Nestle Purina PetCare Company v. The Blue Buffalo Company Ltd.

Filing 943

MEMORANDUM AND ORDER: IT IS HEREBY ORDERED that Blue Buffalo's Motion for Leave to Further Amend its Answer and Counterclaim # 784 is GRANTED in part and DENIED in part. It is granted to the extent Blue Buffalo seeks leave to amend its coun terclaim and its affirmative defense of laches, and it is denied to the extent Blue Buffalo seeks leave to amend its affirmative defense of unclean hands. IT IS FURTHER ORDERED that Blue Buffalo shall strike its unclean hands defense from its plead ings. Fed. R. Civ. P. 12(f). IT IS FURTHER ORDERED that Purina's Motion to Dismiss Defendants' AffirmativeDefenses of Unclean Hands and Laches # 824 is DENIED without prejudice as moot.. Signed by District Judge Rodney W. Sippel on 8/12/16. (LGK)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
NESTLÉ PURINA PETCARE COMPANY,
Plaintiff/Counterclaim Defendant,
vs.
THE BLUE BUFFALO COMPANY LTD.,
Defendant/Counterclaim Plaintiff,

AND RELATED ACTIONS

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Case No. 4:14 CV 859 RWS

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MEMORANDUM AND ORDER
This matter is before me on Defendant/Counterclaim Plaintiff The Blue Buffalo
Company, Ltd.’s motion for leave to further amend its answer and counterclaim [#784] and
Plaintiff/Counterclaim Defendant Nestle Purina Petcare Company’s related motion to dismiss
defendants’ affirmative defenses of unclean hands and laches [#824]. I heard oral argument on
both motions, and they are both fully briefed and ready for review. For the reasons stated below,
I will grant Blue Buffalo leave to amend its counterclaim and its affirmative defense of laches,
will deny it leave to amend its affirmative defense of unclean hands, and will deny without
prejudice as moot Purina’s motion to dismiss.
Background
Familiarity with this case and its history is presumed, but a brief review of the
background as relevant to the two motions that are at issue is as follows.
On April 21, 2016, I granted Purina leave under Rule 16(b)(4) to file a third amended
complaint to address new facts and information revealed in discovery, to add to two new claims,

