disclosed Speaker's identity, since not even the CDC contends that

Speaker himself revealed this information before the AP's May 31

article.

Defendant CDC asserts that the factual scenario in this case largely

mirrors the factually-insufficient pleadings in Twombly. We disagree.

Twombly involved a claim by plaintiffs that telecommunications

providers violated the Sherman Act, 15 U.S.C. § 1, by conspiring to

enter into agreements not to compete in each other's respective

territories. 550 U.S. at 548-50, 127 S. Ct. at 1961-62. The Supreme

Court stated that mere parallel activity that is unfavorable to

competition, “absent some factual context suggesting agreement,”

was insufficient to withstand Rule 12(b)(6) dismissal, since such

parallel activity was equally consistent with lawful independent

action. Id. at 548-49, 567-69, 127 S. Ct. at 1961, 1972-73. In

Twombly, doubt encompassed not merely who entered into an

agreement, but whether such agreement existed at all. The only

lingering uncertainty here, by contrast, concerns whether it was a

federal agency (namely, the CDC) or a very limited number of other

health institutions that divulged Speaker's identity.

Speaker provides greater factual specificity than the Twombly

plaintiffs (and, by extension, a more plausible claim), such as by

alleging an extremely determinate and compressed span of time in

which the violations took place. For example, a fair reading of the

Amended Complaint indicates that the CDC allegedly leaked his

identity to the media sometime between the day it found out about his

elevated diagnosis (May 18, 2007) and the day the AP publicly

revealed his identity (May 31, 2007), and most likely during the

period between its first press conference (May 29, 2007) and the AP

story (May 31, 2007). This contrasts markedly with the long and

nebulous seven-year time frame in which an agreement was alleged

to have occurred in Twombly - a broad window which would have

necessitated “sprawling, costly, and hugely time-consuming”

discovery. Twombly, 550 U.S. at 560 n.6, 127 S. Ct. at 1967 n.6.

Moreover, the short time frame alleged by Speaker is not only

factually specific, but it is also more suggestive of a causal nexus

between the CDC's press interaction and the exposure of Speaker's
571

identity. Although several health institutions treated Speaker in

Atlanta, there are, at this juncture at least, no allegations of press

conferences or such press interaction by those other Atlanta entities

around the time his identity was revealed. This close temporal

relationship between the time of the CDC's press interaction and the

discovery of Speaker's identity is far removed from the factual

allegations in Twombly.

Speaker, 2010 WL 4136634 at *10–11 (internal citations and footnotes omitted). The court

concluded: “Speaker need not prove his case on the pleadings - his Amended Complaint

must merely provide enough factual material to raise a reasonable inference, and thus a

plausible claim, that the CDC was the source of the disclosures at issue. Speaker has met

this burden.” Id. at *11.

• Hopkins v. Saint Lucie County School Board, 399 F. App’x 563, 2010 WL 3995824 (11th

Cir. 2010) (unpublished) (per curiam). Plaintiff Hopkins, an African-American male former

teacher, proceeding pro se, alleged racial and gender discrimination and retaliation both

during and after teacher’s employment. Id. at *1. Defendants, St. Lucie School Board and

several school administrators, moved to dismiss the complaint for failure to state a claim

under Rule 12(b)(6). Id. Hopkins filed a response and the matter was referred to a

magistrate judge, who recommended that the district court dismiss Hopkins’ complaint

without leave to amend. Id. The district court adopted the magistrate’s recommendation and

dismissed. Id. The Tenth Circuit affirmed. 

Hopkins alleged claims for disparate treatment under Title VII of the Civil Rights Act of

1964, 42 U.S.C. § 2000e-2(a), 42 U.S.C. § 1981, and 42 U.S.C. § 1983. Id. The court

explained that “[t]he analysis of a disparate treatment claim is the same” under all three

statutes. Hopkins, 2010 WL 3995824, at *1. “[E]vidence must be presented which is

‘sufficient to create an inference of discrimination.’” Id. (quoting Holifield v. Reno, 115 F.3d

1555, 1564 (11th Cir. 1997)). “A plaintiff can establish that inference by showing: (1) he

was a member of a protected class; (2) he was qualified for the job; (3) he suffered an

adverse employment action; and (4) his employer treated similarly situated employees

outside the protected class more favorably.” Id.

The court described the “motivating factor” behind Hopkins’s complaint as his assignment

as a “floating teacher,” moving from “classroom to classroom to teach Spanish, instead of

being assigned to only one classroom for the entire day.” Id. at *2. The court noted that his

complaint “exhaustively details the various inconveniences and petty difficulties [Hopkins]

encountered during his brief employment.” Id. These allegations included that (1) “Hopkins

was required to teach in a classroom while another teacher was present”; (2) Hopkins “was

not immediately issued a laptop computer carrying bag” and had to use his own bag for

several days; (3) “a fellow teacher would not share bulletin board space”; (4) students were

“occasionally rude and disruptive”; and (5) Hopkins’s “last class was interrupted by the

afternoon announcements.” Id. The court pointed out that “[m]ost of these inconveniences
572

were the result of actions of third parties, such as fellow teachers and students, instead of

actions by the School Board or the individual defendants.” Id. And that “Hopkins himself

admits that the school had other floating teachers, all of whom were female and none of

whom were African-American.” Hopkins, 2010 WL 3995824, at *2. The court concluded

that Hopkins “provides no facts that would allow a court to infer that the school district

treated those outside the class of African-American males more favorably. Instead, his

complaint lists conclusory allegations of discrimination and fails to provide, as required by

Twombly and Iqbal, the “sufficient factual matter” to establish a prima facie case.” Id.

Turning to Hopkins’s retaliation claims, the court explained that, to establish a retaliation

claim under Title VII or Section 1981, Hopkins must show “(1) that he engaged in statutorily

protected expression; (2) that he suffered a materially adverse action; and (3) that there is

some causal relation between the two events. Id. at *2 (discussing the elements required to

establish a Title VII retaliation claim (citing McCann v. Tillman, 526 F.3d 1370, 1375 (11th

Cir. 2008) and Burlington Northern and Santa Fe Ry. Co. v. White, 548 U.S. 53, 68 (2008))

(internal quotations omitted) and *3, n.2 (explaining that the elements required to establish

a Section 1981 claim are the same as the elements required to establish a Title VII claim).

The court decided that Hopkins’ complaint “fails to state the first requirement of such a

claim, because it does not allege sufficient facts to establish that he was engaged in a

statutorily protected form of expression when he was fired in October 2007.” Id. at *3. The

only “statutorily protected” activity Hopkins alleged was employment complaints filed with

the Florida Commission on Human Rights and the Equal Employment Opportunity

Commission. Id. “But both of those administrative complaints were filed months after the

school district fired him.” Id. (emphasis in original). The court then discussed Hopkins’s

claim “that the defendants retaliated against him by failing to provide him with job

references” and decided that it was deficient because Hopkins “alleged no facts that would

suggest a causal connection between his administrative complaints and the defendants’

actions.” Hopkins, 2010 WL 3995824, at *3. “His claim thus founders on the third

requirement to establish a prima facie case of retaliation and for that reason fails to meet

Iqbal’s requirement that a complaint “must contain sufficient factual matter, accepted as true,

to ‘state a claim to relief that is plausible on its face.’” Id. (quoting Iqbal, 129 S. Ct. at 1949

(quoting Twombly, 550 U.S. at 570)).

• Jemison v. Wise, 386 F. App’x 961, 2010 WL 2929692 (11th Cir. 2010) (unpublished) (per

curiam). PlaintiffJemison, an Alabama prisoner proceeding pro se, brought an action under

§ 1983, alleging that Defendant, Warden Wise, retaliated against him for exercising his First

Amendment right to free speech. Id. at *1. The district court dismissed his complaint sua

sponte, for failure to state a claim. Id. The Eleventh Circuit vacated and remanded. Id.

Jemison alleged that “several correctional officers beat him because he had filed numerous

complaints against prison officials.” Id. He filed a lawsuit against the officers, and also

named Wise as a defendant for failing to protect him from abuse. Id. Jemison alleged that

“Wise took great offense” at being named a defendant and retaliated by transferring Jemison

to a prison with a higher level of security. Id. He also alleged that, days before he was
573

transferred, Wise gave him a threatening letter. Id. 

Before Wise received service of process, the magistrate judge recommended that the court

sua sponte dismiss Jemison’s complaint for failure to state a claim upon which relief could

be granted. Id. The magistrate determined that Jemison’s complaint was insufficient

because Jamison “did not plead specific facts from which the court reasonably could infer

that Wise acted with a retaliatory motive when he transferred Jemison.” Id. Jemison field

objections to the magistrate’s report and recommendation, in which he alleged “that Wise

had been ‘greatly upset’ that Jemison had filed a lawsuit against him, and that Wise verbally

had expressed his anger to Jemison in a face-to-face interaction.” Id. at *2. In his objections,

Jemison also asserted “that all of his incoming and outgoing mail was ‘censored’ by prison

officials.” Id. The district court adopted the magistrate’s report and recommendation and

dismissed Jemison’s claim under the Prisoner Litigation Reform Act, 28 U.S.C. § 1915A

(PLRA), for failure to state a claim upon which relief may be granted:

The court found that the fact that Jemison had filed a lawsuit before

he was transferred, standing alone, did not permit an inference that

Wise had acted with a retaliatory motive when he ordered Jemison’s

transfer to Donaldson. The court also found that, while Jemison

alleged in his objections to the report and recommendation that Wise

verbally had expressed his anger regarding Jemison’s complaint, this

allegation was too vague to raise more than an inference of a

“possibility” that Wise had acted unlawfully. Based on its finding

that the complaint permitted an inference of only the mere possibility

of misconduct, the court determined that Jemison’s complaint should

be dismissed.

Id. at *2.

The Eleventh Circuit determined that Jemison should have been given an opportunity to

amend his complaint. It discussed the elements of a retaliation claim:

“The First Amendment forbids prison officials from retaliating

against prisoners for exercising the right of free speech.” Farrow v.

West, 320 F.3d 1235, 1248 (11th Cir. 2003). An inmate raises a First

Amendment claim of retaliation if he shows that the prison official

disciplined him for filing a grievance or lawsuit concerning the

conditions of his imprisonment. Wildberger v. Bracknell, 869 F.2d

1467, 1468 (11th Cir.1989). Even though a prisoner does not have a

liberty interest in not being transferred to another prison, he may state

a retaliation claim by alleging that he was transferred due to his filing

of a grievance or lawsuit concerning his conditions of his

confinement. See Bridges v. Russell, 757 F.2d 1155, 1156-57 (11th

Cir.1985). To establish a retaliation claim, the inmate must show,
574

inter alia, a causal connection between his protected conduct and the

prison official’s action. Farrow, 320 F.3d at 1248-49. In other

words, the prisoner must show that, as a subjective matter, a

motivation for the defendant’s adverse action was the prisoner’s

grievance or lawsuit. Smith v. Mosley, 532 F.3d 1270, 1278 (11th

Cir.2008).

Id. at *4. And concluded that Jemison should have been given an opportunity to amend

because his objections to the magistrate’s report and recommendation indicated that he had

a plausible retaliation claim:

[T]he district court abused its discretion by dismissing Jemison’s

complaint with prejudice before providing him with an opportunity

to amend his complaint. See Fed. R. Civ. P. 41(b); Fed. R. Civ. P.

15(a). Because Wise had not filed a responsive pleading at the time

that the court dismissed Jemison's complaint under § 1915A, Jemison

had the right to amend his complaint as a matter of course, pursuant

to Fed.R.Civ.P. 15(a). See Troville, 303 F.3d at 1260 n. 5. While

Jemison did not expressly state that he wished to amend his

complaint, he alleged additional facts in his objections to the report

and recommendation that were relevant to the causation element of

his retaliation claim-namely, that Wise expressed his anger regarding

Jemison’s lawsuit in a personal conversation with Jemison, and that

Jemison’s mail was censored by prison officials, thus indicating the

plausibility that prison officials learned about Jemison’s lawsuit by

viewing his mail. See Boxer X, 437 F.3d at 1112 & n. 4.

By alleging these additional facts in his objections to the report and

recommendation, Jemison indicated that he could state a plausible

claim that Wise acted with a retaliatory motive by describing the

content of his conversation with Wise, and by detailing the unusual

circumstances surrounding his transfer to Donaldson. See Ashcroft,

556 U.S. at ----, 129 S. Ct. at 1949; Twombly, 550 U.S. at 556, 127 S.

Ct. at 1965. Accordingly, regardless of whether Jemison’s retaliation

claim ultimately has merit, the district court erred by dismissing

Jemison’s complaint with prejudice before providing him with an

opportunity to amend.

Id.

• Azar v. Nat’l City Bank, 382 F. App’x 880, 2010 WL 2381049 (11th Cir. 2010)

(unpublished) (per curiam). Azar, a licensed attorney proceeding pro se, sued his bank for

fraudulent inducement and negligent misrepresentation after he defaulted on his mortgage

payments. See id. at *1. Azar sued National City Bank “seeking to restructure the principal
575

and terms of his mortgage, and/or rescind and cancel his mortgage, and enjoin National City

from instituting foreclosure proceedings.” Id. The claims alleged included fraud, fraudulent

inducement, fraudulent misrepresentation, negligence, breach of fiduciary duty and failure

to disclose, and injunctive relief. Id. The complaint asserted that “‘a confidential and

trusting relationship’ existed between [Azar] and National City’s employees, and that he had

trusted National City ‘to make good and proper decisions’ regarding the mortgage loans.”

Id. The complaint also alleged “that National City employees had intentionally falsified his

income without his knowledge to secure [two of the] loans.” Id. The district court dismissed

the complaint under Rule 12(b)(6). It dismissed the breach of fiduciary duty claim because

the allegations showed only “‘an arms-length, lender-borrower relationship.’” Azar, 2010

WL 2381049, at *1. It also dismissed the claim that the bank acted negligently by failing to

follow sound banking practices in processing the loans. Id. With respect to the fraud claims,

the district court noted that the only false statement alleged was that the bank stated on

Azar’s loan application that his income was three times higher than the actual amount, and

concluded that this statement could only have been intended to induce the lender to loan Azar

money, not to induce Azar to borrow money. Id. The district court also concluded that Azar

could not have relied on the statement because he knew the amount of his own income and

his complaint stated that he did not know his income had been falsified. Id. The district

court denied Azar’s request to file a third amended complaint to replead his fraudulent

inducement and fraudulent misrepresentation claims, and to add new claims for negligent

misrepresentation and breach of contract, describing the motion as frivolous. Id. at *2.

On appeal, Azar argued that the district court erred in dismissing his fraudulent inducement

claim because it ignored the alleged misrepresentation that Azar qualified for the loans and

met underwriting standards for loan approval. Id. Azar argued that this misrepresentation

caused him to take the loans, “on the belief that National City had determined he could afford

to repay the loans and was willing to incur the risk of such loans.” Azar, 2010 WL 2381049,

at *2. The Eleventh Circuit agreed with the district court’s analysis:

[T]he district court correctly found that Azar failed to plead a

plausible claim of fraudulent inducement. Azar contends that, by

approving his loans, National Citymisrepresented that he “qualified”

for the loans and met underwriting standards. The mere fact that his

loans were approved, however, does not constitute a false statement

of fact. Otherwise, every loan approval could potentially result in a

claim for fraudulent inducement. Likewise, Azar’s personal belief

that the loan approvals meant the bank believed he could repay the

loan does not constitute a misrepresentation of fact that was made by

National City. Even if National City employees had told Azar that

they believed he could repay the loan, such a statement is merely an

opinion, which cannot support a cause of action for fraud. 

Id. at *3 (citation omitted). The court concluded that the statement also did not fall into the

exception for opinions by someone with superior knowledge of the subject who knew or
576

should have known that the statement was false because “[e]ven though the bank employees

had access to certain financial documents of Azar’s, Azar did not allege that National City

had superior knowledge of his financial status or that it knew his business would continue

to decline, which is the reason Azar alleged he could not make his mortgage payments.” Id.

The court also agreed with the district court’s conclusion that the alleged falsification of

Azar’s income did not support a fraudulent inducement claim:

We agree with the district court that this misrepresentation, even if

true, reflects an intent to induce the lender to grant the loan, not to

entice Azar to take the loan. The only evidence of inducement in

Azar’s complaint is his bare allegation that National City would

financially benefit from loaning the money to him. Not only is this

assertion devoid of any factual support, but it defies common sense

to believe that a bank would profit from loaning money to someone

it knows cannot repay it. Although Azar suggests on appeal that the

bank employees would receive commissions and additional money

from making the loans, he did not make this allegation in his

complaint. Accordingly, we conclude that Azar’s factual allegations

of fraudulent inducement are insufficient “to raise a right to relief

above the speculative level” and were thus properly dismissed

pursuant to Rule 12(b)(6). Twombly, 550 U.S. at 555, 127 S. Ct. at

1965.

Id. at *4.

Azar asserted on appeal that his fraudulent misrepresentation claim was really a negligent

misrepresentation claim, relying on his allegation that the bank told him he qualified for the

loans and met underwriting standards. Id. The court stated that while it “generally

construe[s] pleadings liberally for a pro se litigant, [it could not] do so [in this case] because

Azar [wa]s a licensed attorney.” Id. The court declined to consider the negligent

misrepresentation issue on appeal because Azar failed to raise it in the district court. Azar,

2010 WL 2381049, at *4.

• Randall v. Scott, 610 F.3d 701, 2010 WL 2595585 (11th Cir. 2010). Randall was hired as

an investigator after Jewel Scott was elected as the district attorney of Clayton County. Id.

at *1. Randall decided to run for the position of Chairman of the Clayton County Board of

Commissioners. Id. Although Jewel Scott initially expressed approval of Randall’s

candidacy, Randall learned that Jewel’s husband, Lee Scott, planned to run for the position

and was angry about Randall’s decision to run. Id. After Randall refused to withdraw from

the race, Lee Scott allegedly asked Jewel Scott to fire Randall. Id. Jewel Scott then

allegedly told Randall that her husband was pressuring her to fire Randall and told him to

look for another job. Id. at *2. After Jewel Scott received an invitation to Randall’s

fundraiser, she terminated Randall’s employment. Randall, 2010 WL 2595585, at *2.

Randall filed suit in state court, asserting a First Amendment retaliation claim under § 1983
577

against Jewel Scott in her individual and official capacities, and a tortious interference claim

against Lee Scott. Id. After the case was removed to federal court, the district court granted

Jewel Scott’s motion to dismiss, concluding that “‘in light of the heightened pleading

standard applicable in § 1983 cases, the mere fact that Randall decided to run for political

office and held an event in connection with his candidacy is not enough to trigger First

Amendment protection.’” Id. (record citation omitted). The district court alternatively held

that even if the allegations were sufficient to state a First Amendment retaliation claim, Scott

was entitled to qualified immunity because she did not violate clearly established law. Id.

The Eleventh Circuit reversed the decision that the complaint did not state a First

Amendment violation, finding that the district court erred in applying a heightened pleading

standard, and affirmed the decision on qualified immunity.

The Eleventh Circuit began by addressing the history of the heightened pleading requirement

for § 1983 cases. The court first noted that “[g]enerally, under the Federal Rules of Civil

Procedure, a complaint need only contain ‘a short and plain statement of the claim showing

that the pleader is entitled to relief,’” id. at *3 (quoting FED. R. CIV. P. 8(a)(2)), and

emphasized that under Twombly, “[t]o survive a 12(b)(6) motion to dismiss, the complaint

‘does not need detailed factual allegations.’” Id. (quoting Twombly, 550 U.S. at 555). The

court cited Conley to note that the complaint “must ‘give the defendant fair notice of what

the plaintiff’s claim is and the grounds upon which it rests.’” Randall, 2010 WL 2595585,

at *3 (quoting Conley, 355 U.S. at 47). The court explained that some courts have required

something more for § 1983 complaints to survive dismissal:

Over two decades ago, “in an effort to eliminate

nonmeritorious claims on the pleadings and to protect public officials

from protracted litigation involving specious claims, we, and other

courts . . . tightened the application of Rule 8 to § 1983 cases.”

Arnold v. Bd. of Educ. of Escambia County, 880 F.2d 305, 309 (11th

Cir. 1989). Under this heightened pleading standard, plaintiffs were

required to provide “some factual detail” in addition to plain

statements showing that they were entitled to relief. Oladeinde v.

City of Birmingham, 963 F.2d 1481, 1485 (11th Cir. 1992). We

found such additional factual detail useful in § 1983 cases in order to

make qualified immunity determinations at the motion to dismiss

stage and to prevent public officials from enduring unnecessary

discovery.

Id. The court then set out the Supreme Court’s pleading decisions, explaining that until

Iqbal, none had addressed whether the heightened pleading standard for § 1983 claims

against individual defendants survived:

In 1993, the Supreme Court decided Leatherman v. Tarrant

County Narcotics Intelligence & Coordination Unit, 507 U.S. 163,

113 S. Ct. 1160, 122 L. Ed. 2d 517 (1993), a § 1983 case involving
578

a municipal entity defendant. In Leatherman, the Supreme Court

stated that “it is impossible to square the ‘heightened pleading

standard’ . . . with the liberal system of ‘notice pleading’ set up by the

Federal Rules. Rule 8(a)(2) requires that a complaint include only ‘a

short and plain statement of the claim showing that the pleader is

entitled to relief.’” Id. at 168, 113 S. Ct. at 1163 (citing FED. R. CIV.

P. (8)(a)(2)).

Since Leatherman, we have yet to decide whether

Leatherman’s holding applies in cases against individual defendants.

See, e.g. GJR Investments, Inc. v. County of Escambia, Fla., 132 F.3d

1359, 1367–68 (11th Cir. 1998) (stating that “heightened pleading .

. . is the law of this circuit” when § 1983 claims are asserted against

government officials in their individual capacities.). We read

Leatherman’s holding as limited to § 1983 actions against entities.

See Swann v. Southern Health Partners, Inc., 388 F.3d 834, 838 (11th

Cir. 2004) (“Leatherman overturned our prior decisions to the extent

that those cases required a heightened pleading standard in § 1983

actions against entities that cannot raise qualified immunity as a

defense.”).

In 1998, the Supreme Court decided Crawford-El v. Britton,

523 U.S. 574, 118 S. Ct. 1584, 140 L. Ed. 2d 759 (1998), in which it

addressed how a § 1983 plaintiff must allege unconstitutional motive.

The Court stated:

In the past we have consistently . . . refused to change

the Federal Rules governing pleading by requiring the

plaintiff to anticipate the immunity defense, or

requiring pleadings of heightened specificity in cases

alleging municipal liability . . . . As we have noted,

the Court of Appeals adopted a heightened proof

standard in large part to reduce the availability of

discovery in actions that require proof of motive. To

the extent that the court was concerned with this

procedural issue, our cases demonstrate that questions

regarding pleading, discovery, and summary judgment

are most frequently and most effectively resolved

either by the rulemaking process or the legislative

process.

Id. at 595, 118 S. Ct. at 1595 (internal citations omitted). In 2002, the

Supreme Court decided Swierkiewicz v. Sorema, 534 U.S. 506, 513,

122 S. Ct. 992, 998, 152 L. Ed. 2d 1 (2002), an employment
579

discrimination case, and held that “complaints . . . must satisfy only

the simple requirements of Rule 8(a).” The Court stated:

Rule 8(a)’s simplified pleading standard applies to all

civil actions, with limited exceptions. Rule 9(b) for

example, provides for greater particularity in all

averments of fraud or mistake. This Court, however,

has declined to extend such exceptions to other

contexts. In Leatherman we stated: “The Federal

Rules do address in Rule 9(b) the question of the need

for greater particularity in pleading certain actions, but

do not include among the enumerated actions any

reference to complaints alleging municipal liability

under § 1983” . . . Just as Rule 9(b) makes no

mention of municipal liability under [§ 1983] neither

does it refer to employment discrimination. Thus,

complaints in these cases, as in most others, must

satisfy only the simple requirements of Rule 8(a).

Id. (footnotes omitted)[.]

While a number of circuits relied upon the language in

Crawford-El and Swierkiewicz to reject a heightened pleading

standard in § 1983 individual-official cases, our circuit did not. See

Swann, 388 F.3d at 838 (reaffirming the heightened pleading standard

in § 1983 cases that involve parties eligible for qualified immunity

after Crawford-El and Swierkiewicz).

Id. at *3–5 (emphasis added) (first alteration and omissions in original) (footnote omitted).

The court rejected Randall’s argument that the Supreme Court’s decision in Jones v. Bock,

549 U.S. 199 (2007), in which the Court “rejected the contention that Prison Litigation

Reform Act (PLRA) plaintiffs were required to affirmatively plead exhaustion of

administrative remedies,” overturned the Eleventh Circuit’s heightened pleading requirement

for § 1983 claims. Randall, 2010 WL 2595585, at *5. The court explained that “[w]hile the

Jones case dicta does speak broadly regarding pleading standards, the holding is restricted

to PLRA plaintiffs and PLRA pleadings,” and concluded that “Jones d[id] not overrule [the

Eleventh Circuit’s] precedent regarding heightened pleading requirements in § 1983 actions

involving individuals able to assert qualified immunity as a defense.” Id.

But the court reached a different conclusion with respect to Iqbal, concluding that Iqbal did

overrule prior circuit court decisions imposing a heightened pleading standard in § 1983

cases:
580

In short, while the Iqbal opinion concerns Rule 8(a)(2)

pleading standards in general, the Court specifically describes Rule

8(a)(2) pleading standards for actions regarding an unconstitutional

deprivation of rights. The defendant federal officials raised the

defense of qualified immunity and moved to dismiss the suit under a

12(b)(6) motion. The Supreme Court held, citing Twombly, that the

legal conclusions in a complaint must be supported by factual

allegations, and that only a complaint which states a plausible claim

for relief shall survive a motion to dismiss. The Court did not apply

a heightened pleading standard.

While Swann, GJR, and Danley [v. Allen, 540 F.3d 1298 (11th

Cir. 2008)] reaffirm application of a heightened pleading standard for

§ 1983 cases involving defendants able to assert qualified immunity,

we agree with Randall that those cases were effectively overturned by

the Iqbal court. Pleadings for § 1983 cases involving defendants who

are able to assert qualified immunity as a defense shall now be held

to comply with the standards described in Iqbal. A district court

considering a motion to dismiss shall begin by identifying conclusory

allegations that are not entitled to an assumption of truth—legal

conclusions must be supported by factual allegations. The district

court should assume, on a case-by-case basis, that well pleaded

factual allegations are true, and then determine whether they plausibly

give rise to an entitlement to relief.

Id. at *7 (emphasis added) (footnote omitted). The court concluded that “the district court

erred in applying a heightened pleading standard to Randall’s complaint,” explaining that

“[a]fter Iqbal it is clear that there is no ‘heightened pleading standard’ as it relates to cases

governed by Rule 8(a)(2), including civil rights complaints,” and that “[a]ll that remains is

the Rule 9 heightened pleading standard.” Id. at *8 (emphasis added). The court noted that

although it had already applied Iqbal to a § 1983 suit against defendants raising a qualified

immunity defense in Keating v. City of Miami, 598 F.3d 753 (11th Cir. 2010), the Keating

opinion’s equation of the Iqbal pleading standard with the Eleventh Circuit’s heightened

pleading standard was merely dicta. See id. at *5 n.2. The court continued:

We now say explicitly what Keating implied: whatever requirements

our heightened pleading standard once imposed have since been

replaced by those of the Twombly-Iqbal plausibility standard. As we

recently emphasized in American Dental Ass’n v. Cigna Corp., “The

[Supreme] Court in Iqbal explicitly held that the Twombly plausibility

standard applies to all civil actions . . . because it is an interpretation

of Rule 8.” 605 F.3d 1283, 1290 (11th Cir. 2010) (emphasis added).

Thus, like complaints in all other cases, complaints in § 1983 cases

must now “‘contain either direct or inferential allegations respecting
581

all the material elements necessary to sustain a recovery under some

viable legal theory.’” Bryson v. Gonzales, 534 F.3d 1282 (10th Cir.

2008) (quoting In re Plywood Antitrust Litigation, 655 F.2d 627, 641

(5th Cir. Unit A 1981), quoted with approval in, Twombly, 550 U.S.

at 562, 127 S. Ct. 1955 (quoting Car Carriers, Inc. v. Ford Motor

Co., 745 F.2d 1101, 1106 (7th Cir. 1984) (quoting In re Plywood

Antitrust Litig., 655 F.2d at 641))).

Id. (alteration and omission in original)

With respect to the First Amendment claim, the court surveyed the case law and concluded

that “[a] plaintiff’s candidacy cannot be burdened because a state official wishes to

discourage that candidacy without a whisper of valid state interest,” and that “[a]n interest

in candidacy, and expression of political views without interference from state officials who

wish to discourage that interest and expression, lies at the core of values protected by the

First Amendment.” Randall, 2010 WL 2595585, at *12. The court found the relevant

analysis to be that “[t]he dismissal of Randall’s complaint [could] only be affirmed if the

state’s interest in permitting Scott to fire Randall [wa]s of sufficient importance to justify the

infringement ofRandall’s First Amendment right to run for Chairman oftheClayton County

Board of Commissioners.” Id. The court concluded that “[s]ince Scott’s interest in firing

Randall was, as alleged in the complaint, for purely personal reasons, the state ha[d] no

interest in preventing Randall from running for office.” Id. Since “Randall’s decision to run

for office enjoy[ed] some First Amendment protection, . . . [c]omparing this level of

protection to the state’s interest—manifestly none—the dismissal of Randall’s complaint

[could not] be affirmed on the failure to state the denial of a First Amendment right.” Id.

Although the court concluded that Randall had sufficiently stated a First Amendment

violation, it explained that “[s]ince federal law provides government officials a qualified

immunity when sued individually for an alleged violation of a constitutional right, if Scott

[could] establish qualified immunity, then the individual capacity claim against her [had to]

be dismissed.” Id. at *13. The court examined the relevant case law and concluded that

Randall’s rights were not clearlyestablished under broad case law or under materially similar

facts and that “Scott’s alleged unconstitutional act of working to prevent Randall from

running for office was not ‘obviously’ clear.” Id. at *13–14. Because “any such right to run

for office was not heretofore clearly established, . . . Scott . . . enjoy[ed] individual qualified

immunity protection for her alleged violations of Randall’s First Amendment rights.”

Randall, 2010 WL 2595585, at *14. The court affirmed the judgment on the qualified

immunity issue regarding the individual capacity claim against Scott. Id. The decision on

the official capacity claim was reversed. Id.

• Lubin v. Skow, 382 F. App’x 866, 2010 WL 2354141 (11th Cir. 2010) (unpublished) (per

curiam). A bankruptcy trustee for a holding company sought to impose liability on the

officers of the holding company and its failed subsidiary bank. Id. at *1. The district court

dismissed the complaint and the Eleventh Circuit affirmed, finding that the trustee lacked
582

standing to sue officers of the bank and failed to sufficiently plead a claim against the

officers of the holding company. Id.

