Shultz et al v. Nomac Drilling LLC et al

Filing 35

ORDER denying 29 Motion to Dismiss, as more fully set out. Signed by Honorable David L. Russell on 7/11/17. (jw)

Case 5:17-cv-00169-R Document 35 Filed 07/11/17 Page 1 of 6

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF OKLAHOMA
ROGER SHULTZ,
Individually and on behalf of all
others similarly situated,

)
)
)
)
Plaintiff,
)
)
v.
)
)
NOMAC DRILLING, L.L.C., and
)
SEVENTY SEVEN ENERGY, INC., )
)
Defendants and
)
Third-Party Plaintiffs.
)
)
v.
)
)
ARMS WELDING, INC.,
)
)
Third-Party Defendant.
)

Case No. CIV-17-169-R

ORDER
Before the Court is Plaintiff’s Motion to Dismiss Defendants’ third-party claims.
Doc. 29. Finding that the Court has supplemental jurisdiction over the claim, the Court
DENIES Plaintiff’s Motion.
This is a collective action under the Fair Labor Standards Act (FLSA) to recover
overtime wages. Plaintiff Roger Shultz and putative class members, rig welders for
Defendants1 during the last three years, were allegedly not paid overtime wages for hours

1
The Court uses the collective “Defendants” for clarity’s sake. Mr. Shultz was allegedly hired in March
2014 by Defendant Nomac, which shortly after either entrusted its rig operations to Seventy Seven, Inc., or
sold itself to that company. In any event, Mr. Shultz has named Seventy Seven as a Defendant, whom he
worked for until October 2015.

1

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worked each week in excess of forty, in violation of the FLSA. Under the FLSA, employers
must compensate their employees “for a workweek longer than forty hours . . . at a rate not
less than one and one-half times the regular rate at which [the employee] is employed.” 29
U.S.C. § 207(a)(1).
Defendants allege that they have a contractual agreement with A.R.M.S. Welding,
Inc. (“ARMS”), in which ARMS agrees to indemnify Defendants against the FLSA-wage
claims here. 2 That contract, the Master Services Agreement (“MSA”), calls for ARMS to
provide welding services, including the requisite labor, to Nomac. The MSA also deems
ARMS an independent contractor and provides that ARMS will indemnify Nomac for any
“claims . . . arising out of or in connection with any asserted or established violation of any
such laws, orders, rules, or regulations by [ARMS] or its subcontractors and their
respective employees.” Doc. 22, Ex. 1, at 4. These laws would ostensibly include the
FLSA. Defendants’ theory is that ARMS has contractually indemnified them against any
FLSA liability. To that end, Defendants’ Complaint asserts claims against ARMS for
breach of contract and indemnification.
Those claims are now subject to a motion to dismiss on the basis that the Court
either lacks jurisdiction over these state-law claims or that they are not appropriate for
policy reasons. Yet it is not ARMS who has moved to dismiss these claims against it.
Rather, it is Plaintiff who has moved to dismiss Defendants’ third-party complaint.

2
ARMS Welding is allegedly an inactive domestic for profit business corporation registered to Plaintiff
Roger Shultz.

2

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“Under Federal Rule of Civil Procedure 8(a)(2), a pleading must contain a ‘short
and plain statement of the claim showing that the pleader is entitled to relief.’” Ashcroft v.
Iqbal, 556 U.S. 662, 677–78 (2009). “The pleading standard Rule 8 announces does not
require ‘detailed factual allegations,’ but it demands more than an unadorned, thedefendant-unlawfully-harmed-me accusation.” Id. at 678 (quoting Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 555 (2007)). To survive a motion to dismiss, a pleading must offer
more than “labels and conclusions” and “a formulaic recitation of the elements of a cause
of action.” Twombly, 550 U.S. at 555. There must be “sufficient factual matter, [which if]
accepted as true . . . state[s] a claim to relief that is plausible on its face.” Iqbal, 556 U.S.
at 678 (quoting Twombly, 550 U.S. at 570). A plausible claim is one that “pleads factual
content that allows the court to draw the reasonable inference that the defendant is liable
for the misconduct alleged.” Id. A plaintiff must “nudge[] his claims across the line from
conceivable to plausible . . . .” Twombly, 550 U.S. at 570. Further, the Court “must accept
all the well-pleaded allegations of the complaint . . . and must construe them in the light
most favorable to the [non-moving party].” Thomas v. Kaven, 765 F.3d 1183, 1190 (10th
Cir. 2014).
Typically the Court would first ask whether it has jurisdiction or whether
Defendants’ claims are plausible. But here, the first inquiry is whether Plaintiff can move
to dismiss these claims at all. After all, Defendants’ claims are against ARMS—not
Plaintiff. Put simply, can parties move to dismiss claims under Rule 12(b)(6) that are not
asserted against them personally? In a word, no. “It is generally accepted that parties lack
standing to seek dismissal of parties other than themselves.” E.E.O.C. v. Brooks Run Min.
3

