Denial Order: Rule 12(b)(6) and Twombly/Iqbal – Cardozo Act Review (2023)


its participantsReview of the Cardozo Lawspecial edition1– Judges, academics and practitioners: Reiterate a point that rings loud and clear: the costs and inefficiencies of civil litigation are high and growing at an alarming rate. This controversy continues to stir the legal community.2The enthusiasm spans several interrelated issues: the prohibitive costs, unreasonable delays, and abusive practices associated with much modern litigation. These circumstances have worrying implications for a wide range of fundamental values, including restricting many people's access to justice, as the cost of going to court, represented by a lawyer, is prohibitive. Such concerns touch the fundamental interests of the legal profession, legal practice, the courts, and society at large.

The opinions expressed by the different participants highlight another important point: the underlying problem is old. It is also ubiquitous and entrenched, and indeed has resisted intervention by a variety of previous reform efforts for generations. Years of recurring consultations, like the ones reproduced here, testify to the pervasiveness of concerns and the shortfalls in action to alleviate them. Numerous attempts to address the fundamental issues through amendments to the federal code of civil procedure (the Federal Code or Regulation), through acts of Congress, and through case law have failed. None of these efforts significantly changed the depth or scope of the problem. Thus, the difficulties remain alive to this day.3Therefore, if problems are to be seriously and meaningfully addressed, new approaches may be needed along with broader remedial methods.

A central aspect of this debate raises the question of what constitutes the problem. Among the explanations put forward, the enormous burdens of discovery procedures generally top the list of complaints from the legal profession. Given the outsized role Discovery plays in modern litigation,4this concern aptly implies continued agitation for reform and dominates responses to corrective action. Two other major phases of pretrial proceedings, which present litigants and attorneys with ample opportunities for inefficiency and waste, top the list of concerns, though they are much less talked about: (1) motions to file pursuant to the Federal Standard 12 (B);5and (2) motions for summary judgment under Federal Statute 56.6In practice, these sources also serve as procedural sources from which litigation draws ample avenues and resources to add unnecessary costs, lengthen duration, and magnify the abuses that characterize many lawsuits.

In some cases, the costs and delays caused by practices moving under these procedures can equal or even lessen those associated with the collection of evidence. However, research into its role among the causes of discontent, raising concerns in the legal community about excessive litigation and extreme advocates, has not received the research attention it deserves. Because they are major sources of excessive litigation, a major overhaul of these procedures to eliminate the vast waste and futility they cause could result in major improvements to the justice system. A company so designed could still secure the officially stated, but in practice often ignored, purposes of Rule 1: "fair, prompt, and inexpensive determination of all acts and proceedings."7

Particularly with respect to motions to dismiss under Rule 12(b)(6), there is the prospect of significant gains for the administration of justice from procedural reform.8Two observations support this claim. First, because a motion to dismiss is made at the beginning of a court case, it can serve as a useful means for the court to provide legal guidance. If successful, the strategy can simplify the lawsuit, help resolve it, or even eliminate it in whole or in part before the parties proceed with full disclosure, a move that tends to significantly alter the dynamics of litigation. Consequently, for the defense, these beneficial effects are a reason to dismiss exercise as exciting and a lifeline to a world of positive thinking. But when they are unsuccessful because they are filed unnecessarily, recklessly, or prematurely, motions to dismiss can lead to counterproductive results and provide ample opportunity for overly costly and inefficient dispute resolution. Second, as discussed in Part IV below, there are alternatives for conceptual improvements in both the doctrine and the process governing filing requests and related pretrial proceedings.9

With the foregoing considerations in mind, these comments examine some key issues that arise in law and practice related to motions to reject. The article's premise is simple, though perhaps provocative in some legal circles. On the day-to-day front and in the trenches of litigation, rule 12(b) claims tend to be overused, misused or abused.10To the extent this phenomenon exists, a certain level of challenges filed on federal matters that are significant under this article may contribute to increased costs and delays and other signs of excessive litigation against the civil jurisdiction system. Thus, any action that reduces the frequency of such practices or simplifies their scope and application can result in a significant reduction in litigation costs and delays, improving the efficiency and fairness of the justice system.

As the limitations of this forum allow for only a generalized treatment of the topic, the broad narrative that follows acknowledges the need for a more specific empirical examination of the topic. In this context, this assessment focuses in particular on waiver requests made pursuant to Rule 12(b) and specifically addresses requests under subsection 12(b)(6) that allege "failure to assert no claims that can be claimed as granted. "11The analysis suggests that Rule 12(b)(6) and the rules prescribed to enforce its procedure are a fertile source of undue power and inefficiency in litigation. The argument concludes that Rule 12(b)(6), as now written and applied, should be drastically changed or abolished entirely.

The argument is based on the general concern indicated above. The complexity, costs, delays, and abusive practices in federal civil litigation have grown to levels that result in significant unfairness and inefficiency in dispute resolution. One of the causes of this evolution can be attributed to the procedural methods that, depending on the rules of procedure or practice, have detrimental effects on the administration of justice. In order to illustrate the existence, scope, and nature of the problem and to articulate the means to mitigate its impact, this Article focuses analytically on submissions under Rule 12(b)(6) filed in securities disputes.

The following discussion is divided into five parts. Part I reviews the legal, doctrinal, and empirical foundations of securities claims that have shaped the frequency of dismissals in this important area of ​​law. It is believed that securities disputes are a unique source of motions to dismiss and that a review of this practice may inform analysis of unnecessary litigation in general. Part II describes the study of the US District Court for the Southern District of New York (SDNY), an empirical survey measuring the volume of securities lawsuits and motions to dismiss filed in a major federal district court.12Part III contains an analysis of the empirical data reported in the SDNY study. Part IV proposes a comprehensive reform program that aims not only to reduce costs and inefficient litigation caused by unnecessary filing of appeals, but also the detrimental effects of other excessive prosecution practices mentioned in Parts I, II, and III. . Part V returns to the macro scale for some considerations, provides a historical overview of previous research, and notes some of the conclusions they suggest for the big picture.


A. History and hypothesis

This presentation seeks to refine and reinforce a salient point in the author's essay published in the 2016 edition.Review of the Cardozo Lawwhich served as a catalyst for discussion in this forum.13As discussed in these considerations, a significant portion of the state litigation pursued by the practice of archiving is premature, unnecessary, or unjustifiable for various reasons beyond the merits of the litigation at hand. Among the main reasons driving this development, several forces have particular implications. First, there are loopholes in the federal regulations that allow and even condone the filing of useless or unnecessary applications.14Second, some economic imperatives, both macro and granular, affecting the particular legal transaction, exert intense pressure on lawyers to pursue self-interested methods that often subordinate or ignore the requirements of fairness, promptness, and economics in dispute resolution.15Third, there is a collective culture in the legal profession that, combined with the practice styles of individual lawyers, encompasses much deliberate inefficiency in litigation.sixteenTo some extent, this vision even rejects abusive practices, essentially because in its manual it is how everyone does it, perceived as the most beneficial. And fourth, inadequate case management by the courts, while constrained to some extent by federal regulations, fails to provide the necessary judicial guidance and oversight to stifle some professionals' innate impulse to over-defense.17

These structural weaknesses have shaken the foundations of the judicial system and, to some extent, have moved the rug under the legal issues.18Often, legal procedures are not only unnecessarily long and expensive, they are also pointless and abusive, resulting in longer delays and higher costs for other cases to reach a court decision. To the extent that some of the procedures that populate judges' dockets are unnecessary or excessive, they produce adverse side effects for parties, attorneys, courts, and ultimately the judiciary and the general public. Such unfavorable consequences occur in both simple and complex cases. Among them, the most worrying are the limitations imposed on access to justice, which exert pressure on the legal system from two sources: on the one hand, the time and resources that the parties and the courts dedicate to disputes involving claims unfounded and excessive or unnecessary litigation. ; and, on the other hand, by more and more litigants who are forced out of the legal services market due to the constant increase in costs.

To assess these claims related to Rule 12(b)(6) motions to reject, the author conducted a study, described in Part II below, that collected empirical evidence from a survey of such motions filed in securities lawsuits with SDNY that were in the years 1990 to 2016 (the SDNY study or the study). The study's focus on securities disputes, to allow for a review of the impact of motions to dismiss on litigation costs and inefficiency, was guided by several considerations. As set forth and elaborated below, trial practice and recorded empirical evidence in securities cases can serve as instructive lenses for examining court cases and theorizing whether the observations and conclusions drawn can inform policy for trial reform more broadly.

