Gessele v. Jack in the Box, Inc.

• Decision Date: 02 September 2011
• Docket Number: 3:10-cv-960-ST
• Parties: JESSICA GESSELE, ASHLEY GESSELE, NICOLE GESSELE, TRICIA TETRAULT, and CHRISTINA LUCHAU, on behalf of themselves and all others similarly situated, Plaintiffs, v. JACK IN THE BOX, INC., a Corporation of Delaware, Defendant.
• Court: U.S. District Court — District of Oregon

JESSICA GESSELE, ASHLEY GESSELE, NICOLE GESSELE, TRICIA TETRAULT,

and CHRISTINA LUCHAU,

on behalf of themselves and all others similarly situated, Plaintiffs,

v.JACK IN THE BOX, INC., a Corporation of Delaware, Defendant.

3:10-cv-960-ST

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF OREGON PORTLAND DIVISION

Dated: September 2, 2011

OPINION

STEWART, Magistrate Judge:

INTRODUCTION

Plaintiffs, Jessica Gessele, Ashley Gessele, Nicole Gessele, and Tricia Tetrault, on behalf of all those similarly situated, filed a putative class action against defendant, Jack in the Box, Inc., for violation of the minimum wage and overtime provisions of the Fair Labor Standards Act, 29 USC §§ 201 et seq. ("FLSA"), and various Oregon wage and hour laws. In its Answer tothe First Amended Complaint, defendant alleges 11 affirmative defenses with little or no supporting facts. Plaintiffs filed a motion to strike all of the affirmative defenses (docket #39). At the hearing on the motion, this court granted that motion in part and denied it in part (docket #45). This Opinion explains the basis for that ruling.

DISCUSSION

I. Pleading Standard

An answer must "affirmatively state any avoidance or affirmative defense." FRCP 8(c). Such defenses must be stated "in short and plain terms." FRCP 8(b). A court may strike affirmative defenses under FRCP 12(f) if they present an "insufficient defense, or any redundant, immaterial, impertinent, or scandalous matter." The purpose of a FRCP 12(f) motion is to avoid spending time and money litigating spurious issues. See Fantasy, Inc. v. Fogerty, 984 F2d 1524, 1527 (9th Cir 1993), rev'd on other grounds, 510 US 517, 114 (1994). However, striking a defense is a "drastic remedy" which is disfavored and seldom granted. 5 C. Wright & A. Miller, FEDERAL PRACTICE & PROCEDURE, § 1380; also see Lunsford v. United States, 570 F2d 221, 229 (8th Cir 1977).

The parties disagree as to whether the heightened pleading standard announced in Bell Atlantic Corp. v. Twombly, 550 US 544, 570 (2007), applies to affirmative defenses. Before Twombly, a complaint was governed by the fair notice pleading standard set forth in Conley v. Gibson, 355 US 41 (1957), which the Circuit extended to affirmative defenses. Wyshak v. City National Bank, 607 F2d 824, 827 (9th Cir 1979) (per curiam) ("The key to determining the sufficiency of pleading an affirmative defense is whether it gives plaintiff fair notice of the defense."). Twombly announced a new pleading standard for claims arising under the ShermanAct, namely the plausibility standard which requires a plaintiff to allege "enough facts to state a claim to relief that is plausible on its face." Twombly, 550 US at 570. In Ashcroft v. Iqbal, 129 S Ct 1937, 1949-50 (2009), the Supreme Court extended the pleading standard in Twombly to all civil cases. However, neither Twombly nor Iqbal discussed affirmative defenses.

Neither the Ninth Circuit nor any other Circuit Court of Appeals has yet ruled on whether Twombly applies to affirmative defenses. Judges in this court have disagreed on this issue. Compare Peterson v. Acumed, LLC, No. CV-10-586-HU, 2010 WL 5158542, at *3 (D Or Dec. 14, 2010) (applying Twombly to affirmative defenses), with Trustmark Ins. Co. v. C&K Market, Inc., No. CV-10-465-MO, 2011 WL 587574 (D Or Feb. 10, 2011) (declining to extend Twombly to affirmative defenses until the Ninth Circuit overrules Wyshak). See also Doe v. Phoenix-Talent Sch. Dist., No. 10-3119-CL, 2011 WL 704877 (D Or Feb. 18, 2011) (acknowledging but not deciding the issue). Other district courts in the Ninth Circuit also disagree. Compare Barnes v. AT & T Pension Ben. Plan-Nonbargained Program, 718 F Supp2d 1167, 1171 (ND Cal 2010) (applying Twombly to affirmative defenses), with J&J Sports Productions, Inc. v. Scarce, No. 10cv2496-WQH-CAB, 2011 WL 2132723, at *1 (SD Cal, May 27, 2011) (declining to extend Twombly to affirmative defenses).

