INDIANA CASE LAW UPDATE -No Set of Facts?

Indiana is a “notice pleading” state which requires a claimant to plead the operative facts involved in the litigation. Accordingly, a claimant must provide a “short and plain statement of the claim showing that the pleader is entitled to relief” together with a demand for relief. Notice pleading is grounded in due process and contemplates that a defendant will receive fair notice of the claim and the grounds upon which the claim rests. The original Commission Comments to Trial Rule 8(A) make it clear that although modern pleading practice is intended to eliminate technical difficulties experienced under the prior-Code, a complaint is expected to contain a “statement of circumstances, occurrences, and events in support of the claim presented.” This means that although minimal factual allegations will generally suffice, a claim should state more than factual speculation, labels and conclusions, or a mere recitation of the basic elements of the cause of action.

Although notice pleading requirements are fairly straightforward, the mechanism for testing the legal sufficiency of the complaint, Trial Rule 12(B)(6), has, over time, become somewhat limited because Indiana courts are instructed not to dismiss a complaint for failure to state a claim unless it appears to a certainty that there are no set of facts under which the plaintiff would be entitled to relief. See, Marriage of Snow v. England, 862 N.E.2d 644 (Ind. 2007). Because trial judges do not generally grant these motions, the defendant’s first meaningful opportunity to challenge the plaintiff’s claim is the motion for summary judgment – a motion that generally follows discovery and the development of expert testimony.

The “no set of facts” standard for deciding motions under Fed.R.Civ.P. 12(b)(6) was recently revisited and rejected by the United States Supreme Court in Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955 (2007). In Bell Atlantic Corp., the plaintiffs initiated a class action against a group of telecomm companies claiming antitrust violations. Specifically, the plaintiffs alleged a parallel course of conduct among the defendants designed to prevent competition from smaller telecomm companies. The district court dismissed the action finding that pleading the presence of parallel conduct was insufficient to properly state an anti-trust violation. The Second Circuit reversed finding that “some set of facts” could support the plaintiffs’ claim of conspiracy or collusion. On certiorari, the U.S. Supreme Court reversed the Court of Appeals and, in so doing, fundamentally changed the standard by which a court must decide a motion to dismiss under Fed.R.Civ.P. 12(b)(6).

The Supreme Court first provided an excellent analysis of the requirements for proper “notice” pleading under Fed.R.Civ.P. 8(a). The Court stated that the “plain statement” must “possess enough heft to ‘sho[w] that the pleader is entitled to relief,’” and that notice pleading requires a “showing,” rather than a blanket assertion of entitlement to relief. The Court then examined the proper standard for reviewing a motion to dismiss under Trial Rule 12(b)(6) and rejected the “no set of facts” standard previously approved by the Court in Conley v. Gibson, 355 U.S. 41 (1957). In reaching this decision, the Court stated: “This ‘no set of facts’ language can be read in isolation as saying that any statement revealing the theory of the claim will suffice unless its factual impossibility may be shown from the face of the pleadings.… [Applying this reading] a wholly conclusory statement of claim would survive a motion to dismiss whenever the pleadings left open the possibility that a plaintiff might later establish some ‘set of [undisclosed] facts’ to support recovery.” The court then stated “[t]he phrase [no set of facts] is best forgotten as an incomplete, negative gloss on an accepted pleading standard.”

If Indiana elects to adopt the approach advocated in Bell Atlantic Corp., it will mean a significant change in the manner in which a trial court must resolve a motion to dismiss an insufficiently pleaded claim under Trial Rule 12(B)(6). Trial Rule 12(B)(6) will become a more effective tool in challenging defectively pleaded claims, especially those bare-bones complaints that are speculative and conclusory, and it will establish a balance between the pleading requirements of Trial Rule 8(A) and a defendant’s right to receive, early in the action, an adequate statement of the reasons he has been sued.

Stephen Arthur is a partner with Harrison & Moberly, LLP in Indianapolis, concentrating his practice in commercial and tort litigation. He is the author of Indiana Civil Trial Practice, published by West Publishing, and co-author of Professor Harvey’s Indiana Rules of Procedure Annotated. The author wishes to thank Paul Carroll for his assistance. The opinions and analysis expressed in this column are those of the author.