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Hoke v. Abrams

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

February 8, 2018

Rita Hoke, Plaintiff,
v.
Daniel J. Abrams; Ashwini Sharan, Defendants and Third Party Plaintiffs,
v.
Cameron C. Horan, Third Party Defendant.

          MEMORANDUM OPINION AND ORDER

          Honorable Thomas M. Durkin United States District Judge.

         Rita Hoke alleges that Daniel Abrams and Ashwini Sharan failed to pay her certain wages in violation of the Illinois Wage Payment and Collection Act (“IWPCA”) for her work at their company, Integrated Care Pharmacy LLC (“ICP”). R. 1. Abrams and Sharan filed a third party complaint against Cameron Horan, former CEO of ICP, for contribution to any liability they have under the IWPCA. R. 12. They also raised affirmative defenses to Hoke's claims, based on “breach of contract, breach of duty of loyalty, and breach of fiduciary duty” (second affirmative defense); and “fraud, estoppel, waiver, [and] unclean hands” (third affirmative defense). Id. at 8. Abrams and Sharan have moved for summary judgment, R. 67; as has Horan, R. 72. Hoke has also moved for summary judgment on Abrams and Sharan's second and third affirmative defenses. R. 69. For the following reasons, Abrams and Sharan's motion is denied, and Horan's and Hoke's motions are granted.

         Legal Standard

         Summary judgment is appropriate “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). The Court considers the entire evidentiary record and must view all of the evidence and draw all reasonable inferences from that evidence in the light most favorable to the nonmovant. Ball v. Kotter, 723 F.3d 813, 821 (7th Cir. 2013). To defeat summary judgment, a nonmovant must produce more than “a mere scintilla of evidence” and come forward with “specific facts showing that there is a genuine issue for trial.” Harris N.A. v. Hershey, 711 F.3d 794, 798 (7th Cir. 2013). Ultimately, summary judgment is warranted only if a reasonable jury could not return a verdict for the nonmovant. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

         Background

         Hoke, Abrams, Sharan, and Horan (among other individuals) started ICP to produce pharmaceutical products. See R. 19-3. Hoke and Horan have submitted declarations stating that they agreed that ICP would pay Hoke a base salary of $206, 000 and an earned bonus of $56, 000. See R. 82-2 ¶ 4; R. 82-3 ¶ 5. Hoke was issued a W-2 form by ICP. R. 93 at 9 (¶ 2).

         In January 2013, mold was discovered in the ceiling of the facility ICP had rented to use for production. Hoke did not disclose the mold discovery during an inspection by the Board of Pharmacy later that month. Hoke “hired professional service providers who removed and replaced ceiling insulation, removed and replaced the ceiling tiles, and professionally cleaned the ducts.” R. 93 at 13 (¶ 22).

         ICP began to suffer financial difficulties. As of July 23, 2013, ICP could not make payroll. R. 82 at 7 (¶ 24); R. 86 at 4 (¶ 7). Both Hoke and Horan stated in their declarations that in light of the fact that ICP had no money to pay them, they agreed to defer their compensation but continue to work for ICP. R. 82-2 ¶ 9; R. 82-3 ¶ 7. Eventually, however, Horan left ICP on August 23, 2013, and Hoke left on September 10, 2013. R. 82-2 ¶ 9; R. 82-3 ¶ 8.

         By October 1, 2013, ICP was able to pay bills totaling over $10, 000. R. 93 at 11 (¶ 12). ICP was also able to pay employees, id. at 12 (¶ 13); to hire new employees, id. at 12 (¶ 16); and to continue operations for over a year after Hoke quit, id. at 12 (¶ 14). Mold was discovered again in ICP's facility sometime in September or October 2014, more than a year after Hoke had resigned. R. 93 at 15 (¶ 32).

         Hoke seeks payment of her deferred compensation and bonus from Abrams and Sharan as her “employers” under the IWPCA. Abrams and Sharan have moved for summary judgment arguing (1) Hoke did not have an enforceable compensation agreement with ICP; (2) to the extent a compensation agreement existed, they did not have sufficient knowledge of it to confer liability under the IWPCA; (3) ICP could not pay Hoke because it did not have the money; (4) deferred compensation is not recoverable under the IWPCA; and (5) any compensation Hoke was owed was rightfully withheld because Hoke breached her duties to ICP by not properly handling the mold situation. Abrams and Sharan also seek contribution from Horan for any liability they have for failure to pay Hoke.

         Analysis

         I. Hoke's Claims Against Abrams and Sharan

         A. Agreement

         The IWPCA permits employees to sue for compensation they are owed by an employer “pursuant to an employment contract or agreement.” 820 ILCS 115/2. A “contract is not necessary under the [IWPCA].” Landers-Scelfo v. Corp. Office Sys., Inc., 827 N.E.2d 1051, 1068 (Ill.App.Ct. 2d Dist. 2005). Rather, “a worker seeking to recover under [the IWPCA] does not need to plead all contract elements if she can plead facts showing mutual assent to terms that support the recovery.” Id.; see also Hess v. Kanoski & Assocs., 668 F.3d 446, 452 (7th Cir. 2012) (“Illinois courts have explained that an agreement under the IWPCA is broader than a contract.”). “Mutual assent” can be manifested “by conduct alone”-i.e., an employer “could have manifested its assent to [an agreement with a plaintiff] ...


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