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Glenn Driver, Demiko D. Mccaster, Rosamar Mallari v. Appleillinois

September 19, 2012

GLENN DRIVER, DEMIKO D. MCCASTER, ROSAMAR MALLARI, JOYCE A. BRITTON AND MICHAEL H. HICKS, ON BEHALF OF THEMSELVES AND ALL OTHER PERSONS SIMILARLY SITUATED, KNOWN AND UNKNOWN, PLAINTIFFS,
v.
APPLEILLINOIS, LLC D/B/A APPLEBEE'S NEIGHBORHOOD GRILL & BAR, W. CURTIS SMITH, JAMES BORKE, J. TIMOTHY BRUGH, ARCHIE IODICE, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Magistrate Judge Geraldine Soat Brown

MEMORANDUM OPINION AND ORDER

Before the court is Plaintiffs' Motion for Summary Judgment on Defendant W. Curtis Smith's Status as 'Employer' Under 29 U.S.C. § 203(d). (Pls.' Mot.) [Dkt 303.] Defendants AppleIllinois, LLC, W. Curtis Smith, Jerry Kreger, Doreen Borke as representative of the estate of James Borke and Archie Iodice (collectively, "defendants") filed their opposition to the motion (Defs.' Opp'n) [dkt 313], and plaintiffs filed their reply (Pls.' Reply) [dkt 320]. For the reasons set forth below, plaintiffs' motion is denied.

BACKGROUND

This case involves plaintiffs' claims against defendants under the Fair Labor Standards Act ("FLSA"), 29 U.S.C. §§ 201 et seq., the Illinois Minimum Wage Law ("IMWL"), 820 Ill. Comp. Stat. §§ 105/1 et seq., and the Illinois Wage Payment and Collection Act ("IWPCA"), 820 Ill. Comp. Stat. §§ 115/1 et seq. (Third Am. Compl. ¶ 1.) [Dkt 141.] The parties consented to the exercise of jurisdiction by a United States Magistrate Judge pursuant to 28 U.S.C. § 636(c). [Dkt 53.]

Summary judgment was recently granted to the plaintiff class on their claim in Count I under the IMWL, and to the named plaintiffs on their individual claims in Count IV under the FLSA. (Aug. 27, 2012 Mem. Op. and Order.) [Dkt 363.] The issue on the present motion is whether on defendant W. Curtis Smith should be held to be an "employer" under those statutes, which would make Smith individually liable for any damages awarded to the plaintiffs. (Pls.' Mem. at 1.) [Dkt 304.]

An employer under the FLSA includes "any person acting directly or indirectly in the interest of the employer in relation to an employee." 29 U.S.C. § 203(d). Likewise, an employer under the IMWL includes "any person or group of persons acting directly or indirectly in the interest of an employer in relation to an employee." 820 Ill. Comp. Stat. § 105/3(c). The FLSA's definition of employer is expansive, and there can be more than one person or entity considered an "employer" responsible for compliance with the statute. Riordan v. Kempiners, 831 F.2d 690, 694 (7th Cir. 1987); see, e.g., Falk v. Brennan, 414 U.S. 190, 195 (1973). Whether the facts demonstrate that a person or entity qualifies as an employer under the FLSA is a question of law. Karr v. Strong Detective Agency, Inc., 787 F.2d 1205, 1206 (7th Cir. 1985).*fn1

Plaintiffs argue that Smith was intimately involved with the day-to-day operations of AppleIllinois, LLC ("AppleIllinois") and that his authority and involvement in the practices at issue here sufficiently establish his personal liability. (Pls.' Mem. at 4-7.) Defendants argue that Smith was not involved in day-to-day decisions involving employees, and that he does not exercise the kind of control over employment relationships at AppleIllinois necessary to establish personal liability under the statutes. (Defs.' Opp'n at 3-8.)

As the movants, plaintiffs must show "that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). To oppose a motion for summary judgment successfully, the responding party may not simply rest on its pleadings, but rather must submit evidentiary materials showing that a material fact is genuinely disputed. Fed. R. Civ. P. 56(c)(1). A genuine dispute of material fact exists when there is "sufficient evidence favoring the non-moving party for a jury to return a verdict for that party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). In determining whether a genuine dispute of material fact exists, the court construes all facts and draws all reasonable and justifiable inferences in favor of the non-moving party. Id. at 255.

FACTS*fn2

The background of this case was set out in detail in the August 27, 2012 Opinion, and will not be repeated here except to the extent necessary for this opinion.

Defendant AppleIllinois is an Illinois limited liability company that currently owns and operates 34 Applebee's restaurants within Illinois. (Defs.' LR Resp. ¶ 6.) It is undisputed that plaintiffs are present or former employees of AppleIllinois. (August 27, 2012 Mem. Op. and Order at 8.) Smith is the president, a member and a manager of AppleIllinois. (Defs.' LR Resp. ¶ 8.) Interestingly, although defendants admit that fact, Smith himself initially testified that he was "not sure" whether he was president of AppleIllinois, although he later acknowledged that he was. (Dep. Curtis Smith at 20, 24.)*fn3

In the 1990's, Smith and the late James Borke purchased a group of approximately 23 established Applebee's restaurants in the Chicago area. (Defs.' LR Resp. ¶ 19.) That presumably was the start of the current AppleIllinois restaurants. Since AppleIllinois' inception, Smith has owned between 30% and 50%. (Pls.' Resp. Add'l Facts ¶ 20.) Smith currently owns 50% of AppleIllinois. (Defs.' LR Resp. ¶ 8.) The only other owner is the estate of the late James Borke. (Id.) Smith is the only living member with an ownership interest in AppleIllinois. (Id.)

Describing the management and ownership structure of AppleIllinois is somewhat challenging. Defendants state that "AppleIllinois is structured as a managing membership." (Defs.' Add'l Facts ¶ 3.) Although plaintiffs do not expressly deny that statement, neither party explains what a "managing membership" is. Also, it appears that changes occurred over the course of this lawsuit. At various times relevant to this litigation, Smith has shared ownership of AppleIllinois with as many as four other people, and at various times there have been as many as three managers. (Defs.' LR Resp. ¶ 8; Pls.' Resp. Add'l Facts ¶ 20.) Not every member, however, was a member-manager; some were just members. (Smith Dep. at 36.) Defendants Jerry Kreger and Archie Iodice were just members, with a 5% interest each. (Id.) Also, James Borke, who had been a member-manager, had not been doing anything for the company for three or four years before he died. (Id. at 33.)

With one exception, however, plaintiffs apparently do not dispute that Smith reports to the other managing members of AppleIllinois who make corporate decisions collectively. (Pls.' Resp. Add'l Facts ΒΆ 3.) That exception is former managing member Timothy Brugh who denied that he was involved in the management or operation of AppleIllinois. (Id.) Neither party explains how ...


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