PARAMOUNT RESIDENTIAL MORTGAGE GROUP, INC. v. NATIONWIDE MORTGAGE BANKERS, INC.

CourtDistrict Court, D. New Jersey
DecidedMay 30, 2024
Docket3:22-cv-04656
StatusUnknown

This text of PARAMOUNT RESIDENTIAL MORTGAGE GROUP, INC. v. NATIONWIDE MORTGAGE BANKERS, INC. (PARAMOUNT RESIDENTIAL MORTGAGE GROUP, INC. v. NATIONWIDE MORTGAGE BANKERS, INC.) is published on Counsel Stack Legal Research, covering District Court, D. New Jersey primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
PARAMOUNT RESIDENTIAL MORTGAGE GROUP, INC. v. NATIONWIDE MORTGAGE BANKERS, INC., (D.N.J. 2024).

Opinion

NOT FOR PUBLICATION

UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY

PARAMOUNT RESIDENTIAL MORTGAGE GROUP, INC.,

Plaintiff, Civil Action No. 22-4656 (ZNQ) (RLS)

v. OPINION

NATIONWIDE MORTGAGE BANKERS, INC.,

Defendant.

QURAISHI, District Judge THIS MATTER comes before the Court upon Plaintiff-Counterclaim Defendant Paramount Residential Mortgage Group, Inc.’s (“Plaintiff”) Motion to Dismiss (“Motion”, ECF No. 43) Defendant-Counterclaim Plaintiff Nationwide Mortgage Bankers, Inc.’s (“Defendant”) Second Amended Counterclaims. (ECF No. 35.) In support of its Motion to Dismiss, Plaintiff filed a Moving Brief. (“Moving Br.”, ECF No. 43-1.) Defendant opposed (“Opp’n”, ECF No. 47) and Plaintiff replied (“Reply”, ECF No. 49). Having reviewed the parties’ submissions filed in connection with the Motion and having declined to hold oral argument pursuant to Federal Rule of Civil Procedure 78(b) and Local Civil Rule 78.1, for the reasons set forth below and for good cause appearing, the Court will GRANT Plaintiff’s Motion to Dismiss and DISMISS Defendant’s Second Amended Counterclaims (First Claim for Relief) with prejudice. I. BACKGROUND AND PROCEDURAL HISTORY1 Plaintiff initiated the instant action on July 20, 2022 by filing its complaint, which generally alleged damages arising from Defendant’s misappropriation of Plaintiff’s employees and trade secrets. (ECF No. 1; see also id. ¶ 1.) On October 3, 2022, Plaintiff filed an amended complaint. (ECF No. 9.) Defendant filed a motion to dismiss (ECF No. 11), which the Court denied. (ECF

No. 15.) On June 28, 2023, Defendant filed an answer with three counterclaims, alleging: (1) unfair competition, (2) “abuse of process,” and (3) tortious interference with economic advantage or employment contract. (“First Countercls.”, ECF No. 20.) On July 19, 2023, Defendant filed an amended answer with counterclaims. (“Am. Countercls.”, ECF No. 27.) The Court subsequently granted leave (ECF No. 36) for Plaintiff to file the operative Second Amended Answer with Counterclaims. (“SAC”, ECF No. 35.) The SAC alleges only a single counterclaim for unfair competition (“First Claim for Relief”). Plaintiff filed the instant Motion to Dismiss the SAC on October 13, 2023. (ECF No. 43.) Plaintiff is a California corporation that provides mortgage products to customers in nearly

every state of the country. (SAC ¶¶ 8–9.) Plaintiff is in the business of soliciting home mortgage loans and employing “loan officers” with various titles to conduct its business. (See id. ¶ 13.) Defendant is a mortgage company incorporated in Delaware. (See id. ¶ 7.) Defendant is a “direct competitor” of Plaintiff. (Id. ¶ 12.) Defendant alleges that Plaintiff’s loan officers must be paid minimum wage as well as, when applicable, overtime compensation for hours worked under the Fair Labor Standards Act (“FLSA”).2 (Id. ¶ 18.) Defendant proffers that Plaintiff’s

