Opinion
2:24-cv-00287 WBS CKD
10-11-2024
UNITED STATES OF AMERICA, Plaintiff v. MATTHEW H. PETERS, BAYVIEW SPECIALTY SERVICES LLC, COASTLINE SPECIALTY SERVICES LLC, STRAND VIEW CORPORATION, INNOVATIVE SPECIALTY SERVICES LLC, PARAGON PARTNERS LLC D/B/A PARAGON MEDICAL PARTNERS, CARDEA CONSULTING LLC, PRAXIS MARKETING SERVICES LLC, PROFESSIONAL RX PHARMACY LLC, INLAND MEDICAL CONSULTANTS LLC D/B/A ADVANCED THERAPEUTICS, PORTLAND PROFESSIONAL PHARMACY LLC, SUNRISE PHARMACY LLC, PROFESSIONAL 205 PHARMACY LLC D/B/A PROFESSIONAL CENTER 205 PHARMACY, SYNERGY MEDICAL SYSTEMS LLC D/B/A SYNERGY RX, SYNERGY RX LLC D/B/A SYNERGY RX, PRESTIGE PROFESSIONAL PHARMACY, JMSP LLC D/B/A PROFESSIONAL CENTER 205 PHARMACY, MPKM, LLC D/B/A PROFESSIONAL CENTER PHARMACY, ONE WAY DRUG LLC D/B/A PARTELL PHARMACY, PARTELL PHARMACY LLC, OPTIMUM CARE PHARMACY INC. D/B/A MARBELLA PHARMACY, GLENDALE PHARMACY LLC, and LAKE FOREST PHARMACY D/B/A LAKEFOREST PHARMACY, Defendants.
MEMORANDUM AND ORDER RE: PLAINTIFF'S MOTION TO STRIKE AFFIRMATIVE DEFENSES
The motion is decided on the papers without oral argument pursuant to Local Rule 230(g). The scheduled October 28, 2024 hearing on the motion is hereby VACATED.
WILLIAM B. SHUBB UNITED STATES DISTRICT JUDGE.
The United States brought this action against Matthew Peters and several pharmacies and other corporate entities, alleging that they operated a kickback scheme that submitted claims for prescription medications to federal government insurance programs in violation of the False Claims Act. (Docket No. 50.) Answers were filed by One Way Drug LLC (Docket No. 52 (“One Way Def.”)) and Matthew Peters and the other corporate defendants, with the exception of those subject to default(Docket No. 53 (“Peters Def.”)). The government now moves to strike several affirmative defenses asserted in defendants' answers. (Docket No. 56.)
The Clerk entered default as to Inland Medical Consultants LLC, Professional Rx Pharmacy LLC, Synergy Medical Systems LLC, and Synergy RX LLC. (Docket No. 63.)
Rule 12(f) authorizes the court to “strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” Fed.R.Civ.P. 12(f). “The 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 . . . . ” Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527 (9th Cir. 1993) (cleaned up), rev'd on other grounds, Fogerty v. Fantasy, Inc., 510 U.S. 517, 114 (1994).
“Affirmative defenses may be insufficient ‘as a matter of law' or ‘as a matter of pleading.'” Bruno v. Equifax Info. Servs., No. 2:17-cv-0327 WBS EFB, 2017 WL 2833393, at *2 (E.D. Cal. June 30, 2017) (quoting Harris v. Chipotle Mexican Grill, Inc., 303 F.R.D. 625, 627 (E.D. Cal. 2014)).
I. Legal Insufficiency
“An affirmative defense is insufficient as a matter of law ‘if it lacks merit under any set of facts the defendant might allege.'” Bruno, 2017 WL 2833393, at *2 (quoting Dodson v. Munirs Co., No. 13-cv-0399 LKK DAD, 2013 WL 3146818, at *7 (E.D. Cal. June 18, 2013)).
Here, the affirmative defense of laches (One Way Def. 15) is insufficient as a matter of law because “[t]he government is not subject to the defense of laches when enforcing its rights.” See United States v. Menatos, 925 F.2d 333, 335 (9th Cir. 1991) (citing United States v. Summerlin, 310 U.S. 414, 416 (1940); United States v. McLeod, 721 F.2d 282, 285 (9th Cir. 1983)). Accordingly, One Way's fifteenth affirmative defense will be stricken.
