Court Declines to Exercise Supplemental Jurisdiction Over Malicious Prosecution and Defamation Counterclaims in Discrimination & Retaliation Case

In a recent decision, Sanders v. New World Design Build, Inc. et al, 19-CV-1071, 2020 WL 1957371 (S.D.N.Y. April 23, 2020) – an employment discrimination and retaliation case – the court declined to exercise jurisdiction over defendants’ counterclaims.

Defendants’ defamation counterclaim, for example, alleges that Plaintiff defamed them when he spoke with Defendant about his termination and complained about the racial epithets and sexual harassment he faced at the hands of defendants.

From the decision:

Defendants’ counterclaims, styled as state common law torts alleging malicious prosecution and defamation based on Plaintiff’s filing of an EEOC Charge of Discrimination and raising a complaint about discrimination with Defendant Farese, do not satisfy the requirements of supplemental jurisdiction under § 1367. First, contrary to Defendants’ contention, the Second Circuit has explicitly held that counterclaims of this nature are not compulsory under Rule 13(a). See Harris, 571 F.2d at 124. (“[A] claim in the nature of malicious prosecution, which arises out of the bringing of the main action, generally cannot be asserted either as a compulsory or a permissive counterclaim, since such a claim is premature prior to the determination of the main action.”) (citation omitted). Second, even if Defendants’ counterclaims independently satisfied the “common nucleus of operative fact” test sufficient to warrant the exercise of supplemental jurisdiction, which they do not, I would still decline to exercise supplemental jurisdiction under § 1367(c).

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