U.S. District Courts in Illinois

Northern District of Illinois Rules that Arbitration Clause in Employee Handbook is Enforceable

May 2, 2011 | Peter S. Lubin and Patrick Austermuehle

More and more businesses are utilizing employment agreements with new hires, and often those agreements contain arbitration dispute resolution clauses. As experienced wage and hour class action attorneys, Lubin Austermuehle is familiar with such agreements and our attorneys are always mindful of court rulings that affect this area of the law. The Northern District of Illinois, Eastern Division federal court rendered a decision affecting employment arbitration agreements recently, and we wanted to make our readers and clients aware of the court’s ruling.

Brown v. Luxottica Retail North America Inc. pits a class of salaried retail, lab, and general managers against their employer Lenscrafters. Plaintiffs argued that they were non-exempt employees, and therefore were entitled to overtime compensation. The employees filed suit alleging violations of the Fair Labor Standards Act (FLSA), Illinois Minimum Wage Law (IMWL), and Illinois Wage Payment and Collection Act (IWPCA) for unpaid overtime wages. In response, Defendant moved to compel one of the named plaintiffs to arbitrate her claims and stay the proceedings with respect to that plaintiff. Defendant so moved pursuant to a dispute resolution agreement contained within the employee handbook Plaintiff was given while still employed by Defendant. Defendant required Plaintiff to accept the terms of the handbook in order to continue her employment. The agreement contained a form to allow the employee to opt-out of the arbitration clause and instructions how to fill it out, but Plaintiff had failed to sign the form. Plaintiff objected to Defendant’s motion on the grounds that it was unconscionable and unenforceable.

In considering Plaintiff’s arguments, the Court evaluated the procedural and substantial unconscionability of the agreement. The Court found no procedural unconscionability because the arbitration language was “clearly set off” from the rest of the employee handbook and was easy to find by those who actually read the entire handbook. Next, the Northern District held that there was no substantive unconscionability due to the existence of the opt-out clause and the fact that the Plaintiff chose not to exercise her right to opt-out even though she signed a document stating she had read and accepted the terms of the handbook. Finally, the Court ruled that nothing in the FLSA precludes an agreement to arbitrate an FLSA claim, and granted Defendant’s motion to compel arbitration.

Northern District of Illinois Federal Court Grants Motion to Strike Plaintiff’s Request for Injunctive Relief in Breach of Contract Case

April 26, 2011 | Peter S. Lubin and Patrick Austermuehle

Lubin Austermuehle has successfully litigated many business disputes, and in our many years of experience we have found that contract claims are among the most contentious conflicts. Because so many of our clients deal with breach of contract issues, our Elmhurst business attorneys are always mindful of new court decisions issued in this area of the law. In fact, our lawyers just discovered one such case, Jumpfly Inc. v. Torling, in the US District Court for the Northern District of Illinois.

Jumpfly Inc. v. Torling pits a Plaintiff employer against two former employees who allegedly violated the non-compete agreements signed when they were hired by Plaintiff. Plaintiff contends that Defendant Torling started a competing pay-per-click internet advertising side-business while in Defendant’s employ, and upon discovering its employee’s side-business, fired him and sent a cease and desist letter demanding that he stop violating the non-compete. The parties eventually negotiated a settlement allowing Torling to continue his business, but the agreement prohibited him from soliciting any of Plaintiff’s employees. Torling allegedly solicited Defendant Burke — who was working for Plaintiff at the time under a similar non-compete agreement — and got him to quit his position with Plaintiff to work for Defendant Torling.

Plaintiff then filed suit against the two individuals and the new company (Windy City) that they worked for — alleging rescission of a settlement agreement, breach of contract, violations of the Lanham Act and Illinois Deceptive Trade Practices Act, and intentional interference with contract based upon non-compete agreements between the parties. Plaintiff’s requested the Court to enjoin Defendants’ competitive business conduct and for monetary damages. In response, Defendants filed a motion to strike Plaintiff’s request for injunctive relief and filed a motion to dismiss under 12(b)(6).

