MEMORANDUM OPINION

GEORGE J. HAZEL, District Judge.

In this putative collective action. Christian Sigala. Juan Jose Flores, and Gabriel Wong (collectively. "Plaintiffs") allege violations of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. §§ 201 et seq., the Maryland Wage and Hour Law ("MWHL"). Md. Code Ann., Lab. & Empl. §§ 3-491 et seq., and the Maryland Wage Payment and Collection Law ("MWPCL"), Md. Code Ann., Lab. & Empl. §§ 3-501 et seq. Plaintiffs' former employers, ABR of VA, Inc. ("ABR"), William Antonio Chavez, and Erica Alvarez (collectively. "Defendants"), have bled certain state-law counterclaims against Sigala and Flores. Three motions arc currently pending before the Court: Defendants' Motion for Default Judgment with respect to their counterclaim, ECF No. 19, Plaintiffs" Motion to Dismiss Defendants" counterclaims, ECF No. 25, and Defendants' Motion for Partial Summary Judgment. ECF No. 26. A hearing on these motions is unnecessary, See Local Rule 105.6 (D.Md.). For the following reasons, the Motion for Default Judgment is denied, the Motion to Dismiss is granted, and the Motion for Summary Judgment is denied.

I. BACKGROUND

Plaintiffs, and all similarly situated employees they seek to represent, are current and former employees of ABR, a Virginia corporation whose principal business is the restoration of water-damaged buildings in Maryland. Virginia, and West Virginia. ECF No. 1 at ¶¶ 4, 9. Plaintiffs seek to recover unpaid overtime wages for hours worked in excess of forty hours per week during their employment with ABR. See id. at ¶¶ 31-56. Plaintiffs initiated this action on June 17, 2015, and, following the Court's ruling on Defendants' Motions to Dismiss, see Sigala v. ABR of VA, Inc., No. GJH-15-1779, 2015 WL 6773717 (D. Md. Nov. 4, 2015). Defendants filed an Answer to the Complaint on November 17, 2015, in which they alleged several affirmative defenses, as well as multiple counterclaims against Sigala and Flores. ECF No. 16.

In their first counterclaim. Defendants allege a claim of fraud, in which they assert that Flores and Sigala both provided false social security numbers before they began working at ABR, "knew or should have known that they did not have valid social security numbers," and "signed statements indicating that they were legal to work." ECF No. 16 at 12-13.1 Thus, according to the Counterclaim, they caused "ABR to incorrectly rely on [their] representations and proceed with independent contractor employment." Id. at 13. Defendants contend that they are entitled to $50,000 in damages, plus all costs associated with litigating this matter, because Flores and Sigala "[b]oth . . . now seek monetary damages [in their FLSA action], but in fact, were never legal to work and used false numbers to dupe or other[wise] mislead ABR into hiring them." Id.

In their second and third counterclaims, Defendants allege that Flores and Sigala, respectively, are liable for certain property damage that occurred when each purportedly caused accidents while they were driving ABR trucks without authorization. See id. at 13-14. Defendants further allege that. "[w]hen confronted with the damage, [each] [Plaintiff] quit his job to avoid any possibility of payment. . . ." Id. at 14.

After the time elapsed for Sigala and Flores to respond to the counterclaims, Defendants filed a Motion for Default Judgment against them. ECF No. 19. After holding a telephone status conference between the Court and counsel, however, the Court granted Plaintiffs leave to file a late response to the counterclaims. ECF No. 24. Plaintiffs then filed their Motion to Dismiss the counterclaims, arguing that the Court lacks jurisdiction over those claims and that, in any event, the claims must be dismissed under Federal Rule of Civil Procedure 12(b)(6). ECF No. 26. Defendants oppose the Motion to Dismiss. ECF No. 29.

Meanwhile, with respect to Plaintiffs' FLSA action, on January 16, 2016, Defendants filed a Motion for Partial Summary Judgment. ECF No. 26, asking the Court to determine what state law will apply in this case.

