Variation in State and Federal Pleading Standards: Webb and Veasy

A few years ago, the United States Supreme Court departed from its long-held “notice” pleading standard, and adopted a new “plausibility” pleading standard in its Twombly/Iqbal[1] decisions. The heightened pleading standard adopted by the Supreme Court in these cases requires a complaint, in order to survive a motion to dismiss, to “contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.”[2]

On July 21, 2011, the Tennessee Supreme Court declined to follow the Twombly/Iqbal pleading standard in its Webb v. Nashville Area Habitat for Humanity Inc.[3] decision, and instead continued to follow the “notice” pleading standard as set forth in Conley v. Gibson.[4] The distinction, of course, applies in all cases. However, it is particularly important in employment discrimination/retaliation cases (“employment case”), many of which are subject to dismissal as a matter of law, at least in federal court. Applying the Twombly/Iqbal standard can help weed out meritless cases before the defendant employer has to spend tens of thousands of dollars on discovery, summary judgment motions and unnecessary trials. The impact of the different standards was highlighted on Apr. 17, 2012, when Judge Trauger of the United States District Court for the Middle District of Tennessee issued the opinion in Veasy v. Teach for America Inc.,[5] in which the Twombly/Iqbal standard was applied to dismiss the plaintiff’s complaint.

The claims in both Webb and Veasy arose out of the plaintiffs’ employment: state law retaliatory discharge in Webb, and federal law discrimination in Veasy. Also, there can be no argument that neither complaint was overly specific in its allegations. However, Webb’s complaint survived a motion to dismiss for failure to state a claim upon which relief could be granted,[6] while Veasy’s did not.[7] Seem odd? Perhaps it is. An examination of the two cases is necessary to better understand how the divergence of these pleading standards can, and will, affect employment litigation

Webb v. Nashville Area Habitat for Humanity Inc.

The plaintiff in Webb sued her former employer alleging violations of the Tennessee Public Protection Act[8] (TPPA) and common law retaliatory discharge. In her complaint, she alleged that she was terminated for her “unwillingness to participate in or remain silent about … illegal acts.”[9] Specifically, she averred that management employees asked her to implement unlawful policies that discriminated on the basis of age, familial status and disability.[10] Upon the defendant’s Tenn. R. Civ. P. 12.02(6) motion to dismiss, the trial court dismissed the complaint, but the Court of Appeals held that the amended complaint sufficiently stated a cause of action for retaliatory discharge.

The Tennessee Supreme Court affirmed, holding that under Tenn. R. Civ. P. 8, Webb’s complaint was sufficient to survive the motion to dismiss. More importantly, as noted above, the court adhered to the “notice” pleading standard, and explicitly rejected the “plausibility” standard set forth in Twombly/Iqbal. In a unanimous opinion by Justice Lee, the court provided a litany of reasons for its refusal to follow the federal standard. First, the court noted that adopting the “plausibility” pleading standard would “reflect a significant and substantial departure” from prior interpretations of Rule 8 and would likely violate the doctrine of stare decisis.[11] Second, the court cautioned that the federal standard requires a “judicial weighing of the facts” to determine whether the pleaded facts “plausibly” present a claim for relief — such a determination would evaluate the plaintiff’s proof and evidence at a very early stage, as opposed to simply the legal sufficiency of the complaint.[12] Third, the Twombly/Iqbal tests to differentiate between facts and legal conclusions were described as difficult to apply.[13] Fourth, the court was concerned that the Twombly/Iqbal standard may cause a “disproportionate dismissal of certain types of potentially meritorious claims that require discovery to be proven, including actions for civil rights … [and] employment discrimination.”[14] There, the court emphasized that in those type of actions (i.e., employment discrimination) there is often an “information asymmetry” problem in that the defendant has possession of discoverable material necessary to make a complaint “plausible,” but to which the plaintiff does not, at that early stage of the proceeding, have access.[15] The court was clearly concerned that employing the heightened standard may “deny access to justice” to plaintiffs with employment discrimination and civil rights claims.[16] Finally, the court explained that the Twombly/Iqbal standard was better suited to deal with issues unique to federal trial courts, such as difficulties in preventing discovery abuses and weeding out weak claims, and thus its implementation in Tennessee was not necessary.[17]

In rejecting the heightened Twombly/Iqbal standard, the Tennessee Supreme Court reaffirmed its commitment to “a liberal notice pleading standard, which recognizes that the primary purpose of pleadings is to provide notice of the issues presented to the opposing party and court.”[18]

Veasy v. Teach for America Inc.