The Court granted the motion to strike as to the breach of contract claim because the two year term of the non-compete agreement had already expired and an injunction would result in an unreasonable restraint of trade. The Court also noted that Plaintiff’s seven-month delay — after discovery of the illicit conduct — in asking for an injunction also weighed in favor of Defendants. The Court denied the motion to strike as to the statutory claims, however, because injunctive relief is provided by both laws which rendered the motion premature.

Next, the Court granted Defendants’ motion to dismiss the breach of contract and intentional interference with contract claims due to pleading insufficient facts that Defendant Windy City induced either of the individual Defendants to breach their contracts with Plaintiff. In dismissing Plaintiffs conspiracy to interfere with contract, the Court applied the Intracorporate Conspiracy Doctrine and declined to agree with Plaintiff’s argument that Defendants’ conduct fell with in an exception to the rule. Finally, the Court denied the motion to dismiss the settlement agreement breach claim as the effect of Defendants’ breaches had yet to be determined.

Illinois Federal District Court Denies Class Certification for Violations of IMWL and IWPCA Under FRCP 23

March 21, 2011 | Peter S. Lubin and Patrick Austermuehle

When large companies fail to properly compensate their employees, a class-action lawsuit is usually the most efficient means to resolve the legal claims between the two parties. At Lubin Austermuehle, our Chicago Fair Labor Standards Act lawyers fight for the rights of those who are due unpaid wages, and our lawyers are always striving to find ways to best serve our clients’ interests. As a firm that focuses on wage and hour class-actions, we are always watching for new court decisions in the area, and our Orland Park overtime lawyers recently found one such case in the federal Northern District of Illinois, Eastern Division Court.

Slayton v. Iowa College Acquisition Corp. is a case brought by a plaintiff who worked for Defendant as an Admissions Advisor for Kaplan University, where she and other putative class members were paid an hourly wage and were frequently required to work more than forty hours a week, but were not paid overtime. Plaintiffs alleged that Defendant required them to arrive at work prior to their shifts in order to perform certain job duties without compensation. Upon filing the putative class-action, the named plaintiff proposed two sub-classes — one for overtime violations of the Illinois Minimum Wage Law (IMWL), and one for unpaid wage violations under the Illinois Wage Payment and Collection Act (IWPCA) — and sought to certify them under Federal Rule of Civil Procedure 23(b)(3). Defendant did not dispute that the proposed class met the numerosity and adequate representation requirements of the rule, but did argue that Plaintiffs could not meet the commonality and typicality requirements.

In denying class certification, the Court found that Plaintiffs did not establish that Defendant engaged in standardized conduct to toward members of the proposed class. While there was evidence that Defendant required Plaintiffs to arrive early, it was unclear that Defendant had a widespread policy to not record that time. The Court also held that typicality was not established because not all the class representative’s claims had the same essential characteristics of the claims of the class at large and consequently, no common questions of law or fact predominated over the individual claims of the class members.

Federal District Court in Illinois Authorizes Class Notice in Warehouse Worker Overtime Litigation

March 6, 2011 | Peter S. Lubin and Patrick Austermuehle

The holiday season is a busy time for many corporations and particularly for those tied to the retail industry, increased holiday business usually means that employees have to work longer hours to keep up with consumer demands. Our Aurora overtime attorneys came across a case that illustrates what can happen when employers fail to compensate employees who work extra hours during such times of increased workflow.

In Nunes v. Chicago Import Inc. Plaintiffs worked for Defendant as warehouse laborers responsible for loading and unloading merchandise from delivery trucks and keeping the warehouse organized. In performing these duties, Plaintiffs routinely worked over forty hours per week, and worked seven days a week during the month of December. Plaintiffs were paid a flat rate of $300.00 per week for the first three weeks of the month, and were paid $400.00 for the fourth week. They were paid an additional $50.00 per week in December, but never received hourly or overtime wages for their services. Plaintiffs then filed suit alleging violations of the Fair Labor Standards Act (FLSA) and the Illinois Minimum Wage Law (IMWL), and asked the Court to issue an Order to Authorize Notice to Similarly Situated Persons under FLSA Section 216(b).

