Warne v. Hall: Well Pleaded for Whom?


Hanie Kim[]

In Colorado, plaintiffs filing complaints in state court will be facing a new standard to survive a 12(b)(5) motion to dismiss. Complaints must now include sufficient facts to plausibly give rise to a claim for relief. While federal litigants will be familiar with this standard, having been adopted by the federal courts several years ago, the Colorado Supreme Court recently announced the adoption of the same “plausibility” criteria. The ruling in Warne v. Hall[1] abolishes the liberal standard previously used in dismissing complaints only when it appeared a plaintiff could prove no set of facts to support their claim.

In 2007 and 2009, the United States Supreme Court ruled in Bell Atlantic Corp. v. Twombly[2] and Ashcroft v. Iqbal[3] that factual allegations in a complaint must be enough to raise a right to relief “above the speculative level.”[4] The Court, describing the holding as an interpretation of Rule 8 of the Federal Rules of Civil Procedure, asserted only complaints that state a plausible claim could defeat a motion to dismiss.[5] This new “plausible on its face” pleading standard replaced the “no set of facts” standard that the Court adopted in Conley v. Gibson.[6] The Conley standard dismissed claims when it was beyond doubt that a plaintiff could prove “no set of facts” that would give rise to relief.[7] Under Conley, complaints were only to provide a short and plain statement to give the defendant fair notice of the claim.[8] With the Supreme Court narrowing the requirements of a sufficient complaint and lowering the bar for their dismissal in federal court, it remained to be seen how state courts would respond to the creation of a new federal pleading standard.

In 2014, Bill Hall filed a complaint in Colorado state district court alleging intentional interference with a contract by the Town of Gilcrest and the mayor of the town, Menda Warne.[9] Hall and Ensign United States Drilling, Inc. had a purchase agreement for a parcel of land.[10] The drilling company terminated the agreement after negotiations between the parties failed.[11] Hall believed the Town of Gilcrest and Warne intentionally interfered with the contract by creating unreasonable conditions to cause the deal’s failure.[12] Hall further asserted that the motives behind the town and mayor’s actions were their feelings of malice towards Hall.[13]

As Hall’s complaint contained both federal and state claims, the case was removed to federal court.[14] In federal court, Warne filed a motion to dismiss under Federal Rule of Civil Procedure Rule 12(b)(6).[15] The case was then remanded back to state district court after Hall’s dismissal of the federal claims.[16] Warne’s motion to dismiss in federal court was converted to a motion to dismiss under the state rules of civil procedure.[17] Warne urged the state district court to apply the same Iqbal/Twombly standard that would have been used in federal court to determine if Hall’s complaint should move into case management and discovery.[18] At the trial court level, Warne’s motion to dismiss was granted for Hall’s failure to state a claim.[19] However, the trial court made no reference to any particular standard of pleading.[20] On appeal, the appellate court reversed the dismissal and stated that they declined to apply the Iqbal/Twombly standard of pleading of “plausible on its face”.[21] On June 27, 2016, the Colorado Supreme Court published their ruling in Warne v. Hall, holding that the complaint was not sufficient to survive a motion to dismiss.[22] In a 4-3 decision, the court announced the adoption of the United States Supreme Court’s Iqbal/Twombly “plausible on its face” pleading standard and abolished the Conley standard that had been in place for decades.[23]

The majority opinion, authored by Justice Coats, addressed the core issue of whether Colorado should mirror the federal rules of procedure.[24] The opinion stressed the importance of uniformity between state and federal judicial proceedings.[25] Justice Coats went as far as to say this was the principle goal of the Colorado Rules of Civil Procedure.[26] Citing the “Conformity Act” of 1789, the opinion referred to the “highly persuasive guidance” of the federal courts on states when discussing the same rule.[27] The ruling warned that failing to adopt the standard set by the United States Supreme Court “risks undermining confidence in the judicial process and the objective interpretation of codified law.”[28] Therefore, the Colorado’s adoption of the plausible on its face pleading was necessary to further confidence of the judicial system and court proceedings.

Also discussed by the majority is the great benefit of being able to dismiss baseless complaints earlier in the litigation process.[29] The majority finds that the Iqbal/Twombly standard champions judicial economy and reduces the expense of lawsuits in general.[30] In using the “plausible on its face” criteria, unfounded complaints are prevented from going through the case management and discovery phase needlessly.[31]

The dissent, authored by Justice Gabriel, joined by Justice Marquez and Justice Hood, finds no reason to cave to the federal interpretation of civil procedure for the mere sake of uniformity and consistency.[32] The dissent finds that the Colorado Rules of Civil Procedure were clearly meant to have a more lenient standard of pleading based on the language found in the rule.[33] Justice Gabriel points out Colorado Rule of Civil Procedure 8(e)(1) allows a pleading to contain allegations based upon “information and belief”, a phrase not included in the federal rule.[34]

Furthermore, Justice Gabriel finds no support for the plausibility standard in the language of the federal rules or the Colorado rules.[35] Therefore the idea that the Colorado Rules of Civil Procedure should now requires the Iqbal/Twombly standard in pleadings “misperceives the existing state of the law in Colorado and grafts onto C.R.C.P 8 a “plausibility” requirement that the rule does not contain.”[36]