Integrity Bancshares, Inc. (the “Holding Company”) was the parent of Integrity Bank (the

“Bank”). Id. The Bank initially did well, but ultimately suffered significant losses and was

closed and placed under FDIC supervision. Id. The Holding Company filed for bankruptcy

and the bankruptcy trustee filed an adversary proceeding against the defendants, seeking

damages for breach of fiduciary duty and negligence. Id. “The Complaint generally

allege[d] that, through mismanagement and risky lending practices, the defendants harmed

the Holding Company and endangered the capital it provided to the Bank.” Lubin, 2010 WL

2354141, at *1. “TheTrustee claim[ed] that because the Holding Company raised the money

to increase the Bank’s lending capital and expand its operations mostly through debt

issuances, those debt issuances ‘materially encumbered and put at risk the equity interests

of the [Holding Company’s] stockholders.’” Id. (alteration in original). The complaint

further alleged that “the Holding Company and its stockholders ‘had and have direct

equitable, if not legal, interests in the business practices, proper management, and profits of

the Bank.’” Id. The FDIC intervened, arguing it had sole ownership of the claims against

the defendants, and the defendants and the FDIC moved to dismiss. Id. at *2. The district

court granted the motion. Id.

With respect to the claims against the officers of the Bank, the complaint alleged that these

defendants “impaired the Bank’s work capital and wasted its assets so as to cause economic

loss to the Holding Company as well as the Holding Company’s ultimate bankruptcy.” Id.

at *3. The court explained that “[t]his [wa]s a classic derivative harm, as ‘[t]he wrong done

by the defendants, if any, was a wrong done to the corporation.’” Id. (third alteration in

original) (citation omitted). Because the FDIC had succeeded to all oftheBank’slegal rights

under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA),

the court found that only the FDIC could sue the Bank officers for the alleged breach of

fiduciary duty to the Bank. Lubin, 2010 WL 2354141, at *3. The court held that the trustee

lacked standing to bring a derivative suit against the Bank’s officers. Id. Although FIRREA

would not bar standing “if the Trustee [could] establish a direct harm to the Holding

Company caused by the Bank officers,” the court concluded that the complaint did not

adequately plead such a nonderivative claim. Id. The court reviewed the pleading standard

set out in Twombly and Iqbal and held that “[t]he district court correctly observed that

whether the claims alleged in the Complaint are direct or derivative is a legal, not factual,

determination, which we are not bound to accept.” Id. (internal citation omitted) (citing

Iqbal, 129 S. Ct. at 1949). The court rejected the trustee’s argument that “Iqbal is limited

to cases resolving qualified immunity against a constitutional tort claim,” explaining that the

court had “consistently applied Iqbal beyond that limited scope.” Id. at *3 n.7 (citations

omitted). The court noted that “[u]nder Georgia law, a direct claim is distinguishable from

a derivative claim if the shareholder is ‘injured in a way which is different from the other

shareholders or independently of the corporation,” and concluded that “[w]hile the

Complaint generally allege[d] that the Bank officers caused a direct harm to the Holding

Company, ‘[i]t [wa]s the nature of the wrong alleged and not the pleader’s designation or
583

stated intention that control[led] the court’s decision.’” Id. at *3 (second alteration in

original) (quoting Phoenix Airline Servs., Inc. v. Metro Airlines, Inc., 397 S.E.2d 699, 701

(Ga. 1990); and citing Gaudet v. United States, 517 F.2d 1034, 1035 (5th Cir. 1975)). The

court found that “[w]ithin the four corners of the Complaint, the Trustee ha[d] only alleged

a derivative claim disguised as a direct claim.” Lubin, 2010 WL 2354141, at *3. The court

explained:

The alleged harm to the Holding Company stems from the

Bank officers’ management of Bank assets. This harm is inseparable

from the harm done to the Bank. That the Bank officers’ poor

business choices reduced the value of the Holding Company’s

investment does not alter the fact that the harm is decidedly a

derivative one.

While the Complaint alleges that the Holding Company

suffered a unique harm because it assumed $34 million of debt to

finance the Bank’s expanded operations, debt is not an intrinsic harm.

The Bank’s insolvency, which precluded the Holding Company from

repaying the $34 million, is what forced the Holding Company into

bankruptcy. In the Complaint, the Trustee acknowledges that

repayment of this debt depended upon the success of the Bank. As

the Seventh Circuit observed, “the fact that the plaintiffs borrowed

money to [fund their investment] and are now on the hook to pay

those personal debts does not alter the nature of their claims.”

Massey v. Merrill Lynch & Co., 464 F.3d 642, 648 (7th Cir. 2006).

Thus, the Holding Company’s harm, and even its ultimate

bankruptcy, is derivative of the harm to the Bank.

Because the Complaint alleges derivative harm, recovery from

which is preempted by FIRREA, the district court properly dismissed

the Complaint against Ballard, Skeen, and Skow as officers of the

Bank.

Id. at *4 (alteration in original) (footnote and internal citations omitted).

With respect to the claims against the officers of the Holding Company, the court noted that

FIRREA did not bar standing, but the complaint failed to adequately plead breach of

fiduciary duty. Id. at *4–5. “The Complaint allege[d] that the officers of the Holding

Company ‘caus[ed], authoriz[ed], approv[ed], raif[ied] or otherwise allow[ed] the Bank to

persist in the deficient condition and unsound practices,’ and that they ‘failed to exercise that

degree of care and competence required by ordinarily prudent persons holding similar

positions under similar circumstances.’” Id. at *5 (second, third, fourth, fifth, and sixth

alterations in original). The court held that the complaint “simply recite[d] the elements of

breach of duty in the ‘unadorned, the-defendant-unlawfully-harmed me’ manner Iqbal
584

prohibits.” Id. (citing Iqbal, 129 S. Ct. at 1949). Although the district court concluded that

even if some of the defendants owed a fiduciary duty to the Holding Company, the complaint

still only alleged a breach of duty in their roles as officers of the Bank, the Eleventh Circuit

gave “the Trustee the benefit of the inference that Skow and Long, as officers of the Holding

Company, had oversight responsibilities for the Bank, and thus are partly to blame for the

Bank’s mismanagement.” Id. But the court concluded that “[w]hile the losses of the Bank

are staggering, a simple recitation of those amounts together with generalized statements of

blame do not state a legal claim for breach of fiduciary duties to the Holding Company.”

Lubin, 2010 WL 2354141, at *5. The court “express[ed] no opinion about whether Skow

or Long might have breached their duties as Holding Company officers by failing to inform

the Holding Company board about bank mismanagement or by failing to influence the

Holding Company (as sole shareholder of the Bank) to respond to this mismanagement by

changing the Bank management,” explaining that “[n]either of these allegations, nor any

other allegations regarding these defendant[s’] conduct as Holding Company officers,

appear[ed] in the Complaint.” Id. The court held that “[b]ecause the Complaint fail[ed] to

plead sufficient facts connecting any act or omission by the defendants with a harm to the

Holding Company that [wa]s distinct from the harm the Holding Company suffered when

its investment in the Bank soured, the Complaint state[d] no claim for which the Trustee

[could] recover.” Id.

• Am. Dental Ass’n v. Cigna Corp., 605 F.3d 1283, 2010 WL 1930128 (11th Cir. 2010). The

court addressed “whether, under FED. R. CIV. P. 9(b) and the pleading standard recently

articulated by the Supreme Court in . . . Twombly . . . and Iqbal . . . , Plaintiffs/Appellants

(‘Plaintiffs’) have sufficiently pled factual allegations in their RICO complaint to survive a

motion to dismiss,” and affirmed the district court’s dismissal of the complaint. Id. at *1.

Three dentists and the American Dental Association sued dental insurance companies that

the plaintiffs contracted with to provide dental servicesto the defendants’ members through

dental service managed care plans. Id. The plaintiffs asserted violations of the Racketeer

Influenced and Corrupt Organizations Act (RICO) and state law claims. Id. The plaintiffs

“allege[d], on behalf of themselves and a putative class of similarly-situated dentists, that

Defendants ‘engaged in a systematic, fraudulent scheme to diminish payments to Class

Plaintiffs through automatic downcoding, Current Dental Terminology (‘CDT’) code

manipulation and improper bundling.’” Id. The district court dismissed all of the RICO

claims without prejudice because the RICO enterprise allegations were deficient. Id. The

plaintiffs filed an amended complaint, which the defendants moved to dismiss, but the case

was transferred to another judge who denied all pending motions with leave to refile in order

to assess the status of the case. See Am. Dental Ass’n, 2010 WL 1930128, at *1. During this

time, the Supreme Court decided Twombly and the plaintiffs filed a second amended

complaint. Id. The second amended complaint contained six counts: (1) RICO conspiracy;

(2) aiding and abetting RICO violations; (3) a substantive RICO claim under 18 U.S.C. §

1962(c); (4) a claim for declaratory relief under 18 U.S.C. § 1964(a) and 28 U.S.C. § 2201

for RICO violations; (5) breach of contract; and (6) tortious interference with contractual

relations and with existing and prospective business expectancies. Id. at *2. The defendants
585

moved to dismiss all claims other than the breach of contract claim, and the district court

granted the motion without prejudice, finding that the substantive RICO allegations were

deficient under Twombly, the conspiracy claim “did ‘not contain sufficient factual allegations

about the Defendants agreeing with other entities and/or persons to engage in the ongoing

criminal conduct of an enterprise,’” and the remaining RICO claims were deficient for

similar reasons. Id. The district court provided another chance to file an amended

complaint, directing the plaintiffs to “‘conform with the pleading requirements announced

in Twombly’” and applied by the Eleventh Circuit in two subsequent cases. Id. The

plaintiffs sought an extension of time to file another amended complaint, but the district

court denied the motion, stating: “‘Because the plaintiffs are operating under newer, more

stringent pleading requirements, the Court decided to afford them one last bite at the

proverbial apple . . . . At this point, the factual averments necessary to satisfy Twombly are

either readily included in yet another amended complaint, or simply do not exist.’” Id. at

*2–3. The plaintiffs never filed a third amended complaint, and the district court dismissed

all counts but the breach of contract claim with prejudice and declined to exercise

supplemental jurisdiction over the contract claim. Am. Dental Ass’n, 2010 WL 1930128, at

*3. The appeal involved the dismissal of the RICO and RICO-related claims. Id.

The Eleventh Circuit began by describing the Supreme Court’s opinions in Twombly and

Iqbal because “[t]he present case reflect[ed] the concerns that motivated the Supreme Court

to adopt a new pleading standard in Twombly and Iqbal . . . .” Id. In discussing Twombly,

the court noted that “[i]n rejecting that [no-set-of-facts] language [from Conley], the Court

in Twombly noted that courts had read the rule so narrowly and literally that ‘a wholly

conclusory statement of claim would survive a motion to dismiss whenever the pleadings left

open the possibility that a plaintiff might later establish some set of undisclosed facts to

support recovery.’” Id. (quoting Twombly, 550 U.S. at 561). In discussing Iqbal, the court

explained that “[i]mportantly, the Court held in Iqbal, as it had in Twombly, that courts may

infer from the factual allegations in the complaint ‘obvious alternative explanation[s],’ which

suggest lawful conduct rather than the unlawful conduct the plaintiff would ask the court to

infer.” Id. at *4 (second alteration in original) (citing Iqbal, 129 S. Ct. at 1951–52).

The court first examined the allegations of predicate acts of a pattern of racketeering under

18 U.S.C. § 1962(c) and noted:

Because Plaintiffs’ section 1962(c) claim is based on an alleged

pattern of racketeering consisting entirelyofthe predicate acts of mail

and wire fraud, their substantive RICO allegations must comply not

only with the plausibility criteria articulated in Twombly and Iqbal but

also with FED.R. CIV. P. 9(b)’s heightened pleading standard, which

requires that “[i]n alleging fraud or mistake, a party must state with

particularity the circumstances constituting fraud or mistake.”

Id. at *6 (alteration in original) (citation omitted). The court noted that under Rule 9(b), “a

plaintiff must allege: ‘(1)the precise statements, documents, or misrepresentations made; (2)
586

the time, place, and person responsible for the statement; (3) the content and manner in

which these statements misled the Plaintiffs; and (4) what the defendants gained by the

alleged fraud.’” Am. Dental Ass’n, 2010 WL 1930128, at *6 (citation omitted).

The court described the allegations:

Plaintiffs’ complaint alleges that “[d]efendants represented in

their on-line advertising, in their provider agreements and in their fee

schedules that their in-network providers would be compensated for

covered procedures based on commonly accepted dental practice,

standard coding practice and Defendants’ fee schedules.” Plaintiffs

argue that these advertisements, agreements, and fee schedules were

fraudulent because they indicated benefits payments lower than what

Plaintiffs believed were due to them under their fee-for-service

agreements with Defendants, which Plaintiffs argue had promised

them timely specified payments “in accordance with standard dental

coding procedures.” In other words, Plaintiffs contend that they

performed multiple procedures worthy of multiple or larger benefits

payments, but that Defendants bundled and downcoded the

procedures into fewer claims worthy of smaller payments.

Additionally, Plaintiffs allege that the onlywaythe alleged scheme of

downcoding and bundling claims could work is if Defendants

“agree[d]” to employ the “same” devices and tactics. Thus, Plaintiffs

do not allege parallel schemes among competing dental insurers; they

allege a single scheme consisting of identical conduct in which all

Defendants agreed to participate. Therefore, not only did Plaintiffs

need to plausibly and particularly allege facts showing related

instances of mail and wire fraud, but also plausibly allege facts

showing that a conspiracy created the alleged scheme. Though the

complaint sets out at least six examples of e-mail and letter

communications between Defendants and Plaintiffs, including online

advertisements, fee schedules, contracts, and Explanations of Benefits

(“EOBs”) documents, Plaintiffs do not point to a single specific

misrepresentation by Defendants regarding how Plaintiffs would be

compensated in any of these communications, nor do they allege the

manner in which they were misled by the documents, as they are

required to do under Rule 9(b). We have held that a plaintiff must

allege that some kind of deceptive conduct occurred in order to plead

a RICO violation predicated on mail fraud. Am. United Life Ins. Co.

v. Martinez, 480 F.3d 1043, 1065 (11th Cir. 2007) (affirming

dismissal of plaintiff’s substantiveRICO claims where complaint did

not allege that defendants made anyaffirmative misrepresentations in
 The Martinez case was decided before Twombly.

33

587

the mailings). Here, Plaintiffs’ complaint provides a list of mailings 33

and wires, without ever identifying any actual fraud. If the specific

misrepresentations do not exist, it follows that the complaint has not

alleged a right to relief that is “plausible on its face.” See Twombly,

550 U.S. 570, 127 S. Ct. at 1974, 167 L. Ed. 2d 929.

Id. (emphasis added) (alterations in original) (citations omitted). The court noted that “[f]or

example, Plaintiffs d[id] not allege any misrepresentations in the EOBs because Plaintiffs

allege in their complaint that the EOBs expressly informed Plaintiffs when their claims were

going to be bundled or downcoded and gave the reasons for doing so,” and that the plaintiffs

had “not shown how they were misled by the EOBs if the language in the EOBs notified

them about any bundling or downcoding of particular procedures.” Id. The court also

explained that the complaint did not allege any misrepresentation in the online

advertisements because “[t]here [we]re no allegations anywhere that the quoted language of

the advertisements [wa]s false” and “[r]ead as a whole, they amount[ed] at most to puffery,

not fraud.” Id. at *7 (citation omitted). The court noted that the plaintiffs made “no

allegations as to who, if anyone, read the advertisements and was misled by them.” Id. The

court also noted that “the complaint d[id] not connect the allegedly fraudulent

communications to any particular acts of bundling or downcoding that Plaintiffs f[ound]

unacceptable.” Id.

The court rejected the plaintiffs’ argument that the “lack of particularity should be excused

because they were at an ‘informational disadvantage’ as to exactly how Defendants’ software

bundled and downcoded submitted procedures.” Am. Dental Ass’n, 2010 WL 1930128, at

*7. The court found “it telling that the three named plaintiffs . . . each received EOBs

explaining the reimbursement of specific procedures they had performed, yet the complaint

never offer[ed] any examples of which claims were bundled and downcoded.” Id. The court

stated that “the closest Plaintiffs c[a]me to alleging a specific instance of fraud [wa]s in

paragraph 49 of the complaint, where they allege[d] that ‘[d]efendants regularly sent EOBs

[to Plaintiffs] that inappropriately and automatically bundled x-ray procedures with other

procedures,’” but noted that the plaintiffs did “not allege other procedures with which the xray codes were bundled.” Id. (fourth and fifth alterations in original). The court found that

“[t]his [wa]s at most an allegation of possible parallel conduct without any allegation of an

agreement as to how Defendants would process x-ray billing codes as part of a greater

scheme.” Id. The court continued: “In fact, Plaintiffs do not allege how Defendants agreed

to employ any of these procedures as part of a long-term criminal enterprise predicated on

acts of mail and wire fraud. Simply specifying particular dates and contents of

communications cannot automatically constitute a valid claim that a defendant violated 18

U.S.C. § 1962(c) without also plausibly alleging the existence of a long-term criminal

enterprise.” Id.
The court noted that the plaintiffs also argued that the district court erred by dismissing their substantive RICO claims 34

not on the basis that they did not meet the Rule 9(b) standard, but on the basis that the allegations were not plausible

under Twombly. Am. Dental Ass’n, 2010 WL 1930128, at *7 n.3. The Eleventh Circuit disagreed, but noted that even

if the district court had relied solely on the plausibility standard in dismissing the substantive RICO claims, the judgment

could be affirmed on the basis that the plaintiffs had not pleaded with sufficient particularity under Rule 9(b). Id.

588

The court concluded that the claim did not meet the standards of Twombly or of Rule 9(b):

In sum, the Second Amended Complaint does not plausibly,

under Twombly, or particularly, under Rule 9(b), allege a pattern of

racketeering activity predicated on a scheme to commit acts of mail

and wire fraud. We find no specific misrepresentations in any of the

communications Plaintiffs referenced, no connection between the

alleged misrepresentations and any particular acts of downcoding or

bundling, and no allegations as to how Defendants agreed to engage

in an illegal scheme to defraud dental providers. Plaintiffs may have

a difference of opinion from Defendants regarding the coding that

was used in processing their claims, but we cannot infer a

scheme-driven deception from a complaint that provides no details of

fraud or conspiracy. Accordingly, we conclude that the district court

did not err in dismissing the substantive RICO claim in the Second

Amended Complaint for failure to state a claim.

Id. (emphasis added) (footnote omitted).34

The court then turned to the allegations of conspiracy under 18 U.S.C. § 1962(d) and

concluded that “the allegations in Plaintiffs’ complaint d[id] not support an inference of an

agreement to the overall objective of conspiracy or an agreement to commit two predicate

acts.” Am. Dental Ass’n, 2010 WL 1930128, at *8. The court eliminated “conclusory

statements such as ‘[d]efendants have not undertaken the above practices and activities in

isolation, but instead have done so as part of a common scheme and conspiracy,’ and ‘[e]ach

Defendant and member of the conspiracy, with knowledge and intent, agreed to the overall

objective of the conspiracy, agreed to commit acts of fraud to relieve Class Plaintiffs of their

rightful compensation, and actually committed such acts.’” Id. (alterations in original)

(internal citation omitted). The court found that “[t]hese [we]re the kinds of ‘formulaic

recitations’ of a conspiracy claim that the Court in Twombly and Iqbal said were

insufficient.” Id. (citing Twombly, 550 U.S. at 557; Iqbal, 129 S. Ct. at 1950–51). The court

also excluded from consideration the allegation that “‘[i]n order for the fraudulent schemes

described above to be successful, each Defendant and other members of the conspiracy had

to agree to enact and utilize the same devices and fraudulent tactics against the Class

Plaintiffs,’” explaining that the court was “‘not required to admit as true this unwarranted

deduction of fact.’” Id. (alteration in original) (quoting Sinaltrainal v. Coca-Cola Co., 578

F.3d 1252, 1268 (11th Cir. 2009)). “After eliminating the wholly conclusory allegations of

conspiracy, [the court] turn[ed] to Plaintiffs’ remaining factual allegations.” Id. The court
 The court recognized that the Twombly Court acknowledged certain examples of parallel conduct that might be 35

sufficient to imply a conspiracy, but concluded that the alleged conduct did not fall into any of the categories described

by the Twombly Court. Am. Dental Ass’n, 2010 WL 1930128, at *8 n.5.

589

noted:

Plaintiffs attempt to bolster their conspiracy allegations by describing

the following “collective” or parallel actions taken by Defendants,

from which they now argue the existence of an agreement may be

inferred: the collective development and use of automated processes

to manipulate CDT codes, i.e. downcoding and bundling; the use of

the same claims procedures, including the data that dentists are

required to provide in submitting claims, the forms on which dentists

must submit their data, and the coding that dentists use to submit their

data; and Defendants’ participation in trade associations and private,

jointly owned partnerships and corporations.

Id. The court concluded that the proposed inferences were not warranted:

Assuming for the sake of argument that parallel conduct has actually

been alleged here, and accepting these factual allegations as true, as

we are required to do under Iqbal, see 129 S. Ct. at 1950, we think

that the Supreme Court’s holding in Twombly forecloses any

possibility that Plaintiffs’ allegations of parallel conduct plausibly

suggest a conspiracy. The Court stated in Twombly that “when

allegations of parallel conduct are set out . . . they must be placed in

a context that raises a suggestion of a preceding agreement, not

merely parallel conduct that could just as well be independent

action.” 550 U.S. at 557, 127 S. Ct. at 1966. The Court held that

allegations of parallel conduct, accompanied by nothing more than a

bare assertion of a conspiracy, do not plausibly suggest a conspiracy,

stating that “without that further circumstance pointing to a meeting

of the minds, an account of a defendant’s commercial efforts stays in

neutral territory.” Id.

Am. Dental Ass’n, 2010 WL 1930128, at *8 (footnotes omitted).35

The court stated that “[t]hese conclusions are especially true where, as here, there is an

‘obvious alternative explanation’ for each of the collective actions alleged that suggests

lawful, independent conduct.” Id. at *9 (citing Twombly, 550 U.S. at 568; Iqbal, 129 S. Ct.

at 1951–52). The court explained that “[a]s for Plaintiffs’ allegation that Defendants

downcoded and bundled some submitted claims, insurance companies must use computers

and software to efficiently process claims, and the use of downcoding and bundling may be
 The court recognized that other circuits have held that failure to state a claim of a primary RICO violation is fatal to

36

a civil RICO conspiracy claim, but found it unnecessary to resolve that issue because the conspiracy allegations failed

to state a claim under Twombly and Iqbal. Am. Dental Ass’n, 2010 WL 1930128, at *10 n.6.

590

proper in order to decrease physicians’ costs and potentially increase profits,” and noted that

“Plaintiffs’ brief only decrie[d] the use of ‘improper’ bundling, which implie[d] that some

bundling of claims [wa]s commonly acceptable.” Id. The court also noted that “the

Department of Health and Human Services ha[d] taken the position that the inverse processes

of ‘upcoding’ and ‘unbundling’ [we]re fraudulent billing practices under Medicare, which

supports the use of automated claims processing systems.” Id. The court concluded that

“[t]he use of automated systems that bundle and downcodemayjust as easily have developed

from independent action in a competitive environment as it would from an illegal conspiracy,

because each insurer would have an economic interest in decreasing physicians’ costs and

increasing profits.” Id. As a result, the court held that “[t]he complaint d[id] not plausibly

suggest that by using similar methods to downcode and bundle claims, Defendants ha[d]

acted in any way inconsistent with the independent pursuit of their own economic selfinterest,” and that “Defendants’ parallel conduct [wa]s equally indicative of rational

independent action as it [wa]s concerted, illegitimate conduct and thus ‘stay[ed] in the

neutral territory.’” Id. (quoting Twombly, 550 U.S. at 557). “As for Plaintiffs’ allegation that

a conspiracy may be inferred from Defendants’ participation in trade associations and other

professional groups,” the court noted that “it was well-settled before Twombly that

participation in trade organizations provides no indication of conspiracy.” Am. Dental Ass’n,

2010 WL 1930128, at *9. The court concluded:

Plaintiffs have not plausibly alleged sufficient facts regarding

Defendants[’] agreement with other entities or persons to engage in

the ongoing criminal conduct of an enterprise. Plaintiffs’ allegations

of Defendants’ parallel conduct, absent a plausibly-alleged “meeting

of the minds,” fail to “nudge[ ] their claims across the line from

conceivable to plausible.” See Twombly, 550 U.S. at 557, 570, 127

S. Ct. at 1966, 1974. Accordingly, we conclude that the district court

did not err in dismissing the RICO conspiracy claim in the Second

Amended Complaint.

Id. at *10 (second alteration in original).36

The court summarized its holdings as follows:

The RICO allegations in Plaintiffs’ Second Amended

Complaint “stop[ ] short of the line between possibility and

plausibility.” See Twombly, 550 U.S. at 557, 127 S. Ct. at 1966. As

explained above, Plaintiffs failed to sufficiently plead a pattern of

racketeering activity predicated on a scheme to commit acts of mail
 With respect to the aiding and abetting RICO claim and the claim for declaratory relief under RICO, the court noted 37

that the appellate arguments were extremely limited and concluded that the district court properly dismissed those claims

for the same reasons it dismissed the claims made under §§ 1962(c) and (d). Id. at *10 n.7.

591

and wire fraud. Plaintiffs also failed to plausibly allege a conspiracy

to commit RICO violations, as they merely offered conclusory

allegations of agreement accompanied by statements of parallel

behavior, which just as easily suggest independent, lawful action.

Id. (alteration in original).37

• Edwards v. Prime, Inc., 602 F.3d 1276, 2010 WL 1404280 (11th Cir. 2010). Former

employees of a Ruth’s Chris Steak House franchise asserted claims against the restaurant and

its owner, operator, and franchisor under the Racketeer Influenced and Corrupt Organizations

Act (RICO), the Fair Labor Standards Act (FLSA), 42 U.S.C. § 1981, and Alabama common

law, alleging that the restaurant “knowingly provided illegal aliens with names and social

security numbers of American citizens to use for illegal employment, unlawfully took

employees’ tips, discriminated on the basis of race, and retaliated against employees who

challenged those and other practices.” Id. at *1. The district court dismissed four of the

fifteen counts and certified those rulings as partial final judgments under Rule 54(b). Id.

The EleventhCircuitreversed the dismissal of theRICO claim, affirmed the other judgments

certified under Rule 54(b), and dismissed for lack of jurisdiction the appeal of rulings that

were not certified. Id.

In describing the allegations, the Eleventh Circuit noted that “[a]t this stage we must and do

assume that any well-pleaded allegations in the amended complaint are true.” Id. Count I

alleged a pattern of racketeering activity under RICO, based on a criminal enterprise to

violate federal immigration laws. Id. According to the complaint, “Prime [(the franchisee

that owned and operated the restaurant)] knowingly hired and employed illegal aliens,

allowed them to work under the names of former Ruth’s Chris employees who were United

States citizens, and provided them with the former employees’ social security numbers.” Id.

The defendants also allegedly “gave the illegal aliens more time than federal law permits to

produce paperwork establishing their eligibility to work in this country and sometimes did

not require the illegal aliens ever to produce the paperwork.” Edwards, 2010 WL 1404280,

at *1. “Prime’s management asked the illegal aliens employed in the restaurant whether they

knew of any other illegal aliens who were interested in working there.” Id. Prime also

allegedly paid the illegal aliens in cash and preferred them over U.S. citizens. Id. The

company also gave the illegal aliens name tags that had names that were not their own. Id.

Counts 2–6 alleged that the defendants violated the FLSA by unlawfully taking and keeping

the plaintiffs’ tips. The complaint alleged:

Because Prime paid the plaintiffs as “tipped employees,” it claimed
592

a “tip credit” and paid them an hourly wage below the minimum

wage that otherwise would have applied. As a standard practice

Prime withheld a percentage of servers’ tips, and a portion of that

money was paid to “the house.” The rest was placed into a “tip pool,”

which Prime used to pay other employees, including some who were

not eligible to participate in the tip pool. When a manager or

supervisor believed that a customer had tipped an employee too

much, the manager or supervisor persuaded the customer to reduce

the amount of the tip to the employee or not to tip at all. Those

practices, it is claimed, rendered defendants’ use of the tip credit

unlawful under the FLSA, requiring them to pay direct wages for the

full minimum wage and to return the tips.

Id. at *2. The complaint further alleged that Prime required the plaintiffs to perform

excessive non-serving tasks, occasionally “clocked out” the plaintiffs even if they were still

working, sometimes docked the plaintiffs’ hours, and did not keep accurate records of the

time the employees worked. Id. The plaintiffs requested “injunctive and declaratory relief,

all unlawfully taken tips, lost minimum and overtime wages, liquidated damages matching

the amount of lost tips and wages, and reasonable attorney’s fees.” Edwards, 2010 WL

1404280, at *2.

Count 7 alleged that the defendants intentionally interfered with the business relationship

between the employees and the patrons of the restaurant who tip and between the employees

who contributed to or received money from the tip pool. Id. Specifically, the plaintiffs

alleged that the defendants “intentionally interfered with those business and contractual

relations ‘by taking amounts of money’ from the plaintiffs ‘based on such gratuities paid to

servers regardless of whether Defendants otherwise complied with the FLSA in

compensating employees.’” Id. Count 8 alleged that this conduct amounted to conversion

under state law. Id.

The final seven counts included claims of unlawful discrimination and retaliation, but only

some were at issue on appeal. Id. at *3. In Count 12, plaintiff Edwards, a Caucasian, alleged

that Prime subjected him to a hostile work environment based on his race, in violation of §

1981. Specifically, Edwards alleged:

While working at Ruth’s Chris, Edwards was targeted by Hispanic

and Latino employees who repeatedly threatened him at the

restaurant. One employee cursed Edwards and threatened to cut his

throat. He complained to Prime’s management about the hostile work

environment, but they failed to take any action “because Prime

disfavored Caucasian Edwards in favor of its Hispanic and Latino

employees and did not want to upset them out of fear of disrupting its

supply of cheap illegal labor.” In addition to being threatened,

Edwards was also shunned. One Hispanic employee threatened
593

Edwards, telling him that it was “going to be bad” for the person who

was complaining about Prime’s employment of illegal aliens.

Id. In Count 13, Edwards claimed, on his own behalf and on behalf of similarly situated

employees, that after his attorney gave a copy of the proposed complaint to the restaurant’s

manager, he was “subjected to added scrutiny at work, and the defendants took ‘no effective

action to prevent . . . Edwards’ hostile work environment including another employee’s

additional threat to Edwards after [he] had complained about a threat.’” Edwards, 2010 WL

1404280, at *3 (alteration and omission in original). The restaurant also reduced Edwards’s

hours and prevented him from participating in the retirement plan. Id. In addition, Prime

allegedly began referring to the withheld percentage of the tips as a service charge on reports

filled out by servers, which Edwards claimed amounted to retaliation in violation of the

FLSA and § 1981. Id. In Count 14, another employee (Key) claimed that Prime unlawfully

retaliated against her by terminating her health care benefits and then firing her after this

lawsuit was filed, in violation of the FLSA and § 1981. Id. at *3–4.