The Court granted Plaintiffs’ motion, holding that it was proper to leniently review the pleadings at this early stage of the litigation. As such, the five sworn declarations submitted by the Plaintiffs established that the representative and pending class members were sufficiently similarly situated to proceed with a class action. Defendants made objections that the proposed notice was too broad, and should not include administrative or executive staff. The Court agreed with Defendant and ordered adjustments to the form of the notice to exclude such employees, but otherwise found in favor of the Plaintiffs and granted their motion to authorize notice.

Northern District of Illinois Rules that State Law Overtime Claims Not Precluded by Prior Dismissal of FLSA Class-Action

February 28, 2011 | Peter S. Lubin and Patrick Austermuehle

When dealing with class-action wage and hour disputes, defendants will try to get the court to dismiss claims by any means that they can, and there are a variety of legal defenses that allow them to do so. At Lubin Austermuehle, our overtime lawyers are familiar with all of the tricks of the trade, so to speak, so they were interested to discover a case that illuminates just one of these many tools that is utilized by defendants to escape liability.

In Anyere v. Wells Fargo Co. Inc, Plaintiffs were current and former employees of Defendant and worked as credit managers who provided customers primarily with loan consolidation services. Plaintiffs filed a lawsuit alleging overtime violations under Fair Labor Standards Act (FLSA) because they were required to work during lunch, on weekends, and late into the night on a regular basis. Plaintiffs also alleged that Defendant “verbally disciplined employees for logging more than forty hours per week” and would adjust employees’ time records to stay under the overtime threshold. In response to these allegations, Defendant moved to dismiss the action on the basis of collateral estoppel due to a previous lawsuit filed against Defendant in California for the same overtime violations.

The Court dismissed the FLSA claims for nationwide relief based upon issue preclusion — the California-filed class-action was dismissed because the members of the proposed class were not similarly situated. However, the Court maintained the statewide action because the prior case did not contemplate an Illinois-only class-action and therefore could not have been litigated previously.

Northern District of Illinois Denies FRCP 12(b)(6) Motion to Dismiss Brought Against Dialysis Technicians

February 28, 2011 | Peter S. Lubin and Patrick Austermuehle

Because we focus on large-scale overtime class-action lawsuits, the attorneys here at Lubin Austermuehle have helped clients from many different fields recover their unpaid wages. We think it is important for all of our potential clients out there to understand what kinds of issues arise in wage and hour cases, so our Evanston overtime attorneys are always on the look-out for new decisions. In fact, our lawyers discovered a federal case in the Northern District of Illinois that involves workers in the medical industry.

In Howard v. Renal Life Link Inc., Plaintiffs worked for Defendant as dialysis technicians and routinely worked over forty hours each week, but Defendant allegedly deducted any overtime worked and paid Plaintiffs for only forty hours. The named Plaintiff complained to Defendant that she was not being paid properly for all of the time that she had worked, but Defendant allegedly ignored these complaints and continued to deduct any time worked over forty hours each week. Plaintiffs then filed suit alleging that these working hour deductions constituted violations of both the Illinois Minimum Wage Law (IMWL) and the Fair Labor Standards Act (FLSA). In response, Defendants filed a motion to dismiss the action under Federal Rule of Civil Procedure (FRCP) 12(b)(6) alleging that Plaintiff failed to supply sufficient factual evidence in the complaint in order to meet the requirements of FRCP 23.

Defendant’s based their argument that Plaintiff failed to allege enough facts because the complaint contained allegations based “upon information and belief” instead of hard evidence. The Court found this argument unpersuasive, however, because FRCP 8 allows such allegations as long as there is sufficient detail in the complaint to make the claims facially plausible. In denying Defendant’s motion to dismiss, the Court held that the issues brought up by Defendant were properly analyzed at the class certification phase of the case, and were not properly brought in a 12(b)(6) motion to dismiss.

Southern District of Illinois Federal Court Dismisses Minimum Wage Claim for Failure to Plead Sufficient Facts

February 28, 2011 | Peter S. Lubin and Patrick Austermuehle

A motions to dismiss is a weapon that is frequently used in large scale wage claim litigation, as it is an easy and expedient way for defendants to eliminate many lawsuits. Lubin Austermuehle is an experienced class-action law firm whose Chicago wage and hour attorneys frequently handle overtime disputes, and we deal with such motions on a regular basis, which is why our lawyers were interested in a case out of the Southern District of Illinois that discusses the federal standard for dismissals under Federal Rule of Civil Procedure (FRCP) 12(b)(6).

