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Zinman v. Vantage Learning, LLC

United States District Court, E.D. Pennsylvania

January 30, 2017

MATTHEW ZINMAN, Plaintiff,
v.
VANTAGE LEARNING, LLC, VANTAGE LEARNING (USA), LLC, MCCANN ASSOCIATES, INC., BRIAN GIBNEY AND PETER MURPHY, Defendants.

          MEMORANDUM OPINION

          WENDY BEETLESTONE, J.

         After Matthew Zinman was fired from his position as a Sales Representative following a period of medical leave, he brought claims under the Family and Medical Leave Act of 1993 (“FMLA”), 29 U.S.C. § 2601 et seq., and the Americans with Disabilities Act of 1990 (“ADA”), 42 U.S.C.A. § 12101 et seq. His employer, Defendant McCann Associates, Inc. (“McCann”), counterclaimed for fraud, breach of contract, and unjust enrichment. McCann alleges that Zinman was terminated because he made false statements and omitted material information in connection with his employment application, misrepresented his disability, and breached his employment contract by moonlighting for his own business. Zinman has now moved to dismiss McCann's Counterclaims and to strike certain allegations in the pleadings.

         I.FACTUAL BACKGROUND

         In May 2014, Zinman applied to be a Regional Sales Representative for McCann. He was hired for the position and started work a short while later. The resumé he submitted to McCann did not identify his immediately prior employer which, unbeknownst to McCann, had filed suit against Zinman for breach of contract, conversion, and fraud.

         According to McCann, during the entire period of Zinman's employment, he focused his attention on soliciting funds for and promoting his own business. Additionally, on McCann's time and McCann's dime, he attended court hearings related to both the matter filed against him by his former employer and to proceedings related to his filing for bankruptcy.

         After Zinman had been with McCann for a year and some months, he informed his employer that he was bipolar and suffered from manic depression. According to McCann, Zinman requested and was granted a leave of absence as unaccrued vacation time and, later, an unpaid leave of absence in order to manage his disability. He then submitted a request for unemployment benefits. Despite his purported disability, while on leave, Zinman engaged in work related to his own business: he made a video, posted a slide presentation online, solicited donations, and sold “Internship eToolkit” licenses - all for his own company. McCann fired him in June 2016.

         II. LEGAL STANDARD

         For the purposes of this motion, the facts McCann alleges in its counterclaims will be accepted as true and viewed in the light most favorable to McCann as the non-moving party. Rocks v. City of Philadelphia, 868 F.2d 644, 645 (3d Cir. 1989) (citations omitted). To survive a motion to dismiss, each of the counterclaims must contain sufficient factual allegations, accepted as true, to state a claim for relief that is “plausible on its face.” See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “In light of Twombly, ‘it is no longer sufficient to allege mere elements of a cause of action; instead a complaint must allege facts suggestive of [the proscribed conduct].'” Great W. Mining & Mineral Co. v. Fox Rothschild LLP, 615 F.3d 159, 177 (3dCir. 2010)(quoting Phillips v. County of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008)).

         III. DISCUSSION

         Zinman posits that McCann's counterclaims must be dismissed on jurisdictional grounds pursuant to Federal Rule of Civil Procedure 12(b)(1). Each of the counterclaims are state law claims and, accordingly, are subject to the Court's supplemental jurisdiction only if they arise out of the same transaction or occurrence that forms the basis of the original claim. Great Lakes Rubber Corp. v. Herbert Cooper Co., 286 F.2d 631 (3d Cir. 1961). A counterclaim that arises out of the transaction or occurrence that is the subject matter of an opposing party's claim is a compulsory counterclaim within the meaning of Fed.R.Civ.P. 13(a). Any counterclaim that is not compulsory is a permissive counterclaim. Fed.R.Civ.P. 13(b). Plaintiff's argument is that this Court lacks subject matter jurisdiction because the counterclaims are all state law claims and are all permissive rather than compulsory.

         A review of McCann's allegations, considered as true for the purposes of this motion, leads to the conclusion that the counterclaims are compulsory in that they arise out of the same transaction or occurrence that is the subject matter of Zinman's claims. Fed.R.Civ.P. 13(a); Mortensen v. First Fed. Sav. and Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977). “[A] counterclaim is compulsory if it bears a ‘logical relationship' to an opposing party's claim. The phrase ‘logical relationship' is given meaning by the purpose of the rule which it was designed to implement. Thus, a counterclaim is logically related to the opposing party's claim where separate trials on each of their respective claims would involve a substantial duplication of effort and time by the parties and the courts. Where multiple claims involve many of the same factual issues, or the same factual and legal issues, or where they are offshoots of the same basic controversy between the parties, fairness and considerations of convenience and of economy require that the counterclaimant be permitted to maintain his cause of action.” Great Lakes Rubber Corp. v. Herbert Cooper Co., 286 F.2d 631, 643 (3d Cir. 1961) (internal citations omitted).

         Zinman's FMLA and ADA claims are premised on his employer's alleged failure to accommodate his disability, the requirement that he take a block of unpaid leave, and his termination. McCann contends that Zinman's conduct during his recruitment and employment created its causes of action against him. Specifically, the fraud, breach of contract, and unjust enrichment counterclaims are premised on allegations that Zinman omitted material information from his employment application, misrepresented his disability, performed deficiently in his role, engaged in unauthorized secondary employment, staged a “sick-out” so he could pursue his own business venture, and was ultimately terminated for poor performance. McCann asserts that this alleged misconduct both served as the basis for Zinman's termination and constituted fraud, breach of contract, and unjust enrichment. Since the misconduct McCann alleges as the basis for its counterclaims is both factually and legally intertwined with Zinman's claims, the counterclaims bear a logical relationship with the facts and issues set forth in the Complaint and are compulsory counterclaims over which the Court has jurisdiction. Moreover, the claims and counterclaims involve the same parties, overlapping witnesses, the same time period, factual background, factual issues, and documents and other evidence. To require that these claims be litigated separately - the claims in federal court and counterclaims in state court - would result in substantial duplication of effort and time by the parties and the courts.

         A. Breach of Contract

         Zinman seeks dismissal of McCann's breach of contract counterclaim for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). To maintain its breach of contract counterclaim, McCann must have alleged: (1) the existence of a contract; (2) breach of duty under that ...


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