UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
) CLINTON SPELLMAN, et al., ) ) Plaintiffs, ) ) v. ) Civil Action No. 09-1666 (RMC) ) AMERICAN EAGLE EXPRESS, INC., ) ) Defendant. ) )
MEMORANDUM OPINION
Plaintiffs sued Defendant for alleged violations of the Fair Labor Standards Act
(“FLSA”), 29 U.S.C. § 201 et seq., and Maryland and District of Columbia wage payment laws.
Defendant answered and counterclaimed against seven of the eleven named Plaintiffs seeking
indemnification pursuant to the indemnification clause in the Transportation Brokerage Agreements
executed by those Plaintiffs. Plaintiffs cry foul and move to dismiss the counterclaim [Dkt. # 16].
They argue that the counterclaim is preempted by the FLSA, is contrary to public policy, and is
outside the scope of the indemnity clause. Defendant responds that the counterclaim survives
because it is not now baseless as a matter of fact or law. The Court agrees with Defendant.
Accordingly, the motion to dismiss will be denied without prejudice.
I. FACTS
Plaintiffs are current and former delivery drivers who sued Defendant on September
1, 2009, alleging that Defendant misclassified them as “independent contractors” under the FLSA
and Maryland and District of Columbia wage payment laws, and as a result, failed to pay them overtime rates for each hour worked in excess of forty per week. On October 22, 2009, Defendant
answered and counterclaimed against seven of the eleven named Plaintiffs seeking to enforce the
indemnification clause in the Transportation Brokerage Agreements executed by those Plaintiffs.
That clause provides in relevant part:
INDEPENDENT CONTRACTOR agrees to defend, indemnify and hold harmless BROKER from any direct, indirect and consequential loss, damage, fine, expense, including reasonable attorney’s fees, action, claim for injury to persons, including death, and damage to property which BROKER may incur arising out of or in connection with the operation of Equipment, CONTRACTOR’s obligations under this Agreement, or any breach by CONTRACTOR or its drivers or workers of the terms of this Agreement.
Countercl. [Dkt. # 9], Ex. A (Transportation Brokerage Agreement) ¶ 10.
Defendant alleges that the claims asserted by Plaintiffs in the Complaint and the
expenses it has incurred to defend against them fall within the scope of the indemnification clause.
Countercl. ¶ 8. It seeks an award of all costs and expenses, including reasonable attorneys’ fees,
incurred in defending against Plaintiffs’ claims. Id. ¶ 9.
Plaintiffs move to dismiss the counterclaim for failure to state a claim upon which
relief can be granted. Defendant opposes.
II. LEGAL STANDARD
A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) challenges
the adequacy of a complaint on its face, testing whether a plaintiff has properly stated a claim.
Federal Rule of Civil Procedure 8(a) requires that a complaint contain “a short and plain statement
of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a). A complaint must
be sufficient “to give a defendant fair notice of what the . . . claim is and the grounds upon which
-2- it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal citations omitted).
Although a complaint does not need detailed factual allegations, a plaintiff’s obligation to provide
the grounds of his entitlement to relief “requires more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action will not do.” Id. The facts alleged “must be enough
to raise a right to relief above the speculative level.” Id. Rule 8(a) requires an actual showing and
not just a blanket assertion of a right to relief. Id. at 555 n.3. “[A] complaint needs some
information about the circumstances giving rise to the claims.” Aktieselskabet Af 21. Nov. 2001 v.
Fame Jeans, Inc., 525 F.3d 8, 16 n.4 (D.C. Cir. 2008) (emphasis in original).
A court must treat the complaint’s factual allegations as true, “even if doubtful in
fact.” Twombly, 550 U.S. at 555. But a court need not accept as true legal conclusions set forth in
a complaint. Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). “Threadbare recitals of the elements
of a cause of action, supported by mere conclusory statements, do not suffice.” Id. “While legal
conclusions can provide the framework of a complaint, they must be supported by factual
allegations. When there are well-pleaded factual allegations, a court should assume their veracity
and then determine whether they plausibly give rise to an entitlement to relief.” Id. at 1950.
