Goobich v. Excelligence Learning Corporation

Background

Joel Goobich sued Excelligence Learning Corporation based on an employment agreement concerning proprietary paint formulas and commissions. Goobich alleged that Excelligence misrepresented or concealed information about the money it owed him, underpaid him, and used his proprietary formulas in new formulations without paying the required commissions. His complaint asserted claims including accounting, breach of contract, misrepresentation, trade-secret misappropriation, unfair competition, unjust enrichment, and fraudulent concealment.

Excelligence filed an answer asserting 41 “affirmative and/or additional” defenses. Goobich moved under Federal Rule of Civil Procedure 12(f), which permits a court to strike an insufficient, redundant, immaterial, impertinent, or scandalous matter from a pleading. He challenged defenses 1 through 16, 25, 26, 35, and 41.

Court’s Analysis

The court held that the challenged affirmative defenses had to contain enough facts to state a defense that was plausible on its face. The court noted that, although the Ninth Circuit has described the standard as requiring fair notice in general terms, courts in the Northern District of California generally apply the heightened pleading standard associated with Twombly and Iqbal to affirmative defenses.

The court found that defenses 2 through 7, 9 through 15, 25, 26, and 35 consisted only of bare references to legal doctrines, without explaining how those doctrines applied to this case. The court therefore found them inadequately pleaded.

The court also found that defenses 1, 8, 16, and 41 were not proper affirmative defenses. Defense 1, “Failure to State a Claim,” merely asserted that Goobich could not prove the elements of his claims. Defense 8, concerning standing to bring the seventh and eighth causes of action, and defense 16, concerning unconstitutional excessive penalties, were also not proper affirmative defenses. Defense 41 attempted to reserve Excelligence’s right to assert additional defenses later, which the court found was not itself a proper affirmative defense.

Disposition

The court GRANTED Goobich’s motion to strike Excelligence’s challenged affirmative defenses. Affirmative defenses 1, 8, 16, and 41 were STRICKEN WITH PREJUDICE. Affirmative defenses 2 through 7, 9 through 15, 25, 26, and 35 were STRICKEN WITHOUT PREJUDICE. Excelligence could file an amended answer addressing those defenses by April 29, 2020.

The court added that striking the standing defense with prejudice would not prevent Excelligence from later arguing that Goobich lacked standing, because standing is a jurisdictional issue that can be raised at any time. The order addressed only the sufficiency and propriety of the affirmative defenses; it did not decide the underlying claims.