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MPC Containment Systems, Ltd. v. Moreland

April 17, 2008

MPC CONTAINMENT SYSTEMS, LTD., MPC CONTAINMENT SYSTEMS LLC, PLAINTIFFS,
v.
JOHN E. MORELAND, LAWRENCE MORELAND AND MORELAND INTERNATIONAL LTD., DEFENDANTS.



The opinion of the court was delivered by: Marvin E. Aspen United States District Judge

MEMORANDUM OPINION AND ORDER

MARVIN E. ASPEN, District Judge

Plaintiffs MPC Containment Systems, Ltd. and MPC Containment Systems LLC (collectively, "MPC") filed a complaint against Defendants John E. Moreland, Lawrence Moreland, and Moreland International, Ltd., alleging six causes of action under federal and Illinois law.*fn1 Defendants answered the complaint and asserted eight affirmative defenses. Presently before is MPC's motion to strike two of Defendants' affirmative defenses pursuant to Federal Rule of Civil Procedure 12(f). For the reasons set forth below, we grant in part and deny in part the motion to strike.

BACKGROUND

MPC is a Delaware corporation that "is in the business of designing, manufacturing and installing primary and secondary containment systems, including flexible storage tanks that are used primarily to store water and fuel." (Compl. ¶ 9.) MPC asserts that it is a "prime supplier" of flexible storage tanks to the U.S. Air Force, among them a 200,000-gallon "soft shell" fuel tank that it specifically designed and manufactured for the Air Force. (Id. ¶¶ 10, 15.) MPC claims that the U.S. Armed Forces, generally, "have been MPC's largest customer for approximately [six] years." (Id. ¶ 14.)

Defendants John Moreland and Lawrence Moreland both, at one time, were MPC employees. John Moreland worked at MPC for approximately 25 years and ended his employment with the company on October 1, 2005. (Compl. ¶ 11; Ans. ¶ 11.) For most of his tenure at MPC, from 1984 to September 2003, John Moreland served as Executive Vice President of the Industrial Division. (Compl. ¶ 11; Ans. ¶ 11.) He also headed the business responsible for providing flexible storage tanks to the U.S. Armed Forces. (Compl. ¶ 12.) Defendants claim, however, that after September 2003 John Moreland's role with the flexible storage tank project was that of a "technical consultant" and that he worked out of his home office.*fn2 (Ans. ¶ 12.) Lawrence Moreland, who is John Moreland's son, worked as a full-time employee and as an independent contractor at MPC beginning in about 1987 until on or about October 1, 2005. (Compl. ¶¶ 18-19; Ans. ¶ 18.) The third defendant, Moreland International, Ltd. ("Moreland International"), is a corporation headed by John Moreland, which employs Lawrence Moreland. (Compl. ¶ 20; Ans. ¶ 20.)

In its complaint, MPC alleges that the Morelands, via Moreland International, competed against MPC for business from the U.S. Air Force and the Air Force's purchasing agent, Scientific Applications International Corporation ("SAIC"). (Compl. ¶ 22.) MPC's claim is succinctly summarized as follows:

Beginning in about the fall of 2003, and continuing until he left MPC in October 2005, John E. Moreland and the Moreland Defendants implemented [a] clandestine plan to form a flexible storage tank business competitive with MPC's flexible storage tank business with the Armed Forces, particularly, the Air Force, and to operate it through Moreland International, all without MPC's knowledge or authorization. A central element of this scheme was to undermine the U.S. Air Force confidence in MPC's capability to manufacture flexible storage tanks and to inflate the Moreland Defendants' capabilities to do so at the expense of MPC. (Id. ¶ 27.) MPC contends that the Morelands submitted competing bids to the Air Force using "confidential and proprietary information . . . [about] the costs, pricing, design and manufacture of MPC's Soft Shell Tanks." (Id. ¶ 23.) In addition, MPC argues that this alleged scheme took place while John Moreland "was employed by MPC and was working on MPC's bids for the very same order." (Id.)

As a result of Defendants' competing bids, MPC alleges that Moreland International obtained purchase orders from SAIC and the Air Force for over 100 tanks worth more than $10 million. (Id. ¶ 26.) These orders, MPC argues, "would have been obtained by MPC" but for Defendants' acts.*fn3 (Id.) MPC's complaint alleges six causes of action under federal and Illinois law for both equitable relief and damages.*fn4 In response, Defendants assert eight affirmative defenses. MPC moves to strike two of those defenses: waiver ("Affirmative Defense No. 5") and unclean hands ("Affirmative Defense No. 6").

STANDARD OF REVIEW

Federal Rule of Civil Procedure 8(c) requires parties to set forth any affirmative defenses in their responsive pleadings and specifically lists nineteen defenses that must be pled "affirmatively." A motion to strike pursuant to Rule 12(f) is the appropriate means of removing "impertinent or redundant matter in any pleading and is the primary procedure for objecting to an insufficient defense." Van Schouwen v. Connaught Corp., 782 F. Supp. 1240, 1245 (N.D. Ill. 1991). Motions to strike affirmative defenses are generally disfavored because of their potential to delay proceedings. U.S. v. 416.81 Acres of Land, 514 F.2d 627, 631 (7th Cir. 1975) (citations omitted). Such a motion should therefore not be granted unless the defense is "patently defective" on the face of the pleadings. Bobbitt v. Victorian House, Inc., 532 F. Supp. 734, 736 (N.D. Ill. 1982). Defenses generally "will not be struck if they are sufficient as a matter of law or if they present questions of law or fact." Heller Fin., Inc. v. Midwhey Powder Co., Inc., 883 F.2d 1286, 1294 (7th Cir. 1989). Nonetheless, a motion to strike can be a useful means of removing "unnecessary clutter" from a case. Id.

A three-step analysis is required when assessing the sufficiency of an affirmative defense. Bobbitt, 532 F. Supp. at 737; see also Reis Robotics USA, Inc. v. Concept Indus., Inc., 462 F. Supp. 2d 897, 905 (N.D. Ill. 2006); Surface Shields, Inc. v. Poly-Tak Prot. Sys., 213 F.R.D. 307, 308 (N.D. Ill. 2003); Van Schouwen, 782 F. Supp. at 1245. First, we determine whether the matter is appropriately pled as an affirmative defense. "Only matters that deserve a clear 'no' answer will be stricken to make the pleadings more concise." Bobbitt, 532 F. Supp. at 737. Second, we consider whether the defense has been adequately pled pursuant to the requirements of Federal Rules of Civil Procedure 8 and 9. Id.; Reis Robotics USA, Inc., 462 F. Supp. 2d at 905. Finally, we evaluate the sufficiency of the defense pursuant to the standard followed in assessing Rule 12(b)(6) motions. Bobbitt, 532 F. Supp. at 737; Reis Robotics USA, Inc., 462 F. Supp. 2d at 905. Ultimately, a defense should be stricken only if the defendant cannot prove any set of facts in support of the defense that would defeat the complaint. Bobbitt, 532 F. Supp. at 737; Reis Robotics USA, Inc., 462 F. Supp. 2d at 905.

ANALYSIS

A. Affirmative Defense No. ...


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