Vizcaino v. Techcrete Contracting, Inc. et al

Filing 21

ORDER DISMISSING as Moot 14 Motion to Dismiss Defendants' Counterclaims; GRANTING 16 Motion to Strike Affirmative Defenses; GRANTING 19 Amended Motion to Dismiss Defendants' Counterclaims. Signed by Judge Sam Sparks. (jk)

FILED

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF TEXAS
AUSTIN DIVISION

2014HAR-3 PH 2:21
WESfl

L

TEXAS

JAIME VIZCAINO,
Plaintiff,
Case No. A-13-CA-229-SS

-vs-

TECHCRETE CONTRACTING, INC.; JEFFREY
GOSS; and TODD NICCUM,
Defendants.

ORDER
BE IT REMEMBERED on this day the Court reviewed the file in the above-styled cause, and
specifically Plaintiff Jaime Vizcaino' s Motion to Dismiss Defendants' Counterclaims [#14], Plaintiff

Jaime Vizcaino' s Motion to Strike Defendants' Affirmative Defenses [#16], Defendants' Combined
Responses to Plaintiff's Motion to Dismiss Defendants' Counterclaims and Plaintiff's Motion to
Strike Defendants' Affirmative Defenses [#18], and Plaintiff Jaime Vizcaino's Amended Motion
to Dismiss Defendants' Counterclaims [#19]. Having reviewed the documents, the relevant law, and

the file as a whole, the Court now enters the following opinion and orders.

Background
Plaintiff Jaime Vizcaino sued Defendants Techcrete Contracting, Inc. (Techcrete), Jeffrey
Goss, and Todd Niccum for unpaid overtime under the Fair Labor Standards Act (FLSA). In

Defendants' First Amended Answer, they asserted affirmative defenses, arguing Vizcaino's claims
were barred by: (1) estoppel and promissory estoppel; (2) waiver; and (3) laches and unclean hands.
See

Defs.' 1st Am. Answer [#11], at

1.

Further, Defendants argued they were entitled to a credit

/

and/or offset. Id.

In addition, Defendants asserted a counterclaim for conversion of personal

property, namely rebar belonging to Techcrete. Id. at 2.
On February 7, 2014, Vizcaino filed a Motion to Dismiss Defendants' Counterclaims [#14]

pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). In short, Vizcaino wants the
Court to dismiss the counterclaim for conversion based on the rebar because it is entirely separate

from his FLSA claim.

On February 15, 2014, Vizcaino filed a Motion to Strike Defendants'

Affirmative Defenses [#16] pursuant to Rule 12(f). In short, Vizcaino argues the affirmative
defenses of(1) estoppel and promissory estoppel; (2) waiver; and (3) laches and unclean hands, are
inapplicable in FLSA cases. With respect to the offset defense, Vizcaino assumes Defendants are
seeking an offset for the rebar, which is the basis for Defendants' conversion counterclaim.

See

P1.' s

Mot. Strike [#16], at 8. Vizcaino argues offsets are generally not allowed in FLSA cases, subject
to certain exceptions, and the offset claim for the rebar does not fit within the recognized exceptions.
Id. at

8-11. Therefore, Vizcaino argues it should be struck.
Defendants filed a Combined Response [#18] to Vizcaino's motion to dismiss and motion

to strike.

Defendants conceded the counterclaim for conversion should be dismissed without

prejudice for lack of subject matterjurisdiction.

See Defs.'

Combined Resp. [#18], at 2. Defendants

further conceded the affirmative defenses of(1) estoppel and promissory estoppel; (2) waiver; and
(3) laches and unclean hands, should be struck because they are not available under the FLSA. Id.

Defendants, however, contend their affirmative defense of credit or offset should not be struck.
Defendants claim Vizcaino was incapacitated and unable to work six to eight weeks due to a
procedure. Id. at 2-3. Nevertheless, Techcrete continued to pay Vizcaino as if he had worked forty
hours per week. Id. at 3. Following the six to eight week period, Defendants claim Vizcaino was
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only able to work on a part-time basis for a multiple week period, but Techcrete still paid him as if
he were working full-time. Id. at 3. Defendants argue these payments for work not performed entitle

them to an offset. Id.

Analysis
I.

Amended Motion to Dismiss Counterclaims
Defendants conceded in their Combined Response the counterclaim of conversion should be

dismissed without prejudice. Therefore, the Court GRANTS the motion.
II.

Motion to Strike Affirmative Defenses
Defendants conceded in their Combined Response the affirmative defenses of (1) estoppel

and promissory estoppel; (2) waiver; and (3) laches and unclean hands, should be struck. Therefore,
the Court GRANTS the motion to strike with respect to these affirmative defenses, leaving only the

affirmative defense of the offset claim.
Generally speaking, courts have been hesitant to permit an employer to raise a counterclaim1
in FLSA suits for money the employer claims the employee owes it, or for damages the employee's

tortious conduct allegedly caused. See Brennan

other grounds by McLaughlin

v.

v.

