United States District Court, N.D. Illinois, Eastern Division
CHAMORA IVERY, individually and on behalf of others similarly situated, Plaintiff,
RMH FRANCHISE CORP., RMH ILLINOIS, LLC, and RMH FRANCHISE HOLDINGS, INC., Defendants.
MEMORANDUM OPINION AND ORDER
J. Tharp, Jr. United States District Judge.
an action for unpaid overtime wages. Plaintiff Chamora Ivery
contends that Defendant RMH Franchise Holdings, Inc.
(“RMH Holdings”) and its subsidiaries, RMH
Franchise Corp. (“RMH Franchise”) and RMH
Illinois, LLC (“RMH Illinois”)-owners of
franchised Applebee's Neighborhood Grill & Bar
classified her and other assistant managers
(“AMs”) as exempt from overtime under the Fair
Labor Standards Act (“FLSA”) and Illinois wage
laws. Before the Court are two motions. The first is
Ivery's motion for conditional certification of a FLSA
collective action and for authorization to issue step-one
notice. Ivery contends that she is similarly situated to
other AMs who worked for the defendants and asks the Court to
notify those AMs about their right to opt in as plaintiffs in
this litigation. The second is the defendants' partial
motion to dismiss. The defendants argue that Ivery does not
properly allege that RMH Franchise was her employer and thus
is not a proper defendant, and that Ivery fails to plead a
necessary element of one her Illinois wage claims. For the
reasons stated below, the motion to dismiss is granted and
the motion for conditional certification is granted in part
and denied in part.
following allegations are taken from Ivery's amended
complaint. The defendants operate an Applebee's franchise
with over 175 restaurants throughout the United States. (Am.
Compl. ¶¶ 1-2, ECF No. 65.) RMH Holdings is the
parent company of the franchise, while RMH Franchise and RMH
Illinois are its subsidiaries. (Id. ¶¶ 34,
41, 48.) The defendants operate a single website to advertise
their restaurants. (Id. ¶¶ 3, 26.) They
share office space, a human resource staff, payroll
functions, training materials, and an onboarding system to
manage their employees. (Id. ¶¶ 23, 26.)
The defendants also maintain joint control and oversight over
human resources, compensation, timekeeping, and other
employment policies and practices, and apply the same
employment policies and procedures to AMs at all of their
restaurants. (Id. ¶¶ 37-38, 44-45, 51-52.)
Moreover, the defendants use the same job postings and
descriptions to advertise open AM positions and allow their
employees to transfer seamlessly across locations.
(Id. ¶¶ 24-25.)
worked as an AM at an Applebee's location in Chicago,
Illinois between early 2013 and June 2014. (Id.
¶ 15.) According to the amended complaint, Ivery was
employed by “RMH”-which the complaint defines as
all three defendants-during that period. (Id.
¶¶ 1, 15.) Ivery worked an average of 50 to 60
hours per week as an AM. (Id. ¶ 17.) However,
the defendants did not pay her overtime for any time worked
in excess of 40 hours per week, even though she frequently
performed the functions of an hourly employee. (Id.
¶¶ 16, 18.)
asserts several related causes of action. She claims that the
defendants' policy of classifying AMs as exempt from
overtime violates the FLSA, the Illinois Minimum Wage Law,
820 Ill. Comp. Stat. 105/1 et seq.
(“IMWL”), and the Illinois Wage Payment and
Collection Act, 820 Ill. Comp. Stat. 115/1 et seq.
(“IWPCA”). She seeks to certify a collective
action under the FLSA and a class action under both the IMWL
and IWPCA to recover unpaid overtimes wages.
initial complaint was filed on March 1, 2017. On May 5, 2017,
Ivery filed a notice of consent to be party in a FLSA
collective action. (Notice of Consent, ECF No. 33.) Ten days
later, she moved for conditional certification and for
authorization to issue notice to prospective opt-in members.
(Mot. for Court-Authorized Notice, ECF No. 35.) Ivery's
proposed collective includes anyone who has “been
employed as an [AM], including a Front of House Manager or
Kitchen Manager, at an Applebee's restaurant operated by
RMH between March 1, 2014 and the present.” (Pl.
Court-Authorized Notice, ECF No. 37-4.) While her motion for
certification was pending, Ivery filed, with the approval of
the Court, an amended complaint on July 6, 2017. (Order, ECF
No. 64.) Two weeks later, the defendants filed a partial
motion to dismiss her amended complaint. (Defs. Mot. to
Dismiss, ECF No. 69.) The Court will address the
defendants' motion to dismiss first and then turn to
Ivery's certification motion.
The Defendants' Motion to Dismiss
defendants ask the Court to dismiss RMH Franchise as a
defendant altogether and to dismiss Ivery's IWPCA claim.
