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United States v. Cole

United States District Court, D. Oregon

March 31, 2014

UNITED STATES OF AMERICA, Plaintiff,
v.
JAMES G. COLE, an individual, JAMES G. COLE, INC., a corporation, JULIE D. GRAVES, an individual, Defendants.

S. Amanda Marshall, United States Attorney, Ronald K. Silver, Assistant United States Attorney, United States Attorney's Office, District of Oregon, Portland, OR Stuart F. Delery, Assistant Attorney General, Maame Ewusi-Mensah Frimpong, Deputy Assistant Attorney General, Michael S. Blume, Director, Consumer Protection Branch, and Ann F. Entwistle, Trial Attorney, Consumer Protection Branch, United States Department of Justice, Washington, D.C. Of Attorneys for Plaintiff.

John J.E. Markham, II, Markham & Read, One Commercial Warf West, Boston, MA Krista M. Shipsey, Law Office of Krista Shipsey, Portland, OR Of Attorneys for Defendants.

OPINION AND ORDER

MICHAEL H. SIMON, District Judge.

Plaintiff, the United States of America (the "Government"), brings this action under 21 U.S.C. § 332(a) to enjoin Defendants James G. Cole, James G. Cole, Inc., and Julie D. Graves (collectively "Defendants"), from further distributing products that allegedly violate the Federal Food, Drug, and Cosmetic Act ("FDCA"). Specifically, the Government alleges that Defendants are acting in violation of: 21 U.S.C. § 331(d), by introducing or distributing into interstate commerce new drugs without review by the Federal Drug Administration ("FDA"); 21 U.S.C. § 331(a), by introducing misbranded drugs into interstate commerce; 21 U.S.C. § 331(k) and 21 U.S.C. § 352(f)(1), by offering for sale misbranded drugs lacking adequate directions for use after the drugs' shipment in interstate commerce; 21 U.S.C. § 331(a) and 21 U.S.C. § 342(g)(1), by distributing into interstate commerce adulterated articles of food (dietary supplements); and 21 U.S.C. § 331(k) and 21 U.S.C. § 342(g)(1), by causing articles of food (dietary supplements) that Defendants hold for sale after shipment in interstate commerce to become adulterated. Before the Court is the Government's Motion to Dismiss Defendants' Counterclaim and Strike Defendants' Affirmative Defenses (ECF 11) under Federal Rules of Civil Procedure 12(b)(1), 12(b)(6), and 12(f). For the reasons set forth below, the Government's motion is granted in part and denied in part.

STANDARDS

A. Motion to Dismiss Under Rule 12(b)(1)

Federal courts are courts of limited jurisdiction. Gunn v. Minton, 133 S.Ct. 1059, 1064 (2013) (citation omitted). As such, a court is to presume "that a cause lies outside this limited jurisdiction, and the burden of establishing the contrary rests upon the party asserting jurisdiction." Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994) (citations omitted); see also Robinson v. United States, 586 F.3d 683, 685 (9th Cir. 2009); Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). A motion to dismiss under Federal Rule of Civil Procedure 12(b)(1) for lack of "subject-matter jurisdiction, because it involves a court's power to hear a case, can never be forfeited or waived." United States v. Cotton, 535 U.S. 625, 630 (2002). An objection that a particular court lacks subject-matter jurisdiction may be raised by any party, or by the court on its own initiative, at any time. Arbaugh v. Y&H Corp., 546 U.S. 500, 506 (2006); Fed.R.Civ.P. 12(b)(1). The Court must dismiss any case over which it lacks subject-matter jurisdiction. Fed.R.Civ.P. 12(h)(3).

A Rule 12(b)(1) motion to dismiss for lack of subject-matter jurisdiction may be either "facial" or "factual." See Safe Air for Everyone, 373 F.3d at 1039. A facial attack on subject-matter jurisdiction is based on the assertion that the allegations contained in the complaint are insufficient to invoke federal jurisdiction. Id. "A jurisdictional challenge is factual where the challenger disputes the truth of the allegations that, by themselves, would otherwise invoke federal jurisdiction.'" Pride v. Correa, 719 F.3d 1130, 1133 n.6 (9th Cir. 2013) (quoting Safe Air for Everyone, 373 F.3d at 1039)). When a defendant factually challenges the plaintiff's assertion of jurisdiction, a court does not presume the truthfulness of the plaintiff's allegations and may consider evidence extrinsic to the complaint. See Terenkian v. Republic of Iraq, 694 F.3d 1122, 1131 (9th Cir. 2012); Robinson, 586 F.3d at 685; Safe Air for Everyone, 373 F.3d at 1039. A factual challenge "can attack the substance of a complaint's jurisdictional allegations despite their formal sufficiency." Dreier v. United States, 106 F.3d 844, 847 (9th Cir. 1996) (citation and quotation marks omitted).

