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Whittlestone, Inc. v. Handi-Craft Co.

August 17, 2010

WHITTLESTONE, INC., A CALIFORNIA CORPORATION, PLAINTIFF-APPELLANT,
v.
HANDI-CRAFT COMPANY, A MISSOURI CORPORATION, DEFENDANT-APPELLEE.



Appeal from the United States District Court for the Northern District of California Saundra B. Armstrong, District Judge, Presiding D.C. No. 4:08-cv-04193-SBA.

The opinion of the court was delivered by: N.R. Smith, Circuit Judge

FOR PUBLICATION

Argued and Submitted May 13, 2010 -- San Francisco, California.

Before: Stephen Reinhardt, William A. Fletcher and N. Randy Smith, Circuit Judges.

OPINION

In this case of first impression, we hold that Rule 12(f) of the Federal Rules of Civil Procedure does not authorize a district court to strike a claim for damages on the ground that such damages are precluded as a matter of law. We reverse and remand.

I. Background

In March 2006, Whittlestone (a California corporation with its principal place of business in California) and Handi-Craft (a Missouri corporation with its principal place of business in Missouri) entered into a written, twenty-year contract. In the contract, Handi-Craft was obligated to make minimum annual unit or dollar amount purchases of Whittlestone products for resale to third parties.

Relevant paragraphs of the contract stated:

5. Term. The "Term" of this Agreement shall begin on the date of this Agreement and end after the initial term described below, unless sooner terminated pursuant to the Agreement.

20. Termination.

a. This Agreement may be terminated as to any or all of the Whittlestone Products at any time by the mutual written consent of both parties.

b. This Agreement may be terminated as to any or all of the Whittlestone Products by Handi-Craft upon at least forty-five (45) days prior written notice to Whittlestone in the event of the occurrence of any of the following events and ...


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