United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
Robert Blakey United States District Judge.
putative collective action arises from alleged violations of
the Fair Labor Standards Act (FLSA), 29 U.S.C. § 201
et seq. . Plaintiffs claim that PrimeSource
Health Group, PrimeSource Health Care Systems, and
PrimeSource of Michigan failed to fully pay Plaintiffs for
hours worked, including overtime, and allege various theories
of liability against the remaining defendants. Id.
Multiple defendants jointly moved to dismiss the claims
against them, , and to dismiss certain plaintiffs from
the suit, . For the reasons explained below, this Court
partially grants and partially denies the motion to dismiss
Plaintiffs' claims, and denies in full the motion to
dismiss certain plaintiffs from this action.
The Complaint's Allegations
all worked for Defendants PrimeSource Health Group,
PrimeSource Health Care Systems, and PrimeSource of Michigan
(together, PrimeSource) as Clinical Assistants, Clinical
Assistant Supervisors, or Patient Assistants at some time
during the three years preceding this case. See 
¶¶ 77, 234.
consists of a network of linked companies offering mobile
medical services to long-term care facilities. See
id. ¶¶ 24-30, 72-75. PrimeSource Group is the
parent corporation of PrimeSource Health Care Systems, which
is the parent company of PrimeSource Michigan (as well as
other subsidiaries not named as defendants here). See
id. ¶¶ 27-29. PrimeSource forms a single
enterprise engaged in commerce and is thus subject to various
requirements under the FLSA. See id. ¶ 30; 29
U.S.C. §§ 203(s)(1), 207(a)(1).
allege that in the three years before they sued in February
2017, PrimeSource failed to pay them for all the hours they
worked, and/or failed to pay them overtime wages when they
worked over 40 hours in a week.  ¶ 234; . As
Clinical and Patient Assistants, Plaintiffs supported
physicians that PrimeSource contracted to provide on-site
medical care at nursing facilities throughout Illinois,
Indiana, Michigan, and Kentucky.  ¶¶ 75, 77-78.
They traveled to different sites during the work week, often
to more than one facility in a day. Id. ¶ 78.
Plaintiffs' responsibilities included: inspecting,
maintaining, and repairing medical equipment, often while at
home; travelling to care facilities to assist physicians and
patients, on journeys that often lasted two to three hours
each way; and shipping or transporting medical equipment and
supplies to care facilities, often on what was ostensibly
their own time. Id. ¶¶ 78-80, 83.
claim that PrimeSource misclassified them as exempt from the
FLSA's minimum wage and overtime requirements and
therefore failed to pay Plaintiffs overtime when they worked
more than 40 hours a week; failed to compensate Plaintiffs
for travel time, despite the fact that they performed
principal job duties while travelling; and failed to
compensate Plaintiffs for the equipment maintenance and
shipping work they performed from home, despite the fact that
this, too, was a “principal job duty” and
PrimeSource knew that Plaintiffs did this work. Id.
¶ 83. These alleged FLSA violations form the basis of
Plaintiffs' suit. See id. ¶¶ 236-44.
addition to suing corporate PrimeSource entities, Plaintiffs
also sue individual PrimeSource officers, including Bobbie
Richey and Traci Bernthal. See id. at 2. At all relevant
times, Richey served as PrimeSource's Senior Vice
President of Clinical Services and/or Senior Vice President
of Human Resources. Id. ¶ 50. In this role,
Plaintiffs allege that she “supervised and/or
controlled” their employment, acting in
PrimeSource's interest. Id. ¶ 51. Richey
contributed to PrimeSource's “budgetary process,
” which determined Plaintiffs' salaries, and she
allegedly controlled PrimeSource's “day to day
operations, ” including paying employees. Id.
¶ 52, n.15. Human Resources officials also played a role
in determining which employees were exempt from FLSA
requirements. See [59-33] at 22-25; [52-2] at
David Fleming, PrimeSource's owner, president, and CEO,
specifically named Richey and Bernthal as two persons
involved in PrimeSource's budget who would have
“decided the salaries” for PrimeSource employees.
 ¶ 48; [52-2] at 8.
served as PrimeSource's Senior Vice President of Finance
and also participated in the budget process, thus
determining, at least in part, Plaintiffs' salaries.
