Nathan Potter, Associate Member, University of Cincinnati Law Review
Introduction
The United States legal system is costly, time-consuming, and sometimes unnavigable. These barriers are further compounded by, what some would call, unfair pleading standard requirements for plaintiffs and defendants. There has been a split among federal circuit courts for nearly a decade following the Bell Atlantic Corp. v. Twombly[1]and Iqbal v. Ashcroft[2] decisions from the Supreme Court of the United States (SCOTUS). The split arises from the argument that the plausibility pleading standard of Twombly/Iqbal applies to more than complaints, that this standard should also apply to affirmative defenses. As of the writing of this article, December 2018, SCOTUS has yet to clarify whether the plausibility pleading standard applies to affirmative defenses. If the legal system is built upon fairness and justice, what is the best method of simultaneously protecting the interests of a plaintiff and a defendant? This article is primarily meant to be informative. It will endeavor to provide a high-level overview of the issue and attempt to educate the reader about whether he or she may wish to contemplate litigation, using the plausibility pleading standard as an offensive tool.
Background
The Federal Rules of Civil Procedure (FRCP) are the basis for procedural law in the United States federal court system. They were first adopted in 1938 and have gone through several amendments to grow with the needs of the legal system.[3] Most states base their own procedural rules on the FRCP. Arguments surrounding pleading standards originate in Rule 8, also known as the notice pleading standard.
When bringing a suit in federal court, Rule 8(a) has three requirements for the plaintiff: (1) a short and plain statement of the grounds for the court’s jurisdiction; (2) a short and plain statement of the claim showing that the pleader is entitled to relief; and (3) a demand for the relief sought.[4] Likewise, Rule 8(c) also provides requirements for a defendant who asserts a defense: (A) state in short and plain terms its defenses to each claim asserted against it; and (B) admit or deny the allegations asserted against it by an opposing party.[5] Prior to 2007, courts customarily applied the notice pleading standard[6] to both claims and affirmative defenses. However, this standard was replaced by the SCOTUS’s holding from Twombly in 2007. Some courts have also extended this replacement to affirmative defenses.
In Twombly, SCOTUS held that complaints must allege facts that are plausible, not merely conceivable.[7] In Iqbal, this heightened pleading standard was fortified and deemed applicable to all Federal court cases, although by a 5-4 split decision.[8] SCOTUS has been silent as to whether this heightened pleading standard applies to affirmative defenses and this has caused a significant split in treatment by the Federal district courts. Additionally, such a disparity promotes the use of forum shopping and the search for obtaining other legal advantages before filing a complaint.
There is a difference between standard defenses and an affirmative defense. “An affirmative defense is generally a defense that, if established, requires judgment for the defendant even if the plaintiff can prove his case by a preponderance of the evidence (civil litigation).”[9] Borrowing from the contract law context, a standard defense is something straightforward, like “the plaintiff’s facts do not support their conclusion that the defendant breached the contract” or “the plaintiff misstated the law and the defendant does not owe the plaintiff any damages.” This type of defense puts the burden on the plaintiff to assert facts which prove their claim. Contrast this to an affirmative defense which, if found credible, will negate the defendant’s civil liability.[10] Affirmative defenses are credible if they are determined to be plausible by a preponderance of the evidence.[11] A common example, continuing with our contract law context, would be “even if the defendant breached the contract, he is not liable for damages because the contract is unconscionable.” The pleading standard for affirmative defenses is an important issue because it deals with the burden placed on either party in a legal dispute. Often, a disparity in capital, time, knowledge, or other resources will defeat a party before they even step into the courtroom. It is also important to know that this article will strictly be dealing with federal law; however, state law often mimics federal law.
The Conflicting Circuits
While there is a split among federal circuit courts regarding whether to apply Twombly to affirmative defenses, that split is not down the middle. Many circuits are even split among the district courts within their own circuit. In an effort at brevity and organization, the circuits will be categorized by whether their circuit—generally—applies Twombly, and then the circuits will be listed in numerical order in that category. Following this organization, the article will provide some of the more common and compelling reasons to apply, or not to apply, Twombly to affirmative defenses.
