                      RECOMMENDED FOR FULL-TEXT PUBLICATION
                          Pursuant to Sixth Circuit I.O.P. 32.1(b)
                                  File Name: 13a0227p.06

               UNITED STATES COURT OF APPEALS
                              FOR THE SIXTH CIRCUIT
                                _________________


                                                  X
                                                   -
 16630 SOUTHFIELD LIMITED PARTNERSHIP;

 ASSOCIATES, L.L.C.; and DANOU TECHNICAL --
 SAMIR A. DANOU; TRIPLE CREEK

                                                   -
                                                       No. 12-2620
 PARK, L.L.C.,
                          Plaintiffs-Appellants, ,>
                                                   -
                                                   -
                                                   -
           v.
                                                   -
                                                   -
                           Defendant-Appellee. N
 FLAGSTAR BANK, F.S.B.,

                    Appeal from the United States District Court
                   for the Eastern District of Michigan at Detroit.
               No. 2:12-cv-12905—Patrick J. Duggan, District Judge.
                                Argued: August 2, 2013
                         Decided and Filed: August 14, 2013
              Before: CLAY, SUTTON and GRIFFIN, Circuit Judges.

                                 _________________

                                      COUNSEL
ARGUED: Carl G. Becker, BECKER LAW FIRM, P.L.C., Troy, Michigan, for
Appellants. J. Adam Behrendt, BODMAN PLC, Troy, Michigan, for Appellee.
ON BRIEF: Carl G. Becker, BECKER LAW FIRM, P.L.C., Troy, Michigan, for
Appellants. J. Adam Behrendt, BODMAN PLC, Troy, Michigan, for Appellee.
                                 _________________

                                       OPINION
                                 _________________

       SUTTON, Circuit Judge. The plaintiffs claim that Flagstar Bank violated the
Equal Credit Opportunity Act, 15 U.S.C. § 1691, et seq., by discriminating against them
on account of national origin. Because they have not pled sufficient facts to raise a
plausible inference of discrimination, we affirm the district court’s grant of a motion to
dismiss their complaint under Civil Rule 12(b)(6).

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No. 12-2620        16630 Southfield L.P. v. Flagstar Bank, F.S.B.                   Page 2


                                            I.

       Samir Danou is a naturalized United States citizen from Iraq. He and his family,
as well as a trust in his name, own several real estate ventures. Of relevance here, they
own 16630 Southfield, Triple Creek Associates and Danou Technical Park, all of which
operate in Wayne County, Michigan.

       In May 2006, Southfield borrowed $13 million from Flagstar Bank. Danou,
Triple Creek and Danou Technical Park guaranteed the loan, and Southfield and Triple
Creek put up collateral for the loan. This turned out not to be a propitious time to invest
in real estate in Michigan or for that matter most areas of the country. Southfield did not
repay the loan in full when it came due in May 2009. In November 2009, Flagstar and
Southfield 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. Around
this time, the plaintiffs add, Chambless told Danou that Flagstar “would under no
circumstances ever consider an application” to refinance the loan again. R. 7 ¶ 33. 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. The district court dismissed the complaint as a matter of law, and this appeal
followed.
No. 12-2620        16630 Southfield L.P. v. Flagstar Bank, F.S.B.                  Page 3


                                           II.

       Civil Rule 8(a)(2) says that a complaint must contain “a short and plain statement
of the claim showing that the pleader is entitled to relief.” A pair of Supreme Court
decisions—Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal,
556 U.S. 662 (2009)—confirms that this rule imposes legal and factual demands on the
authors of complaints.

       William Twombly claimed that four telephone companies violated federal
antitrust laws by agreeing not to compete against each other. In dismissing his
complaint, the Court explained that merely alleging that the companies had colluded did
not suffice. Twombly had to allege facts that plausibly backed up his conclusion of
conspiracy. The most he could muster on this score were perceived similarities between
and among the companies’ business practices. Not enough, the Court replied. There
was an “obvious alternative explanation” for this parallel conduct: The companies were
independently pursuing a “rational and competitive business strategy . . . prompted by
common perceptions of the market.” 550 U.S. at 554, 567. In view of this explanation,
the similarity of the companies’ practices did not plausibly suggest an unlawful
conspiracy, requiring the Court to dismiss Twombly’s complaint.