In general, securities lawsuits are among the most complex and long-running disputes on Federal Court records. The standards required by the applicable doctrine to claim a remedy in a value trial and defend against alleged violations are broad and onerous; they result from a complicated structure of three levels of overlapping regulations.19This structure is based on legal mandates, rules of procedure, and Supreme Court doctrine.20

For the above reasons, the preparation of pleadings and supporting documentation in securities disputes requires an exceptional investment of time, capital, and specialized legal and business knowledge for both plaintiffs and defendants. Taken together, these circumstances manifest themselves in court cases involving large files. In this context, the multi-layered complexities that characterize securities claims also present unique burdens and challenges for courts. they are uniformly perceived as immensely complex and vague. The applicable rules require the exercise of exclusive subjective or normative judgments, such as whether a specific claim made is "sufficient," "plausible," or demonstrates a "strong" conclusion of fraud.21

Since securities disputes consume excessive resources from all parties involved - litigants, lawyers, and courts - a review of such procedures can provide instructive reasons to prove the thesis presented in this review. The results thus obtained can also serve as a microcosm for identifying prevailing practices not only in securities claims, but also in civil litigation in general. In this context, the study hypothesizes that, to the extent that there is a worrying level of excesses in general, and specifically related to the frequency and practice of layoffs, the dark side of this experience is likely to be particularly pronounced. and can manifest itself, albeit disproportionately. in the context of securities cases. In addition, it can be instructive how litigants, attorneys, and courts respond to adjustments to the doctrines and rules applicable to securities litigation specifically designed to prevent, expedite, or expedite the resolution of such lawsuits. This experience can not only help confirm the existence and scale of the problem, but also help design appropriate reforms.22

A caveat is necessary at this point. Of course, the dimensions of the problem shown here cannot be calculated with mathematical certainty. On a large scale, the traces of its spread can only be awkwardly displayed and captured only in blurred outlines and shadows. But, like a malignant tumor photographed on stained X-ray film, when it's imprecisely defined and misinterpreted, it's still there.

With this in mind, understanding the reasons for the difference in the degree to which there is a significant difference in the filing rate of requests for clarification in securities cases compared to other procedures can help to understand how and to what extent such requests are imposed. in some cases it can be an excessive procedure. The analysis can also help highlight the key forces driving unnecessary litigation and ways to prevent or reduce unnecessary claims.23Therefore, improvements in doctrine and practice that limit dismissals could result in corresponding savings, particularly by reducing the significant time and resources that litigants and courts now spend on unnecessary or avoidable litigation.

B. PSLRA eDosmbly/Iqbal

A disproportionate number of motions to reject securities issues appear to be the result of two fundamental developments. First, the bill from Congress, through the Private Securities Litigation Reform Act (PSLRA),24to limit unsubstantiated value claims, which critics say are based primarily on forced and liquidation values ​​by many claimants. To that end, the law has toughened the summary plaintiffs must complete to deny a motion to dismiss. Second, fourteen years after the PSLRA went into effect, the applicable base limit for consideration of Rule 12(b)(6) requests was further tightened by two Supreme Court decisions.Dosmbly25550 EE. UU. 544 (2007).2007 tuIqbal26556 EE. UU. 662 (2009).in 2009. These decisions overturned the soft philosophy embodied by the general "grade" chess rule that had prevailed in federal practice since the federal rules were passed in 1938.27Instead, the court enacted a supposedly more sophisticated "plausibility" doctrine to assess the sufficiency of civil claims.28

In relation to disputes over values, these events have raised a number of fundamental questions that may help to clarify the issues and propositions to which these observations point. It was endorsed by the PSLRA alone or combined with the subsequent impact of theTwombly/Iqbaldoctrine, make a material difference to the extent that: (1) the plaintiffs have filed securities claims; (2) the defendants in those cases have filed submissions; (3) the courts have granted, denied or otherwise decided such requests; and (4) has the litigation been prolonged or complicated by qualitative adjustments in the defense strategies or professional practices of the lawyer?29

The empirical data collected for the SDNY study suggest several important findings, which are detailed below. In short, after the approval of the PSLRA and the judgments of the Supreme Court inTwombly/Iqbalthe number of securities lawsuits filed with the SDNY decreased by 17%.30At the same time, in cases adjudicated under the PSLRA through 2016, defendants filed motions to dismiss an average of 41% more cases than before the PSLRA was passed.31-a significant amount- and the total number of appeals for clarification filed by the defendants in that period increased by 73%. But despite the stricter confession requirements imposed by law and Supreme Court doctrine, and consistent with the findings of several other studies on the effects ofTwombly/Iqbalthe speed at which SDNY judges grant or deny such motions in securities trials has remained relatively unchanged.32

The SDNY study also confirmed another important phenomenon. A significant number of clarification appeals have been filed for which there are no court orders. Such motions are believed to have been abandoned or withdrawn by the plaintiffs for reasons of compromise, ambiguity, or informal judicial guidance. Also in this sense, the data collected by the SDNY study show empirical results superior to similar results on this phenomenon reported in other studies carried out in the context of motions to reject the practice more broadly.

Basically, the SDNY study comes to a radical conclusion. Two major efforts by Congress and the Supreme Court to curb securities disputes and related filing practices may have only partially achieved their essential goal: to reduce the overall volume of securities disputes. However, at the same time, the number of filing requests has increased significantly due to the decline in new claims. This phenomenon raises a fundamental question that would require further research and empirical analysis: whether the savings from decreasing the total number of new securities lawsuits would be offset by higher costs and longer delays for litigants and lawyers due to the increased frequency of cases in which motions for dismissals were made.


a basis

In 1995, Congress passed the PSLRA.33in an effort to limit the filing of frivolous securities lawsuits in federal courts.34To that end, the law imposed increased guilty plea requirements on plaintiffs to limit the number of cases that survive the motion to close the litigation phase.35It applies primarily to civil actions brought pursuant to Section 10(b) of the Securities Exchange Act of 1934 (the Exchange Act).36e Regra 10b-5, emitida pela Securities and Exchange Commission (SEC).37Together, these measures are intended to protect investors from fraudulent or deceptive practices that adversely affect the value of securities and, therefore, could affect the integrity and stability of public capital markets.38

B. Methodology and Scope

The SDNY study sought to determine the potential impact of the PSLRA on securities lawsuits by analyzing the frequency of filing of securities lawsuits and related motions to dismiss. To this end, the study conducted a longitudinal analysis of all securities lawsuits and related termination motions filed with the SDNY from 1990 to 2016.39The data collected therefore covers both the period before and after the PSLRA went into effect and provided a basis for assessing whether there were changes in the number of lawsuits and securities filings filed. Thus, the study's count of (1) the total number of securities lawsuits filed per year, (2) the number of filing petitions filed per case, and (3) injunctions on these petitions provided an analysis of the count. of values. litigation cases, and can also provide information on the potential impact of the law on the quality of briefs in these cases.40

The study found that the overall volume of securities disputes has not changed significantly since the passage of the PSLRA, but that the relative rate of cases where motions to reject have increased significantly.41Still, while the caseload has increased as more motions to dismiss have been filed, courts have granted roughly the same percentage of such motions before and after the PSLRA went into effect.42Based on this, the study suggested that after the passage of the PSLRA, SDNY judges faced a greater number of filing motions in securities cases than before the legislation.43

1. Scope of the investigation

The scope of the SDNY study was limited to an empirical investigation and analysis of claims related to securities claims filed with the SDNY.44The SDNY is an important venue for this investigation because a significant percentage of securities lawsuits filed in the United States are filed in this court.45In addition, New York City is home to two of the largest stock exchanges in the country, the New York Stock Exchange (NYSE) and the NASDAQ Stock Exchange, and is widely considered the corporate capital of the United States. As such, the SDNY filing can serve as a valuable guide in assessing the potential impact of the PSLRA on the volume and quality of filings, briefs, filing practices, and filings in securities cases.

The SDNY study sought to identify process trends by comparing filings and compliance practices before the PSLRA went into effect (years 1990-1995) and after (years 1996-2016). To do this, it raised cases filed from 1990 to 2016.46In total, the study looked at 7,328 cases, the sum of all bond cases filed with the SDNY within the specified time period.47In those years, 4,620 appeals for clarification were filed in these cases. Of these, the courts allowed 1,535, denied 938, partially admitted and partially denied 532, and left 1,615 unresolved.

2. Categories of cases and methodology

A. A category

The study classified all filing requests filed in the cases into four categories. The classification included remedies that the courts (1) awarded in full, including those granted without prejudice, meaning that the plaintiff was allowed to amend the claim; (2) totally denied; (3) did not take any affirmative or negative action, but ordered the motion closed (for example, due to ambiguity), or the party filing the motion withdrew or abandoned it before the court made a decision; and (4) granted in part and denied in part with respect to specific claims or defendants.

B. Calculation methodology

To calculate the percentage of applications granted or denied by the courts, the study used the general formula of dividing the total number of applications granted or denied by the total number of applications filed in a given year.48Therefore, the formula is not considered confirmed if it was partially confirmed and partially denied, since the result of such orders would not result in a resolution of the entire litigation and the action would probably proceed to the dispute resolution phase.

