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Acosta v. Rab Communications, Inc.

United States District Court, S.D. Ohio, Eastern Division

December 27, 2019

R. ALEXANDER ACOSTA, Plaintiff,
v.
RAB COMMUNICATIONS, INC., Defendant,
v.
FAST PACE CONNECTIONS, LLC, AND CORY L. JOHN Third-Party Defendants.

          Jolson Magistrate Judge

          OPINION & ORDER

          ALGENON L. MARBLEY, CHIEF UNITED STATES DISTRICT JUDGE

         This matter comes before the Court on Plaintiff, R. Alexander Acosta, Secretary of Labor, United States Depart of Labor's Motion to Strike or, in the Alternative, to Sever and/or Try Separately RAB Communication Inc.'s Third-Party Complaint (“Motion”). (ECF No. 7). In the Motion, the Secretary asks this Court to strike Defendant's counterclaim (ECF No. 3) against third-party Defendants Cory L. John and Fast Pace Connections, LLC. For the reasons set forth below, Plaintiff's Motion is GRANTED IN PART AND DENIED IN PART.

         I. BACKGROUND

         Defendant and third-party Plaintiff, RAB Communications, (hereinafter “Defendant” or “RAB”) is a Maryland company that provides installation services to cable television, telephone, and internet providers. (ECF No. 3 at 8). RAB contracts with local installation companies, like third-party Defendant, Fast Pace Connections LLC (“Fast Pace”) to provide installation services to those cable and internet providers. Those third-party companies in turn employ installers to provide installation services to users of the telephone, television and internet providers. Id. at 8-9. RAB entered into a contract with Time Warner Cable Midwest in June of 2014. Id. at 9. To comply with this contract, RAB contracted with Fast Pace in January 2015. Id. Fast Pace agreed to employ “competent, reliable installers” that would meet Time Warner's specifications and also “abide by all state and federal laws.” Id. at 9. The agreement between RAB and Fast Pace specifically provided that the contract creates no “employer-employee” relationship between RAB and Fact Pace and that Fast Pace agrees to “indemnify, defend, and hold harmless” RAB. Id. at 9-10. In December 2016, Fast Pace's sole member, Cory L. John, submitted a letter to RAB terminating the contract between RAB and Fast Pace. (ECF No. 17 at 4).

         According to RAB, Plaintiff began investigating RAB shortly thereafter and determined that RAB properly paid its Worthington, Ohio area employees. (ECF No. 3 at 11). Plaintiff also investigated installers officially employed by Fast Pace and determined that those employees were not paid minimum wage or overtime. Id. Plaintiff then filed suit against RAB pursuing injunctive relief and damages, alleging that RAB was the actual employer of those installers, and failed to pay them minimum wage or overtime pursuant to the Fair Labor Standards Act (“FLSA”). Id.

         After suit was brought, RAB submitted a copy of the complaint to Fast Pace and Mr. John and asked that they indemnify RAB and defend them in the action. (ECF No. 17 at 4). Fast Pace and John refused to do so, arguing that they have no indemnification obligation. (ECF No. 17-3). RAB then filed an answer to Plaintiff's complaint including a third-party complaint against Fast Pace alleging breach of contract for failure to pay installers, breach of contract for failure to defend and indemnify, common law indemnity, statutory contribution under Ohio law, unjust enrichment, and requesting a declaratory judgment that Fast Pace must indemnify RAB. (ECF No. 3 at 12-17).

         In response, Fast Pace filed an answer and counterclaim against RAB alleging that RAB never operated according to the terms of the agreement. (ECF No. 20 at 9). According to Fast Pace and Mr. John, RAB hired all the initial installers that worked for Fast Pace and controlled all aspects of the employment relationship including hiring decisions, drug testing, work schedules, assignments, and hours. Id. RAB also required Fast Pace and the installers to wear uniforms that only bore the RAB logo, drive trucks purchased from RAB that only bore the RAB logo and use all of RAB's supplies for projects. Id. at 9-11. Mr. John claims that the agreement with RAB was a deliberate attempt to cause Mr. John to waive his rights under the FLSA and to avoid liability for violating federal and state employment laws. Id. at 12.

         Plaintiff filed a motion to strike or sever RAB's third-party claims arguing: (1) that the third-party complaint should be struck as a whole because it encroaches on the Secretary's power to enforce the FLSA; (2) that in the alternative Counts IV, V, and VI should be stricken because employers have no right to contribution, indemnification, or unjust enrichment under the FLSA; and (3) that should Counts IV, V, and VI be stricken but none of the other claims, the remaining third-party claims should be severed and tried separately because the facts and legal issues in the third-party claims are “different from those in the Secretary's case.” (ECF No. 13 at 3-4, 6). RAB argues that the Secretary's motion is premature because this Court has not yet determined that Fast Pace is an employer or is liable. (ECF No. 17 at 5-6).

         II. LEGAL STANDARD

         Federal Rule of Civil Procedure 14(a)(4) provides that “[a]ny party may move to strike the third-party claim, to sever it, or to try it separately.” Fed.R.Civ.P. 14. The Court has the discretion to decide “whether to permit impleader of third parties.” Fed. Home Loan Mortg. Corp. v. Kantz, No. 3:15-CV-00932, 2018 WL 1535465, at *3 (M.D. Tenn. Mar. 29, 2018), report and recommendation adopted, No. 3:15-CV-00932, 2018 WL 1881254 (M.D. Tenn. Apr. 19, 2018).

         As the Sixth Circuit has observed, the purpose of Rule 14 “is to permit additional parties whose rights may be affected by the decision in the original action to be joined so as to expedite the final determination of the rights and liabilities of all the interested parties in one suit.” Am. Zurich Ins. Co. v. Cooper Tire & Rubber Co., 512 F.3d 800, 805 (6th Cir. 2008). Third-party claims are appropriate “where the third-party defendant's liability to the third-party plaintiff is dependent on the outcome of the main claim; one that merely arises out of the same set of facts does not allow a third-party defendant to be impleaded.” Id.

         III. LAW AND ANALYSIS

         The Secretary argues that: (1) Defendant's counterclaims should be stricken as a whole because it encroaches on Secretary's power to enforce the FLSA; (2) there is no express or implied right to indemnity, contribution, or unjust enrichment in the FLSA; and (3) should the Court only strike some but not all of the claims, the Court should choose not to exercise its supplemental jurisdiction over any remaining ...


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