The district court dismissed with prejudice Counts 1, 7, 8, and 12, concluding that the RICO

claim failed to allege a pattern of racketeering activity, the tort claims were preempted by the

FLSA, and Edwards’s § 1981 hostile work environment claim failed to allege that he was

discriminated against because of his race. Id. at *4. The district court also dismissed with

prejudice Counts 2–6 to the extent they requested declaratory and injunctive relief, finding

that the FLSA did not provide for equitable relief. Id. The district court also dismissed

Counts 13–14 with prejudice to the extent that Edwards and Key requested punitive

damages, finding that such damages were unavailable under 28 U.S.C. § 215. Edwards,

2010 WL 1404280, at *4. Counts 1, 7, 8, and 12 were certified under Rule 54(b). Id. The

Eleventh Circuit held that its jurisdiction extended only to those four certified claims. See

id. at *5–7.

With respect to Count I, the RICO claim, the court noted that “racketeering activity” under

RICO included any violation of § 274 of the Immigration and Nationality Act (INA),

provided that the act was committed for financial gain. Id. at *9. The court explained the

plaintiffs’ claim:

In this case the plaintiffs allege that the defendants engaged in

“racketeering activity” by violating several provisions of INA § 274,

which is codified at 8 U.S.C. § 1324, and that they did so for financial

gain. Specifically, the plaintiffs allege that the defendants violated:

(1) 8 U.S.C. § 1324(a)(3)(A), which makes it a federal crime for any

person to “knowingly hire[ ] for employment at least 10 individuals

with actual knowledge that the individuals are [illegal] aliens” during

a 12-month period; (2) 8 U.S.C. § 1324(a)(1)(A)(iv), which makes it

a federal crime for any person to “encourage[ ] or induce[ ] an alien

to come to, enter, or reside in the United States, knowing or in

reckless disregard of the fact that such coming to, entry, or residence
594

is or will be in violation of law”; (3) 8 U.S.C. § 1324(a)(1)(A)(iii),

which makes it a federal crime for any person to knowingly or

recklessly “conceal[ ], harbor[ ], or shield[ ] from detection, or

attempt[ ] to conceal, harbor or shield from detection” an alien who

“has come to, entered, or remains in the United States” illegally; and

(4) 8 U.S.C. § 1324(a)(1)(A)(v), which makes it a federal crime for

any person to conspire to commit, or to aid and abet, any violation of

§ 1324(a)(1)(A)(i)–(iv). According to the amended complaint, the

defendants have committed “tens and scores if not hundreds,” of

these predicate acts.

Id. (alterations in original).

In considering the alleged violation of § 1324(a)(3)(A), which would constitute a predicate

act under RICO, the court distinguished between that statute and § 1324a, the violation of

which would not constitute a predicate act:

If an employer hires 10 or more illegal aliens with knowledge that

they are unauthorized aliens who have been illegally brought into this

country, § 1324(a)(3)(A) applies and the employer may be fined,

sentenced to as much as 5 years in prison, or both. And that crime

would be a RICO predicate act. By contrast, if an employer

knowingly hires aliens not authorized to work in this country, without

knowledge that they were brought into this country illegally, only §

1324a would be violated. For a violation of § 1324a only civil

penalties are available, unless there is a “pattern or practice” in which

case a conviction may result in a fine and a sentence of up to six

months. And that crime would not be a RICO predicate act.

Id. at *10 (internal citations omitted). The district court concluded that the complaint failed

to allege that Prime or its employees had actual knowledge that the unauthorized aliens they

hired had been “‘brought into the United States’ in violation of § 1324.” Edwards, 2010 WL

1404280, at *10. The Eleventh Circuit agreed:

[T]he plaintiffs have never alleged that any of the defendants knew

the aliens who were hired had been illegally brought into the United

States. The closest the plaintiffs come is their allegation that “Prime

hired and allowed employees to remain employees despite the fact

that . . . they were known by Prime’s management as unauthorized or

ineligible to work or even be in this Country.” Am. Complaint ¶ 26

(emphasis added). Perhaps that allegation “gets the [§ 1324(a)(3)(A)]

complaint close to stating a claim, but without some further factual

enhancement it stops short of the line between possibility and

plausibility of entitlement to relief.” Twombly, 550 U.S. at 557, 127
595

S. Ct. at 1966 (internal quotation marks omitted). An employer may

know that it hired illegal aliens without knowing how theymade their

way into the United States. As the district court recognized in this

case, “Individuals who enter this country legally may overstay their

welcome and become unauthorized to work without ever having been

brought in illegally, whether by others or by themselves.” Likewise,

they may have entered this country illegally on their own instead of

having been “brought into” it. Because the “brought into” element is

essential to § 1324(a)(3)(A), plaintiffs who do not allege it have not

alleged a predicate act under that provision. They may have alleged

a violation of § 1324a(a)(1)(A), but that is not a predicate act for

RICO purposes.

Id. (alterations in original) (internal citations omitted). The court noted that “[a]lthough in

some cases a plaintiff who fails to allege the ‘brought into’ element necessary for a §

1324(a)(3)(A) violation might be entitled to a second chance to plead it, these plaintiffs have

already had their second chance.” Id. at *11 (internal citation omitted). When the district

court dismissed the RICO claim in the original complaint, it emphasized that the plaintiffs

failed to plead the “brought into” element, and “[i]n drafting their amended complaint, the

plaintiffs had an opportunity to fix the problem, assuming they were able to do so without

violating Rule 11.” Id. Because the plaintiffs’ amended complaint did not fix this defect,

the Eleventh Circuit held that the plaintiffs could not state a predicate act under §

1324(a)(3)(A). Id.

With respect to the alleged violation of § 1324(a)(1)(A)(iv), the defendants argued that the

plaintiffs failed to sufficiently plead that the defendants “‘encouraged or induced’ illegal

aliens to reside in this country.” Id. at *12. “The district court concluded the plaintiffs had

not pleaded that element even though they had alleged that the defendants had knowingly

supplied the aliens with jobs and with social security numbers to facilitate their

employment,” concluding that the “alleged actions d[id] not amount to encouragement or

inducement for purposes of § 1334(a)(1)(A)(iv).” Edwards, 2010 WL 1404280, at *12. The

Eleventh Circuit disagreed, noting that the Circuit had “given a broad interpretation to the

phrase ‘encouraging or inducing’ in this context, construing it to include the act of ‘helping’

aliens come to, enter, or remain in the United States.” Id. (citations omitted). The court

noted that “[t]he amended complaint allege[d] not only that the defendants hired and actively

sought out the individuals known to be illegal aliens but also that the defendants provided

them with names and social security numbers to facilitate their illegal employment,” and

concluded that this was sufficient under the relevant case law. Id. at *13. The court rejected

the defendants’ argument that “the amended complaint d[id] not allege that the aliens were

in possession or even had knowledge of the social security numbers under which they were

allowed to work,” noting that “[t]he amended complaint allege[d] that Prime ‘even provided’

the illegal alien employees with the names and social security numbers of former Ruth’s

Chris employees,” and holding that “[c]onstruing that allegation in the light most favorable

to the plaintiffs, Prime gave the social security numbers to the illegal aliens, allowing them
596

to use the numbers for the purpose of getting and holding jobs.” Id. at *14. The court

summarized:

The meat of the matter is that the amended complaint

adequately pleads that the defendants encouraged or induced an alien

to reside in the United States, and either knew or recklessly

disregarded the fact that the alien’s residence here was illegal, in

violation of § 1324(a)(1)(A)(iv). It thereby states a predicate act of

racketeering. And because the amended complaint also alleges that

the defendants did that “far more times than two,” it adequately

pleads the pattern of racketeering activity necessary to state a RICO

claim.

Id. (citation omitted).

Although it concluded that the plaintiffs could survive the Rule 12(b)(6) stage based on their

allegations of violations of § 1324(a)(1)(A)(iv), because that theory may or may not prevail

and because the court had “no way of knowing what the evidence will show about that theory

of the case . . . ,” it also addressed the other theories of racketeering. Id. With respect to the

alleged violations of § 1324(a)(1)(A)(iii), the court noted that “the question presented by this

theory of racketeering is whether knowingly providing an illegal alien with employment and

a social security number is enough to constitute concealing, harboring, or shielding the alien

from detection . . . .” Edwards, 2010 WL 1404280, at *14. The court concluded that the

statutory history indicated that the hiring of an alien while knowingly or recklessly

disregarding his illegal status probably constituted concealing, harboring, or shielding from

detection. Id. at *15–16. But the court stated that it did not need to decide whether

knowingly employing illegal aliens was enough because “the allegations [we]re that the

defendants not only knowingly employed illegal aliens, but also that they provided them with

social security numbers and names, and paid them in cash in order to conceal, harbor, and

shield the aliens from detection,” and that was enough to state a violation of §

1324(a)(1)(A)(iii), which constituted a predicate act under RICO. Id. at *16.

With respect to the alleged violation of § 1324(a)(1)(A)(v), “[t]he amended complaint sa[id]

the defendants violated that provision ‘by engaging in conspiracies to commit, and aiding and

abetting others to commit, the preceding violations [of §§ 1324(a)(1)(A)(iii) and (iv)].’” Id.

at *17 (third alteration in original). The Eleventh Circuit “agree[d] . . . with the district court

that the conspiracy and aiding and abetting allegations d[id] not pass muster under

Twombly.” Id. The court explained that “[t]he mere use of the words ‘conspiracy’ and

‘aiding and abetting’ without any more explanation of the grounds of the plaintiffs’

entitlement to relief is insufficient,” and affirmed the finding that the alleged violations of

§ 1324(a)(1)(A)(v) did not state a predicate act. Id. (citing Twombly, 550 U.S. at 555;

Sinaltrainal v. Coca-Cola Co., 578 F.3d 1252, 1261 (11th Cir. 2009)).

With respect to Count 12—Edwards’s hostile work environment claim—“[t]he district court
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decided that the ‘conclusory allegations only describe[d], albeit ambiguously, discrimination

based on employment status, not race, and certainly d[id] not meet the pleading standards for

a racially hostile [work] environment.’” Edwards, 2010 WL 1404280, at *18 (fourth

alteration in original). The plaintiff argued on appeal that the district court “should have

given more weight to the opening sentence of Count 12, which assert[ed] that ‘[i]n his work

for Prime, Plaintiff Edwards was subjected to a hostile discriminatory environment on the

basis of his race, in violation of 42 U.S.C. § 1981.’” Id. (second alteration in original). The

court explained that this statement did not deserve more weight:

That broad statement, however, is merely a “formulaic recitation of

the elements” of a § 1981 claim and, standing alone, does not satisfy

the pleading standard of Federal Rule of Civil Procedure Rule 8.

Twombly, 550 U.S. at 555, 127 S. Ct. at 1965; see Iqbal, 129 S. Ct.

at 1949 (“[T]he tenet that a court must accept as true all of the

allegations contained in a complaint is inapplicable to legal

conclusions. Threadbare recitals of the elements of a cause of action,

supported by mere conclusory statements, do not suffice.”). Instead,

the “complaint must contain sufficient factual matter, accepted as

true, to ‘state a claim to relief that is plausible on its face.’” Iqbal,

129 S. Ct. at 1949 (quoting Twombly, 550 U.S. at 570, 127 S. Ct. at

1974); see Sinaltrainal, 578 F.3d at 1261; Rivell [v. Private Health

Care Sys., Inc.,] 520 F.3d [1308,] 1309 [(11th Cir. 2008)]; Fin. Sec.

Assurance[, Inc. v. Stephens, Inc.,] 500 F.3d [1276,] 1282 [(11th Cir.

2007)]. An introductory conclusion cannot take the place of factual

allegations in stating a plausible claim for relief.

Id. (first alteration in original). The court continued:

Although the amended complaint does allege that Edwards

was threatened, assaulted, and shunned by his Hispanic and Latino

co-workers, which created a hostile work environment, it does not

plausibly allege that he was harassed because he is Caucasian. To the

contrary, the allegations are that he was threatened by a Hispanic

co-worker because he complained about Prime’s employment of

illegal aliens. See Am. Complaint ¶ 124 (“Plaintiff Edwards was

threatened on the job again by [a] Hispanic Latino of Defendant

Prime, who told Edwards it was ‘going to be bad’ for the person who

was complaining about Prime’s employment of illegal aliens.”). The

amended complaint also alleges that Prime failed to intervene because

it did not want to upset the Hispanic and Latino employees and

compromise its ability to hire cheap illegal labor. That allegation,

like the other one, suggests that Prime discriminated against Edwards

because he had complained, or because his co-workers believed he

had complained, about Prime’s employment of illegal aliens—not
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because of his race. The facts that Edwards is Caucasian and that the

co-workers who were threatening and shunning him were Hispanic or

Latino, by themselves, do not state a plausible claim of race

discrimination. Those factual allegations are not “enough to raise a

right to relief above the speculative level.” Twombly, 550 U.S. at

555, 127 S. Ct. at 1965.

Id. (alteration in original) (footnote omitted).

With respect to Counts 7 and 8, the state law claims for wrongful interference with a

business relationship and conversion, the district court dismissed on the grounds of

preemption, but the Eleventh Circuit held that it did not need to reach the preemption issue

because the complaint failed to adequately plead these claims. See id. at *19. As to the

wrongful interference with a business relationship claim, the court noted that “the burden

[was] on the plaintiff to establish (or at this stage to plead) that the defendant was a stranger

to the protected business relationship with which the defendant interfered,” and that the

complaint failed to allege any facts indicating that the defendants were strangers to the

business relationships at issue. Id. at *19–20. The court concluded: “Prime and Oswald

were essential parties to the business relationships alleged in Count 7. They were involved

in creating those relationships; without them the plaintiffs would have had no relationship

with the patrons of the restaurant or with their co-workers.” Edwards, 2010 WL 1404280,

at *20 (citations omitted). As a result, Count 7 did not state a claim under Alabama law. Id.

The court concluded that the conversion claim failed because there was no allegation that the

defendants “took specific money that could be identified,” as required by Alabama law. Id.

at *21. “The plaintiffs argue[d] that it [wa]s enough that the amended complaint allege[d]

the defendants‘converted specific and identifiable amounts of money’ and that ‘the amounts

taken [were] and [are] identified by, calculated and based on tips and gratuities paid to

servers,’” and “insist[ed] that [the court] must accept those allegations as true given the

procedural posture of th[e] case.” Id. (fourth and fifth alterations in original) (footnote

omitted). But the court explained that under Alabama law, “specific money capable of

identification” must be converted, and the plaintiffs only “allege[d] that the defendants

converted identifiable amounts of money.” Id. at *22. The court concluded that “it would

be implausible to suggest, and [the plaintiffs] ha[d] not alleged, that Prime and Oswald ha[d]

[the plaintiffs’] particular tips stored in a bag somewhere, much less segregated in a fashion

that would permit matching them up to each individual plaintiff.” Id. Because “[t]he

amended complaint d[id] not allege that the withheld tips were ever ‘sequestered’ from other

monies collected by the defendants,” the court concluded that Count 8 failed to state a

conversion claim under Alabama law. Edwards, 2010 WL 1404280, at *22–23.

• Granda v. Schulman, 372 F. App’x 79, 2010 WL 1337716 (11th Cir. 2010) (unpublished)

(per curiam). The district court dismissed the plaintiff’s prisoner pro se complaint sua

sponte under 28 U.S.C. § 1915A, upon the recommendation of the magistrate judge. Id. at

*1. The Eleventh Circuit agreed that the complaint failed to state a claim under § 1983 and

found that the district court did not err in declining to exercise supplemental jurisdiction over
599

the state law claims. Id.

Granda alleged that after he received gunshot wounds inflicted by the Special Response

Team of the Miami-Dade Police Department, he was transferred to a hospital where he

underwent emergency surgery. Id. According to the complaint, the doctor who performed

the surgery left bullet fragments in Granda’s chest and shoulder, and a bullet in his left thigh.

Id. Granda alleged that Dr. Schulman, who did not perform the surgery and was the only

named defendant, approved of the surgeon leaving the bullet and bullet fragments in

Granda’s body. Id. Granda further alleged that after his surgery, “Dr. Schulman gave him

‘an extremely perfunctory examination’” and prescribed various medications. Granda, 2010

WL 1337716, at *1. The complaint stated that Dr. Schulman discharged Granda to an

infirmary only nine hours after his surgery, and that he “was deliberately indifferent to

[Granda’s] medical needs by violating the proper standard of medical care, the Hippocratic

Oath, and his fiduciary duty, which resulted in a breach of trust when he discharged Granda.”

Id. Granda also alleged that “he received injuries, including disfiguring scars, because Dr.

Schulman failed to ensure, following his discharge, that ‘medical personnel [or] staff that

[had] care [or] custody of [him]’ properly cleaned and treated his wounds, as ordered,

changed his dressings ‘daily and consistently,’ and gave him the prescribed medications.”

Id. (alterations in original). “Granda also claimed that he suffered a bacterial skin infection

and painful abscesses in his wounds from such deficient treatment,” and that “although Dr.

Schulman authorized his release into the Metro-Dade West Infirmary, Granda ‘instead was

placed in a classification unit where [he] received absolutely no medical care.’” Id.

(alteration in original).

The court noted that it liberally construed pro se pleadings, but that “this obligation ‘is not

the equivalent of a duty to re-write [a complaint] for [the plaintiff].’” Id. at *2 (quoting Snow

v. DirecTV, Inc., 450 F.3d 1314, 1320 (11th Cir. 2006) (alteration in original)). The court

discussed the Twombly and Iqbal cases, noted that “[c]ourts must view the complaint in the

light most favorable to the plaintiff, accepting all of the plaintiff’s well-pleaded facts as

true,” and noted that “[t]he Supreme Court recently clarified the level of specificity required

to state a plausible claim for relief . . . .” Id. (citations omitted). The court cited a preTwombly case for the proposition that “[a] prisoner must allege the state actor’s subjective

intent to punish by pleading facts that would show that he acted with deliberate indifference.”

Granda, 2010 WL 1337716, at *3 (emphasis added) (citing Taylor v. Adams, 221 F.3d 1254,

1258 (11th Cir. 2000)). The court explained that Granda’s pleadings were insufficient:

As an initial matter, it is unclear whether Dr. Schulman was

acting under color of state law during the relevant time period, or

whether he was acting solely as a private physician. Granda did not

allege that Jackson Memorial Hospital was a state-owned facility, and

he did not allege that a contractual relationship existed between Dr.

Schulman and state prison officials to provide prisoners with medical

care. However, because Granda is a pro se litigant, we must construe

his complaint liberally. Even assuming that Dr. Schulman acted
600

under color of state law, Granda failed to allege facts sufficient to

support a plausible deliberate indifference claim against him under

the Fourteenth Amendment.

First, accepting as true Granda’s claim that Dr. Schulman

approved the operating surgeon’s decision to leave bullet fragments

and an entire bullet in Granda’s body, this fact alone cannot nudge his

claim across the line from conceivable to plausible without further

allegations that would show an impermissible motive behind Dr.

Schulman’s decision. Iqbal, 129 S. Ct. at 1949. Likewise, Granda’s

claim that Dr. Schulman discharged him when he was not stable,

following an “extremely perfunctory” examination and after only nine

hours in the hospital, does not support a reasonable inference that he

received grossly inadequate care. Granda admitted that he received

treatment in the form of surgery and sutures, that Dr. Schulman

oversaw the surgery, and that Dr. Schulman prescribed various

medications, including painkillers and antibiotics, before approving

his discharge. Second, Granda claimed that he remained under Dr.

Schulman’s care after his discharge from the hospital and his release

into the custody of the corrections center, and that Dr. Schulman was

liable for failing to provide him with any of the prescribed treatment

for four days following his discharge. These are conclusory

assertions insufficient to raise his “right to relief above the

speculative level.” Twombly, 550 U.S. at 555, 127 S. Ct. at 1965.

Third, while Granda claimed that corrections center personnel

interfered with Dr. Schulman’s prescribed course of treatment and

delayed his receipt of proper treatment for four days following his

discharge from the hospital, which allegedly caused him to suffer

permanent injuries, he named no such personnel as defendants.

Further, he failed to allege a causal connection in this regard

sufficient to state a claim against Dr. Schulman.

Id. at *4 (emphasis added) (internal citations omitted). The court affirmed dismissal of the

constitutional claims for failure to state a claim and affirmed the dismissal of the pendent

state law claims to allow refiling in state court. Id. at *5.

• Keating v. City of Miami, 598 F.3d 753, 2010 WL 703000 (11th Cir. 2010), cert. dismissed,

131 S. Ct. 501 (2010). The plaintiffs brought an action under § 1983, alleging that their First

and Fourth Amendment rights were violated when they protested outside the Free Trade Area

of the Americas (the “FTAA”) meeting in Miami in November 2003. Id. at *1.

“Specifically, the Protesters allege[d] that Chief John Timoney (‘Timoney’), Deputy Chief

Frank Fernandez (‘Fernandez’), and Captain Thomas Cannon (‘Cannon’), all members of the

Miami Police Department, violated the Protesters’ First Amendment rights under a theory

of supervisory liability when they directed their subordinate officers to disperse a crowd of
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allegedly peaceful demonstrators, including the Protesters.” Id. “The Protesters also

allege[d] that Timoney, Fernandez, Cannon, and Major Adam Burden (‘Burden’) of the

Miami Police Department violated their First Amendment rights under a theory of

supervisory liability when they failed to stop their subordinate officers from dispersing a

large crowd of allegedly peaceful demonstrators, including the Protestors.” Id. The plaintiffs

also alleged, under a theory of supervisoryliability, that their Fourth Amendment rights were

violated when Timoney, Fernandez, Cannon, and Burden’s subordinate officers “herded” the

Protesters out of the demonstration area. Id. The district court denied qualified immunity

for Timoney, Fernandez, Cannon, and Burden on the First Amendment claims, and

determined that the “herding” constituted an unlawful seizure under the Fourth Amendment,

but granted qualified immunity on the Fourth Amendment claims because the right was not

clearly established. Id. The Eleventh Circuit affirmed the denial of qualified immunity to

Timoney, Fernandez, and Cannon on the First Amendment claims; reversed the denial of

qualified immunity to Burden on the First Amendment claim; and dismissed the appeal of

the Fourth Amendment claims for lack of jurisdiction. Keating, 2010 WL 703000, at *1.

The complaint alleged:

[W]hile peacefully demonstrating outside the FTAA meeting on

Biscayne Boulevard in Miami, a police line appeared and engaged the

demonstrators, including the Protesters. The Protesters allege that

law enforcement officers began “herding” the demonstrators, using

their batons to beat unarmed demonstrators, spraying pepperspray up

and down the police line, and discharging bean bags, pepper spray

balls, tear gas, and other projectiles. The Protesters allege that they

were injured as a result of the law enforcement conduct. The

skirmish line continued with the “herding” of demonstrators and the

Protesters by pushing them northward out of the area. The Protesters

further allege that the unconstitutional acts, including “herding,”

encirclement, and use of excessive force, were witnessed, condoned,

and directed by, inter alia, Timoney, Fernandez, and Cannon in their

supervisory capacities. The Protesters also allege that Timoney,

Fernandez, Cannon, and Burden, in their supervisory capacities, could

have intervened at any time to prevent the continued constitutional

violations against the Protesters, but they failed to do so.

Id. at *2 (internal citations omitted).

The court discussed the pleading standards for § 1983 cases and cited a pre-Twombly case

to explain that the Eleventh Circuit requires more detailed pleading in such cases:

Although Rule 8 “allows a plaintiff considerable leeway in framing

its complaint, this circuit, along with others, has tightened the

application of Rule 8 with respect to § 1983 cases in an effort to weed
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out nonmeritorious claims, requiring that a § 1983 plaintiff allege

with some specificity the facts which make out its claim.” GJR Invs.,

Inc. [v. County of Escambia], 132 F.3d [1359,] 1367 [(11th Cir.

1998)]. Thus, a plaintiff must allege some factual detail as the basis

for a § 1983 claim. Id. In other words, “[t]o survive a motion to

dismiss, a complaint must contain sufficient factual matter, accepted

as true, to ‘state a claim to relief that is plausible on its face.’” Iqbal,

129 S. Ct. at 1949 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544,

570, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007)). Therefore, in a §

1983 action, “a plaintiff must plead that each Government-official

defendant, through the official’s own individual actions, has violated

the Constitution.” Id. at 1948.

Id. at *6 (emphasis added). The defendants argued that the plaintiffs “failed to allege

sufficient facts to establish a causal connection between their supervisory actions and the

alleged constitutional violations by the subordinate officers.” Id.

The court found that the complaint adequately pleaded a supervisory liability claim as to

Timoney, Fernandez, and Cannon by pleading that these defendants were authorized

decision-makers present at the time of the alleged events. Id. at *6–7. The court explained:

Specifically, the Protesters allege that Timoney, who is the

Chief of the Miami Police Department, approved orders permitting

the police line to advance while beating unarmed demonstrators and

discharging projectiles and tear gas. The Protesters allege that

Fernandez, Deputy Chief of the Miami Police Department and second

in command to Timoney, made the decision to utilize “herding

techniques” to corral the demonstrators by personally directing the

police lines to march northward. The Protesters allege that Cannon,

a Captain in the Miami Police Department, directed the police lines

to begin discharging weapons at the unarmed demonstrators.

Id. at *7 (internal citations omitted). The defendants argued that the plaintiffs “were required

to allege that [the defendants] directed specific officers to discharge weapons and identify

the specific police officers who injured the Protesters,” but the court found this argument

“without merit because it is irrelevant which officer inflicted injury or the constitutional

violation, so long as the violation was at the direction of Timoney, Fernandez, or Cannon,

in his supervisory capacity.” Keating, 2010 WL 703000, at *7 (citation omitted). The court

cited two pre-Twombly cases to conclude that the plaintiffs’ allegations “satisfied the

heightened pleading requirement for a § 1983 claim under a supervisory liability theory by

alleging a causal connection established by facts that support an inference that Timoney,

Fernandez, and Cannon directed the subordinate officers to act unlawfully.” Id. (citing

Dalrymple v. Reno, 334 F.3d 991, 996 (11th Cir. 2003); Post v. City of Fort Lauderdale, 7

F.3d 1552, 1561 (11th Cir. 1993)). The court noted that the plaintiffs “allege[d] that
603

Timoney, Fernandez, and Cannon committed a violation of the Protesters’ First Amendment

rights because their commands caused the subordinate police officers to disperse a crowd of

peaceful demonstrators, including the Protesters, who were exercising their freedom of

expression.” Id.

With respect to the claim that the defendants violated the plaintiffs’ First Amendment rights

by failing to stop the unlawful acts, “the Protesters allege[d] that Timoney and Burden were

together when the Protesters were assaulted, standing less than 100 feet from the skirmish

line with an unrestricted view of the ‘herding’ of the demonstrators and discharge of the

projectiles and tear case, yet failed to stop the police action,” and that when the plaintiffs

were assaulted, “Fernandez and Cannon were close to the rear of the skirmish line with an

unrestricted view of the ‘herding’ of the demonstrators and discharge of the projectiles and

tear gas, yet failed to stop the police action.” Id. at *8. The court distinguished the claim

against Burden from the claims against the other defendants, finding that only Burden was

entitled to dismissal. The court explained:

Because Timoney, Fernandez, and Cannon had the authority,

and exercised that authority, to direct the subordinate officers to

engage in unlawful acts to violate the Protesters’ First Amendment

rights, they likewise had the authority to stop the subordinate officers

from exercising such unlawful acts. Therefore, because Timoney,

Fernandez, and Cannon knew that the subordinate officers would

engage in unlawful conduct in violation of the Protesters’ First

Amendment rights by directing such unlawful acts, they also violated

the Protesters’ First Amendment rights by failing to stop such action

in their supervisory capacity. Thus, their alleged failure to stop the

subordinate officers from acting unlawfully caused the First

Amendment violations . . . .

However, Burden’s alleged failure to stop the subordinate

officers’ unlawful activity did not cause the violations of the First

Amendment because Burden did not have the authority to stop the

subordinate officers from violating the Protesters’ First Amendment

rights, even though he was an authorized decisionmaker. Burden did

not direct the subordinate officers to engage in unlawful conduct that

violated the Protesters’ First Amendment rights. Burden’s ranking as

a Major in the Miami Police Department is subordinate to that of

Chief Timoney, and Chief Timoney directed the subordinate officers

to engage in unlawful conduct. Burden and Timoney stood next to

each other during the demonstration. It would be unreasonable to

have expected Burden to stop the subordinate officers’ conduct after

Timoney directed the subordinate officersto engage in unlawful acts

because Burden did not have any authority to contravene Timoney’s

orders. Additionally, the Protesters only allege that Burden was
604

present when the subordinate officers engaged in the unlawful

activity. Therefore, Burden did not violate the Protesters’ First

Amendment rights by failing to stop the subordinate officers from

conducting such unlawful activity because his inaction did not cause

the constitutional violations. The Protesters failed to allege a

constitutional violation against Burden, and thus, Burden is entitled

to qualified immunity.

Id. The court concluded that “it should have been obvious to Timoney, Fernandez, and

Cannon that their conduct would violate the Protesters’ First Amendment rights,” and that

they therefore violated the plaintiffs’ clearly established constitutional rights. Id. at *10. The

court held that these three defendants were “not entitled to qualified immunity as to the

Protesters’ First Amendment claims for directing unlawful actions and failing to stop

unlawful actions under a theory of supervisory liability.” Keating, 2010 WL 703000, at *10.

• Waters Edge Living, LLC v. RSUI Indemnity Co., 355 F. App’x 318, 2009 WL 4366031

(11th Cir. 2009) (unpublished) (per curiam). The lawsuit involved a dispute between

competing claimants to an insurance policy. Id. at *1. Plaintiff Waters Edge had purchased

an apartment complex from a real estate trust controlled by Prime Income Asset

Management, Inc. (“Prime”), and as part of the deal, Prime agreed that the property would

remain covered for Waters Edge’s benefit under Prime’s master property insurance policy

for nine months. Id. The master policy had a primary policy with a $10 million limit and

two layers of excess coverage, one with a $10 million limit and a second with an $80 million

limit provided by defendant RSUI. Id. Hurricane Katrina destroyed the apartments that

Waters Edge had bought as well as Prime’s covered properties in Louisiana, which were

valued at more than the $100 million policy limit. Id. The primary insurer paid the policy

limit to Prime, which in turn paid Waters Edge $1.8 million for the value of Waters Edge’s

lost rents. Id. Waters Edge attempted to recover the remainder of its losses from RSUI, and

it was determined that Waters Edge’s property loss was approximately $30.9 million. Waters

Edge Living, 2009 WL 4366031, at *1. The complaint alleged that through a series of

communications, RSUI’s adjuster agreed to pay the $30.9 million, “subject to policy

provisions.” Id. at *2. Prime became concerned that it would not be able to recover for its

losses because the policy limit was insufficient to cover the damage at all of the covered

properties. Id. “Prime insisted that only it could receive payment under the terms of the

RSUI policy and that it would therefore have to sign off as the policyholder on any payments

made to Waters Edge.” Id. Meanwhile, the first excess insurer paid the full $10 million

limit to Prime, and Waters Edge then sued RSUI. Id. Because it was receiving conflicting

claims from Prime and Waters Edge, RSUI sent one check to Waters Edge for the agreed

$30.9 million less the $1 million policy deductible and a second check to cover Waters

Edge’s lost rents. Id. Both checks included Prime as a co-payee, and because Prime would

not sign off on the payments, Waters Edge could not receive the proceeds. Waters Edge

Living, 2009 WL 4366031, at *2. The parties agreed to place the funds in a custodial fund

until an agreement could be reached, but RSUI continued to pay Prime for its losses, which

eventually left only $17,582,939 of the policy proceeds, which RSUI deposited into the
605

custodial account. Id. RSUI then filed counterclaims interpleading the funds in the custodial

account. Id. Waters Edge and Prime agreed to settle the interpleader claim, with Waters

Edge receiving $24 million and Prime receiving the remainder of the custodial account,

leaving Waters Edge with approximately $6 million less than RSUI had agreed to pay to

Waters Edge. Id. Waters Edge reserved its claims against RSUI, and the complaint asserted

claims for: “(1) breach of a settlement agreement; (2) failure to timely pay a settled loss in

violation of the Texas Insurance Code; (3) breach of the duty of good faith; and (4)

misrepresentation.” Id. at *3.

