United States District Court, D. Maryland
JAMES K. BREDAR, District Judge.
David Vasquez Ramirez ("Mr. Ramirez") brought this suit against Amazing Home Contractors, Inc. ("AHC") and James Ryder, Jr. ("Mr. Ryder") for violations of the federal Fair Labor Standards Act ("FLSA"), 29 U.S.C. §§ 201 et seq., the Maryland Wage and Hour Law ("MWHL"), Md. Code Ann., Lab. & Empl. §§ 3-401 et seq., and the Maryland Wage Payment and Collection Law ("MWPCL"), Md. Code Ann., Lab. & Empl. §§ 3-503 et seq. AHC and Mr. Ryder filed an answer, and AHC filed a counterclaim alleging that Mr. Ramirez had committed fraud. (ECF No. 5.) Now pending before the Court is Mr. Ramirez's motion to dismiss AHC's counterclaim for failure to state a claim, or in the alternative, for lack of jurisdiction. (ECF No. 8.) The issues have been briefed (ECF Nos. 8, 10, 12), and no hearing is required, Local Rule 105.6. For the reasons explained below, Mr. Ramirez's motion to dismiss AHC's counterclaim will be GRANTED.
AHC is a roofing contractor "formed under the laws of the State of Maryland" (ECF No. 5 at 9 ¶ 3), and Mr. Ryder is an owner of AHC, ( Id. ¶ 4). Mr. Ramirez was formerly employed by AHC, and he resides in Maryland. ( Id. ¶¶ 4, 6; ECF No. 1 ¶ 1.)
In February 2013, Mr. Ramirez applied to work for AHC. (ECF No. 5 ¶ 5.) Mr. Ramirez filled out an Application for Employment and an I-9 form "attesting that he was a lawful permanent resident, '" and produced a Permanent Resident Card. ( Id. ¶¶ 5-6.) On the basis of this information, AHC hired Mr. Ramirez to work as a roofer. ( Id. ¶ 7.) In May 2013, the Department of Homeland Security ("DHS") audited AHC's labor force and determined that seven of AHC's employees-including Mr. Ramirez-had provided insufficient employment eligibility verification. ( Id. at 9-10 ¶ 8; see also ECF No. 5-1 ("Notice of Suspect Documents" letter from DHS).) Soon thereafter, AHC terminated Mr. Ramirez's employment. (ECF No. 5 at 10 ¶ 11.) AHC lost a contract and other business opportunities "as a result of having to abruptly terminate Mr. Ramirez." ( Id. ¶ 12.)
On July 7, 2014, Mr. Ramirez filed this suit, alleging that AHC and Mr. Ryder failed to pay wages owed in violation of the FLSA, the MWHL, and the MWPCL. (ECF No. 1.) On August 14, AHC and Mr. Ryder filed their Answer to Mr. Ramirez's Complaint. (ECF No. 5.) Along with the Answer, AHC filed a counterclaim alleging that Mr. Ramirez committed fraud when he represented that he was eligible to work in the United States. ( Id. ) On September 8, Mr. Ramirez filed this motion to dismiss AHC's counterclaim for failure to state a claim, and in the alternative for lack of jurisdiction. (ECF No. 8.)
B. LEGAL STANDARD
The burden of proving subject-matter jurisdiction is on the claimant. Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir. 1982) (noting challenge may be either facial ( i.e., complaint fails to allege facts upon which subject-matter jurisdiction can be based) or factual ( i.e., jurisdictional allegations of complaint are not true)). See also Kerns v. United States, 585 F.3d 187, 192 (4th Cir. 2009) (same); Richmond, Fredericksburg & Potomac R.R. Co. v. United States, 945 F.2d 765, 768 (4th Cir. 1991) (same).
For the reasons described below, the Court finds that AHC has raised a permissive counterclaim with no independent basis for federal jurisdiction. The Court cannot exercise jurisdiction over such counterclaims, and thus AHC's counterclaim must be dismissed.
1. Compulsory v. Permissive
A compulsory counterclaim "arises out of the transaction or occurrence that is the subject matter of the opposing party's claim." Fed.R.Civ.P. 13(a). In contrast, a permissive counterclaim is any counterclaim that is not compulsory. Fed.R.Civ.P. 13(b). The Fourth Circuit considers four inquiries when assessing whether a counterclaim is compulsory:
(1) Are the issues of fact and law raised in the claim and counterclaim largely the same? (2) Would res judicata bar a subsequent suit on the party's counterclaim, absent the compulsory counterclaim rule? (3) Will substantially the same evidence support or refute the claim as well as the counterclaim? And (4) Is there any logical relationship between the claim and counterclaim? A court need not answer all these questions in ...