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Christopher Zimmerman and Enrique Macias, On Behalf of Themselves v. Jwcf

September 28, 2011


The opinion of the court was delivered by: Honorable Amy J. St. Eve


AMY J. ST. EVE, District Court Judge:

Plaintiffs Christopher Zimmerman and Enrique Macias, on behalf of themselves and all other persons similarly situated, filed this lawsuit against Defendants JWCF, LP (d/b/a Baker Installations) ("JWCF") and SMC Communications of Illinois, LLC ("SMC LLC"), alleging violations of the Fair Labor Standards Act, 29 U.S.C. § 201, et seq. ("FLSA"), the Illinois Minimum Wage Law, 820 ILCS 105/1, et seq., and the Illinois Wage Payment and Collection Act, 820 ILCS 115/1, et seq. On January 24, 2011, Defendant JWCF filed a motion to dismiss the Complaint for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure ("Rule") 12(b)(2). The Court thereafter allowed the parties to engage in limited discovery with respect to personal jurisdiction. Defendant JWCF subsequently re-filed its motion to dismiss for lack of personal jurisdiction. For the following reasons, the Court grants JWCF's motion.


JWCF, a Pennsylvania limited partnership with its headquarters and principal place of business in McMurray, Pennsylvania, provides cable installation services in several states for major cable system operators such as Comcast, Cox Communications, and Time Warner pursuant to non-exclusive, written subcontractor service agreements. (R. 57-1, Baker Decl. ¶¶ 6-7.) SMC LLC is an Illinois limited liability company, but is no longer actively engaged in business in Illinois. (Id. ¶ 28.)*fn1

I. History of Baker, JWCF, SMC Inc., and SMC LLC

Baker Inc. ("Baker"), a Pennsylvania corporation that is not a party to this case, entered the Chicago cable market in 2003 by teaming up with Bob Sherry, a citizen and resident of Illinois. (Baker Decl. ¶¶ 19-20.) At that time, Mr. Sherry was already operating a successful cable installation business in Illinois as a subcontractor for Comcast, and he had an established work force of cable installation technicians. (Id. ¶ 20) Baker had a relationship with Comcast in other locations, and Comcast wanted Baker to work with Sherry in the Illinois market. (Id.) For the next few years, Mr. Sherry ran the day-to-day operations of the cable installation operation in Illinois, and Baker Inc. provided "back office" support. (Id. ¶ 21.) When Baker ceased active operations in early 2006, JWCF took over Baker's active business operations in several states. (Id. ¶ 22.) JWCF entered into a written licensing agreement with Baker, pursuant to which JWCF obtained the right to use the "Baker Installations" trade name and trademark. (Id.)

JWCF briefly took over Baker's role in the Illinois market in 2006, but Mr. Sherry continued to run the day-to-day operations in Illinois. (Id. ¶ 23.) In mid-to-late 2006, JWCF established a Pennsylvania corporation, SMC Communications, Inc. ("SMC Inc."), to separate JWCF's business in other markets from the business in Illinois (and Minnesota) in which it was working with Mr. Sherry. (Id. ¶ 24.) After creating SMC Inc., JWCF ceased its cable installation work in Illinois and subcontracted its Illinois cable work to SMC Inc. pursuant to a written agreement. (Id. ¶ 26.) JWCF's subcontracting relationship with SMC Inc. ended in 2007, and JWCF has not done any cable installation work in Illinois since that time. (Id. ¶ 27.)

SMC LLC was formed in 2007. (Id. ¶ 28.) JWCF, in its capacity as proprietor of the "Baker Installations" brand name, entered into a written licensing agreement with SMC LLC, granting SMC LLC a limited and non-exclusive license to use the "Baker Installations" brand name. (Id. ¶ 30.) SMC LLC took over the Illinois cable installation work from SMC Inc. in 2008 (id. ¶¶ 31), but SMC LLC and JWCF did not enter into a subcontracting relationship. (Id. ¶ 35.) Rather, SMC LLC directly entered into a series of preferred vendor agreements with Comcast, to which JWCF is not a party. (Id. ¶ 31.)

II. JWCF and SMC LLC During the Relevant Time Period*fn2

JWCF is not incorporated or registered to do business in Illinois, does not maintain any offices in Illinois, does not own any real or personal property in Illinois, does not maintain any bank accounts in Illinois, does not advertise or solicit business in Illinois and has not appointed an agent for service of process in Illinois. (Baker Decl. ¶¶ 10-11; 13-17.)JWCF has no partners or employees who are citizens of Illinois. (Id. ¶ 12.) JWCF never entered into an agreement with SMC LLC to provide cable installation services in Illinois, and SMC LLC never performed any cable installation services for JWCF. (Id. ¶ 35.)

