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Kim v. Center for Seniors

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

October 15, 2019

PAUL KIM, on behalf of himself and all other plaintiffs similarly situated, known and unknown, Plaintiff,
CENTER FOR SENIORS, an Illinois non-profit organization, YOUNG HA, individually, and JAE KWAN HA, individually, Defendants.



         Plaintiff Paul Kim, on behalf of himself and all others similarly situated, has filed a three-count putative collective action second amended complaint against defendants Young Ha, Jae Kwan Ha, and Center for Seniors (“defendants”) alleging violations of: (1) the Fair Labor Standards Act, 29 U.S.C §201, et. seq. (“FLSA”); (2) the Illinois Minimum Wage Law, 820 ILCS 105/1, et. seq.; and (3) the Illinois Wage Payment and Collection Act, 820 ILCS 115/1, et. seq., for defendants' alleged failure to pay overtime wages. Defendants have moved to dismiss the second amended complaint in its entirety for failure to state a claim under Fed.R.Civ.P. 12(b)(6). For the reasons described below, defendants' motion is granted.


         Defendants Young Ha and Jae Kwan Ha operate an adult day-care business called Center for Seniors (“CFS”). CFS is a non-profit organization under Illinois law and tax-exempt under 26 U.S.C. § 501(c)(3). It has four Illinois branches located in Chicago, Morton Gove, Schaumberg, and Wheeling. All locations are managed by Mr. and Mrs. Ha. CFS's primary objective is to provide free services to its enrollees, including meals, shuttle services, and recreational activities for senior citizens who derive their incomes solely or partially from Supplemental Security Income (“SSI”). An enrollee is not eligible for subsidized services if his or her total savings (including checking and saving accounts) and stocks (including mutual funds and life insurance policies) are in excess of $17, 500.00, but can still join CFS by paying a private fee. From government funding and paying enrollees, CFS's annual gross volume of sales made or business done was more than $500, 000.

         CFS hired plaintiff as a maintenance worker on or about July 11, 2015. During his employment for defendants, plaintiff started his work sometime between 6:00 - 6:30 a.m. and ended between 4:30 p.m. - 6:00 p.m. Monday through Friday. He regularly worked more than ten to twelve hours per day, five days per week until the end of his employment in October 2018. Plaintiff's hourly rate was $14.40, and he submitted a timesheet every day for all the hours he worked. Mr. and Mrs. Ha were in charge of supervising and paying all of their employees, including plaintiff.

         The complaint alleges that during his entire employment, defendants failed to pay plaintiff for all the hours plaintiff worked. In the complaint, plaintiff alleges that he was paid only a fixed amount per month regardless of the overtime hours worked in a day or the number of overtime hours worked in a week. As part of his employment, plaintiff purchased various goods with CFS's credit card at either Home Depot or a local Mexican grocery store in order to clean the facility, help prepare food, and perform maintenance tasks. Additionally, plaintiff's duties included handling CFS's packages that were delivered from out-of-state and maintaining CFS's pond, which included buying an out-of-state motor. As instructed by his supervisors, plaintiff worked more than 40 hours a week, and alleges that he was never paid the proper amount of overtime wages. Plaintiff also alleges that he is not exempt from the overtime wage provisions of the FLSA.


         Defendants have moved under Fed.R.Civ.P. 12(b)(6) to dismiss the second amended complaint for failure to state a claim. A motion under Rule 12 (b)(6) challenges the sufficiency of the complaint, not its merits. Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). The court accepts as true all well-pleaded factual allegations and draws all reasonable inferences in plaintiff's favor. Roberts v. City of Chicago, 817 F.3d 561, 564 (7th Cir. 2016). The complaint must allege sufficient facts that, if true, would raise a right to relief above the speculative level, showing that the claim is plausible on its face. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). To be plausible on its face, the complaint must plead facts sufficient for the court to draw the reasonable inference that the defendant is liable for the alleged misconduct. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).


         Defendants argue that plaintiff fails to state a claim because plaintiff fails to adequately plead that CFS is subject to the FLSA, and thus required to pay plaintiff overtime wages. In particular, defendants argue that CFS is exempt from the requirements of the FLSA because it is a non-profit organization. Plaintiff counters that CFS is not exempt from the FLSA because it is an enterprise that engages in commerce by charging a fee to some of its enrollees for the services it provides (those whose income and savings exceed the SSI eligibility standards, and who are, therefore, not eligible to join for free). Further, plaintiff argues that he, too, is engaged in commerce.

         The FLSA, 29 U.S.C. § 207(a)(1) provides:

Except as otherwise provided in this section, no employer shall employ any of his employees who in any workweek is engaged in commerce or in the production of goods for commerce, or is employed in an enterprise engaged in commerce or in the production of goods for commerce, for a workweek longer than forty hours unless such employee receives compensation for his employment in excess of the hours above specified at a rate not less than one and one-half times the regular rate at which he is employed.

         Enterprise is defined as “the related activities performed (either through unified operation or common control) by any person or persons for a common business purpose, and includes all such activities whether performed in one or more establishments or by one or more corporate or other organizational units.” 29 U.S.C. §203 (r)(1). Under the FLSA, defendants are required to pay overtime wages to plaintiff during his employment if either: (1) CFS was an “enterprise engaged in commerce or in the production of goods for commerce,' regardless of whether [] plaintiff was so engaged, ” or (2) “plaintiff was ‘engaged in commerce' or in the production of goods for commerce.” 29 U.S.C. § 207(a)(1); Joles v. Johnson County Youth Serv. Bureau, Inc., 885 F.Supp. 1169, 1173-74. The two FLSA causes of action are respectively referred as “enterprise” and “individual" coverage, and plaintiff has the burden of proving at least one to be covered by the FLSA. See Tony and Susan Alamo Found. v. Sec'y of Labor, 471 U.S. 290, 295 n.8 (1985). Defendant argues that the complaint fails to sufficiently allege either. The court agrees.

         First, plaintiff argues[1] that he was employed in an “enterprise engaged in commerce” because CFS's services for its enrollees constitute commercial activity that can compete on the same level with private entrepreneurs. See 29 U.S.C. § 207(a)(1). Specifically, plaintiff argues that because CFS provides enrollees with round trip transportation service to CFS's facilities, hot breakfasts, lunch, snacks, and activities such as bingo, pool, table tennis, and arts and crafts, it is in the same categories as restaurants, public transportation services, and other senior day-care centers. Plaintiff refers to CFS's fee section on its website, which describes how fees ...

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