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REKHI v. WILDWOOD INDUSTRIES

October 9, 1992

SATINDER S. REKHI, PLAINTIFF,
v.
WILDWOOD INDUSTRIES, INC., A FOREIGN CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Mihm, Chief Judge.

ORDER

Pending before the court is Defendant's Motion to Dismiss and for a More Definite Statement (# 2), and the Magistrate Judge's Recommendation (# 7). For the reasons stated below, the Magistrate's Recommendation is accepted and Defendant's Motion to Dismiss is denied.

This is an action for money damages filed pursuant to state law. The parties are of diverse citizenship and this court has jurisdiction pursuant to 28 U.S.C. § 1332.

Plaintiff Satinder S. Rekhi ("Rekhi") alleges that the Defendant Wildwood Industries, Inc. ("Wildwood") breached an employee contract by failing to pay severance pay for one year's salary when Rekhi left Wildwood's employ (Count I). He also alleges that he was discharged in retaliation for his religious beliefs (Count II). Finally, he seeks damages and penalties under the Illinois Wage and Collection Act of 1974, Ill.Rev.Stat. Ch. 48, ¶ 39m-11 ("the Act").

Wildwood argued that the court does not have subject matter jurisdiction over Count III because it is a state claim seeking approximately $12,000.00 in unpaid salary and penalties pursuant to Ill.Rev.Stat. Ch. 48, ¶ 39m-14(b) which does not arise from the same operative facts as Counts I and II. Therefore, Wildwood argues, the claim does not fall in the court's supplemental jurisdiction under 28 U.S.C. § 1367.

Magistrate Judge Kauffman disagreed and found that Count III arises from the same employment action as Counts I and II. He noted that § 1367 was amended to make clear that federal courts could and should exercise pendent jurisdiction whenever such exercise would further judicial economy and the ends of justice. "Resolving all of Plaintiff's claims against this Defendant in relation to the termination of Plaintiff's employment would further both." See Magistrate's Recommendation, P. 2.

Wildwood filed its objection to the Magistrate's Recommendation on July 20, 1992, reiterating its argument that Count III does not arise from the same "case or controversy" necessary for pendent state claims under 28 U.S.C. § 1367.

The court agrees with Judge Kauffman and finds that Count III is based upon the same nucleus of operative facts as Count I. Rekhi's wage demand was prompted by Wildwood's failure to pay certain compensation which Rekhi felt he deserved under his contract for employment. His breach of contract claim under Count I also arises from the same alleged nonpayment of wages and benefits owed.

Wildwood also argues that Count III involves two unique issues of Illinois law which distinguish it from Counts I and II. First, Wildwood contends that under Ill.Rev.Stat. Ch. 48, ¶ 39m-11, only the Department of Labor, not an employee such as Rekhi, can institute an action for penalties provided under the Act.*fn1 Although Wildwood concedes that § 11 grants employees the right to prosecute their own complaint for the recovery of "wages", it asserts that this authority does not extend to penalties accrued which result from an employer's failure to comply with a Department of Labor decision. Secondly, even if Rekhi can seek recovery of penalties provided for by the Act, Wildwood argues that by tendering payment of the amount determined to be due, it may avoid those penalties under the Act.

The court does not believe that Count III involves unique issues of Illinois state law which would distinguish it from Count I and require resolution in a state court. It is entirely within this court's discretion under the Erie Doctrine to resolve a supplemental claim which requires the court's analysis of statutory construction and intent under Illinois law.

In this case, the court must interpret an employee's rights under Ch. 48, ¶ 39m-11(c) in connection with ¶ 39m-14(b) of the Illinois Wage and Collection Act. ¶ 39m-14(b) states:

  Any employer who has been ordered by the Director
  of Labor or the court to pay wages due an employee
  and who shall fail to do so within 15 days after
  such order is entered shall be liable to pay a
  penalty of 1% per calendar day to the employee for
  each day of delay in paying such wages to the
  employee up to an amount equal to twice the sum of
  unpaid wages due the employee.

This provision must be read together with ¶ 39m-11 which outlines the duties and powers of the Department of Labor in assisting an employee in collecting wages and benefits due from his or her employer. Specifically in qu ...


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