Opinion ID: 2820192
Heading Depth: 3
Heading Rank: 2

Heading: The Plausibility Standard

Text: “Although Twombly and Iqbal clarified that a complaint must state a plausible claim— not just a possible claim—this Court has cautioned against reading ‘Twombly and Iqbal so narrowly as to be the death of notice pleading . . . .’”36 Plaintiffs do not have to prove their discrimination claims at this stage.37 They only need to allege “sufficient ‘factual content’ from which a court, informed by its ‘judicial experience and common sense,’ could ‘draw the reasonable inference’” that Huntington discriminated against Plaintiffs because of their race.38 “This standard does not require detailed factual allegations, but a complaint containing a statement of facts that merely creates a suspicion of a legally cognizable right of action is insufficient.”39 Merely reciting the elements of the cause of action, couched as allegations, will not do.40 Such conclusory allegations “need not be accepted as true on a motion to dismiss.”41 Similarly, we have held that factual allegations about discriminatory conduct that are based on nothing 34 See HDC, LLC v. City of Ann Arbor, 675 F.3d 608, 612 (6th Cir. 2012). 35 See Moniz v. Cox, 512 F. App’x 495, 500–01 (6th Cir. 2013) (discussing similar intent standard applying to § 1981 and § 1982 claims); Jackson v. Quanex Corp., 191 F.3d 647, 658 (6th Cir. 1999) (discussing similar intent standard applying to § 1981 and ELCRA claims). 36 Rhodes v. R&L Carriers, Inc., 491 F. App’x 579, 583 (6th Cir. 2012) (quoting Keys, 684 F.3d at 610); see generally Arthur R. Miller, Simplified Pleading, Meaningful Days in Court, and Trials on the Merits: Reflections on the Deformation of Federal Procedure, 88 N.Y.U. L. Rev. 286, 331–47 (2013). 37 See Swierkiewicz v. Sorema, N.A., 534 U.S. 506, 510 (2002). 38 Keys, 684 F.3d at 610 (quoting Iqbal, 556 U.S. at 678). 39 HDC, 675 F.3d at 614 (internal quotation marks and citations omitted). 40 See, e.g., id. at 613–14 (“The developers’ vague and conclusory allegations that Ann Arbor acted with ‘a discriminatory intent, purpose, and motivation’ . . . do not transform the developers’ otherwise insufficient factual pleadings into allegations that plausibly support an inference of discriminatory animus.”). 41 Id. at 614 (citing Hensley Mfg. v. ProPride, Inc., 579 F.3d 603, 609 (6th Cir. 2009)). -7- No. 14-1827, El-Hallani, et al. v. Huntington Nat’l Bank more than a plaintiff’s belief are “naked assertions devoid of further factual enhancement” that are insufficient to state a claim.42 But we also recognize that at this early stage of the proceedings, a plaintiff is not required to set out detailed factual allegations.43 Until discovery has begun, the plaintiff simply may not have access to all the facts. Especially in a case where a pattern or practice of discrimination is at issue, the court must be aware that the plaintiff will have limited access to the crucial information regarding how the defendant treated other customers.44 A court must engage in a “context-specific” analysis of the plausibility of the plaintiff’s claims. 45 In doing so, it should take into account “economic[] or logistical[]” circumstances that prevent the plaintiff from obtaining evidence supporting his claim and adjust the plausibility threshold appropriately to account for these difficulties.46 C. Allegations in Plaintiffs’ Second Amended Complaint We must decide whether Plaintiffs’ Second Amended Complaint contained sufficient factual allegations that, taken together, allow for a plausible inference that Huntington closed Plaintiffs’ bank accounts because of their race or ethnicity. We find that it does. 42 See 16630 Southfield Ltd. P’ship v. Flagstar Bank, F.S.B., 727 F.3d 502, 506 (6th Cir. 2013) (quoting Iqbal, 556 U.S. at 678). 43 See Twombly, 550 U.S. at 570 (“[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.”). 44 See Miller, supra note 36, at 343 (discussing this difficulty in the context of employment discrimination cases); accord Twombly, 550 U.S. at 586–87 (Stevens, J., dissenting) (opining that, in antitrust cases where “the proof is largely in the hand of the alleged conspirators,” dismissal prior to discovery should rarely be granted (internal quotation marks and citation omitted)). 45 Iqbal, 556 U.S. at 679. 46 Miller, supra note 36, at 341–42. -8- No. 14-1827, El-Hallani, et al. v. Huntington Nat’l Bank
We first consider the experience of the named Plaintiffs—Ali El-Hallani and Mark Manuaeel. Huntington treated both Plaintiffs similarly: they had accounts with Huntington, and had their accounts closed suddenly and without explanation. And nothing in the allegations suggests that either closing was for cause.47 Huntington’s closing of other accounts around the same time lends additional weight to El-Hallani’s and Manuaeel’s assertions. The ACRL hotline identified at least twenty-five Arab or Middle Eastern individuals who had their Huntington accounts closed, and Plaintiffs alleged as much in their complaint.48 Huntington’s closing of more than twenty-five accounts supports Plaintiffs’ claims that these closings were done because of the race of the account holders, rather than for some other reason. Plaintiffs’ allegations show more than being merely “consistent with liability.”49 The district court correctly gave little weight to Plaintiffs’ argument about the ACRL’s lack of complaints received from non-Arab customers.50 That no non-Arab customers called a hotline sponsored by the Arab American Civil Rights League is hardly surprising. But this misses a more important, and more obvious, point: at least twenty-five Arab people did call the hotline and complain about Huntington closing their accounts without warning or explanation. 