Clarke v. Aljex Software, Inc.

          MEMORANDUM DECISION AND ORDER ON MOTIONS TO DISMISS (Dkt Nos. 45 & 50)

          Ronald E. Bush Chief U.S. Magistrate Judge

         Pending are Plaintiff's Renewed Motion to Dismiss Defendant's Counterclaim (Dkt. 50) and Defendants' Motion to Dismiss Second Amended Complaint (Dkt. 45). Having carefully considered the record and otherwise being fully advised, the Court enters the following Memorandum Decision and Order:

         I. BACKGROUND

         Defendant Aljex Software, Inc. (“Aljex”) alleges that it is a New Jersey corporation in the business of providing cloud-based logistics software. Defs.' Answer to Second Am. Compl., Affirmative Defenses, and Countercl. of Aljex Software, Inc. ¶¶ 2, 8 (“Countercl.”) (Dkt. 46).^[1] Aljex's CEO is Defendant Tom Heine (“Heine”), a Colorado resident. Id. ¶ 3. In early 2015, Aljex placed an advertisement on a Denver, Colorado “Craigslist” online forum seeking a programmer to develop a new website. Id. ¶¶ 9, 10. On February 25, 2015, Jonathon Clarke (“Clarke”) responded and quoted a $1500 flat rate to build the website. Id. ¶ 11. Heine communicated further with Clarke and ultimately hired him to develop the website. Id. ¶ 12. On February 26, 2015, Clarke requested $750 via an online payment service, which Aljex paid. Id. ¶ 13. Clarke signed a contract to develop the website the same date. Id. ¶ 14. The contract required Clarke to complete the website “no later than 30 days after [Aljex] has submitted all the necessary materials.” Id. ¶ 16. Aljex began providing the necessary materials that day. Id. ¶ 17.

         According to Aljex, beginning on March 2, 2015, Heine and Aljex's Vice President of Sales, Robyn Freeman, began to contact Clarke inquiring on the status of the website. Id. ¶¶ 18-20. Clarke was either unresponsive or stated he would have something “later in the week.” Id. A conference call was set up for March 19, 2015, but Clarke failed to participate in the conference call or to answer telephone calls to his personal phone. Id. ¶¶ 21-22.

         On March 20, 2015, Clarke emailed Heine a link to review the website but requested an additional $600 payment before the site would be uploaded for review. Id. ¶¶ 24-26. Heine responded that he would not make the payment until he saw the website. Id. ¶ 28. Clarke demanded advance payment before he would permit Aljex to review any work he had performed. Id. ¶¶ 33-34. Aljex brings counterclaims of breach of contract, breach of the implied covenant of good faith and fair dealing, and fraud. Id. ¶¶ 40-65.

         Clarke brings suit against both Aljex and Heine under the federal Telephone Consumer Protection Act, 47 U.S.C. § 227 (“TCPA”), and under state law for invasion of privacy by intrusion upon seclusion. Pl.'s Second Am. Compl. ¶ 1 (“SAC”) (Dkt. 44). Clarke alleges that Defendants Aljex and Heine repeatedly sent fax data to Clarke's telephone using an “automatic telephone dialing system” as that term is defined by the TCPA. Id. ¶¶ 6-8. Specifically, Clarke alleges that between late March and early April of 2015, Defendants placed over 1000 calls from Aljex's number to Plaintiffs cell phone. Id. ¶ 8. The calls were fax calls which Clarke alleges that Defendants knew would result in repeated, auto-dialed, calls that could not be answered. Id. ¶ 12. Heine also sent Clarke an email from his work email saying that Heine had prepared a website titled “jonathanclarkesucks.com” that would be forthcoming. Id. ¶ 10. Heine sent “thousands of emails” to Clarke, making it difficult for Clarke to use his email. Id. ¶ 13. These actions, Clarke alleges, created a pattern of intentional harassment. Id.

         Each party has filed a motion to dismiss. Defs.' Mot. to Dismiss Second Am. Compl. (Dkt. 45); Pl.'s Renewed Mot. to Dismiss Defs Countercl. (Dkt. 50). Clarke contends a lack of subject matter jurisdiction, with no basis for either supplemental jurisdiction or original diversity jurisdiction. Mem. in Supp. of Pl.'s Mot. to Dismiss (Dkt. 34-1).^[2] Heine and Aljex contend that Clarke's second amended complaint fails to state a claim under Fed.R.Civ.P. 12(b)(6). Defs.' Motion to Dismiss Second Am. Compl. (Dkt. 45); Mem. in Supp. of Defs.' Mot. to Dismiss Second Am. Compl. (Dkt. 45-1).

         II. ANALYSIS AND RULINGS

         A. On this Record, the Court has Jurisdiction to Consider the Claims made Against Clarke.

         Clarke argues that this Court has no subject matter jurisdiction to consider Aljex's counterclaims, all of which arise exclusively under state law. Mem. in Supp. of Pl.'s Mot. to Dismiss Def.'s Countercl. (Dkt. 34-1); Pl.'s Reply in Supp. of Pl.'s Mot. to Dismiss Def.'s Countercl. (Dkt. 42). Apparently drawing upon Fed.R.Civ.P. 12(b)(1), Clarke argues that neither supplemental jurisdiction under 28 U.S.C. § 1367, nor original diversity jurisdiction under 28 U.S.C. § 1332, applies to Aljex's claims. Id. The Court, however, concludes that there is supplemental jurisdiction to consider Aljex's counterclaims for the reasons which follow; therefore, it need not reach the question of diversity jurisdiction.

         A compulsory counterclaim is one that “arises out of the transaction or occurrence that is the subject matter of the opposing party's claim; and does not require adding another party over whom the court cannot acquire jurisdiction.” Fed.R.Civ.P. 13(a). To assess whether a claim is compulsory, the Ninth Circuit employs a liberal “logical relationship” test. In re Lazar, 237 F.3d 976, 979 (9th Cir. 2001). Under this test:

[a] logical relationship exists when the counterclaim arises from the same aggregate set of operative facts as the initial claim, in that the same operative facts serve as the basis of both claims or the aggregate core of facts upon which the claim rests activates additional legal rights otherwise dormant in the defendant.

Id. (citing Pinkstaff v. United States, 974 F.2d 113, 115 (9th Cir. 1992)). “This flexible approach to Rule 13 problems attempts to analyze whether the essential facts of the various claims are so logically connected that considerations of judicial economy and fairness dictate that all the issues be resolved in one lawsuit.” Pochiro v. ...