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Bcoww Holdings, LLC v. Collins

United States District Court, W.D. Texas, San Antonio Division

September 15, 2017

BCOWW HOLDINGS, LLC, BCOWW OUTFITTERS, LLC, Plaintiffs
v.
DANIEL COLLINS, JADAC LLC, Defendants

          Honorable Fred Biery, United States District Judge.

          REPORT AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE

          ELIZABETH S. ("BETSY") CHESTNEY, U.S. MAGISTRATE JUDGE.

         This Report and Recommendation concerns the Rule 12(f) Motion to Strike Defendants' Affirmative Defenses (“Motion to Strike”) [#36] and the Corrected Motion to Strike [#45] filed by Plaintiffs BCOWW, LLC and BCOWW Outfitters, LLC (collectively, “Plaintiffs” or “BCOWW”). All pretrial matters in this case have been referred to the undersigned for disposition pursuant to Western District of Texas Local Rule CV-72 and Appendix C [#9].[1] The undersigned has authority to enter this recommendation pursuant to 28 U.S.C. § 636(b)(1)(B).

         After considering the Motion to Strike [#36], the Corrected Motion to Strike [#45], and Defendants' Response [#56], the undersigned recommends that the District Court DENY Plaintiffs' Corrected Motion to Strike [#45]. It is also recommended that the District Court DISMISS Plaintiff's Motion to Strike [#36], which was superseded by the Corrected Motion to Strike, as MOOT. Plaintiffs have failed to show they lack fair notice regarding any of the affirmative defenses pled by Defendants. Moreover, although some of the defenses pled by Defendants may not be classified as true “affirmative defenses, ” there is no evidence that Plaintiffs would suffer unfair surprise with an unexpected defense so as to justify the relief requested.

         I. Background

         This is an unfair competition case brought by Plaintiffs against a former member Defendant Daniel Collins, as well as Defendant JADAC, LLC (“JADAC”) (collectively, “Defendants”), a company Collins formed after resigning from BCOWW. Plaintiffs filed suit against Defendants on May 1, 2017, asserting claims for breach of contract, trademark infringement, trade secret misappropriation, breach of fiduciary duty, tortious interference with prospective business relationships, tortious interference with existing contracts, common law unfair competition, and civil conspiracy [#1]. Plaintiffs allege that Defendants violated the aforementioned federal and/or state laws when Collins set up JADAC to compete in the waffle-maker business.

         Approximately one month after filing suit, this case was stayed for mediation pursuant to a mandatory mediation provision in the Company Agreement [#19, #21]. The stay was subsequently lifted on July 12, 2017, when the mediation ended in impasse [#26]. On August 1, 2017, Defendants filed their Answer and Affirmative Defenses to Plaintiffs' Verified Complaint [#27]

         Plaintiffs filed their Motion [#36] on August 22, 2017 without including a certificate of conference as required by Local Rule CV-7(i). After receiving a deficiency notice from the Clerk of the Court, Plaintiffs filed their Corrected Motion on August 28, 2017.

         II. Legal Standard

         Federal Rule of Civil Procedure 12(f) permits a party to request the Court “strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” Fed.R.Civ.P. 12(f). This rule applies to affirmative defenses. Woodfield v. Bowman, 193 F.3d 354, 362 (5th Cir. 1999).

         Federal Rule of Civil Procedure 8(c) requires a defendant to “affirmatively state any avoidance or affirmative defense.” Fed.R.Civ.P. 8(c). The Fifth Circuit has held that this requires a defendant to plead an affirmative defense with “enough specificity or factual particularity to give the plaintiff “fair notice” of the defense that is being advanced.” Woodfield, 193 F.3d at 362. This “fair notice pleading requirement is met if the defendant sufficiently articulated the defense so that the plaintiff was not a victim of unfair surprise.” Id. (internal quotations omitted). In other words, “[a] defendant should not be permitted to ‘lie behind a log' and ambush a plaintiff with an unexpected defense.” Ingraham v. United States, 808 F.2d 1075, 1079 (5th Cir.1987). However, “[w]here the [affirmative defense] is raised in the trial court in a manner that does not result in unfair surprise . . . technical failure to comply precisely with Rule 8(c) is not fatal.” Id. (quoting Allied Chem. Corp. v. Mackay, 695 F.2d 854, 855-56 (5th Cir.1983) (per curiam). Thus, in some cases, “merely pleading the name of the affirmative defense . . . may be sufficient.” Woodfield, 193 F.3d at 362.

         The Fifth Circuit has not yet specifically addressed whether the heightened Twombly and Iqbal pleading standards have changed the pleading standards for affirmative defenses, resulting in disagreement among the district courts in this Circuit on the issue. See, e.g., Dyson v. Stuart Petroleum Testers, Inc., No. 1-15-cv-282-RP, 2015 WL 4935527 at *2 (W.D. Tex. Aug. 18, 2015) (citing conflicting authorities). However, in one case post-Twombly but pre-Iqbal, the Fifth Circuit cited approvingly to the “fair notice” standard in pleading an affirmative defense. See Rogers v. McDorman, 521 F.3d 381, 385 (5th Cir. 2008) (citing Woodfield, 193 F.3d at 362).

         Moreover, at least two courts in this District have refused to apply the more heightened pleading requirement to affirmative defenses on the grounds that “[d]ifferent policy and practical considerations apply when asserting defenses as opposed to asserting claims.” Deaf Interpreter Services, Inc. v. Webbco Enterprises, L.L.C., No. SA:13-CV-867-OLG, 2014 WL 12489609, at *2 (W.D. Tex. June 30, 2014) (listing several policy and practical reasons for not extending the Twombly/Iqbal pleading standard to affirmative defenses including but not limited to the textual differences between Rule 8(a) and 8(c), the unfairness of holding the defendant to the same pleading standards as the plaintiff, and the fact that a heightened pleading requirement would result in more motions to strike, which are disfavored); see also Dyson, 2015 WL 4935527 at *3 (finding the “fair notice” standard the “better view” based upon a “number of reasons, ” including the textual differences between the rules, the fact that a defendant only has twenty-one days to respond to a complaint whereas a plaintiff is only limited by the applicable statute of limitations, and raising the standard for pleading affirmative defenses would only encourage more motions to strike, prolonging pre-discovery motion practice). In light of the Fifth Circuit's continued application of the “fair notice” standard after Twombly, and the policy and practical considerations discussed in the cases above, the undersigned will apply the “fair notice” pleading standard to Plaintiffs' motion.

         Motions to strike affirmative defenses are viewed with disfavor and are infrequently granted “both because striking a portion of a pleading is a drastic remedy, and because it often is sought by the movant simply as a dilatory tactic.” Fed. Deposit Ins. Corp. v. Niblo, 821 F.Supp. 441, 449 (N.D. Tex. 1993); see also Kaiser Aluminum & Chem. Sales, Inc. v. AvondaleShipyards, Inc., 677 F.2d 1045, 1057 (5th Cir. 1982) (“[M]otions to strike a defense are generally disfavored.”). Accordingly, a “motion to strike should be granted only when the pleading to be stricken has no possible relation to the controversy.” Augustus v. Bd. of Pub. Instruction of Escambia County, Fla., 306 F.2d 862, 868 (5th Cir. 1962). A district court has ...


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