II. MOTION FOR DEFAULT JUDGMENT

"A defendant's default does not automatically entitle the plaintiff to entry of a default judgment: rather, that decision is left to the discretion of the court." Choice Hotels Int'l. Inc. v. Savannah Shakti Carp., No. DKC-11-0438. 2011 WL 5118328 at * 2 (D. Md. Oct. 25, 2011) (citing Dow v. Jones, 232 F.Supp.2d 491, 494 (D. Md. 2002)). When ruling on a motion for default judgment, the Court must be mindful of the "strong policy" that, "as a general matter, defaults [are to] be avoided and that claims and defenses [should] be disposed of on their merits." Colleton Preparatory Acad. Inc. v. Hoover Universal, Inc., 616 F.3d 413, 417-18 (4th Cir. 2010). Here, although Plaintiffs did not timely respond to Defendants' claims, the Court granted them an extension of time to do so, and their Motion to Dismiss the counterclaims were filed within the deadline that the Court imposed. See ECF Nos. 24 & 25. Accordingly, Defendants' Motion for Default Judgment is denied.2

III. MOTION TO DISMISS COUNTERCLAIM

Plaintiffs have moved to dismiss Defendants' counterclaims based on a lack of subject matter jurisdiction.3 "It is well established that before a federal court can decide the merits of a claim, the claim must invoke the jurisdiction of the court." Miller v. Brown, 462 F.3d 312, 316 (4th Cir. 2006). Thus, "[t]he objection that a federal court lacks subject matter jurisdiction may be raised by a party, or by a court on its own initiative, at any stage in the litigation. . . ." Arbaugh v. Y&H Corp., 546 U.S. 500, 506, 126 S.Ct. 1235 (2006) (citations omitted). Once a motion to dismiss is made pursuant to Federal Rule of Civil Procedure 12(b)(1), the party asserting the claim bears the burden of proving that the court has subject matter jurisdiction. See Evans v. B.F. Perkins Co., a Div. of Standex Int'l. Corp., 166 F.3d 642. 647 (4th Cir. 1999); see also Ferdinand-Davenport v. Children's Guild, 742 F.Supp.2d 772, 777 (D. Md. 2010).

Here, Defendants do not argue that the Court may independently exercise diversity or federal question jurisdiction over the counterclaims.4 See ECF No. 29. Rather, they contend that jurisdiction is proper under 28 U.S.C. § 1367(a). which grants federal district courts supplemental jurisdiction over "claims that are so related to claims in the action within [the court's] original jurisdiction that they form part of the same case or controversy. . . ." See ECF No. 29 at 1, In cases such as this, "where neither diversity nor federal question jurisdiction exists over [a] defendant's counterclaims, the counterclaims' status as `compulsory' or `permissive' determines whether the court has jurisdiction over them." Williams v. Long, 558 F.Supp.2d 601, 602-03 (D. Md. 2008) (citing Painter v. Harvey, 863 F.2d 329, 331 (4th Civ. 1988)). A compulsory counterclaim "arises out of the transaction or occurrence that is the subject matter of the opposing party's claim," whereas a permissive counterclaim does not. See Fed. R. Civ. P. 13(a)-(b). A compulsory counterclaim is, therefore. "`within the ancillary jurisdiction of the court to entertain and no independent basis of federal jurisdiction is required.' By contrast, a permissive counterclaim that lacks its own independent jurisdictional basis is not within the jurisdiction of the court." Williams, 558 F. Supp. 2d at 603 (quoting Painter, 863 F.2d at 331). This is so because, although a federal district court may exercise supplemental jurisdiction over counterclaims that "are so related to [the original] claims in the action . . . that they form part of the same case or controversy under Article III of the United States Constitution," 28 U.S.C. § 1367, permissive counterclaims, which by definition do not "arise[] out of the [same] transaction or occurrence" as the original claims, cannot be said to "derive from a common nucleus of operative fact" in order to justify the court's exercise of supplemental jurisdiction. Williams, 558 F. Supp. 2d at 603 n.1.

The United States Court of Appeals for the Fourth Circuit has suggested that, to determine whether a counterclaim is compulsory, a court should consider four inquiries:

Painter, 863 F.2d at 331, Not all of these questions need to be answered in the affirmative for a counterclaim to be compulsory, however. "Rather, the tests are less a litmus, more a guideline." Id.