C. Events Considered: The PSLRA andDosmblymiIqbal

In analyzing the data collected for the study, it was important to consider two major legal events that may have influenced the practice of denying petitions in securities cases: the impact of the PSLRA and the combined impact of two Supreme Court decisions,Bell Atlantic Corporation en Twombly49550 EE. UU. 544 (2007).miAshcroft contra Iqbal.50The PSLRA removed the confession requirements applicable to securities lawsuits, andTwombly/Iqbaltogether they improved the defense doctrine that governs all federal prosecutions. Because the SDNY study focused on the effects of the PSLRA on SDNY motions to dismiss in securities cases, you should take into account any material changes in the facts attributable to theDosmblymiIqbaldecisions, unlike the PSLRA itself. The study therefore conducted two analyzes of data relating to both the adoption of the PSLRA and theTwombly/IqbalDecisions to assess the potential impact of each event on case and claim filing practices. The first analysis compared the numbers recorded for PSLRA action and application registrations prior to the enactment of the PSLRA with those recorded after the enactment of the law in 1996.DosmblymiIqbalas the passage of the PSLRA may have had an impact on motions to dismiss filed in SDNY securities disputes.51The analysis ofDosmblymiIqbalcompared data from years after the passage of the PSLRA, but beforeDosmblymiIqbal(1996–2006) with data from the years after these decisions (2009–2016). The study took into account any changes in the data after the PSLRA that could be attributed to thisTwombly/Iqbaland isolate any trends in the post-PSLRA data that are attributable to law rather than Supreme Court decisions.

C. Results

This section applies the methodology described above to the data collected to analyze whether the PSLRA made changes to (1) the cases filed, (2) the volume of archival requests filed per year per case, and (3) the percentage of such requests granted. or denied in whole or in part.

Denial Order: Rule 12(b)(6) and Twombly/Iqbal – Cardozo Act Review (1)

1. Conclusions on the number of cases

A. Prä vs. Post-PSLRA

From 1990 through 1995, the year before the PSLRA was enacted, an average of 315 securities lawsuits were filed with the SDNY each year. This number dropped dramatically in 1996, with a total of 173 lawsuits filed, compared to 353 the previous year. The sudden drop in cases this year can be explained by the unexplored scope of the recently enacted PSLRA and plaintiffs' uncertainty about how courts would interpret and apply the new law.

Whatever the cause of the decline in SDNY securities lawsuits in 1996, the decline was short-lived. Case records returned to pre-PSLRA levels over the next three years. In 1997, 222 value trials were initiated. And the volume of value lawsuits continued to grow in subsequent years, reaching 399 in 1998. There were 254 lawsuits filed in 1999 and 326 in 2000. Between 1997 and 2000, an average of 300 lawsuits were filed each year, a small, albeit small one. negligible, a reduction from the figures prior to 1996, when an average of 315 lawsuits were filed each year.

In 2001, the number of lawsuits filed by the SDNY grew exponentially. This sharp rise could be the result of the so-called "dotcom bubble" that culminated in the stock market crash in the early 2000s.52The number of securities lawsuits decreased in 2004. From 2004 to 2016, an average of 320 lawsuits were filed each year, indicating a return to the pre-PSLRA case count and supporting the conclusion that the law had no material impact in the long term in the volume of registered securities.

B. Before vs. afterDosmblymiIqbal

Beginning in 2010, the average number of SDNY securities lawsuits filed per year decreased, likely due to the combined effect ofDosmblymiIqbal. Between 1996 and 2006, excluding the break years 2001-2003, an average of 320 value judgments were filed each year. That number dropped by 17% in subsequent years.Twombly/Iqbal, an average of 264 per year for the period 2010-2016.53

2. Findings on the Motion to Reject Submissions

A. Prä vs. Post-PSLRA

Prior to the enactment of the PSLRA (1990-1995 period), the SDNY filed an average of 121 motions to dismiss per year in securities cases. For the years 1996 to 2000, the average number increased to 155. This average continued to increase, reaching 231 in the years 2004 to 2016. Excluding outlier years 2001 to 2003, the average number of claims filed per year after entry into under the PSLRA was 210, an increase of 73% over pre-PSLRA numbers.

Similarly, the percentage of cases in which a motion to close has been filed has increased dramatically since the passage of the PSLRA. In the period 1990-1995, 22% of the cases were closed. From 1996 to 2016 (excluding 2001-2003), 31% of securities cases in the SDNY were dismissed, with an average of 40% being dismissed over the past three years. Put another way, since the passage of the PSLRA, defendants have filed 41% more motions to deny than before the law was passed.

B. Before vs. afterDosmbly/Iqbal

The previously reported increase in exercise does not appear to be due to this alone.Dosmbly/Iqbal. While from 1996 to 2006 (excluding 2001-2003) an average of 184 waivers were made per year, from 2010 to 2016 this average dropped by around 4% to 177 requests per year.54This decrease is likely the result of the decrease in the number of SDNY securities trials since inception, described above.Dosmbly/Iqbal.However, the percentage of cases in which denial requests were filed has increased since these decisions. However, it is clear that the increase in the percentage of cases with motions to deny filed since the passage of the PSLRA appears to predate the passage of the PSLRA.Dosmbly/Iqbaland cannot be explained solely by these decisions.

Denial Order: Rule 12(b)(6) and Twombly/Iqbal – Cardozo Act Review (2)

3. Percentage of Applications Approved/Rejected

A. Prä vs. Post-PSLRA

Using the standard percentage formula, pre-PSLRA SDNY judges granted an average of 35% of motions to dismiss in their entirety between 1990 and 1995.55Between 1996 and 2016 (excluding 2001-2003), this rate dropped slightly to a cumulative average of around 33%. Overall, the PSLRA resulted in only a small decrease in the percentage of motions to dismiss that courts granted.

B. Before vs. afterDosmblymiIqbal

The average number of motions to dismiss fully granted by SDNY judgesDosmbly/Iqbaldecreased by one percentage point, from 35% in 1996-2006 to 34% in 2010-2016. OK,DosmblymiIqbalappear to have had little or no impact on the number of motions to dismiss that SDNY courts have granted relating to securities disputes.56

Denial Order: Rule 12(b)(6) and Twombly/Iqbal – Cardozo Act Review (3)

D. Conclusion

The data shows that the PSLRA had little or no impact on the total number of securities lawsuits filed with the SDNY each year. However, since the passage of the PSLRA, the average number of filings filed in SDNY securities lawsuits each year has increased by 73%. This increase did not occurDosmblymiIqbal, as the data suggests that the number of claims filed each year has decreased slightly since these cases were resolved. While the volume of securities disputes has not changed significantly since the passage of the PSLRA, the relative number of motions to deny has increased significantly. In addition, the results of the SDNY study did not support the hypothesis that enactment of the PSLRA would result in a higher percentage of court-awarded filings in securities cases. Instead, the data suggests that the PSLRA had little or no impact on the percentage of applications that were directly granted by the courts.

Although the PSLRA was intended to limit the number of unsubstantiated securities claims, the law itself appears to have had minimal impact on the number of securities claims filed or the percentage of cases filed at the challenge stage.57and therefore the volume of value disputes that lead to discovery. Instead, the key finding after the enactment of the PSLRA was that the relative rate of motions to dismiss filed in SDNY securities cases increased significantly each year. The clear implication is that, as measured by the percentage of motions filed in cases filed after the law passed, the PSLRA may have done little to reduce the impact of securities litigation costs on litigants and reduce appeals. judicial. In fact, while difficult to document, more research is needed to determine whether the law has actually magnified these effects to the point where the significant increase in practice withdrawal requests recorded in the study may have resulted in higher costs. and related delays resulted in new claims for securities under the PSLRA.58


The results of the SDNY study can be read to support several observations. As such, the stricter defense standard imposed by the PSLRA did not have a significant impact on the number of securities lawsuits filed in the SDNY. But the studio noted a significant drop in demands for SDNY securities thereafter.Dosmbly/Iqbalwhich is largely due to the more rigorous plausibility check performed for these decisions.

The strictest defense pattern.Dosmbly/Iqbalpublished, it may also have triggered another phenomenon that is difficult to explain. Post-PSLRA and upIqbal, the number of cases to file securities lawsuits in the SDNY has increased significantly each year, likely due to the cumulative impact of two developments: the PSLRA's stricter plea standard and its provision that automatically stays litigation and therefore , a judgment pending adjudication bars a motion to dismiss - combined withDosmbly/Iqbalmore rigorous test. AfterIqbalHowever, the total number of such claims registered in court files actually decreased, from an average of 184 from 1995 to 2006 to 177 from 2010 to 2016. But interestingly, the total number of claims filed decreased, the percentage of cases containing such applications continued to increase each year, from aDosmblyan average of 26% of the cases with claims in 37%Dosmbly.

It is also worth noting the results of the judicial decision on dismissal applications. Confirming the results of other studies on dismissal practices that cover broader categories of cases and a broader range of district courts,59The rate at which SDNY judges fully grant such motions in securities cases has not changed significantly. It stayed at around 35% before and afterDosmbly/Iqbal.

That's what these data suggest.Twombly/Iqbalit may have influenced the conduct of the trial and the defense strategies of both plaintiffs and defendants. Both parties may have become more selective and strategic in their litigation practices. Plaintiffs' counsel may be constrained by larger challengesIqbalDemands for stricter confession requirements and fears of dismissal for failing to meet the higher requirements resulted in fewer lawsuits for securities. In other words, some lawyers for the plaintiffs may have chosen to avoid the weaker cases in favor of the stronger ones. In turn, given the decrease in the total number of lawsuits filed by plaintiffs, defendants found fewer cases open to dismissal requests. As a result, over time, the total number of appeals filed began to decline as cases were resolved, some pending appeals were withdrawn or abandoned by authors, and others were decided by courts. However, the percentage of cases with this type of request increased significantly with the entry of new cases, on average 73%.