III. ANALYSIS
In Bill Johnson’s Restaurants, Inc. v. NLRB, 461 U.S. 731 (1983),1 the Supreme
Court recognized that “[a] lawsuit no doubt may be used by an employer as a powerful instrument
of coercion or retaliation” and that by filing a retaliatory lawsuit “an employer can place its
employees on notice that anyone who engages in such conduct is subjecting himself to the possibility
1 While Bill Johnson’s Restaurants concerned a retaliatory lawsuit in the context of the National Labor Relations Act, 29 U.S.C. § 151 et seq., courts have applied its reasoning in the FLSA context. See, e.g., Martin v. Gingerbread House, Inc., 977 F.2d 1405, 1407 (10th Cir. 1992).
-3- of a burdensome lawsuit.” Id. at 740. However, the Court also recognized that “the right of access
to the courts is an aspect of the First Amendment right to petition the Government for redress of
grievances.” Id. at 741. “Considering the First Amendment right of access to the courts[,]” the
Court concluded that “[t]he filing and prosecution of a well-founded lawsuit may not be enjoined
. . . even if it would not have been commenced but for the plaintiff’s desire to retaliate against the
defendant for exercising rights protected by” federal law. Id. at 742-43. “Although it is not unlawful
under” federal anti-retaliation laws “to prosecute a meritorious action, the same is not true of suits
based on insubstantial claims — suits that lack . . . a ‘reasonable basis’.” Id. at 743. “Such suits are
not within the scope of First Amendment protection.” Id. Thus, a retaliatory lawsuit is not unlawful
“unless the suit lacks a reasonable basis in fact or law.” Id. at 748; see also BE & K Constr. Co. v.
NLRB, 536 U.S. 516, 531 (2002) (recounting that “our holdings limited regulation to suits that were
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UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
) CLINTON SPELLMAN, et al., ) ) Plaintiffs, ) ) v. ) Civil Action No. 09-1666 (RMC) ) AMERICAN EAGLE EXPRESS, INC., ) ) Defendant. ) )
MEMORANDUM OPINION
Plaintiffs sued Defendant for alleged violations of the Fair Labor Standards Act
(“FLSA”), 29 U.S.C. § 201 et seq., and Maryland and District of Columbia wage payment laws.
Defendant answered and counterclaimed against seven of the eleven named Plaintiffs seeking
indemnification pursuant to the indemnification clause in the Transportation Brokerage Agreements
executed by those Plaintiffs. Plaintiffs cry foul and move to dismiss the counterclaim [Dkt. # 16].
They argue that the counterclaim is preempted by the FLSA, is contrary to public policy, and is
outside the scope of the indemnity clause. Defendant responds that the counterclaim survives
because it is not now baseless as a matter of fact or law. The Court agrees with Defendant.
Accordingly, the motion to dismiss will be denied without prejudice.
I. FACTS
Plaintiffs are current and former delivery drivers who sued Defendant on September
1, 2009, alleging that Defendant misclassified them as “independent contractors” under the FLSA
and Maryland and District of Columbia wage payment laws, and as a result, failed to pay them overtime rates for each hour worked in excess of forty per week. On October 22, 2009, Defendant
answered and counterclaimed against seven of the eleven named Plaintiffs seeking to enforce the
indemnification clause in the Transportation Brokerage Agreements executed by those Plaintiffs.
That clause provides in relevant part:
INDEPENDENT CONTRACTOR agrees to defend, indemnify and hold harmless BROKER from any direct, indirect and consequential loss, damage, fine, expense, including reasonable attorney’s fees, action, claim for injury to persons, including death, and damage to property which BROKER may incur arising out of or in connection with the operation of Equipment, CONTRACTOR’s obligations under this Agreement, or any breach by CONTRACTOR or its drivers or workers of the terms of this Agreement.
Countercl. [Dkt. # 9], Ex. A (Transportation Brokerage Agreement) ¶ 10.
