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Frank Sommese, et al v. American Bank and Trust Company

July 23, 2012

FRANK SOMMESE, ET AL., PLAINTIFFS,
v.
AMERICAN BANK AND TRUST COMPANY, N.A., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Judge Robert M. Dow, Jr.

MEMORANDUM OPINION AND ORDER

Plaintiffs Frank Sommese, Jeff Gennarelli, and Christine Leyden brought this action against Defendants American Bank and Trust Company, Julia Klaus, and James Allen*fn1 for violation of the Fair Labor Standards Act ("FLSA"), codified at 29 U.S.C. § 201 et seq. (Count I) and violation of the Illinois Wage Payment and Collection Act (Counts II and III). Defendants have moved to dismiss [53] Counts II and III of the complaint pursuant to Federal Rule of Civil 12(b)(6), and Defendant Julia Klaus has moved to dismiss [55] the entire action against her for lack of personal jurisdiction. For the following reasons, the Court grants in part and denies in part Defendants' motion to dismiss [53] and denies Defendant Julia Klaus' motion to dismiss [55]. Plaintiffs' "Request for a Hearing" [65] is stricken as moot.

I. Background*fn2

Defendant American Bank and Trust Company ("AB&T") is a bank that does business in Iowa and Illinois and that has approximately 11 locations in Illinois. Plaintiffs Frank Sommese, Jeff Gennarelli, and Christine Leyden were all employees of AB&T in its mortgage division. Plaintiffs allege that Defendants engaged in a common practice and scheme of denying Plaintiffs the wages that they were owed, including overtime wages and bonuses. According to Plaintiffs, Jeff Gennarelli and Frank Sommese both were denied wages that they were owed pursuant to their employment agreements. Plaintiffs further allege that Christine Leyden was denied minimum wages, overtime wages, and bonuses that she was entitled to pursuant to her employment agreement with AB&T.

During Plaintiffs' employment with AB&T, Defendant Klaus worked as an officer of AB&T as the Senior Vice President of Human Resources. Plaintiffs allege that Defendant Klaus had responsibility and control over Plaintiffs' wages, including minimum wages, overtime wages, and bonuses. Plaintiffs also have presented affidavits which attest that Defendant Klaus traveled to the state of Illinois on a regular basis to meet with AB&T employees located in Illinois and that Defendant Klaus met with Plaintiffs on several occasions in Illinois in her role as Senior Vice President of Human Resources. According to Plaintiffs, Defendant Klaus also conducted trainings, orientations, and meetings in Illinois on a regular basis.

II. Analysis

Defendants have moved to dismiss Plaintiffs' claims under two theories. First, Defendant Klaus moves to dismiss Plaintiffs' claims against her, arguing that she is not subject to personal jurisdiction in Illinois. Second, Defendants Klaus and American Bank move to dismiss Counts II and III for failure to state a claim on which relief may be granted, or, for failure to demonstrate supplemental jurisdiction.

A.Personal Jurisdiction

The Court must dismiss an action against a party over whom the Court lacks personal jurisdiction. SeeFed. R. Civ. P. 12(b)(2). The plaintiff has the burden of establishing a prima facie case of personal jurisdiction. See Steel Warehouse of Wis., Inc. v. Leach, 154 F.3d 712, 714 (7th Cir. 1998). The Court may consider affidavits and other documents outside the pleadings in reaching its decision. See Nelson by Carson v. Park Indus., Inc., 717 F.2d 1120, 1123 (7th Cir. 1983). The Court must construe all facts concerning jurisdiction in favor of the non-movant, including disputed or contested facts (Deluxe Ice Cream Co. v. R.C.H. Tool Corp., 726 F.2d 1209, 1215 (7th Cir. 1984)), unless proved otherwise by the non-movants' affidavits or exhibits. See Purdue Research Foundation v. Sanofi-Sythelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003); Travelers Cas. & Sur. Co. v. Interclaim (Bermuda) Ltd., 304 F. Supp. 2d 1018, 1021 (N.D. Ill. 2004).

Where no federal statute authorizes nationwide service of process, the law of the forum state governs personal jurisdiction. Fed. R. Civ. P. 4(k)(1)(a). A court's exercise of personal jurisdiction may be limited by the applicable state statute or the federal Constitution. Because the Illinois long-arm statute is coextensive with federal due process requirements, the two-step inquiry collapses into one-whether the exercise of personal jurisdiction over the defendants comports with constitutional due process. Trading Technologies Inter. Inc. v. BCG Partners, Inc., 2011 WL 1220013, *2 (N.D. Ill. Mar 28, 2011); see also Tamburo v. Dworkin, 601 F.3d 693, 700 (7th Cir. 2010). The Court must determine whether Defendant Klaus has sufficient "minimum contacts" with Illinois such that the maintenance of the suit "does not offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (internal quotation marks omitted). Put another way, "each defendant must have purposely established minimum contacts with the forum state such that he or she 'should reasonably anticipate being hauled into court' there." Tamburo, 601 F.3d at 701 (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474 (1985)).