With respect to the breach of a settlement agreement claim, the complaint alleged that the

communications between the RSUI adjuster and Waters Edge resulted in a binding

settlement agreement in which RSUI agreed to pay Waters Edge $29.9 million, which

included the property loss less the deductible. Id. “Waters Edge claim[ed] that RSUI

breached this settlement agreement when it included Prime as a co-payee on the checks

tendered to Waters Edge, effectively stopping Waters Edge from receiving the settlement

proceeds.” Waters Edge Living, 2009 WL 4366031, at *4. The Eleventh Circuit concluded

that this claim was sufficiently pleaded:

The district court erred when it dismissed Count I of the

complaint because Count I states a claim to relief that is plausible on

its face. See Iqbal, --- U.S. ----, 129 S. Ct. at 1949. The factual

content of the complaint, particularly the alleged exchange between

Waters Edge and RSUI’s adjuster, allows a reasonable inference that

the parties reached a settlement agreement creating a contractual

obligation independent of the policy. See id. It does not compel that

inference, but it does allow a reasonable factfinder to draw the

inference. If the factfinder does draw the inference, RSUI breached

the independent agreement when it included Prime as a co-payee on

the checkstendered to Waters Edge. Because Count I states a facially

plausible claim for relief, the district court erred when it dismissed

Count I for failure to state a claim on which relief can be granted.

Id.

With respect to the claim under the Texas Insurance Code, the district court dismissed the

claim because it concluded that “Waters Edge had failed to plead factual allegations

plausibly supporting the existence of a binding settlement agreement between RSUI and

Waters Edge.” Id. The Eleventh Circuit had already disagreed with that assessment in

connection with the first claim, and held that “[b]ecause Waters Edge alleged that it entered

a binding settlement agreement with RSUI and that RSUI did not make payment as required

by that agreement, Waters Edge pleaded facts sufficient to state a claim for relief that [wa]s

plausible on its face based on RSUI’s failure to make timely payment of a settled loss.” Id.

(citing Iqbal, 129 S. Ct. at 1949).
606

The Eleventh Circuit found that the claim for breach of the duty of good faith was not

adequately pleaded:

Count III alleges that RSUI breached its duty of good faith by

improperly including Prime as a co-payee on the checks tendered to

Waters Edge and by “skipping over [Waters Edge’s] settled loss to

pay Prime’s unsettled losses, including amounts that were not and

could never be due.” Even viewed in the light most favorable to

Waters Edge, the factual allegations in the complaint do not state a

facially plausible claim of breach of the duty of good faith. The

allegations that RSUI gave in to Prime’s demand that it withhold

payment to Waters Edge “in deference to its business relation with

Prime” and that “RSUI treated [Waters Edge] unfairly, unreasonably

preferring Prime among its coinsureds” are nothing more than

conclusory statements. Under Iqbal, “naked assertions devoid of

further factual enhancement” are not enough to overcome a Rule

12(b)(6) motion to dismiss. Iqbal, --- U.S. ----, 129 S. Ct. at 1949

(quotation marks and citation omitted).

Id. (alterations in original). The court explained that “[i]f you t[ook] out the labels,

conclusions, and formulaic recitations, the factual allegations contained in the complaint

actually indicate[d] that RSUI acted in good faith.” Id. at *5 (internal citation to Iqbal

omitted). The court stated that “[w]hile Waters Edge ha[d] stated a claim that RSUI

breached the alleged independent settlement agreement, it ha[d] not pleaded factual

allegations sufficient to allow [the court] to draw a reasonable inference that RSUI did so in

bad faith,” and concluded that “[t]he district court properly dismissed Count III.” Waters

Edge Living, 2009 WL 4366031, at *5.

The claim for misrepresentation alleged that “RSUI’s insurance adjuster misrepresented to

Waters Edge that Prime, as policyholder, would have to agree to any payment made to

Waters Edge and that this misrepresentation caused Waters Edge to delay its demand for

payment of the amount due under the settlement, ‘prevent[ing] them from timely realizing

the full benefit of their reasonable settlement.’” Id. (alteration in original). The Eleventh

Circuit summarily dismissed Waters Edge’s argument that it did not need to plead with

particularity under Rule 9(b), finding the argument waived, but explained that even if Rule

9(b) did not apply, Waters Edge still failed to state a claim. Id. at *5 n.2. The court cited

pre-Twombly case law and explained that “[d]espite the general leniency of pleading

requirements under the Federal Rules of Civil Procedure, ‘it is axiomatic that defendants

remain entitled to know exactly what claims are being brought against them.’” Id. at *5

(quoting Omar ex rel. Cannon v. Lindsey, 334 F.3d 1246, 1250 (11th Cir. 2003)). The court

held that “[a] sentence in the complaint alleging that RSUI violated two unnamed chapters

of the Texas Insurance Code by failing to timely pay a settled loss did not let RSUI know that

Waters Edge was bringing a claim of misrepresentation against them based on particular

provisions of the Texas Insurance Code.” Id. The court similarly rejected Waters Edge’s
607

argument on appeal that it had stated a claim for common law misrepresentation based on

negligence. Id. The court noted that the argument was waived, but that even without waiver,

the claim did “not state a facially plausible claim for relief.” Waters Edge Living, 2009 WL

4366031, at *6. Texas law required justifiable reliance on the misrepresentation, but the

complaint alleged that Waters Edge’s entitlement to the agreed amount was indisputable.

Id. The court explained that “[i]f Waters Edge’s entitlement to receive the agreed amount

from RSUI was so clear, Waters Edge could not have justifiably relied on the adjuster’s

statement that Prime would have to agree to allow Waters Edge to receive payment from

RSUI.” Id. The court concluded: “Because Count IV does not allow a reasonable inference

that Waters Edge justifiably relied on the adjuster’s alleged misrepresentation, it does not

state a claim of negligent misrepresentation that is plausible on its face.” Id. (citing Iqbal,

129 S. Ct. at 1949).

• Sinaltrainal v. Coca-Cola Co., 578 F.3d 1252 (11th Cir. 2009). The plaintiffs, who were

trade union leaders, brought suit under the Alien Tort Statute (ATS) and the Torture Victims

Protection Act (TVPA), “alleging their employers—two bottling companies in

Colombia—collaborated with Colombia paramilitary forces to murder and torture Plaintiffs.”

Id. at 1257 (footnotes omitted). The plaintiffs’ complaint named, among others, two CocaCola companies, and alleged that they were connected to the Colombian bottlers, and their

employees, through alter ego and agency relationships. Id. “The [original] complaint alleged

the systematic intimidation, kidnapping, detention, torture, and murder of Colombian trade

unionists at the hands of paramilitary forces, who allegedly worked as agents of the

Defendants.” Id. at 1258. The plaintiffs ultimately filed four separate complaints. The

plaintiffs did not allege that the defendants caused the violence, but asserted that the

defendants capitalized on the hostile environment in Colombia and conspired with

paramilitaries or local police to rid their bottling facilities of unions. Id. at 1265. The

defendants moved to dismiss under Rule 12(b)(1) for lack of subject matter jurisdiction, and

the district court ultimately dismissed all four complaints, finding that “each fell short of

pleading the factual allegations necessary to invoke the court’s subject matter jurisdiction

under the ATS and the TVPA,” and that “the allegations in all four complaints insufficiently

pled a conspiracy between the local facilities’ management and the paramilitary officers.”

Id. at 1260.

In discussing the pleading standards, the court emphasized that “[f]actual allegations in a

complaint need not be detailed but ‘must be enough to raise a right to relief above the

speculative level on the assumption that all the allegations in the complaint are true (even if

doubtful in fact).’” Id. at 1261 (quoting Twombly, 550 U.S. at 555). The court also

explained that “in Iqbal, the Supreme Court reiterated that although Rule 8 of the Federal

Rules of Civil Procedure does not require detailed factual allegations, it does demand ‘more

than an unadorned, the-defendant-unlawfully-harmed-me accusation.’” Sinaltrainal, 578

F.3d at 1261 (quoting Iqbal, 129 S. Ct. at 1949). “The mere possibility the defendant acted

unlawfully is insufficient to survive a motion to dismiss.” Id. (citing Iqbal, 129 S. Ct. at

1949).
 Aponte was the chief of security at the bottling facility at issue. The complaint alleged that Aponte falsely told police 38

that he found a bomb in the facility and that the plaintiffs had planted the bomb, and that the police subsequently arrested

the plaintiffs, treated them violently, and locked them in a dirty and dangerous prison. Sinaltrainal, 578 F.3d at 1267–68.

608

“For subject matter jurisdiction to entertain Plaintiffs’ ATS claims, the complaints must

sufficiently plead (1) the paramilitaries were state actors or were sufficiently connected to

the Colombian government so they were acting under color of law (or that the war crimes

exception to the state action requirement applies) and (2) the Defendants, or their agents,

conspired with the state actors, or those acting under color of law, in carrying out the tortious

acts.” Id. at 1266 (footnote omitted). With respect to pleading state action, the Eleventh

Circuit held that the “conclusory allegation that the paramilitary security forces acted under

color of law [wa]s not entitled to be assumed true and [wa]s insufficient to allege statesponsored action”; that “Colombia’s mere ‘registration and toleration of private security

forces d[id] not transform those forces’ acts into state acts’”; that “[a]llegations [that] the

Colombian government tolerated and permitted the paramilitary forces to exist [we]re

insufficient to plead the paramilitary forces were state actors”; and that the “naked allegation

[that] the paramilitaries were in a symbiotic relationship with the Colombian government and

thus were state actors” was conclusory and did not need to be accepted as true. Id. (citing

Iqbal, 129 S. Ct. at 1951). The court noted that there was “no suggestion the Colombian

government was involved in, much less aware of, the murder and torture alleged in the

complaints,” and held that “[t]he plaintiffs’ ‘formulaic recitation’ that the paramilitary forces

were in a symbiotic relationship and were assisted by the Colombian government, absent any

factual allegations to support this legal conclusion, [wa]s insufficient to state an allegation

of state action that [wa]s plausible on its face.” Id. (citing Iqbal, 129 S. Ct. at 1950) (internal

citation omitted). For this reason, the court found that dismissal of three of the complaints

for lack of subject matter jurisdiction was appropriate.

With respect to the fourth complaint, the plaintiffs alleged a conspiracy between local police

and the bottling facility’s management. Id. at 1267. The Eleventh Circuit concluded that the

plaintiffs’ “attenuated chain of conspiracy fail[ed] to nudge their claims across the line from

conceivable to plausible,” id. at 1268 (citing Twombly, 550 U.S. at 570), explaining:

First, while the plaintiffs allege “Aponte’s plan necessarily required

38

the cooperation and complicity of the arresting police officers,” we

are not required to admit as true this unwarranted deduction of fact.

Second, the plaintiffs’ allegations of conspiracy are “based on

information and belief,” and fail to provide any factual content that

allows us “to draw the reasonable inference that the defendant is

liable for the misconduct alleged.” Iqbal, 129 S. Ct. at 1949.

Specifically, these plaintiffs allege “[t]he basis for the conspiracy was

either that Aponte arranged to provide payment to the officers for

their participation, or that the officers had a shared purpose with

Aponte to unlawfully arrest and detain Plaintiffs because they were
609

union officials and had been branded by Panamco officials as leftist

guerillas.” The premise for the conspiracy is alleged to be either

payment of money or a shared ideology. The vague and conclusory

nature of these allegations is insufficient to state a claim for relief,

and “will not do.” Twombly, 550 U.S. at 555, 127 S. Ct. at 1965.

Furthermore, the complaint fails to allege when or with whom

Aponte entered into a conspiracy to arrest, detain, and harm the

plaintiffs. The scope of the conspiracy and its participants are

undefined. There are no allegations the treatment the plaintiffs

received at the hands of the local police and in prison was within the

scope of the conspiracy. Additionally, assuming Aponte even

conspired with the local police to arrest the plaintiffs, this action

alone is insufficient to form the basis of an ATS claim, and there is

no allegation the subsequent six-month imprisonment and

mistreatment was part of the conspiracy. The Garcia plaintiffs, thus,

fail to state a plausible claim for relief against the Panamco

Defendants for a violation of the law of nations. See 28 U.S.C. §

1350. We conclude the district court did not err in dismissing the

ATS claims in the Garcia complaint for lack of subject matter

jurisdiction.

Sinaltrainal, 578 F.3d at 1268–69 (alteration in original) (internal citation omitted).

The plaintiffs alleged the same facts with respect to their TVPA claims. Id. at 1269. In

accordance with its holdings regarding the ATS claims, the court found the facts to be

insufficient to state a claim under the TVPA:

[T]he Gil, Galvis, and Leal plaintiffs fail to sufficiently plead the

paramilitary forces were acting under color of law. Mere toleration

of the paramilitary forces does not transform such forces’ acts into

state acts; moreover there are no allegations the Colombian

government was aware of, much less complicit in, the murder and

torture Plaintiffs allege in their complaints. Additionally, the Garcia

plaintiffs fail to sufficiently allege the Panamco Defendants, or their

agents, conspired with the local police in carrying out the alleged

torture. The Garcia plaintiffs’ vague and conclusory allegations of

a conspiracy do not state a claim for relief that is plausible on its face,

see Iqbal, 129 S. Ct. at 1950, and they fail to detail any factual

allegations “to raise a right to relief above the speculative level,”

Twombly, 550 U.S. at 555, 127 S. Ct. at 1965. We, therefore, vacate

the district court’s dismissal of the TVPA claims for want of

jurisdiction and instruct the court to dismiss the TVPA claims for

failure to state a claim upon which relief can be granted.
610

Id. at 1270 (additional internal citation omitted).

D.C. Circuit

• United States ex rel. Miller v. Bill Harbert Int’l Construction, Inc., 608 F.3d 871, 2010 WL

2487962 (D.C. Cir. 2010) (per curiam), cert. denied, 131 S. Ct. 2443 (2011). The court

applied Iqbal in a False Claims Act (FCA) case to a request that the government’s intervenor

complaint and the relator’s amended complaint relate back to the time of the relator’s filing

of the initial complaint for statute of limitations purposes. 

“Following the 1978 Camp David Accords, the United States had agreed to provide

economic assistance to Egypt through the U.S. Agency for International Development

(USAID), including funding for improving sewer systems in Cairo and Alexandria.” Id. at

*1. Plaintiff Richard Miller was a Vice President of J.A. Jones Construction Company

(“Jones”), which was a partner in a series of joint ventures that bid on several of the sewer

projects. Id. Miller sued under the FCA, alleging that:

in the course of his employment, he discovered that the defendants,

other contractors, and a variety of related corporate entities and

individuals were all members of a conspiracy to rig the bidding on

contracts in Egypt. This so-called Frankfurt Club would meet to

discuss upcoming contract bids in Frankfurt, Germany, the home of

the conspiracy’s leader, Jones’s parent corporation, Holzmann, A.G.

Miller’s complaint focused on the bidding for one particular contract,

Contract 20A, and named Holzmann, Jones, Harbert International,

Inc. (HII)—Jones’s partner on the other side of the joint venture—and

several related corporations as defendants.

Id. As required by the FCA, Miller’s complaint was placed under seal while the Government

decided whether to intervene. See id. Although Miller’s complaint was filed in 1995, the

Government filed repeated motions to keep the complaint sealed while it criminally

prosecuted some of the participants in the bid-rigging arrangements, and did not allow

Miller’s complaint to be unsealed until February 2001. See id. at *1–2. At that time, the

Government filed its own complaint in intervention, which adopted the claims Miller had

asserted on Contract 20A and added claims on Contracts 29 and 07, “which it characterized

as part of the same Frankfurt Club conspiracy.” Miller, 2010 WL 2487962, at *2. The

Government’s complaint also “charged all the defendants with substantive FCA violations

for each of the three contracts and with participating in the overarching conspiracy.” Id.

Miller later amended his complaint to do the same. Id. “In essence, Miller and the United

States alleged that prior to each contract, some or all of the bidders prequalified by the

USAID met in Frankfurt to discuss the bidding. At these meetings or thereafter, the bidders

reached an agreement that all but one would either bid high or refrain from bidding, and the

winning bidder would pay these cooperators a ‘loser’s fee.’” Id. The court explained that

three contracts were at issue:
611

Contract 20A, the first of the three contracts and the only one

identified in Miller’s original complaint, covered installation of

large-diameter, underground sewer pipe in densely populated Cairo

neighborhoods. The plaintiffs alleged that the joint venture between

HII and Jones (Harbert-Jones), one of three prequalified bidders,

sought and received commitments from the other two companies to

either overbid or not bid for the contract. Thanks to this agreement,

Harbert-Jones ultimately won the contract for $115 million,

subsequently paying the other two bidders $2.2 and $3 million for

their cooperation. The plaintiffs further alleged that in order to hide

$10 million in excess profits, the joint venture engaged in a

sale/leaseback transaction with an affiliated corporation.

Contract 29, the second contract, involved the construction of

a wastewater treatment plant near Cairo. In this instance,

Harbert-Jones allegedly met with the only other prequalified bidder

and agreed to lose the bid in exchange for a $4 million loser’s fee.

The third contract, Contract 07, covered the construction of

sewers in Alexandria. Because this time Harbert-Jones was

apparently unable to reach a bid-rigging agreement with all other

qualified bidders, it entered into a bilateral agreement with one other

bidder. Under that deal, the party that won the contract would

compensate the other with a loser’s fee. Although the record is

unclear on this point, the fee would have been either 1.5 million U.S.

Dollars or 1.5 million German Deutschmarks.

Id. The complaints were followed by five years of pleadings, motions, and discovery. Id.

at *3. Two of the defendants settled the claims against them, and after trial, the jury found

for the plaintiffs on every count. Miller, 2010 WL 2487962, at *3.

The defendants had argued that the FCA’s 6-year statute of limitations barred all of the

Government’s claims and Miller’s claims concerning Contracts 07 and 29, but the district

court held that those claims related back to Miller’s initial complaint. Id. at *4. On appeal,

the D.C. Circuit held that the statute of limitations did not bar the Government’s claims on

Contract 20A, but did bar both the Government’s and Miller’s claims regarding Contracts

07 and 29. Id. The court focused on an amendment to the FCA that was enacted after the

trial, but before the appeal, addressing relation back. The amendment provided:

“For statute of limitations purposes, any such Government pleading

shall relate back to the filing date of the complaint of the person who

originally brought the action, to the extent that the claim of the

Government arises out of the conduct, transactions, or occurrences set

forth, or attempted to be set forth, in the prior complaint of that
612

person.”

Id. (quoting 31 U.S.C. § 3731(c)). Because the defendants did “not argue the scope of the

Government’s claims concerning Contract 20A impermissibly expand[ed] beyond that of

Miller’s,” the court held that “the Government’s claims concerning Contract 20A [we]re not

barred by the statute of limitations because they relate[d] back to Miller’s original timely

complaint.” Id. at *6. But the court concluded that the claims on Contracts 07 and 29 did

not relate back under the amendment to the FCA because they were not sufficiently related

to Miller’s claims on Contract 20A. Id. The court found the three contracts to have

significant differences, and concluded that “[a]llegations concerning Contract 20A d[id] not

fairly encompass Contracts 07 or 29 because each contract [wa]s unique and no two involved

the same ‘conduct, transaction[ ], or occurrence[ ].’” Miller, 2010 WL 2487962, at *8

(alterations in original). The court rejected the plaintiffs’ arguments that “the use of the

plural in Miller’s complaint—‘conspired to rig the bidding for construction contracts paid

for by the [USAID]’ (emphasis added)—together with the allegation there was a ‘club[ ]

organized to control prices’ and the contention that ‘discovery in this case will reveal[ ] other

AID contracts,’ broadened the scope of the complaint beyond Contract 20A,” explaining that

“using the plural form does not cause new allegations to relate back when, as here, the new

allegations do not involve ‘conduct, transactions, or occurrences’ common to the timely

pleading.” Id. (alterations in original) (citation omitted). The court found Iqbal relevant to

this analysis, stating:

Miller’s allegations concerning any contracts beyond 20A were

nothing more than “‘naked assertion[s]’ devoid of ‘further factual

enhancement,’” viz., the existence of a price-fixing “club,” and that

discovery would reveal other rigged contracts. Ashcroft v. Iqbal, ---

U.S. ----, ----, 129 S. Ct. 1937, 1949, 173 L. Ed. 2d 868 (2009)

(quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 557, 127 S.

Ct. 1955, 167 L. Ed. 2d 929 (2007)) (brackets in original). Allowing

such broad and vague allegations to expand the range of permissible

amendments after the limitation period has run would circumvent the

statutory requirement in the FCA that the amendments “arise[ ] out

of the conduct, transactions, or occurrences” in the original

complaint, 31 U.S.C. § 3731(c); it would also, we note, circumvent

the recent teachings of Iqbal and Twombly by allowing amendments

to relate back to allegations that were themselves nothing more than

“naked assertions.” That potential for abuse is avoided by the relation

back provision in the FCA, the amendment of which postdates

Twombly, cabining the scope of otherwise untimely amendments by

imposing the same “conduct, transactions, or occurrences”

requirement. 31 U.S.C. § 3731(c).

Id. (alteration in original).
613

With respect to Miller’s claims on Contracts 07 and 29, the court found them barred by the

statute of limitations because he added them after the period had run and the relation back

provision of the FCA applied only to the Government’s pleadings. Id. at *9. The court

stated that “[i]f his claims [we]re to relate back then they must [have] do[ne] so under Rule

15(c)(1)(B), which permits relation back for claims ‘that arose out of the conduct,

transaction, or occurrence set out . . . in the original pleading,” but found that it did not need

to “decide whether Rule 15(c)(1)(B) applies to claims made by a relator in litigation under

the FCA because [it had] determined the claims concerning Contracts 07 and 29 d[id] not

meet that standard, which for [the court’s] purposes [wa]s substantially the same as the

standard in the amended FCA.” Id.

The dissent disagreed with the majority on the issue of relation back, arguing that Miller’s

original complaint sufficiently alleged that more than just Contract 20A was at issue:

Yet in the very first sentence in which Miller described the conduct

at issue, he left no doubt that he was accusing the defendants of fraud

spanningmore than one USAID project: “Defendants conspired to rig

the bidding for construction contracts paid for by the United States

Agency for International Development.” Emphasizing that he was

alleging fraud involving more than one contract, he continued, “The

particular transaction about which most is known is Contract 20A.”

After detailing the bid rigging on Contract 20A, Miller again made

clear that the conspiracy he was alleging was not limited to that

particular contract: “Plaintiff has received information that there was

a ‘club’ in Frankfurt, Germany of contractors qualified to perform

AID contracts in Egypt; the club was organized to control prices in

what should have been full and open competition for AID contracts.”

Indeed, Miller predicted that discovery would uncover additional

rigged contracts: “Upon information and belief, discovery in this case

will reveal that other AID contracts in Egypt were subject to similar

and related collusive agreements on price that resulted in the

submission of other false or fraudulent claims to the U.S.

Government.” Finally, in the complaint’s formal counts, Miller

neither mentioned Contract 20A nor limited his claim for damages to

the allegedly false claims on that contract (estimated earlier in the

complaint at $40 million). Instead, he “incorporate[d] the allegations

of” the preceding paragraphs by reference, including the allegation of

“other false or fraudulent claims” arising from “other AID contracts

in Egypt,” and sought “actual damages in an amount to be proven at

trial.”

From the face of Miller’s complaint, it is thus clear that the

“conduct, transactions, or occurrences set forth, or attempted to be set

forth” encompassed bid-rigging not just on Contract 20A (identified
614

by Miller in his original complaint) but also on Contracts 29 and 07

(later added by the Government in its complaint in intervention). The

Government’s claims on Contracts 29 and 07 “arise[ ] out of” the

Frankfurt-based bid rigging conspiracy originally alleged by

Miller—indeed, the “collusive agreements” on these contracts were

precisely what Miller predicted discovery would unearth. For this

reason, the Government’s claims relate back to Miller’s original

complaint and are therefore not barred by the FCA’s statute of

limitations. As we have said, “an amendment offered for the purpose

of adding to or amplifying the facts already alleged in support of a

particular claim may relate back.” United States v. Hicks, 283 F.3d

380, 388 (D.C. Cir. 2002).

Id. at *33–34 (Tatel, J., dissenting) (alterations in original) (internal record citations omitted).

The dissent emphasized that the differences between the contract did not matter because

“[w]hat matters for relation back purposes is that the three contracts were all part of the

‘conduct,’ i.e., the Frankfurt-based bid-rigging conspiracy, alleged in Miller’s original

complaint.” Miller, 2010 WL 2487962, at *34 (Tatel, J., dissenting). Judge Tatel also

pointed out that “[t]he three contracts . . . are not nearly as different as the court suggests.”

Id. In addition, Judge Tatel argued that “the Government’s theory of liability on Contracts

29 and 07 [wa]s identical to that first pleaded by Miller, namely that the defendants entered

into a Frankfurt-based conspiracy to rig the bidding on USAID contracts in Egypt, and that

through that conspiracy, the defendants rigged the bidding not just on Contract 20A, but also

on Contracts 29 and 07.” Id. at *35. The dissent found the majority’s application of

Twombly and Iqbal inappropriate:

My colleagues also rely on Bell Atlantic Corp. v. Twombly,

550 U.S. 544, 557, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007), and

Ashcroft v. Iqbal, ---U.S. ----, 129 S. Ct. 1937, 173 L. Ed. 2d 868

(2009), in which the Supreme Court held that to survive a motion to

dismiss, a complaint must provide more than “‘naked assertion[s]’

devoid of ‘further factual enhancement.’” Id. at 1949 (quoting

Twombly, 550 U.S. at 557). Characterizing Miller’s conspiracy

allegation as such an assertion, the court concludes that it cannot

support relation back of the Government’s claims on Contracts 29

and 07. This argument suffers from two fundamental defects. To

begin with, the defendants raised it neither here nor in the district

court, and as we have repeatedly said, “appellate courts do not sit as

self-directed boards of legal inquiry and research, but essentially as

arbiters of legal questions presented and argued by the parties before

them.” Carducci v. Regan, 714 F.2d 171, 177 (D.C. Cir. 1983).

Second, and setting aside the fact that the allegations in Miller’s

original complaint, which identified the conspiracy as based in
615

Frankfurt, described the scope of its operations (USAID contracts in

Egypt), and detailed its bid-rigging on Contract 20A, are a far cry

from the “naked assertions” that doomed the complaints in Twombly

and Iqbal, those two cases have no applicabilityto the question before

us. In Twombly and Iqbal the Supreme Court interpreted Federal

Rule of Civil Procedure 8(a)(2), which sets the standard that a

complaint must satisfy to survive a motion to dismiss. Nothing in

either case even hints that the Supreme Court intended Rule 8(a)’s

standards to apply to relation back, which is governed by the entirely

different language of Rule 15(c), now incorporated into the FCA. In

fact, my colleagues’ invocation of Twombly and Iqbal contradicts the

FCA’s plain text, which provides that claims relate back not only to

“conduct, transactions, or occurrences set forth,” in an earlier

complaint, but also to “conduct, transactions, or occurrences . . .

attempted to be set forth.” 31 U.S.C. § 3731(c) (emphasis added); cf.

Krupski v. Costa Crociere S.p.A., 560 U.S. ----, No. 09-337, slip op.

at 13 (June 7, 2010) (emphasizing, with respect to relation back of

parties, that Rule 15 “plainly sets forth an exclusive list of

requirements for relation back,” and “mandates relation back once the

Rule’s requirements are satisfied” (emphasis added)). Indeed, two

other circuits have expressly held, in language we have cited with

approval, that an “amended claim arises from the same conduct and

occurrences upon which the original claim was based,” and therefore

relates back, even if (unlike here) “the original claim contained

insufficient facts to support it.” Dean v. United States, 278 F.3d

1218, 1222 (11th Cir. 2002); see also id. (“One purpose of an

amended claim is to fill in facts missing from the original claim.”);

United States v. Thomas, 221 F.3d 430, 436 (3d Cir. 2000) (an

amendment that “seeks to correct a pleading deficiency by expanding

the facts but not the claims alleged” in an earlier filing “would clearly

fall within Rule 15(c)”); Hicks, 283 F.3d at 388 (quoting Dean and

Thomas). In FCA cases, the time for defendants to file Iqbal motions,

and thus to ensure that Rule 8(a)’s pleading standards are not

“circumvent[ed],” Ct. Op. 18, is when the relator’s complaint is

unsealed. And where, as here, the Government files a complaint in

intervention and the relator an amended complaint, it is those two

complaints, not the relator’s initial, sealed complaint, that are tested

against the Iqbal standard.

Id. at *36 (alterations in original).

• Nattah v. Bush, 605 F.3d 1052 (D.C. Cir. 2010). The lawsuit arose out of Nattah’s

employment by defendant L-3 Communications Titan Group (“L-3”). Nattah alleged that

while attending an L-3 job fair, he was offered a job as an Arabic language interpreter and
616

promised various working conditions, including that he would work only in Kuwait, that he

would be given a luxury, air-conditioned apartment, and that “under no circumstances”

would be sent to Iraq. Id. at 1054. The L-3 representatives also allegedly “told Nattah he

could be fired only for misconduct, lack of work due to termination or diminution of L-3’s

contract with the United States government, or dereliction of duty.” Id. The complaint

alleged that Nattah accepted the offer in reliance on L-3’s promises. Id. Nattah also signed

a letter providing details about his employment, but the letter stated that it was not a contract

for employment. Id. Nattah alleged that when he arrived in Kuwait, he was “sequestered in

a military encampment located in the desert and required to live in a tent with forty soldiers,

eat distasteful food, and live under substandard conditions.” Id. Nattah also alleged that he

was later sold as a slave to the U.S. military and taken to Iraq, where he was forced to serve

on the front line of the Iraq invasion. Nattah, 605 F.3d at 1054–55. Nattah suffered injuries

while in Iraq and while he was being treated, an L-3 representative visited his barracks in

Iraq and told the soldiers that he was on leave without pay and “did not belong there.” Id.

at 1055. Based on these factual allegations, Nattah “alleged twenty separate claims against

multiple defendants, including former President George W. Bush, former Vice President

Richard Cheney, former Secretary of Defense Donald Rumsfeld, ‘Six Unknown United

States Government Employees,’ and L-3.” Id. The district court dismissed the claims

against Bush, Cheney, and Rumsfeld. Id. While L-3’s motion to dismiss was pending,

Nattah sought to file an amended complaint to add then-Secretary of the Army Francis

Harvey as a defendant and to assert additional claims against the six unknown federal

employees. Id. The proposed amended complaint “included claims of slavery, intentional

infliction of emotional distress, fraud, breach of contract, and alleged violations of the

Geneva Convention, Hague Convention, and United Nations Charter, as well as several other

claims based on state and foreign law.” Id. The district court granted the motion for leave

to file the amended complaint in part, denied the motion to add additional defendants, and

granted L-3’s motion to dismiss. Nattah, 605 F.3d at 1055. On appeal, Nattah alleged error

in the denial of his motion for leave to join Secretary Harvey and in the dismissal his claims

against L-3.

