Vasquez v. Dan Keen Services Incorporated ( 2021 )

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 Corey Vasquez, No. CV-21-00320-PHX-DLR 10 Plaintiff, ORDER 11 v. 12 Dan Keen Services Incorporated, et al., 13 Defendants. 14 15 16 Before the Court is Plaintiff’s motion to dismiss, which is fully briefed. (Docs. 17, 17 25, 29.) The Court will grant Plaintiff’s motion for the following reasons.1 18 Plaintiff’s operative complaint brings a collective action against Defendants, his 19 former employer, asserting a single claim for failure to pay overtime wages in violation of 20 the Fair Labor Standards Act (“FLSA”). (Doc. 35.) In response, Defendants raise 21 counterclaims against Plaintiff for theft by conversion and fraud. (Doc. 14.) On March 22 23, 2021, Plaintiff filed a motion to dismiss Defendants’ counterclaims for lack of subject 23 matter jurisdiction. Plaintiff’s motion is now ripe. 24 In certain instances, federal courts may maintain supplemental jurisdiction over 25 counterclaims that have no other basis for jurisdiction. 28 U.S.C. § 1367. Particularly, “a 26 court has jurisdiction over state law claims that are so related to claims brought under the 27 1 The Court refrains from considering Defendants’ exhibits, attached to its response, 28 because reviewing evidence outside the pleadings is inappropriate at the motion to dismiss stage. U.S. v. Ritchie, 342 F.3d 903, 907-08 (9th Cir. 2003). 1 Court’s federal question jurisdiction that they form part of the same case or controversy 2 under Article III.” Ader v. SimonMed Imaging Inc., 324 F. Supp. 3d 1045, 1050 (D. Ariz. 3 2018) (quotations omitted). To determine whether a counterclaim constitutes part of the 4 same case or controversy, “the Court must determine whether the federal claim and the 5 state claim arise from the same ‘common nucleus of operative fact.’” Id. (quoting In re 6 Pegasus Gold Corp., 394 F.3d 1189, 1195 (9th Cir. 2005)). The Ninth Circuit applies the 7 “liberal logical relationship test” which studies “whether the essential facts of the various 8 claims are so logically connected that considerations of judicial economy and fairness 9 dictate that all the issues be resolved in one lawsuit.” Pochiro v. Prudential Ins. Co. of 10 Am., 827 F. 2d 1246, 1249 (9th Cir. 1987) (citation omitted). In applying the test, the Court 11 assumes the factual allegations in the challenged pleadings are true and draws all 12 reasonable inferences in the non-moving party’s favor. Poehler v. Fenwick, No. CV-15- 13 1161-JWS, 2015 WL 7299804, at *1 (D. Ariz. Nov. 19, 2015). 14 There is no independent basis for the Court’s jurisdiction over Defendants’ 15 counterclaims, which arise under state law. Furthermore, it would be inappropriate to 16 exercise supplemental jurisdiction over Defendants’ counterclaims. Notably, 17 considerations of judicial economy and fairness do not dictate that these issues be resolved 18 in one lawsuit. Discovery for Plaintiff’s claim will focus on Plaintiff’s status as an 19 employee, the hours he worked, whether an exemption applies to determine whether he is 20 overtime, and whether any violations by Defendants were willful. Conversely, 21 Defendants’ counterclaim would demand entirely different discovery involving Plaintiff’s 22 alleged use of Defendant’s equipment for his side hustle and his other alleged fraudulent 23 conduct, such as hour padding—not engaged in during the relevant period—while on the 24 job. Therefore, it appears that the “two sets of claims overlap only insofar as each arises 25 from [P]laintiff’s employment relationship with [Defendants.]” Ader, 324 F. Supp. 3d at 26 1051 (dismissing the defendant’s counterclaim alleging that plaintiff engaged in self- 27 dealing while employed with the defendant, concluding that the counterclaim was 28 insufficiently related to the plaintiff’s FLSA claim). 1 Even if there were a greater nexus between Plaintiff's claim and Defendants’ 2 || counterclaim, policy considerations nevertheless compel the Court to decline to exercise || jurisdiction. This district previously has done so under similar circumstances, noting “[t]he only economic feud contemplated by the FLSA involves the employer’s obedience to 5 || minimum wage and overtime standards. To clutter these proceedings with the minutiae of 6 || other employer-employee relationships would be antithetical to the purpose of the Act.” 7\| Poehler, 2015 WL 7299804, at *7 (citations omitted). Accordingly, 8 IT IS ORDERED that Plaintiff's motion to dismiss Defendants’ counterclaims 9|| (Doc. 17) is GRANTED. 10 Dated this 21st day of May, 2021. 11 12 13 , {Z, 14 {UO 15 Usted States Dictric Judge 16 17 18 19 20 21 22 23 24 25 26 27 28 -3-