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Dixon v. The Washington and Jane Smith Community-Beverly

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

May 31, 2018

CYNTHIA DIXON, Plaintiff,
v.
THE WASHINGTON AND JANE SMITH COMMUNITY-BEVERLY d/b/a SMITH SENIOR LIVING, SMITH CROSSING, and SMITH VILLAGE, KEVIN MCGEE, MARTI JATIS, and KRONOS, INC., Defendants.

          MEMORANDUM OPINION AND ORDER

          MATTHEW F. KENNELLY UNITED STATES DISTRICT JUDGE

         Cynthia Dixon, a former employee of Smith Senior Living (Smith), has sued Smith and Kronos, Inc. on behalf of herself and a putative class of similarly situated individuals. Dixon asserts claims for negligence and violation of Illinois's Biometric Information Privacy Act (BIPA) arising from Smith's requirement that its employees clock in and out of work by scanning their fingerprints onto a biometric timekeeping device (Kronos is the third-party supplier of the fingerprint scanners used by Smith). Dixon also has brought claims against Smith and two individuals[1]-Kevin McGee, the CEO of Smith Senior Living, and Marti Jatis, the Executive Director of Smith Village-for violating the Illinois Minimum Wage Law (IMWL) and the Illinois Wage Payment and Collection Act (IWPCA) and for retaliatory discharge. Dixon initially filed this lawsuit in the Circuit Court of Cook County, Illinois, and Kronos removed the case to federal court in November 2017. Kronos and the Smith defendants have filed separate Rule 12(b)(6) motions to dismiss, and Dixon, for her part, has moved to remand the case to state court. For the reasons stated below, the Court denies Dixon's motion to remand and Kronos's motion to dismiss. The Court grants the Smith defendants' motion to dismiss in part and denies it in part.

         Background

         A. Background on class action claims

         The Court takes the following facts from Dixon's complaint. Dixon worked at Smith Senior Living[2] from February 20, 2017 until September 5, 2017. Smith required Dixon to clock in and out of work by scanning her fingerprint, which Smith stored in a database after the first time it was scanned. Smith did not inform Dixon of the specific purpose or length of time for which her fingerprint was to be collected, stored, and / or used. Nor did Smith make available information about its biometric data retention policy (if it had such a policy) or other guidelines regarding the permanent destruction of the biometric information it possessed. Smith also neglected to obtain a written release from Dixon authorizing Smith to collect or store her fingerprints. Lastly, Dixon alleges that, in addition to collecting and storing her biometric information, Smith also "systematically disclosed" that information to Kronos, the out-of-state, third-party vendor of Smith's biometric time clocks, without informing her that it was doing so. Compl. ¶¶ 97, 30. For its part, Kronos did not obtain a written release from Dixon authorizing it to collect or store her fingerprints, nor did it inform her of the specific purpose or length of time for which it would store that information. Kronos also failed to provide information on its biometric data retention policy. As a result of these shortcomings, Dixon alleges that both Smith and Kronos "fail[ed] to implement reasonable procedural safeguards around the collection and use" of her biometric information, as well as that of other Smith employees. Id. ¶ 105.

         B. Background on individual claims

         During her employment with Smith Senior Living, Dixon typically worked about sixty hours per week, and she was paid approximately $16.44 per hour. In April 2017, Dixon was given a number of additional duties as a result of Smith's Environmental Services Manager being placed on a performance improvement plan. Dixon began receiving after-hours e-mails, text messages, and calls from her supervisors, Ashley Castro and Marti Jatis, as well as from employees on the Environmental Services team. Despite the increase in Dixon's on- and off-the-clock responsibilities, her title and pay did not change, though Castro and Chris August, Smith's Corporate Environmental and Safety Director, did agree to reimburse Dixon for her work-related cell phone charges.

         In or around June 2017, Smith required Dixon to become trained and certified by the Federal Emergency Management Agency (FEMA) and to prepare presentations for Smith's Emergency Preparedness Committee. Dixon estimates that she worked approximately 100 to 200 hours of unpaid overtime to complete the FEMA training and certification and prepare the Committee presentations.

         In July 2017, Smith demoted the Environmental Services Manager who had been on the performance improvement plan and assigned his duties to Dixon. These additional duties included scheduling and supervising the Environmental Services team. As a result-and because Smith designated Dixon as the person other employees should call if they encountered a problem after business hours-Dixon frequently received and responded to calls, e-mails, and text messages from her supervisor and members of the Environmental Services team after hours. Prior to August 30, 2017, Dixon informed her supervisors of the work she was performing, but not being paid for, after the end of her shift. Her supervisors "approved of this time and guaranteed reimbursement." Id. ¶ 118.

