Case 2:12-cv-02829-JPM-tmp Document 34-1 Filed 01/25/13 Page 1 of 27 PageID 373
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`UNITED STATES DISTRICT COURT
`WESTERN DISTRICT OF TENNESSEE
`WESTERN DIVISION
`
`B.E. TECHNOLOGY, L.L.C.,
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`Plaintiff/Counter-Defendant,
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`v.
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`MICROSOFT CORPORATION,
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`Defendant/Counterclaimant.
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`
`
`Case No. 2:12-cv-02829 JPM-tmp
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`JURY DEMAND
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`
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`PLAINTIFF’S MEMORANDUM IN SUPPORT OF ITS
`MOTION TO DISMISS UNDER FED. R. CIV. P. 12(b)(6) AND
`MOTION TO STRIKE UNDER FED. R. CIV. P. 12(f)
`
`Richard M. Carter (TN B.P.R. #7285)
`Adam C. Simpson (TN B.P.R. #24705)
`MARTIN, TATE, MORROW & MARSTON, P.C.
`6410 Poplar Avenue, Suite 1000
`Memphis, TN 38119-4839
`Telephone: (901) 522-9000
`
`Robert E. Freitas (CA Bar No. 80948)
`Craig R. Kaufman (CA Bar No. 159458)
`Daniel J. Weinberg (CA Bar No. 227159)
`James Lin (CA Bar No. 241472)
`Qudus B. Olaniran (CA Bar No. 267838)
`FREITAS TSENG & KAUFMAN LLP
`100 Marine Parkway, Suite 200
`Redwood Shores, CA 94065
`Telephone: (650) 593-6300
`
`Attorneys for Plaintiff
`B.E. Technology, L.L.C.
`
`
`
`Dated: January 25, 2013
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`
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`

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`Case 2:12-cv-02829-JPM-tmp Document 34-1 Filed 01/25/13 Page 2 of 27 PageID 374
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`TABLE OF CONTENTS
`
`
`Page
`
`
`I.
`II.
`III.
`
`V.
`
`INTRODUCTION ............................................................................................................. 1
`RELEVANT BACKGROUND ......................................................................................... 1
`APPLICABLE LAW ......................................................................................................... 4
`A.
`Motion to Dismiss Under Federal Rule of Civil Procedure 12(b)(6) .................... 4
`B.
`The Twombly/Iqbal Standard Applies to Counterclaims In Patent Cases ............. 4
`C.
`Motion to Strike Under Federal Rule of Civil Procedure 12(f) ............................. 6
`D.
`The Twombly/Iqbal Standard Applies To Affirmative Defenses .......................... 9
`IV. MICROSOFT’S INVALIDITY ALLEGATIONS DO NOT WITHSTAND A
`RULE 12(b)(6) CHALLENGE ........................................................................................ 12
`A.
`Counterclaim Three and Counterclaim Four Should Be Dismissed .................... 12
`B.
`The Second Affirmative Defense Should Be Stricken ........................................ 14
`MICROSOFT’S NON-INFRINGEMENT ALLEGATIONS DO NOT
`WITHSTAND A RULE 12(b)(6) CHALLENGE ........................................................... 15
`A.
`Counterclaim One and Counterclaim Two Should Be Dismissed ....................... 15
`B.
`The First Affirmative Defense Should Be Stricken ............................................. 16
`VI. MICROSOFT’S OTHER AFFIRMATIVE DEFENSES DO NOT WITHSTAND
`A RULE 12(b)(6) CHALLENGE .................................................................................... 16
`A.
`Third Affirmative Defense ................................................................................... 16
`B.
`Fourth Affirmative Defense ................................................................................. 17
`C.
`Fifth Affirmative Defense .................................................................................... 17
`D.
`Sixth Affirmative Defense ................................................................................... 17
`E.
`Seventh Affirmative Defense ............................................................................... 18
`F.
`Eighth Affirmative Defense ................................................................................. 18
`G.
`Ninth Affirmative Defense .................................................................................. 19
`H.
