Folks are familiar with Twombly, the United States Supreme Court decision that makes it clear that federal court plaintiffs must plead their cases with specific particularity to provide full notice of the claims in order to survive a motion to dismiss. The question is – does Twombly apply to affirmative defenses or counterclaims? There is no binding nationwide federal precedent that answers that question and different trial courts have come up with different answers; for example, New York courts have held that Twombly does apply to counterclaims and affirmative defenses.
In one of the more recent decisions from NJ, Signature Bank v. Check-X-Change, LLC, District Court Judge Esther Sallas was forced to address the issue when Signature moved to dismiss Check-X-Change’s counterclaim and strike its affirmative defenses. Judge Sallas ruled against Signature and held that Twombly (under Third Circuit precedent) only applies to complaints and not the responses thereto. Underscoring her reasoning was the notion that “substantial issues of fact and law are properly viewed only after the opportunity for discovery.”
Although Signature is a positive developments for NJ (and possibly all Third Circuit (including PA)) defendants, the issue is something to be wary of. Form denials and rote pleadings may be going the way of the dodo bird and fact based and specific pleadings may be the wave of the future as federal courts (in the age of the sequester) attempt to keep cases out of the system.
For more information about this post, please contact Bob Cosgrove at firstname.lastname@example.org.