       Javaid Iqbal in turn claimed that, after the terrorist attacks of September 11,
2001, federal officials instituted a policy of detaining Arab Muslim men on account of
their religion, race and national origin. His case became a rerun of Twombly. Like
Twombly, Iqbal could not proceed to discovery simply by making bare allegations that
the defendants violated the law. Like Twombly, he had to identify facts that plausibly
supported his legal conclusion. He tried to discharge this burden by pointing to the
number of Arab Muslim men—“thousands”—confined after September 11. 556 U.S.
at 695. But like the Court in Twombly, the Court in Iqbal perceived an obvious
alternative explanation for the pattern: “The September 11 attacks were perpetrated by
19 Arab Muslim hijackers . . . [so it] should come as no surprise that a legitimate policy
directing law enforcement to arrest and detain individuals because of their suspected link
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to the attacks would produce a disparate, incidental impact on Arab Muslims.” Id. at
682. And so, like Twombly, Iqbal saw his complaint dismissed.

       In the aftermath of these decisions, a plaintiff cannot overcome a Rule 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,” id. at 683, requiring the plaintiff to plead enough “factual matter” to raise a
“plausible” inference of wrongdoing. Id. at 678. 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. Id. at 682; Twombly, 556 U.S. at
567.

       Unlike the technical pleading requirements of a bygone era—when “every slip
(even of a syllable or a letter) was . . . held to be fatal to the pleader,” 3 William
Blackstone, Commentaries on the Laws of England 409 (1765)—these directives do not
exist for their own sake. Discovery imposes costs—not only on defendants but also on
courts and society. And plaintiffs can use the threat of imposing these burdens to coerce
defendants into settling. Iqbal, 556 U.S. at 685–86; Twombly, 550 U.S. at 558–59. Rule
8(a)(2), as the Court has explained, thus serves a vital practical function: It prevents
plaintiffs from launching a case into discovery—and from brandishing the threat of
discovery during settlement negotiations—“when there is no reasonable likelihood that
[they] can construct a claim from the events related in the complaint.” Twombly, 550
U.S. at 558.

       Gauged by these requirements, the plaintiffs’ complaint comes up short. The
Equal Credit Opportunity Act makes it “unlawful for any creditor to discriminate against
any applicant, with respect to any aspect of a credit transaction . . . on the basis of
. . . national origin.” 15 U.S.C. § 1691(a). Yet Danou and the other plaintiffs have filed
a complaint that does not plausibly indicate that Flagstar denied Southfield refinancing
for a discriminatory reason.

       The factual matter in the complaint does not support an inference of
discrimination. Danou’s Iraqi origin does not by itself establish the requisite inference.
No. 12-2620        16630 Southfield L.P. v. Flagstar Bank, F.S.B.                  Page 5


Cf. Iqbal, 556 U.S. at 677, 681 (allegation that the federal government “arrested and
detained thousands of Arab Muslim men . . . as part of its investigation of the events of
September 11” does not support inference that the government acted “for the purpose
of discriminating” rather than “for a neutral . . . reason”). Danou’s offer of his wife’s
guarantee and new collateral does not tip the scales. Banks often refuse to provide
secured loans, just as they often refuse to provide unsecured ones. And a bank, once
bitten by the failure to receive repayment of an initial loan on time, may understandably
become twice shy about restructuring the loan a second time. Nor, in the face of these
common sense explanations for Flagstar’s conduct in the aftermath of the 2008 financial
meltdown, does Flagstar’s refusal to explain its decision help the plaintiffs make any
headway.