`Tenth Affirmative Defense .................................................................................. 19
`VII. B.E. WILL BE PREJUDICED IF MICROSOFT’S AFFIRMATIVE DEFENSES
`ARE NOT STRICKEN .................................................................................................... 20
`VIII. CONCLUSION ................................................................................................................ 20
`
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`-i-
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`

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`Case 2:12-cv-02829-JPM-tmp Document 34-1 Filed 01/25/13 Page 3 of 27 PageID 375
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`
`
`
`TABLE OF AUTHORITIES
`
`FEDERAL CASES
`
`Page(s)
`
`Ashcroft v. Iqbal,
`556 U.S. 662 (2009) ......................................................................................................... passim
`
`Bayer CropScience AG v. Dow AgroSciences LLC¸
`2011 WL 6934557 (D. Del. Dec. 30, 2011) ...............................................................................8
`
`Bell Atlantic Corp. v. Twombly,
`550 U.S. 544 (2007) ......................................................................................................... passim
`
`Conley v. Gibson,
`355 U.S. 41, 47 (1957) .........................................................................................................8, 15
`
`Damron v. ATM Central LLC,
`2010 WL 6512345 (W.D. Tenn. Oct. 29, 2010) ........................................................................7
`
`Dann v. Lincoln Nat’l Corp.,
`274 F.R.D. 139 (E.D. Pa. 2011) .................................................................................................9
`
`Del-Nat Tire Corp. v. A To Z Tire & Battery, Inc.,
`2009 WL 4884435 (W.D. Tenn. Dec. 8, 2009) .........................................................................7
`
`Duramed Pharmaceuticals, Inc. v. Watson Laboratories, Inc.,
`2008 WL 5232908 (D. Nev. Dec. 12, 2008) ............................................................................12
`
`Elliot & Frantz, Inc. v. Ingersoll-Rand Co.,
`457 F.3d 312, 321 (3d Cir. 2006).............................................................................................10
`
`Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co.,
`535 U.S. 722 (2002) .................................................................................................................18
`
`Groupon, Inc. v. MobGob LLC,
`2011 WL 2111986 (N.D. Ill. May 25, 2011) .................................................................5, 13, 20
`
`HCRI TRS Acquirer, LLC v. Iwer,
`708 F. Supp. 2d 687 (N.D. Ohio 2010) ..............................................................................6, 7, 8
`
`Holley Performance Prods., Inc. v. Quick Fuel Tech., Inc.,
`2011 WL 3159177 (W.D. Ky. July 26, 2011) ...........................................................................9
`
`Iconfind, Inc. v. Google, Inc.,
`2011 WL 4505779 (E.D. Cal. Aug. 2, 2011) ................................................................... passim
`
`
`
`
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`- ii -
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`

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`Case 2:12-cv-02829-JPM-tmp Document 34-1 Filed 01/25/13 Page 4 of 27 PageID 376
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`
`
`
`TABLE OF AUTHORITIES
`(CONT.)
