United States District Court, N.D. Illinois, Eastern Division
JIMMY R. NICKS and JAMES EARL PATRICK, individually and on behalf of all persons similarly situated, Plaintiffs,
KOCH MEAT CO., INC., d/b/a KOCH FOODS, KOCH FOODS OF MISSISSIPPI, LLC, and JET POULTRY SERVICES, INC., Defendants.
MEMORANDUM OPINION AND ORDER
ST. EVE, DISTRICT COURT JUDGE.
December 22, 2016, Plaintiffs Jimmy R. Nicks
(“Nicks”) and James Earl Patrick
(“Patrick”), individually and on behalf of all
persons similarly situated, filed an Amended Collective Class
Action Complaint against Defendants Koch Foods, Inc.
(“Koch Foods”), Koch Meat Co., Inc. d/b/a Koch
Poultry Co. (“Koch Meat”), Koch Foods of
Mississippi (“Koch Foods MS”), JET Poultry
Services, Inc. (“JET”), and several other Koch
subsidiaries operating in Georgia, Alabama, and Tennessee
(“AL-TN-GA Koch Defendants”), collectively
“Defendants,” seeking relief under the Fair Labor
Standards Act of 1938, 29 U.S.C. § 201, et seq.
(“FLSA”). (R. 99.) The Court denied
Defendants’ motion to dismiss on May 15, 2017, and
Plaintiffs have now moved for conditional certification and
authorization to facilitate notice pursuant to 29 U.S.C.
§ 216(b). (R. 136.)
following reasons, the Court grants Plaintiffs’ motion.
initially filed a collective action against Defendants on
June 21, 2016 on behalf of all individuals employed by
Defendants as members of live-haul, chicken catching crews in
the United States. (R. 1, Compl. ¶ 14.) JET filed a
motion to dismiss on August 3, 2016, and Koch Foods MS filed
a motion to dismiss on August 4, 2016. Both motions claimed
the Court should dismiss this case for lack of personal
jurisdiction and alternatively, for improper venue. On
October 27, 2016, the Court denied Koch Foods MS’s
motion to dismiss without prejudice and granted Plaintiffs
permission to conduct limited jurisdictional discovery
related to the Koch Defendants’ corporate structure,
operations, and internal governance structure. (R. 82, Mem.
Op. and Order 4.) The Court reserved opinion on the Koch
Defendants’ venue challenge under 28 U.S.C. 1391(b)(1)
and granted limited venue discovery relating to (b)(2).
(Id. 7.) In compliance with the Court’s order,
Plaintiffs ordered discovery on the Koch Defendants and
conducted relevant depositions.
December 19, 2016, Plaintiffs and JET entered into a
settlement agreement. (R. 101, Ex. 1, Settlement Agreement
with JET.) As part of the settlement, JET agreed that the
Court would retain jurisdiction with respect to the
enforcement of the settlement terms and that JET would
“submit to the jurisdiction of the Court for purposes
of interpreting, implementing, and enforcing the
settlement.” (Id. ¶ 14.) On January 11,
2017, the Court approved the settlement and dismissed the
claims against JET with prejudice. (R. 105.)
on the limited jurisdictional and venue discovery, Plaintiffs
filed the First Amended Complaint, in which Plaintiffs added
certain Koch Defendants and modified their allegations. (R.
9, Am. Compl.) The Koch Defendants subsequently filed a
motion to dismiss, or alternatively transfer, and as noted
above, the Court denied that motion. (R. 31, May 15, 2017
considering this motion, the Court presumes familiarity with
the background of this action as set forth in the May 15,
2017 Order and does not recite a detailed background here.
The Court will, however, provide a factual background as it
pertains to Plaintiffs’ allegations that they and the
other potential claimants are similarly situated.
were “previously employed to catch and cage
Koch’s chickens as member[s] of a live-haul chicken
catching crew[.]” (Am. Compl. ¶¶ 10-11.)
According to Plaintiffs, Koch Foods has a policy and practice of
failing to pay overtime premiums and minimum wage to the
individuals, like Plaintiffs, who catch chickens at
Koch’s subsidiary farms in Mississippi, Alabama,
Georgia, and Tennessee. (Id. ¶ 2.)
Koch Corporate Structure
allege that although the Koch Defendants have organized
themselves as several separately registered companies, these
companies are unified in interest and ownership.
(Id. ¶ 14.) Koch Foods is the parent company of
the Koch LLC subsidiaries, including Koch Meat and the eight
separate divisions, each of which is referred to as a
“Complex,” that handle live growing and
processing of chickens for Koch in Mississippi, Alabama,
Georgia, and Tennessee. (Id. ¶¶ 15, 27.)