The Federal courts which do not regularly apply Twombly to affirmative defenses are the First Circuit,[12] the Second Circuit,[13] the Third Circuit,[14] the Seventh Circuit,[15] the Eighth Circuit,[16] the Ninth Circuit,[17] the Tenth Circuit,[18] the Eleventh Circuit,[19] and the DC Circuit.[20] The Federal courts which typically apply Twombly to affirmative defenses are the Fourth Circuit[21] and the Sixth Circuit.[22] The Fifth Circuit is still in flux on whether it wishes to apply the plausibility pleading standard to affirmative defenses; therefore, it would be unfair to categorize it.[23]
Reasons Supporting Application of Twombly to Affirmative Defenses
While most courts now favor retaining the notice pleading standard for affirmative defenses, this was not originally the case. Opinions commonly noted, following the Twombly and Iqbal decisions, that the majority of district courts held that the plausibility pleading standard did apply to affirmative defenses.[24] Those courts often cited Rule 8(b)(2) which says that in a denial defense, a defendant “must fairly respond to the substance of the allegation.”[25] This is cited for its comparative language to the notice pleading standard in Rule 8(a). Courts also subscribe to the logic that in order to raise an affirmative defense, a defendant must readily have, or have researched, some background facts to support that defense.[26] Therefore, because defendants are more readily capable of collecting these facts, the plausibility pleading standard is not overburdensome on any defendant. Additionally, the flexibility of being able to amend a defense “softens any painful blow of heightened pleading standards.”[27] Interestingly, many of the courts who initially applied the Iqbal/Twombly plausibility pleading standard to affirmative defenses have since rejected the Twombly standard for affirmative defenses.[28]
After significant research, it is difficult to determine exactly why several districts have crossed back to the notice pleading camp; however, many of the reasonings are based on what many courts call compelling legal and policy arguments.[29]
Reasons to Reject the Application of Twombly to Affirmative Defenses
Courts arguing against applying the plausibility pleading standard to affirmative defenses often cite that neither the FRCP, the appendix, nor their committee notes mention applying the Twombly standard to affirmative defenses.[30] An affirmative defense is not a “claim for relief” and no rule requires defendants to plead facts “showing” that a plaintiff is—not—entitled to relief.[31] Courts also regularly point out that plaintiffs and defendants begin in very different positions. A plaintiff may prepare their complaint over months, or even years, before bringing suit.[32] In contrast, a defendant only has twenty-one days by statute to gather the information required to serve an answer to the court.[33] If the plausibility pleading standard were to apply to defendants, there would be a much more strenuous burden imposed upon defendants than on plaintiffs due to the time each has to prepare his answer or claim, respectively.[34] Lastly, courts more recently cite to Rule 8(c), which is applies to affirmative defenses.[35] Courts tend to draw a distinction between the language of Rule 8(b) (which is similar to the language of Rule 8(a)) and Rule 8(c) (which says a defendant need only “affirmatively state” any avoidance or affirmative defense).[36]
Analysis
Federal courts have left this area of law in a quagmire. The initial reaction to Twombly and Iqbal was to apply their plausibility pleading standard to affirmative defenses. But, over time, almost all the district courts have rejected this heightened burden on defendants. It cannot simply be an awakening to justice. Initially, there were strong rationales for applying the plausibility standard to affirmative defenses. The fact that the standards for claims and defenses are in the same rule of Federal Procedure is not mere coincidence. And it is not a large jump of logic to say that sections within the same rule should be read together and similarly applied, unless they specifically reject such treatment. Additionally, courts are (usually) very lenient with dates and amendments to complaints, answers, motions, and more. The fact that the defendant statutorily has twenty-one days to file an answer with the court is almost meaningless in practice. There is a limit to how many extensions and continuances a defendant could file, but it is unlikely that a defendant would exhaust such lenient mechanisms without generating enough time to research facts and provide a proper answer including an affirmative defense.