`
`FEDERAL CASES
`
`Page(s)
`
`In re Sterten,
`546 F.3d 278 (3d Cir. 2008).....................................................................................................10
`
`McLemore v. Regions Bank,
`2010 WL 1010092 (M.D. Tenn. Mar. 18, 2010) .....................................................................15
`
`Montgomery v. Wyeth,
`580 F.3d 455 (6th Cir. 2009) ...........................................................................................8, 9, 15
`
`PB Farradyne, Inc. v. Peterson,
`2006 WL 132182 (N.D. Cal. Jan. 17, 2006) ......................................................................13, 15
`
`Phonometrics, Inc. v. Economy Inns of Am.,
`340 F.3d 1356 (Fed. Cir. 2003)..................................................................................................6
`
`Qarbon.com v. eHelp Corp.,
`315 F. Supp. 2d 1046, 1050 (N.D. Cal. 2004) ................................................................. passim
`
`Regions Bank v. SoFHA Real Estate, Inc.,
`2010 WL 3341869 (E.D. Tenn. Aug. 25, 2010) ....................................................................6, 7
`
`Safeco Ins. Co. of Am. v. O’Hara Corp.,
`2008 WL 2558015 (E.D. Mich. June 25, 2008).........................................................................8
`
`Shinew v. Wszola,
`2009 WL 1076279 (E.D. Mich. 2009) .......................................................................................7
`
`Sloan Valve Co. v. Zurn Indus., Inc.,
`712 F. Supp. 2d 743 (N.D. Ill. 2010) .....................................................................16, 17, 18, 19
`
`Sprint Comms. Co., L.P. v. Theglobe.com, Inc.,
`233 F.R.D. 615 (D. Kansas 2006) ......................................................................................13, 15
`
`Sun Microsystems, Inc. v. Versata Enters., Inc.,
`630 F. Supp. 2d 395 (D. Del. 2009) ...........................................................................................5
`
`Surface Shields, Inc. v. Poly-Tak Protection Sys., Inc.,
`213 F.R.D. 307 (N.D. Ill. 2003) .................................................................................................7
`
`Tyco Fire Prods. LP v. Victaulic Co.,
`777 F. Supp. 2d 893 (E.D. Pa. 2011) .........................................................................5, 9, 10, 11
`
`
`
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`- iii -
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`

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`
`
`
`TABLE OF AUTHORITIES
`(CONT.)
`
`FEDERAL CASES
`
`Page(s)
`
`United States v. Quadrini,
`2007 WL 4303213 (E.D. Mich. Dec. 6, 2007) ..........................................................................7
`
`Vivid Tech. Inc. v. Am. Science & Eng., Inc.,
`200 F.3d 795 (Fed. Cir. 1999)....................................................................................................6
`
`Westbrook v. Paragon Sys. Inc.,
`2007 WL 7715075 (S.D. Ala. Nov. 29, 2007) ...........................................................................8
`
`Williams v. Provident Inv. Counsel, Inc.,
`279 F. Supp. 2d 894, 906 (N.D. Ohio 2003) ..............................................................................7
`
`Zampieri v. Zampieri,
`2009 WL 3241741 (E.D. Tenn. Sept. 30, 2009) ........................................................................7
`
`FEDERAL STATUTES
`
`28 U.S.C. § 1498(a) ...................................................................................................................3, 19
`
`28 U.S.C. § 2201 ..............................................................................................................3, 4, 12, 15
`
`35 U.S.C. § 100 ...................................................................................................................... passim
`
`35 U.S.C. § 101 ...................................................................................................................... passim
`
`35 U.S.C. § 102 ...................................................................................................................... passim
`
`35 U.S.C. § 103 ...................................................................................................................... passim
`
`35 U.S.C. § 112 ...................................................................................................................... passim
`
`35 U.S.C. § 116 ................................................................................................................................5
`
`35 U.S.C. § 286 ..........................................................................................................................2, 17
`
`35 U.S.C. § 287 ..........................................................................................................................2, 17
`
`35 U.S.C. § 288 ..........................................................................................................................2, 17
`
`
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`- iv -
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`
`
`
`TABLE OF AUTHORITIES
`(CONT.)