one for common law injurious falsehood and one under the Connecticut Unfair Trade Practices
Act, and to add as a defendant Blue Buffalo’s wholly-owned subsidiary, Great Plains Leasing,
LLC. See [#768]. In my Memorandum and Order of April 21, 2016, I also ordered that if Blue
Buffalo wanted to amend its responsive pleading beyond what was necessary to directly respond
to the new allegations in Purina’s third amended complaint, it must first seek leave to do so.1 See
id.
On May 12, 2016, Blue Buffalo, consistent with my Order, filed its motion for leave to
further amend its answer and counterclaim. Blue Buffalo seeks to include new factual
allegations in its Lanham Act counterclaim against Purina to allege that Purina falsely advertised
some of its own products as being by-product free. Blue Buffalo also seeks to amend its
affirmative defenses of laches and unclean hands to include additional detail related to this
alleged false advertising by Purina and Purina’s alleged delay in bringing this suit.
After Blue Buffalo filed its motion to further amend its responsive pleadings, Purina filed
a related motion to dismiss Blue Buffalo’s defenses of unclean hands and laches. As it must,
Purina’s motion challenges Blue Buffalo’s defenses as presented in Blue Buffalo’s currently
operative pleading, not those in its proposed amended affirmative defenses.
Discussion
A. Blue Buffalo’s Motion for Leave to Further Amend its Answer and Counterclaim
Blue Buffalo contends that it is entitled to amend its answer and counterclaim in response
to Purina’s third amended complaint under the standards of Tralon Corp. v. Cedarapids, Inc.,
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Blue Buffalo complains that this order was only directed to it, and none of the other parties in the case.
The reason I directed this order to Blue Buffalo was because it had specifically indicated its intent to file a
substantial new amendment to its pleading despite the fact that the deadline in the case management order
had long-past expired. As all the parties should know, however, because the case management deadline
for amendment of pleadings has passed, leave must be sought before a party may amend their pleadings,
except where, as will be discussed infra, Section A, they are responding to another party’s amended
pleading that changes the theory or scope of the case.
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966 F. Supp. 812 (N.D. Iowa 1997), aff'd, 205 F.3d 1347 (8th Cir. 2000). Under Tralon, “when
a plaintiff files an amended complaint which changes the theory or scope of the case, the
defendant is allowed to plead anew as though it were the original complaint filed by the
Plaintiff.” Id. at 832.
Tralon does not help Blue Buffalo here because Purina’s third amended complaint did
not change the theory or scope of the case. Rather, as Blue Buffalo itself argued at the time it
opposed Purina’s motion for leave to amend its complaint, the amendments in the third amended
complaint merely added an additional defendant who could be liable for some of the same harms
Blue Buffalo is alleged to have caused, and added two state law claims that were substantially
similar to the existing Lanham Act claim. As a result, Blue Buffalo does not have an automatic
right to amend its responsive pleading.
Blue Buffalo argues that even if I find that it has no automatic right to amend, it should
still be granted leave to amend under Federal Rules of Civil Procedure 16(b) and/or 15(a).
Where, as here, a party seeks leave to amend the pleadings after the case management deadline
to do so has passed, courts must determine whether good cause exists under Rule 16(b)(4)’s good
cause standard. See Popoalii v. Corr. Med. Servs., 512 F.3d 488, 497 (8th Cir. 2008). Then, if
good cause is established, courts will consider whether amendment is proper under Rule 15(a).
See Sherman v. Winco Fireworks, Inc., 532 F.3d 709, 716 (8th Cir. 2008) (citing Leary v.
Daeschner, 349 F.3d 888, 909 (6th Cir.2003)).
Under Rule 16(b)(4), “‘[t]he primary measure of good cause is the movant's diligence in
attempting to meet the [case management] order's requirements.’ While the prejudice to the
nonmovant resulting from modification of the scheduling order may also be a relevant factor,
generally, we will not consider prejudice if the movant has not been diligent in meeting the

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scheduling order's deadlines.” Sherman v. Winco Fireworks, Inc., 532 F.3d 709, 716-17 (8th Cir.
2008).
For the reasons Blue Buffalo articulates in its memorandum in support of its motion for
leave to amend, see Blue Buffalo’s Memorandum in Support of its Motion for Leave to Further
Amend its Answer and Counterclaim, pp. 7-10 [#785], I conclude that Blue Buffalo was diligent
in seeking leave to amend. It learned of the alleged facts supporting its amendments during a
January 20, 2016 deposition. It investigated this new information and sought related discovery
over the course of the next two months, and gave the parties and the Court notice that it would
seek to amend its answer and counterclaims if Purina’s then-pending motion for leave to file its
third amended complaint were granted. Once Purina’s motion for leave to amend was granted,
Blue Buffalo promptly sought leave to bring the current amendments. As a result, Blue Buffalo
was diligent in seeking leave to amend.
Purina argues that it will be prejudiced if leave to amend is granted because the proposed
amendments will drastically expand the scope of the case and therefore delay the case. While
the current scope of discovery in this case will likely expand with Blue Buffalo’s amendments,
the “burden of undertaking [additional] discovery, standing alone, does not suffice to warrant
denial of a motion to amend a pleading.” Dennis v. Dillard Dep't Stores, Inc., 207 F.3d 523,
525-26 (8th Cir. 2000). Additionally, discovery is still open, and the specific discovery that Blue
Buffalo will likely seek in support of its amendments is discovery it would have been entitled to
anyway because it relates to Purina’s claims for damages. Purina’s damages theory appears to be
that Blue Buffalo’s false advertising enabled it to capture a part of the pet food market that
otherwise would have belonged to Purina, among others. But if Purina included byproduct in its
products that were advertised as being byproduct free during the same time period it alleges Blue

