There are litigators who rely on notice pleading: “You were negligent; I was damaged; pay me.” And all litigators understand the realities of modern practice, including the constant need to find more than 24 hours in a day. But the 3rd Circuit Court of Appeals’ recent decision in Santoro v. Tower Health should give pause to litigants who have supporting facts but choose not to plead them, particularly after a court clearly signals that more detail is needed.
3rd Circuit Santoro involved a proposed class action, where the allegation was Tower Health made a business arrangement with Meta. Meta paid Tower Health to capture personally identifiable information about patients and shared the information with Tower Health. Meta allegedly used this to build a third-party profile and target ads at those specific patients. After filing and motions, the District Court was deciding on Tower Health’s motion to dismiss plaintiffs’ second amended complaint for failure to state a claim.
At oral argument, the District Court told plaintiffs that the allegations were not specific enough. The court said it was “showing plaintiff its cards” and told plaintiffs more detail was needed. Plaintiffs’ counsel disagreed that this level of information was necessary to survive the motion but claimed the information could be provided. The Court made clear it was looking for this, but following oral argument plaintiffs failed to seek to file a third amended complaint. Six weeks later, the District Court dismissed all claims with prejudice, noting plaintiff failed to provide the information needed. Two weeks after that decision (eight weeks since oral argument) the plaintiffs filed for reconsideration and attached a proposed third amended complaint. But the District Court denied this motion, finding undue delay.
It was with this background that the 3rd Circuit heard the appeal. The 3rd Circuit noted that plaintiffs failed to ask for review of the order dismissing the Second Amended Complaint. In reading the tea leaves of this opinion, it almost appears that the 3rd Circuit may have granted that appeal.
Instead, the plaintiffs sought review of the dismissal with prejudice. The 3rd Circuit noted plaintiff failed in the six weeks between oral argument and the ruling to request leave to file a third amended complaint, and the general comments from plaintiff at oral argument would not suffice to allow the District Court to determine the allegations to be made. While the 3rd Circuit rejected the reliance by the District Court on defendant’s arguments about the deficiencies and rulings by other district courts on similar claims, it was the undue delay by plaintiffs that supported the dismissal with prejudice. The 3rd Circuit panel noted that at oral argument plaintiffs were told by the District Court that more facts were needed, and plaintiffs claimed to have those facts. Nonetheless, plaintiffs failed to plead the facts and do so timely, and the 3rd Circuit found this cause enough to dismiss with prejudice.
In making its ruling, the 3rd Circuit noted that there is a possibility for plaintiffs to face dismissal in instances where additional information is available at the time the original complaint is filed, but those additional facts are not pled in the complaint. The plaintiffs who fail to include the information do so at their peril. The court also noted that in cases where a plaintiff receives a clear indication that a District Court finds the complaint deficient before the formal ruling, the plaintiff who wishes to amend must do so promptly.
PLEAD THE FACTS – NOW
So, what should subrogation professionals do? It may be that you are in a notice pleading state, and all you need to do is allege the general outline of a legal claim in order to file. Doing so runs the risk of facing unnecessary motion practice. If there are more facts known about the allegations, it is in your best interest to provide the facts in the complaint.
There are several reasons to do this. First, it serves to force the defendant to review the facts and admit or deny them. They may deny everything, and when they do you can ask them about it during discovery, further developing the record. Further, it signals to the defendant a seriousness about the matter because you are including specifics, and you are telling everyone you know about those specifics. Facts in the complaint also give the trial court sufficient information to point to in denying a motion to dismiss. Further, if you appear before the court and say you have other facts, the court is likely to ask why those facts were not pled, making amendment harder.
The other point is one that every litigator is likely to tell you: timing is everything. When faced with the potential for dismissal of your initial pleading, the sooner you act the better. This does not work for all motions – sometimes in opposition you want to “keep your powder dry” for as long as possible. But when it comes to your complaint, you are best served to act quickly. There are many instances where you believe the arguments put forward about deficiencies in your complaint are nonsense. However, it does not hurt you to file an amended complaint, or two, in response to the motion, boosting up facts and information. This works for a few reasons. It makes the defendant have to reread the complaint and try to find new issues. It also signals to the court you are proactive and seeking to put your best foot, and facts, forward. And it also can give you time to serve some quick discovery, get additional facts, and if the defendant files to dismiss again, incorporate those facts into the complaint.
As the 3rd Circuit reminded everyone: plaintiffs who have facts and fail to plead those facts in the complaint, “do so at their peril.” So plead the facts in detail, do it early, and if necessary, do it often.
