Am. River AG Inc. v. Vestis Grp., 2:19-cv-02203-TLN-DB
| Decision Date | 26 August 2021 |
| Docket Number | 2:19-cv-02203-TLN-DB |
| Parties | AMERICAN RIVER AG, INC., a California Corporation, Plaintiff, v. VESTIS GROUP, an Illinois Corporation, and CONSOLIDATED MILL SUPPLY, INC., an Illinois Corporation doing business as VESTIS GROUP, Defendant. VESTIS GROUP, an Illinois Corporation, and CONSOLIDATED MILL SUPPLY, INC., an Illinois Corporation doing business as VESTIS GROUP, Counter claimants, v. AMERICAN RIVER AG, INC., a California Corporation, |
| Court | U.S. District Court — Eastern District of California |
This matter is before the Court pursuant to Plaintiff American River AG, Inc.'s (“Counter-Defendant”) Motion to Strike. (ECF No. 17.) Defendants Vestis Group (“Vestis”) and Consolidated Mill Supply, Inc. (collectively, “Counter claimants”) oppose Counter-Defendant's motion. (ECF No. 19.) Counter-Defendant has filed a reply. (ECF No. 21.) Having carefully considered the briefing filed by both parties, the Court hereby DENIES Counter-Defendant's Motion to Strike.
This breach of contract dispute arises from an agreement between the parties for the sale of dehydrated sweet potato culls. (See ECF Nos. 1, 13.) Counter-Defendant “warehouses and processes . . . sun-dried sweet potatoes and other agricultural commodities for use as ingredients that are sold into the pet food market.” (ECF No. 13 at 6.) Counterclaimants are distributors that partner with manufacturers and suppliers “to provide quality imported and domestic food products and related customized blending, milling, warehousing, and other similar services to its various customers.” (Id.)
In late 2017, Counterclaimants began purchasing dehydrated sweet potato culls from Counter-Defendant for resale to their customers, including Fairview Mills (“Fairview”) on an as-needed, spot basis pursuant to purchase orders (the “Purchase Orders”) that were issued by Counterclaimants to Counter-Defendant. (Id. at 7.) On or about September 15, 2018, the parties entered into an agreement (the “Agreement”) for the purchase of 10 million pounds of conventional sweet potato culls. (Id.) The Agreement contained other material terms such as the applicability of California law. (ECF No. 1 at 2.) The term of the Agreement was to run from January 1, 2019 (the “Effective Date”) to December 31, 2019. (ECF No. 13 at 7.)
After the execution of the Agreement and prior to the Effective Date, Counterclaimants continued to purchase dehydrated sweet potato culls from Counter-Defendant on an as-needed, spot basis pursuant to the Purchase Orders. (Id. at 8.) Through one such spot order in or around September 2018, Counterclaimants purchased fifteen loads of dehydrated sweet potato culls for delivery to Fairview, which Fairview had intended to process into a pre-blend that it would sell to Merrick Pet Care, Inc. (“Merrick”) for a large production run. (Id. at 8-9.) The first four of these shipments were infested with insects and larvae, and therefore summarily rejected by Fairview. (Id.) Counterclaimants allege Merrick refused to accept any product processed by Counter-Defendant going forward as a result of the insect and larvae infested shipments. (Id.) Consequently, Counterclaimants refused to accept delivery of all the sweet potato culls sold under the contract. (ECF No. 1 at 3.)
This action was filed by Counter-Defendant (or Plaintiff) against Counterclaimants (or Defendants) on October 31, 2019. (ECF No. 1.) Counterclaimants filed with its Answer a Counterclaim alleging seven claims against Counter-Defendant on February 6, 2020. (ECF No. 13.) On March 19, 2020, Counter-Defendant filed the instant motion to strike. (ECF No. 17.) On April 15, 2020, Counterclaimants filed an opposition (ECF No. 19), and on April 22, 2020, Counter-Defendant filed a reply (ECF No. 21).
Rule 12(f) provides that a court “may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” Fed.R.Civ.P. 12(f). A court will only consider striking a defense or allegation if it fits within one of these five categories. Yursik v. Inland Crop Dusters Inc., No. CV-F-11-01602-LJO-JLT, 2011 WL 5592888, at *3 (E.D. Cal. Nov. 16, 2011) (citing Whittlestone, Inc. v. Handi-Craft Co., 618 F.3d 970, 973-74 (9th Cir. 2010)). “[T]he function of a 12(f) motion to strike is to avoid the expenditure of time and money that must arise from litigating spurious issues by dispensing with those issues prior to trial.” Sidney-Vinstein v. A.H. Robins Co., 697 F.2d 880, 885 (9th Cir. 1983). However, Rule 12(f) motions are “generally regarded with disfavor because of the limited importance of pleading in federal practice, and because they are often used as a delaying tactic.” Neilson v. Union Bank of Cal., N.A., 290 F.Supp.2d 1101, 1152 (C.D. Cal. 2003). “Ultimately, whether to grant a motion to strike lies within the sound discretion of the district court.” Id. Unless it would prejudice the opposing party, courts freely grant leave to amend stricken pleadings. Foman v. Davis, 371 U.S. 178, 182 (1962); Howey v. U.S., 481 F.2d 1187, 1190 (9th Cir. 1973); see also Fed. R. Civ. P. 15(a)(2). If the court is in doubt as to whether the challenged matter may raise an issue of fact or law, the motion to strike should be denied, leaving the assessment of the sufficiency of the allegations for adjudication on the merits after proper development of the factual nature of the claims through discovery. See generally Whittlestone, Inc., 618 F.3d at 974-75.
