Stafford v. Bath Planet of Arkanas, LLC

JEREMY STAFFORD PLAINTIFF v. THE BATH PLANET OF ARKANAS, LLC,and CHRIS CUSICK DEFENDANTS

NO. 6:20-CV-6005-RTD

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF ARKANSAS HOT SPRINGS DIVISION

November 23, 2020

MEMORANDUM OPINION AND ORDER

I. INTRODUCTION

Before the Court is Plaintiff's Motion to Strike Counterclaim or, in the alternative, Motion to Dismiss Counterclaim. (ECF No. 18.) Defendants have filed a response in opposition, (ECF No. 21), and Plaintiff has filed a reply. (ECF No. 24.) The Court's jurisdiction is proper under the general federal question statute, 28 U.S.C. § 1331. The matter is ripe for decision. Having considered the parties' briefs and the relevant law, the motion will be granted.

II. BACKGROUD

The facts are recounted in a light most favorable to Defendants, drawing all reasonable inferences in their favor. Plaintiff Jeremy Stafford ("Stafford") originally filed suit against Bath Planet, LLC and its manager Chris Cusick (collectively, "Bath Planet") claiming he was employed by Bath Planet as an installer and misclassified as exempt from minimum wage requirements under the Fair Labor Standards Act, 29 U.S.C. § 201, et seq. ("FLSA") and the Arkansas Minimum Wage Act, ARK. CODE ANN. § 11-4-201, et seq. ("AMWA"). Stafford sought a declaratory judgment, monetary damages, liquidated damages, prejudgment interest, and reasonable attorney's fees and costs. (ECF No. 2.)¹

In the Complaint, Stafford contends that he was hired by Bath Planet to work as a bathroom installer and he was provided training and guidelines for the proper performance of the installation work. (Id. at 4, 5.) Stafford alleges that as a condition of employment he was required to maintain his own policy of general liability insurance and list Bath Planet on the insurance certificate. (Id. at 6.) Stafford contends that he was paid on a piece-rate basis and was compensated $100.00 for service calls, $200.00 for "tear out" jobs, and $400.00 for installations. (Id.) Stafford alleges that he drove his own vehicle to perform the installation services and was partially reimbursed for mileage. (Id.). Stafford also alleges that he paid for his own lodging when an out-of-town job required an overnight stay. (Id.). Stafford claims that after deducting his unreimbursed travel expenses, his pay fell below minimum wage. (Id.). Stafford also contends that Bath Planet did not pay him overtime wages for the hours he worked in excess of forty hours a week. (Id.) Stafford alleges that each service call took between one to four hours; each "tear out" job took between two to eight hours; each installation took approximately eight hours; and each job took up to ten hours of drive time. (Id.) Stafford's employment with Bath Planet terminated on or around January 9, 2020 (ECF No. 19 at 11), and he filed this suit a few weeks later claiming damages for violations of the FLSA and the AMWA. (ECF No. 2.)

Bath Planet appeared and filed an Answer alleging Stafford was not a Bath Planet employee covered by the FLSA or AMWA because Stafford was hired as an independent contractor and sole proprietor. (ECF No. 6.) Sometime after filing its Answer in this case, BathPlanet filed six claims against Stafford's insurance policy claiming damages caused by Stafford's deficient performance and failure to meet Defendants' reasonable expectation of satisfactory work.

Believing that Bath Planet filed the insurance claims purely in reaction to his filing suit in federal court, Stafford moved to file an amended complaint seeking to add a claims for retaliation in violation of the FLSA² and monetary damages, punitive damages, and criminal sanctions against any Bath Planet employee that participated in the retaliation. (ECF No. 14 at 10-11). Stafford's motion was granted, and he filed and served the Amended Complaint on August 5, 2020. (ECF No. 15.)

Defendants filed an Answer to the Amended Complaint on August 17, 2020, realleging Stafford was not a Bath Planet employee covered by the FLSA or AMWA because he was hired as an independent contractor and sole proprietor. In addition, Defendants brought a Counterclaim against Stafford for common law negligence, breach of implied contracts, fraud, and violation of the Arkansas Deceptive Trade Practices Act. ("ADTPA") claiming damages in the amount of $4,465.26 arising from specific instances of Stafford's allegedly deficient work performance installing bathrooms for Defendants' customers. (ECF No. 17.)