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Buffalo was falsely advertising, Purina’s claims of damages during that period will be impaired.
Blue Buffalo is entitled to this information to defend against Purina’s damages claims whether or
not it brings these amendments. As a result, I conclude that granting leave to amend will not
cause undue prejudice to Purina.
Accordingly, Blue Buffalo has established that there is good cause for granting it leave to
amend.
Having established that good cause exists, I turn next to the Rule 15(a) analysis. Under
FRCP 15(a), leave to amend “should normally be granted absent good reason for a denial.” Popp
Telcom v. Am. Sharecom, Inc., 210 F.3d 928, 943 (8th Cir. 2000). “The classic ‘good reasons’
for rejecting an amendment are: ‘undue delay, bad faith or dilatory motive, repeated failure to
cure deficiencies by amendments previously allowed, undue prejudice to the non-moving party,
or futility of amendment . . . .’” Id. The decision of whether to grant leave to amend is within
the court’s discretion. Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 330-32
(1971). With one exception, none of the classic good reasons for denying leave to amend are
present here.
For the reasons articulated above, there is no evidence of “undue delay, bad faith or
dilatory motive, repeated failure to cure deficiencies by amendments previously allowed, [or]
undue prejudice to the non-moving party. Popp Telcom v. Am. Sharecom, Inc., 210 F.3d 928,
943 (8th Cir. 2000). Nor does Purina argue that granting Blue Buffalo leave to amend its
counterclaim would be futile.
I also cannot say that granting Blue Buffalo leave to amend its laches defense would be
futile. “The two elements of laches are (1) unreasonable delay by the plaintiff in filing suit and
(2) undue prejudice to the defendant caused by the delay.” Hurst v. U.S. Postal Serv., 586 F.2d

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1197, 1199-200 (8th Cir. 1978). Purina argues that Blue Buffalo cannot establish that Purina
unreasonably delayed filing suit because the statute of limitations has not expired. Laches is
ordinarily unavailable if a plaintiff sues within the statute of limitations. See Petrella v. MetroGoldwyn-Mayer, Inc., 134 S.Ct. 1962, 1973-74 (2014). However, Congress did not include a
statute of limitations in the Lanham Act. As a result, I will not bar application of the laches
defense now based on the fact that Purina did not file suit outside of the statute of limitations.
See id. at 1973-74, n.15 (differentiating cases where Congress enacted a statute of limitations and
therefore laches cannot be invoked to bar legal relief from Lanham Act cases which contain no
statute of limitations). Additionally, the inquiry into whether a plaintiff unreasonably delayed in
filing suit is fact-sensitive and is typically better resolved on summary judgment. See JDR
Indus. V. McDowell, 121 F. Supp. 3d 872, 889 (D. Neb. Aug. 4, 2015). As there are disputed
issues of fact regarding whether Purina unreasonably delayed in filing suit, I cannot say that
amendment of Blue Buffalo’s laches defense would be futile.
I do find, however, that amendment of Blue Buffalo’s unclean hands defense would be
futile because Blue Buffalo’s use of the defense lacks a substantive nexus to the claims against
Blue Buffalo. Purina’s main claim against Blue Buffalo is that it falsely advertised its pet foods
as byproduct-free when in fact they were not. Blue Buffalo’s proposed unclean hands defense is
that Purina’s hands are unclean because Purina engaged in its own false advertising because it
marketed certain of its own pet food products as byproduct-free when in fact they were not.
While many other courts across the country support Blue Buffalo’s more broad view of the
defense, the United States Court of Appeals for the Eighth Circuit does not. In Shaver v. Heller
& Merz Co., the Eighth Circuit held that the unclean hands doctrine would not apply in
circumstances similar to those here. As the Shaver Court explained:

