July 05, 2016

Colorado Supreme Court Adopts Iqbal/Twombly Standard for Pleading Claims

On June 27, 2016, the Colorado Supreme Court announced a major change to the standard for pleading claims in state court. Warne v. Hall, 2016 CO 50, held that the U.S. Supreme Court’s Iqbal/Twombly plausibility standard applies to Colorado cases. It’s unclear if the change will ultimately make motions to dismiss more or less likely to be filed or to win, but the decision generally will be regarded as favoring defendants.

Before Warne, Colorado courts considering a Rule 12(b)(6) motion for failure to state a claim applied the decades-old “no set of facts” rule, which said that a complaint should not be dismissed unless it appeared beyond a doubt that the plaintiff could prove no set of facts that would entitle it to relief. Federal courts applied that standard too, until the U.S. Supreme Court decided Bell Atlantic Corp. v. Twombly1 and Ashcroft v. Iqbal2. Under those cases, plaintiffs’ factual allegations must cross the line from speculative to plausible. The courts are required to accept all factual allegations as true, but may disregard conclusory allegations. “Where a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief.”3

In the years since Twombly and Iqbal — and despite the fact that the Colorado Rules of Civil Procedure are patterned after the federal rules — litigants in Colorado faced different standards for motions to dismiss between state court and federal court. With the Warne decision, the standards are the same again. The majority opinion in Warne emphasized the importance of maintaining uniformity between state and federal practice and rejected the plaintiff’s and dissent’s arguments to keep the old standard. For example, even though Colorado’s rules are unique in explicitly allowing pleading based on information and belief, the majority pointed out that federal courts allow pleading based on information and belief, and the extra Colorado language was not enough to justify a dissonance between state and federal law.

Although Warne announces a major change in Colorado’s pleading standards, it is not clear whether the decision will have a corresponding effect on actual motions to dismiss. After the U.S. Supreme Court announced Twombly (2007) and Iqbal (2009), the Federal Judicial Center studied the impact of the new standards on Rule 12(b)(6) motions to dismiss. The Center’s March 2011 report concluded there had been a marked increase in Rule 12(b)(6) motions, but in general there was no increase in the rate those motions were granted. That data is getting old and even at the time commentators questioned the report because it relied on “statistically significant” information when in fact the raw data showed motions to dismiss were being granted more often4. Another open question is whether the new standard applies to defendants’ affirmative defenses. Lower federal courts have answered that question both ways, and we will have to wait for the case law to develop in Colorado.

For now, we can expect to see more motions to dismiss in state court, and Colorado courts likely will borrow heavily from federal decisions until we have a stable of Colorado cases applying the new standard. Regardless of whether Colorado motions to dismiss become more or less common or successful, Colorado state law more closely matches federal law, and parties and lawyers have one less reason to forum shop.

1 550 U.S. 544 (2007).
2 556 U.S. 662 (2009).
3 Iqbal, 556 U.S. at 678 (quotation marks and citation omitted).
4 Lonny Hoffman, Twombly and Iqbal’s Measure: an Assessment of the Federal Judicial Center’s Study of Motions to Dismiss, 2012 Fed. Cts. L. Rev. 6 (2012).

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