Stafford filed the Motion to Strike, or in the alternative, Motion to Dismiss Bath Planet's Counterclaim contending that the counterclaims should be stricken as untimely and filed without the Court's leave or dismissed for lack of subject matter jurisdiction or failure to state a claim. (ECF No. 19). In response, Bath Planet argues that it had a right to add a Counterclaim without seeking leave of the Court because Stafford changed the scope or theory of the case when he Amended his Complaint to add the retaliation claim, and that Stafford has failed to show good cause why the counterclaims should be stricken. (Id. at 2-10). Bath Planet asserts the Motion toDismiss should be denied because its Counterclaims are compulsory, and it has pleaded sufficient facts to state claims for relief. (Id. at 10-11, 14-18). Lastly, Bath Planet argues that its Counterclaims should be allowed to proceed as affirmative defenses. (Id. at 18-20).

III. DISCUSSION

A. Motion to Strike

Stafford moves to strike the Counterclaims arguing Bath Planet did not seek leave from the Court to file and they were untimely in violation of the Final Scheduling Order. (ECF No. 19 at 1-2). The Court finds the Counterclaims were timely filed, and the motion to strike should be denied on this ground.

Under FED. R. CIV. P. 12(f), a court may strike from a pleading an insufficient defense or any redundant, impertinent, or scandalous matter. The district court enjoys "liberal discretion" under Rule 12(f). Stanbury Law Firm v. I.R.S., 221 F.3d 1059, 1063 (quoting Thor Corp. v. Automatic Washer Co., 91 F.Supp. 829, 832 (D.C. Iowa 1950)). Despite this broad discretion, striking a party's pleadings is an extreme measure, and the Eighth Circuit has previously held that "[m]otions to strike under FED. R. CIV. P. 12(f) are viewed with disfavor and are infrequently granted." Id. (quoting Lunsford v. United States, 570 F.2d 221, 229 (8th Cir. 1977)). The Court does not find anything redundant, impertinent, or scandalous about the Counterclaims, and the motion to strike should be denied.

B. Lack of Subject Matter Jurisdiction

Stafford argues that Bath Planet's Counterclaims should be dismissed for lack of subject matter jurisdiction pursuant to FED. R. CIV. P. 12(b)(1). In deciding a motion under Rule 12(b)(1), the court "must distinguish between a facial attack—where it looks only to the face of the pleadings—and a factual attack—where it may consider matters outside the pleadings." Croyle byand through Croyle v. United States, 908 F.3d 377, 380 (8th Cir. 2018). Stafford is challenging Bath Planet's Counterclaim on its face. When a party makes a facial challenge, the court reviews the pleadings and affords the non-moving party the same protections it would receive on a Rule 12(b)(6) motion to dismiss. See Osborn v. United States, 918 F.2d 724 n. 6 (8th Cir. 1990). The Court also must draw all reasonable inferences in the non-moving party's favor. United States v. Stoltz, 327 F.3d 671, 674 (8th Cir. 2003).

Federal courts are courts of limited jurisdiction. Federal district courts have original jurisdiction only in diversity actions and actions arising under federal law. 28 U.S.C. §§ 1331, 1332. Diversity jurisdiction does not lie in this case because all parties are residents of the State of Arkansas. Therefore, the Court's original jurisdiction over this case is limited to claims involving a federal question. Even though Bath Planet's Counterclaim is based on common law and state statute and presents no question of federal law, Bath Planet asserts the Counterclaim should not be dismissed because it is compulsory under the Federal Rules of Civil Procedure.

1. Compulsory Counterclaim

"[I]n any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction 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." 28 U.S.C. § 1367(a). A counterclaim is considered compulsory where it "arises out of the transaction or occurrence that is the subject matter of the opposing party's claim." FED. R. CIV. P. 13(a). A compulsory counterclaim need not have its own basis of jurisdiction. St. Jude Medical, Inc. v. Lifecare Intern., Inc., 250 F.3d 587, 594 (8th Cir. 2001); Tullos v. Parks, 915 F.2d 1192, 1194 (8th Cir. 1990). Bath Planet argues that the Counterclaim is compulsory to Stafford's FLSA retaliationclaim because all claims arise out of the bathroom installation work performed by Stafford for Bath Planet customers. (ECF No. 21 at 10).

The Eighth Circuit has identified four tests federal courts have applied in determining whether a counterclaim arises out of the same transaction or occurrence: (1) whether the issues of fact and law raised by the claim and counterclaim are largely the same; (2) whether res judicata would bar a subsequent suit on the defendant's claim absent the compulsory counterclaim rule; (3) whether substantially the same evidence will support or refute the plaintiff's claim as well as the defendant's counterclaim; and (4) whether there is any logical relation between the claim and counterclaim. Cochrane v. Iowa Beef Processors, Inc., 596 F.2d 254, 264 (8th Cir. 1979); Tullos v. Parks, 915 F.2d 1192, 1195 (8th Cir. 1990) (applying the logical relation test).

a. Same Issues of Fact and Law

There is no supplemental jurisdiction over the defendant's counterclaim when the counterclaim and the plaintiff's original FLSA...