The D.C. Circuit concluded that the district court had erred in denying the motion for leave

to join Secretary Harvey because none of the defendants had filed an answer and Nattah was

entitled to amend his complaint as a matter of right under Civil Rule 15. Id. at 1056. But

the court considered whether the claims against Harvey would survive a motion to dismiss

because if they would not, no remand was necessary. Id. The appellate court held that the

district court had erred in finding that sovereign immunity applied because the immunity was

waived under section 702 of the Administrative Procedures Act. Id. at 1056. The appellees

also argued that the pleadings were insufficient under Iqbal because they were vague and did

not establish a basis for the claims. Id. The court disagreed, stating:

Although Nattah does not mention Secretary Harvey by name in each

individual count of his amended complaint, we conclude his

pleadings are sufficient. See First Am. Compl. ¶¶ 5 (stating Nattah

brings Counts III, V, and VI against “all defendants”), 237 (stating
617

“Army Intelligence officers” were aware Nattah would not voluntarily

go into Iraq), 269 (stating the “United States Military” denied

Nattah’s right to travel), 355 (stating defendant Harvey violated

Nattah’s rights by requiring him to violate international law).

Id. at 1056–57. The court held that “[b]ecause Nattah’s non-monetary claims against

Secretary Harvey would survive a motion to dismiss—at least on the grounds relied upon by

the district court and the federal Appellees—we remand for further proceedings on those

claims.” Nattah, 605 F.3d at 1057.

The D.C. Circuit also concluded that the district court had erred by dismissing the breach of

contract claim against L-3. L-3 argued that Nattah’s allegations were contradictory because

he alleged an oral contract but specifically stated that he signed an employment contract or,

alternatively, that his pleadings did not state a contract claim under Twombly and Iqbal

because he did not name the individuals who made the alleged oral contract or establish that

they had authority to contract on L-3’s behalf. Id. The court rejected both arguments. With

respect to the argument that the pleadings were insufficient, the court noted that “Nattah

allege[d] ‘[a]gents of defendant [L-3]’ conveyed to him the terms of the oral contract, which

included luxury apartment accommodations in Kuwait and assurances he would not be sent

to Iraq.” Id. at 1058 (alterations in original). The court noted that “L-3 attempt[ed] to use

Twombly . . . and Iqbal . . . to enunciate a blanket rule that requires a plaintiff to plead every

conceivable fact or face dismissal of his claim,” but stated that “L-3 . . . point[ed] to no

language in Twombly or Iqbal requiring a plaintiff to identify by name which employee(s)

made the agreement when pleading a breach of contract claim.” Id. (citation omitted). In

addition, the court concluded that Nattah “allege[d] with specificity the several terms of the

oral contract and how L-3 breached those terms,” and held that “Nattah’s complaint state[d]

a claim against L-3 for breach of its oral contract with Nattah.” Id.

The court affirmed dismissal of the intentional infliction of emotional distress (“IIED”)

claim, noting that “[a]lthough Nattah br[ought] his IIED claim under Iraqi and Kuwaiti law,

he d[id] not address the elements of the claim under either law,” and that “[h]is pleading

consist[ed] of a single sentence stating he ‘incorporates paragraph 1–95 above by reference.’”

Id. The court concluded that “[t]hose paragraphs, primarily discussing the U.S.

government’s alleged deception involving weapons of mass destruction in Iraq, fail[ed] to

satisfy FED. R. CIV. P. 8(a)(2).” Nattah, 605 F.3d at 1058.

The district court had dismissed Nattah’s fraud claim against L-3 “because his ‘assertions

fail[ed] to set out with particularity a plausible claim for fraud,’ as required by FED. R. CIV.

P. 9(b).” Id. (alteration in original). The D.C. Circuit did not decide whether the pleadings

were sufficient because it concluded that this claim was barred by the statute of limitations.

See id.

“With respect to Nattah’s other claims against L-3, his claims against the ‘Six Unknown

Government Employees,’ and his motion for leave to file an amended complaint joining
618

certain Iraqi defendants, [the court] affirmed for the reasons set forth in the district court’s

memorandum opinion . . . .” Id. at 1059.

• Mitchell v. Fed. Bureau of Prisons, 587 F.3d 415 (D.C. Cir. 2009), rehearing en banc

denied, (Mar. 31, 2010). The court considered a motion by the appellant to proceed in forma

pauperis(IFP). After determining that IFP status was barred because the plaintiff’s 65 prior

unsuccessful lawsuits made him an abusive filer, see id. at 419, the court considered whether

the plaintiff qualified for an exception based on imminent danger. In considering the alleged

imminent danger, the court “reject[ed] the government’s argument that [the court] should .

. . subject [the plaintiff’s] allegations to the pleading standard the Supreme Court set forth

earlier this year in Ashcroft v. Iqbal . . . .” Id. at 420. The court explained that the holding

in Iqbal that “‘a complaint must contain sufficient factual matter,’ alleged in non-conclusory

terms, ‘to state a claim to relief that is plausible on its face,’” id. (quoting Iqbal, 129 S. Ct.

at 1949), “ha[d] no applicability to IFP proceedings where [the court] [was] exercising [its]

discretion to grant or withhold a privilege made available by the courts,” id. The court noted

that “IFP proceedings are nonadversarial and implicate none of the discovery concerns lying

at the heart of Iqbal.” Id. (citing Iqbal, 129 S. Ct. at 1950). The court also noted that “if IFP

status [wa]s granted, defendants remain[ed] free to rely on Iqbal in support of a motion to

dismiss the underlying complaint[,] . . . [b]ut when considering IFP eligibility, [the court]

shall continue using the traditional standards applicable to pleadings by pro se prisoners.”

Mitchell, 587 F.3d at 420. The court found that granting IFP status would be inappropriate

because the plaintiff had not adequately alleged imminent danger. Specifically, with respect

to the claim that the defendants had placed the plaintiff in a prison where it was known that

snitches would be attacked, the court emphasized that the plaintiff had waited more than 17

months after the alleged attack to file for IFP status, and that neither the complaint nor the

IFP motion alleged an ongoing threat. Id. at 420–21 (citation omitted). With respect to the

claim that the plaintiff’s hepatitis was not being treated, the court found that the allegations

were “vague and unspecific,” noting that the plaintiff never told the court “when he asked

for assistance, what kind of treatment he requested, who he asked, or who denied it,” and

“never even clearly state[d] that medical attention was actually denied.” Id. at 422. The

court held that the allegations were insufficient, explaining that “even viewing [the

plaintiff’s] complaint through the forgiving lens applicable to pro se pleadings, [it] simply

[could not] determine whether [the plaintiff] face[d] an imminent danger.” Id.

• Tooley v. Napolitano, 586 F.3d 1006 (D.C. Cir. 2009). The plaintiff filed suit against highlevel federal officials, alleging that the officials conducted illegal surveillance of him and his

family. The D.C. Circuit had previously vacated a dismissal of the complaint, finding that

the plaintiff had adequately alleged standing. The government sought rehearing in light of

the subsequent decision in Iqbal. Id. at 1007. “The government argue[d] that Iqbal extended

Twombly, thus invalidating a construction of Twombly previously advanced by [the D.C.

Circuit] in Aktieselskabet AF 21 November 2001 v. Fame Jeans, 525 U.S. 8 (D.C. Cir.

2008).” Id. “While [the D.C. Circuit] d[id] not reject the government’s argument, upon

reflection [it] believe[d] that [it] should affirm the district court . . . for reasons distinct from

but not inconsistent with Iqbal.” Id.
619

The complaint alleged that the plaintiff called Southwest Airlines to book a flight in 2002,

and upon being asked if he had any comments or suggestions, suggested that the airline

screen 100 percent of everything brought on board, given the events of September 11th and

the potential that someone could put a bomb on the plane. Id. The complaint alleged that

the Southwest agent became alarmed. Thereafter, the plaintiff experienced telephone

troubles, which he stated, on information and belief, were caused by illegal wiretaps. Id. at

1007–08. The plaintiff also alleged that he knew from experience on Capitol Hill that “‘as

long as the phone line is plugged into the wall in one’s home, those listening to wiretaps can

hear anything that goes on in the home.’” Tooley, 586 F.3d at 1008 (quoting an affidavit

submitted by the plaintiff). The complaint also alleged that the government subjected the

plaintiff’s cars to Radio Frequency Identification Tags that monitored their movement. Id.

The complaint further alleged that the plaintiff had been subject to strict searches every time

he traveled. Id. The complaint also asserted that when the president was scheduled visit his

hometown, the plaintiff made unflattering remarks to his family about the Administration and

then noticed that an officer in a Ford Crown Victoria sat outside his home for six hours per

day, “‘as a threat of recrimination or persecution of political speech.’” Id.

After the plaintiff filed requests under the Freedom of Information Act (FOIA), which he

believed werewronglydenied, he filed suit alleging violations of the Fourth Amendment and

the constitutional right to privacy, as well as deprivation of First Amendment rights and

retaliation for his comments to the Southwest representative, and seeking declaratory relief

under FOIA. Id. After the plaintiff dismissed some of the defendants, the remaining

defendants included the U.S. Attorney General, the Secretary of the Department of Homeland

Security, and the Administrator of the Transportation Security Administration, each sued in

their official capacities. Id. at 1007. The district court granted summary judgment to the

defendants on the FOIA claims, and that ruling was not challenged on appeal. Tooley, 586

F.3d at 1008. The government sought dismissal of the remaining claims based on lack of

standing, and the district court granted dismissal, finding, with respect to the claims based

on wiretapping and physical surveillance, that “‘it [wa]s altogether possible’ that Tooley was

the subject of ‘entirely lawful wiretaps placed by state or local law enforcement agencies’

and that Tooley could not show that it was a federal agent responsible for any of his alleged

physical surveillance.” Id. at 1008–09. The district court characterized the plaintiff’s other

claims as being based on his placement on a terrorist watch list, and found standing but

dismissed based on lack of subject matter jurisdiction because the Court of Appeals had

exclusive jurisdiction over directives issued by the Transportation Security Administration.

Id. at 1009.

On rehearing, the D.C. Circuit noted that “[a] complaint may be dismissed on jurisdictional

grounds when it ‘is ‘patently insubstantial,’ presenting no federal question suitable for

decision.’” Id. (quoting Best v. Kelly, 39 F.3d 328, 330 (D.C. Cir. 1994), and citing Iqbal,

129 S. Ct. at 1959 (Souter, J., dissenting), for the proposition that “‘[t]he sole exception to

th[e] rule [that allegations must be credited at the pleading stage applies to] allegations that

are sufficiently fantastic to defy reality as we know it: claims about little green men, or the
620

plaintiff’s recent trip to Pluto, or experience in time travel.’”) (second and third alterations

in original) (additional citation omitted). The court found that the claims against the federal

officials were insufficient. The court stated that “[t]he alleged motivation . . . was nothing

if not bizarre: the defendants, people charged with protecting the country’s security, allegedly

acted out of a desire to ‘retaliate’ against Tooley for his having offered a suggestion of

additional measures that he claimed would enhance airline security.” Id. The court noted

that the plaintiff alleged that “[a]lternatively, some of the surveillance was evidently to

persecute him for remarks critical of the Bush Administration, remarks likely

indistinguishable from those of millions of Americans.” Id. The court found that “the

particular combination of sloth, fanaticism, inanityand technical genius alleged . . . seem[ed]

. . . to move the[ ] allegations into the realm of claims ‘flimsier than ‘doubtful or

questionable’— . . . ‘essentially fictitious.’’” Tooley, 586 F.3d at 1009 (quoting Best, 39

F.3d at 330) (third omission in original). The court concluded that the allegations were “not

realistically distinguishable from allegations of ‘little green men’ of the sort that Justice

Souter recognized in Iqbal as properly dismissed on the pleadings.” Id. at 1009–10 (citing

Iqbal, 129 S. Ct. at 1959 (Souter, J., dissenting)). The court also explained that the claims

were similar to those in other cases where the courts had “dismissed for patent

insubstantiality,” and cited cases both before and after Twombly. The court held: “Because

the allegations of Tooley’s complaint constitute the sort of patently insubstantial claims

dismissed in these and other cases, we conclude that the district court was correct in its

judgment of dismissal.” Id. at 1010.

• Atherton v. District of Columbia Office of Mayor, 567 F.3d 672 (D.C. Cir. 2009), cert.

denied, 130 S. Ct. 2064 (2010), rehearing denied, 130 S. Ct. 3406 (2010), cert. denied,

Zachem v. Atherton, 130 S. Ct. 2064, 2010 WL 285700 (May 17, 2010). Two days after the

plaintiff was sworn in as a D.C. Superior Court grand juror, he was permanently removed

from grand jury service when an Assistant U.S. Attorney (“AUSA”) who was presenting

evidence to the grand jurors reported to a supervising AUSA (Daniel Zachem) that the jurors

were complaining about the plaintiff. Id. at 676. Zachem discussed the issue with the juror

officer (Suzanne Bailey-Jones), and Bailey-Jones “summarily and permanently removed

Atherton from the grand jury for being ‘disruptive.’” Id. The plaintiff’s pro se complaint

alleged that he was unlawfully removed from grand jury service because of his deliberative

judgments and his Hispanic ethnicity, and asserted claims against Bailey-Jones, Zachem, the

Director of Special Operations at the Superior Court (Roy Wynn), several other city and

federal officials, the District of Columbia, and the Department of Justice Office of the

Attorney General. Id. at 677. The complaint alleged constitutional violations of due process

and equal protection against the District of Columbia defendants and the federal defendants

under §§ 1983, 1985(3), and 1986, and Bivens, as well as a common law fraud claim. Id.

The district court dismissed the complaint for failure to state a claim, finding that it failed

to allege that any defendants other than Bailey-Jones and Zachem were directly involved in

his dismissal, and that the plaintiff had failed to state a claim for municipal liability against

the District of Columbia. Id. The district court also dismissed the § 1985(3) claim without

explanation; dismissed the § 1986 claim as time-barred; dismissed the official capacity

claims under § 1983 against the municipality because Bailey-Jones was acting outside the
621

scope of her authority in removing the juror; dismissed the individual capacity claims against

the superior court clerk and Wynn because the allegations did not support any personal

involvement by these defendants in the decision to remove Atherton from the jury; declined

to exercise supplemental jurisdiction over the fraud claim alleged against the superior court

clerk and Wynn; and found that the fraud claim against Zachem was barred by sovereign

immunity because the Federal Tort Claims Act required substituting the United States for

Zachem. Atherton, 567 F.3d at 680. Although the district court found that the complaint

adequately stated due process and equal protection claims against Zachem and Bailey-Jones,

it dismissed the claims against them under § 1983 and Bivens because they were entitled to

absolute immunity. Id. The Eleventh Circuit reversed the dismissal of the due process

claims against Bailey-Jones and Zachem because absolute immunity did not apply; affirmed

the dismissal of the equal protection and § 1985(3) claims, and the due process claim against

Wynn, for failure to state a claim; and affirmed the dismissal of the remaining claims. Id.

at 677.

The D.C. Circuit discussed the pleading standards and affirmed that notice pleading is still

effective, first noting that Rule 8 requires only “‘a short and plain statement of the claim

showing that the pleader is entitled to relief’ in order to survive a motion to dismiss,’” id. at

681 (quoting FED.R.CIV. P. 8(a)(2)), and then that “[a] complaint must give the defendants

notice of the claims and the grounds upon which they rest, but ‘[s]pecific facts are not

necessary,’” id. (quoting Erickson v. Pardus, 551 U.S. 89, 93 (2007)). With respect to a

claim of invidious discrimination, the court pointed out that in Iqbal, the Supreme Court had

required pleading that the defendant acted with discriminatory purpose, and that purposeful

discrimination “‘involves a decisionmaker’s undertaking a course of action ‘because of,’ not

merely ‘in spite of,’ [the action’s] adverse effects upon an identifiable group.’” Id. (quoting

Iqbal, 129 S. Ct. at 1948) (alteration in original). The court emphasized that “[a] pro se

complaint . . . ‘must be held to less stringent standards than formal pleadings drafted by

lawyers,’” id. (quoting Erickson, 551 U.S. at 94), but that “even a pro se complaint must

plead ‘factual matter’ that permits the court to infer ‘more than the mere possibility of

misconduct,’” Atherton, 567 F.3d at 681 (quoting Iqbal, 129 S. Ct. at 1950).

The court concluded that the equal protection claim under § 1983 was not supported by

sufficient facts:

The only factual allegations in Atherton’s complaint on his

equal protection claim are that: (1) after a witness who could not

speak English testified before the grand jury, Atherton openly thanked

the witness in Spanish, Compl. ¶¶ 64–65; (2) “based on information,

Atherton was the only semi-fluent Spanish speaking grand juror,” id.

at ¶ 67; and (3) Atherton is “half Mexican,” id. From these facts,

Atherton alleges that, “based upon information,” his removal without

cause from the grand jury was an act of discrimination against him

“and Hispanics in particular because therewere no other Hispanics on

the jury.” Id. at ¶ 73. He also alleges that the defendants conspired
622

to illegally remove him from the grand jury “for ethnic purposes.” Id.

at ¶ 68. These spare facts and allegations are not enough to survive

a motion to dismiss under Iqbal and Twombly. The complaint and

supporting materials simply do “not permit the court to infer more

than the mere possibility of misconduct,” Iqbal, 129 S. Ct. at 1950,

and this is insufficient to show that Atherton is entitled to relief. See

FED. R. CIV. P. 8(a)(2). As the Court noted in Iqbal, “[w]here a

complaint pleads facts that are merely consistent with a defendant’s

liability, it stops short of the line between possibility and plausibility

of entitlement to relief.” Iqbal, 129 S. Ct. at 1949 (internal quotation

marks and citation omitted). We therefore reverse the District

Court’s finding that Atherton stated claims of equal protection

violations by Bailey-Jones and Zachem.

Id. at 688 (alteration in original).

With respect to the § 1985(3) claims, the court noted that Atherton was required to allege

“‘(1) a conspiracy; (2) for the purpose of depriving, either directly or indirectly, any person

or class of persons of the equal protection of the laws, . . . and (3) an act in furtherance of the

conspiracy; (4) whereby a person is either injured in her person or property or deprived of

any right or privilege of a citizen of the United States,’” id. (quoting Martin v. Malhoyt, 830

F.2d 237, 258 (D.C. Cir. 1987)) (alteration in original), but that “Atherton’s complaint and

supporting materials merely allege[d] that Zachem, Bailey-Jones, and Wynn communicated

about his removal before he was dismissed from the grand jury,” id. The court concluded

that “[t]hese bare facts clearly d[id] not raise an inference that Zachem, Bailey-Jones, and

Wynn were conspiratorially motivated by some class-based, invidiously discriminatory

animus.” Id. The court noted that “[t]he complaint also assert[ed] that the defendants

‘conspired under color of law to illegally remove Atherton . . . for ethnic purposes,’ and that

Atherton was illegally removed from the grand jury in violation of the Constitution and D.C.

law,” id. (omission in original) (internal record citation omitted), but concluded that “these

‘[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory

statements do not suffice’ to state a cause of action under § 1985(3),” Atherton, 567 F.3d at

688 (quoting Iqbal, 129 S. Ct. at 1949) (alteration in original).
 Any cases that were included in an earlier version of this memo but that have since been overturned on appeal have 39

been deleted from the appendix.

1

APPENDIX

DISTRICT COURT CASE LAW INTERPRETING IQBAL39

District Court Case Law in the First Circuit

• Soto-Martinez v. Colegio San Jose, Inc., No. 08-2374 (JAG), 2009 WL 2957801 (D.P.R.

Sept. 9, 2009). The plaintiff alleged that he was subject to a hostile work environment,

retaliation, and termination as a result of his gender. Id. at *1. The court found that the

hostile work environment claim failed because the conclusory assertion that the plaintiff was

discriminated against because of his gender was not entitled to a presumption of truth, and

“[t]he only factual allegations proffered by Plaintiffs [we]re that Soto-Martinez suffered from

verbal harassment that insinuated that he was a homosexual.” Id. at *3. The court relied on

pre-Twombly cases to conclude that “[t]hese allegations [we]re certainly not enough to

sustain a Title VII hostile work environment claim.” Id. (citing Bibby v. Philadelphia CocaCola Bottling Co., 260 F.3d 257, 264 (3d Cir. 2001); Spearman v. Ford Motor Co., 231 F.3d

1080, 1085 (7th Cir. 2000); Higgins v. New Balance Athletic Shoe, Inc., 194 F.3d 252, 258

(1st Cir. 1999)). The allegation that one of the defendants corrected the plaintiff’s work in

front of others was not sufficient to sustain a Title VII claim because the complaint did not

allege that this act occurred because the plaintiff was a man. Id. at *4.

In evaluating the claim that the plaintiff was terminated because of his gender, the court

noted that “although heightened fact pleading of specifics is not required to properly allege

a prima facie case of discrimination, there must be enough facts to state a claim to relief that

is plausible on its face.” Id. (citing Twombly, 550 U.S. at 569–70). The court dismissed this

claim because in addition to failing to allege one of the elements of a prima facie case, the

complaint failed to allege any facts to support the conclusion that the plaintiff was terminated

based on his gender. Soto-Martinez, 2009 WL 2957801, at *5.

The court also dismissed the retaliation claim because the allegations that the plaintiff

engaged in protected conduct under Title VII were not sufficient. Id. at *6. The court

explained that “Title VII does not protect against verbal harassment from fellow employees

that insinuate that the person is a homosexual” and that “Title VII does not proscribe

harassment simply because of sexual orientation.” Id. The court concluded that the

“complaint was not directed at an unlawful practice as it did not point out ‘discrimination

against particular individuals nor discriminatory practices by Defendants.’” Id. (citing

Higgins, 194 F.3d at 259).

• Soukup v. Garvin, No. 09-cv-146-JL, 2009 WL 2461687 (D.N.H. Aug. 11, 2009)

(unpublished). The plaintiff sued an arresting officer and the officer’s employer under §
2

1983, alleging violations of his civil rights under the Fourth and Fourteenth Amendments.

Id. at *1. The plaintiff also asserted a common law claim for false imprisonment. Id. In

considering a motion for judgment on the pleadings, the court concluded that allegations that

the town’s police department “‘developed and maintained policies or customs exhibiting

deliberate indifference to the constitutional rights of persons in the Town of Lisbon’ and that

it was the department’s ‘policy and/or custom . . . to fail to exercise reasonable care in

supervising and training its police officers’” did not adequately plead the claim against the

town because there were no supporting factual allegations. Id. at *2 (omission in original).

The court concluded that the allegations would be insufficient both before and after

Twombly/Iqbal:

The debate over the extent to which Twombly and Iqbal have

heightened the pleading standard under Rule 8 continues, and will

undoubtedly fill law review articles, but is ultimately irrelevant to the

disposition of this motion. Soukup cites Conley’s maxim that a

complaint requires notice only of “what the plaintiff’s claim is and

the grounds upon which it rests,” 355 U.S. at 47, but elides the second

requirement, arguing that “pleadings are intended to give notice to the

defendant of the claims—not of the facts supporting them.”

This is incorrect. In fact, even before Twombly and Iqbal, the

court of appeals had repeatedly held that a complaint needs more

than “bald assertions . . . [or] unsubstantiated conclusions,”

Correa-Martinez v. Arrillaga-Belendez, 903 F.2d 49, 52 (1st Cir.

1990), overruled on other grounds by Educadores Puertorriguenos

en Accion v. Hernandez, 367 F.3d 61 (1st Cir. 2004); nor may a

plaintiff “rest on subjective characterizations or conclusory

descriptions of a general scenario.” Murphy v. United States, 45

F.3d 520, 522 (1st Cir. 1995); see also Redondo-Borges v. U.S. Dept.

of Hous. and Urban Dev., 421 F.3d 1, 9 (1st Cir. 2005) (“The fact

that notice pleading governs . . . does not save the plaintiffs’

conclusory allegation.”);Centro Medico del Turabo, Inc. v. Feliciano

de Melecio, 406 F.3d 1, 6 (1st Cir. 2005) (requiring pleadings to “set

forth factual allegations, either direct or inferential, respecting each

material element necessaryto sustain recoveryunder some actionable

legal theory”) (emphasis added) (internal quotation marks omitted).

Soukup’s complaint offers nothing more than these.

While Soukup attempts to argue otherwise, he is belled by his

complaint which, as to the constitutional claims against the Town of

Lisbon, contains not a single assertion of fact. Rather, Soukup’s

accusations are couched completely as legal conclusions, with the

defendant’s name merely plugged into the elements of a municipal

liability claim. Even if Twombly or Iqbal had never been decided,
3

Soukup’s complaint would fall short of the pleading requirements

under prior First Circuit authority; as it is, it certainly fails to avoid

Twombly’s warning that “formulaic recitation of a cause of action’s

elements will not do.” 550 U.S. at 555. His complaint therefore fails

to state a claim that the Town of Lisbon violated his federal

constitutional rights.

Id. at *3 (emphasis added) (omission and alteration in original).

• Chao v. Ballista, 630 F. Supp. 2d 170 (D. Mass. 2009). The plaintiff alleged that prison

officials failed to protect her from sexual abuse, and sought to recover under § 1983 for the

officials’ failure to investigate and prevent the abuse. Id. at 173. The court rejected the

defendants’ argument that the plaintiff alleged only conclusory allegations regarding the

alleged failure to train, supervise, and investigate. Id. at 177. The court explained:

Notice pleading, however, remains the rule in federal courts,

requiring only “a short and plain statement of the claim.” See FED.R.

CIV. P. 8(a). While a plaintiff’s claim to relief must be supported by

sufficient factual allegations to be “plausible” under Twombly,

nothing requires a plaintiff to prove her case in the pleadings. Bell

Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 167

L. Ed. 2d 929 (2007). Plausibility, as the Supreme Court’s recent

elaboration in Ashcroft v. Iqbal makes clear, is a highly contextual

enterprise—dependent on the particular claims asserted, their

elements, and the overall factual picture alleged in the complaint. ---

U.S. ----, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009); Maldonado v.

Fontanes, 568 F.3d 263, 268 (1st Cir. 2009) (“[T]he court’s

assessment of the pleadings is context-specific, requiring the

reviewing court to draw on its judicial experience and common

sense.”) (internal quotation marks omitted).

Id. (emphasis added) (alteration in original). The court elaborated:

Plausibility, in this view, is a relative measure. Allegations

become “conclusory” where they recite only the elements of the claim

and, at the same time, the court’s commonsense credits a far more

likely inference from the available facts. This analysis depends on the

full factual picture, the particular cause of action, and the available

alternative explanations. Yet in keeping with Rule 8(a), a complaint

should only be dismissed at the pleading stage where the allegations

are so broad, and the alternative explanations so overwhelming, that

the claims no longer appear plausible. See Thomas v. Rhode Island,

542 F. 3d 944, 948 (1st Cir. 2008) (juxtaposing Rule 8(a)’s fair notice

and plausibility requirements, as interpreted in Twombly).
4

Id. (emphasis added) (additional internal citations omitted). The court concluded that the

factual allegations were more than sufficient to state a plausible claim to relief. Id. at

177–79. The court stated: “To be sure, discovery may ultimately reveal an alternative

picture, showing that the Defendants made every reasonable effort to prevent the alleged

abuse. But Chao has presented sufficient facts, at a stage where her factual allegations must

be taken as true, to overcome that alternative for the time being.” Chao, 630 F. Supp. 2d at

178.

District Court Case Law in the Second Circuit

• Gillman v. Inner City Broadcasting Corp., No. 08 Civ. 8909(LAP), 2009 WL 3003244

(S.D.N.Y. Sept. 18, 2009). The plaintiff asserted age discrimination and retaliation claims,

alleging that he was fired as a result of his age and in retaliation for his reporting sexual

harassment, and also asserted a claim for sexual harassment. The court confirmed that the

Iqbal standard applies in employment discrimination cases:

The Iqbal plausibility standard applies in conjunction with

employment discrimination pleading standards. According to

Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514 (2002), employment

discrimination claims need not contain specific facts establishing a

prima facie case of discrimination. Rather, “a complaint must

include . . . a plain statement of the claim . . . [that] give[s] the

defendant fair notice of what the plaintiff’s claim is and the grounds

upon which it rests.” Id. at 512 (internal quotation marks and

citations omitted); see also Patane v. Clark, 508 F.3d 106, 113 (2d

Cir. 2007). Iqbal was not meant to displace Swierkiewicz’s teachings

about pleading standards for employment discrimination claims

because in Twombly, which heavily informed Iqbal, the Supreme

Court explicitly affirmed the vitality of Swierkiewicz. See Twombly,

550 U.S. at 547 (“This analysis does not run counter to Swierkiewicz

. . . . Here, the Court is not requiring heightened fact pleading of

specifics, but only enough facts to state a claim to relief that is

plausible on its face.”);see also Iqbal, --- U.S. ----, 129 S. Ct. at 1953

(“Our decision in Twombly expounded the pleading standard for all

civil actions, and it applies to antitrust and discrimination suits alike.”

(internal quotation marks and citations omitted)). Accordingly, while

a complaint need not contain specific facts establishing a prima facie

case of employment discrimination to overcome a Rule 12(b)(6)

motion to dismiss, it must nevertheless give fair notice of the basis of

Plaintiff’s claims, and the claims must be facially plausible.

Id. at *3 (emphasis added) (alterations and omissions in original) (footnote omitted) . The

court also noted:
 See also Peterec-Tolino v. Commercial Elec. Contractors, Inc., No. 08 Civ. 0891(RMB)(KNF), 2009 WL 2591527, 40

at *2 (S.D.N.Y. Aug. 19, 2009) (noting in the “legal standard” portion of the opinion that “‘[a]n employment

discrimination plaintiff . . . must simply ‘give the defendant fair notice of what the plaintiff’s claim is and the grounds

upon which it rests,’’” and that “‘[t]he pleading requirements in discrimination cases are very lenient, even de minimis”

(omission in original) (quoting Kassner v. 2d Ave. Delicatessen Inc., 496 F.3d 229, 237 (2d Cir. 2007); Deravin v. Kerik,

335 F.3d 195, 200 (2d Cir. 2003); and citing Boykin, 521 F.3d at 212–16)). The Peterec-Tolino court concluded that

the plaintiff had adequately stated a claim of disability discrimination under the ADA by alleging that the defendant was

his employer; that the plaintiff had physical impairments, including scoliosis and asthma, that substantially limited one

or more major life activities; that the plaintiff had notified his employer of his medical conditions and requested a

reasonable accommodation; that he was able to do his job and his performance had always been excellent; that the

defendants failed to accommodate his disability; and that he was harassed, threatened, and terminated. Id. at *5. The

court also concluded that the plaintiff had adequately alleged a claim of age discrimination under the Age Discrimination

in Employment Act by alleging that he was 46 years old; that he was able to do his job; that the plaintiffs harassed,

threatened, and terminated him; and that another employee warned the plaintiff that “he should ‘not . . . be in this

industry.’” Id. at *6 (omission in original). The court concluded that “‘[s]uch allegations by a pro se plaintiff are

sufficient to withstand a motion to dismiss.’” Id. (quoting Legeno v. Corcoran Group, 308 F. App’x 495, 497 (2d Cir.