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The principle that ‘he who comes into equity must do so with clean hands’ . . . .
does not repel all sinners from courts of equity, nor does it disqualify any
complainant from obtaining relief there who has not dealt unjustly in the very
transaction concerning which he complains. The iniquity which will repel him
must have an immediate and necessary relation to the equity for which he sues.
Shaver v. Heller & Merz Co., 108 F. 821, 834 (8th Cir. 1901) (emphasis added); see also 6
MCCARTHY ON TRADEMARKS & UNFAIR COMPETITION § 31:48 (2015). Because the defendant in
Shaver was complaining that the plaintiff had engaged in the same type of false or misleading
advertising it was accused of committing but in regards to its own product, rather than affecting
the defendant’s product, the Eighth Circuit rejected the defense for lack of a substantive nexus to
plaintiff’s claims. Id. Likewise, because Blue Buffalo attempts to use the unclean hands defense
to challenge conduct related to Purina’s rather than Blue Buffalo’s products, Blue Buffalo is not
claiming that Purina “dealt unjustly in the very transaction concerning which he complains.”
Shaver, 108 F. at 834. As a result, the defense fails as a matter of law.2
Blue Buffalo argues that a United States Supreme Court case, Keystone Driller Co. v.
Gen. Excavator Co., 290 U.S. 240, 245-46, 54 S. Ct. 146, 147-48, 78 L. Ed. 293 (1933), supports
its broader view of the unclean hands doctrine. The Keystone Court described the unclean hands
doctrine as follows:
[C]ourts of equity do not make the quality of suitors the test. They apply the
maxim requiring clean hands only where some unconscionable act of one coming
for relief has immediate and necessary relation to the equity that he seeks in
respect of the matter in litigation. [Courts] do not close their doors because of
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Blue Buffalo’s proposed use of the unclean hands defense also appears to lack a temporal nexus to the
claims against Blue Buffalo. “The plaintiff's position must be judged by the facts as they were when the
suit was begun, not by the facts of a different condition and an earlier time.” Coca-Cola v. Koke Co., 254
U.S. 143, 147 (1920). Blue Buffalo’s proposed amendment to its unclean hands defense alleges in
conclusory terms that Purina’s false advertising and other inequitable conduct was still ongoing.
However, courts will not presume conclusory allegations to be true in considering a motion to dismiss.
Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). Because I have already concluded that Blue Buffalo’s
unclean hands defense lacks a substantive nexus to Purina’s claims against it, however, I need not and
will not decide whether the apparent lack of a temporal nexus is also grounds for finding that leave to
amend should be denied as frivolous.
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plaintiff's misconduct, whatever its character, that has no relation to anything
involved in the suit, but only for such violations of conscience as in some measure
affect the equitable relations between the parties in respect of something brought
before the court for adjudication. They apply the maxim, not by way of
punishment for extraneous transgressions, but upon considerations that make for
the advancement of right and justice. They are not bound by formula or restrained
by any limitation that tends to trammel the free and just exercise of discretion.
Keystone Driller Co., 290 U.S. 240, 245-46 (1933) (internal citations omitted). Blue Buffalo
focuses on the Court’s statement that unclean hands applies “for such violations of conscience as
in some measure affect the equitable relations between the parties in respect of something
brought before the court for adjudication” for support. Id. at 245. A careful read of the
Keystone Driller case, however, reveals that the Court’s holding does not require the broad
reading of the doctrine that Blue Buffalo advocates.
First, the first sentence of the paragraph quoted above shows that the Keystone Driller
Court made that statement to distinguish between bad actors and bad acts, holding that the
doctrine of unclean hands applies only to those who commit bad acts related to the cause of
action at issue – not just those who have blemished records. Second, other language the Court
uses underscores that the inequity that the Court was concerned with is that which would give
one party an unfair advantage over the other – which supports the Eighth Circuit’s interpretation
limiting the doctrine to bad acts related to the same transaction at issue in the plaintiff’s case.
See id. at 245 (“The equitable powers of this court can never be exerted in behalf of one who has
acted fraudulently, or who by deceit or any unfair means has gained an advantage.”).
Additionally, the Court’s discussion of the doctrine cannot be divorced from the context
of the case. In Keystone Driller, the Court upheld the application of the unclean hands defense
to a plaintiff patentee who had engaged in fraud in a previous proceeding regarding the patent
that was the very basis of the instant lawsuit. This application is entirely consistent with the

