United States District Court, D. Nebraska
Michael D. Nelson United States Magistrate Judge.
matter comes before the Court on the State of Nebraska's
Motion to Quash and Motion for Protective Order (Filing
No. 88 in the Lead Case; Filing No. 96 in the Member
Case), the United States' Motion to Quash and for
Protective Order (Filing No. 89 in the Lead Case;
Filing No. 97 in the Member Case), and the United States'
Motion to Strike Affirmative Defenses (Filing No. 98
in the Lead Case; Filing No. 104 in the Member
Case). Both government entities request a
protective order barring any Rule 30(b)(6) deposition of
current and former attorneys of the United States, EPA, the
State of Nebraska, and Nebraska Department of Environmental
Quality (“NDEQ”). The United States separately
moves to strike eight of the Defendants' affirmative
defenses as legally insufficient, factually irrelevant, and
prejudicial. The Court will grant the motions, in part.
outlined by the Court's previous orders, the United
States and Nebraska filed the instant actions to recover
their respective portions of a more than $2 million judgment
awarded against Stabl Inc. (“Stabl”) in a prior
action as civil penalties for violations of the Clean Water
Act. See United States of America and State of Nebraska
v. Stabl, Inc. f/k/a Nebraska ByProducts, Inc., No.
8:11CV274 (Judgment affirmed by 8th Circuit Mandate issued
October 21, 2015). The United States and Nebraska both allege
that in July 2010, five days after Stabl received notice of
the potential civil enforcement action, Stabl fraudulently
transferred nearly all its assets to Leon and Ann Johnson to
avoid paying penalties, and that Lant, Inc. is an alter ego
of the Johnsons. (Filing No. 47).
United States' Action
United States filed its Complaint on May 26, 2016,
(Filing No. 1), and an Amended Complaint on June 6,
2017 (Filing No. 47). The United States' Amended
Complaint alleges three claims for fraudulent transfers under
the Federal Debt Collection Practices Act
(“FDCPA”) and one claim entitled “Piercing
Stabl's Corporate Veil, ” which claim Defendants
sought to dismiss as time-barred by a four-year statute of
limitations. Chief Judge Smith Camp denied the motion to
dismiss because piercing a corporate veil is simply a
“remedy to enforce a substantive right, ” rather
than an independent cause of action. Accordingly, Chief Judge
Smith Camp concluded that the FDCPA's six-year statute of
limitations applies to all the United States' claims, and
that all the claims were timely. (Filing No. 69 at p.
thereafter filed an answer raising the following affirmative
defenses to the United States' claims: (1) waiver, (2)
estoppel, (3) statute of limitations, (4) failure to state a
claim, (5) unclean hands and failure to act in good faith and
fair dealing, (6) the Defendants did not act in bad faith,
(7) presumption that corporations are separate from
shareholders and officers, (8) there was no improper unity of
interest and ownership, (9) unclean hands, and (10) reliance
on counsel and professional accountants. (Filing No. 71
at pp. 16-19).
State of Nebraska filed its Complaint on July 15, 2016,
(Filing No. 1 in the Member Case), and an Amended Complaint
on August 19, 2016 (Filing No. 15 in the Member Case). The
State's Amended Complaint states one claim for fraudulent
transfers under the Nebraska Uniform Fraudulent Transfer Act
(“NUFTA”). The State alleges in its Amended Complaint
that it discovered the July 2010 transfers on May 26, 2016,
when the United States filed its action in this Court.
