Pro 2 Notes
We hope to get to, and through, the pleading burden issues in the Gomez case, which also ties into heightened pleading. It appears that notice pleading applies for everything except for a certain small subset. Recall that courts have required particularity in pleading for fraud allegations in a variety of ways. Fairman thinks that Rule 9(b) doesn’t make much sense! We wrapped up by asking whether Rule 9(b) is justified by deterrence of frivolous strike suits. Fairman says that only a small subset of all frivolous claims are fraud claims or fraud-like.
What’s docket control? It has to do with giving judges the power to dismiss lawsuits based on their belief that certain cases are more likely to be frivolous. But Fairman fears that this will cause suits that are truly meritorious to be dismissed at an early stage. He says it goes against the preference built into the Federal Rules for trying cases on the merits.
The only rationale for heightened pleading for fraud is “heightened notice”. What did I, the alleged fraudster, say that misrepresented a material fact? I need to know the specific statement so I know the specific allegation. But then Fairman says that this simply reduces to notice pleading. If you need more information for notice, then you need to articulate more facts in the pleading.
Let us return to the case. What’s missing from the insurance company’s allegations? What is Stradford’s fraudulent conduct? The insurance company believes that he lied about when his pipes froze, saying that it happened while he was covered when it really happened after his coverage lapsed. He would have gotten away with it, too, if he hadn’t gotten greedy! We can figure out when the fraud occurs from the complaint. Where did the fraud occur? It most likely occurred at the office. Would it be hard to restate this claim to meet the particularity requirement that the court wants? No way! So why bother? The plaintiff wins on the small point, but the defendant wins out in the end because they’re allowed to move for summary judgment. The motion to dismiss based on Rule 9(b) is granted, so the claim fails to meet heightened pleading under the Rule. But the amended complaint is immediately accepted. The remedy, typically, is that the insurance company gets the right to replead, or, in other words, to try again. As a general rule, the courts will give you a second chance and sometimes more at getting the pleadings right. Here it will be pretty easy.
It looks like the judge has taken a peek at the merits and found that Stradford is a liar and will get booted. So the question of who wins here is both easy and difficult. There will be zero damages for the plaintiff. Why did the insurance company counterclaim for fraud? It’s all about the punitive damages!!! They want to do more than win. They want to win and beat the guy down by getting punitive damages. This case will actually make money for the insurance company (if the dentist has any money).
As to common law fraud, heightened pleading doesn’t do a whole lot of mischief or havoc. These claims are tried and resolved on a daily basis. But heightened pleading doesn’t keep itself neatly contained to where the rules provide for it. Yeazell mentions two other big areas: the first is civil rights cases, like Leatherman and Swierkiewicz. So in Leatherman, it was a Monell action against the cops and the city. Cities used to have immunity until the Supreme Court decided Monell: cities can be liable if they have a policy or practice of unconstitutional violations. But in the Fifth Circuit and many others, courts required heightened pleading for civil rights cases even though the Rules have no provision for that whatsoever. The city in Leatherman filed a 12(b)(6) motion for failure to meet the heightened pleading standard. That created a circuit split, because the Ninth Circuit disagreed. In a really short decision by Rehnquist, they said: “Look at the rules! Heightened pleading for fraud and mistake, not civil rights! You’re wrong!” So Fairman came along in the aftermath of Leatherman. He wrote a note on the circuit split before Leatherman…and of course, now the question is answered, so he didn’t get published. Undeterred, he eventually got his big article published in the Texas Law Review. So there you go.
There’s a whole bunch of stuff that’s requiring heightened pleading even though they shouldn’t! There’s this slim comment from Rehnquist saying that heightened pleading might be okay with civil rights cases against “individual government actors” who are entitled to qualified immunity. So much law was made from that sentence. There was another circuit split! The Seventh and Tenth Circuits said: “Leatherman says what it says”. The Fifth and Eleventh Circuits said: “Heightened pleading okay in everything but Monell.” The Ninth and D.C. Circuits said heightened pleading is okay if intent is an element of the constitutional tort.
Say there’s a police officer using excessive force. Actually, intent doesn’t matter. In the Ninth Circuit, notice pleading would rule. But if you allege judicial deception by an officer in obtaining a search warrant, for example, the officer’s intent is an element of the offense. The Ninth and D.C. Circuits say that in this case you should have heightened pleading. The Rules explicitly say that intent can be pled generally! How do you plead facts about the defendant’s intent? Only the defendant knows what was intended!
The Fifth Circuit is even weirder! They hate to be reversed! They sort of reverse the Supreme Court! They come up with this alternative system using Rule 7 and replies to answers. Here we have Schultea v. Wood, where the Fifth Circuit cleverly decides that they will require notice pleading for civil rights cases, an answer, and then, if there is qualified immunity involved, a heightened reply from the plaintiff! The Rules don’t seem to explicitly prohibit this. The Supreme Court actually approves of this in a later case! Unbelievable!
of the confusion and resistance that resulted from Leatherman, the Court had to revisit the issue in Swierkiewicz, which dealt with an unpublished
Second Circuit opinion. The court
basically refuses to accept Leatherman! The court grants cert on the issue of whether
an employee suing his employer must do anything more than put the employer on
notice. The court reverses with the
exact same rationale! You’d think this
would be the end of the story, but it’s not!
Then we get the