Sneed v. Wireless PCS Ohio #1, LLC et al
Memorandum Opinion and Order. The court GRANTS plaintiff's 12 motion to dismiss defendants' counterclaims for lack of jurisdiction. The remaining issues in the case shall be addressed at the case management conference scheduled for 3/6/2017 at 1:00 p.m.. Magistrate Judge Thomas M. Parker on 3/6/2017. (O,K)
IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
WIRELESS PCS OHIO #1, LLC, et al.,
Case No. 1:16CV1875
THOMAS M. PARKER
MEMORANDUM OPINION &
Plaintiff claims defendants employed him from May 1, 2015 through February 1, 2016
and didn’t pay him the overtime required by the Fair Labor Standards Act (“FLSA”). 1
Defendants filed a joint answer, and in a counterclaim 2 alleged that plaintiff didn’t do the work
for which he was paid and also stole credit card information from their customers and other items
from their stores. Defendants have not clearly identified the causes of action they are attempting
to assert against plaintiff. 3
Plaintiff moves to dismiss defendants’ counterclaim under Fed. R. Civ. P. 12(b)(1) for
lack of jurisdiction and under Fed. R. Civ. P. 12(b)(6) for failure to state a claim. Plaintiff
ECF Doc. No. 1, Page ID# 1-11.
ECF Doc. No. 7, Page ID# 50-58.
In their joint brief in opposition, defendants state that “[a]mong the alleged theories of recovery are
misappropriation, theft, conversion of business property, damage to reputation, breach of contract, breach of
fiduciary duty, and certain intentional torts.” ECF Doc. No. 16, Page ID# 96.
contends that the defendants’ counterclaims are not compulsory because they arise out of a
different occurrence, and that the court should not exercise supplemental jurisdiction over them.
Defendants argue in response that their counterclaim contains both compulsory and
permissive claims. They assert that both parties’ claims involve the same agreement. They
request that the court deny plaintiff’s motion to dismiss and retain jurisdiction over the
permissive claims. The parties have consented to the jurisdiction of the magistrate judge under
28 U.S.C. §636(c). 4
Defendants’ counterclaims are not compulsory; they do not arise from the same
transaction or occurrence that is the subject matter in plaintiff’s claims. The court declines to
exercise supplemental jurisdiction over defendants’ counterclaims because they would
predominate over plaintiff’s claim for a violation of the FLSA and would change the entire
nature of this lawsuit. Plaintiff’s motion to dismiss for lack of jurisdiction will be GRANTED
and defendants’ counterclaims will be DISMISSED.
Standard of Review
Plaintiff moves to dismiss the counterclaims for lack of subject matter jurisdiction
pursuant to Fed. R. Civ. P. 12(b)(1). The court has federal subject matter jurisdiction over
plaintiff’s complaint under 28 U.S.C. § 1331 because it asserts a claim for violation of the FLSA,
29 U.S.C. § 201, et seq.
The court must determine whether it also has jurisdiction over
The determination of whether the court should exercise supplemental jurisdiction is
closely related to the analysis of whether defendants’ counterclaims are compulsory or
permissive. Fed. R. Civ. P. 13(a)(1)(A) makes the pursuit of a counterclaim compulsory when it
ECF Doc. No. 14, Page ID# 89.
arises “out of the transaction or occurrence that is the subject matter of the opposing party’s
claim.” Counterclaims that are not compulsory may be asserted permissively. Fed. R. Civ. P.
13(b). Similarly, 28 U.S.C. § 1367 grants supplemental jurisdiction to district courts over “all
other claims that are so related to 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.”
Basically, the court must determine whether the counterclaims arise out of the same transaction
or controversy asserted in plaintiff’s original claims.
28 U.S.C. § 1367(c) guides the court in determining whether supplemental jurisdiction
should be exercised. It provides that “[t]he district courts may decline to exercise supplemental
jurisdiction over a claim under subsection (a) if:
(1) the claim raises a novel or complex issue of State law,
(2) the claim substantially predominates over the claim or claims over which the
district court has original jurisdiction,
(3) the district court has dismissed all claims over which it has original
(4) in exceptional circumstances, there are other compelling reasons for declining
The use of the word “may” indicates that the exercise of the court’s discretion is involved.
Plaintiff argues that this is simply a case about whether he got paid what the Fair Labor
Standards Act required for the work he did. He argues that whether he also stole things or
breached a contract are different questions that are not related to his claims. In support, plaintiff
relies on a similar case recently decided by this court involving an FLSA claim and
counterclaims for breach of contract, damaged property and criminal acts. See Reed v. Pape
Management, Inc., 2016 U.S. Dist. LEXIS 133345 (N.D. Ohio Sept. 28, 2016).
Defendants argue that the court should follow Sanders v. First Nat’l Bank & Trust Co.,
936 F.2d 273, 277 (6th Cir. 1991), and simply decide whether there is a “logical relationship”
between the parties’ claims. Defendants contend that there is a logical relationship between the
claims in this case. Defendants’ counterclaims allege two separate incidents that occurred when
plaintiff was working for them. First, they claim that plaintiff stole customer credit card
information while he was at work. They claim this was a breach of the employment agreement
between the parties. Second, they assert that plaintiff broke into one of their stores after hours to
steal other things. They admit any cause of action arising from this after-hours crime would not
be a compulsory counterclaim. They request that the court exercise supplemental jurisdiction
over this claim.
Defendants argue that their counterclaims are related to plaintiff’s FLSA claim because
the criminal conduct committed by plaintiff took place during his job and/or at his place of
employment. They contend that plaintiff’s claim and their counterclaims all involve the manner
in which plaintiff performed his employment agreement with them.
