Arteaga et al v. Lynch et al

Filing 151

MEMORANDUM Opinion and Order Signed by the Honorable Rebecca R. Pallmeyer on 9/26/2013: Mailed notice(etv, )

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
MARIA ARTEAGA, OFELIA ARTEAGA,
MARIA AVINA, ROSA BRISEÑO,
KIMBERLY CAMBRA, JOSE DELGADO,
MIKE DICKEY, MARIA GONZALEZ,
BRYAN HODSON, ADALBERTO JIMENEZ,
MARIBEL JIMENEZ, GARY KRAMER,
MARIA MADRID A/K/A MARIA ZUÑIGA,
DONNA MAGNUSON, MONICA MARES,
PABLINO MARTINEZ, GUADALUPE MENDOZA,
SILVIA PEREZ, ROBIN RITCHEY,
BRENDA RODRIGUEZ, IRMA RODRIGUEZ,
JESENYA RODRIGUEZ, JUAN RODRIGUEZ,
DOROTHEA SCHMIDT, PATRICIA SEIDL,
RUDOLPH SEIDL, KENNETH SOCKI,
WILLIAM VAN DUSEN, MARIA VAZQUEZ,
FELIPE ZUNIGA, CHARMAINE SCHALLMO,
MARGARET LORDAN, AGATA TOMAS,
and PATRICK BACA,
Plaintiffs,
v.
KEVIN LYNCH and MICHAEL LYNCH,
Defendants.

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No. 10 C 1444
Judge Rebecca R. Pallmeyer

MEMORANDUM OPINION AND ORDER
Until 2010, Plaintiffs worked for Duraco Products, Inc., a plastics manufacturer in
Streamwood, Illinois. After the plant closed and Duraco sought bankruptcy protection, Plaintiffs
brought this action against Defendants Kevin Lynch, Duraco’s president and sole owner, and Kevin
Lynch’s brother Michael, who assisted with managing the business. Plaintiffs seek unpaid wages
and damages under the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq.; the Illinois
Minimum Wage Law (“IMWL”), 820 ILCS 105/1 et seq.; and the Illinois Wage Payment and
Collection Act (“IWPCA”), 820 ILCS 115/1 et seq. Last year, the court entered summary judgment
on liability in favor of Plaintiffs and against Kevin Lynch. Arteaga v. Lynch, No. 10 C 1444, 2012

WL 3879899 (N.D. Ill. Sept. 6, 2012). Plaintiffs now seek summary judgment against Defendant
Michael Lynch as well, urging that there are no disputes of fact concerning Michael Lynch’s liability
for unpaid wages. Plaintiffs ask this court for an Order of Judgment in the amount of $395,234.40
against Kevin and Michael Lynch. For the reasons stated herein, the motion is granted.
FACTUAL BACKGROUND
Duraco was a plastic injection molding facility that manufactured and sold plastic plant
containers. (Kevin Lynch Deposition [118] at 5-6.) Kevin Lynch purchased Duraco in May 2007
and became its president and Chief Operating Officer. (Id. at 9; Kevin Lynch Affidavit, Ex. A to
Michael Lynch’s Response in Opposition to Plaintiff’s Motion for Summary Judgment [134-1] ¶ 1.)
Michael Lynch was assistant to his brother, Kevin Lynch, and was responsible for strategic
planning. (Kevin Lynch Dep. [118] at 9-10; Michael Lynch Answers to Plaintiff’s Interrogatories,
Ex. D to Pl.’s 56.1 (“hereinafter, “M. Lynch Interrogatories”) [109-1] at 1.) Duraco filed for Chapter
11 bankruptcy on November 18, 2008. (Plaintiffs’ Motion for Entry of an Order of Judgment against
Michael Lynch (hereinafter, “Michael Lynch Motion”) [126] at 2.)
Unpaid Wages
Beginning no later than 2008, Duraco struggled to meet its payroll obligations. Citing,
among other things, copies of checks returned for insufficient funds, Plaintiffs assert that Duraco
first failed to make full payment of wages to its employees in March 2008. (Pls.’ 56.1 [109] ¶ 28;
Sampling of Returned Paychecks, Ex. O to Pl.’s 56.1 [109-2].) Kevin Lynch acknowledged there
were months during which checks were issued to employees even though Duraco’s operations
account did not have sufficient funds to honor those checks. (Kevin Lynch Dep. [118] at 87.) In
fact, Kevin Lynch “[knew] for certain May—May, June, and July, [he] wasn’t able to really pay
anybody.” (Id. at 36.) Kevin Lynch admitted, further, that “when we didn’t hand out payroll checks,
those checks that should have gone out were put aside.” (Kevin Lynch 2010 Deposition, Ex. G to

