Sanders v. New World Design Build, Inc.

• Decision Date: 23 April 2020
• Docket Number: 19-CV-1071 (VSB)
• Parties: ANTONIO SANDERS, Plaintiff, v. NEW WORLD DESIGN BUILD, INC., et al., Defendants.
• Court: U.S. District Court — Southern District of New York

ANTONIO SANDERS, Plaintiff, v. NEW WORLD DESIGN BUILD, INC., et al., Defendants.

19-CV-1071 (VSB)

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

April 23, 2020

OPINION & ORDER

Appearances:

Daniel Judah Altaras

Derek Smith Law Group, PLLC

New York, NY

Counsel for Plaintiff

Gregg P. Tabakin

Fein, Such Fein, Such, Kahn & Shepard, P.C

Parsippany, NJ

Counsel for Defendants

VERNON S. BRODERICK, United States District Judge:

Before me is Plaintiff Antonio Sanders's motion to dismiss Defendants' counterclaims. (Doc. 24.) Because I do not have supplemental jurisdiction over Defendants' counterclaims, Defendants' counterclaims are DISMISSED, and Plaintiff's motion to dismiss is DENIED as moot.

I. Factual Background and Procedural History¹

From April 10, 2018 until May 15, 2018, Plaintiff was employed as a carpenter for Defendant New World Design Build, Inc. ("New World") and Defendant John Farese, the owner of New World. (Id. ¶¶ 8-9.) While employed, Plaintiff reported to Defendants Robert Bulo and George Bardis, Supervising Managers at New World, and worked alongside Defendant Jose Alduvi Pacheco. (Id. ¶¶ 10-12.) Plaintiff alleges that he was repeatedly subject to his co-workers' discriminatory comments and harassment, and that his employment was eventually terminated in retaliation for his complaints about Defendants' unlawful discriminatory conduct.

Plaintiff Antonio Sanders ("Plaintiff") filed the complaint in this action on February 4, 2019. (Doc. 1.) The complaint pleads eleven causes of action arising under federal and state law in connection with Defendants' alleged acts of discrimination and unlawful retaliation against Plaintiff. Prior to filing the complaint, on July 23, 2018, Plaintiff submitted a Charge of Discrimination to the United States Equal Employment Opportunity Commission ("EEOC"), and on November 6, 2018, Plaintiff received a Right to Sue Letter from the EEOC. (Id. ¶ 3.)

On May 13, 2019, Defendants Farese and New World answered Plaintiff's complaint, and asserted a state law counterclaim against Plaintiff for malicious prosecution. (Doc. 21.) On the same day, Defendants Pacheco, Bardis, and Bulo filed a separate but nearly identical answer, and asserted state law counterclaims for malicious prosecution and defamation. (Doc. 22.) Defendants' malicious prosecution claims allege that Plaintiff maliciously prosecuted Defendants by filing the EEOC charge of discrimination and the complaint in the instant action. (Doc. 21 ¶¶ 29-48; Doc. 22 ¶¶ 29-48.) The defamation counterclaim asserted by DefendantsPacheco, Bardis, and Bulo alleges that Plaintiff defamed them on May 29, 2018 when he spoke with Defendant Farese about his termination and complained about the racial epithets and sexual harassment he faced at the hands of these defendants. Defendants allege that I have jurisdiction over these counterclaims because they are compulsory counterclaims. (Doc. 21, at ¶ 7; Doc. 22, at ¶ 7.) Defendants allege no other basis for jurisdiction over their counterclaims.

On June 3, 2019, Plaintiff filed a motion to dismiss Defendants' counterclaims under Federal Rule of Civil Procedure 12(b)(6). (Doc. 24.) Defendants opposed the motion on June 17, 2019, (Docs. 25, 26), and Plaintiff filed a reply memorandum of law on June 24, 2019, (Doc. 27.)

II. The Court's Supplemental Jurisdiction²

Defendants claim that I have supplemental jurisdiction over their state law counterclaims under 28 United States Code § 1367(a). (Doc. 21, at ¶ 7; Doc. 22, at ¶ 7.) Section 1367(a) confers on the Court "supplemental jurisdiction over all [] claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution." 28 U.S.C. § 1367(a). "For purposes of section 1367(a), claims 'form part of the same case or controversy' if they 'derive from a common nucleus of operative fact.'" Shahriar v. Smith & Wollensky Rest. Grp., Inc., 659 F.3d234, 245 (2d Cir. 2011) (quoting Briarpatch Ltd., L.P. v. Phoenix Pictures, Inc., 373 F.3d 296, 308 (2d Cir. 2004)). A state law counterclaim automatically satisfies this test when it is a compulsory counterclaim under Federal Rule of Civil Procedure 13. See Federman v. Empire Fire & Marine Ins. Co., 597 F.2d 798, 810-11 (2d Cir. 1979) ("The general rule as applied to counterclaims is that a federal court has ancillary jurisdiction over compulsory counterclaims . . . ."). A counterclaim is compulsory under Rule 13 if it "arises out of the transaction or occurrence that is the subject matter of the opposing party's claim," and this standard is met when there is a "logical relationship" between the counterclaim and the main claim. Jones v. Ford Motor Credit Co., 358 F.3d 205, 209 (2d Cir. 2004). The "logical relationship" test asks "whether the essential facts of the various claims are so logically connected that considerations of judicial economy and fairness dictate that all issues be resolved in one lawsuit." Harris v. Steinem, 571 F.2d 119, 123 (2d Cir. 1978).

