:: Motions To Strike Affirmative Defenses In ERISA Litigation – An Arrow In The Plaintiff’s Quiver
Plaintiffs are correct that this affirmative defense — particularly the last clause — is sufficiently vague as to fail to provide sufficient notice. While Defendants counter that they addressed the factual underpinning of this defense in the motion to dismiss, nothing in the language of the affirmative defense ties it to the disclosure discussed in the motion.
While Defendants are correct that motions to strike are disfavored, the affirmative defense here is sufficiently vague as to warrant striking.
Trs. of the Local 464A UFCW Pension Fund v. Wachovia Bank, N.A., 2009 U.S. Dist. LEXIS 109567 (D.N.J. Nov. 24, 2009)
Defendants are increasingly tasked with articulating their defenses with clarity and specificity. In this district court opinion in an ERISA case, the plaintiffs employ a motion to strike to eliminate several affirmative defenses set out in the defendants’ answer to the complaint.
“Bare Bones Conclusory Allegations”
The eleventh affirmative defense stated:
“Plaintiffs’ claims are barred … because Defendants have complied with all disclosure requirements under all applicable laws and informed Plaintiffs regarding matters concerning investments and risk.”
The Plaintiffs move to strike the eleventh affirmative defense, arguing that it failed to provide them with notice as to the nature of the defense and the legal basis therefor. The court agreed.
Plaintiffs are correct that this affirmative defense — particularly the last clause — is sufficiently vague as to fail to provide sufficient notice.
Incorporation Of Arguments In Motion To Dismiss
The Court had previously denied a motion to dismiss and the defendants attempted to incorporate those arguments into the affirmative defense. Yet,
“[w]hile Defendants counter that they addressed the factual underpinning of this defense in the motion to dismiss, nothing in the language of the affirmative defense ties it to the disclosure discussed in the motion.”
Note: Motions to strike are disfavored, but this opinion demonstrates circumstances in which they may prevail. In particular, the notice pleading requirement offers possibilities as evidenced by the court’s decision and its citation of United States v. Sensient Colors, Inc., 580 F. Supp. 2d 369, 378 (D.N.J. 2008) (striking affirmative defense that referred to unspecified statutes of repose because it failed to comply with the notice pleading requirement of Rule 8).
Opportunity To Amend - The Court did give the defendants an opportunity to amend their answer (and if not offered, it should be requested.)
Since Defendants contend that the factual information contained in the motion to dismiss and their briefing on this motion describes the basis for this affirmative defense, the granting of the motion to strike will be without prejudice to Defendants’ right to amend their answer within twenty days to comport with the requirements of Rule 8.
Fiduciary Breach Defense Rejected - The facts of the case involved a claim of breach of fiduciary duty relating certain investments. The plaintiffs were also able to have a defense stricken that was based upon “net performance” argument.
CitingLaRue v. DeWolff, Boberg & Associates, Inc., the Court rejected that argument:
While the ninth affirmative defense is appealing on its face, the Plans’ net performance is inconsequential to a determination of liability or damages under ERISA. In calculating damages resulting from a fiduciary’s breach of duty to a plan or to plan beneficiaries, it is necessary to determine the plan’s “losses” resulting from the breach.
Construing potential damages available under Section 502(a)(2), the Supreme Court has counseled that:
“[Section] 502(a)(2) encompasses appropriate claims for “lost profits.” … Under the common law of trusts, which informs our interpretation of ERISA’s fiduciary duties … trustees are chargeable with … any profit which would have accrued to the trust estate if there had been no breach of trust….”
(citations omitted).
Thus, this defense was stricken as legally insufficient.
Disputed Issues Of Fact – On the contrary, the Court refused to strike a defense where the issue involved issues of fact likely to be developed during discovery, stating:
While Plaintiffs take issue with the factual underpinning of this defense, a motion to strike should not be granted where the sufficiency of a defense depends on disputed issues of fact.
In summary, a motion to strike is a useful tool to narrow the issues and one that should not be overlooked by plaintiffs. Where defenses are vague or legally insufficient, the motion has prospects for success. On the other hand, defendants must look to stating or incorporating specific legal defenses, relating such defenses to more expansive articulation, such as in pleadings or motions on file. Care should also be given to noting where circumstances require discovery to properly develop affirmative defenses asserted in the answer.