2009)).

5

[A]lthough decided before the Supreme Court’s Iqbal decision,

Boykin v. KeyCorp, 521 F.3d 202 (2d Cir. 2008), describes the

interrelation of Swierkiewicz and Twombly and concludes that “the

Supreme Court is not requiring a universal standard of heightened

fact pleading, but is instead requiring a flexible plausibility standard,

which obliges a pleader to amplify a claim with some factual

allegations in those contexts where such amplification is needed to

render the claim plausible.”

Id. at *3 n.9 (quoting Boykin, 521 F.3d at 213 (internal quotation marks omitted)).

40

The court concluded that the plaintiff had adequately pleaded a claim for hostile work

environment:

The facts alleged in the Complaint Letter are sufficient to

make out a plausible claim that Plaintiff was forced to work in an

environment where he felt sexually threatened. Plaintiff alleges that

at least since 1993, Cheryl Sutton, a member of the Defendant’s

Board of Directors and sister of the Chairman, made unwanted

advances toward Plaintiff in the form of invitations to travel with her,

requests to work late when no employees would be in the workplace,

and unsolicited gifts. Whether or not those acts actually qualify as

discriminatory conduct severe or pervasive enough to create an

objectively hostile or abusive work environment is a question to be

determined at a later stage of this action. The record reflects that

they were sufficiently troubling to Plaintiff to warrant a complaint to

the Chairman of the Company in 1993 and in late 2007. And the fact

that Plaintiff was terminated relatively soon after complaining to the
6

offending Board Member seems not to be in dispute. Taking

Plaintiff’s factual allegations as true, Plaintiff suffered an alteration

to the conditions of his work environment. Accordingly, Plaintiff's

allegations present at least a minimally plausible and articulate

discrimination claim.

Id. at *4 (emphasis added) (footnote omitted).

But the court concluded that the allegations regarding the age discrimination claim were

insufficient, noting that most of the facts alleged were irrelevant to whether the plaintiff was

fired based on his age. Id. at *5. The one allegation that might support the age

discrimination claim—that 13 other individuals were fired after reaching age 40—was not

sufficient “without more information about the reasons for their termination or specific

employment practices by the Defendant . . . ” because “merely alleging that a disparate

impact occurred or pointing to a generalized discriminatory policy is insufficient to make out

a plausible age discrimination claim.” Id. at *6.

With respect to the retaliation claim, the court concluded that it was sufficiently pleaded

because the plaintiff alleged that he complained about unwanted advances in late 2007 and

was terminated in February 2008. Gillman, 2009 WL 3003244, at *6. The court held that

“[c]onsidering that Plaintiff has made out a plausible hostile work environment claim, . . .

these additional factual allegations, minimal as they might be, are sufficient to show (1)

Plaintiff’s opposition to the allegedly discriminatory treatment, (2) that Defendant was aware

of Plaintiff’s opposition—assuming Cheryl Sutton’s knowledge may be imputed to the

Company, (3) that Defendant took adverse action against Plaintiff by terminating him, and

(4) that a retaliatory motive allegedly played a part in the adverse employment action.” Id.

• Air Atlanta Aero Eng’g Ltd. v. SP Aircraft Owner I, LLC, 637 F. Supp. 2d 185 (S.D.N.Y.

2009). The plaintiff brought suit alleging breach of contract, account stated, unjust

enrichment, quantum meruit, and promissory estoppel in connection with services that the

plaintiff provided to a non-party. The plaintiff alleged that it was a third-party beneficiary

of the contracts at issue. The court granted the defendants’ motion to dismiss all of the

claims, but also granted leave to file an amended complaint. The court found that the breach

of contract claim failed because the plaintiff was not a third party beneficiary, and the unjust

enrichment, quantum meruit, and promissory estoppel claims failed because there were

express contracts preventing quasi-contractual remedies. Id. at 195–96.

With respect to the account stated claim, the court concluded that the plaintiff had not alleged

enough facts to state a plausible claim under Iqbal, particularly with respect to alleging the

required state of mind. See id. at 198. Regarding the first element of the account stated

claim—that an account was presented—the court noted that the complaint alleged an agency

theory but the plaintiff “did not direct the Court to any language in the Leases granting . . .

representatives with the authority to accept and review statements or otherwise supervise

billing and payments.” Id. The court found that “the Complaint d[id] not sufficiently allege
 Another case in the Second Circuit analyzing pleading the defendant’s state of mind is Talley v. Brentwood Union 41

Free School District, No. 08-790, 2009 WL 1797627 (E.D.N.Y. Jun. 24, 2009). In Talley, in analyzing whether the

plaintiff had adequately alleged equal protection violations based on termination of her probationary teaching contract,

the court noted that the facts alleged to support the claim were that “(1) plaintiff is white whereas [defendant school board

member] Del Rio is Hispanic and [defendant school board member] Kirkham is white; and (2) at the October 20, 2007

meeting ‘Kirkham stated on the record that there should be more ‘minority teachers’ teaching in [the District] as it is a

minority district’ and is ‘widely known in the district as advocating for more minority teachers to fill positions within

the [District].’” Id. at *7 (third and fourth alterations in original). The court concluded that “[a]lthough not overwhelmed

with this factual support, [it found the complaint] sufficient to state a race based Equal Protection claim as against

Kirkham only.” Id. The court explained that “[a]s to Del Rio and [defendant board member] Fritz, the amended

complaint simply ‘d[id] not contain any factual allegations sufficient to plausibly suggest [their] discriminatory state of

mind.’” Id. (quoting Iqbal, 129 S. Ct. at 1952) (fourth alteration in original).

7

facts supporting the legal conclusion that ACG functioned as Ambac’s approved agent for

the purpose of receiving presented statements such that presentation of a statement to ACG

was the equivalent of its presentation to Ambac.” Id. at 198–99. With respect to the second

element of the account stated claim—that the account was accepted as correct—the court

found that this element was sufficiently pleaded because the plaintiff alleged that the debtor

never objected to the account stated, which could amount to an implied acceptance. See id.

at 199. But the third element of the account stated claim—that the debtor promised to pay

the amount stated—was deemed insufficiently pleaded. Air Atlanta, 637 F. Supp. 2d at 199.

The court found that even if there was indebtedness, the plaintiff’s “cryptic statement that

‘Ambac confirmed its intention to pay AAAE’ [wa]s not a sufficient pleading under Iqbal.”

Id. at 200. The court explained: “AAAE essentially makes a conclusory allegation as to

Ambac’s state of mind and its intentions. However, AAAE fails to specify the form of the

alleged confirmation; who made the confirmation; how, where, or when the confirmation

took place; or any other details about this confirmation.” Id. (citing Iqbal, 129 S. Ct. at

1952). The court continued: “[I]n the context of this case, a blanket statement that a

defendant ‘confirmed an intention to pay’ without any factual details supporting that

allegation does not state a plausible claim for relief. While such allegations may have

provided sufficient notice pleading in the past, Twombly and Iqbal provide clear instructions

that conclusory statements about a party’s alleged intentions should be accompanied with

supporting factual allegations where circumstances so demand.” Id. (emphasis added).41

• Argeropoulos v. Exide Techs., No. 08-CV-3760 (JS), 2009 WL 2132443 (E.D.N.Y. Jul. 8,

2009). The plaintiff sued his employer and another employee, alleging discrimination under

Title VII and state law claims for violations of the New York Human Rights Law. Id. at *1.

The plaintiff alleged that he was subject to discrimination and harassment because of his

national origin and perceived sexual orientation. Id. The Title VII claims against the

employee were dismissed as frivolous because individuals are not subject to liability under

Title VII. Id. at *3. With respect to the plaintiff’s discrimination claims based on perceived

sexual orientation and sexual harassment, those claims were dismissed because Title VII

does not prohibit harassment or discrimination based on sexual orientation. Id. Although

Title VII protects against sexual harassment, the plaintiff failed to adequately plead facts

supporting a claim for same-sex harassment. Id. at *4. The court emphasized that
8

“[b]ecause he [wa]s at the motion to dismiss stage, Plaintiff obviously ha[d] no evidentiary

burden to establish any of those methods [of showing sexual harassment],” but concluded

that “Plaintiff plead[ed] no facts (or,for that matter, even conclusory allegations) to suggest”

same-sex harassment. Argeropoulos, 2009 WL 2132443, at *4. The court concluded that

the only possible inference from the pleaded facts was that the plaintiff was harassed because

of his sexual orientation, but that Title VII provides no remedy for such harassment. Id.

With respect to the plaintiff’s claims based on national origin discrimination, the court noted

that “[u]nlike with respect to sexual harassment, Plaintiff d[id] at least plead some facts to

suggest that he experienced hostility because of his Greek national origin,” but that the two

incidents discussed in the complaint did not establish discrimination under either a disparate

treatment or hostile work environment theory. Id. With respect to disparate treatment, the

claim failed “because Plaintiff d[id] not plead that he suffered any adverse employment

action, much less an adverse employment action that occurred due to Defendants’ anti-Greek

animus.” Id. The allegations of constructive discharge failed because the plaintiff was still

an employee of the employer defendant, even if he alleged that he had no plans to return to

active work after his disability leave. Id. The hostile work environment claim failed because

although the plaintiff pleaded “two incidents that could arguably be considered national

origin harassment . . . a few ‘isolated incidents,’ especially when only verbal and not

physical, do not suffice to plead a hostile work environment claim.” Id. at *5 (citations

omitted). The court said it was insufficient that the complaint alleged that the two incidents

were only examples of daily discrimination, noting that “this kind of non-specific allegation

might have enabled Plaintiff’s hostile work environment claim to survive under the old ‘no

set of facts’ standard for assessing motions to dismiss, . . . [b]ut it does not survive the

Supreme Court’s ‘plausibility standard,’ as most recently clarified in Iqbal.” Argeropoulos,

2009 WL 2132443, at *6 (emphasis added) (internal citation omitted). The court explained

that “[a]t most, Plaintiff’s national origin hostile work environment claim [wa]s

‘conceivable[,]’ . . . [b]ut without more information concerning the kinds of anti-Greek

animus directed against Plaintiff, and the frequency thereof, the Court [could not] conclude

that Plaintiff’s claim [wa]s ‘plausible.’” Id. (citing Iqbal, 129 S. Ct. at 1951). The court

granted leave to amend this claim “in a manner consistent with Iqbal’s requirements . . . .”

Id.

With respect to the plaintiff’s retaliation claim, the court noted that the plaintiff “fail[ed] to

plead any facts documenting this alleged retaliation,” and that “[a]t most, Plaintiff claim[ed]

that, after he complained about the alleged harassment he suffered, ‘the harassment got

worse’ and Plaintiff ‘became the subject of discriminatory retaliation.’” Id. But the court

noted that the plaintiff “plead[ed] nothing to document how the harassment ‘got worse’ or

how Plaintiff suffered ‘discriminatory retaliation.’” Id. The court explained that “[e]ven

before Iqbal, the federal rules required a plaintiff to do more than just plead ‘labels and

conclusions, and a formulaic recitation of the elements of a cause of action.’” Id. (quoting

Twombly, 550 U.S. at 555) (emphasis added).
9

District Court Case Law in the Third Circuit

• Young v. Speziale, No. 07-03129 (SDW-MCA), 2009 WL 3806296 (D.N.J. Nov. 10, 2009).

The plaintiff filed a pro se action under § 1983, asserting that his constitutional rights were

violated when he received inadequate medical care as a pretrial detainee of the United States

Marshals Service. Id. at *1. The complaint alleged that the plaintiff twisted his knee while

at the county jail and was eventually diagnosed with a torn medial meniscus. Id. The

treating physician ordered physical therapy twice a week for six weeks, but defendant

Hanton, a nurse consultant in the Office of Interagency Medical Services in the Marshals

Service Headquarters, approved only a physical therapy evaluation and a one physical

therapy visit. Id. A request for arthroscopic surgery on the plaintiff’s knee was later

forwarded to Hanton, but she denied the request. Id. The plaintiff sued a variety of officials,

and Hanton moved to dismiss, or alternatively, for summary judgment. Id. The court

determined that the motion ought to be treated as a motion to dismiss, rather than a motion

for summary judgment. Young, 2009 WL 3806296, at *2. Hanton argued that the plaintiff

“fail[ed] to make a prima facie showing of inadequate care under either the Eighth or

Fourteenth Amendments and that even if Plaintiff asserted a viable claim, Defendant Hanton

[wa]s protected by the qualified immunity doctrine.” Id. at *3. The court recognized “the

importance of resolving immunity questions at the earliest possible stage in litigation,” and

therefore turned to that issue first. Id. (citation and internal quotation marks omitted).

However, because “the first step of the qualified immunity analysis ‘is not a question of

immunity at all, but is instead the underlying question of whether there is even a wrong to

be addressed in an analysis of immunity,’” the court explained that “the substantive issues

raised by Defendant’s motion to dismiss [we]re effectively subsumed within the immunity

analysis.” Id. (citations omitted).

To prevail on his claim of denial of medical care, the plaintiff had to show: “(1) the existence

of a serious medical need, and (2) behavior on the part of the defendant officials that

constitute[d] deliberate indifference to that need.” Id. at *5. The court found that the

complaint adequately alleged a serious medical need, explaining:

Plaintiff’s torn meniscus was not only recognized by two physicians

as requiring medical treatment, but its debilitating effects, as alleged

in the Second Amended Complaint, would easily be recognizable to

a layperson as requiring medical attention. According to the Second

Amended Complaint, to this date, Young still suffers from pain as a

result of his knee injury. Furthermore, Plaintiff has gained a

significant amount of weight due to the inactivity resulting from his

injury, and he occasionally falls because his injury does not permit

him to maintain balanced footing. As alleged in his complaint,

Plaintiff’s medical need is serious.

Id. (internal citations to the complaint omitted). With respect to the deliberate-indifference

prong, the court noted that the plaintiff alleged that Hanton exhibited indifference both when

she refused to order the amount of physical therapy recommended and when she denied his
10

surgery. Young, 2009 WL 3806296, at *6. The court held that the reduced physical therapy

did not constitute deliberate indifference because, according to the complaint, “Hanton, after

receiving a recommendation from a physician, approved sufficient physical therapy so that

plaintiff could learn the necessary exercises to perform himself.” Id. (citation omitted).

However, the allegations regarding the denial of surgery were “at this stage in the litigation,

. . . sufficient to state a § 1983 claim.” Id. The court rejected Hanton’s argument that the

allegations were insufficient under Iqbal because they “merely parrot[ed] the legal

requirements of a § 1983 claim and [we]re implausible”:

In Iqbal, the Supreme Court held that a plaintiff seeking to impose

supervisory liability on a § 1983 defendant must allege more than that

the particular defendant “knew of, condoned, and willfully and

maliciously agreed to” violate a plaintiff's constitutional rights.

Although such allegations were held to be insufficient in Iqbal, the

plaintiff’s claims there are distinguishable from those of Young.

Specifically, the plaintiff in Iqbal brought a Bivens action for

discrimination in violation of the First and Fifteenth Amendments.

Such claims require a plaintiff to plead and prove that the defendant

acted with discriminatory purpose. As a result of this particular

requirement, the Supreme Court concluded that mere knowledge on

the part of the supervisor was an insufficient basis for Bivens liability,

which it treated as equivalent to § 1983 liability. There is no such

requirement for a § 1983 claim for inadequate medical care arising

under either the Eighth or Fourteenth Amendments. See Estelle v.

Gamble, 429 U.S. 97, 106, 97 S. Ct. 285, 50 L. Ed. 2d 251 (1976)

(outlining requirements necessary to plead a § 1983 claim for

inadequate medical care). The Supreme Court, in Iqbal, even

prefaced its analysis of this issue by recognizing that “[t]he factors

necessary to establish a Bivens [or § 1983] violation will vary with

the constitutional provision at issue.” Iqbal, 129 S. Ct. at 1948.

Iqbal thus does not support the proposition that general allegations

are never sufficient to support a § 1983 claim. See id. at 1949 (“the

pleading standard Rule 8 announces does not require ‘detailed factual

allegations,’ but it demands more than an unadorned,

the-defendant-unlawfully-harmed-me accusation.”) (citing Bell

Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 167

L. Ed. 2d 929 (2007)).

Id. at *7 (emphasis added) (alterations in original) (additional internal citations omitted).

Besides finding Iqbal to be distinguishable, the court found that the allegations were

sufficiently specific:

In any event, Young’s Second Amended Complaint goes

further and specifically alleges that “[a]s a proximate result of
11

defendant[’s] denial of medical care to the plaintiff, he suffered direct

physical harm as well as residual physical injury due to the long-term

cumulative effects of being forced to walk on his severely injured

knee.” (Second Am. Compl. ¶ 39.) It is plausible (and can be

inferred from the well-pleaded facts) that these long term effects

resulted, at least in part, because “Defendant Hanton denied the

request for surgery outright.” (Id. ¶ 21.); see also Lanzaro, 834 F.2d

at 346–47 (“[d]eliberate indifference is also evident where prison

officials erect arbitrary and burdensome procedures that ‘result[ ] in

interminable delays and outright denials of medical care to suffering

inmates”); Iqbal, 129 S. Ct. at 1950. Consequently, this Court finds

that Plaintiff’s pleadings adequately allege that Hanton was

deliberately indifferent to Plaintiff’s serious medical needs.

Id. (alterations in original). The court explained that more would be required at the summary

judgment stage, but that the allegations were sufficient to survive the pleadings stage:

While, upon a motion by Defendants for summary judgment,

Plaintiff will have to come forward with evidence demonstrating that

Defendant Hanton knew about Plaintiff’s injury and personally

interfered, for non-medical reasons, with Plaintiff’s treatment, at this

stage, the pleadings adequately state a claim against Defendant

Hanton.

Likewise, Defendant Hanton may come forward at a later time

(after Plaintiff has had a chance to engage in further discovery) with

evidence undermining Plaintiff’s allegations; however, at this stage

in the litigation, the Court finds that Plaintiff has adequately alleged

that Defendant was deliberately indifferent to his medical needs. See

Spruill [v. Gillis], 372 F.3d [218,] 237–38 [(3d Cir. 2004)] (“[s]ince

at this stage we are making no judgment about what actually

happened, but only about the sufficiency of the pleadings, we must

take [Plaintiff’s] factual allegations, and the reasonable inferences,

therefrom, as true.”).

Id. at *8 (emphasis added) (fourth and fifth alterations in original) (footnote omitted).

In considering qualified immunity, the court found that the allegations in the complaint were

sufficient to conclude “that it would have been clear to a reasonable officer that [Hanton’s]

actions would have violated a ‘clearly established’ constitutional right.” Young, 2009 WL

3806296, at *8 (citation omitted). The court stated:

Plaintiff has alleged that Hanton denied his request for medically

necessary surgery that was approved by a physician, and that as a
12

result of said denial, Plaintiff’s medical condition deteriorated and led

to further serious injury. In light of Third Circuit precedent holding

that Estelle’s deliberate indifference standard is satisfied “where

knowledge of the need for medical care is accompanied by the

intentional refusal to provide that care[,]” and that “the threat of

tangible residual injury can establish deliberate indifference,” the

Court finds that a reasonable officer would have known that the

denial of Plaintiff’s surgery request would have violated Plaintiff’s

rights under the Fourteenth Amendment.

Id. (internal citations omitted) (alteration in original). The court noted that qualified

immunity could be asserted again later in the case, but could not be applied at the pleadings

stage. See id. (“While the issue of qualified immunity may be revisited in a later motion for

summary judgment, at this stage of the litigation, where the Court must credit Plaintiff’s

factual allegations and construe the Complaint in the light most favorable to Plaintiff, the

Court finds that Defendant is not entitled to qualified immunity.”) (emphasis added).

Despite the fact that qualified immunity usually prevents discovery, the court concluded that

“at this juncture, discovery [wa]s needed to, at a minimum, determine the players involved

in the denial of Plaintiff’s request for surgery.” Id. at *9. The court explained:

Although it “exacts heavy costs in terms of efficiency and

expenditure of valuable time and resources that might otherwise be

directed to the proper execution of the work of the Government, . . .

[l]itigation [may be] be necessary to ensure that officials comply with

the law.” Iqbal, 129 S. Ct. at 1953; see also id. at 1961 (finding that

while it is important to prevent unwarranted litigation from

interfering with the proper functioning of the government, “the law,

after all, provides other legal weapons designed to prevent

unwarranted interference” such as beginning discovery with lower

level government officials before determining whether a case can

proceed to allow discovery related to higher level government

officials) (Breyer, J. dissenting).

Id. (alterations in original).

• Taylor v. Pittsburgh Mercy Health Sys., Inc., No. 09-377, 2009 WL 2992606 (W.D. Pa.

Sept. 17, 2009). The court denied a motion for more definite statement, noting that

“Twombly and Iqbal notwithstanding, the notice pleading standard still applies in federal

court.” Id. at *2. The court noted that “[a]lthough Defendants assert that the details

regarding Plaintiffs’ alleged pre- and postliminary work and/or training may excuse FLSA

liability, these arguments are better suited for resolution at a later stage in the proceedings.”

Id. at *2 n.1 (internal record citation omitted).

• Vorassi v. US Steel, No. 09cv0769, 2009 WL 2870635 (W.D. Pa. Sept. 3, 2009). The court
13

dismissed employment discrimination claims as time-barred. Id. at *1. The court cited preTwombly case law for the proposition that “a court will not accept bald assertions,

unwarranted inferences, or sweeping legal conclusions cast in the form of factual

allegations.” Id. (citing In re Rockefeller Ctr. Props., Inc. Sec. Litig., 311 F.3d 198, 215 (3d

Cir. 2002); Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 n.8 (3d Cir. 1997)). The

court noted that “a plaintiff must put forth sufficient facts that, when taken as true, suggest

the required elements of a particular legal theory,” id. at *2 (citation omitted), but explained

that “this standard does not impose a heightened burden on the claimant above that already

required by Rule 8, but instead calls for fair notice of the factual basis of a claim while

‘rais[ing] a reasonable expectation that discovery will reveal evidence of the necessary

element.’” Id. (emphasis added) (alteration in original) (citation omitted); see also Koynok

v. Lloyd, No. 06cv1200, 2009 WL 2981953, at *3 (W.D. Pa. Sept. 11, 2009) (same).

• Adams v. Lafayette College, No. 09-3008, 2009 WL 2777312 (E.D. Pa. Aug. 31, 2009). In

an employment discrimination case based on alleged age discrimination, the court concluded

that the plaintiff’s pleading was insufficient because it was conclusory and devoid of factual

details, and better explained by lawful conduct. Id. at *3–4. The court rejected the plaintiff’s

argument, based on “the liberal pleading discussion in Swierkiewicz,” that requiring more

detailed pleading “would improperly limit a plaintiff’s ability to raise a discrimination claim

by requiring the plaintiff to muster the crucial evidence, which is most often in the

defendants’ hands, before discovery.” Id. at *4 (citations omitted). The court explained that

“[c]ontrary to plaintiff’s position, the Fowler decision specifically noted the Supreme Court’s

indirect repudiation of the Swierkiewiczruling to the extent it relies on Conley and its ‘no set

of facts’ requirements.” Id. (citation omitted). But the court explained that the complaint

was deficient even under Swierkiewicz:

More importantly, Adams overlooks the key factual

distinctions between his case and Swierkiewicz. In that case, the

Court specifically noted the complaint easily satisfied the

requirements of Rule 8(a) because it “detailed the events leading to

termination, provided relevant dates, and included the ages . . . of at

least some of the relevant persons involved with his [adverse

employment action].” Swierkiewicz, 534 U.S. at 514. On the other

hand, Adams’s complaint[’s] factual allegations are scant and rely

primarily on his own averments that he has been treated differently

because of his age. Though Adams has sufficiently plead[ed] he was

suspended for one day for turning his back to his supervisor, he has

failed to allege sufficient facts to nudge his claim from conceivable

to plausible.

Id. (omission and first alteration in original) (footnote omitted). The court emphasized that

the facts necessary to survive the pleadings stage are minimal:

My ruling should not be construed as requiring potential
14

plaintiffs to muster all facts necessary for their claim before the

complaint is filed. As discussed earlier, the Federal Rules of Civil

Procedure have consistently been interpreted as providing a liberal

pleading standard. To be sure, the Twombly and Iqbal decisions

have clarified the minimal pleading standards by rejecting formulaic

recitations of the elements of a cause of action as well as allegations

consisting only of labels or conclusions. Additionally, the complaint

must . . . recite facts sufficient to show a plausible claim of relief.

Here, the complaint is dismissed because it fails to clear

minimal procedural hurdles. Careful analysis of the allegations reveal

they are only conclusory restatements of the elements of an

employment discrimination claim. Adams has certainly stated facts

for a conceivable claim but falls short of demonstrating a plausible

claim of relief.

Id. at *4 n.2 (emphasis added).

• Garczynski v. Countrywide Home Loans, Inc., 656 F. Supp. 2d 505, No. 08-5128, 2009 WL

2476622 (E.D. Pa. Aug. 12, 2009). The court concluded that the factual allegations were

insufficient to allege that the defendant violated the state unfair trade practices and consumer

protection law, finding that theywere “essentiallynomore than a restatement of the elements

of the statute.” Id. at *6. The court stated: “Plaintiffs cannot adequately plead that

Countrywide violated the UTPCPL simply by pasting the language of the statute into their

Amended Complaint.” Id. The court commented:

Although Twombly and Iqbal have been criticized as both

ignoring the liberal concept of notice pleading and representing an

unwarranted change in Supreme Court jurisprudence on the adequacy

of pleadings, the Complaint in the present case is a good example of

why allowing a case to proceed simply on its allegations of statutory

elements, which some might equate with notice pleading, can be

unfair in some cases. The relationship between the parties in this

case is based on contract. If Plaintiffs had grounds to believe that

Defendants had violated the contract, a claim for breach of contract

would surely be proper. However, Plaintiffs’ claims are based solely

on alleged oral representations, which Plaintiffs claim induced them

to enter into the mortgage agreement. If, as Plaintiffs allege, they did

not understand the mortgage agreement, they should not have signed

it or sought services of a lawyer or written clarification from

Countrywide. Allowing a claim of this nature to proceed when the

terms of the written documents are clearly contrary to the Plaintiffs’

allegations would not only violate Iqbal and Twombly, but other

long-standing principles of federal jurisprudence.
15

Id. at *6 n.6 (emphasis added) (citation omitted).

• Carpenters Health & Welfare Fund of Philadelphia v. Kia Enters. Inc., No. 09-116, 2009

WL 2152276 (E.D. Pa. Jul. 15, 2009). The plaintiffs sued to collect money allegedly owed

under a collective bargaining agreement and related trust agreements, and the defendant filed

a counterclaim, alleging that in seeking to collect the payments, the plaintiffs had violated

the Civil Rights Act of 1866. Id. at *1. The court concluded that the counterclaim was

insufficient under Iqbal:

The Supreme Court’s clarification of federal pleading

standards in Twombly and Iqbal has raised the bar for claims to

survive a motion to dismiss by emphasizing that a plaintiff cannot rely

on legal conclusions or implausible inferences from factual

allegations to state a claim. Measured against this clarified standard,

Kia’s amended counterclaim fails.

The amended counterclaim’s allegations that the Carpenter’s

Union has a “longstanding pattern and practice” of discriminating

against minorities and minority-owned businesses and the allegations

that the plaintiffs’ actions were intentional and motivated by racial

animus and a desire to exclude minorities and minority-owned

businesses from the construction industry are all legal conclusions

that under Iqbal and Twombly are not entitled to be assumed to be

true.

The factual allegations in the amended counterclaim concern

actions by the plaintiffs to collect the payments they claim Kia owes

them. The amended counterclaim alleges that the plaintiffs took steps

to make a claim against Kia’s performance bond, sought to persuade

a city agency to withhold payments to Kia, and demanded to audit

Kia’s books and records. These actions are entirely consistent with

a lawful attempt by the plaintiffs to collect unpaid CBA obligations

that they are owed. By themselves, these allegations are “not only

compatible with, but more likely explained by,” lawful behavior and

therefore cannot “plausibly suggest” actionable wrongdoing. Iqbal,

129 S. Ct. at 1950. Kia’s allegations that the plaintiffs took similar

steps against another minority-owned business . . . are also entirely

consistent with lawful actions by the plaintiffsto collect unpaid CBA

payments.

Kia has attempted to plead sufficient additional facts to

“nudge” its allegations of discrimination across the “line from

conceivable to plausible” by alleging, on information and belief, that

the plaintiffs do not make similar efforts to collect unpaid CBA
16

obligations from non-minority-owed businesses. Kia, however, offers

no specific facts in support of the plaintiffs’ alleged disparate

treatment of minority and non-minority businesses. In the absence of

any more specific allegations identifying particular instances of

disparate treatment, these allegations are merely “legal conclusions

couched as factual allegations,” which under Twombly and Iqbal

cannot be taken as true.

Kia’s allegations that the Carpenter’s Union refused to

cooperate with the Mayor’s Advisory Commission and has a

“historical and present day antipathy” to racial minorities are also not

enough to make Kia’s discrimination claims plausible. Even if taken

as true, these allegations are not probative to the question of whether

the specific actions taken by the plaintiffs against Kia can be

plausibly alleged to have been motivated by discrimination.

Id. at *3 (emphasis added).

District Court Case Law in the Fourth Circuit

• FTC v. Innovative Mktg., Inc., 654 F. Supp. 2d 378, 2009 WL 2959680 (D. Md. Sept. 16,

2009). The Federal Trade Commission (FTC) brought suit under the Federal Trade

Commission Act (FTCA) for alleged deceptive conduct in connection with the sale of

software. Id. at *1. In response to the FTC’s argument that “the Iqbal decision does not

represent a ‘sea change in the law of pleading,’” the court noted that “Iqbal’s importance

cannot be minimalized,” and that Twombly and Iqbal “represent a new framework for

reviewing the sufficiency of complaints under Rule 8.” Id. at *2 n.2. In denying the motion

to dismiss, the court found that the factual allegations were sufficient, and rejected the

defendant’s assertion that a stricter pleading standard applied:

In the face of such thorough pleading, D’Souza advocates for

this Court to apply an unduly stringent pleading standard and dismiss

the Complaint. Indeed, Defendant seems to argue for a pleading

standard akin to the particularity requirement prescribed for claims of

fraud under FED.R.CIV.P. 9(b)—a heightened standard that does not

apply [to] section 5(a) claims under the FTC Act. Twombly and

Iqbal may have raised the bar for stating a claim under Rule 8, but

not to the extent proposed by D’Souza. Rule 8 remains a liberal

standard—a complaint need only set forth a “short and plain

statement” that gives a defendant fair notice of plaintiff’s grounds for

entitlement for relief. FED. R. CIV. P. 8(a)(2). Indeed, in Iqbal, the

Court emphasized the appropriate approach under the plausibility

standard by noting that it was not a “‘probability requirement,’ but it

asks for more than a sheer possibility that a defendant has acted
17

unlawfully.” Iqbal, 129 S. Ct. at 1949 (quoting Twombly, 550 U.S.

at 556). Stated otherwise, a plaintiff need only plead sufficient facts

to “nudg[e]” a claim “across the line from conceivable to plausible.”