In this case, the Court cannot answer any of the four inquiries in the affirmative, and, accordingly, the Court concludes that the counterclaims are permissive and must be dismissed. First, the issues of law and fact raised by Defendants' counterclaims are not "largely the same" as those raised in Plaintiffs' action. Plaintiffs' action alleges that Defendants violated the FLSA, the MWHL, and the MWPCL by, failing to pay Plaintiffs minimum wage and overtime for their work as laborers with ABR. See ECF No. 1. By contrast. Defendants' counterclaims assert fraud and unspecified causes of action seeking recovery for damage to ABR property. See ECF No. 16 at 12-15. The only connection between Plaintiffs" claims and Defendants' counterclaims is the existence of an employment relationship between Plaintiffs and Defendants. The legal issues raised by the wage and hour laws are distinct from any issues regarding Defendants' allegations of fraud and property damage. And as the Court in Williams explained, "[f]ederal courts have been reluctant to exercise supplemental jurisdiction over state law claims and counterclaims in the context of a FLSA suit where the only connection is the employee-employer relationship." 558 F. Supp. 2d at 604 (citing cases from multiple jurisdictions wherein courts held that employment relationship alone was insufficient to justify supplemental jurisdiction over state law claims); see also Martin v. PepsiAmericas, Inc., 628 F.3d 738, 740 (5th Cir. 2010) ("Generally speaking, courts have been hesitant to permit an employer to file counterclaims in FLSA suits for money the employer claims the employee owes it, or for damages the employee's tortious conduct allegedly caused." (footnote omitted)): Wilhelm v. TLC Lawn Care, Inc., No. CIV.A. 07-2465-KHV, 2008 WL 640733, at *3 (D. Kan. Mar. 6, 2008) ("Because defendant relies solely on its employer-employee relationship with plaintiff's to support supplemental jurisdiction, and does not identify a more specific factual connection between its counterclaims and plaintiffs' FLSA claim, the Court cannot find a common nucleus of operative fact between the causes of action. . . .").

Second, res judicata would not bar subsequent litigation on Defendants' counterclaims. Under Maryland law, res judicata is applicable where (1) there is a final judgment on the merits in a previous litigation, and (2) "where the parties, the subject matter and causes of action are identical or substantially identical as to issues actually litigated and as to those which could have or should have been raised in the previous litigation." Boland v. Boland, 31 A.3d 529. 569 (Md. 2011). Here, presumptively the parties in any subsequent litigation would he identical and this Court assumes that it will eventually issue a final judgment on the merits in this case. But it cannot be said that Plaintiffs' wage claims "are identical or substantively identical" to Defendants' counterclaims. See, e.g., Ramirez v. Amazing Home Contractors. Inc., No. CIV. JKB-14-2168, 2014 WL 6845555. at *3 (D. Md. Nov, 25. 2014) (dismissing defendant's counterclaim for fraud in FLSA action where the court's resolution of plaintiff's wage claims would "have no impact on [defendant if it chooses to pursue a subsequent fraud claim"); Williams, 558 F. Supp. 2d at 605 (dismissing breach of contract and breach of fiduciary duty counterclaims in FLSA action, even though counterclaims depended on whether plaintiff was an employee or joint venture partner in business, an issue that would need to be resolved in the FLSA action).5

The Court also concludes that the third and fourth Painter inquiries, which respectively address the degree of overlapping evidence and the logical relationship between the claim and counterclaim, counsel toward a conclusion that Defendants' counterclaims are permissive only. Plaintiffs' wage and hour claims will likely focus on evidence demonstrating the hours they worked and Defendants' failure to pay them for all of those hours. Conversely, the evidence surrounding Defendants' counterclaims will presumably focus on the documents that Plaintiffs signed using purportedly false social security numbers and testimony or documentary evidence regarding the vehicle accidents. The only connection between Plaintiffs' claims and Defendants' counterclaims is Plaintiffs' employment status. This connection alone is insufficient to conclude that the counterclaims are compulsory. See Williams, 558 F. Supp. 2d at 606 (finding no "logical relationship" where "plaintiffs' claims and defendant's counterclaims do not relate to one event or issue"): Ramirez, 2014 WL 6845555 at *4 ("[T]he only logical relationship between [plaintiffs) claims and [defendant's] counterclaim is the parties' employee-employer relationship. This connection alone, however, does not justify labeling the counterclaim as compulsory.").

