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Smith v. Kansas Public Employees Retirement System

United States District Court, D. Kansas

January 28, 2019

JULIE A. SMITH, Plaintiff,
v.
KANSAS PUBLIC EMPLOYEES RETIREMENT SYSTEM, Defendant.

          MEMORANDUM AND ORDER

          CARLOS MURGUIA UNITED STATES DISTRICT JUDGE

         Plaintiff Julie A. Smith brought this discrimination and retaliation action against her former employer, defendant Kansas Public Employees Retirement System. Plaintiff claims that she was subject to disparate treatment and retaliation in violation of the Americans with Disabilities Act (“ADA”), Age Discrimination in Employment Act (“ADEA”), and the Family Medical Leave Act (“FMLA”). Defendant filed a counterclaim for breach of contract, arguing that plaintiff agreed in writing to release her claims against defendant in exchange for retaining a position with defendant through October 1, 2018. Plaintiff then filed a Motion to Dismiss for Failure to State a Claim Upon Which Relief Can Be Granted (Doc. 6). In this motion, plaintiff argues that (1) defendant failed to include a statement of jurisdiction in its counterclaim; (2) defendant's counterclaim does not satisfy the notice pleading standard of Fed.R.Civ.P. 8; (3) defendant cannot assert release/breach of contract as a counterclaim; and (4) defendant cannot assert a claim for attorney's fees. The court addresses each of these arguments below.

         Is defendant required to include a statement of jurisdiction in its counterclaim?

         Plaintiff alleges that defendant's counterclaim requires a statement of jurisdiction, and, because it does not include one, should be dismissed. Specifically, plaintiff alleges that her claim arises under federal law and that defendant must state why this court has jurisdiction over its state law breach of contract counterclaim. Defendant responds that a statement of jurisdiction is not required when the counterclaim is compulsory. Plaintiff disagrees that the counterclaim is compulsory.

         Fed. R. Civ. P. 8(a)(1) requires a statement of the grounds for the court's jurisdiction unless the court already has jurisdiction and the claim needs no jurisdictional support. Whether the district court has jurisdiction over a counterclaim depends upon whether the counterclaim is compulsory. Adamson v. Dataco Derex, Inc., 178 F.R.D. 562, 564 (D. Kan. 1998) (citing Pipeliners Local Union No. 798 v. Ellerd, 503 F.2d 1193, 1198 (10th Cir. 1974)); Gus T. Handge & Son Painting Co. v. Douglass State Bank, 543 F.Supp. 374, 380 (D. Kan. 1982). If the counterclaim is compulsory, the court has jurisdiction. Pipeliners Local Union No. 798, 503 F.2d at 1198. If the counterclaim is permissive, there must be an independent ground of federal jurisdiction. Id.

         A counterclaim is compulsory “if it arises out of the same transaction or occurrence that is the subject matter of the opposing party's claim.” Fed.R.Civ.P. 13(a). If it does not arise out of the same transaction or occurrence, the counterclaim is permissive. Fed.R.Civ.P. 13(b). The sole issue, therefore, is whether defendant's counterclaim for breach of contract “arises out of the same transaction or occurrence” as plaintiff's employment claims.

         The Tenth Circuit joined “most courts” in its adoption of four factors to consider when deciding if a counterclaim is compulsory:

(1) Are the issues of fact and law raised by the claim and counterclaim largely the same?
(2) Would res judicata bar a subsequent suit on defendants' claim absent the compulsory counterclaim rule?
(3) Will substantially the same evidence support or refute plaintiffs' claim as well as defendants' counterclaim? and,
(4) Is there any logical relation between the claim and the counterclaim? Pipeliners Local Union No. 798, 503 F.2d at 1198 (citing Wright and Miller, Federal Practice and Procedure, Civil § 1410). “The ‘logical relation' test is the most controlling.” Id. (citing Moore v. N.Y. Cotton Exch., 270 U.S. 593 (1926)).

         Because of its importance, the court looks first at the “logical relation” test. It appears that, when considering the totality of the facts presented, there is a strong logical relationship between the claims. Both claims center around plaintiff's employment and the conditions thereof. Defendant's counterclaim alleges that by signing the agreement, plaintiff released many of the exact claims she has brought here. Though she does not challenge the agreement's validity, plaintiff alleges that the agreement was essentially a turning point in her constructive discharge. And defendant's answer raises an affirmative defense of release, requiring the court to examine the release as part of the case. The logical relationship between the agreement and discrimination claims is very close and the “most controlling” factor is convincing on its own.

         Next, the court looks at the issues of fact and law. Issues of fact raised by both claims appear largely the same. Plaintiff's various claims allege she was discriminated against and include specific claims she was put under immense pressure to choose between immediate termination and signing the employment agreement at issue in the counterclaim. Although resolution of plaintiff's claims will require evidence regarding her specific treatment and her medical condition outside the agreement, she specifically alleges that circumstances surrounding the agreement led to her constructive discharge, making the agreement a central issue to her case. As a result, the agreement at issue in the counterclaim relates to plaintiff's claims because the agreement is a major event supporting her claims of termination/constructive discharge and the terms of the agreement are crucial to the events alleged after it was signed. Plaintiff will need to provide evidence of the timing and circumstances surrounding the agreement, the terms of her demotion, and the specific terms of the agreement. The agreement also acts a time marker in plaintiff's timeline. After describing the agreement and the difficult decision she was forced to make in signing it, the complaint alleges that her working conditions significantly deteriorated into a constructive discharge after she signed the agreement and accepted the demotion- she was forced to train her replacement and excluded from team meetings based on her new job title under the agreement. The court expects that plaintiff will offer a substantial amount of evidence relating to the counterclaim as part of her own claim.

         The court next turns to the issue of res judicata. Res judicata bars a claim “when there is a final judgment on the merits which precludes the parties or their privies from relitigating the issues that were decided or issues that could have been raised in the earlier action.” Driver Music Co. v. Commercial Union Ins. Cos., 94 F.3d 1428, 1435 (10th Cir. 1996) (quoting Frandsen v. Westinghouse Corp., 46 F.3d 975, 978 (10th Cir. 1995) (citing Allen v. McCurry, 449 U.S. 90, 94 (1980))). Res judicata principles bar a claim “when the prior action involved identical claims and the same parties or their privies.” Id. (quoting Frandsen, 46 F.3d at 978). Here, the link between the claims is probably too tenuous to ...


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