Tuesday, May 18, 2010

Eleventh Circuit Dismisses RICO Class Action under Twombly/Iqbal

From the National Law Journal:

High Court Rulings on Pleading Standards Trip Up Dentists' Class Action
Leigh Jones


A federal appeals court has scotched a multibillion-dollar RICO class action launched by the American Dental Association and its members against major insurance companies for their alleged failure to pay providers.

A three-judge panel of the 11th U.S. Circuit Court of Appeals threw out that the purported class action, finding that the complaint did not meet the controversial heightened pleading standards required under two recent U.S. Supreme Court decisions.

The court upheld the suit's dismissal in favor of Cigna Corp. and MetLife Inc. and their subsidiaries.

The May 14 decision, written by Circuit Chief Judge Joel Dubina, found that the Racketeer Influenced and Corrupt Organizations Act case could not survive the pleading standards under the U.S. Supreme Court's Twombly and Iqbal decisions. In Bell Atlantic Corp. v. Twombly, the Court in 2007 required plaintiffs to show the plausibility, not just possibility, of relief based on claims made in a complaint. Last year, in Ashcroft v. Iqbal, the high court required plaintiffs to present more than conclusory facts in their pleadings and instead to present claims that reasonably supported an inference of liability.

The defense bar has lauded both Twombly and Iqbal as a way to filter out meritless claims, while plaintiffs' attorneys have asserted that the higher standards preclude clients with limited resources or access to information from having their day in court.

The lawsuit was filed in 2003 by three dentists and the American Dental Association in the U.S. District Court for the Southern District of Florida on behalf of potentially hundreds of other dentist in the insurers' networks. Related to so-called "deny, reduce and delay" multidistrict litigation there involving physicians with similar claims against insurers, the lawsuit alleged that the insurers violated the RICO Act by "bundling" dental services rendered. Such bundling, the dentists alleged, resulted in reimbursement for a smaller number of services at a lower price. After the U.S. Supreme Court issued the Twombly decision, the plaintiffs amended their complaint under the new standard. In 2008, the district court dismissed the case without prejudice, finding that it did not meet that new standard.

In affirming the lower court, Dubina wrote that the "present case reflects the concerns that motivated the Supreme Court to adopt a new pleading standard in Twombly and Iqbal." It found that not only did the dentists fail to meet the Twombly and Iqbal standard, but they also did not establish their claims under procedural rules pertaining to RICO allegations. "[W]e cannot infer a scheme-driven deception from a complaint that provides no details of fraud or conspiracy," Dubina wrote.

Representing the individual plaintiffs was G. Robert Blakey, a professor at the University of Notre Dame Law School. He said that he sensed defeat during oral arguments.

"It was clear from the minute I opened my mouth," he said. "The Court of Appeals was a buzzsaw." Blakey estimated damages at between $5 billion and $6 billion.

James Griffith Jr., a partner in the Philadelphia office of Akin Gump Strauss Hauer & Feld, represented MetLife. Jamie Zysk Isani, an associate in the Miami office of Hunton & Williams, represented Cigna. Neither attorney was immediately available for comment. MetLife provided a written statement. "MetLife has long believed that the allegations made by the ADA were without merit, and we were confident that the court would rule in our favor."

The other judges on the appeals panel were Peter Fay and Harold Albritton, who was sitting by designation from the U.S. District Court for the Middle District of Alabama.

Wednesday, May 12, 2010

Second Circuit States that Pleading Allegations on "Information and Belief" Acceptable under Twombly

Per Arista Records, LLC v. Doe 3, --- F.3d ----, 2010 WL 1729107 (2d Cir. April 29, 2010):

The 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 (“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 Twombly Court stated 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[ity].” 550 U.S. at 556.

Friday, May 07, 2010

Junior Faculty Federal Courts Workshop

October 7-8, 2010

The University of Illinois College of Law is pleased to announce that the Third Annual Junior Faculty Federal Courts Workshop will take place at the Club Quarters, Central Loop, 111 W. Adams St., Chicago, IL on October 7-8, 2010. Last year’s workshop, held in October 2009 at the Michigan State University College of Law, was a resounding success attended by junior scholars from 30 law schools, resulting in publications in numerous preeminent journals. We aim to continue this tradition.

The workshop pairs junior and senior, federal courts scholars in a day-long, works-in-progress workshop. Senior scholars who have confirmed their attendance for this year’s workshop are Richard Freer (Emory School of Law), Jim Pfander (Northwestern Law School), Martin Redish (Northwestern Law School), and Louise Weinberg (University of Texas School of Law).

Workshop Agenda

Drafts of papers will be distributed to participants prior to the workshop, which begins with dinner on Thursday, October 7. On Friday, October 8, following breakfast, two panels of junior scholars, composed of three to four persons each, will present papers in the morning. After lunch, two panels of junior scholars will present papers in the afternoon. Each panel will be assigned a senior scholar who will provide commentary on the paper and lead the group discussion.

The workshop is open to non-tenured, or newly tenured, academics who teach Federal Courts (or an equivalent course) or whose scholarly agenda encompasses topics ordinarily associated with such a course. Those who do not currently hold a faculty appointment but expect that they will during the 2011-2012 academic year are also welcome. There is no registration fee for this workshop.

Meals and Accommodations

The University of Illinois College of Law is pleased to provide all the attendees with meals while attending the workshop. Additionally, the College of Law has arranged for the Club Quarters to provide a block of rooms for workshop attendees at a discounted rate. Please see the workshop website listed below for more information.

Registration and Abstract Submissions

Those who plan to attend the workshop are asked to fill out the workshop’s online registration form, which is located at http://www.law.uiuc.edu/faculty-admin/federal-court-workshop.asp no later than July 31, 2010.

Persons wishing to present a paper may upload an abstract to the workshop’s online registration page, or e-mail it to Jamelle C. Sharpe at jcsharpe@illinois.edu. All abstracts must be submitted by June 30, 2010. A committee of past participants will select papers no later than July 15, 2010.

Wednesday, May 05, 2010

Prof. Glashausser Posts Article on Article III Exceptions Clause

Professor Alex Glashausser (Washburn) has recently posted an article entitled A Return to Form for the Exceptions Clause on SSRN. Here is the abstract:

This article challenges the prevailing doctrinal, political, and academic view that the Exceptions Clause – which provides that “the supreme Court shall have appellate Jurisdiction, both as to Law and Fact, with such Exceptions, and under such Regulations as the Congress shall make” – gives Congress a license to strip the Supreme Court of jurisdiction. Properly interpreted, the facially ambiguous clause instead allows Congress to shift cases within the Court’s jurisdiction from appellate to original form. The word “Exceptions,” that is to say, applies not to “Jurisdiction” but rather to “appellate.”

In its initial draft, the clause unmistakably affected only the form, not the existence, of jurisdiction: “[T]his supreme jurisdiction shall be appellate only, except in those instances, in which the legislature shall make it original . . . .” The article traces the devolution of that clear language into the final nebulous version, explaining at each step of the editing process why the Constitutional Convention delegates tinkered with the wording. As a result of what they thought were innocuous changes, the legislative exceptions power became susceptible to the misconception that it was confiscatory. It was meant to be transformative, allowing Congress to empower the Supreme Court by shifting important cases from appellate to original form. In short, the clause was designed not to eliminate cases, but to expedite them.

This article may be downloaded by visiting http://ssrn.com/abstract=1594375.