Thus, the Court concludes that Defendants' counterclaims are not compulsory because they do not "arise[] out of the [same] transaction or occurrence" as Plaintiffs' claims. Fed. R. Civ. P. 13(a)(1). Plaintiffs' Motion to Dismiss is therefore granted.6

IV. MOTION FOR SUMMARY JUDGMENT

Finally, Defendants move for partial summary judgment and ask that the Court declare that Virginia law controls the question of whether Plaintiffs are covered employees under the FLSA or independent contractors who are exempt from such provisions.7 See ECF No. 26. In support of their motion. Defendants rely on contracts signed by Sigala, Flores, and Wong, which purport to show that Plaintiffs were independent contractors for ABR, rather than employees entitled to overtime pay.8 ECF Nos. 26-1, 26-2 & 26-3. In response. Plaintiffs argue that federal law governs the determination of whether Plaintiffs are employees covered by the FLSA, and, accordingly, that Defendants' request that the Court apply Virginia law is baseless. ECF No. 30 at 5.

"Under Rule 56(c), summary judgment is proper `if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.'" Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548 (1986) (citing Fed. R. Civ. P. 56(c)). The party moving for summary judgment bears the burden of demonstrating that no genuine dispute exists as to material facts. Pulliam Inv. Co. v. Cameo Props., 810 F.2d 1282, 1286 (4th Cir. 1987). If the moving party demonstrates that there is no evidence to support the non-moving party's case, the burden shifts to the non-moving party to identify specific facts showing that there is a genuine issue for trial. When ruling on a motion for summary judgment. "[t]he evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor." Anderson v. Liberty Lobby. Inc., 477 U.S. 242, 255, 106 S.Ct. 2505 (1986).

What is notable about Defendants' Motion is that it does not ask that this Court determine the crucial question of whether Plaintiffs are, in fact, employees covered by the FLSA, or independent contractors. Rather, they ask that Virginia law control this question because Plaintiffs signed "independent contractor agreements" with ABR in Virginia, and, according to Defendants, under Maryland choice of law rules, Virginia law would control the interpretation of those agreements. See Harte-Hanks Direct Mktg./Baltimore, Inc. v. Varilease Tech. Fin. Grp., Inc., 299 F.Supp.2d 505, 521 n.16 (D. Md. 2004) ("[U]nder Maryland choice-of-law rules a contractual claim . . . is governed by the law of the place where the contract is made, which is the place where the last act required to make a contract binding occurs." (citation omitted)). The problem, however, is that Plaintiffs' claims are statutory, rather than contractual, in nature. Even if Virginia law controlled the interpretation of the agreements, that fact alone would not be determinative in deciding the legal issue which Defendants contend is the dispositive issue in this case. i.e., whether Plaintiffs were employees or independent contractors of ABR. See ECF No. 26 at 3. Indeed, whether Plaintiffs were employees as that term is defined in the FLSA is a question to be governed by the FLSA itself and is a matter of federal law. See 29 U.S.C. § 203 (defining the term "employee" as "any individual employed by an employer," subject to certain exceptions).

This Court recently addressed a somewhat similar issue in Astorga v. Castlewood Consulting, LLC, No. GM-14-4006, 2015 WL 2345519 (D. Md. May 14, 2015), an FLSA case in which the plaintiff had signed a contract in which he agreed that he was an independent contractor and "[would] not represent [himself] to be an employee. . . ." Id. at *1. The defendants filed a counterclaim to the plaintiffs wage claims alleging that the plaintiff's initiation of the lawsuit was a breach al their contract. Id. The Court denied the plaintiff's motion to dismiss the counterclaim, but noted that it was "express[ing] no view as to [p]laintiff's status as a covered employee or an independent contractor" because "the simple fact that [p]laintiff signed an independent contractor agreement does not automatically mean he is an independent contractor." Id. at *3: see also Robicheaux v. Radcliff Material, Inc., 697 F.2d 662, 667 (5th Cir. 1983) ("[T]he fact that the plaintiff welders in this case signed contracts stating that they were independent contractors, while relevant, is not dispositive."). Rather, to determine whether an individual is an employee or an independent contractor under the FLSA, the Court must look to the "economic realities" of the relationship between the worker and the employer by analyzing the six factors discussed by the Fourth Circuit in Schultz v. Capital International Security, Inc., 466 F.3d 298 (4th Cir. 2006):