Id. ¶¶ 54, 56, n.16. Plaintiffs similarly
allege that Bernthal “supervised and/or
controlled” Plaintiffs' employment; controlled
day-to-day operations (including methods of payment); and
acted in PrimeSource's interest with respect to its
employees. Id. ¶¶ 55-56. Bernthal's
Linked In profile describes her responsibilities in this
position, stating that she directed “all financial
activities, ” secured “cost-effective financing
for daily operations, ” managed a “135-vehicle
fleet, payroll, accounts payable and purchasing functions,
” and advised the company owner and president as part
of the “executive management team.” [59-14] at
Richey and Bernthal worked for PrimeSource until it ceased
operating in or around December 2016.  ¶¶ 58,
76. Plaintiffs' claims against them are limited to the
period before December 2016. Id. n.17.
allege that PrimeSource willfully violated the FLSA because
it underwent Department of Labor (DOL) investigations in both
2003 and 2016 for FLSA violations. Id. ¶¶
126, 128; [59-31]. The 2003 investigation did not address the
exemption status of Clinical or Patient Assistants. 
¶ 127. Despite those investigations, and a lawsuit filed
in May 2016 (discussed below), Plaintiffs allege that
PrimeSource and its successors continued their unlawful pay
practices through the end of 2016. Id. ¶¶
84, 133. PrimeSource's attorneys during the relevant
period have testified that they neither performed nor were
asked to perform any research on the FLSA, and gave no advice
regarding FLSA compliance. Id. ¶¶ 132.
PrimeSource ceased operating in or around December 2016,
id. ¶ 76, the remainder of Plaintiffs'
allegations seek to impose liability on PrimeSource's
alleged successors or joint employers.
The Asset Sale
2016, a group of former Clinical and Patient Assistants
employed by PrimeSource's Ohio subsidiary sued
PrimeSource for the same FLSA violations stated here: namely,
that PrimeSource misclassified them; failed to pay them for
all hours worked; and failed to pay them overtime. See
Id. ¶ 84; see also Wilson v. PrimeSource Health
Care of Ohio, Inc., No. 16-cv-1298, 2017 WL 2869341
(N.D. Ohio July 5, 2017).
allege that in July 2016, Defendant Advantage Capital
Holdings (Advantage) organized and incorporated Defendant
PrimeHealth Group LLC (PrimeHealth) “for the purposes
of taking over and substantially continuing”
PrimeSource's operations, which would officially wind
down that fall. See  ¶¶ 76, 85, 87.
Advantage is the parent company or owner of PrimeHealth,
whose subsidiary entities include PrimeHealth of Illinois,
PrimeHealth of Indiana, PrimeHealth of Ohio, PrimeHealth of
Michigan, and PrimeHealth of Kentucky. Id.
¶¶ 35, 36. Plaintiffs claim that Advantage
employees-including Defendants Elliot and King-make all of
PrimeHealth's management decisions, including hiring and
firing, managing daily operations, and setting policies and
procedures. Id. ¶ 38. In support, Plaintiffs
allege that none of the PrimeHealth companies has its own CEO
or president, and they all share common policies and
guidelines created and promulgated by Advantage. Id.
¶¶ 42-43. Additionally, Elliott is a risk control
officer for Advantage but also “holds herself out as
the Vice President of PrimeHealth, ” though PrimeHealth
does not pay her. Id. ¶¶ 60-61. King
serves as president and CEO of both Advantage and
PrimeHealth. Id. ¶ 62. Advantage employees also
negotiated the transfer of leases and contracts from
PrimeSource to PrimeHealth in the lead-up to
PrimeHealth's purchase of assets from PrimeSource in
September 2016. See id. ¶¶ 88-93; [59-18].
purchase encompassed many of PrimeSource's assets, set
out in an Asset Purchase Agreement (APA). See 
¶¶ 86-87; [59-17]. Specifically, PrimeHealth,
PrimeSource (including all its affiliates except
PrimeSource Healthcare of Ohio), and Fleming (the president,
owner, and CEO of PrimeSource) entered the APA in September,
with a closing date in October 2016. See 
¶¶ 48, 87; [59-17]. The APA provided for
PrimeHealth's acquisition of PrimeSource's leased
real and personal property, including its corporate
headquarters in Buffalo Grove, Illinois, and its intellectual
property, including its trademarks, brand names, logos,
internet domain names, web addresses, and social media
accounts.  ¶¶ 24, 94-98; [59-17]. The APA also
provided that the parties would devise a Management Oversight
Agreement (MOA) to govern the transition period from the
APA's closing date in October 2016 to December 2016, when
PrimeSource shuttered its operations.  ¶¶ 109,
123. Plaintiffs allege that under the MOA, PrimeHealth,
Advantage, and PrimeSource jointly employed Plaintiffs.
See id. ¶¶ 123-25.
allege that when PrimeHealth executed the APA, they and/or
Advantage knew of the Ohio FLSA suit, as well as
PrimeSource's “identical illegal pay practices as
to all Clinical Assistants and Patient Assistants.”
