Cordero v. Voltaire, LLC, No. A-13-CV-253-LY, slip op. (W.D. Tex. Dec. 6, 2013)(Austin, M.J.)

In this Fair Labor Standards Act case, the issue was whether Voltaire had alleged viable counterclaims and affirmative defenses.  Voltaire’s counterclaim charged one employee committed fraud by submitting work statements for “falsified and inflated hours” and billing for time and expenses on personal projects.  Slip op. at 8.  Magistrate Judge Austin found that this was a compulsory counterclaim over which there supplemental jurisdiction under 28 U.S.C. § 1367(a).  Slip op. at 7-9.  But he concluded that Voltaire’s theft, conversion, breach of fiduciary duty, and conspiracy claims were permissive, and that there was no independent basis for federal jurisdiction; therefore, he recommended the dismissal of those claims under Rule 12(b)(1).  Slip op. at 10-13 (theft, conversion, and breach of fiduciary duty) and 16 (sua sponte reaching Voltaire’s conspiracy counterclaim).  Magistrate Judge also recommended that Voltaire’s unclean hands and estoppel defenses be stricken under Rule 12(f).  Slip op. at 18-20.  But he concluded that its offset defense (based on allegedly falsified or inflated hours) as well as good faith defense should stand.  Id. at 15-16.