`
`RULES
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`Page(s)
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`Fed. R. Civ. P. Rule 7(a) ................................................................................................................11
`
`Fed. R. Civ. P. Rule 8 ......................................................................................................................6
`
`Fed. R. Civ. P. Rule 8(a) ........................................................................................................ passim
`
`Fed. R. Civ. P. Rule 8(b) ........................................................................................................ passim
`
`Fed. R. Civ. P. Rule 8(c) ........................................................................................................ passim
`
`Fed. R. Civ. P. Rule 11 ....................................................................................................................6
`
`Fed. R. Civ. P. Rule 12 ............................................................................................................11, 17
`
`Fed. R. Civ. P. Rule 12(b) ................................................................................................................7
`
`Fed. R. Civ. P. Rule 12(c) ..............................................................................................................11
`
`Fed. R. Civ. P. Rule 12(b)(6) ................................................................................................. passim
`
`Fed. R. Civ. P. Rule 12(f) ...................................................................................................... passim
`
`Fed. R. Civ. P. Rule 12(h)(2) .........................................................................................................11
`
`Fed. R. Civ. P. Rule 19 ..............................................................................................................2, 17
`
`Fed. R. Civ. P. Rule 19(b) ..............................................................................................................11
`
`OTHER AUTHORITIES
`
`5C Charles Alan Wright & Arthur Miller,
`Federal Practice and Procedure Civil § 1380 (3d ed. 2004) ....................................................6
`
`5C Charles Alan Wright & Arthur Miller,
`Federal Practice and Procedure Civil § 1381 (3d ed. 2004) ..................................................11
`
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`Case 2:12-cv-02829-JPM-tmp Document 34-1 Filed 01/25/13 Page 7 of 27 PageID 379
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`
`I.
`
`INTRODUCTION.
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`Plaintiff B.E. Technology, L.L.C. (“B.E.”) respectfully moves to dismiss defendant
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`Microsoft Corporation’s (“Microsoft”) counterclaims for failure to state a claim upon which
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`relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6). B.E. also moves for
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`an order striking Microsoft’s affirmative defenses pursuant to Federal Rule of Civil Procedure
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`12(f). For the reasons stated below, the Court should grant B.E.’s motion.
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`II.
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`RELEVANT BACKGROUND.
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`B.E. is a Delaware limited liability company with its principal place of business in
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`Memphis, Tennessee. D.E. 1. B.E. owns all right, title, and interest in United States Patent No.
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`6,628,314 (“’314 patent”) and United States Patent No. 6,771,290 (“’290 patent”). The ’314
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`patent is entitled “Computer Interface Method and Apparatus With Targeted Advertising.” Id.
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`The ’290 patent is entitled “Computer Interface Method and Apparatus With Portable Network
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`Organization System and Targeted Advertising.” Id. The patents claim inventions related to the
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`display of targeted advertisements based on demographic information over a network. Id.
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`Microsoft is a Washington corporation. B.E. filed its Complaint in this matter on
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`September 21, 2012. Id. B.E. alleged that “Microsoft has infringed the ’314 patent by using a
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`method of providing demographically targeted advertising that directly infringes at least Claim
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`11 of the ’314 patent either literally or under the doctrine of equivalents.” Id. at 3. B.E. also
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`alleges that “Microsoft has infringed at least Claim 2 of the ’290 patent by using, selling, and
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`offering to sell in the United States tablet computer products that directly infringe at least Claim
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`2 of the ’290 patent either literally or under the doctrine of equivalents. The accused products
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`include Microsoft Xbox 360 Consoles.” Id. Following a substantial extension of time designed
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`to permit, among other things, Microsoft to “adequately prepare a response,” (see D.E. 17 at 1),
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`Microsoft filed its Answer on December 31, 2012. D.E. 27.
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`Microsoft’s First Affirmative Defense states that “Microsoft does not infringe and has not
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`infringed any valid and enforceable claim of the’314 patent or the ’290 patent (collectively the
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`“Patents-in-Suit”) either directly, indirectly, literally, or under the doctrine of equivalents.” D.E.
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`27 at 4.
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`Microsoft’s Second Affirmative Defense states that “[o]ne or more asserted claims of
`
`the’314 patent and/or the ’290 patent are invalid because they fail to meet one or more conditions
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`and requirements for patentability specified in Title 35, United States Code, including at least §§
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`101, 102, 103 and 112 and/or invalid for statutory or nonstatutory double patenting.” D.E. 27 at
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`4.
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`Microsoft’s Third Affirmative Defense states that “[o]n Information and belief, Plaintiff
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`lacks standing to assert its patent infringement claims, and Plaintiff has failed to join a required
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`party under Federal Rule of Civil Procedure 19, as Plaintiff does not have sufficient rights in and
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`to the’314 patent and/or the ’290 patent to prosecute this litigation.” D.E. 27 at 4.
