Owner Operator Indepen. Drivers v. Arctic Express

• Decision Date: 07 January 2003
• Docket Number: Case No. 97-CV-750.
• Citation: 238 F.Supp.2d 963
• Parties: OWNER-OPERATOR INDEPENDENT DRIVERS ASSOCIATION, INC., et al., Plaintiffs, v. ARCTIC EXPRESS, INC., et al., Defendants.
• Court: U.S. District Court — Southern District of Ohio

238 F.Supp.2d 963

OWNER-OPERATOR INDEPENDENT DRIVERS ASSOCIATION, INC., et al., Plaintiffs, v. ARCTIC EXPRESS, INC., et al., Defendants.

Case No. 97-CV-750.

United States District Court, S.D. Ohio, Eastern Division.

January 7, 2003.

James Burdette Helmer, Paul Martins, Helmer, Martins & Morgan, Cincinnati, OH, Paul D. Cullen, Sr., Joyce E. Mayers, The Cullen Law Firm, Washington, DC, for Plaintiffs/Counter-Defendants.

Mark Alan Johnson, Thomas Leslie Long, A Charles Tell, Baker & Hostetler, Columbus, OH, for Defendant/Counter-Claimants.

OPINION AND ORDER

MARBLEY, District Judge.

I. INTRODUCTION

This matter is before the Court on the Plaintiffs' Motion to Dismiss Counterclaims Against Absent Class Members. The Plaintiffs filed an Amended Complaint in this action on June 21, 2002. On July 3, 2002, the Defendants filed an Amended Answer, in which, for the first time since this litigation began in 1997, they asserted Counterclaims against absent class members. The Plaintiffs now seek to have those Counterclaims dismissed.

For the following reasons, the Court GRANTS the Plaintiffs' Motion to Dismiss Counterclaims Against Absent Class Members.

II. BACKGROUND

The Plaintiffs, Carl Harp, Garvin Kieth Roberts,¹ Micheal Wiese, and the Owner-Operator Independent Drivers Association, Inc. ("OOIDA"), filed a Complaint with this Court on June 30, 1997, alleging that the forfeiture of required maintenance escrow funds upon early termination of Defendants' lease and lease/purchase agreements violated 49 C.F.R. § 376.12(k) of the federal truth-in-leasing regulations. On April 11, 2000, the Defendants, Arctic Express, Inc. ("Arctic") and D & A Associates, Ltd. ("D & A"), filed their Answer to the Plaintiffs' Complaint and simultaneously brought Counterclaims against the Plaintiffs. D & A brought individual Counterclaims against Plaintiffs Wiese, Roberts, and Harp alleging that each Plaintiff had breached his Lease/Purchase Option. Arctic brought a Counterclaim against Plaintiff Roberts alleging a breach of the Independent Contractor Agreement. On August 2, 2001, this Court issued an Order denying the Plaintiffs' Motion to Dismiss Counterclaims for Lack of Subject Matter Jurisdiction. In its Order, the Court concluded that the Counterclaims asserted against the named Plaintiffs were compulsory, and that, therefore, the Court had pendant jurisdiction over those claims.

On August 30, 2001, the Court denied the Defendants' Motion for Summary Judgment and granted the Plaintiffs' Motion for Partial Summary Judgment, concluding that the Defendants had violated 49 C.F.R. § 376.12(k). Then, on September 6, 2001, the Court granted the Plaintiffs' Motion to Certify this matter as a Class Action. In certifying the class, the Court addressed the issue of whether any counterclaims asserted by the Defendants against the absent class members could destroy the predominance of common issues. In particular, the Court found as follows:

In this case, the Defendants have brought counterclaims against the named Plaintiffs, Wiese, Roberts and Harp, but not against the unnamed class members. In addressing the requirements for a compulsory counterclaim, Rule 13 of the Federal Rules of Civil Procedure provides: "A pleadings [sic] shall state as a counterclaim any claim which at the time of serving the pleading the pleader has against any opposing party. . . ." FED.R.CIV.P. 13(a). The unnamed class members are not an "opposing party" under Rule 13(a), and therefore "[a] court may properly conclude that absent class members are not opposing or litigating adversaries for purposes of Rule 13, and therefore Rule 13 is inapplicable in the class context." 1 HERBERT B. NEWBERG AND ALBA CONTE, NEWBURG ON CLASS ACTIONS § 4.34, at 4-146 to 4-147 (3d ed.1992); see also Johns v. Rozet, 141 F.R.D. 211, 219 n. 7 (D.D.C.1992).

Here, the Defendants have brought counterclaims against the named Plaintiffs, but have not brought a counterclaim against the entire class; nor have the Defendants sought to certify a defendant class. It is true that this Court has ruled that the counterclaims against the named Plaintiffs are compulsory, but as the unnamed class members are not "opposing parties," this Court's prior holding does not extend to them. See Frederick County Fruit Growers Assoc., Inc. v. Dole, 709 F.Supp. 242, 245-46 (D.D.C.1989) (declining to create a defendant class so that a counterclaim could be asserted against all of the plaintiff class members); see also Johns, 141 F.R.D. at 218-19 (finding that the defendant's statement of "possible liability does not join the unnamed members of the proposed class as counterclaim plaintiffs.").

