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Nicks v. Koch Meat Co., Inc.

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

October 27, 2016

JIMMY R. NICKS and JAMES EARL PATRICK, individually and on behalf of all persons similarly situated, Plaintiffs,


          AMY J. ST. EVE, United State District Court Judge.

         On June 21, 2016, Plaintiffs Jimmy R. Nicks (“Nicks”) and James Earl Patrick (“Patrick”), individually and on behalf of all persons similarly situated, filed a Collective Class Action Complaint against Defendants Koch Meat Co., Inc. d/b/a Koch Foods (“Koch Meat”), Koch Foods of Mississippi, LLC (“Koch Foods of Mississippi”), and JET Poultry Services, Inc. (“JET”), seeking relief under the Fair Labor Standards Act of 1938, 29 U.S.C. § 201, et seq. (“FLSA”). (R.1). JET moved to dismiss the Complaint pursuant to Federal Rule of Civil Procedure 12(b)(2) and 12(b)(3) for lack of personal jurisdiction and/or improper venue. (R.37). Koch Meat and Koch Foods of Mississippi (collectively, the “Koch Defendants”) separately moved to dismiss the Complaint on similar grounds. (R.40). In the alternative to dismissal, all Defendants request a transfer to the Southern District of Mississippi pursuant to 28 U.S.C. §§ 1404 or 1406.

         The Court now considers the Koch Defendants' jurisdiction and venue challenge. (R.40). For the following reasons, the Court denies that motion without prejudice to refile after conducting the limited jurisdictional and venue discovery described herein.


         I. FLSA Complaint Allegations

         Plaintiffs Nicks and Patrick are Mississippi residents who were “previously employed by Defendants to catch and cage chickens as . . . member[s] of a live-haul crew[.]” (R.1, Compl. ¶ 3-4). Plaintiffs allege that the Koch Defendants operate “one of the largest vertically integrated poultry processors in the United States, with locations across Alabama, Georgia, Illinois, Mississippi, Ohio and Tennessee.” (Id. ¶ 16). As part of that enterprise, the Koch Defendants engage third-party contractors-such as JET-to employ chicken catchers-such as Plaintiffs- for their live-haul crews, who then “travel to [Koch] farms to capture Koch's chickens and place them in Koch's cages, for transport to the Koch poultry processing plants.” (Id. ¶¶ 24-25, 31).[1]According to Plaintiffs, all three Defendants play a role in hiring live-haul crews, supervising live-haul crews, and determining and recording “the piece rate and number of loads captured in order to compensate the live-haul crews.” (Id. ¶¶ 32-34, 41, 45-46). With respect to compensation in particular, Plaintiffs allege that “Defendants paid [them] and the FLSA Collective a piece rate basis, regardless of the number of hours worked, and failed to pay overtime as required by federal law.” (Id. ¶ 59). Accordingly, Plaintiffs now bring a claim for overtime wage violations against the Koch Defendants and JET as joint employers under the FLSA. (Id. ¶¶ 47-48, 68, 72-73). Plaintiffs purport to bring this FLSA collective action on behalf of “[a]ll individuals employed by [Koch Meat, Koch Foods, and/or JET] as members of live-haul, chicken catching crews in the United States, and who were paid on a piece rate and did not receive overtime compensation from the three years preceding the date of the filing of this Complaint.” (Id. ¶ 14).

         II. Jurisdictional Record

         In terms of jurisdictional allegations, Plaintiffs allege that Defendant Koch Meat is “an Illinois corporation headquartered in Park Ridge, Illinois, with facilities in Alabama, Georgia, Mississippi, Tennessee, and Illinois[.]” (Id. ¶ 5). Koch Foods of Mississippi “is a Mississippi entity headquartered in Morton, Mississippi, with processing plants in Mississippi.” (Id. ¶ 7). JET, meanwhile, “is a Mississippi corporation headquartered in Summit, Mississippi, providing staffing of live-haul chicken-catcher crews for the Koch Defendants.” (Id. ¶ 9).

         As Mississippi citizens, Defendants JET and Koch Foods of Mississippi challenge the Court's personal jurisdiction over them under Federal Rule of Civil Procedure 12(b)(2). (R.37, R.40). JET has submitted an affidavit from its Director and Vice President, attesting that JET has never advertised in Illinois, conducted or solicited business in Illinois, or appointed an agent for service of process in Illinois. (R.63-1, Corrected Armstreet Decl. ¶¶ 5-7). Instead, all of JET's “employees, officers, agents and shareholders reside in Mississippi, ” where JET manages “a contract with Koch Farms of Mississippi to catch chickens in Morton, Mississippi.” (Id. ¶¶ 9-11, 15).[2] Koch Farms of Mississippi pays JET “for the chickens [JET's] workers catch in Mississippi[, ]” while JET then “pays its workers, who are Mississippi residents, in Mississippi.” (Id. ¶¶ 12-13). According to its employment files, “the named Plaintiffs and each putative collective action member who has filed a consent in this action was also a resident of Mississippi when hired by [JET].” (Id. ¶ 14). JET maintains its pay records and employment files in Mississippi. (Id. ¶ 16).

