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Manuel Hernandez v. Peoplescout

July 24, 2012


The opinion of the court was delivered by: Judge Robert W. Gettleman


Plaintiff Manuel Hernandez, individually and on behalf of similarly situated employees, brought an individual and putative class action against defendants PeopleScout, Inc. and Seaton LLC, alleging violations of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201 et seq. (Count I) and the Illinois Minimum Wage Law ("IMWL"), 820 ILCS 105/1 et seq. (Count II). Defendants have moved to dismiss all counts pursuant to Fed. R. Civ. P. 12(b)(1), arguing that plaintiff's claims are moot and the court lacks subject matter jurisdiction. In the alternative, defendant Seaton has moved to dismiss pursuant to Fed. R. Civ. P. 12(b)(6). Plaintiff has filed a motion for leave to file a first amended complaint adding two additional plaintiffs. For the following reasons, defendants' Rule 12(b)(1) motion is granted, and plaintiff's motion for leave to file an amended complaint is denied as moot.


According to the allegations in his complaint, plaintiff is currently employed by defendants as a "recruiter/junior recruiter," interviewing prospective employees for defendants' clients. Defendants have failed to pay him for all of the time he worked. Specifically, plaintiff was not paid for time spent logging on and off the phone system, preparing for work, and recovering from computer crashes. In addition, he was paid sub-minimum wages for training.

In moving to dismiss for lack of subject matter jurisdiction, defendants note that, a day after plaintiff filed his complaint, defendants sent plaintiff a letter informing him that they had initiated a direct deposit for $3,597.86 (a gross payment of $4176.82 less applicable taxes and withholdings) into his bank account. The payment represented $1829.28 in wages, $1829.28 in liquidated damages, and $507.86 to compensate plaintiff for any additional expenses or costs. The letter informed plaintiff that the payment exceeded any relief he could claim and rendered his claims moot.


Legal Standard

Rule 12(b)(1) motions to dismiss are premised as either facial or factual attacks on jurisdiction. Publ'ns Int'l, Ltd. v. Leapfrog Enters., Inc., No. 08 C 2800, 2008 WL 5142286, at *2 (N.D. Ill. Dec. 4, 2008). Facial attacks challenge the sufficiency of the pleadings, as compared to factual challenges where "the complaint is formally sufficient but the contention is that there is in fact no subject matter jurisdiction." United Phosphorus, Ltd. v. Angus Chem. Co., 322 F.3d 942, 946 (7th Cir. 2003) (emphasis in original). "If the Rule 12(b)(1) motion denies or controverts the pleader's allegations of jurisdiction, . . . the movant is deemed to be challenging the factual basis for the court's subject matter jurisdiction." Cedars-Sinai Med. Ctr. v. Watkins, 11 F.3d 1573, 1583 (Fed. Cir. 1993). In either case, the plaintiff bears the burden of establishing that subject matter jurisdiction exists. United Phosphorus, 322 F.3d at 946.

In the instant case, defendants dispute the factual basis underlying plaintiff's assertion of subject matter jurisdiction. The Seventh Circuit instructs that different methods of review apply to facial and factual challenges to a district court's subject matter jurisdiction. See id. When presented with a facial challenge, "the court does not look beyond the allegations in the complaint, which are taken as true for purposes of the motion." Apex Digital, Inc. v. Sears, Roebuck & Co., 572 F.3d 440, 444 (7th Cir. 2009). In contrast, when presented with a factual challenge to jurisdiction, "the district court may properly look beyond the jurisdictional allegations of the complaint and view whatever evidence has been submitted on the issue to determine whether in fact subject matter jurisdiction exists." Apex Digital, 572 F.3d at 443-44. In a factual Rule 12(b)(1) motion, "no presumptive truthfulness attaches to plaintiff's allegations, and the existence of disputed material facts will not preclude the trial court from evaluating for itself the merits of jurisdiction claims." Id. "The Court may weigh evidence in order to satisfy itself that jurisdiction exists; as such, disputes over material facts will not preclude the court from deciding jurisdictional issues." Bd. of Trs. of Pipe Fitters' Welfare Fund Local 597 v. Adams, No. 97 C 5592, 1998 WL 259543, at *2 (N.D. Ill. May 7, 1998).

II. Defendant's Motion to Dismiss

Defendants have moved to dismiss plaintiff's complaint for lack of subject matter jurisdiction, arguing that its tender of $3,597.86 to plaintiff exceeds any amount he could receive in the current claim, therefore mooting plaintiff's claim. Plaintiff argues that defendants' tender did not moot his claim for a number of reasons, all of which are incorrect.*fn1

As a general rule, a plaintiff's case becomes moot "[o]nce the defendant offers to satisfy the plaintiff's entire demand." Rand v. Monsanto Co., 926 F.2d 596, 598 (7th Cir. 1991) (citations omitted). At that point, "there is no dispute over which to litigate and a plaintiff who refuses to acknowledge this loses outright, under Fed. R. Civ. P. 12(b)(1), because he has no remaining stake." Id. In the class context, "an offer's effect depends on the timing: offers received before a motion for class certification is filed moot the case, but offers received after the motion has been filed do not." White v. Humana Health Plan, Inc., No. 06 C 5546, 2007 WL 1297130, at *6 (N.D. Ill. May 2, 2007).

Defendants correctly state that they tendered an amount well in excess of plaintiff's claim for relief, mooting plaintiff's claim and depriving the court of subject matter jurisdiction. Defendants attached the sworn declarations of its Financial Reporting Manager and Staffing Manager, who assert that the tender was in excess of any relief plaintiff could claim. These declarations call plaintiff's standing into question, and plaintiff now bears the burden of producing "competent proof that standing exists." Apex Digital, 572 F.3d at 444. Plaintiffs who make a statement or argument in a brief, but fail to provide competent proof, do not provide evidence sufficient to controvert a defendant's sworn declarations. Askins v. Zachry Indus., Inc., No. 09 CV 2202, 2010 WL 780329, at *3 (C.D. Ill. Mar. 3, 2010). Plaintiff has failed to address whether defendants' tender is incomplete, much less provide "proof to support his allegations of jurisdictional facts, such as whether he has a claim for damages in excess of defendant's [tender]." Stilz v. Global Cash Network, Inc., No. 10 CV 1998, 2010 WL 3975588, at *6 (N.D. Ill. Oct. 7, 2010). Thus, plaintiff has not carried his burden, and the court concludes that defendants' tender constitutes full satisfaction of plaintiff's claims.

Plaintiff argues that the Klinghoffer rule is inapplicable and that defendants' calculation of damages based on the rule is invalid. (That rule precludes an employee from stating an FLSA claim if he worked less than 40 hours per week but was paid more than he would have been paid for 40 hours at minimum wage. United States v. Klinghoffer Bros. Realty Corp., 285 F.2d 487, 490 (2nd Cir. 1960).) Although, as plaintiff notes, the Seventh Circuit has not adopted this rule, a number of courts in this district have followed it. See, e.g., Ladegaard v. Hard Rock Concrete Cutters Inc., No. 00 C 5755, 2004 WL 1882449, at *5 (N.D. Ill. July 6, 2004). Plaintiff then launches into a lengthy discussion as to why the rule's calculations do not accurately reflect the wages owed. Although defendants do state that under the ...

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