Federal Issues

    Litigation Pleading Standards 

    AICPA Position

    Congress is considering the Notice Pleading Restoration Act, S. 1504, introduced by Senator Arlen Specter, a Pennsylvania Democrat, and Open Access to Courts Act, H.R. 4115, introduced by Representative Jerrold Nadler, a New York Democrat, that would overturn two recent Supreme Court decisions upholding the position that plaintiffs need to establish plausible facts in order to sue a defendant.  AICPA opposes both bills in their current form and does not support overturning these decisions.


    In the Supreme Court’s 2007 Bell Atlantic v. Twombley, an antitrust case, the Court ruled that in order to meet the appropriate pleading standard, the complaint must contain enough facts to “raise a reasonable expectation that discovery will reveal evidence of illegal agreement" and a pleading must “state a claim to relief that is plausible on its face."

    In the 2009, the Supreme Court built on Twombley in the Ashcroft v. Iqbal case.  In Iqbal, the claimant maintained that the Twombley’s "facial plausibility" test should be limited to the pleadings made in an antitrust dispute, as had been involved in the Twombley case. The Supreme Court held that the argument that Twombley was limited to antitrust actions "is not supported by Twombley and is incompatible with the Federal Rules of Civil Procedure", and the Court also held definitively that Twombley applies to all civil actions.

    Claimants now must explicitly include in their initial pleadings substantial factual assertions, not "threadbare," that give "facial plausibility" to their claims instead of notice pleading, which required only a simple statement of the case against the defendant.

    Legislative Action

    S. 1504 and H.R. 4115, if enacted, would shift the governing legal standard and open the floodgates to frivolous litigation because complaints no longer would need to be specific. Previously established statutory pleading standards would be eviscerated.  Filing a complaint to engage in a “fishing expedition” would become an accepted practice increasing litigation burdens on both defendants and the courts.

    Further, under existing law, if a federal statute requires a more specific form of pleading and if a claim brought under such statute does not meet the specificity requirements of such a statute, it would be dismissed because the claim would fail to meet the standards upon which relief can be granted.  However, S. 1504 and H.R. 4115 would override these previously enacted pleading standards.

    For example, the Private Securities Litigation Reform Act (“PSLRA”) was enacted in 1995 and includes a specific pleading standard.   If either of these bills were to become law the balanced pleading standard of PSLRA found in 15 U.S.C. § 78u-4(b), which requires the claimant, amongst other requirements, to “state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind”, would be nullified.


    Copy of Legislation

    A copy of these bills are available on THOMAS.  The most recent version of the bill, and all Congressional actions, are available by searching for S.1504 and H.R. 4115 by bill number.

    Staff Contacts

    Matthew Iandoli
    Director, Congressional Affairs

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    Congressional and Political Affairs Advocacy

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