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Hoenig v. Karl Knauz Motors, Inc.

United States District Court, N.D. Illinois, Eastern Division

October 16, 2013

Shanda Hoenig, Plaintiff,
v.
Karl Knauz Motors, Inc., Defendant

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[Copyrighted Material Omitted]

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For Shanda Hoenig, Plaintiff: Erika E. Pedersen, LEAD ATTORNEY, Jill S Weinstein, Pedersen & Weinstein LLP, Chicago, IL.

For Karl Knauz Motors, Inc., Defendant: Jane M. McFetridge, LEAD ATTORNEY, Sean C. Herring, Jackson Lewis, LLP, Chicago, IL.

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MEMORANDUM OPINION AND ORDER

Ruben Castillo, Chief United States District Judge.

Shanda Hoenig (" Hoenig" ) brings this action against her former employer, Karl Knauz Motors, Incorporated (" Knauz" ) alleging violations of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., as amended by the Civil Rights Act of 1991 (" Title VII" ); the Equal Pay Act of 1963, 29 U.S.C. § § 206, 207; the Illinois Equal Pay Act, 820 Ill. Comp. Stat. 112/1 et seq. ; and the Family and Medical Leave Act (" FMLA" ), 29 U.S.C. § 2601 et seq., as well as unlawful retaliation in violation of each statute. Presently before the Court are Knauz's motion for leave to amend its answer and affirmative defenses pursuant to Federal Rule of Civil Procedure 15 and Knauz's motion to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(3) or, in the alternative, to stay these proceedings pending arbitration pursuant to the Federal Arbitration Act, 9 U.S.C. § § 3, 4. For the reasons stated below, the Court grants Knauz's motion for leave to amend and its motion to stay these proceedings pending arbitration.

RELEVANT FACTS

Hoenig is a former employee of Knauz, a car dealership located in Lake Bluff, Illinois. (R. 1, Compl. ¶ ¶ 4-5.) Hoenig began working for Knauz in August 1999, and she left Knauz voluntarily in March 2004 to care for her children (the " First Employment Period" ). ( Id. ¶ ¶ 4, 7.) During the First Employment Period, Hoenig began as a part-time cashier, was later promoted to the position of service advisor, and eventually held the position of extended warranty administrator. ( Id. ¶ ¶ 4, 6.) Hoenig returned to work at Knauz in August 2004 as an extended warranty administrator, and she was continually employed by Knauz fro then until her termination in July 2011 (the " Second Employment Period" ). ( Id. ¶ ¶ 4, 7.)

Hoenig alleges that she performed well and received various forms of positive feedback during her time at Knauz. ( Id. ¶ 9.) Nevertheless, she alleges that she was subjected to unlawful gender discrimination

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with respect to her wages and retaliated against for making charges based on that discrimination, eventually resulting in her termination. ( Id. ¶ 10.) The alleged discrimination began when Hoenig was promoted to the position of warranty administrator in July 2007. ( Id. ¶ 11.) Hoenig claims that Knauz promised her that she would receive an increased commission on the warranty revenues she collected after six months in the warranty administrator position. ( Id. ¶ 14.) She did not receive the promised raise after asking about it on more than one occasion. ( Id. ¶ ¶ 16-17.) Hoenig later learned that Knauz had paid her male predecessor a higher commission for performing the same warranty revenue collection work. ( Id. ¶ 18.) Hoenig then asked for the raise again, without revealing her knowledge of the pay discrepancy, and was again denied. ( Id. ¶ 19.) She informed two Knauz managers that she was aware of the pay discrepancy and believed it was unfair. ( Id. ¶ ¶ 20-21.) Upon this disclosure, the managers allegedly ignored her concerns and made statements indicating that she was lucky to have a job and that plenty of people would apply for her position if it were open, which Hoenig understood to be a threat of termination if she continued to ask for a raise. ( Id. ¶ 21.) Hoenig alleges that Knauz attempted to correct the alleged disparity by reducing a male colleague's commission percentage rather than increasing the commission she received, but that Knauz simultaneously increased the male colleague's hourly wage so that he was still earning more than Hoenig. ( Id. ¶ ¶ 22-23.)

In August 2010, because of this pay disparity, Hoenig filed her first charge of discrimination against Knauz with the Equal Employment Opportunity Commission (" EEOC" ), which issued a determination of probable cause. ( Id. ¶ 25.) Hoenig alleges that upon receiving notice of the charge, Knauz retaliated against her in the form of pretextual write-ups, which were back-dated to August. ( Id. ¶ ¶ 27-28.) Hoenig alleges that the purpose of the write-ups was either to drive her out of the company or to fabricate a pattern of behavior that would justify firing her. ( Id. ¶ ¶ 29-30.) She alleges that Knauz issued additional " sham write-ups" through the summer of 2012, and that the pretextual and frivolous write-ups closely followed settlement discussions in which Knauz expressed a desire for Hoenig to resign. ( Id. ¶ ¶ 29-31.) Hoenig also alleges that she experienced retaliation in non-disciplinary ways, including reductions of pay, restrictions on her ability to take vacation days, members of the management instructing one of the owners of the dealership not to speak to her due to her pending claims, and workplace hostility, including one coworker's miming of physical violence directed at her. ( Id. ¶ 32.) Hoenig reported this alleged discrimination and retaliation to Knauz, but no action was taken, so she filed another charge with the EEOC in May 2011 alleging retaliation. ( Id. ¶ ¶ 35-36.) The EEOC issued a second determination of probable cause. ( Id. ¶ 36.)