         Koch Foods of Mississippi, too, has submitted several employee affidavits to contest personal jurisdiction in Illinois. (R.42-1). In particular, Lance Buckert-Chief Financial Officer of Koch Foods Incorporated, which is the sole member of Koch Foods of Mississippi and the sole stockholder of Koch Meat-attested that Koch Foods of Mississippi does not: (i) have an office in Illinois; (ii) own real property in Illinois; (iii) employ anyone in Illinois; (iv) pay income or property taxes in Illinois; or (v) have a telephone listing or phone number in Illinois. (R.42-1, Buckert Decl. ¶¶ 2-9). In addition, Laney White, Koch Foods of Mississippi's “Complex Manager, ” attested that its poultry processing business, including the operation of a slaughter plan in Morton, Mississippi (the “Slaughter Plant”), is limited to the State of Mississippi. (R.42-1, White Decl. ¶¶ 4-8). Ronnie Joe Keyes, its “Live Production Manager, ” meanwhile, explained that he “oversees the production of live broiler chickens before they are delivered to the Slaughter Plant for processing” - commonly referred to as “grow-out” operations. (R.42-1, Keyes Decl. ¶ 5). As part of the grow-out operations, JET “catches broiler chickens on the growers' farms and places them in cages that are loaded onto poultry transport vehicles for delivery to the Slaughter Plant.” (Id. ¶ 7). All of these “live-haul services related to chickens supplied to the Slaughter Plant for processing take place in Mississippi.” (Id. ¶ 8). In addition, Keyes appears to be a signatory on the “Poultry Catcher Agreement” between JET and “Koch Farms of Mississippi, LLC.” (Compare Id. with R.63-1 at 4).

         For its part-although not contesting personal jurisdiction in Illinois-Koch Meat “does not have any business records relating to any services provided” by JET, and “does not control the pay policies or the day-to-day operations” of Koch Foods of Mississippi. (R.42-1, Buckert Decl. ¶ 12; R.62-4, Buckert Supplemental Decl. ¶ 4). Koch Meat, moreover, does not “engage in any live haul operations” or “own any facilities that process any live chickens.” (R.42-1, Buckert Decl. ¶¶ 10-11).


         A motion to dismiss for lack of personal jurisdiction pursuant to Rule 12(b)(2) tests whether a federal court has personal jurisdiction over a defendant. See Fed. R. Civ. P. 12(b)(2); Central States v. Phencorp. Reins. Co., 440 F.3d 870, 875 (7th Cir. 2006). In analyzing a Rule 12(b)(2) motion, courts may consider matters outside of the pleadings. See Purdue Research Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003). Without the benefit of an evidentiary hearing, the plaintiff “bears only the burden of making a prima facie case for personal jurisdiction.” uBID, Inc. v. GoDaddy Grp., Inc., 623 F.3d 421, 423-24 (7th Cir. 2010). Under such circumstances, courts take “the plaintiff's asserted facts as true and resolve any factual disputes in its favor.” Id. Where the plaintiff fails to refute facts contained in the defendant's affidavit, however, courts accept those facts in the affidavit as true. GCIU-Employer Ret. Fund v. Goldfarb Corp., 565 F.3d 1018, 1020 n.1 (7th Cir. 2009).

         Under Rule 12(b)(3), a party may move for dismissal of an action that is filed in an improper venue. See Fed.R.Civ.P. 12(b)(3). Once a defendant challenges the plaintiff's choice of venue, the plaintiff bears the burden of establishing that it filed its case in the proper district. See Gilman Opco LLC v. Lanman Oil Co., No. 13-CV-7846, 2014 WL 1284499, at *2 (N.D. Ill. Mar. 28, 2014). Under Rule 12(b)(3), “the district court assumes the truth of the allegations in the plaintiff's complaint, unless contradicted by the defendant's affidavits.” Deb v. SIRVA, Inc., No. 14-2484, 2016 WL 4245497, at *5 (7th Cir. Aug. 11, 2016) (emphasis in original); see also Faulkenberg v. CB Tax Franchise Sys., LP, 637 F.3d 801, 809-10 (7th Cir. 2011) (courts may consider matters outside of the pleadings in deciding a venue motion). Against a Rule 12(b)(3) challenge, the court must resolve any factual disputes and draw all reasonable inferences in the plaintiff's favor. See ...

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