The plaintiff in Veasy brought a race discrimination claim under Title VII of the Civil Rights Act of 1964 (Title VII)[19] and an age discrimination claim under the Age Discrimination in Employment Act of 1968 (ADEA)[20] against the defendant employer on a failure to hire theory. On the defendant’s Fed. R. Civ. P. 12(b)(6) motion to dismiss, the district court applied the Twombly/Iqbal “plausibility” pleading standard and dismissed both of plaintiff’s causes of action.

As to the Title VII claim, the plaintiff argued that his complaint should survive the motion because the complaint stated that he “noticed” a large majority of the job applicants were white, that the company’s refusal to give him a reason for his nonselection “raise[d] a red flag,” and that he was at a disadvantage because the company held all the relevant documents that could be used to prove his case.[21] The court held that these allegations were insufficient to give rise to a fair inference that he was discriminated against on the basis of his race.[22] The court explained that plaintiff’s “noticing” a majority of applicants are white does not suggest any discriminatory animus. Furthermore, the court noted that the plaintiff did not allege any race-based statements or conducts by the defendant. As to the “information asymmetry” argument, the district court, unlike the Tennessee Supreme Court who relied upon the theory, rejected it outright: “The argument is pure boilerplate, is not justified under the circumstances presented here, and, in any case, is plainly inconsistent with the pleading standards applicable to employment discrimination cases, which definitely do not entitle plaintiffs to discovery in ‘almost all’ discrimination cases, as Veasy’s counsel asserts.”[23]

The plaintiff’s age discrimination claim fared no better. His complaint alleged that he heard comments during the interview process that the program was “only for young people” and that the “program was not developed for people like [him].” Again, he also relied on the fact that he “noticed” most applicants were in the 19-21 age range.[24] The court held that such vague statements were insufficient to show that the plaintiff’s age was a determining factor in his non-selection. Indeed, the court noted that the complaint “does not provide any specific details concerning who made the statement, when, or in what capacity.”[25]

Comparing Webb and Veasy

Analyzing these cases raises a couple of questions: Did Webb’s complaint survive just because it was examined under the more liberal pleading standard of the state court, and not the heightened federal standard? Veasy’s complaint was insufficient under the federal standard, but would it have passed muster at the state level?

At least in regard to these two cases, we wouldn’t go so far as to say that the outcomes would have been different had the cases been in different forums. Webb’s complaint may have simply been more sufficient than Veasy’s complaint. For example, in granting the motion to dismiss in Veasy, the court noted that the complaint failed to mention any employee of the defendant that acted in a discriminatory manner.[26] The same defect was not present in Webb’s complaint — she listed specific individuals who engaged in specific conduct to support her claim for retaliatory discharge. From this perspective, it is conceivable that Veasy’s complaint would not have survived a motion to dismiss even at the state level.

Effects of Different Pleading Standards

Webb and Veasy indicate how the different pleading standards can lead to drastically different outcomes when a defendant files a motion to dismiss. How will these different standards affect litigation strategy?

Choice of Law

Under current Erie jurisprudence, federal courts in a diversity action would not be required to adopt state pleading standards.[27] The rules regarding the specificity to be applied to federal pleadings are governed by federal rules and not state rules.[28] On the other hand, state courts hearing federal subject-matter claims utilize state procedures unless the procedural rights are a “basic and fundamental” part of the federal right at issue.[29] As one can imagine, this will likely lead to the practice of forum shopping.

Forum Shopping

Webb provides just one more reason for an employment discrimination/retaliation plaintiff to file the action in state court and try to keep it there. The Tennessee Supreme Court’s summary judgment decisions in Hannan v. Alltel Publishing Co.[30] (the moving party must demonstrate that the nonmoving party cannot prove an essential element of his/her claim at trial) and Gossett v. Tractor Supply Co.[31] (the McDonnell Douglas burden-shifting paradigm does not apply at the summary judgment stage of the proceedings) have made obtaining a summary judgment in an employment case in state court exceedingly difficult. In 2011, the Tennessee legislature enacted two statutes designed to conform the Tennessee summary judgment standards in employment cases to the federal standards.[32] The Tennessee Supreme Court has yet to address these statutes head-on in an employment case. Nevertheless, even assuming the legislature effectively shifted the summary judgment procedures to conform to federal law, it remains to be seen if this will result in more summary judgments in state court. Even before Hannan, employers’ counsel routinely removed as many cases as possible to federal courts which have traditionally been more for willing to grant dispositive motions. On balance, a plaintiff should have a better chance of getting the case to the jury in state court than in federal court.