Defendant alleges that the claims asserted by Plaintiffs in the Complaint and the
expenses it has incurred to defend against them fall within the scope of the indemnification clause.
Countercl. ¶ 8. It seeks an award of all costs and expenses, including reasonable attorneys’ fees,
incurred in defending against Plaintiffs’ claims. Id. ¶ 9.
Plaintiffs move to dismiss the counterclaim for failure to state a claim upon which
relief can be granted. Defendant opposes.
II. LEGAL STANDARD
A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) challenges
the adequacy of a complaint on its face, testing whether a plaintiff has properly stated a claim.
Federal Rule of Civil Procedure 8(a) requires that a complaint contain “a short and plain statement
of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a). A complaint must
be sufficient “to give a defendant fair notice of what the . . . claim is and the grounds upon which
-2- it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal citations omitted).
Although a complaint does not need detailed factual allegations, a plaintiff’s obligation to provide
the grounds of his entitlement to relief “requires more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action will not do.” Id. The facts alleged “must be enough
to raise a right to relief above the speculative level.” Id. Rule 8(a) requires an actual showing and
not just a blanket assertion of a right to relief. Id. at 555 n.3. “[A] complaint needs some
information about the circumstances giving rise to the claims.” Aktieselskabet Af 21. Nov. 2001 v.
Fame Jeans, Inc., 525 F.3d 8, 16 n.4 (D.C. Cir. 2008) (emphasis in original).
A court must treat the complaint’s factual allegations as true, “even if doubtful in
fact.” Twombly, 550 U.S. at 555. But a court need not accept as true legal conclusions set forth in
a complaint. Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). “Threadbare recitals of the elements
of a cause of action, supported by mere conclusory statements, do not suffice.” Id. “While legal
conclusions can provide the framework of a complaint, they must be supported by factual
allegations. When there are well-pleaded factual allegations, a court should assume their veracity
and then determine whether they plausibly give rise to an entitlement to relief.” Id. at 1950.
III. ANALYSIS
In Bill Johnson’s Restaurants, Inc. v. NLRB, 461 U.S. 731 (1983),1 the Supreme
Court recognized that “[a] lawsuit no doubt may be used by an employer as a powerful instrument
of coercion or retaliation” and that by filing a retaliatory lawsuit “an employer can place its
employees on notice that anyone who engages in such conduct is subjecting himself to the possibility
1 While Bill Johnson’s Restaurants concerned a retaliatory lawsuit in the context of the National Labor Relations Act, 29 U.S.C. § 151 et seq., courts have applied its reasoning in the FLSA context. See, e.g., Martin v. Gingerbread House, Inc., 977 F.2d 1405, 1407 (10th Cir. 1992).
-3- of a burdensome lawsuit.” Id. at 740. However, the Court also recognized that “the right of access
to the courts is an aspect of the First Amendment right to petition the Government for redress of
grievances.” Id. at 741. “Considering the First Amendment right of access to the courts[,]” the
Court concluded that “[t]he filing and prosecution of a well-founded lawsuit may not be enjoined
. . . even if it would not have been commenced but for the plaintiff’s desire to retaliate against the
defendant for exercising rights protected by” federal law. Id. at 742-43. “Although it is not unlawful
under” federal anti-retaliation laws “to prosecute a meritorious action, the same is not true of suits
based on insubstantial claims — suits that lack . . . a ‘reasonable basis’.” Id. at 743. “Such suits are
not within the scope of First Amendment protection.” Id. Thus, a retaliatory lawsuit is not unlawful
“unless the suit lacks a reasonable basis in fact or law.” Id. at 748; see also BE & K Constr. Co. v.
NLRB, 536 U.S. 516, 531 (2002) (recounting that “our holdings limited regulation to suits that were
both objectively baseless and subjectively motivated by an unlawful purpose”) (emphasis in
original).
In light of this authority, the Court can quickly dispose of Plaintiffs’ argument that
the counterclaim fails because it would not have been filed but for Plaintiffs’ initiation of this
lawsuit. See Reply [Dkt. # 26] at 10-12. Under Bill Johnson’s Restaurants, “a meritorious suit may
not be enjoined, regardless of the intent behind the filing.” Gingerbread House, 977 F.2d at 1407.