Counterclaimants allege seven claims: (1) breach of contract with respect to the Agreement; (2) breach of contract with respect to the Purchase Orders; (3) breach of an express warranty in violation of California Commercial Code § 2313; (4) breach of the implied warranty of fitness for a particular purpose in violation of California Commercial Code § 2315; (5) breach of the implied warranty of merchantability in violation of California Commercial Code § 2314; (6) negligent interference with prospective economic relations; and (7) fraud in the inducement. (See ECF No. 13 at 13-20.) Counter-Defendant moves to strike paragraphs 15, 22, 25, 38, 43, and 49 of the Counterclaim. (ECF No. 17 at 2-3.) Counter-Defendant argues: (1) paragraphs 22, 38, 43, and 49 are immaterial, impertinent, and scandalous; (2) paragraph 15 is impertinent; and (3) paragraph 25 is immaterial and impertinent. (See ECF No. 18.) The Court will consider each of Counter-Defendant's arguments in turn.
Counterclaimants allege in paragraphs 22, 38, 43, and 49 information about Counter-Defendant's “illegal and unsanitary operations, ” which includes facts that directly “affected [Counter-Defendant]'s ability to comply with its contractual obligations.” (ECF No. 13 at 9-11, 13, 14.) Counter-Defendant moves to strike paragraphs 22, 38, 43, and 49 on the basis that such allegations are immaterial, impertinent, and scandalous. (See ECF No. 18 at 2, 5-6.) The Court will first consider the immaterial and impertinent arguments, and then address the scandalous argument.
Counter-Defendant argues “the alleged lawsuit and actions taken by ‘various neighbors' ([ECF No. 13 ]¶¶ 22a.-22b.), [the] issuance of an air quality violation notice by the local agency ([Id. at ]¶¶ 22c., 22f., 22g., 22i.), the requirement of a County business license ([Id. at ]¶¶ 22d.-22e., 22j.-22l.), [and] an application for a County Use Permit ([Id. at ]¶¶ 22m[.]-22p.)” are immaterial and impertinent to a breach of contract. (ECF No. 18 at 5-6.) Counter-Defendant contends paragraphs 38, 43, and 49 “simply reference the conclusions” of paragraph 22 and are therefore immaterial and impertinent as well. (Id. at 6.)
In opposition, Counterclaimants argue Counter-Defendant fails to demonstrate these allegations are prejudicial or lack logical connection to a stated claim, both of which are required in a motion to strike. (ECF No. 19 at 7-9.) With respect to prejudice, Counterclaimants assert Counter-Defendant does not “challenge the truth of these allegations” and that it “fails to reference, let alone demonstrate” that it has suffered prejudice. (Id. at 8.) Counterclaimants contend, pursuant to N.Y.C. Emps.' Ret. Sys. v. Berry, 667 F.Supp.2d 1121, 1128-29 (N.D. Cal. 2009), the Court may deny Counter-Defendant's motion based on its failure to argue the allegations are untrue or prejudicial.[2] (Id.) With respect to a logical connection, Counterclaimants note these paragraphs “are all pertinent, material[, ] and go to the very heart of these claims, ” as “illegal and unsanitary operations are relevant to and consistent with” Counterclaimants' allegations that Counter-Defendant's product that was not “‘within spec[]' while using ‘good manufacturing processes, '” thereby in breach of the Agreement. (Id. at 9.)
“Immaterial matters are ‘those which ha[ve] no essential or important relationship to the claim for relief or the defense being pleaded.'” Soil Retention Prod., Inc. v Brentwood Indus., Inc., No. 3:20-cv-02453-BEN-WVG, 2021 WL 689914, at *3 (S.D. Cal. Feb. 23, 2021) (citing Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527 (9th Cir. 1993), rev'd on other grounds sub nom. Fogerty v. Fantasy, Inc., 510 U.S. 517 (1994) (internal quotation marks omitted)). “A statement of unnecessary particulars in connection with and descriptive of a material matter may be stricken as ‘immaterial.'” Wilkerson v. Butler, 229 F.R.D. 166, 170 (E.D. Cal. 2005) (citing Gilbert v. Eli Lilly & Co., Inc., 56 F.R.D. 116, 120 n.5 (D.P.R. 1972); Burke v. Mesta Mach. Co., 5 F.R.D. 134 (D. Pa. 1946)). “An ‘impertinent' allegation is neither responsive nor relevant to the issues involved in the action” and ...
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