Legislation has been proposed that could shatter vital safeguards against frivolous lawsuits. It is intended to overrule two U.S. Supreme Court decisions: Ashcroft v. Iqbal and Bell Atlantic Corp. v. Twombly. These decisions endorse principles applied by the lower federal courts in determining whether a complaint’s allegations are sufficient to defeat a motion to dismiss.
In addition to changing legal precedent, the legislation would impose significant costs on businesses by encouraging frivolous litigation. Pleading standards perform an essential gate-keeping function and ensure that defendants are not subject to the onerous burdens of discovery when it is not merited. Loosening pleading standards would force businesses to divert scarce resources from job creation and investment to legal costs.
Finally, there is no evidence that the Iqbal ruling has resulted in more dismissals of lawsuits. Even when motions to dismiss are granted, the plaintiff almost always has the opportunity to refile an improved complaint. This approach promotes judicial integrity while protecting the interests of plaintiffs with valid claims. The legislation would undo this balance and heavily tilt the playing field in favor of plaintiffs, regardless of the merits of their claims.
ACEC strongly opposes any legislation that would overturn the Iqbal and Twombly decisions.