Without being required to set forth a plausible set of facts for an affirmative defense, the plaintiff is unjustly burdened because of all the resources set forth in the plaintiff’s plausible complaint. A plaintiff may spend months, or years, preparing for litigation. Under the notice pleading standard for affirmative defenses, the defendant would have to provide very little to assert an affirmative defense, consequently requiring much less of the defendant’s time and resources. Whether the defendant is ultimately at fault, the plaintiff would have to endure discovery and pre-trial motions (meaning further significant expenditures of time and money) before the plaintiff could even request the judge to rule on his claim and the defendant’s affirmative defenses. Is this fair to the plaintiff?
A defendant is almost always at a disadvantage by the plaintiff’s initiation of litigation. Even if a defendant is aware of potential litigation in the defendant’s future, it may still be difficult to prepare documents and facts to assert an affirmative defense under the plausibility pleading standard. Recall, this issue is not that the defendant’s facts are conceivable and entitle the defendant to a negation of criminal or civil liability, but that the defendant’s facts must be plausible. In other words, the defendant’s facts must be “more than likely” to be true. This subjective standard is burdensome on everyone (the defendant, the court, and even the plaintiff). Additionally, some may call this heightened standard unnecessary when the judge (bench trial) or jury will be the determiners of fact. Yes, there are concerns of judicial economy and reasons to encourage the plaintiff and defendant to settle, but it is conceivable that a savvy plaintiff could use the court system’s proclivity to the plaintiff’s unfair advantage. Is this fair to the defendant?
This issue is correctly settling on affirmative defenses only needing to meet the lenient notice pleading standard. There is not a tremendous amount of data, but it does not appear that the Fourth and Sixth Circuits are being overrun with forum-shoppers, seeking to take advantage of their application of Twombly to affirmative defenses. The monetary costs and time involved in litigation do help promote judicial economy. And while it may be somewhat unfair to a plaintiff, who has a much heavier burden in most federal circuits, it should be that way. The plaintiff will receive their payout once litigation is over and the court system is designed to deter frivolous claims. The plaintiff having a heavier burden just makes sense. This small unbalancing of the scales in the defendant’s favor is necessary. In practical use, the plausibility pleading standard is commonly held not to apply to affirmative defenses. And it is unlikely that a plaintiff would benefit significantly from filing a claim in the Fourth or Sixth Circuits only to pressure the defendant into the plausibility pleading standard. Finally, the assertion of an affirmative defense does not mean the judge or jury will believe and rule for that defense. Prohibiting the pleading of a possible, by preponderance of the evidence, defense removes power from the fact-finder and places that power in procedural rules.
Conclusion
It is impossible to know why SCOTUS has declined, and continues to decline, to review the application of plausibility pleading standards to affirmative defenses. It could be that SCOTUS does not want the plausibility pleading standard to apply to affirmative defenses and, by watching the majority of lower courts move in that direction, does not see a need to intervene on a “settled” matter. It is also just as likely that SCOTUS does intend the plausibility standard to apply to affirmative defenses and may grant certiorari on a case soon to deliver that very holding. Even if SCOTUS does think the matter is settled, it would be better for them to give a concrete holding so that district courts stop applying inconsistent standards.
Meanwhile, Federal Circuits are
(mostly) moving in the right direction. The assertion of an affirmative defense
in an answer does not mean a defendant is entitled to that defense. If an
affirmative defense is possible, the defendant should be able to assert it and
let the fact-finder determine the credibility of that defense. The plausibility
pleading standard, as applied to affirmative defenses, usurps the fact-finder’s
role in the courtroom for the sake of procedural law.
[1] Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007).
[2] Ashcroft v. Iqbal, 556 U.S. 662 (2009).
[3] Federal Rules of Civil Procedure, Information Institute, https://www.law.cornell.edu/rules/frcp (last visited Dec. 8, 2018).
[4] Fed. R. Civ. P. 8(a).
[5] Fed. R. Civ. P. 8(c).
[6] Notice pleading requirements emphasize that the pleading in a complaint, or answer, be sufficient to notify the other party of the general issues in the case. This allows either party to state their claims or defenses in general terms, instead of using detailed facts for each claim or defense.
[7] Twombly, 550 U.S. at 570.
[8] Iqbal, 556 U.S. at 687.
[9] Wright v. Southland Corp., 187 F.3d 1287, 1303 (11th Cir. 1999).