In reply, plaintiff points out that he has not asserted a breach of contract claim. His claim
simply involves the claimed violation of a federal statute. He argues that the parties’ claims are
based on completely different evidence and that defendants’ counterclaims would predominate
over his FLSA claim.
Reed v. Pape, supra, the case cited by plaintiff, involved similar facts and is instructive in
resolving the motion currently before the court. 5 As in Reed, 2016 U.S. Dist. at *11, the parties’
claims will involve different laws and evidence. Plaintiff’s claim will focus on how many hours
he worked, how much he was paid, and whether he was considered an employee under the
FLSA. Defendants’ counterclaims will involve questions of whether plaintiff engaged in
criminal conduct and/or failed to perform the requirements of his oral employment agreement
with defendants. Defendants’ claims do not arise from the same transaction or occurrence as the
subject matter of plaintiff’s claim. Thus, as in Reed, the court finds that defendants’
counterclaims are not compulsory.
This is not a case in which the court should exercise supplemental jurisdiction over
defendants’ counterclaims. In Reed, the court determined that the counterclaims would
predominate over the plaintiff’s wage claim. The court noted, “[a]lthough there appears to be no
definitive test to determine whether state law predominates over federal claims, courts have
considered such factors as whether they outnumber the federal law claims; whether the claims
are distinct; and whether the state law claims involve proof that is not needed to establish the
federal law claims.” Id. citing Williamson v. Recovery Ltd. P’ship, 2009 U.S. Dist. LEXIS
23264, at *9 (S.D.Oh. March 11, 2009) The court reasoned that defendants’ claims involved
Plaintiffs James Reed and Rayvaughn Mason were employed as manual laborers by defendants, property
management companies and personnel, to perform upkeep on defendants' properties. Plaintiffs each lived in a house
owned by defendants. As part of their compensation plaintiffs paid rent at a reduced rate, which was deducted from
their paychecks. After plaintiffs separated from their employment, they filed an action bringing claims under the
Fair Labor Standards Act, the Ohio Minimum Fair Wage Standards Act, and the Ohio Prompt Pay Act, alleging that
defendants failed to properly pay them and retaliated against them when they complained that their wages had not
been properly paid. Defendants' answer included eight state law counterclaims alleging that plaintiffs: breached
their tenancy agreement when, after their employment ended, they failed to return the houses to defendants in good
condition and failed to pay rent; intentionally or negligently damaged the properties; and committed criminal acts
against the properties and Defendant James Pape.
state law and would lead the court on a long and tortuous detour from the FLSA and Ohio wage
law claim asserted by plaintiff.
Here, defendants’ claims of misappropriation, theft, conversion of business property,
damage to reputation, breach of contract, breach of fiduciary duty, and intentional tort claims
arise under Ohio law not implicated in plaintiff’s FLSA claim. And none of the evidence that
would be needed to prove the counterclaims would be necessary to prove or defend the FLSA
claim. Also, the claims and evidence involved in the counterclaims significantly outnumber
what’s involved in plaintiff’s single FLSA claim. The counterclaims would change the nature of
this lawsuit and would predominate over plaintiff’s statutory wage claim. The court is also
persuaded by plaintiff’s argument that unrelated counterclaims in FLSA litigation should be
disfavored because they could be viewed as retaliation for an employee bringing an FLSA claim
against the employer. 6
Defendants argue that the court should employ the logical relationship test discussed in
Sanders, 936 F.2d at 277. In Sanders, the Sixth Circuit determined that defendant’s
counterclaims were barred because they were compulsory counterclaims in a prior state action.
The court noted that the Sixth Circuit applies the “logical relationship” test for determining
whether a claim arises out of the same transaction or occurrence. Id. “Under this test, we
determine whether the issues of law and fact raised by the claims are largely the same and
whether substantially the same evidence would support or refute both claims.” Id., citing Moore
v. New York Cotton Exchange, 270 U.S. 593, 70 L. Ed. 750, 46 S. Ct. 367 (1926). In Sanders,
the court determined that the defendant’s counterclaims involved a written agreement that had
The court is not unsympathetic to defendant’s procedural plight. They want to use their counterclaims
as a form of set-off. They think being required to pay a convicted criminal more money for the “work” he
did would only add insult to injury. These are genuine concerns. Nothing stops defendants from suing
plaintiff for damages in state court. A state court judgement could be used as a set off to any judgment
plaintiff obtains in this case. But these practical concerns don’t give rise to federal jurisdiction.
been the subject matter of a previous lawsuit. Therefore, it was logically related to the claims
asserted in that prior lawsuit. In applying the logical relationship test to the claims at issue here,
the court finds that the claims are not logically related to one another. They involve different
issues of law and fact and different evidence would be required to prove them.
Because the court determines that defendants’ counterclaims should be dismissed
pursuant to Fed. R. Civ. P. 12(b)(1), it need not reach the second argument raised by plaintiff –
that defendants’ counterclaim should be dismissed under Fed. R. Civ. P. 12(b)(6) for failing to
state a claim upon which relief may be granted.
The court finds that defendants’ counterclaims are not compulsory. Defendants’ claims
sound in criminal conduct and breach of contract. They do not arise out of the same transaction
or occurrence as plaintiff’s claim under the FLSA. The court also declines to exercise
supplemental jurisdiction over these claims because they would predominate over plaintiff’s
claim and would involve different law and evidence. The court GRANTS plaintiff’s motion to
dismiss defendants’ counterclaims for lack of jurisdiction. The remaining issues in the case shall
be addressed at the case management conference scheduled for March 6, 2017 at 1:00 p.m.
Dated: March 6, 2017
Thomas M. Parker
United States Magistrate Judge
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