However, the majority of district courts across the country have extended Twombly's plausibility standard to affirmative defenses. See, e.g., EEOC v. Kelly Drye & Warren, LLP, No. 10 Civ 665 (LTS)(MHD), 2011 WL 3163443 (SDNY July 25, 2011) (". . . most lower courts that have considered the question of the standard applicable to pleading of defenses have held that the Rule 12(b)(6) standard, as elucidated in Twombly and Iqbal, governs the sufficiency of the pleading of affirmative defenses.); Dilmore v. Alion Sci. & Tech. Corp., Civil No. 11-72,2011 WL 2690367, at *5 (WD Pa July 11, 2011) (". . . the emerging majority of district courts apply the Twombly/Iqbal standards to at least affirmative defenses.); Riemer v. Chase Bank United States, N.A., 274 FRD 637, 640 (ND Ill 2011) ("While it may be a stretch to say of the more than 100 cases that have considered the applicability of Iqbal and Twombly to affirmative defenses, that the 'vast majority of . . . districts' are in favor of the application, it does appear that a majority are."(citation omitted)); Barnes, 718 F Supp 2d at 1171-72 ("While neither the Ninth Circuit nor any other Circuit Courts of Appeals has ruled on this issue, the vast majority of courts presented with the issue have extended Twombly's heightened pleading standard to affirmative defenses.). For the reasons stated in those cases, this court is persuaded that Twombly and Iqbal apply to affirmative defenses.

This does not mean, however, that plaintiffs are encouraged to now start filing motions to strike affirmative defenses. If an affirmative defense gives fair notice of the defense by alleging sufficient facts to be plausible, then a motion to strike is not only futile, but a sanctionable dilatory tactic. If it does not, then plaintiff's attorney should first confer with defendant's attorney to flush out the invalid or unnecessary affirmative defenses before resorting to filing a motion to strike. To avoid any problem, defendants are encouraged to eschew the all too common practice of alleging a litany of boilerplate affirmative defenses with the view of dropping them later if discovery fails to support them. Defendants should only plead affirmative defenses that they believe in good faith to have sufficient factual and/or legal support. If discovery later uncovers a basis to allege another affirmative defense, then defendants are free to seek to amend the answer to add it.

II. First Affirmative Defense of Failure to State a Claim

The First Affirmative Defense simply alleges that plaintiffs fail to state a claim for which relief may be granted, either individually or on a class-wide basis. Technically, this is not an affirmative defense under FRCP 8(c), but a defense under FRCP 12(b)(6).

"A defense which demonstrates that plaintiff has not met its burden of proof is not an affirmative defense." Zivkovic v. S. Cal. Edison Co., 302 F3d 1080, 1088 (9th Cir 2002). Such a defense is a negative defense that merely denies plaintiff's allegations. On the other hand, an affirmative defense admits the allegations in the complaint, but avoids liability with new allegations of excuse, justification, or other negating matters. See Roberge v. Hannah Marine Corp., No. 96-1691, 1997 WL 468330, at *3 (6th Cir 1997) ("An affirmative defense, under the meaning of Federal Rule of Civil Procedure 8(c), is a defense that does not negate the elements of the plaintiff's claim, but instead precludes liability even if all of the elements of the plaintiff's claim are proven."). It is a defense on which the defendant has the burden of proof. See, e.g., Kanne v. Conn. Gen. Life Ins. Co., 867 F2d 489, 492 n 4 (9th Cir 1988).

Nonetheless, a failure to state a claim is commonly pled as an affirmative defense in an answer because FRCP 12(h)(2) allows it to be raised "in any pleading," as well as "by a motion under Rule 12(c)" or "at trial." It also is set out as an affirmative defense in Form 30 in the appendix to the Federal Rules of Civil Procedure. When alleged as an affirmative defense, it can simply be treated as a specific denial.

In response to an initial complaint, an affirmative defense based on failure to state a claim may be alleged in a conclusory fashion. Here, however, defendant already filed a motion to dismiss the initial complaint for that reason, and plaintiffs filed the First Amended Complaint tocorrect the deficiencies raised by that motion. There appear to be no additional defects with pleading the elements of plaintiffs' claims. Therefore, this affirmative defense now serves no purpose and is stricken.

III. Second and Third Affirmative Defenses of Actions Taken for Lawful Business Reasons and Bona Fide Dispute

The Second Affirmative Defense alleges as follows:

Plaintiffs and the putative class members were treated fairly and in good faith and were paid all monies due an/or believed to be due. Defendant had reasonable grounds for believing that it was in full compliance with FLSA and Oregon law. The amount and calculation of all wages paid to Plaintiff and the putative class members were undertaken in accord with lawful business reasons and in good faith, and Defendant did not compensate Plaintiffs in willful disregard of any applicable requirements.

The Third Affirmative Defense alleges that:

Any wages that are unpaid are the subject of a bona fide, good faith dispute in that Defendant has paid all wages it knows or knew were due. Thus Defendant should not be subject to the imposition of penalties or liquidated damages.

Both of these affirmative defenses, which are largely duplicative, are designed to avoid defendant's potential liability for liquidated damages under the FLSA and penalties under Oregon law. Plaintiffs contend that they are too conclusory by not stating the nature of the lawful business reasons, why defendant believed it was acting in good faith, or what investigation it performed to ensure compliance. They also assert that a subjective good faith defense is not tenable under Oregon law, citing Wilson v. Smurfit Newsprint Corp., 197 Or App 648,...