Ramirez-Mendoza v. International Pallet Inc
MEMORANDUM OPINION. Signed by Judge R David Proctor on 8/6/2013. (AVC)
2013 Aug-06 PM 02:05
U.S. DISTRICT COURT
N.D. OF ALABAMA
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
INTERNATIONAL PALLET, INC.
Case No.: 2:13-CV-00519-RDP
Before the court is Plaintiff/Counterclaim Defendant’s Motion to Dismiss (Doc. #15).
Defendant/Counterclaim Plaintiff filed a Response (Doc. #17). Plaintiff/Counterclaim Defendant
did not file a Reply, which was allowed under the court’s briefing schedule. (See Doc. #16).
Therefore, the Motion (Doc. #15) has been fully briefed and is properly under submission. For the
reasons discussed below, the Motion (Doc. #15) is due to be granted in part and denied in part.
BACKGROUND AND RELEVANT FACTS
Plaintiff initiated this action on March 19, 2013 by filing a Complaint against Defendant
asserting two claims under the Fair Labor Standards Act of 1938, 29 U.S.C. § 201, et seq. (“FLSA”).
Plaintiff alleges that (1) Defendant failed to pay him overtime for hours worked in excess of forty
hours in a work week and (2) Defendant failed to compensate him at the federal minimum wage for
According to the Complaint, Plaintiff worked for Defendant between 2010 and 2012. (Doc.
#1 at ¶¶ 11-12). He worked ten (10) hour days during the core work week (i.e., Mondays through
Fridays. (Doc. #1 at ¶ 14). He also worked four (4) hours on Saturdays). (Doc. #1 at ¶ 14). Plaintiff
asserts that generally he worked more than fifty (50) hours a week. (Doc. #1 at ¶ 15). He also avers
that Defendant paid him neither the required minimum wage for his hours worked nor overtime for
the hours he worked during his employment. (Doc. #1 at ¶¶ 17-18).
Defendant filed an Answer and Counterclaim on April 17, 2013.
(Doc. #7). The
Counterclaim asserts claims against Plaintiff for the following: (1) fraud; (2) willful breach of
contract; and (3) violations of the Lawsuit Abuse Reduction Act.
STANDARD OF REVIEW
The Federal Rules of Civil Procedure require only that the complaint provide “a short and
plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2).
Having said that, the complaint must include enough facts “to raise a right to relief above the
speculative level.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). Pleadings that
contain nothing more than “a formulaic recitation of the elements of a cause of action” do not meet
Rule 8 standards, nor do pleadings suffice that are based merely upon “labels and conclusions” or
“naked assertion[s]” without supporting factual allegations. Twombly, 550 U.S. at 555, 557. In
deciding a Rule 12(b)(6) motion to dismiss, courts view the allegations in the complaint in the light
most favorable to the non-moving party. Watts v. Fla. Int’l Univ., 495 F.3d 1289, 1295 (11th Cir.
To survive a motion to dismiss, a complaint must “state a claim to relief that is plausible on
its face.” Twombly, 550 U.S. at 570. “A claim has facial plausibility when the plaintiff pleads
factual content that allows the court to draw the reasonable inference that the defendant is liable for
the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Although “[t]he plausibility
standard is not akin to a ‘probability requirement,’” the complaint must demonstrate “more than a
sheer possibility that a defendant has acted unlawfully.” Id. A plausible claim for relief requires
“enough fact[s] to raise a reasonable expectation that discovery will reveal evidence” to support the
claim. Twombly, 550 U.S. at 556.
The Supreme Court has recently identified “two working principles” for a district court to
use in applying the facial plausibility standard. First, in evaluating motions to dismiss, the court
must assume the veracity of well-pleaded factual allegations; however, the court does not have to
accept as true legal conclusions when they are “couched as  factual allegation[s].” Iqbal, 556 U.S.
at 678. Second, “only a complaint that states a plausible claim for relief survives a motion to
dismiss.” Id. at 679. Application of the facial plausibility standard involves two steps. Under
prong one, the court must determine the scope and nature of the factual allegations that are wellpleaded and assume their veracity; and under prong two, the court must proceed to determine the
claim’s plausibility given the well-pleaded facts. That task is context specific and, to survive the
motion, the allegations must permit the court based on its “judicial experience and common sense
. . . to infer more than the mere possibility of misconduct.” Id. If the court determines that wellpleaded facts, accepted as true, do not state a claim that is plausible, the claims are due to be
In his Motion to Dismiss, Plaintiff argues that Defendant’s counterclaims fail to state a claim
under Federal Rule of Civil Procedure 12(b)(6).
Specifically, Plaintiff maintains that the
Counterclaim contains only conclusory allegations and does not meet the pleading standards required
by Twombly and its progeny. This court has carefully reviewed the allegations contained in the
Counterclaim and finds that Counts 1 and 2 are not due to be dismissed for failure to state a claim.1
Count 1 alleges fraud.2 In support of this claim, Defendant states that its accounting records
indicate that Plaintiff presented a false U.S. Legal Permanent Resident card and a false Social
Security card. (Doc. #7, Counterclaim at ¶¶ 3-4). Upon being informed that Defendant maintained
a dishonesty policy, Plaintiff stated that the documents he provided were legitimate for him to be
lawfully authorized to work in the United States. (Doc. #7, Counterclaim at ¶ 5). Defendant
contends that it relied to its detriment on Plaintiff’s false misrepresentations as Defendant invested
time and resources into Plaintiff’s job training. (Doc. #7, Counterclaim at ¶ 6).
