On appeal, the Eighth Circuit refused to honor the District Court’s strict interpretation of Rule 8, which requires that a complaint present "a short and plain statement of the claim showing that the pleader is entitled to relief." In order to meet the Rule 8 pleading standard and survive a motion to dismiss under Rule 12(b)(6), a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face. A complaint states a plausible claim for relief if its factual content allows the court to draw a reasonable inference that the defendant is liable for the misconduct alleged in the complaint. In Braden, the Eighth Circuit determined that the District Court erred in two ways: (1) the court ignored reasonable inferences supported by the facts alleged, and (2) the court drew inferences in defendants’ favor. As the Eighth Circuit noted, “[e]ach of these errors violates the familiar axiom that on a motion to dismiss, inferences are to be drawn in favor of the non-moving party.”
In its decision, the Eighth Circuit acknowledged that in interpreting Rule 8’s pleading standard, courts must not “ignore the significant costs of discovery in complex litigation and the attendant waste and expense that can be inflicted upon innocent parties by meritless claims.” However, the court further emphasized that in applying Rule 8, courts must be “attendant to ERISA’s remedial purpose and evident intent to prevent through private civil litigation ‘misuse and mismanagement of plan assets.’" Moreover, the court recognized that ERISA plaintiffs often (and perhaps most of the time) lack important information necessary to plead their claims in detail. Accordingly, the court essentially held that the intent behind ERISA requires courts to interpret Rule 8 loosely for ERISA plaintiffs:
Congress intended that private individuals would play an important role in enforcing ERISA's fiduciary duties—duties which have been described as "the highest known to the law." Donovan v. Bierwirth, 680 F.2d 263, 272 n.8 (2d Cir. 1982). In giving effect to this intent, we must be cognizant of the practical context of ERISA litigation. No matter how clever or diligent, ERISA plaintiffs generally lack the inside information necessary to make out their claims in detail unless and until discovery commences. Thus, while a plaintiff must offer sufficient factual allegations to show that he or she is not merely engaged in a fishing expedition or strike suit, we must also take account of their limited access to crucial information. If plaintiffs cannot state a claim without pleading facts which tend systemically to be in the sole possession of defendants, the remedial scheme of the statute will fail, and the crucial rights secured by ERISA will suffer. These considerations counsel careful and holistic evaluation of an ERISA complaint's factual allegations before concluding that they do not support a plausible inference that the plaintiff is entitled to relief.
In the short time since Braden, federal courts have unanimously upheld the Eighth Circuit’s holding, thereby preserving the intent behind ERISA and giving employee benefit plan participants the means to enforce ERISA’s fiduciary duties. See e.g., Jones v. MEMC Electronic Material, Inc., 2010 WL 1038536, at *3-5 (E.D. Mo. March 17, 2010) (denying the defendants’ motion to dismiss and noting that “ERISA plaintiffs generally lack the inside information necessary to make out their claims in detail).
The Eighth Circuit’s decision in Braden will protect future ERISA plaintiffs from motions to dismiss filed by plan fiduciaries which directly conflict with the intent behind ERISA. This will in turn lead to more lawsuits filed against plan fiduciaries for their wrongful conduct, which should ultimately motivate plan fiduciaries to take better care in the administration of their employee benefit plans.