When a counterclaim is not compulsory, however, the Court must independently decide under section 1367 "the constitutional question whether there is federal jurisdiction over the counterclaim." Jones, 358 F.3d at 212 (quoting Ambromovage v. United Mine Workers, 726 F.2d 972, 990 (3d Cir. 1984)).³ Therefore, unless the counterclaim satisfies the "common nucleus of operative fact" standard, the Court cannot exercise supplemental jurisdiction pursuant to § 1367(a).⁴ Even if a permissive counterclaim satisfies the constitutional test, that "does notend the inquiry a district court is obliged to make with respect to permissive counterclaims." Jones, 358 F.3d at 214. The court still "must consider whether any of the four grounds set out in subsection 1367(c) are present to an extent that would warrant the exercise of discretion to decline assertion of supplemental jurisdiction." Id. Section 1367(c) provides that "[t]he district courts may decline to exercise supplemental jurisdiction over a claim under [§ 1367(a)] if—

(1) the claim raises a novel or complex issue of State law,

(2) the claim substantially predominates over the claim or claims over which the district court has original jurisdiction,

(3) the district court has dismissed all claims over which it has original jurisdiction, or

(4) in exceptional circumstances, there are other compelling reasons for declining jurisdiction."

28 U.S.C. § 1367(c). "If one of the § 1367(c) categories applies, the district court may then undertake the discretionary inquiry of whether to exercise supplemental jurisdiction." Catzin, 899 F.3d at 85. "[A] district court should not decline to exercise supplemental jurisdiction unless it also determines that doing so would not promote the values articulated in Gibbs: economy, convenience, fairness, and comity." Id. (quoting Jones, 358 F.3d at 214 (citing Gibbs, 383 U.S. at 726)).

III. Discussion

I find that Defendants' counterclaims, styled as state common law torts alleging malicious prosecution and defamation based on Plaintiff's filing of an EEOC Charge of Discrimination and raising a complaint about discrimination with Defendant Farese, do notsatisfy the requirements of supplemental jurisdiction under § 1367. First, contrary to Defendants' contention, the Second Circuit has explicitly held that counterclaims of this nature are not compulsory under Rule 13(a). See Harris, 571 F.2d at 124. ("[A] claim in the nature of malicious prosecution, which arises out of the bringing of the main action, generally cannot be asserted either as a compulsory or a permissive counterclaim, since such a claim is premature prior to the determination of the main action.") (citation omitted). Second, even if Defendants' counterclaims independently satisfied the "common nucleus of operative fact" test sufficient to warrant the exercise of supplemental jurisdiction, which they do not, I would still decline to exercise supplemental jurisdiction under § 1367(c).

In Harris, the Second Circuit dismissed state law counterclaims in circumstances similar to the instant case. 571 F.2d 119. The plaintiff's suit involved defendant's alleged securities law violations and fraudulent inducement of the plaintiff's stock sale. Id. at 121. The defendants raised state law counterclaims for libel and malicious prosecution based on statements contained in the complaint, as well as on statements concerning the lawsuit made after the complaint was brought. See id. In rejecting the defendant's contention that the counterclaims were compulsory under Rule 13(a), and thus subject to the court's ancillary jurisdiction, the court stated that "the case law seems clear that a counterclaim which stems from the filing of the main action and subsequent alleged defamations is not a compulsory counterclaim covered by Rule 13(a)." Id. at 124. The court went on to note that even defamatory statements disseminated before the filing of the complaint do not give rise to a compulsory counterclaim for defamation. See id. at 124-25. Harris recognized that although the plaintiff's claim and the defendants' counterclaims were related in that "success on the main claim would probably have defeated the counterclaim[s]," the issues of fact and law raised by the counterclaims were sufficiently different so that thelogical relation between them was "at best attenuated." Id. at 124. The court specifically identified as distinct issues of fact and law the issues involving the application of certain state law privileges in defamation actions, and questions as to whether the plaintiff's defamatory statements were made with the requisite scienter. See id.

The analysis applied in Harris similarly forecloses Defendants' contention here that their malicious prosecution and defamation counterclaims are compulsory under Rule 13(a) and therefore satisfy § 1367(a). Consistent with the holding in Harris, Defendants' counterclaims "do not arise...