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Kuhl v. Guitar Center Stores

February 28, 2008

MICHAEL KUHL, ERIC DISRUD, AND KEVIN CHERELLO, INDIVIDUALLY AND ON BEHALF OF ALL SIMILARLY SITUATED PERSONS, PLAINTIFF,
v.
GUITAR CENTER STORES, INC. AND GUITAR CENTER, INC., DEFENDANTS.



The opinion of the court was delivered by: Judge Joan B. Gottschall

MEMORANDUM ORDER & OPINION

Plaintiffs Michael Kuhl, Eric Disbud, and Kevin Cherello (collectively, "Kuhl") bring this suit, individually and on behalf of others similarly situated, against defendants Guitar Center Stores, Inc. and Guitar Center, Inc. (collectively, "Guitar Center"). Kuhl's five-count amended complaint alleges breach of contract (Count I), violations of state wage payment and collection acts (Count II), violations of the Fair Labor Standards Act, 29 U.S.C. § 201 et seq. ("FLSA") (Count III), willful FLSA violations (Count IV), and unjust enrichment (Count V). Guitar Center has filed a motion to dismiss or, in the alternative, for a more definite statement in respect to Counts I, II, and V of the amended complaint. For the reasons set forth below, the court grants Guitar Center's motion to dismiss without prejudice as to Kuhl's non-Illinois state claims only, and, as to the Illinois state claims, denies the motion to dismiss, or in the alternative, a more definite statement.

I. BACKGROUND*fn1

Guitar Center owns and operates a chain of music stores around the United States, including several branches in Illinois. Allegedly, Guitar Center failed to pay its employees for all of the hours that they worked. Specifically, Kuhl claims that Guitar Center engaged in two practices that resulted in its employees' paychecks being "short-changed." First, Guitar Center allegedly rounded up the time employees spent on breaks so that it could classify those breaks as unpaid meal breaks instead of paid breaks. Second, Kuhl alleges that Guitar Center retroactively deducted up to one hour for meal breaks from the checks of workers who did not punch out for a meal break at all. Kuhl filed a class action suit on behalf of all employees of Guitar Center.

II. ANALYSIS

Guitar Center raises multiple grounds upon which it asks the court to dismiss Kuhl's case, specifically: (A) lack of standing; (B) lack of subject matter jurisdiction; and (C) insufficiency of the complaint.

A. Standing To Raise State Law Claims

Guitar Center argues that because the three plaintiffs all work in Illinois, Kuhl lacks standing to assert state law claims for any state other than Illinois. The court holds that Kuhl has standing to pursue the Illinois state claims and that the issue of class standing is more appropriately addressed at the time of class certification.

1. Legal Standard

A court ruling on a motion to dismiss that challenges standing must accept as true all material allegations in the complaint and draw all reasonable inferences in favor of the plaintiff. Retired Chi. Police Ass'n v. City of Chicago, 76 F.3d 856, 862 (7th Cir. 1996). The plaintiff bears the burden of establishing the required elements of standing. Lee v. City of Chicago, 330 F.3d 456, 468 (7th Cir. 2003) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992)). To establish standing, a plaintiff must show: (1) "an injury in fact - an invasion of a legally protected interest which is (a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical"; (2) a causal connection between the injury and the challenged conduct; and (3) a likelihood that a favorable court decision will redress the injury. Lujan, 504 U.S. at 560-61 (reviewing requirements to establish a case or controversy under Article III of the U.S. Constitution). In certain circumstances, a court may determine class certification before standing where class certification issues are "'logically antecedent' to Article III concerns and themselves pertain to statutory standing . . . ." See Ortiz v. Fibreboard Corp., 527 U.S. 815, 831 (1999) (noting in an asbestos class action that the determination of whether the named plaintiffs had standing to bring claims on behalf of exposure-only class members should come after the issue of class certification had been determined); see also Payne v. County of Kane, 308 F.3d 673, 680 (7th Cir. 2002) (noting the importance of observing this "directive to consider issues of class certification prior to issues of standing").

2. Standing to Bring State Law Claims

On Behalf of A Class Guitar Center's argument that Kuhl lacks standing to assert non-Illinois state law claims rests solely on the court's conclusion in Schultz v. American Family Mutual Insurance Co., No. 04 C 5512, 2005 WL 5909003 (N.D. Ill. Nov. 1, 2005). In Schultz, the plaintiff had sued the defendant for violations of FLSA, Illinois statutory law, and "other similar state statutes." Id. at *1. Before the court was plaintiff's motion to send an opt-in notice to the FLSA class as well as defendant's motion to dismiss. Id. Notwithstanding its conclusion that subject matter jurisdiction "w[ould] not be clear until the FLSA class has been determined and plaintiff moves to certify the state law class," the court concluded that if the plaintiff "currently lacks standing to sue for [defendant's] alleged violations of other states' statutes . . . class certification will not cure that defect." Id. at *7.

Schultz bases its conclusion on the holdings in two cases where the plaintiffs lacked standing at the inception of the case and could not therefore assert standing on behalf of the class. See Walters v. Edgar, 163 F.3d 430 (7th Cir. 1998) (affirming dismissal for want of standing even after a class was certified where federal jurisdiction never attached to plaintiffs' frivolous individual claims); Portis v. City of Chicago, 347 F. Supp. 2d 573, 576 (N.D. Ill. 2004) (finding no standing to claim injunctive relief on behalf of a class where the named plaintiffs themselves were no longer subject to the challenged practice at the time they filed suit). However, there is no dispute that Kuhl has standing to assert his own claims in this case under both FLSA and Illinois state law. This court respectfully declines to follow the reasoning and conclusion of the Schultz court and agrees with Kuhl that In re Grand Theft Auto Video Game Consumer Litigation, 06 MD 1739, 2006 WL 3039993 (S.D.N.Y. Oct. 25, 2006), is the better fit.

In Grand Theft Auto, plaintiffs from five states alleged the defendant violated consumer protection laws of multiple states. Id. at *1. The defendant challenged the plaintiffs' standing because they had no personal connection to many of the states. Id. The court observed that other courts had certified nationwide classes and that those courts have, upon motion for class certification, "found sufficient similarities between the laws of the various states to justify the prosecution of nationwide class action suits asserting state law claims." Id. at *3 n.3. It concluded that class certification should precede an analysis of standing in this case. See id. at *2 (reviewing the lower courts' split of opinion about when Ortiz, 527 U.S. at 831, requires a determination of standing before class certification). The court reasoned that, because it was undisputed that the plaintiffs had standing to bring claims under ...


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