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`Microsoft’s Fourth Affirmative Defense states that “Plaintiff’s claims are barred in whole
`
`or in part by the statute of limitations, 35 U.S.C. § 286.” D.E. 27 at 4.
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`Microsoft’s Fifth Affirmative Defense states that “[u]pon information and belief, 35
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`U.S.C. § 287 limits Plaintiff’s claims for damages for purported infringement of the’314 patent
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`and/or the ’290 patent.” D.E. 27 at 5.
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`Microsoft’s Sixth Affirmative Defense states that “Plaintiff is barred by 35 U.S.C. § 288
`
`from recovering costs associated with its action.” D.E. 27 at 5.
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`Microsoft’s Seventh Affirmative Defense states that “[b]y virtue of the proceedings in the
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`United States Patent and Trademark Office during the prosecution of the application or
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`applications that matured into the’314 patent and/or the ’290 patent, including the patent
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`applications to which Plaintiff has claimed priority, Plaintiff is estopped from asserting that
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`Microsoft has infringed, directly or indirectly, any claim of the ’314 patent and/or the ’290
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`patent, either literally or under the doctrine of equivalents.” D.E. 27 at 5.
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`Microsoft’s Eighth Affirmative Defense states that “Plaintiff is barred from obtaining any
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`relief sought in the Complaint because of the doctrine of laches, equitable estoppel and/or
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`waiver.” D.E. 27 at 5.
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`Microsoft’s Ninth Affirmative Defense states that “Plaintiff is not entitled to injunctive
`
`relief because any injury to it is not immediate or irreparable and because plaintiff has an
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`adequate remedy at law.” D.E. 27 at 5.
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`Microsoft’s Tenth Affirmative Defense states that “B.E. Technology’s remedies are
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`limited under 28 U.S.C. § 1498(a).” D.E. 27 at 5.
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`Microsoft’s Affirmative Defenses should be stricken.
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`Microsoft also asserts counterclaims seeking declaratory judgments of non-infringement
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`and invalidity. The counterclaims are conclusory and devoid of factual sufficiency. The
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`counterclaim for a declaratory judgment of invalidity states, much like Microsoft’s invalidity
`
`affirmative defense, that “[t]he ’314 patent is invalid for failure to comply with the requirements
`
`of 35 U.S.C. § 101 et seq., including without limitation §§ 101, 102, 103, and/or 112, and
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`Microsoft is entitled to a declaration pursuant to 28 U.S.C. § 2201 stating the claims of the ’314
`
`patent are invalid.” Id. at 8 & 9 (mirroring the same language for the declaratory judgment of
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`invalidity with respect to the ’290 patent). The counterclaim for a declaratory judgment non-
`
`infringement also matches up with the conclusory assertion of non-infringement in Microsoft’s
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`affirmative defense. See id. at 7-8 (“Microsoft has not infringed, directly or indirectly, literally
`
`or under the doctrine of equivalents, any valid claim of the ’314 patent, and Microsoft is entitled
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`to a declaration pursuant to 28 U.S.C. § 2201 stating it has not infringed and does not infringe,
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`directly or indirectly, literally or under the doctrine of equivalents, any valid claim of the ’314
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`patent [or ’290 patent].”)
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`III. APPLICABLE LAW.
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`A. Motion to Dismiss Under Federal Rule of Civil Procedure 12(b)(6).
`
`“To survive a motion to dismiss, a complaint must contain sufficient factual matter,
`
`accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556
`
`U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “[A]
`
`formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555;
`
`see also Fed. R. Civ. P. 8(a)(2) (requiring “a short and plain statement of the claim showing that
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`the pleader is entitled to relief”). As the Supreme Court explained in Iqbal, “[a] claim has facial
`
`plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable
`
`inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. 678.
