Presenting a live 90-minute webinar with interactive Q&A Pleading Federal Environmental and Toxic Tort Claims Navigating Pleading Standards Amid Differing Court Decisions, and Overcoming Other Procedural Challenges TUESDAY, JANUARY 22, 2013 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: Kevin Haroff, Partner, Marten Law , San Francisco Gregory M. Gotwald, Partner, Plews Shadley Racher & Braun , Indianapolis Brianna Schroeder, Plews Shadley Racher & Braun , Indianapolis The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .
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Pleading Federal Environmental and Toxic Tort Claims Navigating Pleading Standards Amid Differing Court Decisions and Overcoming Other Procedural Challenges Gregory M. Gotwald Brianna J. Schroeder P LEWS S HADLEY R ACHER & B RAUN LLP January 22, 2013 4
Background • Common Law Pleading – (emphasis on procedure over substance) • Code Pleading – (hypertechnical scheme that abolished common-law form of action) • Federal Rules Pleading – (adopted in 1938 to relax strict code pleading rules) 5
Background • “Notice Pleadings” – Coined by Conley v. Gibson , 355 U.S. 41 (1957). – Complaint must give “fair notice” of: • the plaintiff’s claim and • the grounds upon which it rests. 6
Background • “Notice Pleadings” – Conley v. Gibson , 355 U.S. 41 (1957). • “[A] complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his which would entitle him to relief.” 7
• “Notice Pleadings” have changed. • Conley overruled by Twombly & Iqbal. • The “no set of facts” standard is no longer the standard. • It is now a “plausibility” standard. 8
Bell Atl. Corp. v. Twombly • Plaintiffs alleged Bell Atlantic’s “parallel behavior” violated Sherman Act. • Under the Act, parallel behavior alone falls short of establishing offense. 9
Twombly (cont’d) • Under the Act, an allegation of parallel conduct requires some factual setting. • Complaint must provide plausible grounds to infer an agreement. 10
Twombly (cont’d) • What are plausible grounds ? – Not a probability requirement. • A complaint may proceed even if actual proof of those facts is improbable, and recovery is remote and unlikely. – Need to allege enough facts to raise reasonable expectation that discovery will reveal evidence of illegal activity. • Without factual enhancement, the complaint stops short of line between possibility and plausibility. 11
Twombly (cont’d) • Conley ’s “no set of facts” should be retired. • This is not requiring Rule 9 heightened pleading. • Need to “nudge” claim across line from conceivable to plausible. 12
Ashcroft v. Iqbal • Iqbal was detained after 9/11. • Alleged he was designated person of “high interest” and mistreated because of his race, religion, or national origin in violation of 1 st and 5 th Amendment. • Alleged defendants Ashcroft and Mueller were behind his mistreatment. 13
Iqbal (cont’d) • Iqbal needed to plead that each defendant acted with discriminatory purpose. • He needed to plead that the defendant took action or made a decision “because of” not merely “in spite of” adverse effects on identifiable group. 14
Iqbal (cont’d) • The Court’s review of the complaint: – Court should assume veracity of well-pleaded “factual” allegations. – Pleadings that are no more than conclusions are not entitled to assumption of truth. – Evaluates whether complaint contains sufficient “factual” matter to state a claim to relief that is “plausible” on its face. 15
Iqbal (cont’d) • Well-pleaded facts: – “‘[L] abels and conclusions’ or ‘a formulaic recitation of the elements’” is not enough”. – “‘[N] aked assertions’ devoid of factual enhancements” will not do”. – Legal conclusions are not considered facts. 16
Iqbal (cont’d) • Plausibility – It is a “context specific task ”. – Courts should utilize “experience and common sense ”. – It exists “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged”. 17
Iqbal (cont’d) • Plausibility – It is not a “probability” requirement. – It is more than a “possibility” requirement. – However, if facts are “‘merely consistent with a defendant’s liability, it ‘stops short of the line between possibility and plausibility of entitlement to relief .’” 18
Iqbal (cont’d) • “Consistent with” – Parallel behavior in Twombly was consistent with illegal agreement, but there was an “obvious alternative explanation” and no factual enhancement. – Actions in Iqbal were consistent with discrimination, but there were “more likely explanations” for the behavior. – Isn’t this weighing the evidence? 19
Where Are We Now? • Plausibility, not possibility or probability, is the rule. Plausibility Possibility Probability 20
Where Are We Now? • Takeaways from Twombly & Iqbal : – Claims must be “plausible” • Claim-specific evaluation • More than possible, less than probable • Allege actual facts – Legal conclusions and bald assertions don’t count – Need to show enough facts: » reasonable expectation that discovery will reveal evidence of wrongdoing » Reasonable inferences will prove your case 21 • Inconsistent with likely alternative explanations
What does this mean in an environmental context? A case study: Z-J, Inc. v. Pfizer . 22
Z-J, Inc. v. Pfizer, Inc. • Plaintiff brought state court action alleging various state-law claims: – Nuisance; – Trespass; and – Other environmental liability claims. • Defendant removed to federal court. 23
Z-J (cont’d) • Plaintiff alleged: – I t owned property adjacent to an open “dump” that defendant owned and used from the 1940s – 70s. – Defendant disposed of “many types of wastes” and “basically everything” from the defendant’s facility. • Plaintiff alleged that the disposal “potentially” included various specific wastes that plaintiff suspected defendant disposed of in the dump. 24
Z-J (cont’d ) • Plaintiff alleged: – Historical test results showed elevated levels of contamination in plaintiff’s groundwater. – Defendant entered into agreement with the state regulatory agency to remediate the dump (maintain cover and test monitoring wells). – Despite this cleanup, waste existed on plaintiff’s property and contamination was still present into the groundwater. – If plaintiff used its irrigation pump, it would draw contaminated water onto its property and into its pond. 25
Z-J (cont’d ) • Defendant moved to dismiss pursuant to 12(B)(6). – Defendant argued: • Plaintiff failed to specify the exact substances in the environment. – Only said specific substances were “potentially” there – Did not identify any specific “hazardous” substance • Plaintiff failed to allege that the contaminants currently existed in the plaintiff’s soil/groundwater. 26
Z-J (cont’d) • Defendant argued: • Plaintiff failed to provide facts regarding the levels of contamination . – Are the levels above background? – Are the levels “actionable” under state regulatory scheme? • Plaintiff failed to explain how the contamination on the defendant’s property caused damage on the plaintiff’s property. 27
Z-J (cont’d) • The Court said: – “[T]he boundary between a well-pled complaint and an insufficient one…is still evolving and therefore is somewhat blurry .” – While it is difficult to articulate why a case falls on one side or the other of the line, notice pleading is all that is required. – Plaintiff must show that it is plausible, rather than merely speculative, that he is entitled to relief. 28
Z-J (cont’d) • The Court said: – Agreeing to defendant’s argument would set pleading standard inconsistent with notice pleading. – Notice pleading does not require allegations of what specific substance was released. 29
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