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Eighth Circuit’s interpretation of the doctrine, which limits it to unclean conduct relating to the
very transaction or occurrence that is the subject matter of the plaintiff’s claims.
Moreover, even if the Keystone Driller opinion could be read to allow a broad application
of the unclean hands doctrine in the appropriate case, it does not require it. As the Court
emphasizes, the application of the doctrine is a matter of equity and it is within a court’s broad
discretion to apply it “for the advancement of right and justice.” Keystone Driller Co., 290 U.S.
at 245. Here, in addition to finding that Blue Buffalo’s proposed application of the unclean
hands defense lacks the requisite substantive nexus, I would also conclude that application of the
doctrine as proposed would not do justice. Even in circuits that allow a broader application of
the doctrine, courts will not apply it where doing so would “leave two wrongs at large” that
could ultimately harm the public. 6 MCCARTHY ON TRADEMARKS & UNFAIR
COMPETITION § 31:53 (2015) (collecting cases). In fact, in such scenarios, courts often hold
that the unclean hands defense does not apply to bar relief, and will instead direct the defendant
to bring its proposed unclean hands claims as counterclaims or as claims in a separate suit. See
id.
That is exactly what will happen here. As discussed above, Blue Buffalo may amend its
counterclaim to allege that Purina falsely advertised some of its own products as byproduct-free.
That is the same argument Blue Buffalo wishes to advance in its unclean hands defense.
Presenting this argument as a counterclaim rather than an affirmative defense that could
otherwise bar relief will make sure we do not leave “two wrongs at large” while still enabling
Blue Buffalo to present its theory of its case as it sees fit.
For all of these reasons, I will deny Blue Buffalo leave to amend its unclean hands
defense because doing so would be futile. Having concluded that Blue Buffalo’s proposed

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defense of unclean hands is barred as a matter of law, I will also order Blue Buffalo to strike the
defense from its pleadings. See Fed. R. Civ. P. 12(f)(a).
B. Purina’s Motion to Dismiss Defendants’ Affirmative Defenses of Unclean Hands and
Laches
As noted above, Purina filed its motion to dismiss Blue Buffalo’s affirmative defenses
after Blue Buffalo sought leave to amend its answer and counterclaim. As a result, Purina’s
motion to dismiss challenges Blue Buffalo’s operative pleading at the time the motion was filed
– its answer and counterclaim to Purina’s third amended complaint. See [#783]. Having decided
that I will grant in part Blue Buffalo leave to amend its answer and counterclaim, Purina’s
motion to dismiss the current operative pleading is moot. As a result, I will deny Purina’s
motion to dismiss without prejudice.
Accordingly,
IT IS HEREBY ORDERED that Blue Buffalo’s Motion for Leave to Further Amend its
Answer and Counterclaim #[784] is GRANTED in part and DENIED in part. It is granted to
the extent Blue Buffalo seeks leave to amend its counterclaim and its affirmative defense of
laches, and it is denied to the extent Blue Buffalo seeks leave to amend its affirmative defense of
unclean hands.
IT IS FURTHER ORDERED that Blue Buffalo shall strike its unclean hands defense
from its pleadings. Fed. R. Civ. P. 12(f).

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IT IS FURTHER ORDERED that Purina’s Motion to Dismiss Defendants’ Affirmative
Defenses of Unclean Hands and Laches #[824] is DENIED without prejudice as moot.

_________________________________
RODNEY W. SIPPEL
UNITED STATES DISTRICT JUDGE
Dated this 11th day of August, 2016.

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