This development may indicate a tactical decision by the defender. encouraged byTwombly/IqbalWith higher defense standards, they may have predicted a higher probability of success on motions to dismiss the practice and thus appeal more appeals. The defendants may have followed this strategy despite the plaintiffs' efforts to strengthen the claims to improve the chances of surviving a motion to dismiss, and despite empirical indicators suggesting that the likelihood that such claims would be fully accepted by courts motions remained virtually unchanged. However, why the number of cases with such filing requests continued to increase even as the total number of new cases decreased is a question that points to the need for further empirical research and analysis.

On the one hand, the above phenomenon may give a clue to the central hypothesis that the SDNY study sought to confirm. In particular, it can be used to show that some of the motions to dismiss considered in the context of the study, and therefore in the litigation in general, were unnecessary because they were made for reasons not necessarily supported by the merits of the motion. its realistic probability of success or the strength of the underlying stock. Some motions may be motivated by tactical considerations, such as B. that the petitioner attempts to force a deal by charging the opponent for the costs of preparing a response. Commercial or personal insistence on self-interest, by litigants or lawyers, whether appropriate, borderline, or inappropriate, can be a driving force in filing practice in other cases. Reasons for movement exercises may also be related to attitude. They can come from the style of practice and the professional perspective of the lawyer, that is, from a procedural perspective, this procedure being a tool to be used because "it is there". From this perspective, a motion to reject represents an opportunity to be seized rather than overlooked—indeed, a hurdle not to be passed over in the name of zealous defense at all costs.60

To the extent causal reasons such as these lead to filing practices that are not primarily motivated by an interest in a fair and efficient resolution of the dispute at issue, the product will manifest itself in unnecessary litigation costs, waste, and potential abuse. Furthermore, to the extent that a statute, rule, or case law implicitly enacts a fundamentally inefficient filing practice, the statute itself can be blamed for providing disputants with means and ways to undermine the overall objectives of Rules 1 and 8.61Only securities disputes support this observation.

The PSLRA does file a motion to dismiss the practice. In lawsuits filed under the Act, once the defendant files a motion to dismiss, discovery automatically stays and the formal discovery process cannot continue until the court has ruled on that motion.62The legal framework therefore incorporates a step that essentially legitimizes a 'check the box' view of professional practice. This approach will prevail to the extent that it implicitly assumes that the defendants will use the device simply because it was included in the lawsuit, and not necessarily because there is a sufficiently compelling reason for each claim made.63In this way, the legal requirement functions as an official invitation, an open door, so to speak, that supports the filing of motions for clarification. Because of this significant incentive, the filing of a large number of unnecessary or unsubstantiated petitions for filing is likely to be required by law.

In practice, this attitude manifests itself in the way some litigants perceive the application of the PSLRA. In particular, the results of the SDNY study show a tendency for the PSLRA to file possibly unnecessary filing motions. As shown in Chart 1, the average number of SDNY securities lawsuits seeking termination in the five years prior to the PSLRA was 66.2. During the next twelve years and beforeIqbalthat average rose to 93.6 and then 96.1 over the next seven yearsIqbal. Even more dramatic is the contrast between the rate of motions to dismiss filed in SDNY securities lawsuits and the rate generally seen in large samples of district court cases across the country. While the SDNY study found a filing rate in 31% of securities cases, Professor Couture's research on securities class actions found motions to file in 96% of these cases.64

However, not all or even most motions to deny are unfounded or necessarily made for dubious reasons. However, to the extent that the frequency of filings filed in securities lawsuits is significantly disproportionate to the rate observed in other types of litigation, the conclusion may suggest that the higher levels of filings in securities litigation may be due, at least in part, to , the usual expectation would be that such requests would be made. In fact, there is evidence to support this conclusion. Several studies of motions to dismiss filed in broader categories of cases and a broader range of courts have documented a rate of motions ranging from 5% to 12% of the complaints reviewed.Sixty-fiveSuch gross inequality cannot be fully explained by the standard action of the forces and gears that drive common practice and procedure. Nor can it be fully attributed to the effect of rules that apply only to securities disputes. Rather, the difference is likely to indicate, to some degree, the operation of legal impulses that are not easily recognized or accurately measured.

There are also firsthand accounts of the prospects for the practice and the tendency of litigants to file and resist unnecessary motions to dismiss with the disproportionate frequency that is prevalent in securities lawsuits. Judges with extensive experience handling securities disputes, such as SDNY, are likely to confirm as commonplace that attorneys, both plaintiffs and defendants, when filing PSLRA cases simply assume that a motion to dismiss is considered has been filed by the defendants becomes a matter. of course. As if viewing the process as mandatory rather than permissive, a sure risk of intrusion rather than a discretionary strategy that sits comfortably within the bounds of good professional judgment, the attorney automatically incorporates case management plans and warrants. planning they propose to the court reporting plan for such presumptive assertions. This thoughtful tactic can be very useless.66In some cases, the motions actually filed are aimed at rejecting some claims or removing certain pleadings or material from the pleadings, but not the entire claim. In effect, then, the claimant admits that part of the allegation is sufficient to establish a claim and that, at least to that extent, the dispute is presented as evidence. In many cases, as discussed in Part IV, such divisional motions result in significant costs and inefficiencies, as they do not provide a net gain in simplifying litigation, but tend to significantly delay resolution.

Data and analysis from the SDNY study found grossly disproportionate and significant results in another telling measure of motions to dismiss: the number of motions filed that did not indicate that the court had taken action to resolve them. The number of applications that fall into this category is significant. Some studies reporting the frequency of filings filed annually in federal courts that do not record a warrant have shown a rate ranging from 23% to 49%.67The equivalent proportion of securities lawsuits identified by the SDNY study is 35%.68

This large number of dismissal requests that the courts have not complied with raises the question of who is responsible for this phenomenon. In some cases, the reasons are obvious: presumably, these claims were voluntarily withdrawn or abandoned by the plaintiff for various reasons before the court could decide. The parties may have resolved the dispute. The underlying problem may have been discussed elsewhere. A new lawyer with a different litigation strategy may have arrived for the change. Or the motion may have served its intended purpose of forcing a settlement or the plaintiff's complete withdrawal of the lawsuit. But none of the various valid reasons can fully and satisfactorily explain the full substantial scope at stake.

Lawsuits that are filed but do not contain evidence of the court order result in a significant amount of unnecessary litigation, a move that reveals high cost and inefficiency. In each case, the applicants spent considerable sums of money preparing the application documents and performing other procedures to ensure the requested legal protection. In response, the opponents also incur the corresponding costs, which may result in a further delay in the decision on the merits. Together, the time and resources spent on lawsuits that do little or nothing to advance dispute resolution add up to a staggering waste of time.69These circumstances, therefore, leave unanswered the fundamental question raised here. To what extent were some of the motions actually made unnecessarily and wastefully, because they were made hastily or recklessly, or were motivated by the attorney's professional style or habits simply because current procedure allows it?


The analysis in Part III of these Commentaries focuses on motions to dismiss the practice in value judgments. At this point, however, it is important to remember the general context driving the debate in this forum: widespread concerns about the costs of the process and inefficiency in its broader manifestations. This article suggests that such archiving practices incorporate a component of waste, inefficiency, and potential abuse that, while difficult to quantify precisely, is so pervasive as to cause great concern in the legal profession and the justice system. However, this argument can be extended to another level of generality. She asserts that similar concerns can be broadly applied to most other categories of cases. Four reasons listed above that encourage or stimulate a motion to reject the practice support this conclusion. Procedurally, rule 12(b)(6) supports a motion to deny in lieu of a final answer in all types of cases. Thus, the 12(b)(6) rule itself, as discussed below, acts as a source of encouragement for inefficient and unnecessary exercises. Professionally, some attorneys are more inclined than others to file motions to dismiss all types of claims as a matter of individual prosecution strategy or practice style. From an economic point of view, whatever the nature of the litigation, there is commercial pressure on lawyers to engage in wasteful practices, although probably to a greater extent in complex cases. And empirically, in all types of cases, the phenomenon of the high number of embargoes that are filed but are not processed in the courts predominates.

Addressing the problem effectively in this broader context will require more than the usual tweaks to the margins of the Rules of Procedure. This method of stopping seizures has shaped many reform efforts to date. The approach has failed because it lacks the vision and will to achieve large-scale holistic improvement on the scale required by the importance and scope of the problems. In this sense, a reform of the practice of rejection could significantly contribute to alleviating the problem. But this improvement should be a starting point, not the end of the company.

Therefore, effective remedies must include multifaceted measures specifically designed to address not only a symptom that manifests itself in excessive waivers, but also the causes that lead to further waste and inefficiency in the administration of justice. A comprehensive system such as the one contemplated here would require drastic changes to federal regulations designed to restrict motions to resign and make other necessary structural changes. The proposed reforms are expected to include changes to the Federal Rules and even a change to the jury rights provision of the Seventh Amendment to the United States Constitution. These proposals are discussed successively below.

