Opinion
Civil Action 2:14-cv-966
01-14-2015
JEFFREY A. SHREVES, et al., Plaintiffs, v. M.A. SOUDERS, INC., et al., Defendants.
Judge Watson
OPINION AND ORDER
Plaintiffs in this action seek recovery of wages for all hours worked, overtime compensation, and commissions allegedly due. Plaintiffs also assert a claim of record-keeping violations. Plaintiffs assert claims under the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201 et seq., and under Ohio statutory law, O.R.C. § 4111.01 et seq.; they also assert claims for breach of contract, promissory estoppel, and unjust enrichment. On November 26, 2014, the Court conditionally certified the case as a collective action pursuant to 29 U.S.C. § 216(b) and ordered that notice be provided to putative class members of plaintiffs' FLSA claims. Order, ECF 17. Thus far, 17 plaintiffs, including Aaron Lotz, have opted into this action. ECF 11, 20, 23. This matter is now before the Court for consideration of Defendant M.A. Souders' Motion for Leave to File an Amended Answer with Counterclaims ("Defendant's Motion"), ECF 18. Defendant M.A. Souders, Inc., seeks to amend its answer to assert counterclaims for unjust enrichment, conversion, tortious interference with contract, and tortious interference with business relations against opt-in plaintiff Aaron Lotz. The proposed counterclaims are premised on this plaintiff's alleged misappropriation of this defendant's property in pursuit of his own side business while "on the clock" for this defendant. Id. at p. 3; Defendant's Reply, ECF 21, p. 4. According to defendant, the proposed counterclaims are compulsory to this plaintiff's non-FLSA claims.
Plaintiffs oppose Defendant's Motion. Plaintiff's Opposition to Defendants' Motion for Leave to File an Amended Answer and Counterclaim ("Plaintiffs' Response"), ECF 19. Plaintiffs argue that Lotz's participation in this action is limited to the claims based on violations of federal and state wage laws, and that the counterclaims do "not involve any of the allegations set forth in Plaintiffs' complaint regarding Defendants' failure to pay over-time hours at one and one-half times the regular rate, Defendants' failure to pay employees for all hours worked, Defendants' failure to keep mandated wage and hour records, or Defendants' failure to pay commissions." Id. at pp. 6-7. Plaintiffs also argue that it is improper for an employer to assert counterclaims against an employee-plaintiff in an FLSA action.
Defendants' Motion is governed by Rule 15(a) of the Federal Rules of Civil Procedure. When a party cannot amend its pleading as a matter of course, see Fed. R. Civ. P. 15(a)(1), it may amend "only with the opposing party's written consent or the court's leave." Fed. R. Civ. P. 15(a)(2). The Court "should freely give leave when justice so requires." Id. Leave to amend may be denied, however, where the court finds "undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of the amendment, etc." Foman v. Davis, 371 U.S. 178, 182 (1962). See also Marquette Gen. Hosp. v. Excalibur Med. Imaging, LLC, 528 F. App'x 446, 448 (6th Cir. 2013).
The parties appear to agree that defendant M.A. Souders, Inc., should be permitted to amend its Answer if the proposed counterclaims are compulsory counterclaims under Rule 13. However, the parties disagree whether the proposed counterclaims are compulsory. A compulsory counterclaim is a claim that "arises out of the transaction or occurrence that is the subject matter of the opposing party's claim" and "does not require adding another party over whom the court cannot acquire jurisdiction." Fed. R. Civ. P. 13(a)(1). Courts apply the "logical relationship" test to determine whether a claim arises out of the same transaction or occurrence. Sanders v. First Nat'l Bank & Trust Co. in Great Bend, 936 F.2d 273, 277 (6th Cir. 1991); Cent. W. Va. Energy Co. v. Wheeling-Pittsburgh Steel Corp., 245 F. App'x 415, 424 (6th Cir. 2007). Under this test, a court considers "whether 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." Sanders, 936 F.2d at 277.
As noted supra, the Court conditionally certified this case as a collective action pursuant to 29 U.S.C. § 216(b) and ordered that notice be provided to the putative class members of Plaintiffs' FLSA claims. Order, ECF 17. The notice sent to the putative class members indicates that plaintiffs are seeking unpaid wages, unpaid overtime compensation, liquidated damages, attorney's fees, and costs under the FLSA. See ECF 16-1, p. 1. However, the Complaint, ECF 1, asserts, in addition to the FLSA claims, Ohio statutory claims under O.R.C. § 4111.01 et seq., and claims for breach of contract, promissory estoppel, and unjust enrichment. The Complaint alleges that the latter three claims are brought on behalf of the original named plaintiffs and "on behalf of others 'similarly situated' who are part of the FLSA Collective." Complaint, ¶ 50. See also id. at ¶¶ 55-59 (asserting a promissory estoppel claim on behalf of members of the FLSA Collective), 60-64 (asserting an unjust enrichment claim on behalf of the members of the FLSA Collective). Despite these allegations, plaintiffs assert in response to Defendant's Motion that Lotz "filed a [sic] opt-in form for the limited purpose of participating in the collective action's claims for violations of the FLSA, as stated in the opt-in form." Plaintiffs' Reply, p. 4. The opt-in form does not, however, expressly limit Lotz' participation in this matter to prosecution of the FLSA claims. See ECF 11-1, p. 3.
Plaintiffs' non-FLSA claims seek unpaid commissions for work performed and sales made by plaintiffs. The proposed counterclaims allege that, while "on the clock" with defendant M.A. Souders, Inc., Lotz misappropriated defendant's property and used it to conduct his own side business, interfered with this defendant's potential customers and procured breaches of contract by defendant's customers by offering to perform services at reduced rates and performing those services using this defendant's equipment.
The Court concludes that defendant's proposed counterclaims arise out of the same transaction or occurrence as plaintiffs' non-FLSA claims. Nevertheless, the record is ambiguous because it is unclear whether plaintiff Aaron Lotz intends to pursue any non-FLSA claims.
Opt-in plaintiff Aaron Lotz is therefore ORDERED to indicate on the record, within fourteen (14) days, whether he intends to pursue the non-FLSA claims asserted in the Complaint. To the extent that Lotz does assert non-FLSA claims, the Court will permit defendants to proceed with their proposed counterclaims, which arise out of the same transactions as the non-FLSA claims in the Complaint. January 14, 2015
s/Norah McCann King
Norah McCann King
United States Magistrate Judge