United States District Court, N.D. California
ORDER DENYING MOTION TO STRIKE AND GRANTING MOTION TO
RICHARD SEEBORG UNITED STATES DISTRICT JUDGE.
Bunnett & Company, Inc. (“Bunnett & Co.”)
and Energy Feeds International, LLC (“Energy
Feeds”) are sister companies and distributors of
nutritional supplements for dairy cows. They aver that an
enterprise consisting of J.D. Heiskell Holdings, LLC
(“JDH”), historically one of Plaintiffs'
largest customers; Todd Gearheart, JDH's Vice President;
and certain other defendants and co-conspirators devised a
scheme to establish and exert control over a new distribution
channel for the supply and sale of dairy cow nutritional
supplements in the United States, effectively driving
Plaintiffs out of business through wrongful conduct. JDH now
moves to strike or dismiss certain counts in Plaintiffs'
Third Amended Complaint (“TAC”) on the grounds
that Plaintiffs were not granted express leave to amend, nor
can Plaintiffs plead vicarious liability on behalf of JDH as
a matter of law. For the reasons stated below, JDH's
motion to strike is denied, but the motion to dismiss is
orders have set forth the relevant facts and only those
pertaining to the present motion are recounted here.
Plaintiffs are two affiliated, family-owned businesses that
distribute nutritional supplements for dairy cows across the
United States and have historically operated under exclusive
distribution agreements with their suppliers. JDH is a large
animal feed distributor and agricultural trading company
where Todd Gearheart is a Vice President. JDH, Todd
Gearheart, and other defendants created a scheme to establish
and exert control over a new distribution channel and edge
Plaintiffs out of business in the Fall of 2015.
filed suit on March 17, 2017, alleging, among other claims
for relief, that defendants engaged in a conspiracy in
violation of the Racketeer Influenced and Corrupt
Organization Act (“RICO”) Sections 1962(c) and
1962(d). Plaintiffs averred that Todd Gearheart conducted
this scheme through activities including perjury, money
laundering, mail and wire fraud, and bankruptcy fraud, and
further asserted that JDH was vicariously liable for his
Order dated February 27, 2018, certain defendants' Motion
to Dismiss the Second Amended Complaint was granted
in part and denied in part. See Dkt. No. 104. In
relevant part, that Order dismissed Plaintiffs' RICO
claims for relief against JDH on the grounds that Plaintiffs
had not pled facts showing Todd Gearheart's conduct was
of a kind he was hired to perform, and therefore Plaintiffs
could not plead vicarious liability of JDH. The Order did not
expressly grant Plaintiffs leave to amend those claims for
relief. On April 2, 2018, Plaintiffs filed their TAC. The TAC
contained new averments regarding JDH's role in the
alleged RICO claims for relief, discussed below.
Rule 12(f) Motion to Strike
Federal Rule of Civil Procedure 12(f) courts may strike from
a pleading any “insufficient defense or any redundant,
immaterial, impertinent, or scandalous matter.”
Fed.R.Civ.P. 12(f). The function of a Rule 12(f) motion is to
avoid spending time and money litigating spurious issues.
See Sidney-Vinstein v. A.H. Robins Co., 697 F.2d
880, 885 (9th Cir. 1983). A matter is immaterial if it has no
essential or important relationship to the claim for relief
pleaded. Fantasy, Inc. v. Fogerty, 984 F.2d 1524,
1527 (9th Cir. 1993), rev'd on other grounds,
510 U.S. 517 (1994). A matter is impertinent if it does not
pertain, and is not necessary, to the issues in question in
the case. Id. Motions under Rule 12(f) are generally
disfavored. See Barnes v. AT&T Pension Ben.
Plan-Nonbargained Program, 718 F.Supp.2d 1167, 1170
(N.D. Cal. 2010) (citing Stanbury Law Firm v.
I.R.S., 221 F.3d 1059, 1063 (8th Cir. 2000)).
Rule 12(b)(6) Motion to Dismiss
Federal Rule of Civil Procedure 12(b)(6), a district court
must dismiss a complaint if it fails to state a claim upon
which relief can be granted. To survive a Rule 12(b)(6)
motion to dismiss, the plaintiff must allege “enough
facts to state a claim to relief that is plausible on its
face.” Bell Atl. Corp. v. Twombly, 550 U.S.
544, 570 (2007). A claim is facially plausible when the
plaintiff pleads facts that “allow the court to draw
the reasonable inference that the defendant is liable for the
misconduct alleged.” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009) (citation omitted). There must be
“more than a sheer possibility that a defendant has
acted unlawfully.” Id. While courts do not
require “heightened fact pleading of specifics, ”
a plaintiff must allege facts sufficient to “raise a
right to relief above the speculative level.”
Twombly, 550 U.S. at 555, 570.
deciding whether the plaintiff has stated a claim upon which
relief can be granted, the court accepts the plaintiff's
allegations as true and draws all reasonable inferences in
favor of the plaintiff. See Usher v. City of Los
Angeles, 828 F.2d 556, 561 (9th Cir. 1987). However, the
court is not required to accept as true “allegations
that are merely conclusory, unwarranted deductions of fact,
or unreasonable inferences.” In re Gilead Scis.
Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008).
court dismisses a complaint, it “should grant leave to
amend even if no request to amend the pleading was made,
unless it determines that the pleading could not possibly be
cured by the allegation of other facts.” Lopez v.
Smith, 203 F.3d 1122, 1127 (9th Cir. 2000). In making
this determination, the court should consider factors such as
“the presence or absence of undue delay, bad faith,
dilatory motive, repeated failure to cure deficiencies by
previous amendments, undue prejudice to the ...