New York Attorneys JHA handles range the gamut of complex financial and commercial litigation and arbitration, including securities, RICO, corporate and contract disputes, credit default swaps, derivatives, and class, mass, and derivative actions. The firm also represents law firms in major disputes.

Commercial Litigation and Arbitration

New York Attorneys JHA handles range the gamut of complex financial and commercial litigation and arbitration, including securities, RICO, corporate and contract disputes, credit default swaps, derivatives, and class, mass, and derivative actions. The firm also represents law firms in major disputes.
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More on Bell Atlantic v. Twombly & the Supreme Court’s New Pleading Standards

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On Monday, I moderated an ALI-ABA seminar exploring Bell Atlantic v. Twombly, 2007 U.S. LEXIS 5901 (U.S. May 21, 2007) (see our post of May 27, 2007), with panelists Chief Judge Anthony Scirica of the Third Circuit, Professors Steve Burbank of the University of Pennsylvania and Arthur Miller of NYU, and two lawyers on the opposite sides of the case in the Supreme Court, Aaron Panner of D.C. and Doug Richards of New York. Some facts, issues and conclusions:

• As of Monday, July 23, 2007 — 9 weeks to the day after Twombly was decided — 396 federal decisions had cited the case, including approximately 20 Circuit opinions dealing with subject matters (in addition to antitrust) as diverse as § 1983, securities, derivative actions, defamation, insurance coverage, Fair Debt Collection Practices Act, state human rights claims, RICO, the Federal Arbitration Act, the Fair Housing Act and qualified immunity.

• One could read Twombly’s plausibility-in-pleading standard as requiring that the inference alleged in the complaint be more persuasive than alternate inferences (see, e.g., 2007 U.S. LEXIS 5901, at *24 (allegation insufficient where it ‛could just as well“ give rise to inference of non-violative conduct) and at *42-*43 (allegation insufficient where ‛we have an obvious alternative explanation“)). But, whatever Rule 8(a)(2) means, it cannot by any means require more than the strict scienter pleading requirement of the PSLRA, and Tellabs, Inc. v. Makor Issues & Rights, Ltd., 2007 U.S. LEXIS 8270 (U.S. June 21, 2007) (discussed in our post of July 7, 2007) teaches that the PSLRA is satisfied by an inference of equal plausibility.

• Consider a securities case alleging § 11, 10b-5 and common law fraud claims (thus, not a class action). The § 11 claim is governed by Rule 8(a)(2) because it doesn’t require fraudulent intent, the 10b-5 claim is governed by the strict statutory scienter requirement of the PSLRA, and the common law fraud claim is governed by Rule 9(b). What is the difference in the pleading standards among the three of them? It is not possible to articulate those differences with any assurance.

• Twombly was decided in the antitrust setting, where more than a century’s worth of precedent addresses whether certain alleged factual settings are sufficient to state a plausible conspiracy claim. Other legal settings have nothing like the rich precedential history of antitrust concerning what factual allegations are sufficient to state a conspiracy — RICO, for example, or state civil conspiracy claims. Are allegations that would be insufficient for antitrust actions sufficient for these other types of claims? One step further removed, there are conspiracy-like doctrines such as aiding and abetting. What are the factual allegations required for these? Is it necessary, or sensible, to attach an expert report construing the complaint’s allegations to the complaint to show the court that you have stated a plausible claim? How is the judge to decide plausibility in a vacuum?

• In Credit Suisse Secs. (USA) LLC v. Billing, 2007 U.S. LEXIS 7724 (U.S. June 18, 2007), the Supreme Court held that the securities laws implicitly preclude the application of the antitrust laws to conduct subject to strict SEC regulation. One of the reasons offered by the Court was that ‛antitrust plaintiffs may bring lawsuits throughout the Nation in dozens of different courts with different nonexpert judges and different nonexpert juries. In light of the nuanced nature of the evidentiary evaluations necessary to separate the permissible from the impermissible, it will prove difficult for those many different courts to reach consistent results.“ Id. at *31. Between Twombly, Billing, Tellabs and Dura, we seem to be seeing a Supreme Court that is skeptical of the ability not only of juries but also of judges — a court that wants to impose strict limits on large scale litigation absent a showing of merit at the outset of the suit in light of the costs that such suits impose. In many prior cases, the Court has said this is a matter for rulemakers. Now, it seems to have taken matters into its own hands.

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New York Attorneys JHA handles range the gamut of complex financial and commercial litigation and arbitration, including securities, RICO, corporate and contract disputes, credit default swaps, derivatives, and class, mass, and derivative actions. The firm also represents law firms in major disputes.
New York Attorneys JHA handles range the gamut of complex financial and commercial litigation and arbitration, including securities, RICO, corporate and contract disputes, credit default swaps, derivatives, and class, mass, and derivative actions. The firm also represents law firms in major disputes.

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