Another point made by the dissent is the unusual amount of power bestowed on a judge to dismiss a claim based on speculative factors.[37] As a judge decides what a plaintiff may be plausibility able to prove, the dismissal of claims before any evidence or discovery is presented rests in the hands “of the particular judge who happens to be assigned to the case.”[38] Citing the subjective nature of this decision, the dissent hardly finds this new pleading requirement fair or superior to the previous Conley standard.[39]

Who benefits from the Iqbal/Twombly standard and why? The dissent asserts that the Conley standard has been adequate for the purpose of a complaint: to give fair notice to the defendant of the claim being made and on what basis.[40] This notice allows a defendant to develop their arguments and assertions, to ensure proceedings are fair and not prejudicial to a party who was not given fair notice. The majority opinion spends a great deal of time discussing how the Iqbal/Twombly standard helps in “weeding out groundless complaints” and its effectiveness in reducing the cost of litigation.[41] The majority reports “a growing need . . . to expedite the litigation process and avoid unnecessary expense, especially with respect to discovery.”[42] In focusing on this benefit to the “plausible on its face” standard in pleading, the majority uncovers a different meaning and purpose behind the well-pleaded complaint. Could it be that complaints are meant only to act as a gatekeeper for the courts?

If one is to believe that complaints should be pleaded to give fair notice to a defendant, then the Conley standard continues to be adequate and appropriate for pleadings. The “no set of facts” test allowed for complaints to be heard. They also gave a defendant adequate opportunity to develop their own arguments and assertions about the wrong that was purported to have occurred. The Conley standard presented no issue with giving a defendant fair notice to defend oneself from a claim, which would then force no change to this requirement.

If one is to believe that complaints should be used as a benchmark for keeping plaintiffs and their complaints out of the court system, then the Iqbal/Twombly standard conforms to that idea. The “plausible on its face” sets a higher bar for plaintiffs to ask the court for relief. And it asks a judge to ask himself if the claim could be proven by the plaintiff; rather than asking if the claim gives a defendant fair notice in the furtherance of justice and preventing prejudicial effect.

In ruling on Warne v. Hall, the state of Colorado finds itself on the side of judicial economy and the desire to reduce the number of cases being litigated, regardless of what is fair and just to a plaintiff, defendant, or the wrongs that have been committed. In applying the Iqbal/Twombly standard to pleadings, if it appears you cannot plausibly show you are entitled to relief, despite not having presented a single piece of evidence to dispute that belief, you have failed to state a claim. Your complaint will be dismissed without reference to the merits or evidence.

It remains to be seen how the Iqbal/Twombly standard will affect the number complaints allowed to move into discovery and the number of motions to dismiss being granted in Colorado. On the federal level, a recent study revealed that civil rights cases and employment discrimination claims have been dismissed at a higher rate since Iqbal/Twombly.[43] Additionally, government and corporate plaintiffs are performing better than individuals in surviving a motion to dismiss.[44] However, when comparing dismissal rates pre and post Iqbal/Twombly, “there is almost no significant change” and “there has been little if any change in party behavior as a result of plausibility pleading” according to the same study.[45] Additionally, the study asserts that the new heightened pleading standard has not resulted in “higher quality lawsuits” as hoped.[46] Therefore, if Colorado mirrors the federal courts, the new “plausible on its face” standard may have no discernable impact to complaints filed in state court.

In any case, the Supreme Court of Colorado has sent a clear message that they desire uniformity and conformity with the federal courts. But if the verdict is still out on whether Iqbal/Twombly has had a positive impact on litigation, Colorado should have paused before following in line to be in step with the federal courts. In prematurely adopting the “plausible on its face” standard, Colorado is now left with a standard which may provide no more meaning or purpose than Conley ever did.

J.D. Candidate 2018, University of Denver Sturm College of Law and Staff Editor for the Denver Law Review.

[1] Warne v. Hall, 373 P.3d 588, 589 (2016).

[2] 550 U.S. 544 (2007).

[3] 556 U.S. 662 (2009).

[4] Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).

[5] Id.

[6] Conley v. Gibson, 355 U.S. 41, 47 (1957).

[7] Id.

[8] Id.

[9] Warne, 373 P.3d at 589.

[10] Id. at 590.

[11] Id.

[12] Id.

[13] Id.

[14] Id.

[15] Id.

[16] Id.

[17] Id.

[18] Id.

[19] Id.

[20] Id.

[21] Id. at 591.

[22] Id. at 597.

[23] Id. at 588, 595.

[24] Id. at 592.

[25] Id. at 592–95.

[26] Id. at 593.

[27] Id. at 592, 593. 

[28] Id. at 592.

[29] Id. at 594.

[30] Id.

[31] Id.

[32] Id. at 597–98 (Gabriel, J. Dissenting).

[33] Id. at 599–600 (Gabriel, J. Dissenting).

[34] Id. (Gabriel, J. Dissenting).

[35] Id. at 600 (Gabriel, J. Dissenting).

[36] Id. at 597 (Gabriel, J. Dissenting).

[37] Id. at 600–01 (Gabriel, J. Dissenting).

[38] Id. (Gabriel, J. Dissenting).

[39] Id. (Gabriel, J. Dissenting).

[40] Id. (Gabriel, J. Dissenting).

[41] Id. at 594.

[42] Id.

[43] Alexander A. Reinert, 101 Va. L. Rev. 2117, 2122 (2015).

[44] Id. at 2170.

[45] Id. at 2169.

[46] Id. at 2124.