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Vanessa Chavez, Bernadete Johnson, Keith Dismukes, and Latasha v. Hat World

December 11, 2012


The opinion of the court was delivered by: Judge Joan B. Gottschall


Plaintiffs Vanessa Chavez, Bernadete Johnson, Keith Dismukes, and Latasha Turner (collectively "Plaintiffs") are former managers of retail stores owned by Defendant Hat World, Inc. ("Hat World"). Plaintiffs claim, on behalf of themselves and a class of other similarly situated store managers, that Hat World misclassified them as exempt employees and failed to pay them overtime wages, in violation of the Fair Labor Standards Act (the "FLSA"), 29 U.S.C. § 201 et seq, and the Illinois Minimum Wage Law (the "IMWL"), 820 Ill. Comp. Stat. § 105/1 et seq. Hat World now moves to dismiss Plaintiffs' Second Amended Complaint for lack of jurisdiction, pursuant to Federal Rule of Civil Procedure 12(b)(1), and for failure to state a claim, pursuant to Rule 12(b)(6). For the reasons that follow, the court denies the motion.


Chavez and Johnson filed their initial complaint on July 16, 2012. At the time, they were the only two named plaintiffs in the case, and a motion for class certification had not been filed. On July 20, 2012, Hat World sent a letter to Plaintiffs' counsel stating:

[T]ender is hereby made to your clients, Vanessa Chavez and Bernadete Johnson, in an amount payable to each of them, respectively, for: (1) wages claimed pursuant to the Fair Labor Standards Act and Illinois Minimum Wage Law, in the amount of half of her regular rate for any hours in excess of 40 worked per week; (2) statutory penalties pursuant to the formula set forth in 820 ILCS 105/12(a); (3) an additional amount payable to her as liquidated damages under the Fair Labor Standards Act equal to the amount in section 1; and (4) costs.

(Def.'s Mot. to Dismiss Ex. A (July 20, 2012 Letter), ECF No. 12-1.) The letter did not specify the dollar amount to be tendered to each plaintiff. Plaintiffs' counsel replied on July 30, 2012, stating that "our clients, Vanessa Chavez and Bernadete Johnson, accept the tender offer." (Def.'s Mot. to Dismiss Ex. B (July 30, 2012 Letter), ECF No. 12-2.) This letter, too, did not specify the amount of the tender.

In light of the tender offer, Plaintiffs filed a motion to dismiss their complaint on August 9, 2012. Hat World mailed various checks on August 10, 2012: two payable to Chavez in the amounts of $6,326.98 and $2,943.51, two payable to Johnson in the amounts of $455.38 and $269.03, and one payable to Plaintiffs' law firm for costs in the amount of $450.00. (Def.'s Mot. to Dismiss Ex. C, ECF No. 12-3.)

On the morning of August 15, 2012, the parties appeared before the court for a status hearing. Plaintiffs' counsel stated during the hearing that they considered the payment tendered to Chavez and Johnson insufficient, while Hat World's counsel stated that they believed they had tendered an amount greater than that to which Chavez and Johnson were entitled. The court inquired of Hat World's counsel, "You're taking the position that there is no settlement at this point." Hat World's counsel replied, "that's our position." Hat World's counsel further stated, "I think we're beyond tender at this point, it's failed." ((Def.'s Mot. to Dismiss Ex. D (Tr. Aug. 15, 2012) 4-5, ECF No. 12-4.) Based on the parties' representations that no settlement had been reached, the court denied as moot Plaintiffs' motion to dismiss the complaint. The parties agreed that Plaintiffs would file an Amended Complaint in order to add Dismukes and Turner, plaintiffs in a later-filed related action brought on behalf of the same class, as plaintiffs in this case. (Id. at 8-9.)

On August 15, 2012, Hat World's counsel requested that Chavez and Johnson return the tender checks. (Def.'s Mot. to Dismiss Ex. E, ECF No. 12-5.) On August 16, 2012, Plaintiff's counsel informed Hat World's counsel that Chavez and Johnson had cashed the checks. (Id.) That same day, Plaintiffs filed the Amended Complaint adding Dismukes and Turner as additional plaintiffs.*fn1 Hat World moved to dismiss the Dismukes case on October 2, 2012. The court dismissed the Dismukes case "insofar as plaintiffs are now part of the Chavez action." Dismukes v. Hat World, Inc., No. 12 C 5971, ECF No. 23, (Oct. 10, 2012). Plaintiffs were granted leave to file a Second Amended Complaint in this case on October 10, 2012. After Hat World filed the motion to dismiss the Second Amended Complaint, Dismukes and Turner moved to reinstate the Dismukes case. That motion was entered and continued pending the court's ruling on the motion to dismiss. Dismukes v. Hat World, Inc., No. 12 C 5971, ECF No. 27 (Nov. 28, 2012).


A. Rule 12(b)(1)

Under Article III of the United States Constitution, the federal courts have jurisdiction over "cases and controversies." Both litigants in an action must have a personal interest in the case throughout the course of the action. See U.S. Parole Comm'n v. Geraghty, 445 U.S. 388, 396 (1980). A case becomes moot when a dispute no longer exists between the parties, or when a party loses its personal interest in the outcome. Banks v. Nat'l Collegiate Athletic Ass'n, 977 F.2d 1081, 1085 (7th Cir. 1992). On a motion to dismiss pursuant to Rule 12(b)(1), the plaintiff bears the burden of establishing that the court has jurisdiction over its claims. United Phosphorous, Ltd. v. Angus Chem. Co., 322 F.3d 942, 946 (7th Cir. 2003) (en banc). The court may consider matters outside of the complaint in ruling on a motion to dismiss for lack of subject matter jurisdiction. Ezekiel v. Michel, 66 F.3d 894, 897 (7th Cir. 1995).

Hat World argues that a tender offer was conveyed to Chavez and Johnson on July 20, 2012, that constituted satisfaction of their demands pursuant to the FLSA and the IMWL. Hat World contends that the court has lacked jurisdiction over this action since that time, meaning that when Plaintiffs filed their Amended Complaint on August 16, 2012, and their Second Amended Complaint on October 10, 2012, the court had no subject matter jurisdiction.

The Seventh Circuit has held that an offer to satisfy all of the damages demanded by a plaintiff renders the litigation moot. "Once the defendant offers to satisfy the plaintiff's entire demand, 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." Rand v. Monsanto Co., 926 F.2d 596, 598 (7th Cir. 1991) (citations omitted); see also Holstein v. City of Chi., 29 F.3d 1145, 1147 (7th Cir. 1994) ("[Defendant] may not spurn this offer of all the damages he is owed and proceed to trial."). The Seventh Circuit has declined to create an exception to mootness for class actions. Damasco v. Clearwire Corp., ...

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