On November 18, 2015, in Silha v. ACT, Inc., the US Court of Appeals for the Seventh Circuit clarified the standard for facial challenges to subject matter jurisdiction under FRCP 12(b)(1), stating that courts in the Seventh Circuit should use the same Twombly-Iqbal "plausibility" requirement used to evaluate facial challenges to claims under Rule 12(b)(6) ( (7th Cir. Nov. 18, 2015)).

Plaintiff-appellants, a group of former participants in programs that provided their personally identifiable information with educational organizations through an information exchange program, brought suit against the testing agencies for failing to disclose that the students' information was actually sold to the educational organizations for profit. The defendants moved to dismiss for lack of subject matter jurisdiction under FRCP 12(b)(1). The district court granted the motion, holding that the plaintiffs did not fulfill their burden of establishing Article III standing because they could not establish the requisite harm. Plaintiffs appealed.

In evaluating a challenge to subject matter jurisdiction, the Seventh Circuit explained that a court must first determine whether a defendant has raised a factual challenge (there is no subject matter jurisdiction) or a facial challenge (the plaintiff has not sufficiently alleged a basis for jurisdiction). The court found that the defendants' Rule 12(b)(1) motion was a facial challenge because the defendants contended that the plaintiffs' complaint lacked sufficient factual allegations to establish standing.

The court then noted that, under Lujan v. Defs. of Wildlife, the US Supreme Court held that standing "must be supported in the same way as any other matter on which the plaintiff bears the burden of proof" (504 U.S. 555, 559-60 (1992)). The Seventh Circuit also discussed the Supreme Court's clarification of the standard for pleading a claim in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009), in which a court must both:

Based on this Supreme Court precedent, the Seventh Circuit clarified that the Twombly-Iqbal facial plausibility requirement for pleading a claim is incorporated into the standard for pleading subject matter jurisdiction in the Seventh Circuit. In doing so, the Seventh Circuit joined a number of its sister circuits that require a court to use Twombly-Iqbal's "plausibility" requirement not only to evaluate facial challenges to claims under FRCP 12(b)(6), but also to evaluate a facial challenge to subject matter jurisdiction under Rule 12(b)(1).

Applying Iqbal's two-pronged approach, the court found that the plaintiffs failed the second prong of Iqbal because the well-pleaded factual allegations failed to support an injury in fact sufficient for standing under Article III of the Constitution. Specifically, the court held that a plaintiff's claim of injury in fact could not be based solely on a defendant's gain; it must be based on a plaintiff's loss. However, the plaintiffs failed to allege that they had lost anything of value as a result of the alleged misconduct.

The Seventh Circuit affirmed the judgment of the district court and held that the plaintiffs' failed to meet their burden of establishing subject matter jurisdiction.