United States District Court, S.D. Illinois
MICHAEL DALEY, individually and on behalf of all others similarly situated, Plaintiff,
JONES MOTOR CO., INC., and ZURICH AMERICAN INSURANCE COMPANY, Defendants.
MEMORANDUM AND ORDER
J. Rosenstengel, United States District Judge
before the Court is Defendant Jones Motor Co. Inc.'s
Motion to Dismiss, filed on April 25, 2017 (Doc. 24).
Plaintiff Michael Daley filed a response in opposition to the
Motion on May 30, 2017 (Doc. 34), and Jones Motor filed a
reply on June 13, 2017. (Doc. 35). For the reasons set forth
below, the Motion to Dismiss is granted.
Michael Daley brought a six-count complaint against
Defendants Jones Motor Co. Inc. (“Jones Motor”)
and Zurich American Insurance Co. (“Zurich”) on
behalf of himself and putative class members, all of whom are
truck drivers for Jones Motor (Doc. 1). The complaint is
based primarily on the allegations that Plaintiff and the
other drivers were employees of Jones Motor, and therefore,
Jones Motor was required by the Illinois Workers'
Compensation Act to purchase workers' compensation
coverage for the drivers. But Jones Motor purportedly schemed
with Zurich to misclassify its drivers as independent
contractors in order to evade its obligations under the
Illinois Workers' Compensation Act and avoid paying
workers' compensation premiums.
how Plaintiff alleges that it all worked. Jones Motor made
Plaintiff and its other drivers sign Contractor Operating
Agreements. The Agreements indicated that the drivers were
independent contractors and that no workers' compensation
benefits would be provided by Jones Motor to the drivers in
the event they were injured on the job. Instead, the
Agreements required the drivers to purchase an
“occupational accident policy” from Zurich and to
allow Jones Motor to make a deduction from their wages of to
cover the cost of the policy. The deduction was approximately
$38 per week.
Motor and Zurich then conspired with each other to discourage
the drivers from filing workers' compensation claims so
that the Illinois Workers' Compensation Commission would
never have the opportunity to analyze and determine whether
the drivers were actually employees of Jones Motor and
entitled to workers' compensation coverage. For example,
the occupational accident policies issued by Zurich included
a term immediately terminating benefit payments under the
policy if the driver filed a workers' compensation claim.
event that a driver nevertheless filed a workers'
compensation claim, Jones Motor was covered by a
“contingent liability policy” through Zurich for
which it paid an annual premium of approximately $1, 500.
This policy required Zurich to pay for Jones Motor's
liability under state workers' compensation acts and also
required Zurich to pay for Jones Motor's legal defense in
defending workers' compensation claims filed by its
employees and drivers. Plaintiff essentially alleges,
however, that the contingent liability policy was just for
show. The modest premiums Jones Motor paid for the contingent
liability policy were not sufficient to cover, and were never
intended to cover, the costs of workers' compensation
claims. Instead, when a driver filed a workers'
compensation claim, Zurich used the contingent liability
policy to pay the driver's initial workers'
compensation benefits, but then paid the driver's
subsequent benefits out of the occupational accident policies
that the drivers purchased. Thus, the drivers were
unwittingly paying the workers' compensation benefits
they were owed by Jones Motor and also paying for an attorney
to represent Jones Motor against them in the workers'
to Daley, he and the putative class members were coerced and
deceived into paying premiums for occupational accident
policies that were worthless, or worth far less than
represented, because the policies provided coverage for
work-related injuries that were already covered by the
Workers' Compensation Act. Jones Motor, on the other
hand, was able to save a significant amount of money by
avoiding workers' compensation premiums. Zurich turned a
profit because, even though it lost money on the contingent
liability policy with Jones Motor, it was able to recoup that
money and then some through the substantial premiums paid by
well over one hundred drivers for the occupational accident
policies. Zurich also was able to save money by structuring
the occupational accident policies to transfer responsibility
for medical bills to the drivers' private healthcare
plan, by implementing coverage limits not found in the
Illinois Workers' Compensation Act, and by paying
benefits less frequently than benefits are paid under the
on these allegations, Daley asserts claims against Jones
Motor and Zurich for civil conspiracy (Count 1), for
violations of the “Illinois Deceptive Business
Practices Act” (Counts 2 & 3),  and for unjust
enrichment (Counts 4 & 5). Daley also asserts a claim
against Jones Motor for violations of the Illinois Wage
Payment and Collection Act (Count 6).
Motor filed a motion to dismiss the complaint, contending
that Daley's claims are all predicated upon a common set
of facts: that under the Illinois Workers' Compensation
Act, 820 Ill. Comp. Stat. 305 et seq., an employment
relationship existed between Daley and Jones Motor, that
Jones Motor misclassified Daley as an independent contractor,
and that Jones Motor unlawfully required Daley to purchase
his own Workers' Compensation insurance policy from
Zurich (Doc. 24). Jones Motor argues that the resolution of
these issues rests within the exclusive jurisdiction of
Illinois Workers' Compensation Commission
(“Commission”) (Doc. 24).
response, Daley argues that the Commission does not have any
jurisdiction, much less exclusive jurisdiction, over the
issue of whether he was misclassified as an independent
contractor because he does not have a pending workers'
compensation claim for a workplace injury or death (Doc. 34).
Daley also argues that Jones Motor should be judicially
estopped from denying that the truckers were its employees
Court begins its discussion by noting that although Jones
Motor's motion appears to raise a question about the
Court's jurisdiction, which would fall under Federal Rule
of Civil Procedure 12(b)(1), the motion to dismiss is
properly brought under Rule 12(b)(6) for failure to state a
claim. See Dunlap v. Nestle USA, Inc., 431 F.3d
1015, 1017 (7th Cir. 2005); Goetzke v. Ferro Corp.,
280 F.3d 766, 779 (7th Cir. 2002). The basis for subject
matter jurisdiction is the Class Action Fairness Act, 28
U.S.C. § 1332(d), which is a component of the federal
diversity statute, 28 U.S.C. § 1332 (Doc. 1). In matters
of diversity jurisdiction, “[t]he exclusivity
provisions of Illinois's workers' compensation
statute do not (indeed, may not) affect the scope of the
jurisdictional authority granted to the federal courts by
Congress.” Dunlap, 431 F.3d at 1017
(parenthetical in original). Goetzke, 280 F.3d at
779 (“Once Congress has conferred subject matter
jurisdiction on the federal courts, state law cannot expand
or contract that grant of authority.”) Instead, the
question is whether Daley's claims are viable causes of
action in light of the exclusivity provisions of the
Workers' Compensation Act. “If state substantive
law has denied a plaintiff a remedy for his cause of action,
the district court must dismiss the complaint for failure to
state a claim upon which relief may be granted.”
Goetzke, 280 F.3d at 779.
consideration in this matter is whether the Illinois
Workers' Compensation Act provides exclusivity of remedy
over Daley's claims to the Illinois Workers'
Compensation Commission, such that a federal court would be
unable to grant relief. Jones Motor points to Section 18 of
the Workers' Compensation Act (Doc. 24, pp. 1, 5), so the
Court will start there. Section 18 provides “All
questions arising under this Act, if not settled by agreement
of the ...