As reported previously here, the Sixth Circuit in June reluctantly dismissed a complaint that probably would have been allowed to proceed in the pre-Twombly and pre-Iqbal era, recognizing that no discovery is permitted even though Plaintiff had no way of finding out the facts solely in the hands of Defendants.
Since that ruling, numerous District Courts within the Circuit have relied on the Sixth Circuit’s New Albany decision (PDF) to dismiss cases where Plaintiffs were not precise in their pleading and where the information to demonstrate plausibility was solely in the hands of the Defendants.
For instance, Judge Sara Lioi’s opinion in Theiss v. Burger King Restaurant, et. al., (N.D. Ohio July 20, 2011) (PDF) should serve as a caution against overly broad pleading. Plaintiff complained that she got food poisoning from eating at a Burger King restaurant. Carrols Corporation, the Burger King franchisee and the only named and served defendant remaining, moved for judgment on the pleadings because the Complaint failed to link Carrols to the allegations of injury. The Complaint alleged that Doe defendants negligently prepared, handled, cooked, served, manufactured, inspected, tested, supplied, and marketed the product, but failed to state which, if any, of the Doe defendants were employees of Carrols and which performed which function. The Court noted that Carrols likely would not have any connection to Doe defendants who did the manufacturing, inspecting, testing, supplying and marketing other than being in the overall chain of commerce. Noting that New Albany does not allow a plaintiff to use discovery to obtain facts to support allegations after filing suit, rather than allow Plaintiff the opportunity to amend to address the linkage to Carroll, the Court dismissed without prejudice the entire action.
Magistrate Judge Laurie Michelson of the District Court for the Eastern District of Michigan also relied on New Albany in Infection Prevention Tech., LLC v. UVAS, LLC (July 25, 2011) (PDF) to dismiss a Plaintiff’s Lanham Act Claim where the Plaintiff was unable to plead which exact hospitals received the false letters, so Plaintiff was unable to plead “significant pentration of the target market” by the false letters. Although the Court admittedly “empathized” with Plaintiff’s position, it noted that under New Albany a plaintiff apparently can no longer use discovery to obtain the factual detail necessary to survive a motion to dismiss, even when the information is solely within the purview of defendant or a third party.
In contrast, in In re Polyurethane Foam Antitrust Litigation, (N.D. Ohio July 19, 2011) (PDF), which contains a thorough and insightful analysis of how to practically apply Twombly when analyzing a Complaint, Judge Jack Zouhary examined Plaintiffs’ antitrust allegations, and relied on the Sixth Circuit’s opinion in Watson Carpet (PDF), to uphold the claims at the pleading stage. Notably, as in Watson Carpet and in contrast to New Albany, there was a prior litigation or governmental proceeding from which Plaintiffs obtained much of the materials on which their Complaint relied.
We will continue to monitor the District Courts’ treatment of New Albany, but initial indications are that it is fast becoming a significant barrier to imprecise pleading.