Accordingly, Plaintiffs are simply wrong in arguing that the counterclaim cannot lie against them
based solely on their filing of this lawsuit.
The real issue is whether the counterclaim is objectively baseless, that is, whether it
“lacks a reasonable basis in fact or law.” Bill Johnson’s Restaurants, 461 U.S. at 748. Putting aside
for a moment whether the indemnification lawsuit is preempted by the FLSA or contrary to the
-4- policy of that statute, the lawsuit plainly is reasonably based. Those Plaintiffs that executed
Transportation Brokerage Agreements agreed to indemnify Defendant for any “action” against
Defendant “arising out of or in connection with” Plaintiffs’ “obligations under this Agreement.”
Countercl. ¶ 6. One such “obligation” was the agreement to work for a liquidated fee amount. See
id., Ex. A (Transportation Brokerage Agreement) ¶ 3 (“It is expressly understood and agreed that
CONTRACTOR’S fees for transportation services rendered shall be as set forth in Appendix B and
such fees shall constitute the total fees for everything furnished, provided, or done by
CONTRACTOR in connection with this Agreement, including driver’s services.”). The crux of this
lawsuit is Plaintiffs’ allegation that “Defendant failed to pay” Plaintiffs “for all hours worked and
failed to pay these employees at the overtime rate for any hours worked in excess of forty hours per
week.” Am. Compl. [Dkt. # 23] ¶ 58. In other words, Plaintiffs allege that they are owed more than
the liquidated fee amount in the Transportation Brokerage Agreement. Therefore, Defendant has
a reasonable basis for alleging that this lawsuit is an “action” against it “arising out of or in
connection with” Plaintiffs’ “obligations under this Agreement.” Countercl. ¶ 6.
Still remaining is whether the counterclaim is baseless because it is preempted by the
FLSA or contrary to the policy of that statute. The Court agrees with the Fourth, Fifth, and Tenth
Circuits that “[i]ndemnity actions against employees work against the purposes of the FLSA[,]”
Gingerbread House, 977 F.2d at 1407-08; see also Lyle v. Food Lion, Inc., 954 F.2d 984, 987 (4th
Cir. 1992); LeCompte v. Chrysler Credit Corp., 780 F.2d 1260, 1264 (5th Cir. 1986), and that “a
third party complaint by an employer seeking indemnity from an employee is preempted.”
Gingerbread House, 977 F.2d at 1408. But, whereas here, Defendant asserts that the FLSA is wholly
inapplicable because Plaintiffs are “independent contractors” exempt from the statute’s scope, see
-5- Affirmative Defense ¶ 1, and resolution of that issue will turn on the Court’s application of a fact-
intensive “economic reality” test after discovery has been completed, see Morrison v. Int’l Programs
Consortium, Inc., 253 F.3d 5, 11 (D.C. Cir. 2001), the Court cannot say at this juncture that the
counterclaim is preempted by, or contrary to the policy of, the FLSA.2 Because application of the
FLSA appears at this early stage to “involve[] genuine issues of material fact or law[,]” Bill
Johnson’s Restaurants, 461 U.S. at 745 n.11, Defendant’s counterclaim is not now baseless.
IV. CONCLUSION
For the foregoing reasons, the Court will deny without prejudice Plaintiffs’ motion
to dismiss Defendant’s counterclaim [Dkt. # 16]. A memorializing Order accompanies this
Memorandum Opinion.
Date: January 27, 2010 /s/ ROSEMARY M. COLLYER United States District Judge
2 The Court rejects Plaintiffs’ argument that the counterclaim fails because Defendant did not specifically plead facts about the “economic reality” of the parties’ relationship. Defendant need not plead, either generally or specifically, that Plaintiffs are “independent contractors” within the meaning of the FLSA in order to state a claim for indemnification under the Transportation Brokerage Agreements.
-6-