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Berger v. Pikr, Ltd.

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

May 8, 2015

JESSICA BERGER, TIMOTHY RENDAK, AND PATRICK McCUMBER, ON BEHALF OF THEMSELVES AND ALL OTHER PERSONS SIMILARLY SITUATED, KNOWN OR UNKNOWN, PLAINTIFFS,
v.
PIKR, LTD., PERRY'S RESTAURANTS, LTD., PERRY'S STEAKHOUSE OF ILLINOIS, LLC, D/B/A PERRY'S STEAKHOUSE AND GRILLE, PBS HOLDINGS, INC., HOWARD CORTES, AND CHRISTOPHER V. PERRY, Defendants.

MEMORANDUM OPINION AND ORDER

THOMAS M. DURKIN, District Judge.

Plaintiffs Jessica Berger, Timothy Rendak, and Patrick McCumber worked as servers at Perry's Steakhouse and Grille in Oak Brook, Illinois. They allege that the defendants failed to pay them all the tips that they were entitled to, and required them to perform non-tip work at the discounted "tip-credit" rate.[1] Four of the six defendants in this case-PIKR, Ltd., Perry's Restaurants, Ltd. ("PRL"), Perry's Steakhouse of Illinois, LLC ("Perry's Illinois"), and Christopher Perry (collectively, the "Moving Defendants")-have moved to dismiss the plaintiffs' complaint under Rule 12(b)(6) for failure to state a claim under the Fair Labor Standards Act ("FLSA"), 29 U.S.C. §§ 201-219, and the Illinois Minimum Wage Law ("IMWL"), 820 ILCS 105/1-15, and for lack of personal jurisdiction under Rule 12(b)(2). For the reasons explained below, the Court: (1) grants the Rule 12(b)(6) portion of the corporate defendants' motion; (2) denies the Rule 12(b)(6) portion of defendant Christopher Perry's motion; and (3) takes under advisement the Rule 12(b)(2) portions of defendants' motions.

BACKGROUND

The plaintiffs allege, on information and belief, that the defendants used a portion of the tip money that the plaintiffs should have received for general business expenses. R. 9 ¶ 27. They further allege that the defendants required them to perform non-tip work-e.g., cleaning, set-up, and food preparation-at the reduced tip-credit wage. Id. at ¶¶ 31-33. Defendant Perry's Illinois, an Illinois limited liability company, "operates" the restaurant. Id. at ¶ 9. Defendant Howard Cortes was the restaurant's general manager during the relevant time period. Id. at ¶ 15. Defendants PIKR, PRL, and PBS are all Texas entities. Id. at ¶¶ 11-13. PRL is "the parent company for all Perry's Steakhouse and Grill Restaurants in the United States." Id. at ¶ 12. PBS "manages" PRL. Id. at ¶ 13. Christopher Perry, a Texas resident, is the President and Director of PBS, and the registered agent for PBS, PIKR, and PRL. Id. at ¶ 14. The plaintiffs allege that Perry "owns" Perry's Illinois, [2] and that he "had the authority to hire and fire employees, the authority to direct and supervise the work of employees, the authority to sign on corporate checking accounts, including payroll accounts, and the authority to make decisions regarding wage and hour classifications, employee compensation, employee timekeeping and capital expenditures." Id.

The plaintiffs have asserted claims against the defendants for: (1) violations of the FLSA (Count I - all defendants); (2) violation of the IMWL (Count II - all defendants); (3) breach of contract (Count III - Perry's Illinois); and (4) unjust enrichment (Count IV - Perry's Illinois). Perry's Illinois and Cortes have answered the complaint. See R. 41, 17; R. 40 ¶ 15. Perry's Illinois admits that it "employed" the plaintiffs. R. 41 ¶¶ 17, 36-39. Cortes admits that he "had the authority to hire and fire employees at [the Oakbrook restaurant], to direct and supervise their work, and to make decisions concerning employee raises and employee timekeeping, " R. 40 ¶ 15, but denies that he "personally" employed the plaintiffs, id. at ¶ 17. The Moving Defendants have moved to dismiss the claims against them for failure to state a claim and lack of personal jurisdiction.