Koch Meat, the original Koch entity that preceded the
creation of Koch Foods, directly pays the officers,
directors, and other employees of Koch Foods, as well as the
managers of the eight Complexes. (Id. ¶ 28.)
eight Koch Complexes are each registered as limited liability
companies (“LLCs”) in the state in which they are
located, with facilities in-state, but with a corporate
headquarters in Illinois. (Id. ¶¶
29-50.) The Complexes are organized into an
Eastern and Western Region, and each Region has a Vice
President (“VP”) who reports directly to the
President and the Chief Operating Officer of Koch Foods, both
of whom are located at Koch’s Corporate Headquarters in
Illinois. (Id.) Plaintiffs allege that the finances
of each Complex are “consolidated with the ultimate
goal of increasing the profitability of the entity at a
whole.” (Id. ¶ 16.) Plaintiffs allege
that at each Complex there is a “Foods” entity
that processes the chickens and a “Farms” entity
that grows the chickens, although the entities have the same
management and reporting structure. (Id. ¶ 18.)
The Foods entities pay all employees at a given Complex,
regardless of whether the employee works in the grow-out
operation or the chicken processing operation. (Id.)
Complex has a Complex Manager, who oversees the live
production and processing operations at that Complex.
(Id. ¶ 73.) The Complex Managers report to the
corresponding Eastern or Western Region VPs, who are
responsible for managing the Complexes’ operations,
including reducing the Complexes’ labor costs when
possible. (Id. ¶¶ 73-74.) The Region VPs
are Koch Foods employees who oversee multiple Koch
subsidiaries. (Id. ¶ 74.) Plaintiffs allege
that the Complex employees must abide by the directives of
the Region VPs. (Id. ¶ 75.) Koch Foods, for
example, holds weekly conference calls, led by Koch Foods
Cost Controller, Wayne Brantley, in which each Complex
provides operational reports to the COO and the Region Vps.
(Id.) Each Complex also has a Controller, who is
responsible for maintaining the books and records for the
Complex and reporting the financial results to Koch Foods CFO
Lance Buckert (“Buckert”) at the end of every
month. (Id. ¶ 76.) The Koch Defendants also
share key managerial employees, such as Cost Controller,
Director of Purchasing, and Senior Director Quality
Assurance. (Id. ¶ 77.)
Koch Chicken Catching Operations
Foods produces poultry products for human consumption
worldwide and thus requires large quantities of chickens for
its processing operations. (Id. ¶ 63.) Koch
Foods hatches chicken in Koch-owned hatcheries and ships them
to poultry growers. (Id. ¶ 65.) Koch chickens
are all raised “cage free,” and Koch Foods only
retrieves the chickens for processing once they reach a
marketable age and size. (Id. ¶ 69.) Plaintiffs
allege that Koch Foods, through each of the Koch Complexes,
employs crews of chicken-catchers like Plaintiffs who operate
in substantially the same manner, regardless of the Complex
at which they work. (Id. ¶¶ 87, 90.)
According to Plaintiffs, the live-haul catching crews are
critical to the Koch Defendants’ chicken processing
business and allow it to produce large-scale poultry products
for interstate distribution. (Id. ¶ 88.) Each
live-haul crew consists of eight to twelve chicken-catchers,
one or two forklift operators, and a crew leader.
(Id. ¶ 89.)
allege that prior to 2012, the Koch Defendants used a
combination of direct employee chicken catching crews and
crews provided by third party staffing companies, but the
services provided by both types of crews was identical.
(Id. ¶¶ 92-93.) In the 2012 to 2013 time
period, the Koch Defendants began exclusively using third
party contractors to staff its live-haul crews because they
were having difficulty maintaining a labor force to serve on
the chicken catching crews. (Id. ¶¶ 55,
94.) Koch Foods COO Mark Kaminsky and the Region VPs approved
this decision. (Id. ¶ 95.) Koch Foods has
engaged 11 contractors, but there is significant overlap in
the ownership of many of those contractors, and all the
contractors provide substantially similar services regardless
of the Complex with whom they are contracting. (R. 138, Ex.
A, Keyes Dep. 163: 24 – 164: 10.) Plaintiffs claim that
Koch Foods, through the subsidiary Complexes, pays the third
party contractors, including JET, based on the number of
chickens caught, and the third party contractors in turn pay
the members of the chicken catching crews. (Am. Compl.
¶¶ 56, 100-02; R. 138, Exs. L-V, Contractor
Agreements.) Plaintiffs further allege that Koch Foods does
not pay the third party contractors enough for them to pay
their employees minimum wage and overtime pay and still
operate profitably. (Id. ¶ 103.)
allege that although the Koch Defendants use third party
staffing contractors for their live-haul crews, the
contractors and Koch are joint employers of Plaintiffs and
other members of the crews. (Id. ¶ 104.)
Plaintiffs claim that the Koch Defendants maintain
operational control over the day-to-day functions of
Plaintiffs and every aspect of the chicken catching
operation. (Id. ¶¶ 105, 108.) Plaintiffs
travel to Koch Foods’ farms to capture the chickens and
they place them in Koch cages for transport to Koch
Foods’ processing plants at each of the Koch Complexes.
(Id. ¶ 106.) Plaintiffs allege that JET and the
other third party staffing companies merely provide the
“human labor,” but the equipment and materials
they use, as well as the chickens they catch, belong to Koch.
