Talece Inc. v. Zhang

Background

Defendant and third-party plaintiff Zheng Zhang moved to strike the affirmative defenses asserted by Talece Inc. and third-party defendant Lanhai Su in their answers to the First Amended Counter- and Third-Party Complaint. Zhang challenged the defenses under Federal Rules of Civil Procedure 8(a) and 9(b). Talece and Su opposed the motion. The court considered the motion without oral argument and vacated the scheduled hearing.

Legal standard

Rule 12(f) permits a court to strike an insufficient defense or material that is redundant, immaterial, impertinent, or scandalous. The court explained that motions to strike are generally disfavored. The key question for an affirmative defense is whether it gives the opposing party fair notice of the defense.

Discussion

Zhang sought to strike all 52 affirmative defenses pleaded by Talece and Su, but the court declined to do so. Talece asserted 25 defenses and Su asserted 26. The court stated that Zhang could not expect it to analyze every defense without legal argument explaining why each specific defense was insufficient.

The court also rejected Zhang’s specific challenges. It declined to strike the first defense, which asserted failure to state a claim, noting that it had rejected the same argument when Zhang defended that defense in his own answer. The court found that the second defense, failure to mitigate damages, and the seventh defense, unclean hands, were not identical and gave Zhang fair notice. It likewise declined to strike the eleventh defense, based on the business judgment rule, or the twenty-fourth defense, which generally asserted privilege, because Zhang had not provided a legal basis for striking them.

The court found that the twenty-sixth defense, asserting no duty, gave fair notice because Talece had denied that Zhang was its shareholder and therefore asserted that it owed him no duty. It also declined to strike the thirteenth defense, based on unjust enrichment, because that defense could apply to Zhang’s breach-of-fiduciary-duty and conversion claims. The court did not address Zhang’s challenges to the third, sixth, and fourteenth defenses because he raised those arguments for the first time in his reply.

Zhang separately challenged the seventh through tenth defenses under Rule 9(b), including unclean hands, waiver, estoppel, and the principle that a person seeking equitable relief must do equity. The court rejected those challenges because Talece’s allegations in the primary complaint gave Zhang sufficient notice of the alleged inequitable conduct. The court also stated that it would not revisit through a motion to strike its earlier ruling that the complaint adequately pleaded a factual basis for the claims under Rules 12(b)(6) and, where applicable, 9(b).

Disposition

The court denied the motion to strike. It stated that the existing case schedule remained in effect. Judge Beth Labson Freeman did not decide the underlying claims in this order.