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`Although a court must accept all well-pleaded factual allegations as true when it
`
`considers a motion to dismiss, that rule does not apply to a legal conclusion that is “couched as a
`
`factual allegation.” Twombly, 550 U.S. at 555; see also Iqbal, 556 U.S. at 678-79. Additionally,
`
`even where a complaint presents appropriate factual allegations, a court must determine whether
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`the allegations, accepted as true, “plausibly give rise to an entitlement to relief.” Iqbal, 556 U.S.
`
`at 679. The allegations must “permit the court to infer more than the mere possibility of
`
`misconduct.” Id.
`
`B.
`
`The Twombly/Iqbal Standard Applies to Counterclaims In Patent Cases.
`
`The Twombly and Iqbal standard is generally applicable to cases filed in federal court.
`
`See id. at 684 (“Our decision in Twombly expounded the pleading standard for ‘all civil actions,’
`
`and it applies to antitrust and discrimination suits alike.”) (citing Twombly, 550 U.S. at 555-56,
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`555 n.3, and Fed. R. Civ. P. 1). The Twombly and Iqbal standard applies to declaratory judgment
`
`counterclaims in patent cases. See Tyco Fire Prods. LP v. Victaulic Co., 777 F. Supp. 2d 893,
`
`903 (E.D. Pa. 2011); Sun Microsystems, Inc. v. Versata Enters., Inc., 630 F. Supp. 2d 395, 412
`
`(D. Del. 2009); Iconfind, Inc. v. Google, Inc., 2011 WL 4505779, at *1 (E.D. Cal. Aug. 2, 2011);
`
`Groupon, Inc. v. MobGob LLC, 2011 WL 2111986, at *2 (N.D. Ill. May 25, 2011).
`
`In Groupon, the plaintiff Groupon moved to dismiss a counterclaim seeking a declaratory
`
`judgment that the Groupon patent is invalid. 2011 WL 2111986, at *2. The counterclaim stated
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`the “[t]he . . . Patent is invalid for failing to comply with one or more provisions of Title 35 of
`
`the United States Code, including without limitation, 35 U.S.C. §§ 101-103, 112, and 116.” Id.
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`Applying the standard of Twombly and Iqbal, the court dismissed the invalidity counterclaim,
`
`stating:
`
`Because MobGob has not alleged a single fact in support of its
`claim, it fails to give Groupon notice of the basis of its claim.
`Moreover, it provides the Court with no basis for making a
`reasonable inference in its favor. In other words, its claims of
`invalidity are not plausible. They are merely possible. This is not
`enough to survive a Rule 12(b)(6) motion to dismiss.
`
`Id. at *5. In Google, the court dismissed an invalidity counterclaim because “Google’s invalidity
`
`allegations are comprised solely of legal conclusions and/or conclusory factual allegations. . . .
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`Google’s prior art invalidity allegations, alleged under 35 U.S.C. §§ 102 and 103, are []
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`insufficient since Google fails to allege facts sufficient for a reasonable inference to be drawn
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`that the claimed invention is invalid in light of prior art.” Google, 2011 WL 4505779, at *1;
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`Tyco, 777 F. Supp. 2d at 904 (concluding the invalidity counterclaim “plainly does not satisfy
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`[the Twombly/Iqbal] standard: it contains a mere legal conclusion, no supporting facts, and cites
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`four broad provisions of Title 35 of the United States Code in support ‘without limitation’.”).
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`There are compelling practical reasons to require declaratory judgment claimants to
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`satisfy the Twombly and Iqbal standard. Requiring patent infringement defendants to provide a
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`factual basis for their allegations of noninfringement and invalidity insures that defendants
`
`comply with Rule 11 requirements applicable in patent cases. See Phonometrics, Inc. v.