       A more obvious explanation, indeed the most obvious explanation, for Flagstar’s
conduct was its understandable concern about repayment. Cf. Iqbal, 556 U.S. at 682;
Twombly, 550 U.S. at 567. In 2009, Southfield failed to repay its original loan on time,
requiring an extension of the maturity date. And in 2011, Flagstar sent an employee to
look into Southfield’s affairs. Common sense suggests that Flagstar denied Southfield’s
request for a further extension because it thought the extension was a bad business
proposition, not because it wanted to discriminate against people of Iraqi origin. When
all is said and done, the factual matter in the complaint does not support an inference of
discrimination.

       To be sure, the mere existence of more likely alternative explanations does not
automatically entitle a defendant to dismissal. See Watson Carpet & Floor Covering,
Inc. v. Mohawk Indus., Inc., 648 F.3d 452, 458 (6th Cir. 2011) (“Often, defendants’
conduct has several plausible explanations. Ferreting out the most likely reason for the
defendants’ actions is not appropriate at the pleadings stage.”); see also Iqbal, 556 U.S.
at 678. Civil Rule 8(a) is not 15 U.S.C. § 78u-4(b)(2), which requires the inference of
fraudulent intent in securites fraud cases to be “at least as compelling as any opposing
inference.” Tellabs, Inc. v. Makor, 551 U.S. 308, 314 (2007). Thus, if a plaintiff’s claim
is plausible, the availability of other explanations—even more likely explanations—does
No. 12-2620         16630 Southfield L.P. v. Flagstar Bank, F.S.B.                    Page 6


not bar the door to discovery. But you can’t assess the plausibility of an inference in a
vacuum. The reasonableness of one explanation for an incident depends, in part, on the
strength of competing explanations. (How reasonable is it to infer that it rained last
night from the fact that my lawn is wet? It depends, among other things, on whether I
own a sprinkler.) Where, as here, the complaint alleges facts that are merely consistent
with liability (i.e., being Iraqi and being denied a loan extension) as opposed to facts that
demonstrate discriminatory intent (i.e., disparate impact or direct evidence), the
existence of obvious alternative explanations simply illustrates the unreasonableness of
the inference sought and the implausibility of the claims made.

        The plaintiffs respond by pointing to the complaint’s statements that Flagstar has
treated comparable non-Iraqi applicants more favorably. See R. 7 ¶ 35 (alleging “upon
information and belief” that Flagstar has refinanced delinquent borrowers who “were
Caucasian” or “not . . . members of minority groups”); id. ¶ 93 (alleging “upon
information and belief” that Flagstar has made loans “to persons not of Iraqi origin or
business entities not associated with persons of Iraqi origin where the debt to equity ratio
is significantly less than what Danou has without the additional collateral proposed”);
id. ¶ 94 (alleging “upon information and belief” that Flagstar has refinanced “non-Iraqi”
borrowers “where the debt to equity ratio is significantly less than exists regarding
Plaintiffs”). These are precisely the kinds of conclusory allegations that Iqbal and
Twombly condemned and thus told us to ignore when evaluating a complaint’s
sufficiency. No doubt disparate treatment of similarly situated people may support an
inference of discrimination. See, e.g., Keys v. Humana, Inc., 684 F.3d 605, 610 (6th Cir.
2012). But the plaintiffs have not identified any similarly situated individuals whom
Flagstar treated better. They have merely alleged their “belief” that such people exist.
These “naked assertions devoid of further factual enhancement” contribute nothing to
the sufficiency of the complaint. Iqbal, 556 U.S. at 678 (internal quotation marks and
alteration omitted).

        At bottom, as between the “obvious alternative explanation for the [denial] and
the purposeful, invidious discrimination [the plaintiffs] ask[ ] us to infer, discrimination
No. 12-2620        16630 Southfield L.P. v. Flagstar Bank, F.S.B.                   Page 7


is not a plausible conclusion.” Id. at 682 (internal quotation marks and citation omitted).
The complaint thus merits dismissal, as the district court properly concluded.

                                           III.

       For these reasons, we affirm.