[10] Affirmative Defense, Legal Information Institute, https://www.law.cornell.edu/wex/affirmative_defense (last visited Dec. 8, 2018).
[11] This standard means that the defense is more likely true than not. Specifically, the facts need only be greater than fifty percent true.
[12] Lexington Luminance LLC v. TCL Multimedia Tech. Holdings, Ltd., Civil Action No. 16-cv-11458-DJC, 2017 U.S. Dist. LEXIS 140479, *19 (D. Mass. Aug. 30, 2017).
[13] Erickson Beamon Ltd. v. CMG Worldwide, Inc., 2014 U.S. Dist. LEXIS 112437, *18 (S.D.N.Y. Aug. 12, 2014).
[14] Gelman v. Rosen, Civil Action No. 14-6790 (JBS/KMW), 2015 U.S. Dist. LEXIS 52678, *5 (D.N.J. Apr. 22, 2015).
[15] Perez v. PBI Bank, Inc., No. 1:14-cv-01429-SEB-MJD, 2015 U.S. Dist. LEXIS 13590, *5 (S.D. Ind. Feb. 4, 2015).
[16] Wells Fargo & Co. v. United States, 750 F. Supp. 2d 1049, 1051 (D. Minn. 2010).
[17] Gomez v. J. Jacobo Farm Labor Contractor, Inc., 188 F. Supp. 3d 986, 992 (E.D. Cal. 2016).
[18] Daley v. Scott, No. 2:15-cv-269-FtM-29DNF, 2016 U.S. Dist. LEXIS 83735, *5 (M.D. Fla. June 28, 2016).
[19] Floyd v. SunTrust Banks, Inc., No. 1:10-CV-2620-RWS, 2011 U.S. Dist. LEXIS 65190, *21 (N.D. Ga. June 13, 2011).
[20] United States v. All Assets Held at Bank Julius, 229 F. Supp. 3d 62, 70 (D.D.C. 2017).
[21] Hammer v. Peninsula Poultry Equip. Co., Civil Action No. RDB-12-1139, 2013 U.S. Dist. LEXIS 2505, *13 (D. Md. Jan. 8, 2013).
[22] Peters v. Credit Prot. Ass’n LP, No. 2:13-CV-0767, 2015 U.S. Dist. LEXIS 31820, *9 (S.D. Ohio Feb. 19, 2015).
[23] See generally Kleppinger v. Tex. DOT, No. L-10-124, 2012 U.S. Dist. LEXIS 198322, *15 (S.D. Tex. Aug. 10, 2012); Cordero v. Voltaire, LLC, No. A-13-CA-253-LY, 2013 U.S. Dist. LEXIS 172532, *26 (W.D. Tex. Dec. 6, 2013); Calvillo v. J & M Tank Lines, Inc., No. SA-15-CA-1165-FB, 2016 U.S. Dist. LEXIS 180980, *6 (W.D. Tex. Apr. 15, 2016).
[24] Bradshaw v. Hilco Receivables, LLC, 725 F. Supp. 2d 532, 536 (D. Md. 2010).
[25] Bradshaw, 725 F. Supp. 2d at 536.
[26] Francisco v. Verizon S. Inc., Civil Action No. 3:09cv737, 2010 U.S. Dist. LEXIS 77083, *25 (E.D. Va. July 29, 2010).
[27] Id.
[28] Brian Robison & Alithea Z. Sullivan, District Courts Extend Twombly to Affirmative Defenses, American Bar Ass’n.,(2010), https://apps.americanbar.org/litigation/litigationnews/trial_skills/082710-trial-evidence-Twombly-district-courts.html.
[29] All Assets, 229 F. Supp. 2d at *70 (referring to Judge Rudolph Contreras’s thorough explanations on the subject).
[30] Wells Fargo, 750 F. Supp. 2d at 1051.
[31] Id.
[32] Id.
[33] Id.
[34] Id.
[35] Summers Mfg. Co. v. Tri-Cty. AG, LLC, 300 F. Supp. 3d 1025, 1044 (S.D. Iowa 2017).
[36] Id.