`
`Economy Inns of Am., 340 F.3d 1356, 1367-68 (Fed. Cir. 2003) (affirming Rule 11 sanctions
`
`against plaintiff in patent infringement action); Vivid Tech. Inc. v. Am. Science & Eng., Inc., 200
`
`F.3d 795, 802-03 (Fed. Cir. 1999) (applying Rule to defendant’s counterclaim). Potential
`
`counterclaimants aware that their pleadings will be tested under the Twombly/Iqbal standard will
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`hesitate to assert frivolous or otherwise unsupportable claims. Baseless claims will not be made,
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`and expensive discovery or other proceedings will be avoided in many cases. See Iqbal, 556
`
`U.S. 678-79 (“Rule 8 marks a notable and generous departure from the hyper-technical, code-
`
`pleading regime of a prior era, but it does not unlock the doors of discovery for a plaintiff armed
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`with nothing more than conclusions.”).
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`C. Motion to Strike Under Federal Rule of Civil Procedure 12(f).
`
`Under Rule 12(f) of the Federal Rules of Civil Procedure, “[t]he court may strike from a
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`pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous
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`matter.” Fed. R. Civ. P. 12(f). “A motion to strike under Rule 12(f) is the primary procedure for
`
`objecting to an insufficient defense.” Regions Bank v. SoFHA Real Estate, Inc., 2010 WL
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`3341869, at *12 (E.D. Tenn. Aug. 25, 2010) (citing 5C Charles Alan Wright & Arthur Miller,
`
`Federal Practice and Procedure Civil § 1380 (3d ed. 2004)). “[C]ourts have developed a three-
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`part test to determine whether an affirmative defense survives a motion to strike.” HCRI TRS
`
`Acquirer, LLC v. Iwer, 708 F. Supp. 2d 687, 689 (N.D. Ohio 2010).
`
`First, the matter must be properly pleaded as an affirmative
`defense. Second, the affirmative defense must be adequately
`pleaded under the requirements on Federal Rules of Civil
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`Procedure 8 and 9. Finally, the affirmative defense must be able to
`withstand a Rule 12(b)(6) challenge.”
`
`Id. (internal citations and quotations omitted); see also Surface Shields, Inc. v. Poly-Tak
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`Protection Sys., Inc., 213 F.R.D. 307, 308 (N.D. Ill. 2003) (applying the three-part test); Regions
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`Bank, 2010 WL 3341869, at *12 (“It has been recognized . . . that if a defendant’s affirmative
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`defense cannot withstand a Rule 12(b) challenge, the defense may be stricken as legally
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`insufficient.”) (citing Williams v. Provident Inv. Counsel, Inc., 279 F. Supp. 2d 894, 906 (N.D.
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`Ohio 2003)).
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`There is a split of authority as to whether the Twombly/Iqbal standard applies to
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`affirmative defenses, and no Sixth Circuit or other circuit case law addresses the issue. Damron
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`v. ATM Central LLC, 2010 WL 6512345, at *2 (W.D. Tenn. Oct. 29, 2010) (“The Sixth Circuit
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`has yet to decide whether the new pleading standards announced in Twombly and Iqbal apply to
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`affirmative defenses and the district courts are divided on the issue.”); Del-Nat Tire Corp. v. A
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`To Z Tire & Battery, Inc., 2009 WL 4884435, at *2 (W.D. Tenn. Dec. 8, 2009) (“Neither the
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`Sixth Circuit Court of Appeals nor any of the other Courts of Appeals have addressed this issue,
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`and the district courts have reached different conclusions.”). See also United States v. Quadrini,
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`2007 WL 4303213, at *4 (E.D. Mich. Dec. 6, 2007) (“Like the plaintiff, a defendant must plead
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`sufficient facts to demonstrate a plausible affirmative defense, or one that has a ‘reasonably
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`founded hope’ of success.”); Zampieri v. Zampieri, 2009 WL 3241741, at *3 (E.D. Tenn. Sept.
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`30, 2009) (applying Twombly standard to the pleading of affirmative defenses).