The government also argues that several other equitable defenses, including estoppel, bad faith, unclean hands, and failure to mitigate damages, are unavailable as a matter of law. While these defenses may ultimately be unavailable, the case law cited is not persuasive enough to warrant striking these defenses on the grounds of legal insufficiency at the pleading stage.
II. Inadequate Pleading
The government argues that defendants have failed to adequately plead the affirmative defenses of estoppel (One Way Def. 10, Peters Def. 2); ratification (One Way Def. 12); waiver and release (One Way Defs. 8-9); unclean hands (One Way Def. 11); failure to mitigate damages (One Way Def. 14, Peters Def. 4); damages and claims barred by express contract (Peters Def. 5); contribution and indemnification (Peters Def. 11); bad faith (One Way Def. 16); and “all other defenses enumerated in Rule 8(c)” (One Way Drug Def. 17).
The parties agree that the “fair notice” standard governs the pleading of affirmative defenses. Under this standard, an affirmative defense is insufficient if it fails to provide “fair notice” of its nature and grounds to the plaintiff. Kohler v. Flava Enters., Inc., 779 F.3d 1016, 1019 (9th Cir. 2015). “[T]he ‘fair notice' required by the pleading standards only requires describing the defense in ‘general terms.'” Id. (quoting 5 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1274 (3d ed. 1998)).
The result here would be the same under the more demanding Rule 12(b)(6) pleading standard, which some courts have applied in considering motions to strike affirmative defenses. See, e.g., Goobich v. Excelligence Learning Corp., No. 5:19-cv-06771 EJD, 2020 WL 1503685, at *2 (N.D. Cal. Mar. 30, 2020) (“[T]he courts in [the Northern District] have generally applied the Twombly/Iqbal pleading standard to affirmative defenses.”) (collecting cases).
While this standard is “less demanding” than that applied under Rule 12(b)(6), “‘it still requires a party to plead some factual basis for its allegations.'” Television Educ., Inc. v. Contractors Intelligence Sch., Inc., No. 2:16-cv-1433 WBS EFB, 2016 WL 7212791, at *1 (E.D. Cal. Dec. 12, 2016) (quoting Beco Dairy Automation, Inc. v. Global Tech Sys., Inc., No. 1:12-cv-1310 LJO SMS, 2015 WL 5732595, at *10 (E.D. Cal. Sept. 28, 2015)); see also Est. of Jackson v. City of Modesto, No. 1:21-cv-0415 AWI EPG, 2023 WL 2246872, at *3 (E.D. Cal. Feb. 27, 2023) (same). “Mere ‘reference to a [legal] doctrine . . . is insufficient.'” Television Educ., 2016 WL 7212791, at *1 (quoting Qarbon.com Inc. v. eHelp Corp., 315 F.Supp.2d 1046, 1049 (N.D. Cal. 2004)); see also In re Honest Co., Inc. Sec. Litig., 343 F.R.D. 147, 152 (C.D. Cal. 2022) (“A defendant is not free to conjure its responses out of thin air, as there must be ‘at least some . . . factual basis in support of its affirmative defense.'”) (quoting Rosen v. Masterpiece Mktg. Grp., LLC, 222 F.Supp.3d 793, 799 (C.D. Cal. 2016)).
Defendants have failed to adequately plead the defenses at issue. Their answers merely refer to the name of each defense with no supporting allegations whatsoever. Without providing any factual basis for their assertion of these defenses, defendants cannot be said to have provided “fair notice.”
The law does not require extensive pleading of affirmative defenses. However, defendants must provide more than bare boilerplate references to various doctrines. Accordingly, the motion to strike the defenses enumerated above will be granted.
IT IS THEREFORE ORDERED that the government's motion to strike (Docket No. 56) be, and the same hereby is, GRANTED. The eighth, ninth, tenth, eleventh, twelfth, fourteenth, sixteenth, and seventeenth affirmative defenses of One Way's answer, and the second, fourth, fifth, and eleventh defenses of Peters' answer are hereby STRICKEN. Defendants have twenty-one days from the date of this Order to file amended answers, if they can do so consistent with this Order.