47 This makes two of the cases relied on by the district court distinguishable. In 16630 Southfield, 727 F.3d 502, the plaintiffs had previously defaulted on a loan. And in Mekuria v. Bank of America, 883 F. Supp. 2d 10 (D.D.C. 2011), the bank notified the plaintiff that it had identified several problems with the paperwork accompanying the plaintiff’s deposits before it ultimately closed his accounts. Thus, there were obvious and legitimate alternative explanations in the complaints themselves for those plaintiffs’ accounts to have been closed. 48 See R. 23, Second Amended Class Action Complaint ¶¶ 10, 31–32 (citing R.23-3, Ex. B to Second Amended Class Action Complaint (Affidavit of Samia Sareini)). 49 See El-Hallani, 2014 WL 988957, at . 50 See id. -9- No. 14-1827, El-Hallani, et al. v. Huntington Nat’l Bank At this initial stage, this cluster of account closures sufficiently supports an inference that the closures were done for discriminatory purposes rather than proper business reasons. The district court was incorrect, however, when it found that Plaintiffs’ failure to provide specific information about these other twenty-five accounts turned the pleading into a “bald assertion.”51 Class action litigation allows the named plaintiffs to protect the rights of many without imposing the burdens of litigation on the entire class. 52 The district court’s request for more information about the class members at this stage is in tension with this goal. Although Plaintiffs will likely need to present more information about other potential class members to achieve certification,53 at this stage of the litigation it is enough that Plaintiffs have identified numerous potential class members and have put Huntington on notice that they exist.54 Even without the allegations regarding twenty-five additional individuals, though, the complaint should still have survived the motion to dismiss. As explained below,55 the key allegations that make Plaintiffs’ claims plausible are (1) the affidavit from a former Huntington employee describing account closures, and (2) the apparent illogic of willy-nilly cancelling business accounts. Identifying a sizable group of similarly affected people makes it less likely that Plaintiffs El-Hallani and Manuaeel share some additional characteristic other than their race or ethnicity that caused Huntington to close their accounts, and makes it more likely that the 51 See El-Hallani, 2014 WL 2217237 at  (“[T]he Court is left to wonder why the twenty-five other individuals have failed to come forward with any additional facts to support this litigation.”). 52 See 7A Charles Alan Wright & Arthur Miller, Federal Practice & Procedure Civil § 1751 (3d ed. 2014). 53 See Fed. R. Civ. P. 23(a) (requiring, among other things, the class representatives to demonstrate that their claims are typical of the class and share common questions of law or fact). 54 See Federal Judicial Center, Manual for Complex Litigation, §§ 21.13–14 (4th ed. 2004). 55 See infra Sections III.C.2–3. - 10 - No. 14-1827, El-Hallani, et al. v. Huntington Nat’l Bank decision to close El-Hallani’s and Manuaeel’s accounts was due to some systematic policy of Huntington.
Plaintiffs also supported their Second Amended Complaint with an affidavit from Hussein Dabaja, a former employee who attested that Huntington engaged in a bank-wide practice of closing accounts held by Arab or Middle Eastern people.56 Dabaja’s affidavit says that from 2008 to 2009, Huntington’s headquarters sent quarterly lists of Arab-owned business accounts to close.57 It further states that Huntington closed associated personal accounts including those held by family members of business owners when the business accounts were closed.58 Dabaja estimates that from 2008 to 2009, Huntington closed over 200 business accounts.59 Furthermore, Dabaja attests that the Huntington branch he worked at “had many non-Middle Eastern bank account holders that were similar in many respects, only differing by the Arab, [or] Middle Eastern . . . characteristics, which were not closed during this period.”60 The district court discounted Dabaja’s declaration for two reasons. First, because Dabaja left Huntington in 2009, the district court found his experiences could not explain why Plaintiffs’ accounts were closed in 2013.61 Second, the district court viewed Dabaja’s attestation that 56 See R.23, Second Amended Class Action Complaint ¶¶ 33–35 (citing R. 23-4, Ex. C to Second Amended Class Action Complaint (Affidavit of Hussein Dabaja)). 57 R. 23-4, Ex. C to Second Amended Class Action Complaint ¶¶ 6–9 (Affidavit of Hussein Dabaja). 58 Id. ¶¶ 6–9. 59 Id. ¶ 10. 60 Id. ¶ 15. 