A U.S. Supreme Court which ruling focused on national security may end up becoming a significant decision for U.S. businesses. Ashcroft v. Iqbal, 556 U.S. ___, 128 S.Ct. 2931, (2009) will make it more difficult for plaintiff’s to bring a lawsuit without asserting specific factual evidence, raising the threshold for moving a case into litigation and possibly saving companies millions of dollars in legal fees.
A Pakistani named Javaid Iqbal sued the U.S. government officials over his detainment after September 11, 2001. The Supreme Court ruled that Mr. Iqbal didn’t have sufficient factual evidence to proceed with his discrimination claims.
“While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations,” Justice Anthony Kennedy wrote in the 5-4 opinion. He cited the 2007 decision in Bell Atlantic Corp. v. Twombly, an antitrust case that outlined what plaintiffs must assert to make it through initial court proceedings.
As a result of the Iqbal ruling, businesses may find it easier to fend off lawsuits by persuading courts to dismiss complaints early in litigation. The court didn’t allow Mr. Iqbal to assert that government officials had “supervisory liability” for the orders that resulted in his arrest. The decision translates most easily to business cases that list not only a single, but also its parent company and its affiliates.
Justice David Souter in the dissent said that the Twombly decision didn’t require the court to decide early on if the facts are true, as was decided in Iqbal.
“We made it clear, on the contrary, that a court must take the allegations as true, no matter how skeptical the court may be,” he said in the dissent.
Robin Conrad, executive vice president of the U.S. Chamber of Commerce indicated “It puts the burden on the person filing the complaint, and that applies to businesses, too.”
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