         On August 30, 2017, Smith formally offered Dixon the Environmental Services Manager job-a salaried position that paid $43, 000 a year. The next day, Dixon sent an e-mail to Castro and Jatis in which she challenged whether she could be properly classified as an "exempt" employee if she was paid a $43, 000-a-year salary. On September 1, Dixon had a meeting with her supervisor (presumably Castro), Marti Jatis, and Karen Jellema from human resources. Dixon was told that she would receive answers to her questions about the position and her salary on September 5, after the holiday weekend. On September 5, however, Smith terminated Dixon's employment. Dixon was told that her department was being restructured and that she was being terminated for twice working past the end of her shift. Jellema also told Dixon that Dixon was "wrong" regarding the salary threshold for "exempt" employees. Compl. ¶ 71. Smith never paid Dixon for the estimated 100 to 200 hours of overtime she worked on her FEMA and other emergency preparedness duties, nor did it pay her for the additional overtime she worked responding to after-hours communications from supervisors and Environmental Services staff. Moreover, although Smith previously had reimbursed Dixon for cell phone charges from April 2017 through June 2017, Dixon did not receive any reimbursement for the work-related cell phone expenses she incurred from July 2017 until her termination in September 2017.

         C. Procedural history

         In September 2017, Dixon filed suit against Smith Senior Living, Smith Crossing, Smith Village, [3] McGee, Jatis, and Kronos in the Circuit Court of Cook County. She asserted the following six claims in her complaint:

(1) Violations of Illinois's Biometric Information Privacy Act (against Smith and Kronos on behalf of Dixon and a putative class);
(2) Negligence (against Smith and Kronos on behalf of Dixon and a putative class);
(3) Failure to pay minimum wage and overtime for all hours worked, in violation of the Illinois Minimum Wage Law (against Smith, McGee, and Jatis on behalf of Dixon individually);
(4) Retaliation in violation of the Illinois Minimum Wage Law (against Smith, McGee, and Jatis on behalf of Dixon individually);
(5) Violation of the Illinois Wage Payment and Collection Act (against Smith, McGee, and Jatis on behalf of Dixon individually); and
(6) Retaliatory discharge (against Smith on behalf of Dixon individually).

See Compl. at 17-24. With the consent of the Smith defendants, Kronos removed the case to federal court pursuant to the Class Action Fairness Act of 2005 (CAFA) in November 2017. In December 2017, Kronos and the Smith defendants filed separate motions to dismiss the suit under Rule 12(b)(6) of the Federal Rules of Civil Procedure.

         Kronos argues that the Court should dismiss the BIPA claim because Dixon has not alleged an injury sufficient to make her a person "aggrieved" under the Act. Kronos also has moved to strike Dixon's request for liquidated damages under BIPA. Kronos further contends that Dixon has failed to state a claim for negligence. Like Kronos, the Smith defendants argue that Dixon has not sufficiently alleged that she is a person aggrieved under BIPA and that she has not alleged an injury that would support a common law negligence claim. Additionally, they contend that Smith Village and Smith Crossing should be dismissed because Dixon does not allege that she worked for Smith Village or Smith Crossing, nor does she allege any facts that would render either entity liable for the violations alleged in the complaint. The Smith defendants likewise argue for dismissal of the claims against McGee and Jatis on the ground that Dixon has not alleged facts sufficient to establish their individual liability, as employers, for the IMWL and IWPCA violations alleged. Lastly, Smith contends that Dixon's IMWL, IWPCA, and retaliatory discharge claims fail to state a claim upon which relief can be granted.

         In response, Dixon has filed a motion to remand the case to state court. According to Dixon, remand is warranted on the ground that the defendants' arguments for dismissal cast doubt on the existence of Article III standing and, consequently, on the Court's jurisdiction over the case.

         The Court will address Dixon's motion to remand before proceeding to the merits of the defendants' motions to dismiss.

         Discussion

         A. Motion to remand

         Dixon contends that, by arguing in their motions to dismiss that she has not alleged an injury sufficient to make her a person aggrieved under BIPA, the defendants have effectively asserted that she does not meet the injury-in-fact requirement for Article III standing. Because Article III standing is a necessary component of federal jurisdiction-and because it is the burden of the party that removed the case to federal court to establish jurisdiction-Dixon asserts that the Court must remand the case to the Circuit Court of Cook County in light of the defendants' failure to meet that burden.

         Pursuant to Article III of the U.S. Constitution, federal jurisdiction is limited to actual cases or controversies. Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1547 (2016), as revised (May 24, 2016). To ensure that this case-or-controversy limitation is respected, the Supreme Court has defined an "irreducible constitutional minimum of standing" that litigants who are seeking to avail themselves of the federal courts must meet. Lujan v. Defs. of Wildlife, 504 U.S. 555, 560 (1992). To meet those minimum requirements- that is, to have Article III standing to sue in federal court-"a plaintiff must have '(1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.'" Taylor v. McCament, 875 F.3d 849, 853 (7th Cir. 2017) (quoting Spokeo, 136 S.Ct. at 1547). The party or parties asserting federal jurisdiction bear the burden of establishing that "all elements of jurisdiction-including Article III standing-existed at the time of removal." Collier v. SP Plus Corp., No. 17-2431, 2018 WL 2186786, at *2 (7th Cir. May 14, 2018) (per curiam); see also Taylor, 875 F.3d at 853; Ne. Rural Elec. Membership Corp. v. Wabash Valley Power Ass'n, Inc., 707 F.3d 883, 893 (7th Cir. 2013). If, after a case has been removed to federal court, it appears that the federal district court lacks subject matter jurisdiction, it must remand the case to state court. 28 U.S.C. § 1447(c).

