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Beltran v. Brentwood North Healthcare Center

April 4, 2006

CHERY G. BELTRAN, LAVERNE BRENT, LUZVIMINDA GUIDAYA, CLAUDIA HERNANDEZ, MAYJYARAH ANN MEADE, ALLEN ORETO AND MADELINE PIRAMIDE, PLAINTIFFS,
v.
BRENTWOOD NORTH HEALTHCARE CENTER, LLC AND JUDY PITZELE, DEFENDANTS.



The opinion of the court was delivered by: John F. Grady, United States District Judge

MEMORANDUM OPINION

This case is before the court for ruling on (1) plaintiffs' motion to dismiss defendant Brentwood North Healthcare Center's ("Brentwood") counterclaim for breach of fiduciary duty and (2) defendant Brentwood's motion to dismiss plaintiffs' retaliation claim.*fn1 For the reasons explained below, both the counterclaim and the retaliation claim are dismissed, but plaintiffs' request for attorneys fees is denied.

BACKGROUND

Defendant Brentwood is a nursing care facility located in Riverwoods, Illinois. Plaintiffs Chery Beltran, Laverne Brent, Luzviminda Guidaya, Claudia Hernandez, Mayjyarah Ann Meade, Allen Oreto and Madelin Piramide are former Brentwood employees who worked the night shift as registered nurses, licensed practical nurses or certified nursing assistants. After Brentwood terminated each of the plaintiffs' employment, plaintiffs commenced this lawsuit against Brentwood and its Administrator, defendant Judy Pitzele, seeking unpaid wages under the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201 et seq., the Illinois Minimum Wage Law ("IMWL"), 820 ILCS 105/1 et seq., and the Illinois Wage Payment and Collection Act ("IWPCA"), 820 ILCS 115/1 et seq. According to plaintiffs, they were given a thirty-minute, unpaid meal break during each shift, but they were not allowed to use their meal breaks for their own benefit. For example, Pitzele told them that they could not sleep during their meal breaks. Plaintiffs thus contend that they are entitled to be paid for those meal breaks because they were "'on-call' and constantly required to attend to residents during meal breaks." (Sec. Am. Compl. ¶ 18.)

In addition to denying liability under the FLSA, IMWL and IWPCA, Brentwood has asserted a counterclaim alleging that plaintiffs owed fiduciary duties of loyalty to their employer which they breached by sleeping on the job rather than performing their assigned job duties. Brentwood thus seeks to recover all the wages it paid plaintiffs from the first date of breach through the date of termination.

In plaintiffs' view, Brentwood's breach-of-fiduciary-duty counterclaim is frivolous and was filed solely to retaliate against plaintiffs for filing their FLSA claim. As a result, plaintiffs moved to dismiss the counterclaim for failure to state a claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure and amended their complaint to include a claim for retaliation in violation of the FLSA. Brentwood responded to the Second Amended Complaint with a motion to dismiss plaintiffs' retaliation claim pursuant to Rule 12(b)(6).

ANALYSIS

A. Rule 12(b)(6) Standard

The purpose of a 12(b)(6) motion to dismiss is to test the sufficiency of the complaint, not to resolve the case on the merits. 5B Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1356, at 354 (3d ed. 2004). When evaluating such a motion, the court must accept as true all factual allegations in the complaint (or counterclaim) and draw all reasonable inferences in the plaintiff's (or counterplaintiff's) favor. Hentosh v. Herman M. Finch Univ. of Health Sciences, 167 F.3d 1170, 1173 (7th Cir. 1999); Jang v. A.M. Miller & Assocs., 122 F.3d 480, 483 (7th Cir. 1997). Dismissal is appropriate only if "'it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations.'" Ledford v. Sullivan, 105 F.3d 354, 356 (7th Cir. 1997) (quoting Hishon v. King & Spalding, 467 U.S. 69, 73 (1984)).

B. Plaintiffs' Motion to Dismiss Brentwood's Counterclaim

In seeking dismissal of Brentwood's counterclaim, plaintiffs argue that (1) as a matter of law, sleeping on the job does not constitute a breach of the fiduciary duty of loyalty, and (2) Brentwood's breach-of-fiduciary-duty counterclaim also fails for lack of specificity. Because defendants' first argument is dispositive, there is no need to address the latter. As explained further below, we conclude that Illinois courts would not recognize a claim that an employee who sleeps during work hours faces liability to his employer for breach of the fiduciary duty of loyalty.