FRCP 12(b)(6) allows litigants to dismiss an action for a failure to state a claim upon which relief can be granted by a federal court. Nicholson v. UTI Worldwide, Inc. is an action brought by forklift operators who worked for Defendant Uti in its warehouses in Illinois. Plaintiffs claimed that they were forced to work without pay prior to the start of their shifts performing inspections, logging into computer systems, “donning special clothing and protective gear,” and other activities. Because they were not paid for this work, Plaintiffs claimed that Defendant had violated the Fairl Labor Standards Act (FLSA), and the Illinois Minimum Wage Law (IMWL). In their complaint, Plaintiffs failed to plead how frequently the pre-shift activities occurred and also included no estimates of the applicable wage rates that applied during the times that Plaintiff’s performed such work. Defendant filed a motion to dismiss for the lack of pleading specificity in response to Plaintiff’s complaint.

In making its decision, the Court held that Defendants had been sufficiently notified of the overtime claims because Plaintiffs plead enough facts to show that their employment was covered by FLSA and the IMWL. Despite the fact that the complaint did not include allegations that Plaintiffs worked over forty hours a week, Plaintiffs did allege that they worked “overtime,” which was enough to give Defendant notice of the claim. However, the Court dismissed the minimum wage claims because Plaintiffs failed to plead facts suggesting that their actual wages fell beneath the applicable minimum wage. Thus, the Court allowed the overtime claims to proceed, but dismissed the minimum wage claim under the IMWL.

Central District of Illinois Rules that Filing Opt-in Consent Forms is not Enough to Establish a Class-action Under FLSA

February 21, 2011 | Peter S. Lubin and Patrick Austermuehle

Across the nation, there are employees who go to work each day and earn overtime wages, but are unaware that they should be getting paid time and a half for the time they work over forty hours each week. Lubin Austermuehle focuses on wage and hour law, and our attorneys frequently meet clients who have years worth of unpaid overtime, and we help them get the wages they are owed. Our Chicago unpaid overtime class action attorneys discovered a case from the federal court for the Central District of Illinois that we wanted to share with our readers due to the unique nature of the issues tackled by the Court in its opinion.

Murray v. Tyson Foods is a case to determine whether Tyson should have paid overtime wages for the time that Plaintiffs spent putting on and taking off protective clothing worn in Tyson’s beef and pork processing plants. The case is one of many similar actions filed in five different states regarding this same issue. Plaintiffs filed a class-action suit alleging that Defendant’s failure to compensate Plaintiffs for that time constituted violations of the Illinois Wage Payment and Collection Act (IWPCA) and the Illinois Minimum Wage Law (IMWL), and filed individual claims for violations of the Fair Labor Standards Act (FLSA),
After the start of the litigation, Defendant filed a motion for partial summary judgment on the basis that the state law claims were preempted by the Labor Management Relations Act and the parties’ collective bargaining agreement. This motion was was granted, eliminating the class action issues and leaving only the FLSA claim for the six named Plaintiffs. The parties went on to discovery, and three days before the close of discovery, Plaintiffs noticed a 30(b)(6) deposition. Defendant opposed the deposition and filed for a protective order on the grounds that Plaintiffs sought the deposition to gather information on the previously dismissed class action claims. Plaintiffs responded by asserting that the filing of 1,474 opt-in consent forms from other putative class-members had created a collective action under FLSA.

The Court declined to agree with Plaintiffs’ argument because the complaint did not contain a representative FLSA claim and no motion was ever filed to certify a class-action on the claim. Thus, the opt-in consent forms had no legal meaning and did not create a class-action under FLSA. Additionally, the Court found that Plaintiffs’ 30(b)(6) notice was too broad, and granted Defendant’s protective order, but gave Plaintiffs time to issue a more tailored 30(b)(6) notice.