         Here, because the defendants removed the suit to federal court, it is the defendants who bear the burden of establishing federal jurisdiction, which includes Article III standing.[4] See Collier, 2018 WL 2186786, at *2. Defendants concede that they would bear the burden of establishing subject matter jurisdiction if Dixon challenged it by affirmatively arguing that she lacked Article III standing. They argue, however, that this burden has not been triggered because neither party has raised a challenge to subject matter jurisdiction: defendants do not contend that Dixon lacks Article III standing, and Dixon herself takes no position on the matter, beyond asserting that the defendants have effectively called it into question. Specifically, Dixon asserts that the defendants have cast doubt on federal jurisdiction by arguing for dismissal of her complaint on the ground that the procedural injuries she has alleged are insufficient to support a cause of action under BIPA or a negligence claim. According to Dixon, this argument, "though ostensibly aimed at the meaning of 'aggrieved' in BIPA, directly question[s] whether [she] has alleged a 'cognizable injury, '" which is a requirement for Article III standing and, thus, federal jurisdiction. Pl.'s Mot. to Remand at 3; see also Pl.'s Reply in Supp. of Mot. to Remand at 6 ("Defendants' motions to dismiss are jurisdictional motions dressed up as motions for failure to state a claim, undoubtedly because Defendants know that improper removal is sanctionable conduct.").

         It is true that the defendants do not expressly challenge Dixon's Article III standing in their motions to dismiss. But it also is true that the cases upon which defendants rely to support their argument that Dixon's alleged injuries are insufficient to render her a "person aggrieved" under BIPA also address whether the injury is sufficient for Article III standing purposes. See Robins v. Spokeo, Inc., 867 F.3d 1108, 1112-18 (9th Cir. 2017); Gubala v. Time Warner Cable, Inc., 846 F.3d 909, 911-13 (7th Cir. 2017); Monroy v. Shutterfly, Inc., No. 16 C 10984, 2017 WL 4099846, at *8 n.5 (N.D. Ill. Sept. 15, 2017); Vigil v. Take-Two Interactive Software, Inc., 235 F.Supp.3d 499, 507-19 (S.D.N.Y. Jan. 27, 2017), aff'd in part, vacated in part, remanded sub nom. Santana v. Take-Two Interactive Software, Inc., 717 Fed.Appx. 12 (2d Cir. 2017); McCollough v. Smarte Carte, Inc., No. 16 C 03777, 2016 WL 4077108, at *2-4 (N.D. Ill. Aug. 1, 2016). Regardless of whether the defendants intended to cast doubt on Dixon's Article III standing, it takes no great leap of imagination to read the above-mentioned cases, along with the defendants' repeated assertions that Dixon has alleged nothing more than "a bare procedural violation of BIPA, " Kronos's Mem. in Supp. of Mot. to Dismiss (Kronos's Mot. to Dismiss) at 10, and begin to wonder whether Dixon has, in fact, alleged an injury sufficient to confer Article III standing. See Monroy, 2017 WL 4099846, at *8 n.5 ("The court notes that, in addition to McCollough, Vigil . . . also dismissed a BIPA suit after concluding that the plaintiffs were unable to satisfy Article IIIc's injury-in-fact requirement. Although Shutterfly has not challenged Monroy's standing in this case, the court has an independent obligation to assure itself of its jurisdiction.").

         In light of the Court's independent obligation to ensure that it has subject matter jurisdiction, the defendants' suggestion that they bear no burden to establish Article III standing unless it is affirmatively challenged is beside the point. See Smith v. Am. Gen. Life & Acc. Ins. Co., 337 F.3d 888, 892 (7th Cir. 2003) ("This court has an independent obligation to satisfy itself that federal subject matter jurisdiction exists before proceeding to the merits in any case, even where, as here, neither the parties nor the district court has questioned the existence of such jurisdiction."); Cook v. Winfrey, 141 F.3d 322, 325 (7th Cir. 1998) ("[O]nce the district judge has reason to believe that there is a serious jurisdictional issue, he [or she] is obliged to resolve it before proceeding to the merits even if the defendant, whether as a matter of indolence or strategy, does not press the issue.") (citation omitted). There is no question that defendants bear the burden of establishing federal jurisdiction, which they invoked when they removed the case to federal court. See Lujan, 504 U.S. at 561 ("[t]he party invoking federal jurisdiction bears the burden of establishing" Article III standing); Collier, ...


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