More Sizzling Snoozers

It's late June, so the Supreme Court is coming down with buckets of decisions, and boy are we Civ Pro professors happy -- there haven't been so many pleading decisions since . . . well, there haven't been, I don't think. And although any normal person would fall asleep just reading the caption, these decisions are actually rather important.

Yesterday's sizzling snoozer was Tellabs v. Makor Issues & Rights, in which the Justices made it harder for investors to sue companies for securities fraud.

Unlike an earlier pleading case this Term, in which the Court just blatantly ignored the Federal Rules in an effort to get rid of some cases it doesn't like, this decision had the excuse that the bad rule it lays down was more or less commanded by Congress, which tried to put the kibosh on excessive securities litigation by commanding that plaintiffs in securities fraud cases must "state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind."

The great question: does this mean that plaintiffs must plead facts that make the inference that the defendant deliberately defrauded them at least as plausible as any competing inference, or more plausible than any competing inference? Or maybe just make the inference probable, without even requiring it to be more probable than not? The Court split 6 to 2 to 1 among these choices, so "at least as plausible" it is.

But none of the Justices said what really needed saying: look, if Congress insists on this requirement, we have to enforce it and it has to mean something, but it's just silly. The pleading stage of a case exists to let the defendant know generally what it's being sued for. Everything else should be moved to discovery. You can't require the plaintiff to know everything before litigation even gets started. Particularly with regard to the defendant's state of mind. How is the plaintiff supposed to know that before litigation even gets started?

Congress has control over these things, and the Court was right to enforce what Congress wanted, but Congress wanted the wrong thing.