Twombly, 550 U.S. at 570.

Id. at *7 (emphasis added) (second alteration in original) (additional internal citations

omitted). The court denied the motion to dismiss, finding that “[t]hrough its extensive

factual pleadings, the FTC has positioned its claims against Marc D’Souza safely within the

realm of plausibility.” Id.

• Boy Blue, Inc. v. Zomba Recording, L.L.C., No. 3:09-CV-483-HEH, 2009 WL 2970794

(E.D. Va. Sept. 16, 2009). The court examined whether pleading on information and belief

can be appropriate, and explained:

This Court must therefore consider whether a pleading “upon

information and belief,” without further factual support, is sufficient

to state an actionable claim. Pleading “upon information and belief”

is appropriate when the factual basis supporting a pleading is only

available to the [opposing party] at the time of pleading. See, e.g.,

Boykin v. KeyCorp, 521 F.3d 202, 215 (2d Cir. 2008) (holding that

pleading upon “information and belief” is appropriate when the

information is in the opposing party’s possession); Johnson v.

Johnson, 385 F.3d 503, 531 n.19 (5th Cir. 2004) (“‘information and

belief’ pleadings are generally deemed permissible under the Federal

Rules, especially in cases in which the information is more accessible

to the defendant.”). The Court finds that any facts establishing [one

of the elements of tortious interference] could, at this stage of the

proceedings, be entirely within the possession of the opposing parties.

In this circumstance, a pleading “upon information and belief”

survives a 12(b)(6) challenge. The dignity accorded “information and

belief” pleadings has more limited application in other contexts.

Id. at *2. The court noted that with respect to the allegations regarding the other elements

of the claim, “[t]hey [we]re nothing more than a listing of the required element with

Defendant Zomba’s or Sony Music’s name inserted as the offending party,” and concluded

that “[s]tripped of such legal incantation, these allegations provide[d] no factual support for

the remaining elements of Plaintiff’s tortious interference claim.” Id. at *3.

• Fletcher v. Philip Morris USA Inc., No. 3:09CV284-HEH, 2009 WL 2067807 (E.D. Va.

Jul. 14, 2009). The plaintiff alleged race and gender discrimination and retaliation under

Title VII and race discrimination under § 1981 against his employer. The court concluded

that the plaintiff had inadequately alleged discrimination under Title VII and § 1981 because

although the plaintiff alleged an adverse employment action, there were no specific factual

allegations that similarly situated employees, who were not members of a protected class,
18

received more favorable treatment, or that the defendants acted with discriminatory intent.

Id. at *6. The court found that “it would be difficult for a reasonable person to conclude that

the factual allegations in the Amended Complaint even give rise to the suggestion of

discrimination,” noting that the decisionmakers involved in the adverse employment

decisions were members of the same race as the plaintiff, and one was also a male, and the

defendants replaced the plaintiff with a person of the same race and gender as the plaintiff.

Id. at *7. The court found the retaliation claim insufficient as well because the court could

“find no indication from the facts as pled that Plaintiff’s race or gender played any role in the

low-performance ratings that led to Plaintiff’s internal complaint,” and the complaint

therefore did not constitute a protected activity under Title VII. Id. at *8. The plaintiff’s

EEOC charge did constitute a protected activity, but the retaliation claim still failed because

the alleged adverse actions either did not rise to the level of a true adverse action or there was

no causal connection alleged between the adverse action and the alleged retaliation. Id. at

*9–10.

District Court Case Law in the Fifth Circuit

• Lehman Bros. Holdings, Inc. v. Cornerstone Mortgage Co., No. H-09-0672, 2009 WL

2900740 (S.D. Tex. Aug. 31, 2009). The court dismissed a counterclaim for attorneys’ fees

under state law, noting that the “allegations as to the breach [of contract supporting the

request for attorneys’ fees] [we]re scant.” Id. at *5. The court concluded:

To the extent Cornerstone alleges breach of contract, it fails

to plead sufficiently under the standards that applied even before

Twombly and Iqbal. Cornerstone has simply alleged that a contract

was breached by a failure properly to service the loans and to give

notice. This bare-bones allegation neither provides fair notice of the

claim nor of the grounds on which it rests. Because the Rule 8

standard is not satisfied, dismissal with leave to amend under Rule 12

is appropriate.

Id. (emphasis added).

District Court Case Law in the Seventh Circuit

• Mounts v. United Parcel Serv. of Am., Inc., No. 09 C 1637, 2009 WL 2778004 (N.D. Ill.

Aug. 31, 2009). The plaintiffs, retired drivers for UPS, alleged retaliation and discrimination

in connection with their formation of an organization that assisted current and retired UPS

employees with filing complaints with the EEOC and with securing medical and retirement

benefits. In considering the retaliation claims, the court noted that “[t]he level of facts

required varies with the type of claim asserted,” and that “[c]omplaints ‘alleging illegal

retaliation on account of protected conduct must provide some specific description of that

conduct beyond the mere fact that it is protected.’” Id. at *4 (quoting E.E.O.C. v. Concentra

Health Servs., Inc., 496 F.3d 773, 781 (7th Cir. 2007)). The court noted that the remaining
19

plaintiffs had alleged that they helped another plaintiff in the investigation regarding his

charge of discrimination and that UPS removed them from the health plan for retired

employees because of that assistance. Id. at *5. The court concluded that because the

plaintiffs alleged that their assistance related to another plaintiff’s discrimination under the

ADEA and the ADA, and retaliation under Title VII, the allegations were sufficient to state

a claim for retaliation under those statutes. Id. The court also concluded that the remaining

plaintiffs had adequately alleged discrimination under the ADEA because they alleged that

they were over 40 years old and that UPS found them ineligible to participate in the health

plan because of their age. Id. The court found that the plaintiffs failed to state a claim for

discrimination under the ADA because they did not allege that they suffered from an

impairment, let alone an impairment that substantially limited their ability to perform a major

life activity. Id. at *6. The court denied leave to replead the discrimination claim under the

ADA because the plaintiffs conceded that they were not UPS employees, and retired

employees had no right to bring discrimination suits under Title I of the ADA. Mounts, 2009

WL 2778004, at *6.

• Fulk v. Village of Sandoval, No. 08-843-GPM, 2009 WL 1606897 (S.D. Ill. Jun. 9, 2009).

Police officers claimed they were fired in retaliation for reporting the mayor’s misconduct.

Id. at *1. The defendants claimed that the police officers were speaking pursuant to their

official duties and that as a result, their words enjoyed no First Amendment protection. Id.

at *2. The court concluded that although the plaintiffs pleaded that they complained as

private citizens, not as part of their official duties, “[t]he bare allegation that they made the

statements as private citizens [wa]s not sufficient to move th[e] allegation from ‘conceivable’

to ‘plausible’ under the Ashcroft standard.” Id. However, “[b]ecause of the recent change

in federal pleading standards,” the court granted leave to amend “to allege sufficient facts to

show they acted as private citizens.” Id.

District Court Case Law in the Eighth Circuit

• Turner v. Sikeston Police Dep’t, No. 1:09CV92 LMB, 2009 WL 2836513 (E.D. Mo. Aug.

31, 2009). The plaintiff brought claims under § 1983, alleging violations of his

constitutional rights. The plaintiff alleged that he was falsely arrested, that his home was

unlawfully searched, that he was unlawfully retained in the county jail, that a police officer

used a false affidavit that prompted the prosecutor’s office to initiate a malicious prosecution,

that after his arrest he was placed in unpleasant conditions, and that other defendants failed

to properly supervise and train the police officer who searched the plaintiff’s home and

created the allegedly false affidavit. See id. at *2. The court noted that in evaluating a

complaint, Iqbal requires engaging in a two-step inquiry. Id. at *1. The court explained that

the plaintiff’s “allegations are mostly conclusory and such conclusory allegations need not

. . . be given an assumption of truth.” Id. at *2 (citing Iqbal, 129 S. Ct. at 1950–51). The

court noted that the complaint did not “identify whether the members of the prosecutor’s

office knew that defendant [police officer] Rataj’s affidavit was purportedly false,” and that

the plaintiff’s “allegations of misconduct with regard to the prosecutor’s office [we]re stated

on ‘information and belief.’” Id. The court concluded that the plaintiff’s claims of false
 In Brown v. Lewis, the prisoner’s complaint under § 1983, which alleged that the prison’s medical technician and nurse 42

failed to diagnose the plaintiff with a heart attack, was insufficient to allege the requisite mental state of deliberate

indifference because the plaintiff must show that the defendants knew of and disregarded an excessive risk to the

plaintiff’s health. 2009 WL 1530681, at *1. The court also found that the complaint failed to allege whether the plaintiff

was ever diagnosed with a heart attack or what led him to believe he had a heart attack, and did not describe how the

alleged misdiagnosis injured him. Id. Finally, the complaint alleged no facts connecting the nurse to the incident. Id.

Despite dismissing the complaint for the second time for failure to state a claim, the court granted leave to amend. Id.

at *2.

20

imprisonment, false arrest, and malicious prosecution failed to state a claim because “[a]

prisoner may not recover damages in a § 1983 suit where the judgment would necessarily

imply the invalidity of his conviction, continued imprisonment, or sentence unless the

conviction or sentence is reversed, expunged, or called into question by issuance of a writ

of habeas corpus.” Id. (citations omitted). Regardless of this conclusion, the court found

that the malicious prosecution claims against the prosecutors could not proceed because the

plaintiff had “not alleged any facts supporting his assertions that he was maliciously

prosecuted,” and because the prosecutors were entitled to absolute immunity. See Turner,

2009 WL 2836513, at *3 (citation omitted). The claims against the police department failed

because the police department was not an entity that could be sued. Id. The claims regarding

the conditions of the plaintiff’s confinement failed because the plaintiff did not allege a

person responsible and did not allege “that the purported deprivations denied him the

minimal civilized measure of life’s necessities and that defendants were deliberately

indifferent to excessive risk to his health or safety.” Id.(citations omitted). Finally, the court

concluded that the claims of inadequate training failed to state a plausible claim because they

were based on conclusory allegations. See id. (citing Iqbal, 129 S. Ct. at 1950–51). The

court allowed the claim that the police officer illegally searched the plaintiff’s home to go

forward. Id.

District Court Case Law in the Ninth Circuit

• Westerfield v. Spinks, No. 2:08-CV-1970-RCF, 2009 WL 3042418 (E.D. Cal. Sept. 15,

2009). In evaluating a pro se prisoner complaint alleging inadequate medical treatment, the

court concluded that the complaint’s allegation that the plaintiff was “left for dead by MTA

Spinks” after he had a heart attack and was later rushed to the hospital and received medical

treatment, was “both inadequate and implausible.” Id. at *2. The court explained that

“[a]lthough ignoring an individual suffering a heart attack creates a condition posing a risk

of serious harm, Westerfield does not offer any allegations concerning Spinks’ knowledge

of the danger or how he was brought to a hospital if he was being ignored.” Id. The court

concluded that “‘[a] conclusory allegation to the effect that [Spinks] knew that [Westerfield]

had a heart attack is insufficient. [Westerfield] must allege specific facts ‘plausibly showing’

that [Spinks] had the requisite mental state.’” Id. (second, third, fourth, and fifth alterations

in original) (quoting Brown v. Lewis, No. 2:07-cv-2433, 2009 WL 1530681, at *1 (E.D. Cal.

Jun. 1, 2009)).42
21

• Elan Microelectronics Corp. v. Apple, Inc., No. C 09-01531, 2009 WL 2972374 (N.D. Cal.

Sept. 14, 2009). In a patent infringement action, the court noted that “Apple’s allegation of

infringement in all three of the challenged counterclaims consist[ed] of nothing more than

a bare assertion, made ‘on information and belief that Elan ‘has been and is currently,

directly and/or indirectly infringing, in violation of 35 U.S.C. § 271’ the specified patents

‘through its design, marketing, manufacture and/or sale of touch sensitive input devices or

touchpads, including but not limited to the Smart-Pad.’” Id. at *2. The court explained that

“[w]hile the line between facts and legal conclusions is not always easy to draw, this

pleading plainly f[ell] within the prohibition against ‘[t]hreadbare recitals of the elements of

a cause of action, supported by mere conclusory statements.’” Id. (third alteration in

original) (quoting Iqbal, 129 S. Ct. at 1949). With respect to the “plausibility” aspect of

Twombly/Iqbal, the court noted that “[a]t this juncture, the allegations of fact [we]re so

sparse that it [wa]s difficult to analyze plausibility, although nothing in what ha[d] been

alleged raise[d] any significant plausibility concerns,” but concluded that “[b]ecause the

claims fail[ed] under Iqbal’s ‘first’ principle, the Court [did not] need [to] further address

this point.” Id. The court noted that the Federal Circuit, in McZeal v. Sprint Nextel Corp.,

501 F.3d 1354 (Fed. Cir. 2007), had concluded that a pro se pleading based on conclusory

allegations survived dismissal, relying on the pleading form for patent infringement. Elan

Microelectronics, 2009 WL 2972374, at *2. The court concluded that “[i]t is not easy to

reconcile Form 18 [for direct patent infringement] with the guidance of the Supreme Court

in Twombly and Iqbal; while the form undoubtedly provides a ‘short and plain statement,’

it offers little to ‘show’ that the pleader is entitled to relief,” but noted that “[u]nder Rule 84

of the Federal Rules of Civil Procedure, however, a court must accept as sufficient any

pleading made in conformance with the forms.” Id. (footnote omitted). The court found that

since Form 18 addresses only direct infringement, and Apple asserted direct and/or indirect

infringement, neither the McZeal case nor Form 18 supported allowing Apple’s

counterclaims to proceed. Id.

In considering the impact of Rule 11(b)(3), the court noted that “regardless of what

knowledge may lie exclusively in the possession of Elan or others, Apple should be able to

articulate at least some facts as to why it is reasonable to believe there is infringement,” and

concluded that “[s]imply guessing or speculating that there may be a claim is not enough.”

Id. at *4 (emphasis added) (footnote omitted). But the court cautioned:

This is not to say that Apple necessarily must plead any or all such

facts to state a claim; indeed some of them could be protected by

privilege or the work product doctrine. However, in at least some

situations, a party might be able to plead a great number of

circumstantial facts supporting a belief of wrongdoing, while still

needing discovery to “confirm the evidentiary basis” of the

allegations.

Id. at *4 n.5.
 See also Lewis v. City of Fresno, No. CV-F-08-1062, 2009 WL 2905738, at *10 (E.D. Cal. Sept. 4, 2009) 43

(concluding that prior to Twombly and Iqbal, the allegation that “‘Defendants . . . used and/or allowed official policies,

procedures and/or practices to discriminate against Plaintiff on the basis of his race’” would have been sufficient to

survive a motion to dismiss because the Ninth Circuit had held that “an allegation based on nothing more than a bare

averment that the official’s conduct conformed to official policy, custom or practice suffice[d] to state a Monell claim

under § 1983,” but that such an allegation was not sufficient under Twombly and Iqbal).

22

• McClelland v. City of Modesto, No. CV F 09-1031 AWI dlb, 2009 WL 2941480 (E.D. Cal.

Sept. 10, 2009), order corrected, 2009 WL 2982850 (E.D. Cal. Sept. 14, 2009). The plaintiff

brought a civil rights action based on the execution of a search warrant at the plaintiff’s home

that resulted in injury to the plaintiff. Id. at *1. The plaintiff alleged that her Fourth and

Fourteenth Amendment rights were violated under § 1983. Id. at *2. In evaluating the

motions to dismiss, the court noted that “[a]lthough there is some debate as to whether the

Supreme Court’s decision in Twombly worked ‘a sea change in the law of pleadings,’ the fact

remains that, since Twombly, the requirement for fact pleading has been significantly

raised.” Id. at *5 (citing Moss, 572 F.3d at 972) (emphasis added). The court dismissed

some of the claims, but granted leave to amend. Id. In refusing to dismiss the plaintiff’s

negligence claim against the individual defendants, the court held that “[w]hile it [wa]s

certainly possible that Plaintiff could have pled causation and duty of care with more

particularity, the fact remain[ed] that Plaintiff ha[d] pled facts which, if proven, could

support a determination by the finder of fact that the individual officers executing the search

warrant acted unreasonably and without due care for Plaintiff’s physical limitations.” Id. at

*10.

• Young v. City of Visalia, 687 F. Supp. 2d 1141, No. 1:09-CV-115 AWI GSA, 2009 WL

2567847 (E.D. Cal. Aug. 18, 2009). The plaintiffs asserted civil rights violations under §

1983, alleging a search that exceeded the scope of a warrant and unlawful detention. See id.

at *1–2. The court noted that “‘[c]ontext mattersin notice pleading. Fair notice under [Rule

8(a)] depends on the type of case.’” Id. at *2 (alterations in original) (quoting Phillips v.

County of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008); citing Iqbal, 129 S. Ct. at 1950).

The court noted that prior Ninth Circuit precedent regarding pleading municipal liability

under § 1983 appeared to have been abrogated by Iqbal:

[W]ith respect to municipal liability, the Ninth Circuit has held that,

“a claim of municipal liability under section 1983 is sufficient to

withstand a motion to dismiss even if the claim is based on nothing

more than a bare allegation that the individual officers’ conduct

conformed to official policy, custom, or practice.” Whitaker v.

Garcetti, 486 F.3d 572, 581 (9th Cir. 2007). However, Iqbal has

made clear that conclusory, “threadbare” allegations that merely recite

the elements of a cause of action will not defeat a motion to dismiss.

See Iqbal, 129 S. Ct. at 1949–50. In light of Iqbal, it would seem that

the prior Ninth Circuit pleading standard for Monell claims (i.e. “bare

allegations”) is no longer viable.43
23

Id. at *6. The court dismissed the claim “[b]ecause the Complaint contain[ed] insufficient

facts that plausibly indicate[d] a valid Monell claim . . . .” Id. at *7.

• Doe ex rel. Gonzales v. Butte Valley Unified Sch. Dist., No. 09-245 WBS CMK, 2009 WL

2424608 (E.D. Cal. Aug. 6, 2009). The plaintiff brought suit under § 1983 against his

teacher and the school district’s superintendent, alleging violations of his civil rights because

of sexual abuse and harassment allegedly committed by other students. Id. at *1. The

plaintiff also sued the school district, alleging sexual discrimination, and asserted a state law

negligence claim against the teacher and superintendent. Id. The teacher and superintendent

moved to dismiss the § 1983 claim.

The court granted the motion with respect to the substantive due process claim asserted on

the basis of an exception to the rule that failure to protect from harm does not create a due

process violation, finding that the conclusory allegation that the defendants had a special

relationship with the plaintiff was not sufficient to establish the “special relationship”

exception. Id. at *3. With respect to another exception—the “danger creation”

exception—the court granted the teacher’s motion to dismiss because there were no

allegations of an affirmative act by the teacher that created or exposed the plaintiff to the risk

of harm, but denied the superintendent’s motion on this issue because the plaintiff alleged

affirmative conduct and the superintendent’s only response was that he was taking action

pursuant to state law by educating the accused students. Id. at *4–5. The court dismissed

the procedural due process claim because “nowhere d[id] plaintiff allege that he had a

property interest in a safe school or that defendants’ conduct amounted to a deprivation of

that interest without proper procedural safeguards.” Id. at *5.

With respect to the equal protection claim, the court found that the “bare legal assertion that

[the defendants] ‘intentionallydiscriminated’ again[st] him[wa]s insufficient to satisfy Rule

8 . . . and [could not] withstand a motion to dismiss.” Doe, 2009 WL 2424608, at *6. The

court also found the allegation that the superintendent “‘fail[ed] to provide or obtain

education for [the teacher]’ d[id] not sound in unconstitutional discrimination toward

plaintiff.” Id. at *7 (first alteration in original). The court speculated as to a possible theory

for liability, but explained, “[o]f course, plaintiff may very well have a different theory or no

theory at all, and for this reason, the Supreme Court has made clear that district courts are

not free to coax a hapless complaint into compliance with federal pleading standards.” Id.

(citing Twombly, 550 U.S. at 561–63). The court granted the motion to dismiss with respect

to the equal protection claims. Id.

In considering whether to grant leave to amend, the court noted Iqbal’s effect on pleading

standards and the federal forms:

Although Iqbal’s majority opinion itself did not intimate any

seachange, jurists and legal commentators have observed that the

decision marks a striking retreat from the highly permissive pleading

standards often thought to distinguish the federal system from “the
 Twombly seemingly approved of the adequacy of pleading under Form 9, distinguishing the notice given in the model 44

form from the notice given in the complaint in Twombly. See Twombly, 550 U.S. at 565 n.10 (noting that the lack of

notice in the complaint in Twombly “contrasts sharply with the model form for pleading negligence,” and that “[w]hereas

the model form [9] alleges that the defendant struck the plaintiff with his car while plaintiff was crossing a particular

highway at a specified date and time, the complaint here furnishes no clue as to which of the four ILECs (much less

which of their employees) supposedly agreed, or when and where the illicit agreement took place”). The Court explained

that “[a] defendant wishing to prepare an answer in the simple fact pattern laid out in Form 9 would know what to answer;

a defendant seeking to respond to plaintiffs’ conclusory allegations in the § 1 context would have little idea where to

begin.” Id.

24

hyper-technical, code-pleading regime of a prior era,” 129 S. Ct. at

1949. See, e.g., Moss v. U.S. Secret Serv., --- F.3d ----, No. 07-36018,

2009 WL 2052985, at *8 (9th Cir. July 16, 2009); Adam Liptak, 9/11

Case Could Bring Broad Shift on Civil Suits, N.Y. TIMES, July 21,

2009, at A10.

Prior to Iqbal, many courts—including this court and,

apparently, the Supreme Court itself—read Rule 8 to express a

“willingness to ‘allow [ ] lawsuits based on conclusory allegations .

. . to go forward,’” Maduka v. Sunrise Hosp., 375 F.3d 909, 912 (9th

Cir. 2004) (quoting Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514,

122 S. Ct. 992, 152 L. Ed. 2d 1 (2002)) (alteration in original).

Indeed, for over half a century, district courts had been instructed that

the “short plain statement” required byRule 8 “must simply ‘give the

defendant fair notice of what the plaintiff’s claim is and the grounds

upon which it rests.’” Swierkiewicz, 534 U.S. at 514 (quoting Conley,

355 U.S. at 47). Now, however, even the official Federal Rules of

Civil Procedure Forms, which were touted as “sufficient under the

rules and . . . intended to indicate the simplicity and brevity of the

statement which the rules contemplate,” FED.R.CIV. PROC. 84, have

been cast into doubt by Iqbal. See, e.g., FED. R. CIV. P. Form 9

(setting forth a complaint for negligence in which the plaintiff simply

states, “On June 1, 1936, in a public highway called Boylston Street

in Boston, Massachusetts, defendant negligently drove a motor

vehicle against plaintiff who was then crossing said highway”).44

Id. at *8 (emphasis added) (alteration and omissions in original). The court dismissed the

complaint, but granted leave to amend. Id. at *9.

• Ibrahim v. Dep’t of Homeland Sec., No. C 06-00545 WHA, 2009 WL 2246194 (N.D. Cal.

Jul. 27, 2009). The plaintiff sued because her name was placed on a “no-fly list” and she

encountered numerous difficulties as a result. In part, the plaintiff’s suit involved

discrimination claims against the San Francisco Airport, the City and County of San

Francisco, the San Francisco Police Department, and two San Francisco police officers

(collectively, the “San Francisco defendants”), and John Bondanella, an employee of the
25

private corporation United States Investigations Services, Inc. The plaintiff alleged that the

San Francisco defendants and Bondanella discriminated against her on the basis of her

national origin and religious beliefs by detaining her. Id. at *8. The court concluded that the

allegation that the plaintiff was placed on the non-fly list did not support the discrimination

claim against these defendants because the list was compiled and maintained by the federal

government, not the defendants. Id. at *9. The court found that the allegations that the

plaintiff was arrested because she was Muslim and a Malaysian citizen and that the

defendants acted in a discriminatory manner, with the intent to discriminate based on the

plaintiff’s religion and national origin, were conclusory statements that were not sufficient

to survive a motion to dismiss. Id. The court explained:

Ibrahim has not pleaded that defendants took action because

of and not merely in spite of her being a Muslim and a Malaysian

citizen. That plaintiff was Muslim and detained is not enough to

draw an inference of discrimination under the Iqbal standard. No

additional facts, such as derogatory statements, are alleged.

Accordingly, as pled, the discrimination claims against San Francisco

officers or Bondanella are insufficient.

Id. at *10. The court questioned whether Iqbal imposed a harsh standard:

A good argument can be made that the Iqbal standard is too

demanding. Victims of discrimination and profiling will often not

have specific facts to plead without the benefit of discovery. District

judges, however, must follow the law as laid down by the Supreme

Court. Yet, the harshness is mitigated here. Counsel for the San

Francisco defendants and Bondanella admit that plaintiff’s Fourth

Amendment claim can go forward. This meansthat discovery will go

forward. During discovery, Ibrahim can inquire into facts that bear

on the incident, including why her name was on the list. If enough

facts emerge, then she can move to amend and to reassert her

discrimination claims at that time.

Id. (emphasis added). The court also concluded that the allegation that one of the officers

temporarily removed the plaintiff’s hijab to search underneath did not adequately plead an

equal protection violation. Ibrahim, 2009 WL 2246194, at *10.

• Consumer Prot. Corp. v. Neo-Tech News, No. 08-1983-PHX-JAT, 2009 WL 2132694 (D.

Ariz. Jul. 16, 2009). The plaintiff alleged a violation of the Telephone Consumer Protection

Act of 1991 (TCPA), civil conspiracy, and aiding and abetting a violation of the TCPA,

based on the plaintiff’s receipt of an unsolicited fax advertising a stock. Id. at *1. The court

cited both Twombly itself and pre-Twombly case law for the proposition that “a ‘plaintiff’s

obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels

and conclusions, and a formulaic recitation of the elements of a cause of action will not do.’”
26

Id. (alteration in original) (quoting Twombly, 550 U.S. at 555; citing Papasan v. Allain, 478

U.S. 265, 286 (1986)). The court applied the two-prong approach suggested in Iqbal, and

concluded that while some allegations were conclusory, the allegations that the defendant

knew the faxes were advertisements, participated in the preparation of the faxes, provided

or obtained the fax numbers of the plaintiff and other class members, paid a third party for

transmission, and/or knew that the faxes were not authorized, were factual and entitled to a

presumption of truth. Id. at *2. The court explained that “unlike in Ashcroft, the factual

allegations d[id] not describe parallel conduct; rather they describe[d] a clear violation of the

TCPA.” Id. The court also noted that “[o]n a motion to dismiss, we are required to assume

that all general allegations embrace whatever specific facts might be necessary to support

them,” and concluded that the plaintiff was not required to detail how the fax constituted an

advertisement. Id. at *3. With respect to the civil conspiracy claim and the aiding and

abetting claim, the court found that the facts alleged, taken as true, supported both of those

claims and were incompatible with any lawful behavior. Consumer Prot. Corp., 2009 WL

2132694, at *4. The motion to dismiss was denied.

• Padilla v. Yoo, 633 F. Supp. 2d 1005 (N.D. Cal. 2009). The plaintiff’s claims arose out of

his designation as an “enemy combatant” and his resulting detention. See id. at 1012. The

plaintiff alleged that the defendant, the Deputy Attorney General in the Office of Legal

Counsel for President George W. Bush, was responsible for the harsh treatment plaintiff

received as an enemy combatant, which allegedly resulted from policies implemented under

the defendant’s counsel. See id. at 1014–15. Among the violations of rights that the plaintiff

alleged were: denial of access to counsel, denial of access to court, unconstitutional

conditions of confinement, unconstitutional interrogations, denial of freedom of religion,

denial of the right to information, denial of the right to association, unconstitutional military

detention, denial of the right to be free from unreasonable seizures, and denial of due

process. See id. at 1016–17. The court concluded that the plaintiff had stated a sufficient

Bivens claim. Id. at 1030. In considering qualified immunity, the court found that the

allegations contained “sufficient facts to satisfy the requirement that Yoo set in motion a

series of events that resulted in the deprivation of Padilla’s constitutional rights.” Id. at 1034.

The court distinguished Iqbal, explaining that “[h]ere, in contrast, Padilla allege[d] with

specificity that Yoo was involved in the decision to detain him and created a legal construct

designed to justify the use of interrogation methods that Padilla allege[d] were unlawful.”

Padilla, 633 F. Supp. 2d at 1034 (footnote omitted). With respect to the allegations of

constitutional violations, the court concluded that “[t]he allegation that Padilla was denied

any access to counsel for nearly two years [wa]s sufficient to state a claim for violation of

his access to courts”; that Padilla had stated a claim for violation of the Eighth Amendment

(although the claim had to be analyzed under the Due Process Clause of the Fourteenth

Amendment); and that “[b]ecause there [wa]s no allegation in the complaint . . . that Padilla

was ever made to be a witness against himself or that his statements were admitted as

testimony against him in his criminal case, he ha[d] not stated a claim for violation of the

Self-Incrimination Clause of the Fifth Amendment.” Id. at 1035–36. The court concluded

that qualified immunity did not apply because the violations alleged involved clearly

established constitutional rights, and a reasonable federal officer could not have believed the
27

conduct was lawful. Id. at 1038.

District Court Case Law in the Tenth Circuit

• Masters v. Gilmore, 663 F. Supp. 2d 1027, No. 08-cv-02278-LTB-KLM, 2009 WL 3245891

(D. Colo. Oct. 5, 2009). The claims arose out of the plaintiff’s conviction in a case involving

the murder of Peggy Hettrick. Masters, who was fifteen at the time of the murder, was

arrested more than eleven years after the murder, and was convicted and sentenced to life in

prison. Id. at *2. Nearly a decade later, Masters’s conviction was vacated based on postconviction motions, and the charges against him were dismissed. Id. In his complaint,

Masters asserted claims against VanMeveren (the district attorney for the Eighth Judicial

District during the time of the murder and Masters’s conviction), Abrahamson

(VanMeveren’s successor), Gilmore (a deputy district attorney who assisted in the

investigation of the murder and was lead counsel in the prosecution and trial of Masters), and

Blair (a deputy district attorney who worked on the murder case and was second chair in the

prosecution and trial of Masters). Id. The complaint contained numerous allegations against

the defendants, including, among other allegations, that Gilmore and/or Blair engaged in

misconduct such as targeting only Masters as a suspect; withholding the results of a 1988

surveillance of Masters that contradicted the theory that Masters was guilty; failing to

investigate several other potential suspects; failing to recuse themselves from the case despite

the fact that Gilmore and Blair had connections to one of the other potential suspects;

authorizing the release and destruction of evidence relating to other potential suspects;

manufacturing expert opinions by disclosing only selected evidence and withholding

exculpatory evidence; and ignoring, hiding, withholding and/or destroying the opinions

proffered by other experts as well as other potentially exculpatory evidence. See id. at *2–6.

