Opinion ID: 184335
Heading Depth: 2
Heading Rank: 1

Heading: Timeliness of Affirmative Defenses

Text: 8 The issue in this case regarding the timeliness of affirmative defenses requires construction of Rule 8(c). Because this is a legal issue, we review the District Court's interpretation of Rule 8(c) de novo. Harbeson v. Parke Davis, Inc., 746 F.2d 517, 520 (9th Cir.1984). 1 This court has not heretofore decided whether a defendant may raise an affirmative defense for the first time in a dispositive motion, or whether failure to raise the defense in pleadings constitutes forfeiture under Rule 8(c). The language of Rule 8(c) itself requires that the defense of statute of limitations be raised affirmatively in a pleading to a preceding pleading. FED.R.CIV.P. RULE 8(c). Although the Rules do not explicitly mention waiver or forfeiture as the consequence of failure to follow Rule 8(c), it is well-settled that [a] party's failure to plead an affirmative defense ... generally 'results in the waiver of that defense and its exclusion from the case.'  Dole v. Williams Enterprises, Inc., 876 F.2d 186, 189 (D.C.Cir.1989) (emphasis in original, quoting 5 CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE § 1278 (1990)). More specifically, [r]eliance on a statute of limitations is an affirmative defense and is waived if a party does not raise it in a timely fashion. Banks v. Chesapeake and Potomac Telephone Co., 802 F.2d 1416, 1427 (D.C.Cir.1986) (citations omitted). 2 9 The Supreme Court has explained that the purpose of the pleading requirement of Rule 8(c) is to give the opposing party notice of the plea of estoppel and a chance to argue, if he can, why the imposition of an estoppel would be inappropriate. Blonder-Tongue Lab. v. University of Illinois Found., 402 U.S. 313, 350, 91 S.Ct. 1434, 1453, 28 L.Ed.2d 788 (1971). The same rationale the Court invoked regarding collateral estoppel applies with equal or greater force to the defense of the statute of limitations, where a party may require notice and time not only to frame legal arguments, but to establish relevant facts that might affect the applicability of the statute of limitations. The pleading requirement of Rule 8(c) gives the opposing party notice of the defense of untimeliness and permits the party to develop in discovery and to argue before the District Court various responses to the affirmative defense. These responses could include, for example, facts and legal arguments that require the tolling of the statute, whether by action of law, by agreement of the parties, or by equitable means. 10 As its name implies, notice pleading relies on the principle of fair notice to secure the just, speedy, and inexpensive determination of actions, FED.R.CIV.P. Rule 1. Where the old forms of action delimited the kinds of arguments that parties could make according to the forms they chose, notice pleading aims to produce a general chart of possible claims and defenses available to the parties before they embark on the voyage of litigation. Cf. Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 102-03, 2 L.Ed.2d 80 (1957) (purpose of Rules is to give fair notice of what the ... claim is). A party must make strategic decisions about how to proceed, and can plot its course adequately only if it can anticipate which issues will dispose of the case. Failure to raise an affirmative defense in pleadings deprives the opposing party of precisely the notice that would enable it to dispute the crucial issues of the case on equal terms. The structure of the Federal Rules therefore demands notice pleading of affirmative defenses as a crucial element of its overall conception of the progress of a lawsuit. 11 At the same time, the Rules reject the approach that pleading is a game of skill in which one misstep by counsel may be decisive to the outcome and accept the principle that the purpose of pleading is to facilitate a proper decision on the merits. Conley, 355 U.S. at 48, 78 S.Ct. at 103. For this reason, Rule 15 provides a mechanism whereby a party who harmlessly failed to plead an affirmative defense may find satisfaction. Rule 15(a) permits amendment of any pleading as a matter of course before a response or within twenty days for a pleading to which no response is appropriate. FED.R.CIV.P. Rule 15(a). This provision permits easy amendment in a situation where no significant developments in the case have occurred and where little time has passed. Subsequently, a party may amend the party's pleading only by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires. Id. Where a matter has gone to trial and parties have litigated the unpled issues by express or implied consent, Rule 15(b) may render a failure to amend irrelevant. 3 Here, the case was decided on a motion for summary judgment, and so Rule 15(b) did not apply. 12 The provision of Rule 15(a) allowing amendment with leave of court gives the District Court discretion and direction. It instructs the District Court to determine the propriety of amendment on a case by case basis, using a generous standard: 13 In the absence of any apparent or declared reason--such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of the amendment, etc.--the leave sought should, as the rules require, be freely given. 