(Id. ¶¶ 109-10.) The staffing companies
transport the crew members from their homes to the Koch
farms, and after the shift is complete, the companies drop
off the crew members at their homes. (Id. ¶
113.) The pick-up and drop-off process can take up to two
hours each way, and the Koch Defendants set the work
locations and shift durations. (Id.) Plaintiffs
allege that each contractor has a similar agreement with Koch
to catch and load chickens pursuant to scheduled Koch
provides. (Id. ¶ 109; Keyes Dep. 165: 1-7;
to Plaintiffs, the Koch Defendants also largely control the
rate and method of payment to Plaintiffs at each of the
Complexes by paying the staffing companies on a piece rate
basis with such thin margins that it is impossible for the
companies to pay overtime and minimum wage. (Id.
¶ 114.) The Koch Defendants maintain the chicken
catching records upon which they base their payments to the
staffing companies, and the Koch Defendants determine the
work schedules and conditions of Plaintiffs’
employment. (Id. ¶¶ 115-16; Keyes Dep.
120: 12-21, 108: 4-15; R. 138 Berman Dep. 6: 10 – 7:
4.) The Live Haul Operations Manager at each Complex
supervises the work of the live-haul crews and dictates their
daily schedules and working conditions as well as the number
of chickens they need to catch. (Am. Compl. ¶ 117; Keyes
Dep. 106: 22 – 107: 10.) Koch employees also set the
growing and catching requirements as directed by Koch Foods
in Illinois. (Am. Compl. ¶ 118.) Specifically, Koch
Foods dictates the times at which chickens are put in cages
and how many chickens are put in cages based on specific
factors related to Koch Foods’ processing plants that
Koch Foods’ employees monitor. (Id.
¶¶ 119-20; Keys Dep. 108: 4-15.) The Koch Complexes
also employ an internal auditor and an independent auditor
who visit the work sites to ensure that the live-haul crews
are adhering to Koch’s directives and if there are any
aberrations, the Quality Control department at Koch Foods or
the Koch Complex notifies the staffing companies that the
crews must follow Koch’s directives. (Am. Compl.
¶¶ 122-23.) The Koch Complexes also employ Live
Haul Supervisors on-site who oversee the catching practices
and ensure that the live-haul crews are following
Koch’s directives. (Id. ¶ 124.) Both the
Koch Defendants and the third party staffing companies retain
the right to hire and terminate live-haul crew members.
(Id. ¶ 125.)
allege that regardless of the Complex or state, the live-haul
crews’ work is uniform. (Id. ¶ 126.)
According to one Koch Live Production Manager, “there
is only one way to catch a chicken.” (Keyes Dep. 156:
11.) On a typical work day, vans pick up the crews at their
respective homes on a route that Koch Foods and the Koch
Complexes determine based on the availability of Koch’s
processing plans. (Am. Compl. ¶ 113, 126.) The vans take
the crew members several miles away from their homes to farms
where they spend the day catching chickens. (Id.)
Their work requires no specialized training, is unskilled,
repetitive work, and does not involve raising poultry.
(Id. ¶¶ 127-28.) Live-haul crews typically
work ten to twelve hours per day, five to six days per week,
catching tens of thousands of chickens each day.
(Id. ¶¶ 129-30.) Once they place the
chickens in the cages, the crew forklift operator moves the
cages onto trucks owned by the Koch Defendants for transport
to the processing plant at a Koch Complex. (Id.
¶ 131; R. 138, Ex. C, Mitchell Decl. ¶ 5; Ex. D.
Burkes Decl. ¶ 7.) The Koch Defendants own the forklifts
and cages used by the crews and they also own the chickens,
the chicken feed, and the trucks used to distribute the
chicken feed. (Am. Compl. ¶¶ 132-33; Mitchell Decl.
¶ 5; Burkes Decl. ¶ 7.)
allege that all crew members are non-exempt employees paid on
a piece-rate basis per 1,000 chickens caught. (Id.
¶ 134.) According to Plaintiffs, Defendants require crew
members to work hours in excess of 40 hours per week, but do
not pay them overtime or compensate them for travel time or
time spent waiting for the Koch Defendants’ machines to
become available. (Id. ¶¶ 136-37; Mitchell
Decl. ¶¶ 7-8; Burkes Decl. ¶¶ 7-8.)
Plaintiffs contend that Defendants do not properly record the
number of hours worked by crew members, and accordingly, do
not pay crew members minimum wage or pay them overtime
premium for hours worked over 40 hours per work. (Am. Compl.
¶¶ 138-40; Mitchell Decl. ¶¶ 7-8; Burkes
Decl. ¶¶ 7-8.) The Koch Defendants have not advised
the third party staffing companies that they are obligated to
pay overtime and minimum wage, and in fact, the Koch
Defendants’ negotiated prices do not account for
minimum wage or overtime costs. (Am. Compl. ¶¶
145-46.) As a result, Plaintiffs allege that Defendants have
violated the FLSA provisions relating to minimum wage and
overtime pay. (Id. ¶¶ 167, 182.)
FLSA Collective Actions-29 ...