Ader v. Simonmed Imaging Inc., 324 F. Supp. 3d 1045

Background

Plaintiff Keith Ader, a former modality service engineer for SimonMed Imaging (SMI), sued under the FLSA and Arizona Wage Act alleging unpaid overtime and FLSA retaliation after being terminated shortly following service of his complaint.
After Ader’s termination, SMI discovered Ader owned Hi‑Caliber, Inc., a parts vendor; SMI alleges Ader used his SMI email and position to self‑deal by arranging purchases through Hi‑Caliber at inflated prices.
SMI asserted five state‑law counterclaims and crossclaims against Ader and Hi‑Caliber for fraud, unjust enrichment, breach of fiduciary duty, negligent misrepresentation, and civil conspiracy; it also pleaded affirmative defenses including set‑off and after‑discovered evidence.
Ader moved to dismiss SMI’s state counterclaims and crossclaims for lack of subject‑matter jurisdiction (invoking absence of § 1367 supplemental jurisdiction) and to strike the affirmative defenses of set‑off and laches.
The court held SMI’s state claims do not arise from the same common nucleus of operative fact as Ader’s federal wage claims — the counterclaims are based on alleged self‑dealing distinct from the FLSA overtime/retaliation claims — and therefore dismissed the counterclaims and crossclaims for lack of supplemental jurisdiction.
The court struck SMI’s set‑off affirmative defense because it merely repackaged the dismissed counterclaims, but denied the motion to strike laches, finding it was not clearly immaterial at the pleading stage.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether court has supplemental jurisdiction over SMI’s state counterclaims under 28 U.S.C. § 1367	Ader: counterclaims do not arise from same case or controversy and thus no supplemental jurisdiction; alternatively court should decline supplemental jurisdiction	SMI: counterclaims relate to the same case because they tie into affirmative defenses (set‑off/after‑discovered evidence) and rely on overlapping evidence	Held: No supplemental jurisdiction; counterclaims and crossclaims dismissed because claims arise from different facts than FLSA claims and relation to affirmative defenses is insufficient
Whether SMI may recast dismissed counterclaims as an affirmative defense of set‑off	Ader: set‑off is substantively a counterclaim and cannot be litigated because counterclaims lack jurisdiction	SMI: set‑off is a valid affirmative defense and distinguishable from its counterclaims	Held: Struck set‑off defense — it effectively duplicates dismissed counterclaims
Whether laches should be stricken as an affirmative defense in an FLSA action	Ader: laches is improper in FLSA cases and should be stricken	SMI: laches is a permissible defense to limit damages or as applicable equitable argument	Held: Denied — laches not clearly immaterial; cannot be struck at pleading stage
Whether court should decline to exercise supplemental jurisdiction even if it existed	Ader: urged dismissal; argued federal FLSA policy counsels against mixing state claims	SMI: urged retention of claims to resolve related issues	Held: Court noted it would decline to exercise jurisdiction under § 1367(c)(4) if jurisdiction existed, citing FLSA policy against cluttering federal FLSA suits with collateral employer‑employee disputes

Key Cases Cited

United Mine Workers v. Gibbs, 383 U.S. 715 (establishes "common nucleus of operative fact" test for pendent/supplemental jurisdiction)
In re Pegasus Gold Corp., 394 F.3d 1189 (discusses relationship of claims for § 1367 analysis)
Pochiro v. Prudential Ins. Co. of Am., 827 F.2d 1246 (addresses compulsory vs. permissive counterclaims and judicial economy)
Thornhill Publ'g Co. v. Gen. Tel. & Elecs. Corp., 594 F.2d 730 (authority on jurisdictional factual disputes under Rule 12(b)(1))
Arbaugh v. Y & H Corp., 546 U.S. 500 (district courts have independent obligation to assess subject‑matter jurisdiction)
Simmons v. Navajo Cty., 609 F.3d 1011 (affirmative defenses must give "fair notice")