Southern District of Illinois Federal Court Conditionally Certifies FLSA Overtime Class-Action

February 21, 2011 | Peter S. Lubin and Patrick Austermuehle

Whether intentional or not, many companies implement policies and procedures that create violations of both federal and state wage laws. In our years of practicing law, Lubin Austermuehle has seen many such policies, and our Crystal Lake overtime attorneys have helped many previous clients victimized by them. Our lawyers recently discovered a wage and hour class-action case regarding one such policy and wanted to share it with our readers.

In Marshall v. Amsted Industries, Inc., the two named Plaintiffs worked at Defendants’ steel foundry as an hourly leadman and hourly chipper, respectively. Plaintiffs filed a class-action suit for unpaid overtime and a failure to keep accurate payroll records pursuant to the Fair Labor Standards Act (FLSA). They sought conditional certification of a class comprised of all current and former hourly employees who worked at Defendants’ facility in the last three years. Plaintiffs alleged that Defendants implemented a company policy that all hourly workers had to perform maintenance and service tasks as well as don protective clothing prior to the beginning of their work shifts. Additionally, Plaintiffs had to carry out shut-down and clean-up procedures after the end of their shifts, but were never compensated for the work performed during these times. In response to Plaintiff’s motion for conditional certification, Defendants’ moved to de-certify the action.

The Court found that they met the requirements of certification under FLSA and conditionally certified a class, despite the presence of four different collective bargaining agreements and varied job titles of the potential plaintiffs. The Court based their conditional approval on the fact that all of the hourly workers were similarly situated enough to allow Plaintiffs to send out opt-in notices. In so holding, the Court decided that Defendans’ company policies of requiring workers to complete pre- and post-shift tasks applied equally to all of the hourly workers and deprived them of their overtime pay.

Illinois District Court Holds that Termination is Not a Wage Reduction under FMLA

February 9, 2011 | Peter S. Lubin and Patrick Austermuehle

We here at Lubin Austermuehle have extensive experience as Joliet overtime class-action lawyers and are constantly scouring the federal court dockets in Illinois for cases that may help our practice. One particularly instructive opinion was issued by the Northern District of Illinois, Eastern Division earlier this year in Ottaviano v. Home Depot Inc.

In Ottaviano v. Home Depot Inc., the Plaintiff employees worked for Home Depot as assistant store managers, and allege that they and their fellow class members were misclassified as exempt employees. Plaintiff’s claimed that Defendant’s misclassification was intentional for the purpose of circumventing the Illinois Minimum Wage Law (IMWL). Defendant Home Depot denied the claims and filed to dismiss the action through a motion for summary judgment.

The named Plaintiffs had worked for Defendant between approximately two to six years, and had worked well in excess of forty hours per week during the entirety of their employment. During the time that the Plaintiffs worked for Home Depot, they were paid a salary and were required to work fifty-five hours a week. Home Depot requires that all assistant store managers (ASM), including Plaintiffs, go through a training stage for two to eight weeks before they are deemed to be a qualified and capable ASM able to fulfill the responsibilities required for the position. The trainee ASM’s are classified as exempt by Defendants and are paid a salary during this period. Defendant has a universal policy of scheduling its ASM’s for fifty-five hours per week, and Home Depot terminates assistant store managers who fail to work the hours they are scheduled.

Plaintiffs filed their class action alleging that they were owed overtime for the training period and for every other week of their employment with Home Depot. Plaintiffs contended that Defendant’s policy of terminating ASM’s who do not work fifty-five hours a week is effectively a wage reduction under the Federal Labor Standards Act (FMLA). Plaintiffs also argued that under the salary-basis test, any employee whose wages can be reduced by their employer is non-exempt. The Court did not find Plaintiffs’ arguments persuasive, and in dismissing the claims Judge Dow cited a U.S. Supreme Court ruling that true exempt employees are disciplined by terminations, demotions, or restricted work assignments, as the Plaintiffs were, instead of wage deductions. The District Court went on to say that employers are permitted to set requirements for the overall number of hours worked by their exempt employees. Finally, the Court granted summary judgment to dismiss the overtime claims for the training period because they were barred by the applicable statute of limitations.