United States District Court, D. Maryland
K. BREDAR, UNITED STATES DISTRICT JUDGE
employees of EM Consulting Group, Inc. ("EM"),
trading as Helion Automotive Technologies
("Helion"), brought this collective and class
action under the Federal Fair Labor Standards Act of 1938
("FLSA"), the Maryland Wage and Hour Law, and the
Maryland Wage Payment and Collection Law. (Compl. ECF No. 1.)
In a combined submission with its Answer, EM filed a
Counterclaim against Plaintiff George Yassa
("Yassa"), alleging fraud (Count I) and breach of
contract/breach of fiduciary duty (Count II).
(Answer/Countercl., ECF No. 5.) Yassa has moved to dismiss
the Counterclaim for failure to state a claim on which relief
may be granted or, alternatively, moved for summary judgment.
(ECF No. 8.) That motion has been fully briefed, and is now
ripe. (ECF Nos. 13, 14.) No hearing is necessary.
See Local Rule 105.6 (D. Md. 2016). The Court will
dismiss the Counterclaim sua sponte for the reasons
stated below. Accordingly, Yassa's motion to dismiss and
his alternative motion for summary judgment are moot.
Automotive Technologies ("Helion") is in the
business of providing information technology support to car
dealerships. (Compl. Introduction; Answer Introduction.)
Yassa worked for Helion and held the position of Project
Department Manager from April 1, 2016, to September 15, 2016.
(Countercl. ¶ 5.) The Project Department Manager is
tasked with overseeing various projects for Helion's
clients, and the position includes the responsibilities of
monitoring project milestones and ensuring that project
deadlines are met. (Id. ¶¶ 6, 12.) As part
of his job, Yassa participated in weekly meetings with
executives to review reports summarizing the progress of
ongoing projects. (Id. ¶¶ 10-13.) These
reports were generated through a computer program called
"Exepron, " which Helion uses to track all its
ongoing projects. (Id. ¶¶ 7-10.)
allegations contained in the Counterclaim arise from projects
related to one of Helion's clients, an entity known as
"Ciocca." (Id. ¶ 6.) Helion alleges
that in order to conceal the fact that the Ciocca project had
fallen behind, Yassa deleted from Exepron various dates
representing the actual deadlines related to the Ciocca
project and replaced them with later dates. (Id.
¶ 15.) The result of these modifications was that as the
Ciocca project fell behind schedule, its lateness was never
revealed by the summary reports generated through Exepron.
(Id.) Furthermore, Helion alleges that Yassa never
called attention to this discrepancy during any of his weekly
meetings with company executives, providing the false
impression that the Ciocca project was on schedule.
(Id.) Finally, Helion alleges that had Yassa not
concealed the project delays from his superiors, Helion could
have reallocated its resources in time to have gotten the
Ciocca project back on schedule. (Id. ¶ 17.)
Because that did not happen, the Counterclaim indicates
Helion was forced to credit Ciocca's account in the
amount of $50, 000 in order to retain the valuable client.
argues that the Counterclaim is deficient in several
respects: that Helion insufficiently pled the elements of
fraud under the heightened requirements of Rule 9(b)
(Yassa's Mem. in Supp. 9-17, ECF No. 8-1), that it failed
to allege the existence of a contract with Yassa
(id. at 17-18), and that it failed to allege the
existence or breach of any fiduciary duty by Yassa
(id. at 18-19). The Court declines to reach any of
these arguments. Instead, it will dismiss the permissive
counterclaim on account of the general policy disfavoring
counterclaims in the FLSA context and because it threatens to
overly complicate the litigation.
of the Federal Rules of Civil Procedure divides counterclaims
into two categories: compulsory and permissive. Compulsory
counterclaims are those that "arise out of the
transaction or occurrence that is the subject matter of the
opposing party's claim" and that do not require
adding any party over which the court lacks jurisdiction.
Fed.R.Civ.P. 13(a). All other counterclaims are permissive.
Fed.R.Civ.P. 13(b). A party to litigation may assert any
permissive counterclaim it wishes to bring (provided the
court has subject matter jurisdiction to hear such a claim),
but the court retains discretion to refuse to entertain
permissive counterclaims that threaten to unduly complicate
the litigation. 6 Charles Alan Wright & Arthur R. Miller,
Fed. Prac. & Proc. Civ. § 1420 (3d ed. 2017).
FLSA is based on a congressional finding that "labor
conditions detrimental to the maintenance of the minimum
standard of living necessary for health, efficiency, and
general well-being of workers" burden commerce, among
other negative social effects. See 29 U.S.C. §
202 (2017). The FLSA thus serves to enforce a public-rather
than a private-right. Donovan v. Pointon, 717 F.2d
1320, 1323 (10th Cir. 1983). It expresses the legislative
desire that the individual worker have the freedom "to
allocate his minimum wage among competing economic and
personal interests." Brennan v. Heard, 491 F.2d
1, 4 (5th Cir. 1974), overruled on other grounds by
McLaughlin v. Richland Shoe Co., 486 U.S. 128, 130
(1988). But the FLSA does not designate the federal
courts to settle disputes against the employee's wages.
Id. ("To clutter these proceedings with the
minutiae of other employer-employee relationships would be
antithetical to the purpose of the Act."). It is for
this reason that several courts, including this one,
"have been hesitant to permit an employer to file
counterclaims in FLSA suits for money the employer claims the
employee owes it, or for damages the employee's tortious
conduct allegedly caused." Ramirez v. Amazing Home
Contractors, Inc., Civ. No. JKB-14-2168, 2014 WL
6845555, at *4 (D. Md. Nov. 25, 2014) (quoting Martin v.
PepsiAmericas, Inc., 628 F.3d 738, 740 (5th Cir. 2010)).
instant case, Yassa and the other Plaintiffs have filed an
action under the FLSA and state law, alleging Helion failed
to pay them required overtime wages. (Compl.
¶¶ 190-208.) The facts alleged to support such a
claim involve the Plaintiffs' job functions, their
compensation, the hours they worked, and the amount they were
paid. (See Id. ¶¶ 143-162.) By contrast,
the Counterclaim for fraud and breach of contract is based on
the details of Yassa's actions with respect to a
particular project. (Countercl. ¶ 15.) Because the
Counterclaim is not based on the same transaction or
occurrence as the Complaint, it is permissive in nature.
While the Court has independent subject matter jurisdiction
over the Counterclaim,  it is persuaded that the public policy
of protecting workers' rights to receive and to direct
the allocation of their minimum wages means Counterclaims by
employers in FLSA cases should be disfavored. Furthermore,
the Court finds that the evidence relevant to resolving the
charges in the Counterclaim is unrelated to that which is
pertinent to the Complaint. Therefore, entertaining the two
causes of action in the same case would unduly complicate the
litigation and add little benefit in terms of judicial
may choose to refile its claims against Yassa in a separate
action in federal or in state court, but the Court will not
entertain them as part of the instant case. For the foregoing
reasons, the Court will dismiss the Counterclaim without
prejudice to refile in a separate action. Yassa's motion
to dismiss for failure to state a claim and his alternative
motion for summary judgment are thus moot. A separate order
 The Court here summarizes the
allegations as presented by EM in the ...