Was Iqbal a Big Win for Business?

Today’s WSJ has an interesting story about the potential impact of the Supreme Court’s decision in Ashcroft v. Iqbal, a 5-4 decision rejecting Javaid Iqbal’s effort to sue various high-level government officials for his alleged mistreatment and detention after September 11.

Ashcroft v. Iqbal, released in May, will make it harder to bring a lawsuit without specific factual evidence, raising the threshold for moving a case into expensive litigation and possibly saving companies millions of dollars in legal fees. The case was overshadowed by other business rulings on consumer lawsuits, environmental and employment law and other matters in a term set to end Monday, but legal experts said it may be the most important. . . .

In the case, a Pakistani named Javaid Iqbal sued government officials over his detainment after Sept. 11, 2001. The Supreme Court ruled that Mr. Iqbal didn’t have sufficient factual evidence to proceed with his discrimination claims.

“While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations,” Justice Anthony Kennedy wrote in the 5-4 opinion. He cited the 2007 decision in Bell Atlantic Corp. v. Twombly, an antitrust case that outlined what plaintiffs must assert to make it through initial court proceedings.

As a result of the Iqbal ruling, businesses may find it easier to fend off lawsuits by persuading courts to dismiss complaints early in litigation. . . .

The decision translates most easily to business cases that list not only a single company, but also its parent company and affiliates, Ms. Willis said. The court didn’t allow Mr. Iqbal to assert that government officials had “supervisory liability” for the orders that resulted in his arrest.

More broadly, the opinion clarifies that the Twombly ruling applies beyond antitrust cases. It also makes it harder to press a lawsuit without making more substantive, factual allegations.