Opinion ID: 344160
Heading Depth: 1
Heading Rank: 2

Heading: The Order to Strike Portions of the Complaint.

Text: 22 The court below struck two general portions of Darin's complaint. The first was a series of references to SEC objections to various CUC registration and proxy statements. The second was an SEC complaint against CUC, filed in the United States District Court, District of Columbia, alleging various violations of the securities laws. 23 Rule 12(f), Fed.R.Civ.P., 6 permits the court to strike certain objectionable matter in the pleadings at a party's request. In his order of July 11, 1975, Judge McFadden granted in full defendants' motions to strike, but he did not write an opinion or explain the reasons why he found the matter objectionable. CUC claimed, in its moving papers, that the matter was impertinent and immaterial. Only an examination of the parties' briefs provides an insight into the precise nature of defendants' contentions. 24 In their brief, CUC and CUM 7 cite numerous cases for the proposition that the consent judgment, which finally disposed of the SEC complaint referred to in Darin's complaint, would be inadmissible as evidence at a subsequent trial on the merits. Defendants argue that since plaintiffs can derive no evidentiary benefit from the consent judgment, itself, a fortiori, they cannot receive any succor from the complaint in that action. Thus, Darin's references to this complaint are entirely immaterial. 25 Plaintiff does not dispute that the consent judgment, itself, or the SEC complaint is inadmissible. Rather, he maintains that the SEC position towards CUC's registration and proxy statements is quite relevant to the question whether CUC used its best efforts to register the Darin stock. 26 In deciding whether to strike a Rule 12(f) motion on the ground that the matter is impertinent and immaterial, it is settled that the motion will be denied, unless it can be shown that no evidence in support of the allegation would be admissible. Gleason v. Chain Service Restaurant, 300 F.Supp. 1241 (S.D.N.Y.1969), aff'd, 422 F.2d 342 (2d Cir. 1970); Fleischer v. A. A. P., Inc., 180 F.Supp. 717 (S.D.N.Y.1959); Wimberly v. Clark Controller Co., 364 F.2d 225 (6th Cir. 1966); Parks-Cramer Co. v. Mathews Cotton Mills, 36 F.Supp. 236 (W.D.S.C.1940); see generally, 2A Moore's Federal Practice P 12-21(1) (2d ed. 1975). The Federal Rules of Civil Procedure have long departed from the era when lawyers were bedeviled by intricate pleading rules and when lawsuits were won or lost on the pleadings alone. Thus the courts should not tamper with the pleadings unless there is a strong reason for so doing. Nagler v. Admiral Corp., 248 F.2d 319, 325 (2d Cir. 1957); Atlantic City Electric Co. v. General Electric Co., 207 F.Supp. 620, 623 (S.D.N.Y.1962). 27 Evidentiary questions, such as the one present in this case, should especially be avoided at such a preliminary stage of the proceedings. Usually the questions of relevancy and admissibility in general require the context of an ongoing and unfolding trial in which to be properly decided. And ordinarily neither a district court nor an appellate court should decide to strike a portion of the complaint on the grounds that the material could not possibly be relevant on the sterile field of the pleadings alone. Atlantic City, supra at 627; Federated Dept. Stores, Inc. v. Grinnell Corp., 287 F.Supp. 744, 747 (S.D.N.Y.1968); A. B. T. Sightseeing Tours v. Gray Line, 242 F.Supp. 365, 369 (S.D.N.Y.1965). 28 We state these principles only to convey the care with which we affirm the district court's order. Although it appears to us that the opinion of the SEC may well be relevant to the question whether CUC used its best efforts, we hold that neither a complaint nor references to a complaint which results in a consent judgment may properly be cited in the pleadings under the facts of this case. 29 This is a consent judgment between a federal agency and a private corporation which is not the result of an actual adjudication of any of the issues. Consequently, it can not be used as evidence in subsequent litigation between that corporation and another party. Fed.Rules Evid., Rule 410, 28 U.S.C.A., prohibits a plea of nolo contendere from being later used against the party who so pleaded. Although CUC did not, technically, plead nolo contendere to the SEC's complaint, nolo pleas have been equated with consent decrees for purposes of the proviso to § 5(a) of the Clayton Act. 8 City of Burbank v. General Electric Co., 329 F.2d 825, 834 (9th Cir. 1964); Atlantic City Elec. Co. v. General Electric Co., 207 F.Supp. 620, 628 (S.D.N.Y.1962); State of Minnesota v. United States Steel Corp., 44 F.R.D. 559, 583 (D.Minn.1968). The reason for this equivalence is that both consent decrees and pleas of nolo contendere are not true adjudications of the underlying issues; a prior judgment can only be introduced in a later trial for collateral estoppel purposes if the issues sought to be precluded were actually adjudicated in the prior trial. Buckeye Powder Co. v. E. I. DuPont, 248 U.S. 55, 63, 39 S.Ct. 38, 63 L.Ed. 123 (1918); International Shoe Mach. Corp. v. United Shoe Machinery Corp., 315 F.2d 449 (1st Cir. 1963); Bronxville Palmer Ltd. v. State of New York, 18 N.Y.2d 560, 277 N.Y.S.2d 402, 223 N.E.2d 887 (1966). The consent decree entered into by the SEC and CUC was the result of private bargaining, and there was no hearing or rulings or any form of decision on the merits by the district court. 30 Since it is clear that the SEC-CUC consent judgment, itself, can have no possible bearing on the Darin action, the SEC complaint which preceded the consent judgment is also immaterial, for the purposes of Rule 12(f). 31 We agree that the SEC's opinion on the sufficiency of the various statements may be relevant and may be admissible. 9 But we do not agree that it necessarily follows that its complaint is appropriately within the pleadings. 32 Quite frankly, we do not understand how Darin is harmed by the elimination of the SEC references. If the trial judge finds that testimony or documents from the SEC are admissible on the best efforts question, surely Darin need not allude to this evidence in his complaint as a condition for its admission. 33 The order of the district court is modified to the extent that plaintiff be permitted to amend his complaint to particularize the alleged inadequacies of the Darin statements, omitting any references to the complaint of the SEC against CUC. Rule 12(f) should be construed strictly against striking portions of the pleadings on the grounds of immateriality, and if the motion is granted at all, the complaint should be pruned with care. Nagler v. Admiral Corp., 248 F.2d 319, 322 (2d Cir. 1957); Atlantic City Electric Co., supra. 34