Under the "minimum contacts" test, a defendant may be subject to either general or specific jurisdiction. Id. For general jurisdiction, a defendant must have "continuous and systematic" contacts with the forum. See Helicopteros Nacionales de Colimbia, S.A. v. Hall, 466 U.S. 408, 415-16 (1984). "The threshold for general jurisdiction is high; the contacts must be sufficiently extensive and pervasive to approximate physical presence." Tamburo, 601 F.3d at 701. If such contacts exist, "the court may exercise personal jurisdiction over the defendant even in cases that do not arise out of and are not related to the defendant's forum contacts." Hyatt Int'l Corp. v. Coco, 302 F.3d 707, 713 (7th Cir. 2003). On the other hand, specific jurisdiction is more limited. The Seventh Circuit instructs that specific jurisdiction is appropriate where: (1) the defendant has purposefully directed his activities at the forum state or purposefully availed himself of the privilege of conducting business in that state; (2) the alleged injury arises out of the defendant's forum-related activities; and (3) the exercise of specific jurisdiction comports with traditional notions of fair play and substantial justice. Tamburo, 601 F.3d at 701 (citing Burger King, 471 U.S. at 472; Int'l Shoe, 326 U.S. at 316).

Looking at the complaint and affidavits, at a minimum, Plaintiffs appear to have carried their burden to establish specific jurisdiction over Defendant Klaus. Although she lives and works in Iowa, Defendant Klaus acknowledges that she traveled to the state of Illinois at least seven or eight times on AB&T business. Furthermore, although Defendant Klaus attests that she does not recall having met with Plaintiffs individually or as a group, both Mr. Genarelli and Ms. Layden attest that they have met with her several times and that they spoke with her regarding the compensation issues at play in this litigation-specifically, bonus and wage payments. Plaintiffs also attest that Defendant Klaus conducted trainings, orientations, and meetings for AB&T in Illinois on a regular basis, and that they are aware of Klaus's presence in Illinois because they coordinated, attended, or scheduled the trainings and orientations.

Defendant argues that Plaintiffs' allegations are (1) not included in the complaint and (2) are disputed by Klaus's affidavit. Neither of these arguments is particularly persuasive. The fact that the majority of Plaintiffs' jurisdiction-related allegations are in affidavits, and not the complaint, is of no moment; the Court may consider affidavits and other documents outside the pleadings in reaching its decision. See Nelson by Carson v. Park Indus., Inc., 717 F.2d 1120, 1123 (7th Cir. 1983). Furthermore, at the motion to dismiss stage, the conflicting affidavits are construed in favor of Plaintiffs. See Purdue Research Foundation v. Sanofi-Sythelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003); Travelers Cas. & Sur. Co. v. Interclaim (Bermuda) Ltd., 304 F. Supp. 2d 1018, 1021 (N.D. Ill. 2004). Plaintiffs' affidavits unequivocally state that Klaus had responsibility and control over employee wages, including minimum wages, overtime wages, and bonuses, and that Klaus communicated to Plaintiffs that she had authority and control over compensation issues including wages, changes to compensation, and the eligibility of new employees. Plaintiffs further allege that they raised with Klaus the fact that they had not been paid the wages and bonus payments that they believed they were owed. At this stage, these allegations are sufficient to confer personal jurisdiction.

Klaus's better argument is that the so-called "fiduciary shield doctrine" protects her from being sued in Illinois. Illinois courts lack personal jurisdiction over an individual whose presence and activity in the state in which the suit is brought were solely on behalf of her employer or other principal. Rice v. Nova Biomedical Corp., 38 F.3d 909, 912 (7th Cir. 1995) (citing Rollins v. Ellwood, 565 N.E.2d 1302 (1990)). The rationale for the fiduciary shield doctrine is that it would be "unfair and unreasonable * * * to assert personal jurisdiction over an individual who seeks the protection and benefits of Illinois law, not to serve his personal interests, but to serve those of his employer or principal." Rollins, 565 N.E.2d at 1318. Application of the doctrine is discretionary or equitable, not absolute. See Consumer Benefit Servs., Inc. v. Encore Mktg. Int'l, Inc., 2002 WL 31427021, at *3 (N.D.Ill. Oct. 30, 2002). In evaluating whether it is equitable to apply the doctrine in the circumstances of a particular case, courts consider whether (i) the individual's personal interests motivated his actions and presence in the ...


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