They seek dismissal of RMH Franchise on two fronts: under
Rule 12(b)(1) for lack of standing (and thus lack of subject
matter jurisdiction) and under Rule 12(b)(6) for failure to
state a claim. The defendants also move to dismiss
Ivery's IWPCA claim under Rule 12(b)(6) on the basis that
she has failed to assert an essential element of that claim.
survive the defendants' standing challenge, Ivery must
show that she suffered (1) an injury in fact that is (2)
fairly traceable to the challenged conduct of RMH Franchise
and (3) that likely will be redressed by a favorable
decision. Berger v. Nat'l Collegiate Athletic
Ass'n, 843 F.3d 285, 289 (7th Cir. 2016) (citing
Friends of the Earth, Inc. v. Laidlaw Envtl. Servs.
(TOC), Inc., 528 U.S. 167, 180-81 (2000)). Here, the
defendants raise a facial challenge to standing, (Defs. Mem.
in Supp. of Mot. to Dismiss 12, ECF No. 70); thus, the Court
must evaluate whether Ivery's complaint adequately pleads
the elements of standing by applying the “same analysis
used to review whether a complaint adequately states a
claim” under Rule 12(b)(6). Silha v. ACT,
Inc., 807 F.3d 169, 173-74 (7th Cir. 2015) (citations
omitted). Ivery therefore “must plead sufficient
factual allegations, taken as true, that ‘plausibly
suggest' each standing element is met. Berger,
843 F.3d at 289 (quoting Silha, 807 F.3d at 174).
overcome a Rule 12(b)(6) motion, “a complaint must
‘state a claim to relief that is plausible on its
face.'” Adams v. City of Indianapolis, 742
F.3d 720, 728 (7th Cir. 2014) (quoting Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007)). “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.”
W. Bend Mut. Ins. Co. v. Schumacher, 844 F.3d 670,
675 (7th Cir. 2016) (quoting Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009)). This Court “must accept as true
all factual allegations in the . . . complaint and draw all
permissible inferences” in Ivery's favor.
Id. (quoting Bible v. United Student Aid Funds,
Inc., 799 F.3d 633, 639 (7th Cir. 2015) (internal
quotation marks omitted)). However, “[w]hile a
plaintiff need not plead ‘detailed factual
allegations' to survive a motion to dismiss, she still
must provide more than mere ‘labels and conclusions or
a formulaic recitation of the elements of a cause of
action' for her complaint to be considered adequate under
[Rule] 8.” Bell v. City of Chicago, 835 F.3d
736, 738 (7th Cir. 2016) (quoting Iqbal, 556 U.S. at
Dismissal of RMH Franchise: Joint Employer Liability
the defendants move to dismiss RMH Franchise for lack of
standing and failure to state a claim, both challenges center
on a single issue: whether Ivery adequately alleges that RMH
Franchise was her employer under the FLSA. The basis for
dismissal under Rule 12(b)(6) is that liability for unpaid
overtime wages extends only to an “employer.” 29
U.S.C. § 207(a). And because employees have standing to
sue only their current or former employers under the FLSA,
dismissal under Rule 12(b)(1) also hinges on Ivery's
relationship with RMH Franchise. Berger, 843 F.3d at
289 (“Under the FLSA, alleged employees' injuries
are only traceable to, and redressable by, those who employed
them.”) (internal quotation marks
language of the statute should be the starting place for a
determination of Ivery's status vis-à-vis RMH
Franchise, but the text of the FLSA provides no guidance in
this regard, unhelpfully defining employment relationships in
circular fashion. An “employee” means “any
individual employed by an employer.” Id.
§ 203(e). To “employ” means to “suffer
or permit to work.” Id. § 203(g). And
“employer” includes “any person acting
directly or indirectly in the interest of an employer in
relation to an employee.” 29 U.S.C. § 203(d). In
the absence of a meaningful statutory definition, and
consistent with Supreme Court guidance to construe the terms
“employer” and “employee” broadly,
the Seventh Circuit has concluded that courts must examine
the economic reality of the working relationship to assess
whether an entity is an employer. Hollins v. Regency
Corp., 867 F.3d 830, 835 (7th Cir. 2017); see also
Goldberg v. Whitaker House Coop., 366 U.S. 28, 33
(1961). Whether an entity is an employer under the Act is a
question of law. Karr v. Strong Detective Agency
Inc., 787 F.2d 1205, 1206-07 (7th Cir. 1986).
examining the “economic realities” of working
relationships, courts must look to “the totality of the
circumstances” instead of applying “formalistic
labels or common law concepts of agency.”
Villareal, 776 F.Supp.2d at 785 (citing
Goldberg, 366 U.S. at 33; Donovan v. Sabine
Irrigation Co., Inc., 695 F.2d 190, 194 (5th Cir.
1983)). Although there is no set framework for establishing
an employer-employee relationship, many courts look at
whether the defendant (1) had the power to hire and fire the
employee, (2) supervised and controlled the employee's
work schedule or conditions of employment, (3) determined the
rate and method of payment, and (4) maintained employment
records. See, e.g., Zampos v. W & E
Commc'ns, Inc., 970 F.Supp.2d 794, 802 (N.D. Ill.
2013); Babych v. Psychiatric Solutions, Inc., No. 09
C 8000, 2011 WL 5507374, at *6 (N.D. Ill. Nov. 9, 2011);
Nehmelman, 790 F.Supp.2d at 795. The Seventh
Circuit has found these factors to be relevant to the
employer analysis; however, it has cautioned that they are
not “the only relevant factors, or even the
most important.” Moldenhauer v. Tazewell-Pekin
Consol. Commc'ns Ctr., 536 F.3d 640, 643 (7th Cir.
