A Tale of Two Panels: The Size of the Chancellor’s Foot in Text Messaging and Potash

Chris Sagers, Nov 16, 2011

Pretty strong words have been bandied in the few years since Bell Atlantic Corp. v. Twombly. Two leading procedure scholars recently wrote that Twombly, and the subsequent Ashcroft v. Iqbal, have “destabilized the entire system of civil litigation,”  creating a “revolutionary” new “civil procedure hitherto foreign to our fundamental procedural principles. . . .” Sitting federal judges, too, have been rather uncommonly open in their criticism, in academic writing and in published opinions, and there have been dozens of legislative and academic proposals for reform or repeal.

A fair bit of the criticism has been essentially political, in stating fears that Twombly-Iqbal will unduly chill private litigation. Even before Twombly there had been fears that the new Roberts majority had “closed the courts,” and at least in antitrust there is little doubt that Twombly-Iqbal has impacted the number of new private filings. But the view is also growing that Twombly-Iqbal is just not a workable system of pleading. It is hard to see how the standard is more than the chancellor’s foot; though Twombly has been cited more than 100,000 times in cases, treatises, and briefs, no consensus whatsoever has emerged other than that the test remains “unclear.”

And so, tellingly, two panels of the Seventh Circuit came to opposite conclusions in massive antitrust cases during the past year, even though they applied nominally the same Twombly-Iqbal standard to very similar fact allegations on the same procedural posture. The cases were In re Text Messaging Antitrust Litigation, which affirmed a denial of dismissal in December 2010, and Minn-Chem, Inc. v. Agrium Inc. (“Potash”), which reversed a denial of dismissal in September 2011.

These two cases show not only how unrestrained the Twombly-Iqbal standard really is, a point about which I will have more to say, but how great the stakes are for our larger society. Both cases involved allegations of many billions of dollars of consumer injury, but whether the alleged conduct could be subjected to the rule of law was made to depend on a legal standard that amounts more or less to poetry. In effect, whether the substantive law will be applied in any major lawsuit now boils down to the subjective and essentially unrestrained personal impulses of the two appellate judges it takes to make a panel majority.

As Adolph Berle once put it, the courts in these cases now apply only words, and not rules.