A. The Federal Rules

1. Requests for rejection

Under the system proposed below, motions to reject would be significantly limited by a drastic revision of the timing, content, and structure of the practice of rejecting motions.

A. Calendar

Regarding the term, motions for clarification should not be admitted without prior communication between the parties and judicial review. Under the existing procedure under Rule 12(b), instead of filing a reply, a defendant may respond to a claim by filing a motion to have the claim dismissed in whole or in part. This request can be made within the same deadline for sending a response.70Just as the defendant is not required to notify the plaintiff or the court of the timing or content of his answer before filing it, so the defendant is also required to serve a motion to dismiss in response to the complaint. Many defendants make correct use of this permission. If this is the case, the procedure can have a number of adverse consequences.

Often, neither the plaintiff nor the court knows about the lawsuit until it is filed and placed in the public record of the case. In addition, the adversary or judge, upon reviewing the claim documents, often realizes that the claim is unfounded, premature, or could have been easily avoided by prior communication between the parties and the court. In many cases, if the motion has alleged deficiencies that were disclosed to the plaintiff or the court before the defendant filed the hidden motion, the plaintiff can amend the complaint to correct the apparent flaws. Unsurprisingly, given the Complaint's challenge and the pressure of applicable timelines to respond, there is a natural tendency for plaintiffs' attorneys to oppose the motion, questioning the defense attorneys' insult to their editorial skill. opponents and understanding of the law. The defendants then counterattack with the expected and permissible step; they give an answer.

Months later, at the end of this pointless track, the court is faced with a fully reported and potentially avoidable motion on its docket. Therefore, judges are called upon to decide many claims that should never have been filed and that could have been avoided if they had examined the issues at hand before changing the parties' claims. But emphasizing the futility of the process in these circumstances is another dimension of the problem. If courts agree that the allegations are wrong but correctable, they can, and usually do, allow claimants to repeat what they are required to do under Rule 15.71The procedural cycle, therefore, restarts the action from the beginning, leaving a byproduct of wasted effort and costly and unnecessary delays.

There are alternatives to avoiding premature or unnecessary dismissal motions, which federal regulations now allow in lieu of a response. If the claims raise substantive uncertainties or procedural flaws that make it difficult for defendants to prepare an answer, defendants have another avenue to point out deficiencies in the complaint or request clarification, rather than seeking a total dismissal. They could bring a claim under Rule 12(e) seeking a more definitive explanation of the alleged deficiencies in the pleadings and providing the details the defense would need to respond to the claims. Despite the apparent usefulness for its intended purpose, this method is rarely used. Instead, some defendants instinctively resort to counterattacking through some form of ambush. Discover the shock and surprise effect and the terrible cost of damage that a filing action causes to litigants and courts. In any case, if the claim is filed, both the parties and the courts have a duty to commit significant resources to deal with what can be a lengthy, costly and unnecessary process.

To address the inherent inefficiency of the current Rule 12(b) procedure, to the extent that it allows a motion to dismiss to go unheeded in lieu of a response, some judges have developed prescribed limitations on their individual pretrial practice. . In general, these guidelines require defendants, before filing a motion to dismiss, to contact the plaintiffs, usually in three-page letters with a copy to the court, and point out the weaknesses in the claim that the defendant alleges warrant the waiver.72The practices also instruct authors to respond within a specified time frame, either by specifying amendments to the complaint that commit to correcting any reasoning errors they agree with, or by keeping the complaint filed and opposing any motion to file. that can be archived. After reviewing the correspondence, the court may schedule a teleconference or an in-person appearance to hear arguments about the reasonableness of a motion to dismiss. At that time, the court may provide the parties with preliminary guidance that the action may be dismissed as stated if left unmodified, or that a motion to dismiss is likely to be dismissed in whole or in part on the grounds invoked by the defendants. Interestingly, judges who use this practice consistently report that, in most cases, it is designed to prevent or expedite the filing of motions.

Rule 12(b) should be amended to end the procedure that allows defendants to automatically request a dismissal in lieu of an answer and incorporate the pre-petition practices described above or formally allow courts to adopt them.73

B Content

In terms of content, requests to refuse practice under Rule 12(b) can be grouped into four categories according to the various grounds specified by the Rule: (1) lack of jurisdiction or personal matter;74(2) inappropriate forum;75(3) inadequate notice or notice of process;76and (4) insufficient claims to establish a right to relief.77Categories one through three, which correspond to Rules 12(b)(1)–12(b)(5), have a common appearance. They include circumstances that act as legal or contingent obstacles that are grounds for rejecting the claim. But such an injunction would be based on grounds unrelated to the factual basis or substantive validity of the claims in question. By contrast, a claim to invoke the fourth category, which corresponds to rule 12(b)(6), requires an examination of the reasonableness of the facts presented, which, if true, would satisfy the principles of certain substantive claims set out by applicable law or common law.

In practice, Rule 12(b)(6) requests have become two distinct subsets, grouped under the rubric “Failure to specify a right that is eligible for relief.”78In one category, analogous to the common features of Rules 12(b)(1)–12(b)(5), claims under Rule 12(b)(6) depend primarily on whether a separate legal issue exists and decisive or precedent condition, which does not imply an assessment of the underlying facts or the merit of the substantive reasons presented in the Complaint. Such decisive reasons can be, for example, the application of a limitation period, the lack of legitimacy, res judicata or the illegality of the transaction in question by law or public order.79In any of the above circumstances, the dispute could easily end if the court resolves an operational question that essentially refers to a judicial decision. This ruling would conditionally bar litigation of the substantive claims in the lawsuit.

However, another subset of Rule 12(b)(6) requests are based on the details of the facts presented in the appeal, provided they are true and reasonable conclusions are drawn in favor of the appellant. In particular, claims that fall into this category involve the merits test described above: whether the claims in the lawsuit, when assessed together, sufficiently express the elements that make up the specific legal grounds and claims of the claimant "to make it plausible at first sight. "80

Some observations about these classifications underscore their distinction and suggest reasons why they should be treated differently in practice. The analysis can also help formulate concepts to reform the practice of rejection. As a general suggestion, forehand points that fall within the scope of Rule 12(b)(1)–12(b)(5) and the first subsection of Rule 12(b)(6) that are normally described in This document can be reviewed and resolved relatively quickly by the courts. In most cases, this does not require any complex discovery. Rather, in the typical process, the pleadings alone and perhaps a few key documents should suffice to form the record of the decision. Not much more than such a limited file should be required, since the question to be decided fundamentally involves a dispositive question of law and not an appreciation and qualitative assessment of the sufficiency and correctness of the facts that define the substantive elements of a claim.

However, requests that fall under the second component of rule 12(b)(6) identified above often present other challenges that are more difficult and time-consuming to resolve. These questions are often factual and require the use of vague standards. Therefore, resolving the issues raised by such motions is perhaps the biggest source of costly, inefficient, and often unnecessary pretrial motions. The dismissal remedies in this subset require litigants and courts to collect, assess, and manage controversial substantive facts of doctrinal norms that suffer from various deficiencies.

First, the applicable rules require submissions by the parties and determinations by the courts as to whether the underlying facts are sufficient to establish a valid claim. The judge's decision can only be made on the basis of the author's allegations in the complaint and the documents that he includes in the preparation of the procedural documents or on which he relies.81Therefore, the request must be resolved before access to the documents, testimonies and expert evidence, which are normally obtained through instruction. But often, at least limited or specific discovery is essential to create the substantive and credible record necessary to support such decisions. Second, the prevailing standard - the "plausibility" test promulgated byDosmbly/Iqbal,82nothing less than the "non-facts" doctrine that preceded itDosmbly/Iqbaland reigned fifty years under the foundationsKonley83Conley gegen Gibson, 355 US 41, 45–47 (1957).Regime – is hopelessly opaque. Third, the applicable test requires the exercise of an extraordinary degree of subjective and normative judgment by courts, decisions that must be made on the basis of little more than typically self-serving statements of fact asserted by lawyers.84And fourth, there is extensive empirical research suggesting, as confirmed by the SDNY study, that the fundamental change in confession doctrine was caused byDosmbly/Iqbalproduced little or no substantive change in the rate of court rulings on motions to dismiss.85

In this sense, Rule 12(b)(6), as drafted and applied, which encompasses the two distinct aspects described above, is detrimental to the interests of all key stakeholders in the justice system. Particularly in more complex litigation, plaintiffs spend more time and resources preparing longer, more detailed claims that address the necessary elements of the causes of action they are claiming.86although they often operate on the basis of nebulous "facts". Without the benefit of a few discoveries, these summaries sometimes amount to bits of firsthand knowledge supplemented by a hodgepodge of suspicions, inferences, beliefs, conjectures, and inferences—any claim that can be mustered to cross the narrow threshold that research authorities rules and doctrines are intended to cross. make a waiver request. But often, no matter how long, voluminous, or substantive plaintiffs' statement of facts as read by some defendants, what is alleged in the pleadings is never sufficient for plaintiffs to constitute prima facie evidence, even occasionally, for For example, when the plaintiffs' factual allegations are based largely on findings of wrongdoing and liability made public through government investigations and enforcement actions.