LEGAL STANDARD

A Rule 12(b)(6) motion challenges the sufficiency of the complaint. See, e.g., Hallinan v. Fraternal Order of Police of Chi. Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009). A complaint must provide "a short and plain statement of the claim showing that the pleader is entitled to relief, " Fed.R.Civ.P. 8(a)(2), sufficient to provide defendant with "fair notice" of the claim and the basis for it. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). This standard "demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). While "detailed factual allegations" are not required, "labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555. The complaint must "contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.'" Mann v. Vogel, 707 F.3d 872, 877 (7th Cir. 2013) (quoting Iqbal, 556 U.S. at 678). In applying this standard, the Court accepts all well-pleaded facts as true and draws all reasonable inferences in favor of the non-moving party. Mann, 707 F.3d at 877.

It is the plaintiffs' burden to establish that the defendants are subject to this Court's personal jurisdiction. N. Grain Mktg., LLC v. Greving, 743 F.3d 487, 491 (7th Cir. 2014). On a Rule 12(b)(2) motion to dismiss, the Court may "receive and weigh" affidavits and other evidence outside the pleadings. Purdue Research Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003) (citation and internal quotation marks omitted). The plaintiffs "need only make out a prima facie case of personal jurisdiction" because the Court has not held an evidentiary hearing to resolve factual disputes. Id. (citation and internal quotation marks omitted). The Court construes the plaintiffs' complaint "liberally with every inference drawn" in their favor. GCIU-Employer Retirement Fund v. Goldfarb Corp., 565 F.3d 1018, 1020 n.1 (7th Cir. 2009).

ANALYSIS

I. Whether the Plaintiffs Have Stated a Claim for Relief Against the Moving Defendants

PIKR, PBS, and PRL argue in their joint motion to dismiss that the plaintiffs have not adequately alleged that they are liable for the wage-law violations asserted in the complaint. The FLSA allows employers to pay "tipped employees" an hourly wage below the prevailing minimum wage for tipped work (e.g., waiting tables). See 29 U.S.C. § 203(m) and (t).[3] The employer may "pool" tips and then distribute the money to tipped employees, but it may not retain any portion of those tips. Id. at § 203(m). The FLSA broadly defines the term "employer":

"Employer" includes any person acting directly or indirectly in the interest of an employer in relation to an employee and includes a public agency, but does not include any labor organization (other than when acting as an employer) or anyone acting in the capacity of officer or agent of such labor organization.

Id. at § 203(d). Whether a defendant "employs" a plaintiff within the meaning of the statute depends on the "economic reality" of the parties' relationship. Nehmelman v. Penn Nat. Gaming, Inc., 790 F.Supp.2d 787, 795 (N.D. Ill. 2011). Relevant factors include whether the employer: "(1) had the power to hire and fire the employees; (2) supervised and controlled employee work schedules or conditions of employment; (3) determined the rate and method of payment; and (4) maintained employment records." Id. (citation and internal quotation marks omitted). The plaintiffs' complaint contains the types of allegations that would support an FLSA claim against the entity defendants. See R. 9 ¶¶ 17-33. It does not, however, specify each defendant's alleged role with respect to the plaintiffs' employment. Instead, it alleges that the "defendants, " collectively, operate the restaurant, including work assignments and tip pooling. See, e.g., R. 9 ¶ 31 (" Defendants require servers to regularly perform activities commonly referred to as side work, ' opening side work, ' and/or closing side work.'") (emphasis added). These allegations are facially plausible as applied to Cortes, who was responsible as general manager for the restaurant's day-to-day operations. They are less plausible as applied to corporate defendants further up the organizational chain. The plaintiffs' group pleading does not provide each defendant with adequate notice of the claims against it. So, the plaintiffs' claims against PIKR, PBS, and PRL are dismissed without prejudice.

The complaint's allegations against Christopher Perry mirror the allegations against Cortes. The plaintiffs allege that Perry, like Cortes, "had the authority to hire and fire employees, the authority to direct and supervise the work of employees, the authority to sign on corporate checking accounts, including payroll accounts, and the authority to make decisions regarding wage and hour classifications, employee compensation, employee timekeeping and capital expenditures." R. 9 ¶ 14. This boilerplate allegation is somewhat less plausible as applied to Perry, a Texas resident. On the other hand, the plaintiffs allege that Perry owns Perry's Illinois, and he is ...


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