Bell Atlantic v. Twombly: How Motions to Dismiss Become (Disguised) Summary Judgments

The recent Supreme Court decision in Bell Atlantic v. Twombly stands at the crossroads of antitrust and civil procedure. As an antitrust case, Twombly makes sense on structural grounds. The FCC regulation of the telecommunications industry, and the many innocent explanations as to why each telecommunications company would stay out of its rival’s territories obviated the need for further discovery. But in many other contexts, including Conley v. Gibson—a case involving potential breach of the duty of fair representation on matters of racial discrimination— discovery could flesh out the relevant factual issues. The Supreme Court’s general disapproval of Conley sweeps far too wide. Discovery should only be denied when the plausible inferences that can be drawn from the complaint and publicly available evidence clearly imply further discovery is of little value. Accordingly, the Federal Rules of Civil procedure should explicitly acknowledge that in a small set of cases motions on the pleadings can properly function as truncated and disguised motions for summary judgment. The present Federal Rules of Civil Procedure allow a plaintiff’s case to be attacked either for its legal or factual sufficiency. The rules governing the former are in general adequate because judgments on the validity of claims do not require any discovery. Decisions before trial on factual matters are much more complex, especially in antitrust cases where discovery before a summary judgment motion can be highly expensive on open-ended claims of collusion over prices or territories. To counteract that risk, all courts today allow some judgments to be entered at the close of pleading and before discovery. The recent Supreme Court decision in Bell Atlantic Corp. v. Twombly, reversing the Second Circuit decision in Twombly v. Bell Atlantic Corp., resolved the ongoing dispute by requiring that a complaint contain “enough facts to state a claim to relief † This paper was prepared from a speech given at Washington University in St. Louis School of Law as part of the 2006–2007 Public Interest Law Speakers Series ∗ James Parker Hall Distinguished Service Professor of Law, The University of Chicago; Peter and Kirsten Bedford Senior Fellow, The Hoover Institution. . I would like to thank my colleagues at the University of Chicago work in progress for their helpful comments on earlier drafts of the paper. I would also like to thank Brad Grossman, University of Chicago Law School, Class of 2007 and Ramtin Terheri, University of Chicago Law School, Class of 2009 for their excellent research assistance. An early version of this Article, written before the Supreme Court’s decided Bell Atlantic v. Twombly was published by the AEI Brookings Joint Center. See AEI-Brookings Joint Center for Regulatory Studies, Epstein, Motions to Dismiss Antitrust Cases: Separating Fact from Fantasy, Related Publication 06–08, pp. 3–4 (2006). It contained a detailed analysis of the decisions by Judge Sack in the Second Circuit and Judge Lynch in the District Court. I have left much of that material in this Article because it sets the stage for what happened in the United States Supreme Court. Although I have worked as a consultant for Verizon on previous occasions, I have written this article without any assistance or financial support from it or any other defendant involved in this litigation. 1. Bell Atlantic Corp. v. Twombly (Twombly III), 127 S. Ct. 1955 (2007), rev’g Twombly v. Bell Atlantic Corp. (Twombly II), 425 F.3d 99 (2d Cir. 2005), rev’g Twombly v. Bell Atlantic Corp. (Twombly I), 313 F. Supp. 2d 174 (S.D.N.Y. 2003). 403-rae-twombly.doc 4/28/2008 2007] Twombly Summary Judgment 2 that is plausible on its face.” While the result of the decision is to be welcome, its analysis is flawed. In reality, Twombly III was a disguised motion for summary judgment that is best defended as properly balancing the relative error costs of stopping too soon or going too far. A close look at the record suggests that discovery would supply no new information of value, no matter how the case was pleaded. Therefore, the proper principle is that courts should be more willing to enter final judgments at the close of the pleadings, especially against plaintiffs whose claims are based solely on easily accessible public information which already have been rebutted by the same kinds of public evidence.