. . . . .

Although this Court concludes that the unnamed class members are not "opposing part[ies]" as contemplated by Rule 13(a), assuming arguendo that the unnamed class members are opposing parties, and also assuming that the Defendants are able to bring counterclaims against all of the unnamed class members, this Court could, if necessary, certify a subclass of class members who are subject to the Defendants' counterclaims. At the present time, however, certification of the Plaintiffs' class is proper, and certification of a subclass is unnecessary.

September 6, 2001 Certification Opinion and Order at 20-21, 23.

On June 21, 2002, the Plaintiffs filed an Amended Complaint, adding Richard Durst and Stephen Russi as Defendants, as well as claims against them for breach of fiduciary duty. The Defendants answered the Amended Complaint on July 3, 2002. Along with their Amended Answer, they asserted Counterclaims against absent class members. In particular, Count IV of D & A's Counterclaims alleges that the absent class members, identified in Exhibit D attached to the Counterclaims, materially breached their Lease/Purchase Agreements and failed to make payment due under those agreements. Count II of Arctic's Counterclaims alleges that the absent class members, identified in Exhibit F attached to the Counterclaims, materially breached their Independent Contractor Agreements and failed to make payments owed thereunder. The Defendants seek damages for their Counterclaims.

This matter is now before the Court on the Plaintiffs' Motion to Dismiss Counterclaims Against Absent Class Members for Lack of Subject Matter Jurisdiction.

III. STANDARD OF REVIEW

The Plaintiffs have brought their Motion to Dismiss under Federal Rules of Civil Procedure 12(b)(1) and 12(h)(3). Under Rule 12(b)(1), a motion to dismiss based on subject matter jurisdiction can fall into two categories: facial attacks and factual attacks. United States v. Ritchie, 15 F.3d 592, 598 (6th Cir.1994). Facial attacks question the sufficiency of the pleading. Id. Review of such a motion must take the allegations in the complaint as true and construe them in the light most favorable to the nonmoving party. Id. A factual attack, however, is a challenge to the factual existence of jurisdiction. Id. In considering a motion that questions the factual existence of subject matter jurisdiction, "no presumptive truthfulness applies to the factual allegations" set forth in the pleading. Ohio Nat'l Life Ins. Co. v. United States, 922 F.2d 320, 325 (6th Cir.1990).

A court reviewing a factual attack must resolve any factual disputes by weighing the evidence that gives rise to the controversy to determine whether a factual predicate for subject matter jurisdiction does or does not exist. Moir v. Greater Cleveland Reg'l Transit Auth., 895 F.2d 266, 269 (6th Cir.1990); Ohio Nat'l Life Ins. Co., 922 F.2d at 325. To resolve disputed jurisdictional facts, the Court may, in its discretion, allow affidavits, documents, and even a limited evidentiary hearing. Ohio Nat'l Life Ins. Co., 922 F.2d at 325. The party opposing a factual Rule 12(b)(1) motion has the burden of proving jurisdiction and may not rest on factual assertions in its pleadings. Moir, 895 F.2d at 269.

Rule 12(h)(3) also provides for dismissal "[w]henever it appears by suggestion of the parties or otherwise that the court lacks jurisdiction over the subject matter. . . ." FED.R.CIV.P. 12(h)(3).

IV. ANALYSIS

The Plaintiffs contend that this Court has already ruled that the Counterclaims asserted by the Defendants against absent class members are not compulsory claims under Rule 13 of the Federal Rules of Civil Procedure.² They assert that, because the claims are permissive, the Defendants must demonstrate an independent basis for this Court's jurisdiction to hear those claims, separate and apart from the Court's jurisdiction over the Plaintiff's claims. Accordingly, they argue that the Counterclaims must be dismissed because the Defendants cannot demonstrate any independent basis for federal jurisdiction over those Counterclaims.

The Defendants, however, contend that this Court has not yet decided whether the Counterclaims against absent class members are compulsory, and argue that, in fact, the claims are compulsory. They state that, at this point in the litigation, the Court's consideration of the Counterclaims is proper as the absent class members have been identified, and all that remains for the Court is a determination of damages.

Contrary to the Defendants' interpretation of this Court's prior orders, the Court has, in fact, already ruled that any counterclaims asserted against absent class members are not compulsory claims under Rule 13. In particular, in ruling on the Plaintiffs' motion to certify the class, the Court stated:

The unnamed class members are not an "opposing party" under Rule 13(a), and therefore "[a] court may properly conclude that absent class members are not opposing or litigating adversaries for purposes of Rule 13, and therefore Rule 13 is inapplicable in the class context." 1 HERBERT B. NEWBERG AND ALBA CONTE, NEWBURG ON CLASS ACTIONS § 4.34, at 4-146 to 4-147 (3d ed.1992); see also Johns v. Rozet, 141 F.R.D. 211, 219 n. 7 (D.D.C.1992).

. . . . .

It is true that this Court has ruled that...