GS Holistic, LLC v. Crows Landing Smoke Shop Inc.

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GS HOLISTIC, LLC, Plaintiff, v. CROWS LANDING SMOKE SHOP INC., d/b/a 99 PLUS OUTLET & SMOKESHOP and BASMA MUTHANA, Defendants.

No. 1:22-cv-1454 JLT SAB

United States District Court, E.D. California

April 5, 2023

ORDER GRANTING IN PART PLAINTIFF'S MOTION TO STRIKE DEFENDANTS' AFFIRMATIVE DEFENSES

(DOC. 10)

GS Holistic LLC seeks to hold Crows Landing Smoke Shop, doing business as 99 Plus Outlet & Smokeshop, and Basma Muthana liable for trademark infringement, counterfeiting, and false designation of origin and unfair competition under the Lanham Act. (Doc. 1.) GS Holistic seeks to strike the affirmative defenses asserted by Defendants pursuant to Rule 12(f) of the Federal Rules of Civil Procedure. (Doc. 10.) Defendants have not opposed the motion.^[1] The Court finds the matter suitable for decision without oral arguments, and no hearing will be held pursuant to Local Rule 230(g). For the reasons set forth below, the motion to strike is GRANTED IN PART.

I. Background^[2]

GS Holistic alleges that it “is the registered owner of the Stundenglass trademarks,” and the company “has marketed and sold products using the well-known trademark ‘Stundenglass'” since 2020. (Doc. 1 at 2-3, ¶¶ 5, 8.) According to GS Holistic “[t]he Stundenglass branded products, such as glass infusers and accessories related thereto, are widely recognized nationally and internationally.” (Id. at 3, ¶ 8.)

GS Holistic asserts that “[f]or approximately two years, [GS Holistic] has worked to distinguish the Stundenglass brand as the premier manufacturer of glass infusers by emphasizing the brand's unwavering use of quality materials and focusing on scientific principles.” (Doc. 1 at 3, ¶ 9.) GS Holistic contends: “As a result of the continuous and extensive use of the trademark ‘Stundenglass,' GS was granted both valid and subsisting federal statutory and common law rights to the Stundenglass trademark.” (Id., ¶ 10.) Specifically, GS Holistic asserts it owns the following registered trademarks:

a. U.S. Trademark Registration Number 6,633,884 for the standard character mark “Stundenglass” in association with goods further identified in registration in international class 011.

b. U.S. Trademark Registration Number 6,174,292 for the design plus words mark “S” and its logo in association with goods further identified in the registration in international class 034.

c. U.S. Trademark Registration Number 6,174,291 for the standard character mark “Stundenglass” in association with goods further identified in registration in international class 034.

(Id. at 3-4, ¶ 11.) According to GS Holistic, each of these trademarks “are valid, subsisting and in full force and effect.” (Id., ¶ 12.) GS Holistic alleges that “because of the recognized quality and innovation associated with the Stundenglass Marks that consumers are willing to pay higher prices for genuine Stundenglass products.” (Id. at 5, ¶ 21.) GS Holistic contends the “Stundenglass branded products are targeted by counterfeiters” due to the higher sales value. (Id., ¶ 22.)

GS Holistic contends that defendants have-without the company's consent-“previously offered to sell and sold within the United States commerce, glass infusers bearing reproductions, counterfeits, copies and/or colorable imitations of the Stundenglass Trademarks that were not made or authorized by GS.” (Doc. 1 at 6, ¶ 25.) GS Holistic alleges that it had an investigator who visited 99 Plus Outlet & Smokeshop, and the “investigator purchased a Glass Infuser with a Stundenglass Mark affixed to it, for a cost of $280.00.” (Id. at 7, ¶ 30.) GS Holistic contends an inspection of the purchased glass infuser confirmed it was a counterfeit, with an infringing mark affixed. (Id., ¶ 31.) In addition, GS Holistic notes that its authentic brand glass infusers are priced at $599.95. (Id. at 5, ¶ 21.)

GS Holistic asserts defendant “Muthana owed, managed, and/or operated 99 Plus Outlet & Smokeshop,” and regularly exercised the authority to purchase products for resale, decide which products [the shop],.. offered for sale.” (Doc. 1 at 2-3, ¶ 7.) GS Holistic contends “Muthana authorized, directed, and/or participated in” the sale of counterfeit goods at 99 Plus Outlet & Smokeshop. (Id. at 7, ¶ 32.)

On November 9, 2022, GS Holistic initiated this action by filing a complaint. Based primarily upon the foregoing facts, GS Holistic seeks to hold Defendants liable for: (1) federal trademark counterfeiting and infringement, pursuant to 15 U.S.C. § 1114 and (2) federal false designation of origin and unfair competition, pursuant to 15 U.S.C. § 1125(a). (Doc. 1.) Defendants filed their answer to the complaint on February 23, 2023. (Doc. 9.) Defendants asserted four affirmative defenses, which GS Holistic now seeks to strike pursuant to Rule 12(f) of the Federal Rules of Civil Procedure. (Doc. 10.)

