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August 7, 2014

Minnesota Supreme Court Rejects the Iqbal/Twombly Plausibility Pleading Standard in Favor of Minnesota's Existing More Permissive Standard

Case Update: Walsh v. U.S. Bank, N.A.

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On August 6, 2014, the Minnesota Supreme Court decided to follow Minnesota’s traditional pleading standard. In doing so, it rejected the federal court’s more stringent Iqbal/Twombly pleading requirement that applies a “plausibility” standard to claims. Minnesota’s traditional standard is more lenient. It allows a claim to survive a motion to dismiss if it is possible, on any evidence which might be produced, consistent with the pleader’s theory, to grant the relief requested. 

Although Walsh v. U.S. Bank also addressed whether proper service of process had been perfected by plaintiff, the import of the case is much broader. By reinforcing Minnesota’s traditional and more permissive pleading standard, the Court provides forum-shopping plaintiffs one more reason to file claims in Minnesota state court rather than in federal courts or in the other jurisdictions that follow the more restrictive federal pleading standards set forth in Iqbal/Twombly.

The Supreme Court’s decision also places a renewed emphasis on the importance of timely removal of actions to federal courts by defendants. Under 28 U.S.C. § 1446(b), defendants generally have 30 days to remove a case to federal court. Given the decision in Walsh v. U.S. Bank, failure to timely remove an action now could mean the difference between having a case dismissed immediately pursuant to a Rule 12 motion in federal court, or having to bring a Rule 56 motion for summary judgment in state court that may not be granted if a non-moving party successfully demonstrates discovery may assist in finding facts essential to opposing the summary judgment motion.

In reaching its decision, the Supreme Court started its analysis by focusing on the proper interpretation of Minn. R. Civ. P. 8.01 which provides:  “[a] pleading which sets forth a claim for relief . . . shall contain a short plain statement of the claim showing the pleader is entitled to relief.” Despite the relevant text of Minn. R. Civ. P. 8.01 being “identical” to the text of Fed. R. Civ. P. 8(a)(2), the Court determined the purpose, history, and procedural context of Rule 8.01—as well as its plain language—required the established precedent in Minnesota to remain unchanged. It explained:

The doctrine of stare decisis directs us to adhere to our former decisions in order to promote the stability of the law and the integrity of the judicial process.

The Court reiterated “Minnesota is a notice-pleading state” and, therefore, rejected the plausibility standard of Iqbal/Twombly which “raises the bar for claimants” by “requir[ing] factual enhancement.” Further, the Court pointed to the sample complaints appended to the Minnesota Rules of Civil Procedure to illustrate the simplicity and brevity of statements of claims intended by the rules.

It is unclear whether the Supreme Court’s decision in Walsh v. U.S. Bank will result in an influx of cases filed in Minnesota as yet another forum-friendly factor plaintiffs may consider in deciding where to file their claims. Clearly, though, it does create a more favorable environment for would-be claimants. Additionally, the case provides support for those arguing that Minnesota Rules of Civil Procedure should be interpreted differently than their federal counterpart.

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