While defendants generally have better access to and control over the facts, they spend inordinate amounts of time and resources claiming weakness in the claim and claiming that the facts articulated in the case record are insufficient to establish a plausible basis for a claim. appeal under any or all of the various claims that complaints typically incorporate in complex cases. Sometimes these defenses present legal theories and arguments that seem thoughtful, formulaic, and forced. However, courts have to expend significant amounts of their limited resources to examine and resolve such challenges. That the judges grant only about a third of the motions to reject them outright,87and that the rate of orders to reject motions belowDosmbly/IqbalRelatively unchanged, despite the dramatic shift from the earlier simplified typesetting pattern to more substantive and sophisticated plausibility theory, it is quite revealing. While motions to dismiss can be useful in expediting litigation and providing judicial guidance on the feasibility of specific claims, practical experience shows the opposite effect, suggesting that what happens in many motions to dismiss practice is unacceptably wasteful. and may be unnecessary.

C. Structure

I. Subdivisions of Rule 12(b)(6)

With respect to procedural reform, the distinction made above between the two subcategories of Rule 12(b)(6) requests, combined with the specific difficulties presented by requests in the second subcategory, suggests the adoption of remedial actions designed to : significantly reduce the number of such applications filed. First, the 12(b)(6) rule must be divided into two categories, corresponding to the classifications described above. These divisions would be called 12(b)(6)(1) and 12(b)(6)(2). The first part would be titled "Motion to Dismiss the Action at Your Right." The second, if allowed as an option under the approach described below, would be called an "order to dismiss for failure to identify eligible relief."

Pursuant to subsection 12(b)(6)(1), the Proposal would permit the filing of motions to reject that are based essentially on dispositive legal theories comparable to those governed by Rules 12(b)(1)– 12(b) (5) regular). Such requests can, in most cases, be decided on the basis of pleadings, which are supplemented by key documents, depositions, and statements from both parties. In exceptional circumstances, limited or targeted disclosures may be permitted to address material discrete issues that cannot be resolved based on the existing factual record.

Second, subsection 12(b)(6)(2) would include requests that require an assessment of the sufficiency of statements of fact to satisfy the substantive elements of a legal claim. In this context, two alternatives should be considered. Firstly, this provision could be removed entirely, and grounds alleging that the complaint does not contain sufficient grounds for appeal must be decided on the basis of full evidence at summary judgment or in court. The core of this approach is based on comments and suggestions from respected authorities on federal regulations. Former Yale Law School dean Charles E. Clark (later Judge of the Court of Appeals for the Second Circuit), who served as first rapporteur on the original Supreme Court Committee on Civil Procedure that wrote the federal code , has advocated the removal of the provisions relating to the motion to dismiss for failure to file a claim under Rule 12(b)(6) and the motion to decide claims under Rule (12)(c) (to which referred to in pre-federal practice as an immigrant).88Dean Clark's position was animated by the expectation that the motion to dismiss the practice would be superseded by summary judgment.89

Alternatively, such requests may be permitted, but only after the development of a factual record collected as necessary through limited and specific discovery. Such discovery would be permitted to the extent necessary to establish or disprove claims of fact in either party's submissions and to determine whether such claims are sufficient to establish the essential elements of a cause of action. This approach does not require the court to assume that the plaintiffs' allegations in the lawsuit are true. The court will accept for consideration any relevant documents that the plaintiff may have strategically or otherwise omitted from the pleadings and that the defendants offer to add to the record.90

This process would encourage parties to focus the initial investigation on gathering facts that might support or deny a motion to file based on the fact that the plaintiff has not claimed a right to relief. Under the proposed amendment, courts would not be bound, as they are now, by the triple obligation: (1) to assess the sufficiency of the allegations solely on the basis of the plaintiffs' allegations that are found to be true;91(2) exclude from consideration relevant documents that have, at times, been carefully omitted by the authors of the reference or inclusion in the complaint, but which are subsequently presented by the defendants and may be crucial in determining a motion to dismiss; and (3) making significant normative judgments based on unsubstantiated allegations, such as whether claimants' allegations are sufficient and specific enough to establish a plausible claim consistent with the essential elements of the challenged cause of action.

In fact, under the proposal described here, the applicable standard that defendants must meet to justify a production order would change the focus of the relevant investigation. In practice, the assessment would be comparable to the evidence underlying requests for summary judgment.92The assessment of the operative part would be based on the admissible evidence. It would focus on whether the claimant is legally entitled to a judgment because the claimant has not provided sufficient evidence to support the specific claim based on a factual record developed as necessary through the applicable limited or directed discovery teaching requirements and, therefore, it did not assert any right of appeal.93

The division of Rule 12(b)(6) into two subsections, as presented here, may raise concerns that the measure may be counterproductive, given the practice of requests for summary judgment. In that case, it could be argued that the reform could create three procedures for the operational application of Rules 12(b) and 56 instead of the current two. In practice, the probability that the proposal will lead to such an outcome is very small. It is no secret that in existing cases, particularly complex cases, judges are reluctant to rule on both a Rule 12(b)(6) motion to dismiss and a subsequent motion for summary judgment on the same claim. . Partly for this reason, it is not uncommon for courts, when parties go beyond pleading or responding to a motion to dismiss, to change such motions to motions for summary judgment under rule 12(d) to instruct the parties and then proceed with further investigation as necessary. In this way, the courts essentially condense two injunction proceedings into one. Therefore, the justices would likely rule out any possibility that the rules proposed here provide opportunities for three procedural bites of the apple devices.

Therefore, if an action was ruled unfavorable on a motion to dismiss under proposed Rule 12(b)(6)(1), it is likely that, given the amount of evidence that would be gathered to make a motion to dismiss to Rule 12(b)(6)(2), the court would change that motion to summary judgment rather than grant another round of a third operative motion.

This judicial denial of additional prosecution burdens is contextually important in addressing the potential concerns outlined above for two reasons. First, as suggested, the parties could not file a motion to reject rule 12(b)(6) without first contacting and meeting with the Court. Second, a motion to dismiss for failure to enforce a claim under proposed Rule 12(b)(6)(2) could not be filed without sufficient supporting evidence based on at least limited findings. A motion filed at this point would essentially function as a motion for summary judgment. If the parties indicate at the preliminary hearing that the evidence produced by them requires further investigation, the court may convert the case to a request for summary judgment, as described above. Furthermore, in many cases, the parties themselves may find it advisable to proceed to summary judgment at this point, rather than opening up the possibility of what would amount to a second round of summary judgment. Based on this analysis, there is no reason for genuine concern that the proposal would result in three rounds of dispositive motions.

In any event, discussion of proposed Rule 12(b)(6) as described above opens up the option advocated by Dean Clark to abolish Rule 12(b)(6) entirely, allowing the parties to proceed directly to the preliminary investigations and summary proceedings. The reform proposed here essentially describes a variant of this concept. This would allow denial motions on operative points of law, but not on grounds that require a sufficiency test and factual evaluation of the factual claims.

ii. partial movements

Partial motions represent an additional source of inefficiency and waste in rejecting motions. The reform measures proposed above should alleviate the problem. In practice, it is not uncommon for defendants to request that a lawsuit be dismissed for some claims but not others, or for certain claims brought by plaintiffs to be dismissed.94without questioning the sufficiency of the allegations relating to the other parts of the lawsuit. Such circumstances are fraught with cost, waste, and unnecessary delay. In such cases, the request for partial release of the Defendant amounts to an implicit acknowledgment that the allegations in the Lawsuit, as formulated, are sufficient to provide a cause of action for relief of some claims. Therefore, regardless of how the court decides on a motion contesting the other parts of the Complaint, the litigation will proceed with the determination of the uncontested claims.

It is also often the case that the assertions the author wants to reject are so closely related to the uncontested ones that the scope of the conclusion does not differ materially, regardless of whether the assertions or assertions subsequently contradicted by the author remain in the process. process or not of the litigation stages. At that time, a more complete record of evidence would be available to facilitate the determination of a rule 56 disapproval order for summary judgment of all or part of the claim. In addition, some litigation presents allegations of such complexity that they would be more efficiently resolved in a motion based not in part on the allegations, but on more extensive evidence after discovery. Claims remaining in the proceeding that the plaintiff has attempted to contest through a motion to dismiss may be resolved at summary judgment or in court along with the uncontested claims.95

However, normally, with the exceptions provided by the PSLRA, the filing of a motion to dismiss does not automatically become a decision.96Consequently, the plaintiff of a partial dismissal motion may have little to gain from this strategy unless the court grants a stay of determination with respect to the contested claims. It is conceivable that, by the time the court decides on such a claim, a substantial set of findings will already have been produced involving issues that may be related to the contested claims. If, on the contrary, the court granted the suspension of the production of evidence until the partial claim is resolved and later also granted said claim, the final result would significantly delay the decision of the case. In this case, a preliminary investigation would have to be initiated for the entire action. Without the dilatory effect of the partial application, the uncontroversial claims would have advanced to the investigation phase and, therefore, brought forward the resolution of the controversy.