B. Motion to Dismiss Under Rule 12(b)(6)

A motion to dismiss for failure to state a claim may be granted only when there is no cognizable legal theory to support the claim or when the complaint lacks sufficient factual allegations to state a facially plausible claim for relief. Shroyer v. New Cingular Wireless Servs., Inc., 622 F.3d 1035, 1041 (9th Cir. 2010). In evaluating the sufficiency of a complaint's factual allegations, the court must accept as true all well-pleaded material facts alleged in the complaint and construe them in the light most favorable to the non-moving party. Wilson v. Hewlett-Packard Co., 668 F.3d 1136, 1140 (9th Cir. 2012); Daniels-Hall v. Nat'l Educ. Ass'n, 629 F.3d 992, 998 (9th Cir. 2010). To be entitled to a presumption of truth, allegations in a complaint "may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively." Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). All reasonable inferences from the factual allegations must be drawn in favor of the plaintiff. Newcal Indus. v. Ikon Office Solution, 513 F.3d 1038, 1043 n.2 (9th Cir. 2008). The court need not, however, credit the plaintiff's legal conclusions that are couched as factual allegations. Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009). In addition, a complaint must contain sufficient factual allegations to "plausibly suggest an entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the expense of discovery and continued litigation." Baca, 652 F.3d at 1216. "A claim has facial plausibility when the pleaded factual content allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 663 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007)). All of these principles apply with equal force both to a claim stated in a complaint and a counterclaim stated in a responsive pleading. See Baca, 652 F.3d at 1216.

C. Motion to Strike

The purpose of a motion to strike under Rule 12(f) of the Federal Rules of Civil Procedure is to avoid spending time and money litigating spurious issues. Whittlestone, Inc. v. Handi-Craft Co., 618 F.3d 970, 973 (9th Cir. 2010); see also Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527 (9th Cir. 1993), rev'd on other grounds, 510 U.S. 517 (1994). The disposition of a motion to strike is within the discretion of the district court. See Fed. Sav. & Loan Ins. Corp. v. Gemini Mgmt., 921 F.2d 241, 244 (9th Cir. 1990). A court may strike an affirmative defense under Rule 12(f) if it presents "an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." Fed.R.Civ.P. 12(f).

An answer "must affirmatively state any avoidance or affirmative defense." Fed.R.Civ.P. 8(c)(1). Such defenses must be stated "in short and plain terms." Fed.R.Civ.P. 8(b)(1)(A). An affirmative defense may be insufficient as a matter of pleading or as a matter of law. See Wyshak v. City Nat'l Bank, 607 F.2d 824, 827 (9th Cir. 1979) (addressing an affirmative defense that was insufficiently plead); Fantasy, 984 F.2d at 1527 (addressing legally insufficient pleadings). "The key to determining the sufficiency of pleading an affirmative defense is whether it gives plaintiff fair notice of the defense." Wyshak, 607 F.2d at 827 (citation omitted); see also Simmons v. Navajo Cnty., Ariz., 609 F.3d 1011, 1023 (9th Cir. 2010). Rule 12(f) provides that pleadings that are "immaterial" or "impertinent" may be struck by a court. Such pleadings are legally insufficient because they clearly lack merit "under any set of facts the defendant might allege." Polk v. Legal Recovery Law Offices, 291 F.R.D. 485, 489 (S.D. Cal. 2013) (citation and quotation marks omitted). An "immaterial" matter is "that which has no essential or important relationship to the claim for relief or the defenses being pleaded." Fantasy, 984 F.2d at 1527 (quoting C. Wright, A. Miller, et al., 5C Fed. Prac. & Proc. Civ. § 1382 (3d ed. 2013)). "Impertinent" matters are those "that do not pertain, and are not necessary, to the issues in question." Id.

BACKGROUND

On September 12, 2013, the Government brought this action pursuant to the FDCA to enjoin and restrain Defendants from violating the FDCA and FDA regulations. Pl.'s Compl., ECF 1. Defendants in this case include James G. Cole, Inc. ("the firm"), a privately-held Oregon corporation, James G. Cole, the firm's President, Secretary, and sole board member, and Julie D. Graves, who is alleged to be the firm's General Manager. Pl.'s Compl. ¶¶ 4-6; Defs.' Answer, ECF 6 at 2 ¶¶ 4-6. The Government alleges that Defendants have manufactured, promoted, and distributed more than 47 products and that these products are either: (1) unapproved drugs under the FDCA and distributed in interstate commerce; (2) misbranded drugs because the product labels do not bear adequate directions of use; or (3) dietary ...


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