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`District courts that have applied the Twombly/Iqbal standard to affirmative defenses
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`recognize that the underlying rationale of the Supreme Court’s decisions extend to affirmative
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`defenses. See, e.g., Shinew v. Wszola, 2009 WL 1076279, at *4 (E.D. Mich. 2009) (“The
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`Twombly decision also observed that discovery costs required to explore the factual basis for a
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`Case 2:12-cv-02829-JPM-tmp Document 34-1 Filed 01/25/13 Page 14 of 27 PageID 386
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`pleaded claim or defense are a problem.”); Safeco Ins. Co. of Am. v. O’Hara Corp., 2008 WL
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`2558015, at *1 (E.D. Mich. June 25, 2008) (explaining that applying the Twombly/Iqbal standard
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`to affirmative defenses will help streamline litigation). On the other hand, courts concluding that
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`the Twombly/Iqbal standard does not apply to affirmative defenses rely on differences in the
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`language of Rule 8(a), Rule (8)(b), and Rule 8(c). See, e.g., Westbrook v. Paragon Sys. Inc.,
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`2007 WL 7715075, at *1 (S.D. Ala. Nov. 29, 2007) (“Neither [Rule 8(b) nor Rule 8(c)]
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`expresses a requirement that the answer ‘show’ the defendant is entitled to prevail on its
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`affirmative defense.”); Bayer CropScience AG v. Dow AgroSciences LLC¸ 2011 WL 6934557, at
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`*1 (D. Del. Dec. 30, 2011) (stating that “textual differences between Rule 8(a), which requires
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`that a plaintiff asserting a claim show entitlement to relief, and Rule 8(c), which requires only
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`that the defendant state any defenses”) (emphasis in original); but see HCRI TRS Acquirer, 708
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`F. Supp. 2d at 690-91 (“While the language in Civil Rule 8(a) differs from the language in Civil
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`Rule 8(b) & (c), this difference is minimal and simply reflects the fact that an answer is a
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`response to a complaint.”).
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`One post-Twombly/Iqbal Sixth Circuit decision, that did not address Twombly or Iqbal,
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`held that “[t]he Federal Rules of Civil Procedure do not require a heightened pleading standard
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`for a statute of repose defense.” Montgomery v. Wyeth, 580 F.3d 455, 468 (6th Cir. 2009)
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`(addressing whether the statute of repose defense codified in the Tennessee Products Liability
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`Act had been waived). The Court relied on Supreme Court precedent that a plaintiff must “give
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`the defendant fair notice of what the plaintiff’s claim is and the grounds upon which it rests.”
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`Montgomery v. Wyeth, 580 F.3d 455, 468 (6th Cir. 2009) (quoting Conley v. Gibson, 355 U.S.
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`41, 47 (1957)). A few district courts in this circuit have likened the Sixth Circuit’s comments on
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`the pleading requirements of the statute of repose—not an affirmative defense—to affirmative
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`Case 2:12-cv-02829-JPM-tmp Document 34-1 Filed 01/25/13 Page 15 of 27 PageID 387
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`defenses. See, e.g., Holley Performance Prods., Inc. v. Quick Fuel Tech., Inc., 2011 WL
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`3159177, at *1 (W.D. Ky. July 26, 2011) (“Given the Sixth Circuit’s ‘fair notice’ standard for
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`pleading affirmative defenses, its ruling in Montgomery, and the total absence of appellate
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`precedent on this issue the Court declines to adopt the heightened pleading standard of Twombly
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`and Iqbal for the pleading of defenses.”). The Montgomery case does not address the holdings of
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`Twombly or Iqbal, neither of which articulates a “heightened pleading standard,” but B.E.
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`submits that the Twombly/Iqbal standard applies equally to defenses as it does to claims for
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`relief.
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`D.
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`The Twombly/Iqbal Standard Applies To Affirmative Defenses.
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`The Twombly/Iqbal pleading standards should apply to affirmative defenses, as a
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`majority of district courts have held, Dann v. Lincoln Nat’l Corp., 274 F.R.D. 139, 145 n.6 (E.D.
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`Pa. 2011), because the rationale upon which courts rely to conclude otherwise represents a
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`misunderstanding of Rule 8(c). Federal Rule of Civil Procedure 8(a) requires a