These circumstances would justify a procedure that makes it impossible to present partial suspensions, except with the prior approval of the court with sufficient proof of special circumstances.

iii. Structure and Procedure

Restriction of futile motions to dismiss the practice may be achieved as a side effect of other major reforms to federal rules and reorganization of the court's judicial structure. Potentially, the benefits of such an enhancement could also extend to other legal proceedings, such as B. Summary Judgment Orders, which, in certain circumstances, serve to provoke excessive litigation. As a starting point, this task would challenge a premise that essentially underpins and determines the scope of cases filed and heard in federal courts, and thus affects the cost and length of litigation: all questions now for decision of district judges question your eligibility? the implementation of the entire structure of the Federal Justice and the allocation of its resources for this purpose? Or could the federal court system be streamlined to remove cases from district judge files that could be handled more quickly and cheaply through more efficient mechanisms? The jurisprudence of the Supreme Federal Court, as it is structured today, is based on a kind of one size fits all. With respect to some categories of cases and disputes, the federal courts are equally open and the federal rules apply in full, regardless of the nature of the action or the content of the contested claims. In other circumstances, the Federal Rules do not distinguish between a constitutional crisis and a slip and fall claim, regardless of whether the wagers in dispute are worth $100 million or $100 million. In many court cases, this philosophy creates tension with Rule 1 and undermines the achievement of its objectives. The justice system's work at such a potential crossroads suggests that a different route may be warranted.

Given these circumstances, if all disputes now eligible for District Judge decision-making continued to follow a model that would significantly reduce disproportionately costly pretrial proceedings, including summary proceedings and dismissal, it would be a negative. According to this predicate, the responsive reform would create a hierarchy of jurisdiction and procedure to adjudicate disputes. This structure would create a hierarchical design, made up of different forums organized according to two criteria: the complexity of the action and the magnitude of the dispute.97A structure for such a system would contain three levels. First, parties must be referred to mandatory mediation on claims involving relatively small interests, the value of which would be disproportionate to the likely costs of litigation. To quantify this qualification, a monetary threshold may be established by law or rule.98

A second level of judicial decision would be defined for measures of lesser value, but within a determined limit. Cases in this category would be assigned to expedited hearings before a magistrate.99based on limited evidence consisting primarily of documents critical to the dispute and, where applicable, affidavits and court testimony. A parallel to this procedure is found in the procedure generally applicable to requests for precautionary measure or precautionary measure.100In this context, even in cases involving complex and high-stakes disputes, courts are required to make substantive decisions that apply strict standards, such as More importantly, judges often make these weighty initial decisions, which in most cases cases coincide with final orders, fairly expeditiously, often deciding from the court. These decisions are generally made on the basis of procedural documents and an instrument, supplemented by testimony and arguments presented at a hearing where the rules of evidence generally do not apply.101The same system could operate with similar speed and efficiency to resolve moderate value disputes.102In fact, this model also reflects the decision-making process allowed in some state courts.103

The hierarchical jurisdiction system proposed here should alleviate, albeit indirectly, the serious problem that excessive requests for rejection of the practice represent for litigants and courts. Under the terms of the Proposal, if there are dispositive causes to dismiss an action that falls within the range of values ​​of the First and Second Phases, the origin of the challenge would be decided by the Investigating Judge summarily, through the abbreviated procedure described , without the need for a separate hearing in the practice of the movement of the device. Consequently, since small- and medium-interest litigation would be eliminated from the class of cases district courts must hear under the proposed system, many of the circumstances that now give rise to motions to dismiss these claims would be decided in summary judgment. . before a district judge. . This should result in fewer quits. Eliminating some unnecessary filing practices can, in turn, create opportunities to reduce unnecessary costs and delays in federal court proceedings, thereby improving access to justice.

A higher level of jurisdiction would be established to adjudicate complex disputes involving larger interests, defined by the amount involved and/or specific categories of cases. At this level, dispute resolution would take place in the district courts.104However, such litigation should be simplified with more limitations on filing and discovery practice, both in time and scope. In this sense, the model must contain several limitations:

  • Discussion between the parties and a meeting with the court must be required as a condition of filing motions to dismiss.
  • Partial rejection motions will not be accepted if the contested claims are closely related to uncontested claims that would lead to a finding.
  • The Rule 12(b)(6) proceeding should be viewed as a legally-based filing request and broken down into the two components suggested above.
  • Except in demonstrable exceptional circumstances, courts must strictly adhere to the disclosure deadlines set out in approved case management plans.
  • Document preparation must not include matters relating to more than a specified number of months from the date of the disputed event or transaction without prior court approval to justify it.
  • The number and duration of interrogations must be further restricted. In general, for example, the number may be limited to an anticipated fixed limit, which may vary depending on the nature or complexity of the dispute. The duration must be limited to no more than seven hours for the parties or their designated representatives and no more than three hours for other witnesses.
  • At the first conference, the parties must submit for court approval an investigative plan that specifies, if reasonably known, the specific document or testimony they will seek and the relevance of that material to the merits of the action and its nature and wisdom. . tend to support the claim and its legal theory.105

B. The Seventh Amendment

The Seventh Amendment to the United States Constitution retains a curious relic. It guarantees the right to a jury trial in civil actions in federal court "when the amount in dispute exceeds twenty dollars."106Changing this provision would give Congress and the courts greater latitude to address concerns about high litigation costs and inefficiency.

At the time of its passage, the cash-limited jury trial served two purposes. In substance, it codified the common law to trial by jury in civil cases. However, the provision also promoted an efficiency goal. To the extent that jury rights were limited to cases and controversies of higher monetary value, their unavailability in trials of other disputes would presumably facilitate faster and more cost-effective determination of trials involving relatively small interests, perhaps most of them. prevailing judgments at the time. Of course, the relative value of twenty dollars in 1791 is not what it is today.107Low-stakes cases that would not be eligible for jury trial at the time the amendment was ratified would qualify to appeal the law in modern times. Consequently, parties today may seek jury trials in federal courts in many more civil cases than plaintiffs may have contemplated or may be practicable or reasonable for current economic or efficiency reasons.

This anomaly has significant implications for efforts to address the high costs and delays of federal litigation. In theory, for example, in a $25 civil lawsuit, the litigants have a constitutional right to demand that the entire federal grand jury be mobilized and summoned to resolve the relatively minor dispute. In this case, the daily salary paid to a single juror was recently increased to $50.108- would double the amount in dispute, not to mention the huge capital outlay litigants must spend and the additional time they must spend on the case to fully exercise their right to a jury trial.109More importantly, this outdated constitutional inequality serves not only to impose disproportionate public costs on the justice system, but also as an impediment to judicial or legislative efforts to funnel the resolution of low-value disputes toward a hierarchical system of jurisdiction, as discussed earlier. or other alternative means of dispute resolution, such as mediation or binding arbitration, where the right to a jury decision does not exist.

A simple wording change to the Seventh Amendment could remove the obstacle it poses to legal fee reform. Instead of setting a fixed dollar amount in its text, the amendment could authorize Congress to adjust the amount periodically, taking into account changes in the cost of living and fluctuations in the value of money over time. If Congress could enact such a limitation, it might be beneficial to link the established standard to the claim value requirement applicable to diversity of jurisdiction in federal courts.110

Of course, a reform that requires a constitutional change may seem far-fetched to some critics. Anticipating this objection, three points are offered here.

First, this article has made the point that any attempt to address the concerns raised in this forum must be driven by a strong spirit of innovation. As highlighted above, the problem of excessive legal costs is deeply embedded in some aspects of the professional culture, practice, and economic model of the legal profession. The values ​​thwarted by this phenomenon are so fundamental that corrective action requires more than the usual adjustments to the edges of the problem to achieve significant change. In fact, just one bold and far-reaching action can be enough to make a material difference. Refusing to say what needs to be said, or refusing to put a proposal on the table because action at the moment seems remote or even unlikely, would diminish that life force.

Second, to effectively resolve a problem, some corrective actions are necessarily long-term, a consideration well illustrated by experience with federal regulations. When this project was adopted in 1938, it culminated in a generation-spanning effort of reformers engaged in what may at first also have been perceived as a windmill attack.

After all, there is no better testimony than various reforms to the Constitution itself to demonstrate how time is reaching the power of ideas and making concepts come true that, in their first presentation, were accused of naive, deviant or feverish chimeras. The abolition of slavery, equal protection of the law for all people, voting rights for African-Americans and women, and a federal income tax are some examples.


The procedural law in the Federal Court was closed. Fundamentally and disturbingly, federal practice in modern times has recreated some of the same fundamental flaws and associated adverse effects that inspired the reform movement that culminated in the adoption of the federal regulations in 1938, with broad goals they were intended to achieve when they were enacted. . This sea change, as occurred during its previous demonstration, had equally damaging consequences for the justice system and the administration of justice.