14 Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 230, 9 L.Ed.2d 222 (1962). The District Court possesses sufficient familiarity with the circumstances of a case to exercise its discretion wisely and determine whether any of the five enumerated Foman factors, or others implied by the Court's etc., apply in a given case. 15 We recognize that, rather than requiring amendment under Rule 15(a), some circuits permit parties to raise affirmative defenses for the first time in dispositive motions where no prejudice is shown. See, e.g., Blaney v. United States, 34 F.3d 509, 512 (7th Cir.1994) (unpled untimeliness defense could be raised in motion to dismiss); Camarillo v. McCarthy, 998 F.2d 638, 639 (9th Cir.1993) (affirmative defense may be raised at summary judgment absent prejudice); Kleinknecht v. Gettysburg College, 989 F.2d 1360, 1374 (3d Cir.1993) (affirmative defense may be raised at summary judgment absent prejudice); Moore, Owen, Thomas & Co. v. Coffey, 992 F.2d 1439, 1445 (6th Cir.1993) (affirmative defense may be raised in response to summary judgment motion); Ball Corp. v. Xidex Corp., 967 F.2d 1440, 1443-44 (10th Cir.1992) (raising affirmative defense in summary judgment motion preserved defense for trial three months later). This approach subtly alters the structure dictated by Rules 8(c) and 15(a) in two ways. First, it apparently relieves the moving party of the need to request amendment, and the District Court of the need to state and explain its grant of leave to amend, so long as the opposing party does not show prejudice. This change allows parties to omit affirmative defenses in pleadings strategically, in violation of the notice purpose. It will often prove difficult for a party to support a claim of prejudice in circumstances involving only inconvenience or surprise. And, by the time the opposing party raises the prejudice claim, a strategic advantage may already have been gained by the party who failed to amend its pleading. By contrast, if the District Court systematically follows the procedural structure required by Rules 8(c) and 15(a), it can conduct its own inquiry in every case into the circumstances of the delay, and need not rely solely on a convincing showing of prejudice by one party. It likely will articulate the basis for the amendment, and will not simply approve it as a matter of course. 16 Second, automatically permitting late raising of affirmative defenses where no prejudice has occurred reduces the multifarious reasons for denying leave to amend envisioned by the Court in Foman to the single, non-exhaustive factor of prejudice. Improper circumstances such as undue delay, bad faith or dilatory motive on the part of the movant, [or] repeated failure to cure deficiencies by amendments previously allowed, Foman, 371 U.S. at 182, 83 S.Ct. at 230, do not necessarily result in quantifiable prejudice to an opposing party. Nonetheless, taken collectively rather than individually, they may undercut the fairness and efficiency of litigation generally. Strategic or merely lazy circumventions of a legal process grounded in a sound policy have the effect of eroding the regularized, rational character of litigation to the detriment of practitioners and clients alike. 17 When an opposing party does receive notice of a previously unpled defense when a dispositive motion is filed, it lacks the advance notice required by Rule 8(c) that would have enabled it to develop factual and legal defenses fully. Although an opposing party may introduce affidavits in response to a motion for summary judgment, FED.R.CIV.P. Rule 56(c), as Appellant did in this case, affidavits will not always suffice to provide adequate evidence for the defenses proposed. Frequently, mounting a proper defense will necessitate further discovery, which may not be possible in the time allotted to respond to the motion. Rule 15(a) authorizes the District Court to allow amendment, but this does not mean it would be unduly formalistic for the District Court to deny amendment to a strategic litigant who intentionally neglected to plead a defense. To the contrary, denying leave to amend to such a litigant would serve, not impede, the interests of substantive justice. 18 In order to preserve the notice purpose of Rule 8(c) and the discretionary structure of Rule 15(a), we hold that Rule 8(c) means what it says: a party must first raise its affirmative defenses in a responsive pleading before it can raise them in a dispositive motion. The Fifth Circuit has interpreted Rule 8(c) similarly. See Ashe v. Corley, 992 F.2d 540, 545 n. 7 (5th Cir.1993); Funding Systems Leasing Corp. v. Pugh, 530 F.2d 91, 96 (5th Cir.1976) (unpled affirmative defense cannot be raised on summary judgment unless summary judgment motion is first responsive pleading). But cf. Lucas v. United States, 807 F.2d 414, 417-18 (5th Cir.1986) (unpled affirmative defense not waived when raised at trial at pragmatically sufficient time). 19 There is no reason to fear that procedural formalism will displace substantive justice here, because a party may request, and the District Court shall freely give, leave to amend the pleadings under Rule 15(a) when justice requires. The District Court must not simply consider the defense in deciding the summary judgment motion. The procedural requirement that the District Court await a request for leave to amend, and grant or deny leave based on the circumstances of the case, is not empty formalism but the logical consequence of a system of rules that strives to achieve fairness without rigidity. On its face and on its logic, Rule 8(c) requires that a party actually plead its affirmative defenses, not that it plead them only in those cases where failure to plead would result in prejudice to the opposing party. 20 On remand, if the Department petitions for leave to amend the pleadings, the District Court may consider that request within the framework specified by the Court in Foman in deciding whether to grant leave to amend under Rule 15(a). It may grant or deny leave, and thus permit or exclude the defense of untimeliness. Our holding requires only that the District Court await a request of leave to amend and consider that request in its good discretion.