In This Issue

• Longstanding Ban on Vertical Price Restraints Lifted
• Does Your Complaint "State a Claim"?
• You've Been Sued. Now What?

Longstanding Ban on Vertical Price Restraints Lifted

By Jennifer L. Mackanos and Alexis Zouhary

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Does Your Complaint "State a Claim"?

By Larry McClatchey and Erin Cleary

In May, 2007, the U.S. Supreme Court abrogated a long-standing procedural rule by deciding Bell Atlantic Corp v. Twombly, 127 S. Ct. 1955 (2007). Since 1957, motions to dismiss for failure to state a claim under Rule 12(b)(6) were held to a stringent standard articulated in Conley v. Gibson, 355 U.S. 41 (1957). Under Conley, "a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley at 45-46. Bell Atlantic explicitly rejects the "no set of facts" language, Bell Atlantic at 1969, and adopts a new standard based on the plausibility of the complaint. Now, a plaintiff's complaint must allege sufficient facts to demonstrate that the claim is "plausible on its face." Bell Atlantic at 1974.

If a complaint can be dismissed more easily under a "plausibility" standard, then it reasonably follows that Bell Atlantic also raises the bar for a viable complaint. According to Conley, under Rule 8(a)(2) of the Federal Rules of Civil Procedure, a complaint need only be "a short and plain statement of the claim showing that the pleader is entitled to relief" so that the defendant has notice of the claim and "the grounds on which it rests." Conley at 47. In Bell Atlantic, the Court notes that these "grounds" should be more factually-oriented than a simple list of elements and conclusions for each cause of action. The complaint must allege facts that "nudge … claims across the line from conceivable to plausible." Bell Atlantic at 1974. This heightened pleading requirement may pose problems for plaintiffs who do not possess the evidence necessary to allege certain facts, but would otherwise obtain such evidence (from the defendant) during the discovery process. Scott Dodson, Pleading Standards After Bell Atlantic v. Twombly, 93 VA. L. REV. IN BRIEF 121, 124 (2007).

The antitrust context of Bell Atlantic sheds some light on the Court's reasons for such a shift. The Court's underlying concern was the costly discovery process involved in a typical class action antitrust lawsuit. In the class action securities fraud context, the Court has gone a step further to require that securities fraud pleadings "give rise to a strong inference of scienter," a mental state of deception, manipulation, or fraudulence. Tellabs, Inc. v. Makur Issues & Rights, Ltd., 127 S. Ct. 2499, 2509 (2007). However, regardless of the Court's motivations, the language of Bell Atlantic clearly extends the new plausibility standard beyond either the antitrust or class action contexts. Dodson at 124.

In Bell Atlantic, the Court carefully qualifies its holding by stating that plausibility does not equal probability, and that recovery can still be very remote and unlikely. Bell Atlantic at 1965. However, academic commentators predict that Bell Atlantic will have an impact on the content of pleadings, the frequency of dismissal motions filed under Rule 12(b)(6) and the regularity with which these motions will be granted. Dodson at 126.

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You've Been Sued. Now What?

By Rebecca Roderer Price and Kacie N. Ferguson

Insurance law in Ohio is governed upon a purely contractual basis, making your coverage rights dependent upon your policy from your insurance company. To find if the claim is covered, you will need to read your insurance policy to find which type of coverage it ensures in regard to timing of claims and the coverage available. There are two different types of insurance policies with two different coverage plans: occurrence-based and claims-made policies. Occurrence policies obligate the insurance company to cover and defend against any claim that occurred during the period of time you had the policy, regardless of when the claim was actually served. Claims-made policies cover a claim that was made during the lifetime of the policy. Under a claims-made policy, if your claim was filed after your insurance policy had terminated, the insurance company has no duty to defend the claim. If you change from a claims-made to an occurrence policy, it is important to purchase coverage for claims that may not be covered by either policy - this is usually referred to as “gap coverage.” You should talk in detail to your insurance agent about whether or not you are fully covered.

If the claim has been filed within the timing of your coverage, you then need to see if the particular claim is covered under your policy. This is important because an insurer's duty to defend is based on the scope of allegations of the claim. National Engineering & Contracting Co. v. United States Fidelity & Guaranty Co. (10th Dist. 2004), 2004-Ohio-2503. Each policy sets out the general coverage of the individual policy within the initial coverage sections. It is also important to check that your claim has not been excluded elsewhere in the policy. Insurance companies will generally provide a broad coverage plan in the beginning of the policy and whittle down their actual liability through multiple exclusions and limitation sections. Your insurance policy will also have a section of definitions defining the words used within the policy; be sure to check these definitions since basic words could have different meanings according to your insurance policy.

Once you have determined that your claim is covered within your policy, you will need to contact your insurance company and notify them of the claim. You do not need to have an actual lawsuit in progress to notify your insurance company; any claim or demand letter triggers the insurance company's duty to defend. However, you have an obligation to the insurer to notify it of a claim. The easiest way to notify the company would be to contact your insurance agent or the insurance company's claim department.

If your insurance company denies coverage for a claim that you believe should be covered under the policy, you can seek a declaratory judgment from a court stating that the claim is covered. In Ohio, the interpretation of an insurance contract is ordinarily a question of law to be decided by the court, and where the policy terms and coverage are ambiguous, the court will construe the policy in a light most favorable for the insured, erring on the side of coverage against the insurance company's unwillingness to defend. National Engineering & Contracting Co. v. United States Fidelity & Guaranty Co. (10th Dist. 2004), 2004-Ohio-2503. Unfortunately, it is only in extreme circumstances that you can recover the cost of bringing a declaratory judgment action against your insurer.

This article is meant for informational purposes only, and should not be relied on as legal advice. If you have any further questions about whether a claim is covered by an insurance policy, or would like help in seeking a declaratory judgment, please contact Kegler, Brown, Hill & Ritter.

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