Removal

Removing employment cases to federal court becomes an even more important consideration for defendants in light of these varied pleading standards.[33] In most cases, defendants will continue to remove eligible actions to federal court where the motion to dismiss and summary judgment standards are more conducive to having nonmeritorious actions dismissed before trial. As demonstrated in Veasy, the plaintiff’s complaint must reach a higher level of specificity to survive a motion to dismiss in federal court.

Conclusion

The standard for pleading a sufficient cause of action in an employment case will differ depending on whether the action is in state court or in federal court. The Tennessee Supreme Court’s decision in Webb made clear that the liberal “notice” pleading standard is still firmly in place … at least on the state level. However, as demonstrated in Veasy, the “plausibility” pleading standard of federal court requires the plaintiff to more specifically plead facts to establish an actionable claim as opposed to relying upon vague and conclusory allegations. These different standards will likely affect litigation strategy of counsel on both sides of the aisle.

Notes

  1. Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007); Ashcroft v. Iqbal, 556 U.S. 662 (2009).
  2. Iqbal, 556 U.S. at 678.
  3. 346 S.W.3d 422.
  4. 355 U.S. 41, 47 (1957) (“… all the Rules require is a short and plain statement of the claim that will give a defendant fair notice of what a plaintiff’s claim is and the grounds upon which it rests.”).
  5. 868 F.Supp.2d 688.
  6. Tenn. R. Civ. P. 12.02(6).
  7. Fed. R. Civ. P. 12(b)(6).
  8. Tenn. Code Ann. 50-1-304.
  9. Webb, 346 S.W.3d at 424-25.
  10. Id. at 425.
  11. Id at 430-31.
  12. Id. at 431-32.
  13. Id. at 432 (“In many instances, however, the distinction between whether an allegation is a ‘fact’ or a ‘conclusion’ is fine, blurry, and hard to detect.”).
  14. Id. at 434.
  15. Id. at 434-35.
  16. Id. at 435. It is important to note that the concept of “access to justice” has become a focal point for Tennessee’s highest court. In Dec. 2008, the Court made access to justice its number one strategic priority and formally announced its Access to Justice Initiative. In Apr. 2009, the Court formed the 10-member Access to Justice Commission. See Access to Justice, Tennessee Administrative Office of the Courts, http://www.tncourts.gov/programs/access-justice.
  17. Webb, 346 S.W.3d at 435-36.
  18. Id. at 426.
  19. 42 U.S.C. § 2000e et seq.
  20. 29 U.S.C. § 621 et seq.
  21. Veasy, 868 F. Supp.2d 688, 2012 U.S. Dist. LEXIS 53627 at **20-21.
  22. Id. at *22.
  23. Id.
  24. Id. at *24.
  25. Id.
  26. Id. at **22-24.
  27. See Erie Ry. Co. v. Tompkins, 304 U.S. 64 (1938).
  28. Hanna v. Plumer, 380 U.S. 460 (1965).
  29. Felder v. Casey, 487 U.S. 131, 151 (1988).
  30. 270 S.W.3d 1 (Tenn. 2008).
  31. 320 S.W.3d 777 (Tenn. 2010).
  32. Tenn. Code Ann. § 20-16-101 (adopts the federal standard that a summary judgment is proper, in addition to the Hannan standard, where the defendant can establish that the nonmoving party’s evidence is insufficient to establish an essential element of the nonmoving party’s claim); and Tenn. Code Ann. § 4-21-311 (which amended the Tennessee Human Rights Act to apply the McDonnell Douglas paradigm to all stages of a state law employment discrimination/retaliation claim, including at summary judgment).
  33. See 28 U.S.C. § 1441.

EDWARD G. PHILLIPS is a lawyer with Kramer Rayson LLC in Knoxville, where his primary areas of practice are labor and employment law. He graduated with honors from East Tennessee State University and received his law degree from the University of Tennessee College of Law in 1978 with honors, and as a member of The Order of the Coif. He is a former chair of the Tennessee Bar Association’s Labor and Employment Law Section.

BRANDON L. MORROW is an associate with Kramer Rayson LLP in Knoxville, where his primary areas of practice are labor and employment and litigation. He earned a bachelor’s degree from the University of Tennessee and a law degree from UT College of Law in 2012.