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Owens v. GLH Capital Enterprise, Inc.

United States District Court, S.D. Illinois

July 14, 2017

TABITHA OWENS and CHAD WALTERS, on behalf of themselves and all others similarly situated, Plaintiffs,
v.
GLH CAPITAL ENTERPRISE, INC., M.L.K. ENTERPRISES, LLC, BACKSTREET ENTERTAINMENT, LTD., CHARLES “JERRY” WESTLUND, JR., an individual, and DOES 1-10, Defendants.

          MEMORANDUM AND ORDER

          NANCY J. ROSENSTENGEL United States District Judge

         A Motion to Dismiss Defendant Westlund's Counterclaims (Doc. 36), filed by Plaintiffs Tabitha Owens and Chad Walters, and a Motion to Dismiss (Doc. 29) filed by Defendant Charles “Jerry” Westlund are pending before the Court. For the reasons set forth below, the Court grants the Motion to Dismiss Westlund's Counterclaims and denies Westlund's Motion to Dismiss.

         Factual And Procedural Background

         This action arises under the Fair Labor Standards Act (FLSA), 29 U.S.C. § 201, and the Illinois Minimum Wage Act, 820 ILCS § 105/1. Tabitha Owens (Owens) and Chad Walters (Walters) (collectively “Employees”) are former employees of Defendants GLH Capital Enterprise, Inc., M.L.K. Enterprises, LLC, Back Street Entertainment, Ltd., Charles “Jerry” Westlund, Jr., and Does 1-10 (collectively “Employers”).

         Under the FLSA employers are prohibited from requiring an employee to work more than forty hours in a workweek unless the employee receives compensation of at least one-and-a-half times their regular rate. 29 U.S.C. § 207(a)(1). Employees filed an Amended Complaint on December 19, 2016, alleging Employers willfully violated the FLSA by failing to pay overtime. (Doc. 25, pp. 1-2). Employers timely filed an Answer, Affirmative Defenses, and Counterclaims. (Doc. 28). At issue are Westlund's counterclaims for false light and defamation. (Doc. 28, pp. 18-19). Both claims are based on language in paragraph 24 of Employees' Amended Complaint stating “Plaintiffs and other employees understand that Hamilton is simply Westlund, Jr.'s ‘fall guy.'” (Doc. 25, ¶ 24). Employees filed the pending Motion to Dismiss Westlund's Counterclaims arguing the statement in paragraph 24 of their Amended Complaint is privileged and they are immune from suit for false light and defamation. (Doc. 36, pp. 1-2).

         Westlund also has filed a Motion to Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), alleging Employees' Amended Complaint fails to state facts to support any allegations against defendant Westlund personally and he should be dismissed as an individually named defendant. (Doc. 29, ¶¶ 3-4).

         Analysis

         I. Motion to Dismiss Counterclaims

         Employees' Motion to Dismiss Defendant Westlund's Counterclaims raises two arguments for dismissal: (1) Westlund's Counterclaims are barred as a matter of law; and (2) Westlund's Counterclaims fail to establish subject matter jurisdiction for his permissive counterclaims. (Doc. 36, pp. 1-2). Because the Court finds Westlund's Counterclaims are barred as a matter of law, Employees' second argument is deemed moot.

         A. Barred as a Matter of Law

         There is a long standing principal in Illinois that anything said or written in a legal proceeding, including pleadings, is protected by an absolute privilege against defamation actions, as long as the words are relevant or pertinent to the matters in controversy. Defend v. Lascelles, 500 N.E.2d 712, 714 (1986); see also Libco Corp. v. Adams, 426 N.E.2d 1130, 1131 (1981) (“The absolute privilege protects anything said or written in a legal proceeding.”); Ritchey v. Maksin, 376 N.E.2d 991, 993 (Ill.App.Ct. 1978); Wahler v. Schroeder, 292 N.E.2d 521, 523 (Ill.App.Ct. 1972); Harrell v. Summers, 178 N.E.2d 133, 134 (Ill.App.Ct. 1961); Dean v. Kirkland, 23 N.E.2d 180, 187 (Ill.App.Ct. 1939). This rule flows from the principle that the judicial system is best served when individuals are free to report facts to a court without fear of civil liability. Defend, 500 N.E.2d at 714.

         An absolute privilege has been held to apply in both defamation and false light claims. McGrew v. Heinhold Commodities, Inc., 497 N.E.2d 424, 432 (Ill.App.Ct. 1986) (“Every jurisdiction that has considered the question has concluded that this privilege also applies to ‘false light' suits.”) The question before this Court, therefore, is whether the complained of statement in Employees' Amended Complaint is relevant or pertinent to the matters in controversy, and therefore privileged against Westlund's defamation and false light claims. Statements are considered relevant or pertinent if they have any bearing upon the subject matter of the litigation. Talley v. Alton Box Board Co., 185 N.E.2d 349, 352 (Ill.App.Ct. 1962). Courts are generally liberal in construing this question, resolving all doubts in favor of relevancy or pertinence. Harrell, 178 N.E.2d at 134.

         Employees' Amended Complaint alleges Employers willfully failed to pay overtime for work performed in excess of forty-hours in a workweek. (Doc. 25, ¶¶ 68, 75, 79). Employees further allege Garrett L. Hamilton (Hamilton) is employed by Defendants as the manager and/or president of Employers' named business entities. (Doc. 25, ¶ 24). In that role, he is responsible for general business and financial operations (Doc. 25, ¶ 24), which the Court infers to include payroll. The complained of language-that Mr. Hamilton is Westlund's “fall guy”-indicates that Mr. Hamilton is working at the direction of Westlund, and thus Mr. Westlund is responsible for either knowingly or recklessly failing to pay overtime. Since that is the gravamen of Employees' complaint, the statement has a direct bearing on the subject matter of the litigation, and the statement is privileged.

         Westlund argues that he filed the defamation and false light claims against Employees, not their attorneys (Doc. 38, ¶ 6), presumably arguing the privilege against defamation applies only to attorneys. Westlund provides no legal authority for his argument[1] and ignores mandatory authority on point. Specifically, the Seventh Circuit has repeatedly held parties are also immune to defamation for statements made during the course of a legal proceeding.[2]Novoselsky v. Brown, 822 F.3d 342, 353 (7th Cir. 2016); see also Zanders v. Jones,680 F.Supp. 1236, 1238 (N.D. ...


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