Id. at 305. Defendants have not argued the extent to which the contracts Plaintiffs signed would factor into this test. But, in any event, as the Court indicated in Astorga, the determination of whether Plaintiffs fall into the statutory definition of "employee," is one best made after discovery has been completed. See Astorga, 2015 WL 2345519, at *4: see also Zamora v. Washington Home Servs., LLC., No. 11-CV-00831 AW. 2011 WL 6297941, at *2 (D. Md. Dec. 15, 2011) (noting that question of whether an individual is a covered employee under FLSA is a "fact-intensive" inquiry). Ultimately, because die question is answered through an analysis of the FLSA and not interpretation of the contract, to the extent that Defendants argue that Virginia law must control whether Plaintiffs were covered employees under the FLSA, their Motion must be denied.9

This conclusion does not end the Court's inquiry, however, because it appears that Defendants also seek a judicial determination that Virginia law applies to these contracts so that they may avoid liability under the MWPCL. See ECF No. 26 at 2-1 But the Court fails to see how any such choice of law determination could possibly be relevant in this case in light of Cunningham v. Feinberg, 107 A.3d 1194 (Md. 2015).10 In Cunningham, the Court of Appeals of Maryland considered whether the doctrine of lex loci contractus—the choice of law doctrine that provides that the law of the place where the contract was made generally controls the construction and interpretation of a contract, absent a strong Maryland public policy to the contrary—would apply to preclude application of the MWPCL where the plaintiff employee sought to recover unpaid wages from his former employer, a Virginia law firm. The plaintiff in that case had signed an employment contract, which dubbed the plaintiff an "independent contractor," and the trial court concluded that, because the contract was a "Virginia contract," the MWPCL did not apply and accordingly dismissed the plaintiffs claim. Id. at 1199, The Court of Appeals, however, explained that "[l]ex loci contractus is not implicated in all contract-related disputes," id. at 1205, and noted that neither party disputed the validity or enforceability of the employment contract, nor did they ask that the court interpret or construct any express term of the contract, id. at 1206. Rather, the dispute in Cunningham revolved around what the plaintiff was to be paid, an issue on which the contract was silent. See id. ("The contract is silent largely as to the recovery of unpaid wages. . . . There is nothing in the Agreement relevant expressly to the payment of wages to interpret or enforce."). Thus. lex loci contractus did not resolve the dispute, and the Court of Appeals instead adopted the reasoning applied by the Court of Special Appeals of Maryland in Himes Associates, Ltd. v. Anderson, 943 A.2d 30 (Md. Ct. Spec. App. 2008). In Himes. the court noted that the MWPCL defines an "employer" as any person who "employs an individual in the State [of Maryland]" and therefore concluded that the MWPCL "covers the situation in which a company outside of Maryland directs its employee to go to a work site in Maryland." Id. at 48. Finally, the court in Cunningham went on to explain, "[i]n a nifty bit of considered dicta," that, even if lex loci contractus applied, it would not preclude a claim for relief under the MWPCL, because "the MWPCL represents a strong public policy of Maryland" and that, therefore, the Virginia employment contract did not preclude the employee's recovery under the MWPCL. 107 A.3d at 1201, 1218.11

Here. too, neither Plaintiffs nor Defendants are asking the Court to resolve any issues of construction or interpretation regarding the contracts that Plaintiffs signed. Thus, even assuming Defendants presented sufficient evidence to demonstrate that the contracts were formed in Virginia,12 application of lex loci contractus would not resolve any dispute before the Court. And even if lex loci contractus was relevant the "strong public policy" embodied in the MWPCL would override the choice of law doctrine. See Cunningham, 107 A.3d at 1218. This case involves issues purely of statutory interpretation, and, on those issues, it appears Defendants prefer to await resolution until after discovery has been completed. See ECF No. 26 at 5 (asking that the Court "leave open the question of whether missing pay should be determined under the provisions of Maryland code until Plaintiffs produce some evidence that they did, in fact, work on jobs in Maryland. . . ."). ECF No. 26 at 5. Accordingly. Defendants' Motion for Partial Summary Judgment, ECF No. 26, is denied.

V. CONCLUSION

For the foregoing reasons, Defendants' Motion for Default Judgment. ECF No. 19, is DENIED: Plaintiffs' Motion to Dismiss Defendants' counterclaims, ECT No. 25, is GRANTED: and Defendants' Motion for Partial Summary Judgment. ECF No. 26, is DENIED. A separate Order follows.