"An agent owes its principal a fiduciary duty to treat the principal with the utmost candor, care, loyalty and good faith." LaSalle Bank Lakeview v. Seguban, 937 F. Supp. 1309, 1324 (N.D. Ill. 1996). Under Illinois law, employees as well as officers and directors owe a duty of loyalty to their employer. Riad v. 520 S. Michigan Ave. Assoc. Ltd., 78 F. Supp. 2d 748, 763 (N.D. Ill. 1999); E.J. McKernan Co. v. Gregory, 623 N.E.2d 981, 993-994 (Ill. App. Ct. 1993). The scope of the duty of loyalty may vary depending on whether a corporate officer or an employee is involved. See, e.g., Aon Risk Serv., Inc. of Ill. v. Shetzer, No. 01 C 7813, 2002 WL 1989466, at *4 (N.D. Ill. Aug. 27, 2002); Veco Corp. v. Babcock, 611 N.E. 2d 1054, 1059 (Ill. App. Ct. 1993). Because of the duty of loyalty, "a fiduciary cannot act inconsistently with his agency or trust[.]" ABC Trans Nat'l Transp., Inc. v. Aeronautics Forwarders, Inc., 379 N.E.2d 1228, 1237 (Ill. App. Ct. 1978); Cooper v. Chicago Transit Auth., No. 95 C 2616, 1996 WL 520855, at *14 (N.D. Ill. Sept. 10, 1996). Courts applying Illinois law have construed the duty of loyalty to prohibit officers or employees from improperly competing with their employer, soliciting the employer's customers, enticing co-workers away from the employer, diverting business opportunities, engaging in self-dealing and/or otherwise misappropriating the employer's property or funds. E.g., Foodcom Int'l v. Barry, 328 F.3d 300, 304 (7th Cir. 2003) (employees who exploit positions with employer for own benefit to detriment of employer's customer relationships face liability for breach of fiduciary duty); TMF Tool Co., Inc. v. Siebengartner, 899 F.2d 584, 589 (7th Cir. 1990) (officer who commingled funds to pay personal debts breached fiduciary duty); RKI, Inc. v. Grimes, 177 F. Supp 2d 859, 877 (N.D. Ill. 2001) (breach of duty of loyalty to download confidential client information during the course of employment then use that information to compete with the employer); Ladenberger v. Gen. Signal Pump Group/Aurora Pump, No.00 C 4054, 2001 WL 709488, at *5 (N.D. Ill. June 22, 2001) (breach of duty of loyalty for employee to take advantage of property or knowledge acquired in employer's business to make profit for self at expense of employer); Riad, 78 F. Supp. 2d at 763 (employee who solicits customers or co-workers away from employer may be liable for breaching duty of loyalty); LaSalle Bank, 937 F. Supp. at 1324 (bank employee who embezzled funds from employer breached fiduciary duty); ABC Trans Nat'l Transp., 379 N.E.2d at 1237-1238 (breach of duty of loyalty for employee to continue working for principal after establishing a rival business). But, plaintiffs point out, no court has recognized a breach-of-fiduciary-duty claim grounded on the fact that an agent fell asleep on the job or otherwise failed to perform job requirements satisfactorily.*fn2

See Dangeles v. Muhlenfeld, 548 N.E.2d 45, 49 (Ill. App. Ct. 1990) (conduct involving mere negligence in job performance rather than disloyalty does not implicate fiduciary duty). The court agrees that sleeping on the job, like other forms of negligent or substandard job performance, is inherently dissimilar from the types of self-dealing scenarios that courts have recognized as forming the basis for viable breach-offiduciary-duty claims. For that reason, Brentwood's counterclaim that its employees breached their duty of loyalty by sleeping on the job is not actionable under Illinois law. See Mason v. Ashland Exploration, Inc., 965 F.2d 1421, 1424 (7th Cir. 1992) (in the absence of a controlling state court decision, the task of a federal court sitting in diversity is to predict how the Illinois Supreme Court would decide case).

Brentwood's argument to the contrary does not persuade us to rule otherwise. Relying on LaSalle Bank, 937 F. Supp. at 1324, a case in which a bank employee who embezzled $940,000 from her employer was found liable for breaching the fiduciary duties she owed to her employer, Brentwood argues that "[t]here is no meaningful distinction between an employee who steals directly from his employer and an employee who takes money in the form of a paycheck for hours he did not work." (Def.'s Resp. at 5.) This analogy is unpersuasive. An employee who fails to perform his work - whether he spends his work time sleeping on the job, daydreaming or surfing the internet - but still accepts his full paycheck simply is not comparable to an employee who embezzles from her employer. Under many circumstances sleeping on the job, like other types of substandard job performance, will serve as a legitimate ground for discipline, including termination. See Reed v. Amax Coal Co., 971 F.2d 1295, 1299-1300 (7th Cir. 1992) (upholding summary judgment against Title VII plaintiff who was discharged for sleeping on the job); Harris v. TNT Logistics N. Amer., Inc., No. 04-1100, 2005 WL 3577016, at *8 (C.D. Ill. Dec. 29, 2005) (sleeping on ...


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