See id. ¶ 102. In support, they point out that
the APA references the Ohio litigation-even though the
purchase did not include PrimeSource's Ohio
subsidiary-and notes that the litigation “may
affect” other entities. Id. ¶ 103;
[59-17] at 5.
the October to December 2016 transition period, PrimeHealth
notified most of the care facilities previously serviced by
PrimeSource of the asset purchase, and stated that
PrimeHealth would “continue to provide” the
facilities with the same services, using “physicians
and clinicians” that the facilities were
“familiar with.” Id. ¶ 100. These
transition letters also noted that the facilities'
“contacts” and “Customer Care line”
had not changed. Id. Additionally, PrimeHealth's
website (www.seniorwell.com) retained the same format,
language, and stock art as PrimeSource's website through
approximately February 2017, and displayed a photograph of
PrimeHealth's offices-in PrimeSource's former
premises, with PrimeSource's name still on the building.
 ¶ 101.
October 2016, PrimeSource sent a Worker Adjustment and
Retraining (WARN) notice to the employees at its Indiana,
Ohio, and Michigan subsidiaries, informing them that they
would be laid off on or by December 31, 2016, when
PrimeSource closed. Id. ¶ 104. Soon after,
PrimeHealth sent unsolicited offer letters to “a
majority of PrimeSource's employees, ” and
ultimately rehired “a substantial number” of
PrimeSource employees. Id. ¶¶ 105, 108,
110-12. Elliot signed PrimeHealth's offer letters.
Id. ¶ 106.
end of 2016, PrimeSource ceased its operations. Id.
¶ 76. PrimeHealth continued to operate, employing many
of PrimeSource's former employees. Id.
¶¶ 108, 110-12. Starting January 2, 2017,
PrimeHealth stopped paying its Clinical and Patient
Assistants a salary, and began paying them hourly.
Id. ¶ 119. In February 2017, Plaintiffs filed
this suit, containing a single claim for FLSA violations.
. They amended their complaint in March and July. [9, 59].
But the action in this case did not stop there, as discussed
The DOL Settlement
point in 2016, DOL began investigating PrimeSource's wage
and hour practices, resulting in a settlement in May 2017.
Id. ¶¶ 113, 114. DOL has authority to
supervise settlements for unpaid wages or overtime, and
oversee the ensuing payments to employees from whom employers
improperly withheld wages. See 29 U.S.C. §
216(c). Under the FLSA, “the agreement of any employee
to accept such payment shall upon payment in full constitute
a waiver by such employee” to sue in his or her own
the DOL settlement, PrimeSource began “issuing checks
to Plaintiffs and those similarly-situated” along with
a letter describing the check as containing “back pay,
” and the DOL's WH-58 form, which primarily
functions as a receipt for FLSA settlement checks. 
¶ 115; [46-3] at 2. PrimeSource's letter instructed
recipients to sign the enclosed form and return it to the
Buffalo Grove office.  ¶ 117. The letter did not
mention the pending collective action before this Court, or
the fact that signing the enclosed form would waive the
employee's individual right to sue. See id.;
see also [46-3] at 1. The WH-58 form, however, contains
a “notice to employee, ” stating:
Your acceptance of this payment of wages and/or other
compensation due under the Fair Labor Standards Act (FLSA) or
Family Medical Leave Act (FMLA), based on the findings of
[DOL's Wage and Hour Division] means that you have given
up the right you have to bring suit on your own behalf for
the payment of such unpaid minimum wages or unpaid overtime
compensation for the period of time indicated above [and
[46-3] at 2. The “period of time” indicated on
the WH-58 forms sent to PrimeSource employees covers November
15, 2014 to November 12, 2016. Id.
opinion addresses two motions: (1) a motion to dismiss
pursuant to Federal Rule of Civil Procedure 12(b)(6), brought
by Defendants PrimeHealth, Advantage, Richey, Bernthal,
Elliott, and King, ; and (2) a motion to dismiss certain
Plaintiffs under Rule 12(b)(1), brought by the same
Defendants together with PrimeSource, .
survive a motion to dismiss under Rule 12(b)(6), a complaint
must provide a “short and plain statement of the
claim” showing that the pleader merits relief,
Fed.R.Civ.P. 8(a)(2), so the defendant has “fair
notice” of the claim “and the grounds upon which
it rests.” Bell Atl. Corp. v. Twombly, 550
U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355
U.S. 41, 47 (1957)). A complaint must also contain
“sufficient factual matter” to state a facially
plausible claim to relief. Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at
facially plausible claim “allows the court to draw the
reasonable inference that the defendant is liable for the
misconduct alleged.” Iqbal, 556 U.S. at 678
(citing Twombly, 550 U.S. at 556). This plausibility
standard “asks for more than a sheer possibility that a
defendant has acted unlawfully.” Williamson,
714 F.3d at 436. Thus, “threadbare recitals of the
elements of a cause of action, supported by mere ...