II. Legal Standards

Rule 8 of the Federal Rules of Civil Procedure requires a party responding to a pleading to “state in short and plain terms its defenses to each claim asserted against it.” Fed.R.Civ.P. 8(b)(1). Further, responding parties are instructed to “state any avoidance or affirmative defense, including: accord and satisfaction; arbitration and award; assumption of risk; contributory negligence; duress; estoppel; failure of consideration; fraud; illegality; injury by fellow servant; laches; license; payment; release; res judicata; statute of frauds; statute of limitations; and waiver.” Fed.R.Civ.P. 8(c)(1).

The Court may strike “an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter” from a pleading, either on the Court's own motion or by motion of a party. Fed.R.Civ.P. 12(f). An affirmative defense may be “insufficient” under Rule 12(f) as a matter of pleading or as a matter of law. Butcher v. City of Marysville, 398 F.Supp.3d 715, 728 (E.D. Cal. 2019); see also Wyshak v. City Nat'l Bank, 607 F.2d 824, 827 (9th Cir. 1979). A defense is insufficiently pled if it fails to give “fair notice” of the defense and is insufficient as a matter of law when there are no questions of fact or law, and the defense would not succeed under any circumstances. Wyshak, 607 F.2d at 827; SEC v. Sands, 902 F.Supp. 1149, 1165 (C.D. Cal. 1995) (citations omitted). Further, a defense may be stricken as immaterial if it “has no essential or important relationship to the claim for relief or the defenses being pleaded.” Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527 (9th Cir. 1993) (citations omitted), rev'd on other grounds, 510 U.S. 517 (1994); see also Fed.R.Civ.P. 12(f).

The purpose of a motion to strike under Rule 12(f) “is to avoid the expenditure of time and money that must arise from litigating spurious issues.” Sidney-Vinstein v. A.H. Robins Co., 697 F.2d 880, 885 (9th Cir. 1983). However, motions to strike affirmative defenses “are disfavored and infrequently granted.” Neveau v. City of Fresno, 392 F.Supp.2d 1159, 1170 (E.D. Cal. 2005). The Court “must view the pleading under attack in the light more favorable to the pleader.” Garcia ex rel. Marin v. Clovis Unified School Dist., 2009 WL 2982900, at *23 (E.D. Cal. Sept.14, 2009) (internal citation omitted). Even if a court strikes an affirmative defense, leave to amend should be freely given where the opposing party will not be prejudiced given the strong policy favoring resolution of cases “on the proofs rather than the pleadings.” Rennie & Laughlin, Inc. v. Chrysler Corp., 242 F.2d 208, 213 (9th Cir. 1957); Wyshak, 607 F.2d at 827.

III. Discussion and Analysis

GS Holistic asserts that each of the affirmative defenses identified by Defendants should be stricken because they either fail to meet the pleading standard or do not qualify as a proper affirmative defense. (See generally Doc. 10.)

A. Prejudice

As an initial matter, the Court acknowledges there is a split among the courts regarding whether prejudice is required to prevail on motion to strike. Compare FTC v. Medicor LLC, 2001 WL 765628, at *5 (C.D. Cal. June 26, 2001) (requiring prejudice to be shown) with Peacock v. Pabst Brewing Co., LLC, 2022 WL 446201, at *4 (E.D. Cal. Feb. 14, 2022) (declining to require prejudice for a motion under Rule 12(f)). However, the plain language of Rule 12(f) does not require a moving party to show prejudice. See Fed.R.Civ.P. 12(f). Rather, it appears a showing of prejudice was “judicially created,” as a result of the view that “motions to strike ‘are often used as delaying tactics and because of the limited importance of pleadings in federal practice.'” Citizens for Quality Educ. San Diego v. San Diego Unified Sch. Dist., 2018 WL 828099, at *3 (S.D. Cal. Feb. 12, 2018) (citing Ollier v. Sweetwater Union High Sch. Dist., 735 F.Supp.2d 1222, 1223 (S.D. Cal. 2010), aff'd, 768 F.3d 843 (9th Cir. 2014)).

Previously this Court observed that no published Ninth Circuit authority requires a showing of prejudice to strike affirmative defenses. Houston Cas. Co. v. Crum & Forster Ins. Co., 2016 WL 4494444 at *4 (E.D. Cal. Aug. 25, 2016). However, the Court noted that in an unpublished opinion, the Ninth Circuit rejected the argument that a moving party should be required to demonstrate prejudice to strike redundant material, observing “Rule 12(f) says nothing about a showing of prejudice.” Atlantic Richfield Co. v. Ramirez, 1999 WL 273241, at *2 (9th Cir. 1999). The Ninth Circuit expressly indicated it “decline[d] to add additional requirements to the Federal Rules of Civil Procedure when they are not supported by the text of the rule.” Id. Following this “clear, directly on-point (albeit non-precedential) guidance from the Ninth Circuit,” this Court concluded a moving party is not required to show prejudice in moving to strike under Rule 12(f). See Houston Cas. Co., 2016 WL 4494444 at *5. ...