Albert's Organics, Inc. v. Holzman

Background

Albert’s Organics, Inc. sued Greg Holzman, Steven Akagaki, Jason Laffer, and Terrafresh Organics, Inc. The complaint asserted nine claims: violations of the federal and California trade-secret laws, breach of contract, inducing a breach of contract, interference with business relations or contract, breach of the duty of loyalty, inducing a breach of the duty of loyalty, unfair competition, and interference with prospective economic relations.

The defendants filed an answer after the court ruled on their earlier motion to dismiss. Albert’s then filed a motion under Federal Rule of Civil Procedure 12(f), which allows a court to remove an insufficient defense or redundant, immaterial, impertinent, or scandalous material from a pleading.

Responses to the Complaint

The court denied the motion to strike the defendants’ response to paragraph four. The defendants admitted part of Albert’s allegation about the purchase of PACO’s assets and denied the portion concerning the agreement’s purpose. The court held that Rule 8 allows a party to admit part of an allegation and deny the rest, and that the response sufficiently identified what the defendants disputed.

The court also denied the motion concerning paragraph six. The defendants admitted that Albert’s purchased some PACO business information but denied the rest of the allegation. Although the response might lack specificity, the court held that the disputed scope of the trade secrets could be clarified through discovery and that the response could have a bearing on the case.

The court denied the motion to strike the defendants’ responses to paragraphs nine and thirty-nine. Those responses disputed whether Terrafresh was competing with PACO and whether it was a “direct competitor” of Albert’s, while another answer paragraph admitted that Terrafresh was a competitor of Albert’s. The court found that these positions were not clearly irreconcilable. It also noted that a court does not have authority to strike pleadings merely because a party has taken positions that appear inconsistent.

The court denied the motion concerning paragraph seventy. It held that the defendants’ response was a permitted partial admission and partial denial and adequately addressed the substance of Albert’s allegation.

Affirmative Defenses

Albert’s challenged the defendants’ first through fifth and seventh through twenty-seventh affirmative defenses as insufficiently detailed and as failing to identify which claims they addressed. The court denied this part of the motion because Albert’s grouped the defenses together instead of explaining separately why each challenged defense was inadequate. The court would not independently review the answer to determine which defenses were sufficiently pleaded.

The court granted the motion to strike the twenty-seventh affirmative defense. That defense reserved the possibility of asserting additional, unspecified defenses, and the court held that such a reservation is not permitted under Rule 8.

The court denied the motion as to the remaining affirmative defenses challenged as legally invalid. It found that Albert’s had not shown with sufficient specificity that those defenses were legally unavailable. The court also denied the separate challenge to the twenty-first affirmative defense, which asserted statutes of limitations. The court held that discovery might produce evidence implicating a limitations period, and any uncertainty should be resolved against striking the defense at this stage.

Sanctions and Other Matters

The court declined to deny the motion based on alleged violations of local briefing rules but advised Albert’s to state the issues and relevant facts more clearly in future motions.

Both sides suggested that the other should be sanctioned under Rule 11. The court ruled that neither side followed Rule 11’s requirement that a sanctions request be filed separately and identify the specific conduct at issue. Sanctions were therefore not warranted for or against either side. The court warned that future sanctions requests not complying with Rule 11 would be stricken.

The court overruled Albert’s objection to a declaration attached to the defendants’ opposition because the court did not rely on that declaration in resolving the motion.

Disposition

Judge Phyllis J. Hamilton granted Albert’s Organics, Inc.’s motion to strike with respect to the defendants’ twenty-seventh affirmative defense and denied it in all other respects.