2008) (applying FLSA standard for joint-employer to claim
under the Family and Medical Leave Act).
well accepted that an employee may have more than one
employer at a time. See Falk v. Brennan, 414 U.S.
190, 195 (1973). Indeed, federal regulations contemplate that
entities that share common control over an employee may be
deemed “joint employers” under the FLSA. 29
C.F.R. § 791.2(a). Courts apply the same economic
reality test “to determine whether more than one
employer may be held liable under the FLSA.”
Babych, 2011 WL 5507374, at *7 (citing Reyes v.
Remington Hybrid Seed Co., Inc., 495 F.3d 403, 406-08
(7th Cir. 2007)). And while the joint employer analysis turns
on the specific facts of each case, the Seventh Circuit has
emphasized that “for a joint-employer relationship to
exist, each alleged employer must exercise control over the
working conditions of the employee.”
Moldenhauer, 536 F.3d at 644.
alleges that RMH Franchise, RMH Illinois, and RMH Holdings
shared control over her work and thus all qualify as her
joint employers. (Am. Compl. ¶¶ 1, 15; Pl.
Opp'n 4, ECF No. 73.) The defendants do not contest that
RMH Illinois and RMH Holdings were her employers under the
FLSA; they challenge only Ivery's claim that RMH
Franchise was also her employer. Their principal argument is
that Ivery's allegation that she worked for RMH Franchise
is “conclusory.” (Defs. Mem. 2, ECF No. 70.)
Instead of providing details of her employment relationship
with RMH Franchise, Ivery asserts only
“boilerplate” allegations of joint employment
that fail to “differentiate” between the three
defendants, which are separate corporate entities.
(Id. at 2, 7-10.) As such, the defendants contend
that Ivery pleads “no facts” in her complaint
that plausibly “establish she was ever employed by RMH
Franchise.” (Id. at 7.) Ivery counters that
her joint employment allegations are sufficient to give RMH
Franchise fair notice of her joint employer theory and to
plausibly support that theory. (Pl. Opp'n 3-4.)
Court finds that the defendants have the better of the
argument. For starters, Ivery fails to allege even the most
basic facts concerning her employment as an AM; namely, who
hired her, paid her, or directly supervised her work. By
omitting such information, the amended complaint fails to
identify which of the defendant entities was Ivery's
primary, direct employer. That deficiency alone is enough to
sink her claim. See Cavallaro v. UMass Mem'l
Healthcare, Inc., 678 F.3d 1, 9-10 (1st Cir.
2012) (finding that “some direct employer needs to be
identified before anyone in a group could be liable” on
a joint-employer theory under the FLSA); Nakahata v. New
York-Presbyterian Healthcare Sys., Inc., 723 F.3d 192,
201 (2d Cir. 2013) (noting in dicta that plaintiff's
“actual and direct employer is an essential element of
notice pleading” in FLSA action involving related
defendants); Davis v. Abington Mem'l Hosp., 817
F.Supp.2d 556, 563-64 (E.D. Pa. 2011) (rejecting joint
employment theory where complaint did not plead facts that
identified which defendants primarily employed each
plaintiff, such as “to which [defendants] they reported
each day; from whom they received their paycheck; information
about who, specifically, set their rate of pay and other
conditions of employment; or who directly supervised their
employment.”); see also Heuberger v. Smith,
No. 16 C 386-JD-JEM, 2017 WL 3923271, at *11-15 (N.D. Ind.
Sept. 7, 2017) (discussing how “the four
Bonnette factors, as used to determine whether
multiple entities are a ‘joint employer' for FLSA
liability purposes, establish the proper analysis to
determine whether a plaintiff has standing to sue entities
apart from his immediate employer” in dismissing FLSA
claim for lack of standing).
does not suggest that this sort of basic information is
beyond her ken. Nor does she contend that identifying a
primary employer would waive a claim against the other two
defendants. The omission of this information from her
complaint therefore suggests that her joint employer
allegations should be viewed as an exercise in artful
pleading rather than as a good faith effort to provide fair
notice of a claim against RMH Franchise. A number of other
courts have seen through this approach and made clear that
there is no room for “game-playing omissions of plainly
relevant detail” concerning a plaintiff's direct
employer. Cavallaro, 678 F.3d at 10 & n.10
even setting that issue aside, the amended complaint fails to
plausibly show that RMH Franchise was her joint employer. As
the defendants maintain, many of Ivery's allegations
simply parrot factors relevant to the issue of joint
employment, including conclusory statements like:
“Defendants share control over the terms and conditions
of AMs' employment, ” (Am. Compl. ¶ 27);
“Each Defendant, directly or indirectly and jointly or
severally, directed the terms of employment and compensation
of Plaintiff, ” (id. ¶ 29); and
“Each Defendant had the power to control the terms and
conditions of employment of Plaintiff, ” (id.
¶ 31). These sorts of conclusory allegations are
not entitled to a presumption of truth. Iqb ...