61 El-Hallani, 2014 WL 988957, at . - 11 - No. 14-1827, El-Hallani, et al. v. Huntington Nat’l Bank similarly situated non-Arab account holders had not had their accounts closed as “merely a label and conclusion under Twombly.”62 Contrary to the district court’s conclusion, Dabaja’s affidavit offers some support for Plaintiffs’ claims and pushes them toward plausibility. Although Dabaja was not working at Huntington at the time Plaintiffs’ accounts were closed, when taken in the light most favorable to Plaintiff, his testimony supports an inference that race may have been a factor in these account closings. The four-year gap lessens the weight of this inference, but it does not make it irrelevant. The district court’s conclusion that Dabaja’s testimony regarding Huntington’s treatment of similarly situated non-Arab or Middle Eastern people was “merely a label” was also incorrect. Dabaja’s testimony was based on his first-hand observations. Although the language used in the affidavit is short on details, it is a factual assertion of what Dabaja observed, not just a conclusion.63 This testimony in Dabaja’s affidavit, when taken as true, goes beyond the type of “naked assertions” and “conclusory allegations” that this court has previously criticized. In 16630 Southfield Limited Partnership v. Flagstar Bank, F.S.B., we concluded the complaint’s allegations that the defendant had treated non-minority customers better than the minority plaintiff were insufficient because the plaintiff had no supporting facts, only his own beliefs.64 Here, by contrast, Dabaja’s first-hand observations contained in his affidavit supply the “further factual enhancement” required to survive a motion to dismiss.65 62 Id. (citing Twombly, 550 U.S. at 555). 63 See Rhodes, 491 F. App’x at 583–84. 64 727 F.3d 502, 506 (6th Cir. 2013). 65 See Iqbal, 556 U.S. at 678. This difference also distinguishes a third case that the district court primarily relied on. The plaintiff in Life for Relief & Dev. v. Charter One Bank, - 12 - No. 14-1827, El-Hallani, et al. v. Huntington Nat’l Bank
Plaintiffs have pointed to Huntington’s refusal to explain the account closures as evidence of an improper motive.66 Although Huntington has not and is not required to offer an alternative explanation in order to win a motion to dismiss, closing a large number of Arabowned business accounts raises the plausibility of unlawful, discriminatory motivation, particularly given the competitive banking-business environment.67 Against this backdrop, Plaintiffs’ claims seem more plausible.68 If there were a legitimate reason to close these accounts, such as a loan default or other dispute, Huntington likely would have specified it.69 Furthermore even if Huntington had provided such an explanation, “the mere existence of an ‘eminently plausible’ alternative, lawful explanation for a defendant’s allegedly unlawful conduct is not enough to dismiss an adequately pled complaint because pleadings need only be ‘plausible, not probable.’”70 N.A., No. 12-cv-13550, 2013 WL 3810255 (E.D. Mich. July 23, 2013), based his complaint of discrimination solely on his own information and belief that the bank had discriminated against him. 66 See R. 23, Second Amended Class Action Complaint ¶¶ 27, 39. 67 Huntington’s counsel agreed during oral argument that there is competition between banks for accounts. As explained above, the affidavit of Hussein Dabaja suggests that both business and personal accounts held by people who are Arab or of Middle Eastern descent were closed, which makes the situation even more unusual. See supra Section III.C.2. 68 Cf. 16630 Southfield, 727 F.3d at 505 (“The reasonableness of one explanation for an incident depends, in part, on the strength of competing explanations.”). 69 The affidavit from Hussein Dabaja that Plaintiffs attached to their Second Amended Complaint suggests that anti-money laundering concerns may have played a role in closing the accounts. See R. 23-4, Ex. C to Second Amended Class Action Complaint ¶ 12 (Affidavit of Hussein Dabaja). 70 HDC, 675 F.3d at 613 (quoting Watson Carpet & Floor Covering, Inc. v. Mohawk Indus., Inc., 648 F.3d 452, 458 (6th Cir. 2011)); see also 16630 Southfield, 727 F.3d at 505 (“[I]f a plaintiff's claim is plausible, the availability of other explanations—even more likely explanations—does not bar the door to discovery.”). - 13 - No. 14-1827, El-Hallani, et al. v. Huntington Nat’l Bank
We agree with the district court that the survey Plaintiffs’ submitted with their Second Amended Complaint does nothing to tip the balance in favor of their claims.71 The survey’s flaws are obvious. It was conducted by having someone stand outside a few Huntington branches in the metro-Detroit area, and ask exiting customers about themselves and their Huntington accounts. Only six responses were gathered, and of those only four were attached to the Second Amended Complaint. The questions and answers from the surveys are vague, and do not tell us more than we knew: that Huntington has white customers with open accounts. But even without this survey, the other allegations contained in the Second Amended Complaint suffice to state a plausible claim. Although showing disparate treatment of otherwise similarly situated comparators can raise an inference of intentional discrimination, such showing is not required in every case.72 Here, where other allegations provide sufficient support to push Plaintiffs’ allegations over the line into the realm of plausibility, identifying such similarly situated individuals was not necessary.