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Kavanagh v. Cds Office Systems Incorporated

United States District Court, Seventh Circuit

January 3, 2014

MICHELLE KAVANAGH, Plaintiff,
v.
C.D.S. OFFICE SYSTEMS INCORPORATED, D/B/A CDS OFFICE TECHNOLOGIES, INC., Defendant.

OPINION

SUE E. MYERSCOUGH, District Judge.

This cause is before the Court on Defendant C.D.S. Office Systems Incorporated, D/B/A CDS Office Technologies, Inc.'s Motion to Dismiss (d/e 5) Counts I and II of Plaintiff Michelle Kavanagh's Complaint. Defendant's Motion is DENIED. Plaintiff has pleaded facts that permit a reasonable inference that Plaintiff engaged in activity protected by the Fair Labor Standards Act. Furthermore, Plaintiff's allegations that Defendant discharged her for reporting Defendant's illegal conduct to a supervisor support Plaintiff's claim for Illinois common law retaliatory discharge.

I. FACTUAL BACKGROUND

The Complaint contains the following allegations. From February 22, 2010 through July 3, 2012, Plaintiff worked as the Human Resource Director for Defendant. Mr. Bruce Egolf, Defendant's Chief Financial Officer, acted as Plaintiff's direct supervisor during Plaintiff's term of employment. As a supervisor, Mr. Egolf reported directly to officers and directors of the company, including Jerome Watson and Mark Watson. Jerome Watson made all hiring and firing decisions and was responsible for Defendant's policy regarding overtime wages.

On June 1, 2012, Plaintiff met with Defendant's IT Manager to discuss complaints directed to the IT Manager by Bob Goldesberry and Dakota Kennedy, two of Defendant's IT Technicians. The technicians had complained to the IT Manager about their classification pursuant to the Fair Labor Standards Act as exempt from overtime pay.

After hearing about the technicians' complaints, Plaintiff began researching how the Fair Labor Standards Act applied to the two technicians whose duties included installing customer work stations and servers. After spending five days gathering information about the overtime classification issue, Plaintiff, as Human Resource Director, formed the opinion that Bob Goldesberry and Dakota Kennedy were not exempt from overtime pay under the Fair Labor Standards Act.

On June 6, 2012, at 2:56 p.m., Plaintiff sent an e-mail to her supervisor, Mr. Egolf, advising him of the technicians' complaints. In the e-mail, Plaintiff included information about the complaints and about Plaintiff's meeting with Defendant's IT Manager. Plaintiff also included applicable provisions of the Fair Labor Standards Act, information on the possible penalties Defendant faced for failure to address the technicians' complaints, a recommendation that Defendant perform an audit of all employees to ensure that each was properly classified under the Fair Labor Standards Act, and information on the proper method for tracking hours worked by employees who should receive overtime wages. On June 6, 2012 at 3:52 p.m., Mr. Egolf acknowledged receipt of this email and responded that he needed some time to digest the information before meeting with Plaintiff.

On June 13, 2012, Plaintiff had yet to hear back from Mr. Egolf. Therefore, Plaintiff sent Mr. Egolf another email on June 13, 2012 at 5:14 p.m. requesting a meeting. Mr. Egolf responded at 8:54 p.m. agreeing that he and Plaintiff needed to meet and that Mr. Egolf would check his Friday schedule. On June 14, 2012 at 6:14 a.m., Plaintiff received an email from Mr. Egolf stating he hoped to speak with Plaintiff about the employee complaints on Friday, June 15, 2012.

At about 3:00 p.m. on June 15, 2012, Mr. Egolf asked Plaintiff to meet with him regarding the complaints. Mr. Egolf brought to the meeting the information Plaintiff had emailed to Mr. Egolf on June 6, 2012. Mr. Egolf's first question was why Defendant's IT Manager had approached Plaintiff about overtime classification under the Fair Labor Standards Act. Plaintiff replied that the IT Manager brought the Complaints to Plaintiff's attention because Plaintiff was the Human Resource Director. Mr. Egolf then asked why Bob Goldesberry and Dakota Kennedy should not be classified as exempt from overtime pay under the Fair Labor Standards Act. Plaintiff referred Mr. Egolf to the information Plaintiff had emailed to Mr. Egolf and summarized how the Fair Labor Standards Act classifies computer professionals. Mr. Egolf said that Bob Goldesberry likes to stir up trouble so Mr. Egolf was not surprised that Bob Goldesberry had complained. However, Mr. Egolf was surprised that Dakota Kennedy had complained because Dakota Kennedy is the step-grandson of Jerome Watson, one of Defendant's directors. Mr. Egolf told Plaintiff that Mr. Egolf needed to speak with Kelly Kennedy, Jerome Watson's daughter and Dakota Kennedy's step-mother, to see if she could stop Dakota Kennedy's complaints. Mr. Egolf then said that he thought Dakota Kennedy complained at the urging of Bob Goldesberry.