Count 2 alleges a breach of contract. In support of its claim for breach of contract, Defendant
states that the parties had an oral agreement with a condition precedent of hiring to not make
misrepresentations by providing false documents. (Doc. #7, Counterclaim at ¶ 12). Defendant
Plaintiff/Counterclaim Defendant does not seek dismissal of the counterclaims on the basis of subject matter
jurisdiction. However, the court nevertheless pauses here to note that it has supplemental jurisdiction over the fraud and
breach of contract claims. Federal courts are courts of limited jurisdiction, and the presumption is that a federal court
lacks jurisdiction in a particular case until it has been demonstrated that jurisdiction over the subject matter exists.
United States v. Rojas, 429 F.3d 1317, 1320 (11th Cir. 2005) (citations omitted). The court’s jurisdiction over Plaintiff’s
Complaint is based on federal question jurisdiction. Defendant/Counterclaim Plaintiff’s counterclaims for fraud and
breach of contract are based on state law. According to the Complaint, both parties are Alabama citizens. Therefore,
no basis exists for diversity jurisdiction.
But even in the absence of an independent basis for jurisdiction exists, a court may exercise supplemental
jurisdiction over counterclaims that are “so related to the claims in the action within such original jurisdiction that they
form part of the same case or controversy under Article III of the United States Constitution.” 28 U.S.C. § 1367(a).
When state law claims form part of the same “case or controversy” or “arise out of a common nucleus of operative fact
with a substantial federal claim,” a district court may exercise supplement jurisdiction over those state law claims.
Parker v. Scrap Metal Processors, Inc., 468 F.3d 733, 742-43 (11th Cir. 2006).
Whether Plaintiff was an employee of Defendant for purposes of the FLSA and whether Plaintiff defrauded
Defendant and in so doing breached an oral contract with Defendant arise from the same set of facts and will require the
parties to argue similar issues at trial. Therefore, although not directly raised by Plaintiff, the court concludes it may
exercise supplemental jurisdiction over Defendant’s counterclaims.
Defendant cites 18 U.S.C. § 1028, which criminalizes fraud and related activity in connection with
identification documents and 8 U.S.C. § 1182(a), which makes an alien who commits document fraud ineligible to
receive visas or to be admitted to the United States in support of its counterclaim for fraud. (See Doc. #7, Counterclaim
at ¶¶ 10-11). Although the court finds the counterclaim for fraud should not be dismissed for failure to state a claim, the
court STRIKES these portions of the counterclaim as they are irrelevant to a state law claim for common law fraud.
alleges that Plaintiff breached this oral agreement by providing two false documents to Defendant
and by further asserting that they were legitimate documents. (Doc. #7, Counterclaim at ¶ 12).
To survive Plaintiff’s motion, these allegations must permit the court based on its “judicial
experience and common sense . . . to infer more than the mere possibility of misconduct.” Iqbal,
556 U.S. at 679. Having reviewed these factual allegations, and accepting them as true, the court
finds that Defendant’s counterclaims for fraud and breach of contract satisfy applicable pleading
standards. However, the same cannot be said for Count 3, which alleges violations under the
Lawsuit Abuse Reduction Act of 2011.
Defendant does not cite a statutory code section for the Lawsuit Abuse Reduction Act of
2011. The court presumes this is the case because this act never became law. The court’s own
research reveals this Act was introduced in the House of Representatives on March 9, 2011 as H.R.
966. On the same day, an identical measure was introduced in the Senate. But, to date, the
legislation has not been enacted. See Lonny Hoffman, The Case Against the Lawsuit Abuse
Reduction Act of 2011, 48 Hous. L. Rev. 545, 546 (2011). A similar bill, H.R. 2655, has been
introduced this year but has not been enacted. See Lawsuit Reduction Act of 2013, H.R. 2655, 130th
Cong. (2013). In support of its claim that Plaintiff has violated this act, which has not been enacted
or signed into law, Defendant submits that Plaintiff’s claims are frivolous because they are barred
by the statute of limitations. The statute of limitations is an affirmative defense, which Defendant
pleaded in its Answer. (See Doc. #7). Therefore, the court finds that Defendant’s third counterclaim
for sanctions, attorney’s fees, and litigation costs under an act that is not yet law, is due to be
dismissed for failing to state a claim upon which relief can be granted.
For the reasons outlined above, Plaintiff/Counterclaim Defendant’s Motion to Dismiss (Doc.
#15) is due to be granted in part and denied in part. The court will not dismiss Defendant/
Counterclaim Plaintiff’s counterclaims for fraud and breach of contract. However, the court will
dismiss the counterclaim for damages under the Lawsuit Abuse Reduction Act. A separate order
consistent with the memorandum opinion will be entered.
DONE and ORDERED this
day of August, 2013.
R. DAVID PROCTOR
UNITED STATES DISTRICT JUDGE
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