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McGuire v. Town of Stratford

United States District Court, D. Connecticut

June 6, 2016

ERIN MCGUIRE, Plaintiff,
v.
TOWN OF STRATFORD, Defendant.

          ORDER

          STEFAN R. UNDERHILL, UNITED STATES DISTRICT JUDGE

         The plaintiff, Erin McGuire, brings this gender/sex discrimination action against the Town of Stratford, Connecticut ("the Town"), under Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e, et seq. McGuire brought the following causes of action against the Town: Sexual Harassment/Prima Facie Gender Discrimination (Count One); Hostile Work Environment (Count Two); Title VII Retaliation (Count Three); and Negligent Supervision (Count Four). (doc. 1) On September 4, 2015, the Town filed an answer with counterclaims against McGuire for conversion, statutory theft under Conn. Gen. Stat. § 52-564, and unjust enrichment. (doc. 48) On October 13, 2015, McGuire moved to dismiss the counterclaims for lack of subject matter jurisdiction. (doc. 53) On January 15, 2016, I denied McGuire‘s motion for reasons stated on the record. McGuire has now moved for reconsideration of my ruling. (doc. 67)

         For the following reasons, McGuire‘s motion is denied.

         I. Standard of Review

         The standard for granting motions for reconsideration is strict; motions for reconsideration "will generally be denied unless the moving party can point to controlling decisions or data that the court overlooked-matters, in other words, that might reasonably be expected to alter the conclusion reached by the court." Shrader v. CSX Transp., Inc., 70 F.3d 255, 257 (2d Cir. 1995). Motions for reconsideration will not be granted where the party merely seeks to relitigate an issue that has already been decided. Id. The three major grounds for granting a motion for reconsideration in the Second Circuit are: (1) an intervening change of controlling law, (2) the availability of new evidence, or (3) the need to correct a clear error or prevent manifest injustice. Virgin Atlantic Airways, Ltd. v. Nat’l Mediation Bd., 956 F.2d 1245, 1255 (2d Cir. 1992) (citing 18 Charles A. Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice & Procedure § 4478).

         II. Background

         The following factual allegations are set forth in McGuire‘s Consolidated Complaint. The Town hired McGuire as an Information Technology ("IT") Services Manager within the Town‘s IT Department on January 29, 2001. Consol. Compl. ¶ 12. Beginning in October, 2013, McGuire alleges that, beginning in October 2013, she was subjected to a campaign of sexual harassment by Thomas Eckels, a co-worker. Id. at ¶ 13. On May 16, 1014, after unsuccessful attempts to resolve the problem, McGuire was "constructively discharged" and forced to resign due to the harassment. Id. at ¶ 26.

         In its answer, the Town asserted state-law counterclaims of conversion, statutory theft, and unjust enrichment against McGuire. Those counterclaims were based on an allegation that, beginning as early as the fall of 2013, McGuire had been removing and selling computer equipment owned by the Town without permission. Consol. Ans. at ¶ 1-7.

         III. Discussion

         McGuire moves for reconsideration of my previous ruling on two grounds: (1) the Town‘s counterclaims, which she argues are permissive, seek affirmative relief in addition to a damages set-off, and therefore must be supported by independent jurisdiction in order for me to exercise supplemental jurisdiction over them; and (2) in a substantially similar argument to that in her initial motion, she asserts that a defendant cannot assert a counterclaim sounding in tort against a Title VII plaintiff.

         Federal courts may exercise supplemental jurisdiction over state law claims when authorized by 28 U.S.C. § 1367. Section 1367(a) states that a district court may exercise supplemental jurisdiction over "all other claims that are so related to the claims in the action within such original jurisdiction that they form part of the same case or controversy." "A state law claim forms part of the same controversy if it and the federal claim derive from a common nucleus of operative fact." Briarpatch Ltd., L.P v. Phoenix Pictures, Inc., 373 F.3d 296, 308 (2d Cir. 2004) (internal quotation marks and citation omitted). "In determining whether two disputes arise from a common nucleus of operative fact, " courts query "whether the facts underlying the federal and state claims substantially overlapped or the federal claim necessarily brought the facts underlying the state claim before the court." Ozawa v. Orsini Design Associates, Inc., 2015 WL 1055902, at *11 (S.D.N.Y. Mar. 11, 2015) (quoting Achtman v. Kirby, McInerny & Squire, LLP, 464 F.3d 328, 335 (2d Cir. 2006)).[1]

         In her initial motion, McGuire argued that the counterclaims do not meet the case-or-controversy standard because they arise from completely different fact patterns during a completely different time period, and because they do not provide the basis for any of the Town‘s defenses to liability. I ruled that, because the counterclaims involve after-acquired evidence that would have provided the basis for termination once discovered and accordingly provide a defense to McGuire‘s damages claims, they are part of the instant case or controversy. That ruling was based on several after-acquired evidence cases, see Klein v. London Star Ltd., 26 F.Supp.2d 689 (S.D.N.Y. 1998); Deshaw v. Lord & Taylor, Div. of May Dep’t Stores Co., 1991 WL 107271 (S.D.N.Y. June 13, 1991); and Ginsberg v. Valhalla Anesthesia Associates, P.C., 971 F.Supp. 144 (S.D.N.Y. 1997); as well as my observation that there does not appear to be any principled basis in the section 1367(a) case-or-controversy definition itself that would grant federal jurisdiction over a counterclaim that was identical to a defense against liability, but not over a counterclaim identical to a defense against damages.

         McGuire first attempts to relitigate the question whether the court may exercise supplemental jurisdiction over counterclaims arising out of after-acquired evidence in the employment context. She relies heavily on Weber v. Fujifilm Med. Sys. U.S.A., Inc., 2011 WL 781172 (D. Conn. Feb. 28, 2011), and Spencer v. Banco Real, S.A., 623 F.Supp. 1008 (S.D.N.Y. 1985), both cases to which she cited in her initial motion. See Pl.‘s Mot. to Dismiss Br. at 4; Pl.‘s Mot. to Dismiss Reply Br. at 5. She has not pointed to any controlling or significant case law that I overlooked in my initial ruling, but I will nevertheless articulate my reasoning more fully here.

         In Deshaw v. Lord & Taylor, an age-discrimination case based on actual termination, a Southern District of New York court exercised supplemental jurisdiction over the defendant‘s counterclaim for actions taken by the plaintiffs against the defendant‘s business interests during his employment. 1991 WL 107271, at *4. Importantly, the defendant in that case, like the Town in the present case, argued that the after-acquired evidence that formed the basis of the counterclaims would also have constituted sufficient grounds for termination. Id. The Deshaw court reasoned that because any discovery pertinent to the counterclaims would accordingly be relevant to the primary claim, the counterclaims could be heard. Id. at *5. That reasoning is compelling to me. And McGuire herself provides the basis for such reasoning where she correctly points out that the after-acquired evidence doctrine permits the Town to enter into the case-in-chief the same underlying facts that give rise to the counterclaims. See Pl.‘s Br. at 7. That ...


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