The Risks of Group Pleading in Federal Courts

Practical Law Legal Update w-001-3232 (Approx. 3 pages)

The Risks of Group Pleading in Federal Courts

by Practical Law Litigation

Published on 19 Jan 2016 • USA (National/Federal)

Although the Federal Rules of Civil Procedure set out a liberal pleading standard, a party must still allege facts that are sufficiently detailed to put a defendant on notice of the claims against it. This update examines how group pleading does not satisfy the federal pleading standard and has commonly resulted in dismissal in federal court.

Complex litigation often involves multiple claims containing a myriad of factual allegations against a variety of defendants. While the Federal Rules of Civil Procedure (FRCP) set out a liberal pleading standard, to place defendants on notice of the plaintiff's claims, attorneys should avoid group pleading and making overly general factual allegations against defendants in a complaint. As several recent decisions from the US District Courts show, complaints must still properly describe relevant factual allegations against all defendants to avoid dismissal.

Because the FRCP provide for notice pleading, a complaint must generally include only a short and plain statement of the claim showing that the relevant party is entitled to relief (FRCP 8(a)(2). This standard does not require the party to plead detailed factual allegations, but does require a pleading to contain facts sufficient to give rise to a reasonable inference that the named defendant is liable for the alleged misconduct (Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). Therefore, despite the liberal pleading standards provided by the FRCP, a complaint must still place a defendant on notice of the claims against it.

When litigation involves multiple defendants who are affiliated with each other in some way, plaintiffs sometimes:

Attempt to define the group of defendants by a single name.
Set out allegations against all defendants by referring to that definition.

This type of group pleading is often discouraged by federal courts. Recently, several US district courts have dismissed complaints when the plaintiffs alleged causes of action against:

All eight defendants without separating out each defendant's liability or responsibility for each specific duty in the complaint (Sheeran v. Blyth Shipholding, S.A., , at *3 (D. N.J. Dec. 16, 2015)).
A collectively defined group of three defendants, even though one of the defendants was not alleged to have any involvement in the plaintiff's alleged injuries other than owning the intellectual property of a co-defendant for securitization purposes (Rysewyk v. Sears Holding Corp., , at *7 (N.D. Ill. Dec. 18, 2015)).
A group of affiliated corporate entities, even though some of the entities were named as defendants solely because they were in the chain of custody of one of the warehouses underlying the defendants' alleged antitrust violations (In re Zinc Antitrust Litig., , at *32 (S.D.N.Y. Jan. 7, 2016)).

By asserting allegations against a general group of defendants, the plaintiffs in all three cases failed to put each and every defendant named in the lawsuit on notice of the claims filed against them. This failure prevented the courts from inferring the plaintiffs' theory of liability against each defendant from the allegations in the complaint.

As shown by these decisions, counsel should try to avoid group pleading when drafting a complaint to avoid an adverse ruling on a motion to dismiss. Although it may be difficult to untangle the facts of a case, careful planning and organization before drafting can help attorneys avoid including unnecessary parties and ensure that the complaint properly alleges causes of action against every defendant named in the lawsuit.

Practical Law's Commencing a Federal Lawsuit Toolkit has many resources designed to assist attorneys when drafting a complaint, including:

The Risks of Group Pleading in Federal Courts | Practical Law