The complaint alleged that VanMeveren was regularly and thoroughly briefed on the

investigation and prosecution of Masters, consulted closely with Gilmore and Blair

throughout the investigation and prosecution, was informed of the results of the 1988

surveillance and the conflict of interest that Gilmore and Blair had with another potential

suspect, agreed not to investigate one of the other potential suspects, allowed the destruction

of evidence, failed to recuse the district from the case, and failed to take action to address

doubts as to Masters’s guilt raised by a police detective. See id. at *6. The complaint also

alleged that VanMeveren failed to adequately train and supervise his subordinates and had

customs, policies, and/or actual practices that allowed the alleged misconduct. See id. at *7.

With respect to Abrahamson, the complaint alleged that he was responsible for managing the

district’s personnel, that he was responsible for assigning deputy district attorneys to the

post-conviction investigation, and that his customs, policies, and/or actual practices allowed

the alleged misconduct. Masters, 2009 WL 3245891, at *7. The complaint made similar

allegations against the Eighth Judicial District. Id. at *8.

Masters asserted claims under § 1983 for malicious prosecution, destruction and/or hiding

of exculpatory evidence, manufacture of inculpatory evidence, unreasonable seizure/arrest

without probable cause, false imprisonment, fundamental unfairness of his criminal trial in

violation of his rights under the Fourth and Fourteenth Amendments, and conspiracy to
28

violate his civil rights. Id. The defendants moved to dismiss, largely relying on absolute

prosecutorial immunity, qualified immunity, and Eleventh Amendment immunity. Id.

With respect to Gilmore, the court concluded that he was entitled to absolute prosecutorial

immunity as to his involvement in the preparation and filing of the affidavit supporting the

1998 arrest warrant, his alleged failure to conduct an investigation of the murder separate

from the police department, and conduct following Masters’s arrest and at trial, but

concluded that the allegation that Gilmore destroyed exculpatory evidence was not covered

by prosecutorial immunity, regardless of when it occurred. Id. at *10, *18. The court also

concluded that Gilmore was not entitled to qualified immunity. Id. at *16. The false arrest

and false imprisonment claims failed because Masters was arrested pursuant to a warrant.

Masters, 2009 WL 3245891, at *16. The court declined to dismiss the claim against Gilmore

based on the fundamental unfairness of Masters’s trial in violation of his substantive due

process rights, concluding that the allegations, taken as true, shocked the court’s conscience.

Id. at *17. The court also declined to dismiss the claims alleging destruction and/or hiding

of exculpatory evidence, manufacture of inculpatory evidence, and unfairness of the criminal

trial, on the argument that they were duplicative of the malicious prosecution claim, finding

it inappropriate “to dismiss them solely to streamline the litigation at this early stage in the

proceedings.” Id.

With respect to Blair, the court found her to be absolutely immune for her involvement in

the preparation and filing of the affidavit supporting the 1998 arrest warrant, her failure to

conduct an independent investigation of the murder, and her conduct following the arrest,

except the destruction of evidence. Id. at *22. The complaint contained other allegations

regarding Blair’s misconduct occurring before the affidavit supporting the arrest or involving

destruction of evidence, and the court rejected Blair’s argument that those allegations had

to be dismissed as insufficiently specific. Id. at *18. The court explained:

Mr. Masters has alleged that Ms. Blair worked with other Defendants

to manufacture probable cause that Mr. Masters committed the

Hettrick murder before a decision to charge him for the crime was

made. Mr. Masters has further alleged specific acts and omissions by

Ms.Blair that would serve this objective including her alleged hiding,

ignoring and/or destruction of exculpatory evidence. Although Mr.

Masters’ Amended Complaint does not set forth specific dates on

which Ms. Blair performed specific acts, the pleading standards

under FED R. CIV. P. 8 as recently refined by Twombl[]y, supra, and

Ashcroft, supra, do not require this level of specificity. See

Twombl[]y, 550 U.S. at 555 (plaintiff need not provide “detailed

factual allegations” to survive motion to dismiss).

Id. (emphasis added). The court permitted the malicious prosecution claim against Blair to

proceed based on her alleged knowing fabrication of probable cause and incriminating expert

opinions. Masters, 2009 WL 3245891, at *20. The claim based on destruction and/or hiding
29

of an exculpatory expert report could proceed despite Blair’s argument that the expert

opinions were obtained before she was involved in the murder case because “the time when

Dr. Tsoi provided his opinions regarding the case and when the evidence of these opinions

was allegedly destroyed [we]re not specified in the Amended Complaint, and it [wa]s

plausible that the alleged destruction occurred sometime after April of 1998 [when Blair

began work on the case].” Id. Prosecutorial immunity did not apply to the § 1983 claim for

relief based on the alleged manufacture of inculpatory evidence because the complaint

alleged “that there was no probable cause to arrest [the plaintiff] at the time [the expert]

began working on the Hettrick murder case sometime beforeDecember of 1997 and for some

period of time thereafter,” and “[d]uring this period of time, it c[ould not] be said that [the

expert’s] work on the case was done in preparation for trial such that the immunity typically

afforded prosecutors in dealing with trial witnesses [wa]s applicable.” Id. The court found

that the claims for false arrest and false imprisonment failed because Blair was entitled to

absolute immunity and because Masters was arrested pursuant to a warrant. See id. at *21.

The court also concluded that Blair was not entitled to prosecutorial immunity with respect

to the claims regarding fundamental unfairness of the criminal trial and conspiracy. Id. at

*22.

With respect to VanMeveren, the court rejected his argument that the claims against him

were insufficient under Twombly and Iqbal. The court explained:

Mr. Masters alleges that Mr. VanMeveren (1) was regularly

and thoroughly briefed by and consulted closely with Defendants

Gilmore and Blair throughout the investigation and prosecution of

Mr. Masters; (2) was specifically aware of the results of the 1988

surveillance and the conflict of interest that Defendants Gilmore and

Blair had with any investigation of [another potential suspect]; (3)

allowed Mr. Gilmore to participate in [this other suspect’s]

investigation and to offer [the other potential suspect’s wife]

immunity; and (4) upon information and belief, agreed not to

investigate [this other potential suspect] as a suspect, allowed for the

destruction of evidence in the case, and failed to recuse the Eighth

Judicial District from the Hettrick murder case.

Mr. VanMeveren argues that Ashcroft dictates that a plaintiff

seeking to impose supervisory liability on a § 1983 defendant must

allege more than that the particular defendant “knew of, condoned,

and willfully and maliciously agreed to” violate a plaintiff’s

constitutional rights. Although such allegations were held to be

insufficient in Ashcroft, the plaintiffs’ claims there are

distinguishable from those of Mr. Masters. Specifically, the plaintiff

in Ashcroft brought a Bivens action for discrimination in violation of

the First and Fifteenth Amendments. Such claims require a plaintiff

to plead and prove that the defendant acted with discriminatory
30

purpose. Ashcroft, 129 S. Ct. 1948. As a result of this particular

requirement, the Supreme Court concluded that mere knowledge on

the part of the supervisor was an insufficient basis for Bivens

liability, which it treated as equivalent to § 1983 liability. The

Supreme Court prefaced its analysis of this issue by recognizing that

“[t]he factors necessary to establish a Bivens [or § 1983] violation

will vary with the constitutional provision at issue.”

Ashcroft thus does not support the general proposition that

allegations of knowledge, acquiescence, and agreement on the part

of a supervisory defendant are never sufficient to support a § 1983

claim. In any event, Mr. Masters’ Amended Complaint goes further

and alleges that Mr. VanMeveren “consulted closely” and plausibly

participated with Defendants Gilmore and Blair throughout the

investigation and prosecution of Mr. Masters.

Id. at *23 (emphasis added) (fourth and fifth alterations in original) (internal citations

omitted). The court held that “[i]n view of Mr. VanMeveren’s substantial personal

participation with the investigation and prosecution of Mr. Masters as alleged in the

Amended Complaint, . . . Mr. Masters ha[d] adequately pled the required elements of

supervisory liability under § 1983,” and had provided “fair notice of the nature of Mr.

Masters’ claims against [VanMeveren].” Masters, 2009 WL 3245891, at *24. The court

concluded that VanMeveren was absolutely immune for involvement in the preparation and

filing of the affidavit supporting the 1998 arrest warrant, alleged failure to conduct an

investigation of the Hettrick murder independent of the police department, and conduct

following Masters’s arrest and at trial, except any involvement in the destruction of evidence.

Id. at *25. The court also dismissed the claims predicated on VanMeveren’s role as a

supervisor responsible for training and/or creating the policies, practices, and customs of the

district, after the plaintiff conceded that they could not proceed, and dismissed the false

imprisonment and false arrest claims because theywere predicated on conduct done pursuant

to a warrant and for which VanMeveren was absolutely immune. See id.

Finally, with respect to the claims against Abrahamson and the Eighth Judicial District, the

court dismissed the false arrest and false imprisonment claims for failure to state a claim

based on the existence of a warrant, but found that Eleventh Amendment immunity did not

apply, and, because these claims were not for individual liability under § 1983, “none of the

limitations recognized on the remaining claims against the other DA Defendants [we]re

applicable to these Defendants.” Id. at *27.

• Bell v. Turner Recreation Comm’n, No. 09-2097-JWL, 2009 WL 2914057 (D. Kan. Sept.

8, 2009). In a Title VII case alleging unlawful discrimination and retaliation, the court

rejected the defendants’ argument that the complaint failed to allege enough facts under
 The Northern District of Oklahoma has also confirmed that Twombly and Iqbal apply to employment discrimination 45

cases. See Coleman v. Tulsa County Bd. of County Comm’rs, No. 08-CV-0081-CVE-FHM, 2009 WL 2513520, at *3

(N.D. Okla. Aug. 11, 2009). In Coleman, the court cited pre-Twombly case law for the propositions that conclusory

allegations need not be accepted as true and that factual averments are necessary to adequately state a claim. See id. at

*2 (citing Erikson v. Pawnee County Bd. of County Comm’rs, 263 F.3d 1151, 1154–55 (10th Cir. 2001); Hall v.

Bellmon, 935 F.2d 1106, 1109–10 (10th Cir. 1991)). In considering the plaintiff’s claims of retaliation and hostile work

environment, the court noted that the complaint did “not reference a single date on which any event occurred, nor [did]

it identify which of defendant’s employees harassed her or describe any of the harassing statements,” and that although

the plaintiff alleged that the defendant took “‘unreasonabl[e] disciplinary action’ against her and subjected her to adverse

employment action,” she did not explain the disciplinary action. Id. at *3. The court stated that “[w]hile plaintiff is

correct that Twombly does not impose a demanding pleading standard, she must still state a claim that is plausible on its

face and allege enough facts to support a claim that defendant has unlawfully discriminated against her.” Id. The court

noted that the plaintiff did not provide “any factual allegations describing the alleged hostile work environment and, for

her retaliation claims, she d[id] not even state how defendant allegedly retaliated against her.” Id. The court found that

“while Twombly is not a demanding standard, it does require plaintiff to allege some facts in support of her claims.”

Id. (emphasis added). The court noted that the complaint might have survived under Conley, but that “[t]he allegations

. . . [w]ere so general that it [wa]s not possible for the Court to determine if plaintiff ha[d] stated a claim.” Coleman,

2009 WL 2513520, at *3. The court granted leave to amend. Id.

31

Iqbal. The court noted that: 45

With respect to her discrimination claim, plaintiff alleges that her

supervisor, BeccaTodd, routinely treated plaintiff less favorably than

she treated similarly situated white employees by assigning plaintiff

less desirable tasks; reducing plaintiff’s hours while increasing the

hours of white employees; subjecting plaintiff to heightened scrutiny

in her job performance; and requiring plaintiff to adhere strictly to her

work schedule while permitting white employees to arrive late and

take extended breaks. She further alleges that her supervisor refused

to socialize with plaintiff but routinely socialized with white

employees and that her supervisor excluded plaintiff from certain

activities that were made available to white employees. Finally, she

contends that she received two written reprimands on February 7,

2009 on the basis of her race and that she was suspended and

ultimately terminated on the basis of her race. 

Id. at *3. The court found that these allegations were “more than sufficient to satisfy the

pleading standards set forth in Twombly and Iqbal.” Id. With respect to the retaliation claim,

the court noted that the plaintiff alleged that she complained to her supervisor that she was

being treated less favorably than the white lifeguards; that she complained in writing to her

supervisor’s supervisor that she was subject to racial discrimination; that one hour and fifteen

minutes after the latter complaint, she was suspended; and that she was terminated upon

returning to work after suspension. Id. The court concluded that “Plaintiff, then, ha[d]

clearly alleged specific facts showing that she was treated less favorably than similarly

situated white employees and that she suffered an adverse action and, with respect to her

retaliation claim, that she complained to her employer about racial discrimination in the work
 See also Johnson v. Liberty Mutual Fire Ins. Co., 653 F. Supp. 2d 1133, 1145 (D. Colo. 2009) (In considering a 46

complaint alleging that the plaintiffs’ insurance company acted in bad faith in destroying evidence that the plaintiffs

needed in a later lawsuit against a driver who hit one of the plaintiffs, the court noted that “[t]he only clear allegation by

the Plaintiffs of Liberty’s state of mind [wa]s the allegation that Liberty ‘knew, or should have known, of [the]

evidentiary significance of the Johnsons’ claims’ of the taillights,” and concluded that, as explained in Twombly and

Iqbal, this “entirely conclusory” allegation was not sufficient under Rule 12(b)(6). (third alteration in original)).

32

place and that she suffered an adverse employment action as a result of that complaint.” Id.

The court explained that “[n]othing more is required under the law” and that “it is difficult

to imagine what more the court could require of plaintiff in terms of pleading her claims with

specificity.” Id. (emphasis added).

• Clark v. Nweke, No. 04-cv-02414-LTB-KMT, 2009 WL 3011117 (D. Colo. Sept. 16, 2009).

The plaintiff alleged violations of the Eighth Amendment in connection with medical

treatment he received in state prison. The plaintiff alleged that a prison doctor failed to

provide necessary surgery in a timely manner, but the court concluded that the claim could

not proceed because the plaintiff “failed to allege any facts showing that he had a need for

‘immediate surgery’ that was ‘so obvious that even a lay person would easily recognize’ it,”

id. at *4 (quoting Sealock v. Colorado, 218 F.3d 1205, 1209 (10th Cir. 2000)), and had

therefore “failed to sufficiently allege that he had an objectively serious medical need for

‘immediate surgery’ . . . ,” id. The court also concluded that the plaintiff failed make any

allegations that the doctor “had ‘sufficiently culpable state of mind.’” Id. (quoting Farmer

v. Brennan, 511 U.S. 825, 833 (1970)).46

District Court Case Law in the Eleventh Circuit

• NCI Group, Inc. v. Cannon Servs., Inc., No. 1:09-CV-04410-BBM, 2009 WL 2411145

(N.D. Ga. Aug. 4, 2009). The plaintiff, a business that manufactures metal buildings, metal

components, and metal coil coatings, alleged that the defendants operated several schemes

to defraud the plaintiff and its clients. Id. at *1. The complaint detailed the alleged schemes,

which included kickbacks paid to the plaintiffs’ employees. See id. at *2. The complaint

asserted claims for fraud, conversion, breach of fiduciary duty, aiding and abetting breach

of fiduciary duty, tortious interference with contractual or business relations, negligence,

violations of the Federal Civil Racketeer Influenced and Corrupt Organizations Act, and

violations of the Georgia Racketeer Influenced and Corrupt Organizations Act. Id. at *3.

Among other arguments, one group of defendants (the “Goldin Defendants”) argued that the

complaint failed to properly assert the federal RICO claims because it “failed to adequately

allege the existence of (1) an enterprise; (2) a pattern of racketeering activity; (3) predicate

acts; (4) relatedness; (5) continuity; and (6) relationship.” Id. at *7. The court rejected that

argument:

The court finds that NCI has sufficiently pled claims against

the Goldin Defendants for violations of federal RICO, 18 U.S.C. §

1962(b)–(d) so as to survive the Motion to Dismiss. NCI has alleged
33

facts supporting the existence of an enterprise—asserting that “the

Defendants were operating several related schemes to defraud NCI

and the Clients,” and describing with particularity the overlapping

participation of individuals in the schemes, as well as specific acts

undertaken by Defendants “as part of the NCI-Targeted Scheme.”

The underlying acts alleged, inter alia, violations of 18 U.S.C. §§

1957 [(which prohibits “‘[e]ngaging in monetary transactions in

property derived from specified unlawful activity’”)] and 2320

[(which prohibits “‘[t]rafficking in counterfeit goods or services’”)],

. . . constitute racketeering activity pursuant to 18 U.S.C. §

1961(1)(B). Likewise, NCI has asserted and described that the

pattern of racketeering the Goldin Defendants engaged in constituted

two or more acts within the last ten years, as required by the statute.

The continuity element is satisfied, as NCI has alleged that the

NCI-Targeted Scheme “operated continually from approximately

1995 until 2006.” Consequently, in its Amended Complaint, NCI sets

forth ample factual allegations, accepted as true for the purposes of

this Motion, which are sufficient to state a claim for violations of 18

U.S.C. § 1962(b)–(d). See M.T.V.[ v. DeKalb County Sch. Dist.], 446

F.3d [1153,] 1156 [(11th Cir. 2006)]; Iqbal, 129 S. Ct. at 1949. As

a result, NCI’s Amended Complaint gives the Goldin Defendants

“fair notice of what the . . . claim[s] [are] and the grounds upon which

[they] rest [ ].” Twombly, 550 U.S. at 555. Therefore, the court

denies the Goldin Defendants’ Motion to Dismiss the federal RICO

claims found in Count 8 of NCI’s Amended Complaint.

Id. at *10 (second, fourth, eighth, ninth, tenth, and eleventh alterations in original) (footnotes

and additional internal citations omitted). The court noted:

In arguing for dismissal of NCI’s claims, the Goldin Defendants

repeatedly seek to hold NCI to a standard that is unrealistic given the

current posture of the case. At the Motion to Dismiss stage,

discovery has not yet been conducted. “[T]he pleading standard Rule

8 announces does not require detailed factual allegations, but it

demands more than an unadorned, the-defendant-unlawfullyharmed-me accusation.” Iqbal, 129 S. Ct. at 1949 (citation and

internal quotations omitted). “To survive a motion to dismiss, a

complaint must contain sufficient factual matter . . . to state a claim

to relief that is plausible on its face . . . [or] plead [ ] factual content

that allows the court to draw the reasonable inference that the

defendant is liable for the misconduct alleged.” Id. (citations and

internal quotations omitted).

NCI Group, 2009 WL 2411145, at *10 n.7 (first emphasis added) (alterations and omission
34

in original).

The court also rejected the defendants’ request for dismissal of the fraud claim, finding the

allegations in the complaint sufficient:

NCI alleges that the Defendants conspired and engaged in

conduct constituting fraud, including but not limited to: (1) falsifying

and manipulating MCG’s and MCM’s computer records; (2)

developing, implementing, participating in, and profiting from the

NCI-Targeted Scheme; (3) concealing the NCI-Targeted Scheme

from NCI; (4) incorrectly designating or labeling coil as secondary or

scrap; and (5) concealing evidence of kickbacks, bribes or other

related benefits. It incorporates the allegations made previously in the

Amended Complaint that describe in detail the Goldin Secondary

Scheme. NCI alleges that the fraud occurred through false

representations stemming from both affirmative acts and omissions,

known to be false, and intentionally made to induce NCI to act or

refrain from acting. NCI further states that as a result, it justifiably

relied on these acts and omissions, and suffered damages in the

course of this reliance. Taking its allegations to be true, NCI’s

Amended Complaint contains enough factual allegations to state a

claim for fraud. In other words, NCI has “alleged enough facts to

suggest, raise a reasonable expectation of, and render plausible,” its

fraud claim against the Goldin Defendants. Watts[ v. Fla. Int’l

Univ.], 495 F.3d [1289,] 1296 [(11th Cir. 2007)].

Id. at *11.

The court found the allegations supporting the Georgia RICO claim sufficient as well:

NCI has sufficiently stated a claim for violations of Georgia

RICO § 16-14-4(a)–(c) against the Goldin Defendants. NCI alleges

that the Goldin Defendants engaged in at least two acts of

racketeering activity, in furtherance of one or more incidents,

schemes, or transactions that have the same or similar intents, results,

accomplices, victims, or methods of commission. O.C.G.A. §

16-14-3(8)(A). O.C.G.A. § 16-14-3(9)(A)(xxix) specifies that

racketeering activity consists of “[a]ny conduct defined as

‘racketeering activity’ under 18 U.S.C. Section 1961(1)(A), (B), (C),

and (D),” and the court has already found that NCI has properly

alleged facts supporting the Goldin Defendants’ violations of 18

U.S.C. § 1957 and 18 U.S.C. § 2320, which constitute racketeering

activity under federal RICO. Therefore, NCI’s allegations as to

predicate acts pursuant to Georgia RICO are sufficient. NCI’s factual
35

allegations that the Goldin Defendants violated O.C.G.A. §

16-14-4(a)–(c) are sufficient to state a well-pleaded claim.

Id. at *13 (alteration in original) (footnotes omitted).

The conversion claim was held to be sufficient as well:

NCI alleges that as part of the NCI-Targeted Scheme,

Defendants removed and sold steel coils, without authorization, that

they knew NCI or its clients owned or possessed. NCI further asserts

that in turn, Defendants benefitted from the unauthorized removal of

steel coils. It states that as part of this scheme, the Defendants

exercised the right of ownership over and took possession of NCI’s

property, and/or exhibited acts of dominion over NCI’s property or

hostility toward NCI’s property rights. As previously noted, NCI

describes in detail the roles of each of the Goldin Defendants in the

Goldin Secondary Scheme, and the specifics of this scheme. Taken

as true for the purposes of this Motion, NCI has asserted facts that

sufficiently alleged a claim for conversion against the Goldin

Defendants.

Id. at *14 (internal citation omitted).

The claim for aiding and abetting breach of fiduciary duty was also adequately pleaded:

In its Amended Complaint, NCI alleges that through improper action

or wrongful conduct that was unauthorized, the Goldins acted to

procure a breach of certain NCI employees. In its description of the

Goldin Secondary Scheme, NCI makes clear that the Goldin

Defendants made arrangements and agreements with Mr. Carroll that

resulted in a breach of his fiduciary duties—namely directing

employees to perform work on the Goldin Coils, incorrectly charging

the Goldin Defendants, placing a fake Master Coaters’ trademark on

the coils, and receiving kickbacks for his actions. NCI further alleges

that the Goldin Defendants knew that the NCI employees, in

particular Mr. Carroll, owed NCI a fiduciary duty “by virtue of [his]

employment” acting purposely and with malice and intent to injure

NCI. Finally, NCI alleges that the Goldin Defendants’ “wrongful

conduct proximately caused damages to NCI.”

In alleging a claim for aiding and abetting breach of fiduciary

duty, NCI has satisfied its burden of alleging “enough facts to

suggest, raise a reasonable expectation of, and render plausible” its

claim. Watts, 495 F.3d at 1296. The allegations, if true, state a claim
36

for violation of Georgia’s law prohibiting aiding and abetting breach

of fiduciary duty.

Id. at *14–15 (alteration in original) (internal citation and footnote omitted).

The court also found that the allegations supporting the claim for tortious interference with

contractual or business relations were sufficient:

In its Amended Complaint, NCI has alleged a number of facts

supporting its assertion of improper and wrongful conduct on the part

of the Goldin Defendants due to their participation in the Goldin

Secondary Scheme. NCI says that the Goldin Defendants

“intentionally and maliciously carried out” the schemes to cause NCI

damages. NCI alleges further that in so doing, the Goldins induced

NCI employees to breach their contractual obligations with NCI. As

has been described previously, NCI alleged that the Goldin Secondary

Scheme involved the Goldin Defendants and Mr. Carroll, an

employee of NCI. NCI explains that the contractual obligation to

which it refers is Mr. Carroll’s employment agreement with NCI, and

the court similarly finds this to be sufficiently clear from the

allegations in the Amended Complaint. NCI also alleges that the

Goldin Defendants caused NCI’s customers to discontinue or fail to

enterinto anticipated business relationships with NCI by virtue of the

NCI-Targeted Scheme. Finally, NCI states that the Goldin

Defendants’ tortious conduct was the proximate cause of damage to

it.

NCI has adequately alleged facts which are sufficient to state

a claim for tortious interference with business or contractual relations

under Georgia law . . . .

Id. at *15 (internal citations and footnotes omitted). The court noted that the plaintiff had

“not alleged any actual facts to support” its claim that the Goldin Defendants caused the

plaintiff’s customers to discontinue or fail to enter into anticipated business relationships

with the plaintiff as a result of one of the alleged schemes, NCI Group, 2009 WL 2411145,

at *15 n.14 (citing Twombly, 550 U.S. at 555), but concluded that “because NCI ha[d]

alleged facts sufficient to support its claim that the Goldin Defendants induced a breach of

Mr. Carroll’s contractual obligations with NCI, this failure [wa]s not fatal to the claim.” Id.

Finally, the court found the allegations supporting the negligence claim sufficient. The

plaintiff had incorporated previous factual allegations, and “allege[d] that the Goldin

Defendants ‘owed NCI a duty of good faith and fair dealing’ as well as ‘a duty of ordinary

care’”; “assert[ed] that the Goldin Defendants breached these duties to NCI ‘by participating

in and profiting from the NCI-Targeted Scheme’”; and “allege[d] that as a result it ha[d]
37

suffered damages.” Id. at *16. The court noted that while “the duty of good faith and fair

dealing is an implied duty imposed upon parties to a contract, applicable to the contract’s

‘performance and enforcement,’” NCI had “neither mentioned nor alleged the existence of

a contract between itself and the Goldin Defendants.” Id. (citation omitted). As a result, the

court concluded that “NCI ha[d] not alleged facts which, if accepted as true, [could] support

the idea that the Goldin Defendants owed NCI a duty of good faith and fair dealing.” Id. But

the court rejected the defendants’ argument that the “negligence claim fail[ed] because ‘the

complaint charge[d] the Goldins only with intentional misconduct, not negligent

misconduct.’” Id. (citation omitted). The court explained that the allegations were

sufficient:

[T]he Goldin Defendants have not provided, and the court is not

aware of, any authority requiring NCI to specifically allege that the

conduct was “negligent” in so many words. Asset out above, a claim

for negligence requires only the elements of duty, breach, causation,

and injury. NCI has asserted factual allegations sufficient to support

each of these elements, describing in detail the Goldin Defendants’

alleged misconduct. Furthermore, the Federal Rules provide for

alternative pleading, and parties routinely allege both fraud and

negligence claims in their complaints. See, e.g., FED. R. CIV. P.

8(d)(2) (“A party may set out 2 or more statements of a claim or

defense alternatively or hypothetically, either in a single count or

defense or in separate ones. If a party makes alternative statements,

the pleading is sufficient if any one of them is sufficient.”); Reynolds

v. Fla. Highway Prods., Inc., No. CV507-78, 2008 WL 5430332, at

*1 (S.D. Ga. Dec. 31, 2008) (asserting claims for negligence and

fraud, both of which survived summary judgment). The court

therefore finds that NCI has sufficiently stated a claim for negligence

against the Goldin Defendants, and denies their Motion to Dismiss

this claim.

NCI Group, 2009 WL 2411145, at *16 (internal citations omitted).

The court dismissed the counterclaims for attorneys’ fees and costs. The court explained that

to the extent the claim was predicated on one provision of state statutory law, it could not

proceed because the statute was “‘unavailable to civil litigants in federal court.’” Id. at *17

(quoting Bruce v. Wal-Mart Stores, Inc., 699 F. Supp. 905, 906 (N.D. Ga. 1988)). To the

extent the claim was predicated on a state statute providing liability for abusive litigation,

the claim was premature because the statute required termination of the proceeding in which

the alleged abusive litigation occurred. Id. at *18 (citations omitted). The court also found

that the defendants “ha[d] not provided, and the court[was] not otherwise aware of, any basis

in ‘federal law’ through which [the defendants] would be entitled to state counterclaims

solely for attorneys’ fees and costs due to NCI’s allegedly frivolous claims against them.”

Id. (footnote omitted).
38

The court then considered the request of one of the defendants for a more definite statement

of cross-claims for contribution and indemnification. The court cited a pre-Twombly case

for the proposition that a complaint must contain enough detail to provide notice of the

claim:

“While the requirements of pleading under the Federal Rules

are ‘liberal,’ and a litigant need not allege a specific fact to cover

every element or allege with precision each element of a claim . . . a

pleader must at least provide his opponent with ‘fair notice of what

[his] claim is and the grounds upon which it rests.’”

Id. at *19 (emphasis added) (omission and alteration in original) (quoting Parker v. Brush

Wellman, Inc., 377 F. Supp. 2d 1290, 1294 (N.D. Ga. 2005) (quoting Conley, 355 U.S. at

47)). The court cited the same pre-Twombly case to emphasize that “‘a plaintiff should

include in his pleading some brief factual description of the circumstances surrounding the

acts or omissions upon which he bases his claim for relief.’” Id. (quoting Parker, 377 F.

Supp. 2d at 1294). The court granted the motion for a more definite statement, finding that

the cross-claimants “failed to identify ‘the grounds upon which [their claims] rest[ ],’” NCI

Group, 2009 WL 2411145, at *19 (alterations in original) (quoting Parker, 377 F. Supp. 2d

at 1294), and explaining that “[f]or example, the cross-claims d[id] not specify whether Ms.

Coker and Mr. Coots [sought] contribution under state or federal law,” and “the cross-claims

[did not] specify the nature of any duty owed by Mr. Byers to Ms. Coker and Mr. Coots

which might be the basis for a contribution claim.” Id.

• Ansley v. Florida, Dep’t of Revenue, No. 4:09cv161-RH/WCS, 2009 WL 1973548 (N.D.

Fla. Jul. 8, 2009). The plaintiff’s employment discrimination claims failed to allege

sufficient facts. The court noted that Swierkiewicz does not require “a complaint [to] allege

with precision all the elements of a cause of action,” id. at *1 (citing Swierkiewicz, 534 U.S.

at 514–15), but explained that the complaint was insufficient:

The plaintiff asserts claims of gender discrimination in

violation of Title VII of the Civil Rights Act of 1964 as amended and

disability discrimination in violation of the Florida Civil Rights Act.

But the plaintiff does not say what the alleged reason—the pretextual

reason—for the firing was. He does not even allege the reason was

false; a reason can be true but still pretextual if it was not the real

reason for the decision. He does not allege a factual basis for the

conclusion that the others who were treated better were similarly

situated. He does not allege his medical condition and thus does not

allege a factual basis for his claim that it—or the defendant’s

perception of it—entitled him to protection under the Florida Civil

Rights Act. He does not allege a claim under the Family and Medical

Leave Act and does not explain how his father’s illness—also

unexplained—entitled the plaintiff to protection under the Florida
39

Civil Rights Act.

Id. at *2. The court noted that “[t]hese allegations might have survived a motion to dismiss

prior to Twombly and Iqbal,” but held that “now they do not.” Id. (emphasis added). The

court stated that an employment-discrimination plaintiff “must allege facts that are either (1)

sufficient to support a plausible inference of discrimination, or (2) sufficient to show, or at

least support an inference, that he can make out a prima facie case under the familiar burdenshifting framework set forth in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S. Ct.

1817, 36 L. Ed. 2d 668 (1973), and its progeny.” Id. The court concluded that “[t]he

plaintiff ha[d] not done so,” but granted leave to amend. Id.