Paugstat v. Pepperidge Farm, Inc.

• Decision Date: 21 January 2022
• Docket Number: 1:20-cv-00508
• Parties: Daniel Paugstat, Plaintiff, v. Pepperidge Farm, Incorporated, Defendant.
• Court: U.S. District Court — Southern District of Ohio

Daniel Paugstat, Plaintiff,
v.
Pepperidge Farm, Incorporated, Defendant.

No. 1:20-cv-00508

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

January 21, 2022

OPINION & ORDER

Michael R. Barrett, Judge United States District Court

This matter is before the Court on Daniel Paugstat's Motion to Dismiss the Counterclaim. (Doc. 17). Pepperidge Farm, Incorporated ("Pepperidge Farm") filed a Response in Opposition (Doc. 19), Paugstat filed a Reply (Doc. 21), and the Court permitted Pepperidge Farm to file a Sur-Reply (Doc. 27).

I. BACKGROUND

Paugstat filed a collective and class action Complaint asserting claims for violations of the Fair Labor Standards Act ("FLSA") and Ohio's overtime compensation statute. (Doc. 1). The Complaint alleges that Pepperidge Farm has employed Paugstat as a Sales Development Associate since March 2007. (Id. ¶ 12). The Complaint also alleges that Pepperidge Farm misclassifies Paugstat as an independent contractor and consequently fails to pay Paugstat overtime in violation of the FLSA and Ohio law. (Doc. 1).

Pepperidge Farm filed an answer stating that Paugstat is an independent contractor and has been since March 2007. (Doc. 14 ¶ 12 PageID 94). Pepperidge Farm also filed a declaratory judgment counterclaim seeking a declaratory judgment that the

1

parties' Consignment Agreement is rescinded and voided, for lack of an essential element, if the Court holds that Pepperidge Farm misclassified Paugstat as an independent contractor.^[1] (Id. ¶¶ 1-15 PageID 116-120); (Doc. 19 PageID 178). Stated otherwise, "Pepperidge Farm requests a judicial determination, contingent on P[augstat] prevailing on his misclassification claims, of the continuing validity of the parties' contract." (Doc. 19 PageID 166); accord (id. PageID 172, 183); (Doc. 27 PageID 240).

Paugstat filed a Motion to Dismiss the Counterclaim pursuant to Federal Rule of Civil Procedure 12(b)(1) for lack of jurisdiction or, alternatively, pursuant to Rule 12(b)(6) arguing that the counterclaim improperly seeks to circumvent the FLSA's requirements. (Docs. 17, 21). In response, Pepperidge Farm clarifies that, by filing the counterclaim, the company does not seek to retain the value of Paugstat's distributorship investment under the Consignment Agreement, and argues that this Court's jurisdiction is present and proper, and its declaratory judgment counterclaim is actionable. (Docs. 19, 27).

II. ANALYSIS

As an initial matter, to the extent that the parties dispute the timeliness of Paugstat's Motion to Dismiss the Counterclaim, the Court will consider the merits of the Motion to Dismiss. See Kanuszewski v. Michigan Dep't of Health & Hum. Servs., 927 F.3d 396, 407 n.4 (6th Cir. 2019) ("The Federal Rules of Civil Procedure 'evidence a clear preference to resolve disputes on their merits.'") (quoting Hawkins v. Washington Metro. Area Transit Auth., 311 F.Supp.3d 94, 102 (D.D.C. 2018)); compare (Doc. 19 PageID 169-70) (arguing that the Court should deny Paugstat's Motion to Dismiss as he

2

filed the motion seven days late), with (Doc. 21 PageID 197-99) (arguing that Paugstat's Motion to Dismiss is timely and, even if it is untimely, the Court should consider the merits thereof at this stage in the litigation).

The Court will address Paugstat's jurisdictional argument first. Paugstat contends that the Court should dismiss Pepperidge Farm's declaratory judgment counterclaim for...