(Id. at p. 6 ¶ 36).
moved to dismiss the State's action arguing, in part,
that the State did not bring the action prior to the running
of NUFTA's four-year statute of limitations or within one
year after the transfer or obligation was or could reasonably
have been discovered. The Court denied Defendants' motion
because on a review of a motion to dismiss, the Court assumes
as true those facts asserted in a complaint, including the
State's allegation that “it filed the action within
one year after the [allegedly fraudulent] transfers could
reasonably have been discovered.” However, the
Court's denial was “without prejudice to
reassertion in a motion for summary judgment.” (Filing
No. 35 at p. 8 in the Member Case). Thereafter, Defendants
filed an answer raising the following affirmative defenses:
(1) waiver, (2) estoppel, (3) statute of limitations, (4)
failure to state a claim, and (5) unclean hands and failure
to act in good faith and fair dealing. (Filing No. 45 in the
instant dispute concerns Defendants' Rule 30(b)(6)
Notices sent to the United States and the State. Both the
United States and the State object to producing any 30(b)(6)
deposition witness for a variety of reasons, which the Court
will discuss further below. Relatedly, the United States has
moved to strike several of the defendants' affirmative
defenses to prevent the Defendants from seeking discovery
related to those defenses.
United States' Motion to Strike
United States has moved to strike the Defendants' first,
second, third, and fifth through ninth affirmative defenses.
The United States argues that such defenses are legally
insufficient and factually irrelevant, and that striking the
defenses is necessary to avoid prejudice because Defendants
are seeking discovery related to those defenses. (Filing
No. 99 at p. 1).
Federal Rule of Civil Procedure 12(f) “the court may
order stricken from any pleading any insufficient defense or
any redundant, immaterial, impertinent, or scandalous
matter.” Fed.R.Civ.P. 12(f). Although courts have
“liberal discretion” to strike pleadings under
Rule 12(f), “[s]triking a party's pleading . . . is
an extreme and disfavored measure.” BJC Health Sys.
v. Columbia Cas. Co., 478 F.3d 908, 917 (8th Cir. 2007).
An affirmative defense may be stricken “where the
defense has no basis in law, is insufficient as a matter of
law, and the moving party will suffer prejudice in the
absence of the court granting its motion to strike.”
GGA-PC v. Performance Eng'g, Inc., No.
8:16CV567, 2017 WL 2773532, at *2 (D. Neb. June 26,
2017)(Bataillon, J.) (citing United States v. Dico,
Inc., 266 F.3d 864, 880 (8th Cir. 2001); see
Lunsford v. United States, 570 F.2d 221, 229 (8th
Cir. 1977). Prejudice may be shown if striking the defense
would “prevent a party from engaging in burdensome
discovery” or “from expending time and resources
litigating irrelevant issues that will not affect the
case's outcome.” Cynergy Ergonomics, Inc. v.
Ergonomic Partners, Inc., No. 4:08-CV-243 JCH, 2008 WL
2817106, at *2 (E.D. Mo. July 21, 2008)(citing Canadian
St. Regis Band of Mohawk Indians ex rel. Francis v. New
York, 278 F.Supp.2d 313, 325 (S.D.N.Y. 2003)).
United States seeks to strike Defendants' sixth, seventh,
and eighth affirmative defenses because they were raised
without sufficient explanation of their factual basis.
Fed.R.Civ.P. 8(b) provides, “In responding to a
pleading, a party must . . . state in short and plain terms
its defenses to each claim asserted against it.”
Fed.R.Civ.P. 8(b). Defenses “need not be articulated
with any rigorous degree of specificity, and may be
sufficiently raised for purposes of Rule 8 by their bare
assertion.” Infogroup, Inc. v. DatabaseLLC, 95
F.Supp.3d 1170, 1193 (D. Neb. 2015)(Gerrard, J.) (citing
Zotos v. Lindbergh Sch. Dist., 121 F.3d 356, 361
(8th Cir. 1997)).
the foregoing standards, the Court concludes that Defendants
have adequately pled their sixth through eighth affirmative
defenses pursuant to Fed.R.Civ.P. 8(b) and have provided the
United States with fair notice of those defenses. Striking
affirmative defenses is a disfavored measure. “Motions
to strike are often considered time wasters, and should be
denied unless the challenged allegations have no possible
relation or logical connection to the subject matter of the
controversy.” Infogroup, Inc., 95 F.Supp.3d at
1194. While several of Defendants' affirmative defenses
do not state ...