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Martinez v. Petrenko

United States District Court, First Circuit

January 13, 2014

Gabriel F. Martinez
v.
Victor F. Petrenko and IceCode, LLC Opinion No. 2014 DNH 004

Benjamin T. King, Esq. Martha Van Oot, Esq.

ORDER

Joseph A. DiClerico, Jr. United States District Judge

Gabriel F. Martinez brought suit against his former employer, IceCode, LLC, and Victor Petrenko, who founded IceCode and served as chairman of IceCode’s board, seeking payment of wages, overtime compensation, severance benefits, and damages for wrongful termination under state law and the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 207(a). Petrenko moves for summary judgment on Martinez’s FLSA claim, arguing that Martinez cannot show enterprise coverage, as required by § 207(a), and asking the court to decline supplemental jurisdiction over the state law claims. Martinez objects on the grounds that factual disputes preclude summary judgment on his FLSA claim and argues that even if the FLSA claim were dismissed, diversity jurisdiction exists or, alternatively, the court should not decline supplemental jurisdiction.

Standard of Review

Summary judgment is appropriate when “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “A genuine issue is one that can be resolved in favor of either party, and a material fact is one which has the potential of affecting the outcome of the case.” Jakobiec v. Merrill Lynch Life Ins. Co., 711 F.3d 217, 223 (1st Cir. 2013) (internal quotation marks omitted). In deciding a motion for summary judgment, the court draws all reasonable factual inferences in favor of the nonmovant. Kenney v. Floyd, 700 F.3d 604, 608 (1st Cir. 2012).

Background

Petrenko founded IceCode, originally Ice Engineering, LLC, in 2001, in Lebanon, New Hampshire. In the complaint, Martinez describes IceCode as being “engaged in research and development of intellectual property for so long as the entity existed.” Compl. ¶ 7. IceCode’s “Limited Liability Company Operating Agreement” states that the purposes of the company were:

to develop, improve, license, and commercially apply ice friction modification technology and other technologies developed and/or acquired that provide significant cost savings, energy savings, or otherwise provide better reliability and safety for consumers and manufacturers; to develop, market, offer, sell, license and promote products and services related to such technology and to engage in all ancillary activities directly or indirectly related to such purposes.

Agreement, § 2.5.

From March 1, 2010, to March 1, 2011, Petrenko was the Chief Technology Officer at IceCode and chairman of its board of directors. In February of 2010, Martinez became Chief Operating Officer of IceCode. During that time, Roman Zhigalov and then Sam Fairchild were Chief Executive Officer.[1]

The terms of Martinez’s employment at IceCode were governed by an agreement which was titled “Executive Agreement.” The Executive Agreement was amended after Martinez complained about his compensation in July of 2010. Martinez left IceCode in May of 2011 because he was not being compensated in the amount that he believed had been promised.

Martinez filed this action in August of 2012. Petrenko moved to dismiss Martinez’s FLSA claim for lack of subject matter jurisdiction or in the alternative for failure to state a claim and filed a motion for judgment on the pleadings. Petrenko also moved for default against Martinez on Petrenko’s counterclaim.

In support of the jurisdictional challenge, Petrenko argued that diversity jurisdiction under 28 U.S.C. § 1332 was lacking and that federal question jurisdiction under 28 U.S.C. § 1331 was lacking because the FLSA claim was “insubstantial and frivolous.”[2] The court denied the motion to dismiss as untimely, because it presented a procedural tangle of jurisdictional issues under Federal Rule of Civil Procedure 12(b)(1) and a challenge on the merits under Rule 12(b)(6), and because Martinez presented a colorable claim under the FLSA. The court concluded that the motion for judgment on the pleadings was premature and that the issues should be addressed by a motion for summary judgment.

Default was entered against Martinez on the counterclaim but was later cured. On January 18, 2013, the claims against IceCode were dismissed without prejudice, due to Martinez’s failure to file a return of service or a motion to extend time to ...


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