Oregon Potato Company v. Kerry Inc.

Filing 17

ORDER granting 10 Motion to Strike by Plaintiff Oregon Potato Company. Defendant Kerry Inc. may have until August 24, 2020, to file an amended answer. Signed by District Judge James D. Peterson on 8/10/2020. (voc)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF WISCONSIN

OREGON POTATO COMPANY, doing business as
RADER FARMS,
Plaintiff,

OPINION and ORDER

v.
20-cv-92-jdp
KERRY INC.,
Defendant.
Plaintiff Oregon Potato Company is suing defendant Kerry Inc. for breach of contract,
alleging that Kerry failed to fulfill orders as promised. Kerry has asserted several affirmative
defenses in its answer, and now Oregon Potato moves to strike two of those defenses: (1) failure
to state a claim; and (2) force majeure. Dkt. 10. The court will grant the motion to strike, but
Kerry may file an amended answer that fixes the problems with its force majeure defense.

BACKGROUND
Oregon Potato Company entered a licensing agreement with third party Jamba Juice,
giving Oregon Potato the right to manufacture and distribute various flavors of frozen smoothie
mixes that customers can use to make smoothies at home. One ingredient of the mix was a
yogurt cube manufactured by defendant Kerry Inc.
Oregon Potato placed eleven purchase orders with Kerry for yogurt cubes, but Kerry
failed to deliver the products as promised. Some of the orders were late, and others never came.
Oregon Potato alleges that it sustained damages of approximately $2,600,000.

ANALYSIS
A. Legal standard
Under Federal Rule of Civil Procedure 12(f), a court may strike “an insufficient defense”
from the defendant’s answer. The Court of Appeals for the Seventh Circuit has provided
limited guidance on the standard district courts should apply under Rule 12(f). In Heller Fin.,
Inc. v. Midwhey Powder Co., 883 F.2d 1286, 1294 (7th Cir. 1989), the court stated: “Affirmative
defenses are pleadings and, therefore, are subject to all pleading requirements of the Federal
Rules of Civil Procedure. Thus, defenses must set forth a ‘short and plain statement,’ of the
defense,” pursuant to Federal Rule of Civil Procedure 8(a). See also Williams v. Jader Fuel Co.,
944 F.2d 1388, 1400 (7th Cir. 1991) (applying Rule 8(a) standard to affirmative defense).
Heller suggests that the pleading standard that applies to claims should also apply to defenses.
The court of appeals has not considered the standard for pleading an affirmative defense
since the Supreme Court decided Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007), and
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Under those cases, a complaint must be plausible
on its face and include allegations that raise the right to relief above a speculative level. One
leading treatise argues that the plausibility standard shouldn’t apply to affirmative defenses
because Twombly and Iqbal relied on the language of Rule 8(a), which requires a party to
“show[]” that it is entitled to relief, but Rule 8(c), which applies to affirmative defenses,
requires only that a party “affirmatively state” a defense. 2 Moore’s Federal Practice § 8.08[1]
(3d. ed 2020). The treatise also says that Twombly and Iqbal were concerned about the burdens
of discovery, but that is a less of a concern with affirmative defenses because striking an
affirmative defense will not end the case, so both sides will still be subjected to discovery on
the plaintiff’s claim even if the defenses are struck. Id. Finally, the treatise says that “defendants

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do not have the luxury of a prefiling investigation,” and they generally only have 21 days to
file an answer, so requiring plausibility “is likely to accomplish little more than encouraging a
flurry a motions to strike affirmative defenses.” Id.
The arguments in the treatise have considerable appeal, and they are consistent with
the view that motions to strike are typically a waste of time. See Heller, 883 F.2d at 894. But
the plausibility standard comes from Rule 8(a), which Heller says also applies to affirmative
defenses. Moreover, it appears that most district courts in this circuit, including this one, have
applied the plausibility standard to affirmative defenses. See Dace v. Chicago Pub. Sch., No. 19
C 6819, 2020 WL 1861671, at *4 (N.D. Ill. Mar. 18, 2020) (collecting cases); Scalia v. Comfort
Care 4 U, LLC, No. 19-cv-226-jdp, 2019 WL 6174379, at *1 (W.D. Wis. Nov. 20, 2019). But
see, e.g, Eastgate Investments I, LLC v. MW Builders, Inc., No. 19-cv-304-jtm-jpk, 2020 WL
1887936, at *1 (N.D. Ind. Apr. 15, 2020) (concluding that plausibility standard doesn’t apply
to affirmative defenses because of textual differences between Rule 8(a) and Rule 8(c)).
Until the court of appeals provides additional guidance, the court will apply the
plausibility standard to affirmative defenses. “But the context of an affirmative defense includes
the allegations of the complaint, and thus it typically does not take a rich factual exposition to
make an affirmative defense plausible.” Nouis Techs., Inc. v. Polaris Indus. Inc., No. 14-cv-233jdp, 2015 WL 3407862, at *2 (W.D. Wis. May 27, 2015). And what qualifies as sufficient
must take into consideration the information available to the defendant at the pleading stage.
See Olson v. Champaign Cnty., Ill., 784 F.3d 1093, 1100 (7th Cir. 2015).
B. Failure to state a claim
Oregon Potato moves to strike Kerry’s first affirmative defense, which is for failure to
state a claim upon which relief can be granted. As other courts have noted, “failure to state a