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Co., LLC, No. CIV.A. 5:08-CV-00071, 2008 WL 2543545, at *2 (S.D. W.Va. June 23,
2008). And based on the Court’s survey, other courts have been unanimous on the matter.3
That said, even if Plaintiff lacks standing to dismiss Defendants’ third-party claims
for breach of contract and indemnification, the Court must still have subject matter
jurisdiction over those claims to proceed. Plaintiff insists it does not and, in support, cites
a line of cases4 that he believes suggests either that the Court lacks jurisdiction or that
Defendants’ claims thwart the very policy rationale behind the FLSA.
Not exactly. These cases do not hold that the purpose of the FLSA is undermined
by allowing a defendant to argue that a third party has indemnified it against FLSA claims.
Rather, as one district court summed up these cases, “[s]everal courts, including the Tenth
Circuit, have indicated that counterclaims, particularly when they are akin to setoffs, are
not allowed in a FLSA action.” McFeeters v. Brand Plumbing, Inc., No. 16-1122-EFMKGS, 2016 WL 6581515, at *2 (D. Kan. Nov. 7, 2016) (emphasis added). This hardly
seems controversial. Allowing claims for setoff or other non-FLSA-related claims distracts

3
See, e.g., Nix v. NASA Fed. Credit Union, 200 F. Supp. 3d 578, 585 (D. Md. 2016) (finding that
“[employer] had no standing to seek dismissal of the complaint against its non-moving employees”);
Healthsmart Benefit Sols., Inc. v. Interwest Ins. Servs., Inc., No. 2:16-CV-00144-MCE-AC, 2016 WL
4096704, at *4 (E.D. Cal. Aug. 1, 2016) (holding that Defendants lacked standing to move to dismiss
Plaintiff’s claim for declaratory relief against yet-unidentified parties); Qwest Corp. v. Arizona Corp.
Comm'n, No. CV 08-2374-PHX-JAT, 2009 WL 3059127, at *5 (D. Ariz. Sept. 23, 2009) (“The Court
simply does not believe that a non-party to a claim can move to dismiss that claim on behalf of the actual,
non-moving party to the claim.”) (denying party’s motion to dismiss a cross-claim not asserted against it);
Cook v. United States, 765 F. Supp. 217, 223 (M.D. Pa. 1991) (“[U]nder 12(b)(6), the party asserting the
motion must be adverse to the party it seeks to dismiss, unless the court in its discretion decides to strike a
pendant matter.); see also Alan Wright et al., Federal Practice and Procedure § 1349 (3d ed.) (“The movant
may obtain relief only as to himself; the movant has no standing to seek dismissal of the action as to
nonmoving parties.”)
4
Donovan v. Pointon, 717 F.2d 1320, 1323 (10th Cir. 1983); Brennan v. Heard, 491 F.2d 1, 4 (5th Cir.
1974); Saarela v. Union Colony Protective Servs., Inc., No. 13–cv-01637, 2014 WL 3408771, at *5 (D.
Colo. July 14, 2014).

4

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from the central mission of an FLSA suit, which is to bring “the defendant employer into
compliance with the FLSA by enforcing a public right.” Id. (alterations omitted) (citing
Donovan, 717 F.2d at 1323). Consequently, permitting “private claims, real or imagined,
against [] employees would delay and even subvert the whole process.” Id.
Here, Defendants’ claims do little to subvert the FLSA process and, in fact, bear
directly on the merits of Plaintiff’s overtime-wage claim. If Plaintiff is to recover overtime
wages under the FLSA, that hinges on his ability to first identify his employer. That,
though, is a matter of dispute. Defendants insist that by the terms of the MSA it entered
into with ARMS, ARMS is Plaintiff’s employer and has a duty to indemnify Defendants
for FLSA violations. Naturally this dispute must be resolved before Plaintiff can recover
anything.
Given that Defendants’ claims for breach of contract and indemnification intertwine
with the merits of Plaintiff’s FLSA claim, exercising supplemental jurisdiction over them
is appropriate.5 The Court may exercise supplemental jurisdiction over any claims that are
“so related” to the jurisdiction-invoking claim “that they form part of the same case or
controversy under Article III.” 28 U.S.C. § 1367(a). “A claim is part of the same case or
controversy if it derives from a common nucleus of operative fact.” Price v. Wolford, 608
F.3d 698, 702–03 (10th Cir. 2010) (alterations omitted). Here, Defendants’ claims for
breach of contract and indemnification stem from a common set of facts: Plaintiff believes

5
To clarify, because no federal-question jurisdiction exists under 28 U.S.C. § 1331, and no diversity
jurisdiction is available by virtue of Defendants’ and ARMS’s Oklahoma domicile under 28 U.S.C. § 1332,
if the Court has jurisdiction, it must be under 28 U.S.C. § 1367.

5

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he is owed overtime wages under the FLSA, and the MSA purports to transfer any FLSA
liability from Nomac to ARMS.
Granted, the Court could of course decline to exercise supplemental jurisdiction
under 28 U.S.C. § 1367(c), but it sees little sense in that. Claims for breach of contract and
indemnification hardly raise novel or complex issues of Oklahoma law, which would allow
the court to decline jurisdiction under § 1367(c)(1). Nor do these claims predominate over
the FLSA claim, which would permit it to forego exercising jurisdiction under §
1367(c)(2). Further, there is no reason to decline jurisdiction under § 1367(c)(3) because
the Court still has original jurisdiction over the FLSA claim. Finally, the Court can identify
no other compelling reason that would justify the Court declining jurisdiction under §
1367(c)(4).
Plaintiff’s Motion to Dismiss, Doc. 29, is therefore DENIED.
IT IS SO ORDERED THIS 11th day of July 2017.

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