For many years, leading reformers and scholars of the pre-federal era have criticized the procedural rules that govern the practice of federal courts. These exacting standards, critics charge, have led to stifling results. The judicial adjudication of disputes has often been guided not by the substance, truth, or legal sufficiency of the claims made, but by binding adherence to rigid canons of asserting that procedural law directs the parties to invoke a cause of action. valid to observe meticulously. Such excessive formalism often limited the ability of the parties to obtain crucial information for a full assessment of the matters at hand and therefore made it difficult to achieve the main objectives of the civil justice system: guaranteeing access to justice, identify the truth behind the facts. disputes and deter criminal behavior.

In fact, a principle of procedural control was embedded in established Federal Court practice, which created obstacles to clarifying the main point of private court disputes and clarifying disputed factual issues in the main hearing. The drafters of the federal order rejected such a dogmatic and unfair approach. In doing so, they also reacted to the negative consequences that strict adherence to form often brought with it. As commentators have noted, court decisions were often governed by begging niceties that sacrificed substantive fairness in the service of technical formality.111

In response, federal rule reformers sought to dismantle the old system and devised a sweeping revision of civil practice to correct its shortcomings. Starting from a fundamentally different philosophical foundation, they reaffirmed what are perhaps the most central values ​​underpinning the administration of justice: equity and efficiency, as primary objectives of the new process. To that end, the federal code prescribed a simplified court procedure. The reorganized system simplified procedural documents, opened the trial doors to simpler and more symmetrical discovery by all parties, prioritized content over form, and sought resolution of factual disputes through the judicial process. The planned procedural reform would thus promote equity and efficiency and improve access to justice.

These objectives are expressly articulated in advance in the federal regulations. Rule 1 of the Preamble explains that the new procedure is designed to ensure "fair, fast and cheap" decisions in any judicial proceeding. And Rule 8 states that, to establish a sufficient cause of action, a claim must contain little more than a “simple and concise statement” explaining the grounds for jurisdiction and supporting the claimant's right to relief. By placing so much emphasis on the fundamental purposes of the redesigned procedural framework at the top, the reform has delivered an important message. The emphasis implicitly referred to the history and context from which the federal rules arose. He embodied a vocal acknowledgment of what was fundamentally wrong with the old system, essentially proclaiming that the procedural law in force at the time was neither fair nor efficient.

Modern federal practice has deviated significantly from the course of the fundamental reforms initiated by the federal rules and, as a result, has fallen far short of some of its main objectives. In short, many of the deleterious effects created by pre-federal legal practice, which overloaded and paralyzed the civil justice system, have made a comeback in contemporary form, though they have just as troubling implications now as then.

This phenomenon is reflected in several qualitative and empirical indicators. Federal disputes are anything but streamlined these days.112On the contrary, the hallmarks of complexity abound in current judicial practice. Stricter precedents, obstacles posed by common enforcement practice, and longer and more complex procedures characterize today's legal dispute.113Such obstacles and limitations have far-reaching, often damaging consequences. Among the many adverse effects of this phenomenon is the marked aversion to litigation expressed by legislators, courts, and private entities. This hostility is evident in the multitude of means developed by private interest advocates, litigants, Congress, and even the Supreme Court as a means to prevent or suppress litigation. Whether through mechanisms that provide for mandatory arbitration, limiting class actions, contractual changes to procedural guarantees, civil liability reform, increasing defense standards, or limiting recovery of damages and damages, the overall purpose of this company is clear: to discourage private enforcement actions, especially class action lawsuits, because litigation is deemed too costly or abusive.114

As scholars have noted, these efforts are often led by powerful corporate interests, with their burden falling disproportionately on consumers, employees, and others who lack the resources or bargaining power to challenge such actions.115Perhaps most critically, they limit access to substantive justice, as dispute resolution is typically based not on the substance and merits of claims or defenses, but on largely irrelevant technical advantages, economic pressures, or strategic calculations. . But, paradoxically, despite the abundant documentary and testimonial material that litigants accumulate to support their claims and defenses, often creating conclusive records, it is assumed that this conclusion applies to a trial that they know to be illusory by an order of magnitude that far exceeds the actual or realistic need for the findings they are collecting or their demonstrable usefulness in a probable decision of the case before a court.

For these reasons, seeking the truth in dispute resolution and civil litigation proceedings in federal courts is the exception rather than the rule. Today, the dominant method of adjudicating disputes is the practice of settlement or petition. In this way, litigants generally try to avoid discovery and court rulings on the content of the lawsuits.116In particular, waivers serve a prophylactic purpose in these strategies. As noted above, such a practice constitutes the most widely used preemptive sword and shield by adversaries to block access to evidence, thus preventing discovery that sheds light on the facts in question and an optimal decision to promote substantives that might support the claim. justice. . .

These circumstances dramatically weakened an essential function of the courts, redefining the contours and public expression of the judiciary. Less than 2% of lawsuits filed in federal courts now end up in court.117Judges and juries rarely evaluate the truth and real value of claims and defenses. Instead, a legal dispute often ends with an overload of evidence, forcing the process to be delayed by tactical procedures. As a result, in some cases, legitimate claims may be under-compensated, dismissed, or discouraged altogether, while in other cases, frivolous processes may compel or coerce a strategic payment. In any case, the dispute may be concluded without a court having issued a substantive decision confirming the fact underlying the facts in question. However, despite this tactical reduction in court cases and the calculated lack of finality, the time and therefore total cost of resolving cases that reach court has increased steadily and significantly in recent years. years.118As a result, the federal court system is witnessing, to the troubling extent presented here, a resurgence of the serious concerns that prompted the reforms underpinning federal regulations. In other words, at least as evidenced by the return of the troublesome side effects of its past, trial law has come full circle.

However, the current version of these facts is based on a different set of circumstances, the explanation of which reflects the realities of modern legal practice. The excessive formalism and sophistication of plea bargaining rules that characterized the earlier procedural era of federal courts have been replaced by a contemporary version of excess. Today, extreme litigation is based on an updated measure of exorbitance. In practice, litigation is now expressed in other metrics: increased claim complexity, longer delays in resolving cases, prohibitive or disproportionate costs, expedited conduct of attorneys, and the resulting waste and inefficiency associated with much of it. of federal court practice.

While the reasons for these negative developments vary, the general result is the same. As the discussion above suggests, onerous and unnecessarily higher costs of litigation may be determined to some extent by the rules, depending on excessive practices that are permitted or tolerated by applicable trial law.119Another source comes from litigants' attitudes toward trial law and their practice style in enforcing the rules, for example, the degree to which they tend to exploit or avoid the pitfalls or unforeseen inefficiencies built into federal practice.120The attitudes of professionals towards compliance with the rules may, in turn, be influenced by the context in which legal proceedings are currently taking place.

Today, strong economic and professional momentum, manifested in increasing pressure on lawyers to work more billable hours, charge higher fees, and earn higher profits and rewards, not only drives but shapes the practice. daily control of the law. the predominant mode of business of the legal profession.121Consequently, there is a fundamental link between the business needs of lawyers and practice models and the excessive costs and levels of waste and inefficiency experienced in legal services, for example, as argued here, when unnecessary motions are filed to dismiss or extremes of disclosure are required. The two forces are likely to be paired in direct cause-and-effect relationships.

There is a touch of irony in the crisis of these developments. The extravagant form once required by the standards of legal practice has given way to extravagant substance. Claims and findings are now perceived by disputing parties as binding and voluminous content that in many cases turns out to be disproportionate or unnecessary, increasing the length and cost of legal proceedings. However, from the point of view of determining the truth, the resolution of private conflicts in the matter and access to justice for the litigants, the final result is the same. The modern form of material excess constrains the justice system no less than its formalistic equivalent during the golden age of federal civil procedure reform generations ago.122


The longstanding debate in the legal community about the rising costs, delays, and inefficiencies of litigation continues with considerable vigor. The prevalence of these concerns has disastrous consequences for the legal system and for the administration of justice, seriously affecting all the vital interests of legal practice. Consequently, spectacular new ways of solving the problem are needed. One way to respond effectively may be to change the culture of needless and unnecessary litigation that is so widespread among professionals. In this sense, streamlining the process steps that contribute most to excessive practices, such as the motion for clarification and summary judgment, can yield productive results. Shortening the motion to reject the practice through revisions to Rule 12(b)(6) to allow judicial decisions on such motions to be based on a fuller evidentiary hearing could further this goal.

* United States District Judge, Southern District of New York. Thank you to my colleagues, Judges Richard A. Berman, John G. Koeltl, Loretta A. Preska, and Jed S. Rakoff of the United States District Court for the Southern District of New York and Robert A. Katzmann, Chief Justice Supreme Court of the United States. United States Court of Appeals for the Second Circuit for their valuable comments and contributions related to this work. I am also grateful for the invaluable support of several of my internship classes, particularly Anders Linderot, Kate Ferguson, Liliana Zaragoza, Joshua Weiss, Jordana L. Haviv, Becky Abrams Greenwald, Richard Cipolla, and Alina Lindblom, as well as my legal assistant, Maria Ramos and interns Tamer Mallat, Ian C. Bruckner and Travis Elliott-Knaggs. In closing, I offer my special thanks to the editors of the Cardozo Law Review and to former Cardozo Law School Dean David Rudenstine for his continued commitment to this project and his exceptional editorial support.

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