Thompson v. Fathom Creative, Inc.

Citation: Not availableDocket: Civil Action No. 2008-1841

Court: District Court, District of Columbia; June 18, 2009; Federal District Court

Original Court Document: View Document

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Monique Thompson filed a lawsuit against Fathom Creative, Inc., claiming unpaid overtime wages under the Fair Labor Standards Act, the District of Columbia Minimum Wage Revision Act, and the Wage Payment and Collection Act. Additionally, she alleges a lack of continuation health care coverage under the District of Columbia Health Continuation Coverage Act. In response, Fathom initiated counterclaims against Thompson for tortious conversion and breach of fiduciary duty, alleging that she misappropriated company funds, misused a corporate credit card, failed to return company property, and did not pay her share of health insurance premiums. Fathom further claimed that Thompson breached her fiduciary duty by creating false time records.

Thompson filed a motion to dismiss or for summary judgment on the counterclaims, asserting that her control over the funds was lawful and within her fiduciary duties. However, the court determined that summary judgment was premature since discovery had not yet occurred, resulting in the denial of Thompson's motion.

The background outlines that Thompson was hired as a part-time Bookkeeper/Administrator in June 2005, with Fathom offering her a salary of $35,000 and a shared health insurance premium. Thompson disputes the terms of employment, claiming a salary of $36,500 and that Fathom agreed to cover all her health benefits initially. Fathom contends that Thompson managed its financial accounts without express approval and was issued a corporate credit card. Thompson claims her job responsibilities did not include financial management and that all transactions were conducted with authorization from Fathom's president, Drew Mitchell, although he contests the frequency of these meetings. Fathom also alleges discrepancies in Thompson's timekeeping, which Thompson attributes to Mitchell’s authorization and technical issues with the timekeeping system.

Fathom initially compensated Thompson through checks from its account, but she later began to pay herself via wire transfers into her own accounts. Fathom claims that Thompson overpaid herself by over $30,000, despite receiving two pay raises in early 2007. Additionally, Fathom alleges that Thompson opened an unauthorized PayPal account in the company's name, diverting funds into her personal accounts through this account. Thompson contends that her transactions were authorized by Mitchell and that she is owed unpaid overtime wages.

Fathom also accuses Thompson of improperly charging her six-night stay at the Ritz Carlton, along with stays for her friend and two employees, to a corporate American Express card, for which Fathom was never reimbursed. Thompson claims these charges were accidental and that she attempted to rectify the situation. Fathom further alleges that Thompson made unauthorized purchases at the Apple Store using the corporate card and failed to return company property, including a laptop, upon her termination.

In response to Thompson's lawsuit for unpaid overtime and health insurance coverage, Fathom filed a counterclaim alleging conversion of property and breach of fiduciary duty. The conversion claim includes allegations of overpayment, failure to pay health premiums, misappropriation of funds, unauthorized charges, and failure to return company property. The breach of fiduciary duty claim is based on the same actions and the creation of false time records. Thompson has moved to dismiss the counterclaims, arguing she lacked intent for conversion, acted with authorization, and fulfilled her obligations regarding health insurance and property return. She asserts that her fiduciary duty was not breached as her actions were known and authorized by Mitchell. The court is reviewing her motion under Federal Rule of Civil Procedure 12(b)(6) or for summary judgment.

A Rule 12(b)(6) motion that includes matters outside the pleadings, which are not excluded by the court, must be treated as a motion for summary judgment under Rule 56. In such cases, all parties must have a reasonable opportunity to present relevant materials. Thompson's submission of external documents necessitates treating her motion as one for summary judgment, which is warranted when there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. The burden initially lies with the movant to show the absence of a material fact dispute, supported by pleadings, discovery materials, and affidavits. The court must accept the non-movant's statements as true and view evidence in their favor, yet the non-moving party must provide more than a mere scintilla of evidence. If the evidence presented is merely colorable or lacks significant probative value, summary judgment may be granted.

Thompson's reliance on external documents has turned her motion to dismiss into a motion for summary judgment, requiring all parties to be given reasonable opportunity to present pertinent materials. Pre-discovery motions for summary judgment are typically disfavored, as noted in case law, and Thompson's motion was filed before discovery had commenced. The only testimonial evidence consists of declarations and affidavits from Thompson and others. Thompson contends that the record is adequate to rule in her favor, arguing that the evidence primarily consists of Fathom's own business documents. Conversely, Fathom asserts that it requires additional time for discovery, particularly of third-party documents, to adequately address the facts underlying Thompson's motion.

Fathom has articulated specific discovery needs in its opposition brief and accompanying declaration from Mitchell, emphasizing the necessity for information beyond its own business documents. The Court finds the current record insufficient, as critical material facts are still in dispute, primarily due to the lack of depositions from either party. The contested issues include allegations of conversion and breach of fiduciary duty, with both parties relying on conflicting affidavits from Thompson and Mitchell. 

To succeed on its conversion counterclaim, Fathom must prove Thompson's unlawful control over its property, a claim complicated by varying accounts of authorization for financial transactions, including transfers to Thompson’s personal account and salary increases. Thompson asserts that Mitchell was informed of all transactions, while Mitchell denies these meetings occurred until concerns about Thompson's performance arose. Additionally, Thompson claims authorization for a salary increase, which Mitchell disputes, leading to ambiguity around the legitimacy of transactions.

The breach of fiduciary duty counterclaim similarly hinges on authorization and adherence to Fathom’s timekeeping policies, with conflicting testimonies about whether Thompson was permitted to use her own tracking methods. The Court underscores that summary judgment is inappropriate when genuine issues of material fact are present, particularly when the non-movant offers only affidavits. Thus, Fathom has sufficiently demonstrated the need for further discovery to contest Thompson's summary judgment motion, which is deemed premature. The motion for summary judgment will be denied without prejudice, allowing either party to resubmit after discovery concludes. A separate order has been issued.