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Niebrugge v. King's Medical Group

July 31, 2008

THERESA NIEBRUGGE, PLAINTIFF,
v.
KING'S MEDICAL GROUP, INC., DEFENDANT.



The opinion of the court was delivered by: Michael M. Mihm United States District Judge

ORDER

This matter is now before the Court on Defendant's Motion to Stay Litigation and Compel Arbitration. For the reasons set forth below, the Motion [#12] is DENIED.

JURISDICTION

This action arises in part under the Fair Labor Standards Act (FLSA). This Court therefore has jurisdiction based on 28 U.S.C. § 1331. This Court also has jurisdiction of the claim arising under the Illinois Minimum Wage Act based on supplemental jurisdiction under 28 U.S.C. § 1367.

BACKGROUND

Plaintiff, Theresa Niebrugge ("Niebrugge"), was employed by Defendant, King's Medical Group ("KMG"), from March 20, 2000, until October 18, 2007. Niebrugge alleges that she was not paid for all of the hours that she worked and was not paid the proper rate for the overtime hours that she worked.

During the course of Niebrugge's employment with KMG, at least two distinct versions of the employee handbook were in place; the 2001 handbook applied at the time of her hire, and the 2007 version is cited by KMG as being controlling for this case. The language used in the arbitration sections of the 2001 and 2007 handbooks is significantly different.

KMG argues that both versions of the employee handbook mandate binding arbitration for employee dispute resolution. Niebrugge argues that said language in both versions of the employee manual merely provides arbitration as an option for employees. Niebrugge also argues that KMG did not give her notice of a substantial change in company policy between the 2001 and 2007 versions of the handbook.

On January 15, 2008, Niebrugge brought this suit against KMG to recover her allegedly withheld wages. KMG has moved to stay litigation and compel arbitration. The matter is fully briefed, and this Order follows.

LEGAL STANDARD

An arbitration agreement should be treated in the same manner as a contract. Kresock v. Bankers Trust Co., 21 F.3d 176, 178 (7th Cir. 1994). If there is no contractual relationship between the parties, then no enforceable arbitration clause exists. Schacht v. Beacon Ins. Co., 742 F.2d 386, 390 (7th Cir. 1984).

This Court applies Illinois law when determining whether a valid agreement to arbitrate was created between KMG and Niebrugge, because all the relevant events took place in Illinois. Koveleskie v. SBC Capital Markets, Inc., 167 F.3d 361, 366-67 (7th Cir. 1999). Illinois law states that "[a]mbiguous contractual language is generally construed against the drafter of the language." Duldulao v. Saint Mary of Nazareth Hosp. Center, 505 N.E.2d 314, 320 (Ill. 1987); see also Weiland Tool & Mfg. Co. v. Whitney, 251 N.E.2d 242, 248 (Ill. 1969), Cedar Park Cemetery Ass'n, Inc. v. Village of Calumet Park, 75 N.E.2d 874, 879 (Ill. 1947). Consequently, this Court will review the alleged binding arbitration agreement in the light most favorable to Niebrugge.

DISCUSSION

This Court recognizes that "the overwhelming majority of courts considering the issue have held that an employee handbook may, under proper circumstances, be contractually binding." Duldulao v. Saint Mary of Nazareth Hosp. Center, 505 N.E.2d 314, 317 (Ill. 1987). Illinois law states that an "employee handbook or other policy statement creates enforceable contractual rights if the traditional ...


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