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claim” isn’t an affirmative defense. See Dace, 2020 WL 1861671, at *3 (collecting cases). An
affirmative defense is something that limits or excuses the defendant’s “liability even if the
plaintiff establish[es] a prima facie case.” Tober v. Graco Children's Products, Inc., 431 F.3d 572,
579 n.9 (7th Cir. 2005). And an affirmative defense is an issue that the defendant bears the
burden of proving. Reed v. Columbia St. Mary's Hosp., 915 F.3d 473, 478 (7th Cir. 2019). The
plaintiff has the burden of proving that it has stated a claim, and Rule 12(h)(2) allows a party
to raise failure to state a claim at any time until trial, which is inconsistent with a view that the
defendant must plead the defense.
So the court will grant the motion to strike this defense, but it doesn’t prevent Kerry
from challenging the sufficiency of the complaint later in the case.
C. Force majeure
Oregon Potato also contends that the court should strike Kerry’s fourth affirmative
defense, force majeure. In support of that defense, Kerry alleges in its answer that “any
nonperformance or delay on the part of Kerry, Inc. was caused by factors outside of Kerry Inc.’s
control, including, but not limited to, a breakdown of equipment used to manufacture the
yogurt chips.” Dkt. 8, at 9.
Oregon Potato contends that Kerry’s force majeure defense is insufficient for four
reasons: (1) the defense is “redundant” to Kerry’s fifth affirmative defense of commercial
impossibility and impracticability; (2) the defense doesn’t apply to mechanical breakdowns;
(3) the defense doesn’t apply unless the contract at issue includes a force majeure clause, and
Kerry hasn’t identified a contract with such a provision; and (4) Kerry didn’t provide enough
factual detail explaining the basis for the defense.
Oregon Potato’s contentions raise questions about the scope of a force majeure defense,

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which, in turn, raises the question of which state’s law applies to this case. Neither side includes
a choice-of-law discussion in their brief, which generally means that Wisconsin law applies.
FutureSource LLC v. Reuters Ltd., 312 F.3d 281, 283 (7th Cir. 2002) (“[T]here's no discussion
of choice of law issues, and so we apply the law of the forum state.”). But both sides cite case
law from throughout the country, suggesting that neither side believes that Wisconsin law
meaningfully differs from other jurisdictions on this issue.
As a general matter, a force majeure is a “superior or irresistible force which keeps parties
from performing under a contract due to causes which are outside the control of the parties
and could not be avoided by exercise of due care.” State v. Noyes, 149 Wis. 2d 401, 439 N.W.2d
646 (Ct. App. 1989) (quoting Black's Law Dictionary 581 (5th ed. 1979)). But the general
rule is that the scope of a force majeure defense is dependent on the language of a contractual
provision. See Wisconsin Elec. Power Co. v. Union Pac. R. Co., 557 F.3d 504, 507 (7th Cir. 2009)
(“[A] force majeure clause must always be interpreted in accordance with its language and
context, like any other provision in a written contract.”). It follows that a party doesn’t have
the right to raise the defense unless a contract creates that right. Kerry acknowledges this in its
brief. Dkt. 15, at 5 (“[F]orce majeure is a defense based on the particular language used in
parties’ contracts.”).
In contrast, impossibility is a common-law defense that “excuses performance when it
would be unreasonably costly (and sometimes downright impossible) for a party to carry out
its contractual obligations.” Wisconsin Elec. Power, 557 F.3d at 505. “[T]he proper question in
an ‘impossibility’ case is whether the promisor’s nonperformance should be excused because
the parties, if they had thought about the matter, would have wanted to assign the risk of the
contingency that made performance impossible or uneconomical to the promisor or to the

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promisee; if to the latter, the promisor is excused.” Id. (internal quotation marks and alterations
omitted).
So force majeure and impossibility are distinct defenses, but they both relate to a party’s
ability to perform the contract. If a force majeure clause is included in a contract, it supersedes
the common law doctrine of impossibility. Commonwealth Edison Co. v. Allied-Gen. Nuclear Servs.,
731 F. Supp. 850, 855 (N.D. Ill. 1990) (citing Northern Indiana Public Service Co. v. Carbon
County Coal Corp., 799 F.2d 265, 276 (7th Cir. 1986)). This means that Kerry can’t prevail on
both defenses, but Rule 8(d)(2) and (3) allow a party to plead defenses in the alternative, even
if the defenses are inconsistent. So the court won’t strike the force majeure defense as
“redundant” of the impossibility defense.
The question remains whether Kerry has adequately pleaded a force majeure defense.
Mechanical breakdown can be a force majeure, but only if the contract at issue defines it as
such. See, e.g., IPF/Ultra Ltd. Partnership v. UP Improvements, LLC, No. 2:08-CV-21, 2008 WL
3896746 (N.D. Ind. Aug. 19, 2008). So the important questions for a force majeure defense
are whether the relevant contract includes a force majeure clause, and, if so, what the clause
says. In this case, Kerry doesn’t allege that it has a contract with Oregon Potato that includes
a force majeure clause, so the defense is insufficient on its face. The court will grant the motion
to strike this defense, but Kerry may have an opportunity to file an amended answer that
includes the necessary allegations.

ORDER
IT IS ORDERED that plaintiff Oregon Potato Company’s motion to strike defendant
Kerry Inc.’s first and fourth affirmative defenses, Dkt. 10, is GRANTED, and those two

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defenses are DISMISSED. Kerry may have until August 24, 2020, to file an amended answer
that identifies a force majeure clause in a relevant contract. If Kerry fails to respond, the
dismissal with be with prejudice.
Entered August 10, 2020.
BY THE COURT:
/s/
________________________________________
JAMES D. PETERSON
District Judge

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