1 The parties are familiar with the factual and procedural history of this matter and therefore the Court recites only those facts necessary to resolve the instant Motion. 2 The FLSA requires that employees be compensated in an amount equal to at least the federal minimum wage for all hours worked and overtime compensation of at least one and one-half times the regular rate for any hours worked over 40 hours in a workweek unless they meet one of certain statutory exemptions. See 29 U.S.C. §§ 206–207. “misclassification” of at least some of its loan officers allows such employees to qualify for the “outside sales exemption” from the FLSA’s minimum wage and overtime requirements, even though they do not actually qualify for the exemption. (Id. ¶¶ 4–5, 15 (citing 29 U.S.C. 213(a)(1)), 18.) To qualify for the outside sales employee exemption, employees must, inter alia, be “customarily and regularly engaged away from the employer’s place or places of business.” (Id.

¶ 16 (citing 29 C.F.R 541.500(a)).) Defendant alleges that Plaintiff improperly treats some of its loan officers who primarily work in Plaintiff’s facilities or their home offices3 like outside salespeople. (Id. ¶ 4.) Accordingly, Plaintiff allegedly pays those loan officers on a “purely commission basis” rather than a minimum hourly wage.4 (Id. ¶¶ 15, 17, 19.) Those employees are paid less than they would be if they were paid in compliance with the FLSA, thus lowering Plaintiff’s operating costs compared to its competitors. (See id. ¶¶ 5, 22–23, 26–27.) Defendant alleges that Plaintiff’s conduct constitutes unfair competition that is “unbecoming of the ethical standards of the business world.”5 (Id. ¶¶ 5, 27, 30.) The SAC requests an unspecified amount in damages. (Id. ¶ 31.)

3 The SAC points to a U.S. Department of Labor fact sheet which clarifies that “[a]ny fixed site, whether home or office, used by a salesperson as a headquarters or for telephonic solicitation of sales is considered one of the employer’s places of business” under the FLSA. Fact Sheet #17F: Exemption for Outside Sales Employees Under the Fair Labor Standards Act (FLSA), U.S. Dep’t of Lab. (Sept. 2019), https://www.dol.gov/agencies/whd/fact-sheets/17f-overtime- outside-sales (last visited May 22, 2024); (see also SAC ¶ 16 n.1.). In contrast, to qualify as an exempt outside sales employee, that employee must make sales at “the customer’s place of business, or, if selling door-to-door, at the customer’s home.” See supra Fact Sheet #17F (emphases added). 4 According to the SAC, “[c]ommission payments to loan officers are customary in the mortgage industry, so unless a loan officer is exempt under the FLSA they would be paid both commissions and additional wages in the form of hourly compensation.” (SAC ¶ 21.) 5 Defendant also alleges the following as support for its claim that Plaintiff’s violations of the FLSA constitute unfair competition: The State of New Jersey’s Department of Labor and Workforce Development (“LWD”), the Agency charged with enforcing New Jersey’s wage and hour laws, considers the sorts of wage and hour violations alleged in the counterclaims to be unfair competition that harms competitors. . . . LWD’s approach specifically focuses on companies [in industries] alleged to have a “history of non-compliance with existing laws and on those whose employees are less likely to file complaints with the Department.” II. JURISDICTION The Court has jurisdiction over the claims alleged in the Complaint and the counterclaim alleged in the SAC under 28 U.S.C. §§ 1331, 1332, and 1367. III. LEGAL STANDARD Federal Rule of Civil Procedure 12(b)(6) provides that a court may dismiss a claim “for

failure to state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). On a motion to dismiss for failure to state a claim, the moving party “bears the burden of showing that no claim has been presented.” Hedges v. United States, 404 F.3d 744, 750 (3d Cir. 2005) (citing Kehr Packages, Inc. v.

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PARAMOUNT RESIDENTIAL MORTGAGE GROUP, INC. v. NATIONWIDE MORTGAGE BANKERS, INC., Counsel Stack Legal Research, https://law.counselstack.com/opinion/paramount-residential-mortgage-group-inc-v-nationwide-mortgage-bankers-njd-2024.