JWCF is the sole member of SMC LLC. (Id. ¶ 38.) SMC LLC is a "manager-managed" limited liability company, and the managers of SMC LLC (Wade Baker, James Mazur and Chad Baker) are all citizens and residents of Pennsylvania. (Id. ¶¶ 39-41.)None of the managers of SMC LLC has ever had any responsibility or involvement in its day-to-day operations. (Id. ¶¶ 40-41.)Mr. Sherry and James Allen ran SMC LLC's day-to-day operations in Illinois.(Id. ¶ 42.)Neither Mr. Sherry nor Mr. Allen had a role in or received compensation from JWCF, and neither had any involvement with JWCF's operations in other states. (Id. ¶ 43.)SMC LLC employed cable installers in Illinois, including Plaintiffs, who reported directly to supervisors that also worked for SMC LLC in Illinois. (Id. ¶ 44.)

JWCF and SMC LLC maintain separate bank accounts and separate books. (Id. ¶ 48.) SMC LLC rented the warehouse and office facilities it used in Illinois from a third party unrelated to JWCF. (Id. ¶ 50.)

JWCF filed tax returns with the Illinois Department of Revenue for the years 2007 through 2010, and SMC LLC did not file tax returns with the Illinois Department of Revenue.

(R. 60-2, Baker Dep. 102:8-104:17.) According to JWCF, SMC LLC is a single-member LLC, which is classified as a "disregarded entity" under federal and state tax laws. (Id. ¶ 65.) Therefore, for tax purposes, SMC LLC is treated as a sole proprietor and cannot file tax returns separately from JWCF. (Id.) Because SMC LLC is a disregarded entity, JWCF's state and federal tax returns for the years 2008 through 2010 include the results of SMC LLC's operations in Illinois, including the taxes SMC LLC paid in Illinois. (Id.) Even though the Illinois taxes were reported on JWCF's returns, SMC LLC paid all of the Illinois taxes. (Id.)

JWCF provided various clerical and administrative services to SMC LLC. JWCF printed checks drawn on SMC LLC's bank account to pay SMC LLC's vendors, and printing and sending invoices to SMC LLC's customers. (Id. ¶ 51.) SMC LLC paid its own expenses from its separate bank account, either directly to the vendors or by reimbursing JWCF if JWCF paid the bill in the first place. (Id. ¶ 49; Baker Dep. 108:6-110:3; Baker Dep. Ex. 9.) Although JWCF printed the checks, SMC LLC issued Plaintiffs' paychecks and W-2s. (Id. ¶ 34.) JWCF also processed payroll for SMC LLC according to policies SMC LLC set, and the payroll was generated from data that SMC LLC employees in Illinois entered into a computer program. (Id. ¶ 52; R. 60-3, Bronzenec Decl. ¶¶ 7-8.) JWCF's employees maintained SMC LLC's general ledger and generated SMC LLC's monthly income and balance sheet. (Baker Dep. 108:2-109:5; R. 60-3, McClain Dep. 79:14-22.)

Additionally, JWCF provided human resources support to SMC LLC by placing mployment advertisements on websites such as and for open positions with "Baker Installations." (Id. ¶ 54.) SMC LLC reimbursed JWCF for the costs of those ads. (Id.) JWCF referred any leads on employment candidates in Illinois that came in from the Baker Installations website or the ads to SMC LLC although JWCF would sometimes conduct initial screening interviews. (Id. ¶ 55.) JWCF also filed paperwork relating to drug tests and background checks. (Id. ¶¶ 56.) SMC LLC was free to reject candidates, and it made all employment decisions relating to its business, including the decision to hire, fire, promote and discipline all employees, to assign work and to determine the rate and method of compensating employees. (Id. ¶ 55.)

SMC LLC employees completed online training through a portal that JWCF maintained. (Id. ¶ 58; R. 63-3, Zimmerman Decl. ¶ 5.) The training website does not contain the JWCF name, but rather contains the "Baker Installations" name. (Id.) Plaintiff Zimmerman was instructed to call JWCF if he had issues with his compensation. (Zimmerman Decl. ¶ 3.) SMC LLC paid ...

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