Heard, 491 F.2d 1,4 (5th Cir. 1974), rev'don

Rich/and Shoe Co., 486 U.S. 128 (1988); see also Donovan v.

Pointon, 717 F.2d 1320, 1323 (10th Cir. 1983) ("{T]he purpose of the present action is to bring
Pointon into compliance with the Act by enforcing a public right. To permit him in such a
proceeding to try his private claims, real or imagined, against his employees would delay and even
subvert the whole process. Pointon is free to sue his employees in state court.

. .

."). In Heard, the

Defendants raise the set-off issue as an affirmative defense rather than a counterclaim, but courts have treated
the two as the same. See Martin v. PepsiAmericas, Inc., 628 F.3d 738, 740 n.1 (5th Cir. 2010).
I

-3-

Fifth Circuit held set-offs and counterclaims are inappropriate in any case brought to enforce the

FLSA's minimum wage and overtime provisions. 491 F.2d at 2 ("The only economic feud
contemplated by the FLSA involves the employer's obedience to minimum wage and overtime
standards.

To clutter [FLSA] proceedings with the minutiae of other employeremployee

relationships would be antithetical to the purpose of the Act.").
In Singer

v.

Waco, 324 F.3d 813 (5th Cir. 2003), however, the Fifth Circuit allowed an

exception for an employer to set-off certain wage overpayments against the employees' overall
damages award. Singer involved a class of municipal firefighters whose hours varied among pay
periods. The city's method for calculating their regular rate of pay resulted in an underpayment of

overtime pay during some pay periods but also considerable overpayments during other periods. Id.
at 824-26. The Fifth Circuit viewed the overpayments as akin to pre-.payments not prohibited by the

FLSA and affirmed the set-off overpayments in some work periods against shortfalls in others. Id.
at 826. The court reconciled Heard and Singer by observing "the offsets permitted by the district

court [in Heard] caused the final awards of many of the defendants' workers to drop below the
statutory minimum wage," but in Singer, "no party contend[ed] that the offset might cause the fire

fighter's wages to fall below the statutory minimum wage." Id. at 828 n.9.
The Fifth Circuit has since clarified that Heard's longstanding prohibition of set-offs in

FLSA cases is the rule in this circuit and Singer the exception. See Gagnon v. United Technisource,
Inc., 607 F.3d 1036 (5th Cir. 2010). Gagnon distinguished the set-off allowed in Singer as one that

"simply acknowledged that the City had already paid the bulk of its overtime obligations." Id. at
1043 (citing Singer, 324 F.3d at 828). The plaintiff in Gagnon, by contrast, was not paid "any

additional sums that could be characterized as advanced or inappropriate amounts subject to an offset

against the overtime owed him," and therefore, a set-off was inappropriate. Id. The Fifth Circuit

"continue[s] to look with disfayor on set-offs unless the money being set-off can be considered
wages that the employer pre-paid to the plaintiff-employee." Martin, 628 F.3d at 742.
In the instant case, Defendants argue they overpaid Vizcaino during the period of his

incapacity and are entitled to a credit/offset like the City was in Singer. See Defs.' Combined Resp.
[#1 8], at 3.

Defendants argue these payments should be considered wages it pre-paid Vizcaino. Id.

(citing Martin, 628 F.3d at 742). Defendants are mistaken, however, because there is no indication
they continued to pay Vizcaino as if he were working forty-hour weeks during the time he was
supposedly incapacitated as part of an effort to pre-pay his overtime wages. Defendants argue this

situation fits within the Singer exception, but the court in Singer simply recognized the employer had
already paid the bulk of its overtime obligations. The supposed overpayments to Vizcaino were not

pre-payments of Defendants' overtime obligations, and therefore, a set-off would be inappropriate.
Defendants do not explain why they continued to pay Vizcaino as a full-time worker when he was
not working full-time, but if they think they are entitled to these overpayments, they can pursue these

claims in a separate lawsuit in state court. This Court is concerned with Defendants' compliance

with the FLSA's overtime standards. The Court GRANTS Vizcaino's motion to strike the
affirmative defense based on a claimed credit or offset.

Conclusion
Accordingly,
IT IS ORDERED that Plaintiff Jaime Vizcaino's Motion to Dismiss Defendants'

Counterclaims [#14] is DISMISSED AS MOOT;

-5-

IT IS FURTHER ORDERED that Plaintiff Jaime Vizcaino's Motion to Strike

Defendants' Affirmative Defenses [#16] is GRANTED;
IT IS FINALLY ORDERED that Plaintiff Jaime Vizcaino's Amended Motion to

Dismiss Defendants' Counterclaims [#19] is GRANTED.
SIGNED this the

'

day of March 2014.

UNITED STATES DISTRICT JUDGE

229 mtd cc's and niot strike jtw.frm