Rudolph v. 1ProFence

1
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
JAMES RUDOLPH 	)
)
Plaintiff, 	)
) Case No. 1:24-cv-00267-KD-C
v. 	)
)
1PROFENCE, 	) 	JURY DEMAND
)
Defendant. 	)
REPORT AND RECOMMENDATION
This matter is before the Court on plaintiff/counterclaim defendant James
Rudolph’s (“Plaintiff”) Motion to Dismiss Counterclaim for Lack of Jurisdiction.
(Doc. 21). For the reasons stated below, it is recommended that plaintiff’s motion
be GRANTED.
I. 	PROCEDURAL HISTORY
Plaintiff filed his complaint on August 1, 2024, alleging race discrimination,
hostile work environment, and retaliation in violation of Title VII and 42 U.S.C. §
1981. 	(Doc. 	1). 	Defendant 	1Profence 	(“Defendant”) 	filed 	an 	answer 	and
counterclaim on December 16, 2024, as well as a partial motion to dismiss Count II
and a partial motion for summary judgment. (Doc. 12-16). Defendant contends in its
counterclaim that Plaintiff borrowed $913 from Defendant that he did not repay.
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Plaintiff filed a motion to dismiss the counterclaim, arguing that this Court
lacks subject matter jurisdiction over this permissive counterclaim. Defendant did
not file a response.
II. 	DISCUSSION
“Federal courts have limited subject matter jurisdiction and are empowered to
hear only those cases within its statutory or constitutional authority.” 	Bell v.
Birmingham Bd. of Educ., No. 23-10118, 2023 U.S. App. LEXIS 29644, at *2 (11th
Cir. Nov. 7, 2023) (quoting Taylor v. Appleton, 30 F.3d 1365, 1367 (11th Cir. 1994)).
Congress has granted federal courts jurisdiction “over cases raising federal questions
or cases involving 	diverse citizens where the amount in controversy exceeds
$75,000.” Id. (citing 28 U.S.C. §§ 1331, 1332(a)).
Furthermore, Rule 13 of the Federal Rules of Civil Procedure recognizes two
types of counterclaims: compulsory and permissive. A compulsory counterclaim is
one that “arises out of the transaction or occurrence that is the subject matter of the
opposing party’s claim.” Fed. R. Civ. P. 13(a)(1)(A). Any other type of counterclaim
is merely a permissive counterclaim. Fed. R. Civ. P. 13(b). Historically, federal
courts have held that a permissive counterclaim “had to have an independent federal
jurisdictional basis before a federal court could hear it.” Barr v. Hagan, 322 F. Supp.
2d 1280, 1284 (M.D. Ala. 2004) (citing Baker v. Gold Seal Liquors, Inc., 417 U.S.
467, 469 n.1, 94 S. Ct. 2504 n.1, 41 L. Ed. 2d 243 (1974); East-Bibb Twiggs
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Neighborhood Ass'n v. Macon Bibb Planning & Zoning Com'n, 888 F.2d 1576, 1578
(11th Cir. 1989)).
“However, in 1990, Congress adopted 28 U.S.C.A. § 1367, which codified the
judicially crafted doctrines of ancillary and pendent jurisdiction under the title of
‘supplemental jurisdiction.’” Barr, 322 F. Supp. 2d at 1284. Section 1367 provides
that district courts “shall have supplemental jurisdiction over all other claims that
are so related to claims in the action within such original jurisdiction that they form
part of the same case or controversy under Article III of the United States
Constitution.” 28 U.S.C.A. § 1367.
In this case, this Court lacks subject matter jurisdiction over Defendant’s
counterclaim under either analysis. First, Defendant’s purported loan of money to
Plaintiff is completely unrelated to Plaintiff’s claims of race discrimination, hostile
work environment, and retaliation. Thus, under the analysis of § 1367, Defendant’s
claim is not part of the same case or controversy as Plaintiff’s claims.
Second, since the counterclaim is unrelated to Plaintiff’s claims, this Court
must 	have 	an 	independent 	jurisdictional 	basis 	in 	order 	to 	hear 	Defendant’s
counterclaim, but no such jurisdictional basis exists here. See Barr, 322 F. Supp. 2d
at 1284. Defendant’s claim is not a federal question, 28 U.S.C. § 1331, nor is there
diversity jurisdiction since both parties are located in Alabama and the amount at
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issue is $913, 28 U.S.C. § 1332. Accordingly, this Court lacks jurisdiction over
Defendant’s counterclaim.
III. 	CONCLUSION
Because this Court does not have subject matter jurisdiction over Defendant’s
permissive counterclaim, it is recommended that Plaintiff’s Motion to Dismiss
Counterclaim (Doc. 21) be GRANTED.
Notice of Right to File Objections
A copy of this report and recommendation shall be served on all parties in the
manner provided by law. Any party who objects to this recommendation or anything
in it must, within fourteen (14) days of the date of service of this document, file
specific written objections with the Clerk of this Court. See 28 U.S.C. § 636(b)(1);
Fed. R. Civ. P. 72(b); S.D. Ala. GenLR 72(c). 	The parties should note that under
Eleventh Circuit Rule 3-1, “[a] party failing to object to a magistrate judge’s findings
or recommendations contained in a report and recommendation in accordance with
the provisions of 28 U.S.C. § 636(b)(1) waives the right to challenge on appeal the
district court’s order based on unobjected-to factual and legal conclusions if the party
was informed of the time period for objecting and the consequences on appeal for
failing to object. In the absence of a proper objection, however, the court may review
on appeal for plain error, if necessary, “in the interest of justice.” 11th Cir. R. 3-1.
In 	order 	to 	be 	specific, 	an 	objection 	must 	identify 	the 	specific 	finding 	or
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recommendation to which objection is made, state the basis for the objection, and
specify the place in the Magistrate Judge’s report and recommendation where the
disputed determination is found. An objection that merely incorporates by reference
or refers to the briefing before the Magistrate Judge is not specific.
DONE this 14th day of March, 2025.
/s/WILLIAM E. CASSADY
UNITED STATES MAGISTRATE JUDGE
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