Opinion
8:02CV472
December 10, 2003
MEMORANDUM AND ORDER
This matter is before the court on Filing No. 85, the "Plaintiffs' Motion to Dismiss Counterclaim of Defendant American Credit Systems, Inc." For the reasons stated herein, the court grants the Plaintiffs' motion.
I. BACKGROUND
On October 8, 2002, the Plaintiffs brought their lawsuit against the Defendants alleging violations of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et seq. ("FDCPA") and the Nebraska Consumer Protection Act, Neb. Rev. Stat. § 59-1601, et seq. ("NCPA"). In response, the Defendant American Credit Systems, Inc. ("ACS") filed a Counterclaim against the Plaintiffs for collection of the debt. (Filing No. 73.) The Plaintiffs, pursuant to Fed.R.Civ.P. 12(b)(1), have moved to dismiss the state law Counterclaim on the ground that this court lacks subject matter jurisdiction over ACS's Counterclaim.
II. ANALYSIS
In 1990, the supplemental jurisdiction statute, 28 U.S.C. § 1367(a), was enacted; it provides that "in any civil action of which the district courts have original 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 under Article III of the Constitution." 28 U.S.C. § 1367(a). Prior to the adoption of section 1367(a), the "settled analytical framework" for determining the limits of federal jurisdiction over a state law counterclaim "depended on the distinction between `compulsory' and `permissive' counterclaim."Blue Dane Simmental Corp. v. American Simmental Ass'n, 952 F. Supp. 1399, 1407 (D. Neb. 1997). There is much debate about whether section 1367(a) alters this well-settled framework. Nevertheless, this court concurs with the court in Blue Dane: "[P]re-1990 counterclaim case law focusing on Rule 13 and the `compulsory' versus `permissive' distinction remains as relevant and instructive today as it was before section 1367 was adopted. Using pre-1990 case law to ascertain whether a federal court has subject matter jurisdiction over a counterclaim is appropriate. . . ." Id.
ACS asserted in its Counterclaim that jurisdiction was proper pursuant to Fed.R.Civ.P. 13(a); that is, ACS contends its Counterclaim is compulsory. However, in Peterson v. United Accounts, Inc., 638 F.2d 1134 (8th Cir. 1981), the Eighth Circuit held that a claim for damages under the FDCPA was not a compulsory counterclaim in a state action to collect the underlying debt. In so holding, the Eighth Circuit stated that while the debt claim and the FDCPA claim "may, in a technical sense, arise from the same loan transaction, the two claims bear no logical relation to one another." Peterson at 1137.
The Peterson case, of course, pre-dates the enactment of section 1367(a). Nevertheless, this court finds Peterson is still relevant and controlling. Since 1990, other courts have concluded that a federal court does not have jurisdiction over a defendant's state law counterclaim, when the plaintiffs claim arises under the FDCPA. For example, in Orloff v. Syndicated Office Systems, Inc., 2003 WL 22100868, *2 (E.D. Pa. Aug. 20, 2003), the court stated that the "[p]laintiff s claims involve issues of statutory compliance. Defendants' counterclaim is simply a state law debt collection claim." The Orloff court continued: "Evidence of plaintiffs failure to pay Defendants money owed to them has no relevance on the issue whether the Defendants' actions in collecting the debt violated federal law." Id. This court determines thatPeterson is still good law and that Peterson is supported by post-1990 case law. Accordingly, the court judges that ACS's counterclaim is a permissive counterclaim.
Unlike a compulsory counterclaim, a permissive counterclaim requires an independent basis of federal jurisdiction in order for the federal court to retain jurisdiction over the matter. There being no independent jurisdictional basis in this case, the court does not have subject matter jurisdiction over ACS's state law Counterclaim. Accordingly, the court grants the Plaintiff's motion and dismisses ACS's Counterclaim.
THEREFORE, IT IS ORDERED:
(1) That the "Plaintiffs' Motion to Dismiss Counterclaim of Defendant American Credit Systems, Inc.," (Filing No. 85) is granted; and
(2) That ACS's Counterclaim is dismissed.