Hoenig alleges that Knauz's discriminatory and retaliatory behavior harmed her health such that she was diagnosed with depression, panic attacks, and anxiety. ( Id. ¶ 37.) Based on the recommendation of her physician, Hoenig requested and received leave under the FMLA in May 2011. ( Id. ¶ ¶ 38-39.) Hoenig claims that Knauz subjected her to unlawful retaliation and discrimination on the basis of her medical leave by, among other things, citing " frequent absences" as a reason for her eventual termination. ( Id. ¶ ¶ 39-40.)

Finally, Hoenig alleges that Knauz drafted a Litigation Hold Memorandum (" Memo" ) that purported to require her to

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save documents and emails that were relevant to her discrimination and retaliation claims. ( Id. ¶ 33.) Hoenig refused to sign the Memo until she could discuss it with her attorney. ( Id. ¶ 34.) She alleges that Knauz accused her of insubordination in response to her waiting to sign and threatened her with termination if she did not comply with the directives in the Memo. ( Id. ) Upon later receiving an email that the Memo needed to be signed that day, Hoenig called her lawyer during working hours to discuss the Memo. ( Id. ) Knauz subsequently issued her a write-up for being away from her desk and speaking on her cell phone during working hours. ( Id. )

Knauz terminated Hoenig on July 22, 2011, for the stated reason of insubordination. ( Id. ¶ 41.) Hoenig alleges that the purported insubordination consisted of her gathering information to prove that a write-up contained false accusations and talking to her attorney about the Memo. ( Id. ) Hoenig also alleges that she was terminated three days after she notified Knauz that she would be filing another charge of retaliation with the EEOC. ( Id. ¶ 42.) Hoenig alleges that upon the EEOC's finding of reasonable cause that Knauz discriminated and retaliated against her, and the subsequent failure of the EEOC's conciliatory efforts, it issued Hoenig a Notice of Right to Sue in November 2012. ( Id. ¶ ¶ 47-48.) As a result of Knauz's actions, Hoenig alleges that she has suffered extreme emotional distress; lost wages, compensation, and benefits; damage to her career and reputation; embarrassment and humiliation; other non-pecuniary losses; and that she has incurred attorneys' fees. ( Id. ¶ ¶ 49-52.)

PROCEDURAL HISTORY

On February 4, 2013, Hoenig filed an eight-count complaint with this Court, alleging violations of Title VII, the Equal Pay Act, the Illinois Equal Pay Act, and the FMLA, as well as unlawful retaliation in violation of each statute. ( Id. ¶ ¶ 54-88.) On April 5, 2013, Knauz filed its answer and affirmative defenses, (R. 9, Def.'s Answer,) which did not raise the issue of arbitration or contest Hoenig's allegations regarding venue. ( See id. ¶ 3). In a joint status report filed on April 8, 2013, the parties agreed upon a June 3, 2013 deadline to amend the pleadings. (R. 11, Jt. Status Report at 3.) On April 11, 2013, the Court ordered the parties to commence discovery, and it set a discovery deadline of September 30, 2013. (R. 12, Min. Entry.)

On May 9, 2013, Knauz moved to amend its answer and affirmative defenses pursuant to Federal Rule of Civil Procedure 15 in order to deny Hoenig's allegation that venue is proper in this Court and to assert as an affirmative defense that Hoenig's complaint be dismissed based on improper venue. (R. 16, Def.'s Mot. Leave Am. ¶ ¶ 4-5.) In conjunction with its motion for leave to amend, Knauz also filed a motion to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(3) or, in the alternative, to stay these proceedings pending arbitration pursuant to the Federal Arbitration Act (" FAA" ), 9 U.S.C. § § 3, 4. (R. 18, Def.'s Mot. Dismiss.) The impetus for the filing of these motions was that while preparing its initial discovery disclosures, defense counsel allegedly came across an employment agreement Hoenig signed in August 2003 in her personnel file. (R. 16, Def.'s Mot. Leave Am. ¶ 3.) The employment agreement contains an agreement to arbitrate (the " Agreement" ). (R. 20, Ex. 1, Agreement.) In relevant part, this Agreement states:

It is further agreed that Employee and the Dealership will utilize binding arbitration to resolve all disputes that may arise ...

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