How have the appellate courts understood these cases? The dust has not yet settled but here is one good summary:

The best way to understand the impact of a Supreme Court decision is to see what the appellate and trial courts are saying about the decision and how they are applying it. Also helpful is assessing empirically, through social science statistical techniques, the actual impact of the decision. Not surprisingly, appellate courts are noting that the plausibility standard is different from the Conley standard and that this new standard is a move away from pure notice pleading. For example, in Boykin v. KeyCorp, the Second Circuit said that the Court intended to “make some alteration in the regime of pure notice pleading” but “does not offer much guidance to plaintiffs regarding when factual ‘amplification [is] needed to render [a] claim plausible.” 521 F.3d 202, 213 (2d Cir. 2008). Likewise, in Fowler v. UPMC Shadyside, the Third Circuit recognized that “pleading standards have seemingly shifted from simple notice pleading to a more heightened form of pleading.” 578 F.3d 203, 210 (3d Cir. Aug. 2009); see also Courie v. Alcoa Wheel & Forged Products, 577 F.3d 625, 629 (6th Cir. 2009) (noting that (1) “the Supreme Court recently raised the bar for pleading requirements,” and (2) “exactly how implausible is ‘implausible’ remains to be seen ....”); Brooks v. Ross, 578 F.3d 574 (7th Cir. 2009) (providing that Twombly “repudiated the general notice pleading regime of Rule 8 ....”); Nemet Chevrolet Ltd. v. Consumeraffairs.com, Inc., 591 F.3d 250, 262 (4th Cir. 2009) (providing that (1) “Twombly and Iqbal announced a new, stricter pleading standard”; and (2) “[T]he present federal pleading regime is a significant change from the past ....”); Am. Dental Ass'n v. Cigna Corp., 605 F.3d 1283, 1288 (11th Cir. 2010) (describing Twombly and Iqbal as creating a “new pleading standard[.]”).

One appellate court raises an interesting question: Does this heightened pleading standard apply to all types of claims or, rather, should it apply to just some? Although Iqbal seems to say that the heightened standard is not restricted to certain types of claims--a debate left open after Twombly--Seventh Circuit Judge Richard Posner recently suggested that the Supreme Court's “new pleading rule” requires a floating plausibility standard that rises and falls with the circumstances of the case. Circumstances requiring application of a higher plausibility standard include complexity (as in Twombly), immunity (as in Iqbal), and allegations of conspiracy, at least when made by possibly “paranoid” pro se litigants. Cooney v. Rossiter, 583 F.3d 967, 971 (7th Cir. 2009); see also Swanson v. CitiBank, N.A., 614 F.3d 400, 404-5 (7th Cir. 2010) (“[I]n many straightforward cases, it will not be any more difficult today for a plaintiff to meet [his pleading] burden than it was before the Court's recent decisions ... [but] [a] more complex case ... will require more detail ....”).

At the close of 2010, the appellate courts basically have settled into the post-Twombly/Iqbal framework, and extended discussions of the plausibility standard are becoming less common. Still, particular issues continue to be litigated. For example, the Seventh Circuit recently held that “while raising the bar for what must be included in the complaint in the first instance, [Twombly/Iqbal] did not eliminate the plaintiff's opportunity to suggest facts outside the pleading, including on appeal, showing that a complaint should not be dismissed.” Reynolds v. CB Sports Bar, Inc., 623 F.3d 1143, 1147 (7th Cir. 2010). The Eighth Circuit, meanwhile, recently sought guidance as to the required level of pleading specificity in a negligence case by looking to the forms included with the rules. Hamilton v. Palm, 621 F.3d 816, 818 (8th Cir. 2010); Fed. R. Civ. P. 84. The forms, therefore, may present plaintiffs a backdoor way of incorporating a slightly less demanding pleading standard, at least until the forms are updated with the plausibility standard in mind.

What courts do empirically--the direction that the law follows--is, of course, as important as the interpretation individual courts give. It remains uncertain, however, whether district courts, in the aggregate, are actually applying a heightened standard and dismissing complaints under Twombly/Iqbal that would have withstood Conley scrutiny. One might be tempted, for example, to think that Twombly/Iqbal would increase the likelihood of success on Rule 12(b)(6) motions where the likelihood is measured by the ratio of the number of successful 12(b)(6) motions divided by the total number of such motions. But this misses a key “supply” effect; thoughtful defense litigators are now taking a shot at filing 12(b)(6) motions arguing that complaints are asserting implausible theories when they never would have filed a motion to dismiss under Conley. Thus, even though the pleading standard may make it easier to win a 12(b)(6) motion, there may be more long-shot motions filed, leaving the overall likelihood of success unchanged. Likewise, as plaintiffs' lawyers adapt to the plausibility standard, they will likely craft more factually detailed complaints when in the past they might have omitted known detail for strategic and other reasons.

Notwithstanding the foregoing limitations, at least one early analysis found that there has been a statistically significant increase in the likelihood that a motion to dismiss will be granted under Twombly/Iqbal. Using multinomial logistic regression, Professor Hatamyar found that “under Twombly/Iqbal, the odds of a 12(b)(6) motion being granted rather than denied were 1.5 times greater than under Conley, holding all other variables constant.” Hatamyar, “The Tao of Pleading,” 59 Am. Univ. L. Rev. 553 (Feb. 2010). Of particular interest, the study found that the increase in the odds varied by subject matter, most significantly in civil rights cases, from 50 percent under Conley to 55 percent under Twombly and then to 60 percent under Iqbal. This is likely because plaintiffs in civil rights cases, due to the nature of such cases, lack access to the underlying facts necessary to nudge their lawsuits across the line from possible to plausible.

The Rules Committee has also released preliminary data, updated as of October 2010, that are less clear as to whether a motion to dismiss is more likely to be granted now as opposed to before Twombly/Iqbal. The committee's data, however, are subject to further study . . . .