After these comments, Mr. Egolf asked Plaintiff how to make the Fair Labor Standards Act issues "go away." Complaint, d/e 1 at ¶ 10 ("How can we make this go away?"). Plaintiff said that she could not just make a violation of the Fair Labor Standards Act "go away." Complaint, d/e 1 at ¶ 10 ("Bruce, we can't make this go away, the law is what the law is and as an employer we have to follow it."). Mr. Egolf told Plaintiff that she needed to make the issue "go away." Complaint, d/e 1 at ¶ 10 ("I need for you to make this go away."). Plaintiff again said she would not.

Plaintiff proceeded to tell Mr. Egolf that Defendant had incorrectly classified other employees in addition to Kennedy and Goldesberry. Mr. Egolf asked Plaintiff who else had been classified incorrectly. Plaintiff gave Mr. Egolf the example of service technicians and told Mr. Egolf that half of the technicians were classified as exempt from overtime pay, and the other half were classified as non-exempt, meaning they receive overtime pay. Mr. Egolf told Plaintiff to make them all exempt. Plaintiff explained that under Fair Labor Standards Act one cannot simply list a position under whichever classification one wants. Plaintiff advised Mr. Egolf that Defendant must look at the job duties and responsibilities of an employee before classifying the employee for Fair Labor Standards Act purposes. Plaintiff further explained that the technicians did not fall within the classification for exempt employees and, therefore, all service technicians should be classified as non-exempt.

During the same June 15, 2012 meeting, Plaintiff also told Mr. Egolf that Defendant was not compliant with Fair Labor Standards Act recording requirements for non-exempt staff because Defendant had not tracked all of the non-exempt employees' daily hours worked. Mr. Egolf asked Plaintiff how Defendant could track the service technicians' daily hours if the technicians were not exempt. Plaintiff advised Mr. Egolf that Defendant could implement time clocks, require technicians to fill out electronic timesheets, or assign an administrator to track the technicians' time with a Global Positioning System. Plaintiff then suggested conducting a full audit of all employee positions to make sure each was classified correctly under the Fair Labor Standards Act. Mr. Egolf agreed that Plaintiff should conduct an audit and complete a report of her findings.

Plaintiff told Mr. Egolf that the audit would be much easier and smoother if the employees had job descriptions. Mr. Egolf agreed but noted that employee job descriptions were improbable until Jerome Watson retires and Mark Watson, his son, takes over. Plaintiff asked why this was the case, and Mr. Egolf explained that Jerome Watson thinks that job descriptions result in employees not working above and beyond the tasks listed in the description.

Plaintiff then asked Mr. Egolf if Mark Watson felt the same way about performance reviews as Jerome Watson. When Mr. Egolf asked what Plaintiff was talking about, Plaintiff responded that Mr. Egolf had told Plaintiff that Jerome Watson does not authorize performance reviews because reviews give employees an expectation of a raise. Mr. Egolf answered that he did not know how Mark Watson felt about performance reviews. Plaintiff told Mr. Egolf that employees want reviews to find out how they are doing. Plaintiff elaborated by saying that she does not even know what she is supposed to be doing most of the time because she has no job description and nobody communicates with her. Mr. Egolf told Plaintiff that she just needed to "stay safe." Complaint, d/e 1 at ¶ 12.

After her meeting with Mr. Egolf, Plaintiff performed the audit that she and Mr. Egolf had discussed. At approximately 1:30 p.m. on June 26, 2012, Plaintiff left the results of her Fair Labor Standards Act audit in Mr. Egolf's chair for his review. Mr. Egolf did not acknowledge receipt of the Fair Labor Standards Act information compiled by Plaintiff.

At 4:42 p.m. on June 27, 2012, Plaintiff sent Mr. Egolf an email letting him know that Plaintiff had reviewed four other IT technicians' job duties and responsibilities and concluded that these technicians should also be classified as non-exempt. In the email, Plaintiff also suggested that Defendant ...


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