Earlier this month, a magistrate judge in the Northern District of California dealt another blow to the “kitchen sink” approach to pleading affirmative defenses. In Wesch v. Yodlee, Inc.,¹ Magistrate Judge Sallie Kim granted in full plaintiffs’ motion to strike nearly all the defendant’s 28 affirmative defenses, holding that several had failed to satisfy the pleading standards set forth in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009), and still more were not even valid affirmative defenses in the first place. Judge Kim’s order is an important reminder that defendants must be mindful of courts’ growing impatience with defendants who plead a laundry list of factually unsupported—or patently invalid—affirmative defenses. Indeed, the Wesch decision makes clear that enterprising plaintiffs will move to strike such faulty defenses, dealing an early and avoidable loss to defendants that could have lasting implications on their credibility with the court.

Background

Wesch is a putative class action brought by consumers who allege that Yodlee, a financial data aggregator that develops programming interfaces for financial apps, collects and sells users’ personal and sensitive financial data without their consent. Plaintiffs brought several state and federal claims against Yodlee, along with its parent company; after two motions to dismiss failed to dispose of the case in its entirety, Yodlee answered plaintiffs’ remaining claims and alleged 28 affirmative defenses. Plaintiffs thereafter moved to strike 19 of those defenses. 

This month, Judge Kim granted plaintiffs’ motion in full, striking all the challenged affirmative defenses on two grounds. First, Judge Kim determined that 13 of the 19 defenses were invalid affirmative defenses in the first instance. Among the 13, Yodlee had asserted a list of what are commonly found in many defendants’ answers as affirmative defenses: 

• that plaintiffs’ complaint failed to state any claims for which relief may be granted; 
• that plaintiffs lacked Article III standing; 
• that plaintiffs’ claims were barred because the harm alleged was not proximately caused by Yodlee; and
• that plaintiffs’ claims could not be properly certified as a class action. 

When challenged, Yodlee could not deny that these challenged defenses were invalid, instead arguing that the court should deny plaintiffs’ motion to strike because plaintiffs suffered no prejudice from their inclusion. Judge Kim rejected this argument, pointing to case law holding the opposite,² and granted plaintiffs’ motion to strike the 13 affirmative defenses.

Second, Judge Kim also granted—with leave to amend—plaintiffs’ motion to strike six additional affirmative defenses as insufficiently pleaded. Recognizing that the Ninth Circuit has yet to rule on the issue, Judge Kim explained that the majority of district courts have concluded that the pleading standards set forth in Twombly and Iqbal apply to affirmative defenses.³ Under this standard, Judge Kim clarified that “[w]hile a defense need not include extensive factual allegations in order to give fair notice, bare statements reciting mere legal conclusions may not be sufficient.”⁴ She further explained, “Just as a plaintiff’s complaint must allege enough supporting facts to nudge a legal claim across the line separating plausibility from mere possibility, a defendant’s pleading of affirmative defenses must put a plaintiff on notice of the underlying factual bases of the defense.”⁵ Judge Kim then granted plaintiffs’ motion to strike because Yodlee had failed to allege any facts to support the six defenses. Specifically, Judge Kim held that conclusory defenses such as “Plaintiffs’ claims are barred, in whole or in part, by laches and/or by the relevant statute of limitations for each claim”; “Plaintiffs’ claims are barred to the extent that Plaintiffs recover or have recovered any alleged damages or restitution already”; “Plaintiffs’ claims are barred, in whole or in part, because Plaintiffs would be unjustly enriched if they recover from Yodlee for any of the conduct alleged in the Complaint”; and “Plaintiffs failed to mitigate any damages they suffered and are therefore barred from recovering mitigatable damages” were insufficiently alleged and thus properly stricken from the answer.

Implications for Other Cases

Judge Kim’s decision in Wesch is a warning shot to defendants. For quite some time, defendants have been guilty of what might be called “affirmative defense inflation,” pleading as affirmative defenses what are really just defenses or failings of proof. However, as Judge Kim noted, an affirmative defense is a defense “that does not negate the elements of the plaintiff’s claim, but instead precludes liability even if all of the elements of the plaintiff’s claim are proven” and on which the defendant bears the burden of proof.⁶ Thus, commonly pled affirmative defenses such as failure to state a claim, lack of standing or impropriety of class certification are not actually affirmative defenses at all. 

Accordingly, two lessons can be learned from the case, the first of which is fairly obvious: defendants should only plead affirmative defenses that are actually affirmative defenses. Patently invalid affirmative defenses that challenge whether plaintiffs state a claim for which relief can be granted, whether plaintiffs have standing and whether plaintiffs can certify their claims as a class action—not to mention proximate cause or other merits issues—will be summarily stricken by judges. Enterprising plaintiffs will jump at the opportunity to call out such reckless pleading, handing defendants an early and avoidable loss that will impugn their credibility with the court. And should there ever be a dispute about whether the plaintiff or defendant bears the burden of proof on a particular issue, its inclusion as an affirmative defense could be used against the defendant, forcing it to bear the burden on an issue that properly rests with the plaintiff.

Second, for those affirmative defenses that are valid, defendants must allege enough factual detail to meet the standards set forth in Twombly and Iqbal. This means that in addition to exercising basic care and forethought, defendants should reasonably investigate the facts underlying their potential affirmative defenses before answering a complaint. Boilerplate or canned affirmative defenses may be stricken. This is no small thing, especially where defendants seek to challenge plaintiffs’ claims on laches or statute of limitations grounds. Repeatedly failing to adequately plead either of these critical defenses could result in defendants being precluded from raising them altogether. Indeed, judges are always looking for ways to streamline case management, and they seize any opportunity, even at the answer stage, to cut off vague or frivolous claims in order to avoid the time and expense of unnecessary or far-reaching discovery.⁷  

With this in mind, defendants can keep the court’s focus on plaintiffs’ complaint by not proffering inadequately pleaded or, for that matter, patently invalid affirmative defenses in their answers. Doing so will require significant care, but it can go a long way toward preserving credibility before the court. Defendants should recognize courts’ growing impatience with answers that plead a litany of invalid or unsupported affirmative defenses. 

WilmerHale has significant experience representing defendants in federal and state court at all stages of litigation, including the pleading stage. Please feel free to reach out to the contacts below with any questions.