A plaintiff cannot overcome a Fed. R. Civ. P. 12(b)(6) motion to dismiss simply by referring to conclusory allegations in the complaint that the defendant violated the law. Instead, the sufficiency of a complaint turns on its factual content, requiring the plaintiff to plead enough factual matter to raise a "plausible" inference of wrongdoing. The plausibility of an inference depends on a host of considerations, including common sense and the strength of competing explanations for the defendant's conduct.
Danou, a naturalized citizen from Iraq, took out a multi-million dollar loan from Flagstar in May 2006. Come its due date in May 2009, Danou was struggling to repay the loan. In November 2009, Flagstar and Southfield, Danou's real estate venture, restructured the loan. Southfield paid off some of the debt immediately and agreed to repay the balance—approximately $6.5 million—three years later, in November 2012. In 2011, John Chambless, a Flagstar employee charged with work on the bank's "troubled assets" and loans, investigated Southfield's finances. He did so even though, say the plaintiffs, Southfield was current on all of its (restructured) obligations. The next year, when Danou requested an extension of the November 12 deadline to repay the loan, the bank refused to provide an application, even though Danou offered additional collateral and his wife's guarantee. Danou asked for an explanation for the decision, but Flagstar refused to give one. Southfield, Danou, Triple Creek and Danou Technical Park sued Flagstar, claiming that Flagstar had discriminated against them on account of Danou's Iraqi origin.
Did the district court err in dismissing the discrimination claim?
The alleged facts did not support an inference that a bank engaged in national origin discrimination when it refused to refinance a loan; the most obvious explanation for the bank's conduct was its concern about repayment. An allegation that the bank treated comparable non-Iraqi applicants more favorably was conclusory, as no similarly situated individuals were identified.