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Krulee v. Receivables Performance Management, LLC

United States District Court, N.D. California, San Jose Division

October 1, 2014

DANA SCOTT KRULEE, on behalf of himself and all others similarly situated, Plaintiff,
v.
RECEIVABLES PERFORMANCE MANAGEMENT, LLC, a Washington limited liability company; and JEFFERSON CAPITAL SYSTEMS, LLC, a Georgia limited liability company, Defendants.

ORDER GRANTING IN PART MOTIONS TO STRIKE [Re Docket Nos. 20, 21]

RONALD M. WHYTE, District Judge.

Plaintiff moves to strike the affirmative defenses contained in answers filed by Receivables Performance Management, LLC ("RPM") and Jefferson Capital Systems, LLC ("Jefferson"). Dkt. No. 20 (MTS Jefferson Answer); Dkt. No. 21 (MTS RPM Answer). The court finds this case suitable for decision without oral argument. Civil Local Rule 7-1(b). For the reasons explained below, the court grants in part the motions to strike. RPM and Jefferson may file an amended answer by October 30, 2014.

I. Analysis

A. The Twombly/Iqbal standard applies to affirmative defenses

Although the Ninth Circuit and other circuit courts have yet to rule on the issue, this Court has joined the majority of other district courts in applying the heightened pleading standard set forth in Twombly and Iqbal [1] to affirmative defenses. See Spears v. First Am. eAppraiseIt, 5-08-CV-00868-RMW, 2013 WL 1748284 at *6 (N.D. Cal. Apr. 23, 2013).

Applying the standards set forth in Twombly and Iqbal to affirmative defenses requires that "[w]hile a defense need not include extensive factual allegations in order to give fair notice, bare statements reciting mere legal conclusions may not be sufficient." Perez v. Gordon & Wong Law Grp., P.C., 11-CV-03323-LHK, 2012 WL 1029425 at *8 (N.D. Cal. Mar. 26, 2012) (internal quotation marks omitted)). A defense may be insufficient "as a matter of pleading or a matter of law." Scott v. Fed. Bond & Collection Serv., Inc., No. 10-2825, 2011 WL 176846, at *4 (N.D. Cal. Jan. 19, 2011). "Just as a plaintiff's complaint must allege enough supporting facts to nudge a legal claim across the line separating plausibility from mere possibility, a defendant's pleading of affirmative defenses must put a plaintiff on notice of the underlying factual bases of the defense." Perez, 2012 WL 1029425, at *8 (internal quotation marks omitted).

"If the Court determines that a pleading is deficient, it may strike the pleading and require the non-moving party to submit an amended pleading that includes more specific allegations." Id. When striking an affirmative defense, leave to amend should be freely given so long as no prejudice to the moving party results. Wyshak v. City National Bank, 607 F.2d 824, 826 (9th Cir.1979).

B. Jefferson's Affirmative Defenses (Dkt. No. 14, Answer)

First Affirmative defense: failure to state a cause of action: Courts in this district agree that "failure to state a claim is not a proper affirmative defense but, rather, asserts a defect in [the plaintiff's] prima facie case." Barnes v. AT & T Pension Ben. Plan-Nonbargained Program, 718 F.Supp.2d 1167, 1174 (N.D. Cal. 2010); see also J & J Sports Prods., Inc. v. Mendoza-Govan, No. 10-5123, 2011 WL 1544886, at *3 (N.D. Cal. Apr. 25, 2011).

Accordingly, the Court GRANTS Plaintiff's Motions to Strike the affirmative defense for failure to state a cause of action. The court grants plaintiff's motion with respect to this defense with prejudice because failure to state a cause of action is not an affirmative defense. However, defendants may still assert this claim as an ordinary defense to liability. See Hernandez v. Dutch Goose, Inc., No. 13-3537, 2013 WL 5781476, at *7 (N.D. Cal. Oct. 25, 2013) ("Although struck with prejudice as affirmative defenses, the court makes clear that Defendants are not precluded from arguing, in a motion or at trial, that [Plaintiff] has failed to state a claim.").

Third Affirmative Defense: Compliance with Laws: For the same reasons as the first affirmative defense, the third affirmative defense is simply a denial of liability. The court grants plaintiff's motion with respect to this defense with prejudice because it is not an affirmative defense.

Eleventh Affirmative Defense: Reservation to Raise Other Defenses: The defendant does not oppose striking the eleventh affirmative defense. Dkt. No. 23 at 8.

Remaining Defenses (2nd, 4th, 5th, 6th, 7th, 8th, 9th, 10th): The court agrees that these defenses are conclusory. A review of the affirmative defenses shows that they lack supporting facts or explanation as to how the defense applies to this case. However, the court is not prepared to say at this point that they are immaterial or inapplicable to plaintiff's claims. ...


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