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Pls.’ 56.1 [109-1] at 52.) Plaintiffs have submitted copies of a number of employee paychecks they
describe as “undisbursed” (that is, as the court understands it, written to employees but never
distributed to them). (Sampling of Undisbursed Employee Checks, Ex. P to Pls.’ 56.1 [109-2].) In
addition, the Plaintiffs have submitted spreadsheets on which Kevin Lynch recorded “what
employees told [him] they were owed.” (Kevin Lynch 2010 Dep. [109-1] at 69; Spreadsheets, Ex.
R to Pls.’ 56.1 [109-3].) The spreadsheets, labeled “pre 11/18/08 payroll issues” and “checks not
received,” list thirty-one employees who reported being owed money by Duraco, and include
individual entries for each paycheck that was returned for insufficient funds or never received in the
first place. Id.
William Sasser worked as Duraco’s plant manager from January 2009 until the plant closed
in February 2010, reporting directly to Michael Lynch. (Sasser Aff., Ex. A to Michael Lynch Motion
[128-1], at ¶¶ 2, 4; M. Lynch Interrogatories [109-1] ¶ 6b.) Duraco was in bankruptcy proceedings
during the time Mr. Sasser was employed, and he acknowledged that Duraco was “often unable
to meet their payroll obligations to the employees of Duraco.” (Sasser Aff. [128-1] ¶ 6.) On
payday, he recalled, “dozens of production workers would come to [his] office” to ask whether they
would be paid that week. (Id. ¶ 7.) In several instances, Kevin Lynch wrote letters on behalf of
Duraco employees who were struggling to pay their own bills because of the missed paychecks,
attesting to the fact that the employees were working and promising that they would be paid soon.
For example, on December 7, 2009, Kevin Lynch wrote a letter on behalf of Kimberly Cambra, an
employee of Duraco, requesting that her late mortgage payment be forgiven. (Letter for Cambra,
Ex. C to Pls.’ Local Rule 56.1(B)(3)(b) Reply to Defs.’ Statement of Additional Facts in Opposition
to Michael Lynch Motion (hereinafter “Pl.’s M. Lynch Reply”) [138-1].) The letter confirms that
Cambra was employed by Duraco and attributes Cambra’s late mortgage payment to the fact that
Duraco was several weeks behind in paying her. Id. The letter states that “Duraco intends to make
good on those checks in the forthcoming weeks.” Id. A notation on the letter shows that Michael
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Lynch received a copy. Id. Kevin Lynch also wrote a letter dated December 30, 2009 on behalf
of Donna Magnuson to her current creditors. (Letter for Magnuson, Ex. C to Pls.’ M. Lynch Reply
[138-1].) This letter states, “Donna J. Magnuson is owed money by Duraco for several payroll
periods. It is the intent of Duraco to bring Donna J. Magnuson current with payroll by the end of
January, 2010.” Id.

As noted, Plaintiffs have also presented copies of a large number of

paychecks that were returned for insufficient funds. (Ex. O to Pls.’ 56.1 [109-2].)
Blue Cross Blue Shield Insurance
Duraco’s financial difficulties also affected the Plaintiffs’ health insurance coverage.
Starting around August of 2009, Duraco stopped making payments to Blue Cross Blue Shield
(“BCBS”) for the insurance deductions taken from employee’s paychecks. (Kevin Lynch Dep. [118]
at 128.) BCBS billing statements from July 17, 2009 to November 30, 2009 show that Duraco’s
payments were past due. (BCBS Billing, Ex. Z to Pls.’ 56.1 [109-3].) Michael Lynch testified that
Duraco “held up payments” to BCBS for a period of time because Duraco’s insurance agent, Tom
Terrell, advised that there was a credit on Duraco’s account with BCBS. (Michael Lynch Dep. [119]
at 105.) It appears BCBS did not agree: Health care providers stopped providing care for some
employees because the insurer refused to cover employee medical expenses. (Phone message,
Ex. W to Pls.’ 56.1 [109-3]) (copy of a January 30, 2009 phone message for Michael Lynch stating,
“insurance is stopping [the employee] from having heart surgery”).) In October 2009, Plaintiff
William Van Dusen spoke with Kevin Lynch about medical bills that were not covered by his group
health insurance because the premiums had not been paid by Duraco. (Van Dusen Dep., Ex. V
to Pls.’ 56.1 [109-3] at 67.) At Kevin Lynch’s direction, Van Dusen spoke with Michael Lynch about
the matter several times between October and December 2009, and Michael Lynch reassured him
that “everything would be okay.” Id. On January 18, 2010, Van Dusen wrote an e-mail message
to Kevin Lynch, Michael Lynch, and Dorothea Schmidt, requesting that Duraco “stop deducting

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money for health insurance” from his wages. (E-mail from Van Dusen, Ex. AA to Pls.’ 56.1 [109-3];
Van Dusen Dep. [109-3] at 65.)
Michael Lynch’s Role
Michael Lynch’s role in the company is disputed. As noted, Michael Lynch was the assistant
to Kevin Lynch and in charge of strategic planning. (M. Lynch Interrogatories [109-1] ¶ 1.) In his
deposition, Kevin Lynch described Michael Lynch as playing a “consulting” role in the company,
advising Kevin Lynch on production issues, employee disputes, and financing matters. (Kevin
Lynch 2010 Dep., Ex. G to Pls.’ 56.1 [109-1] at 29-31.) In 2007, Kevin Lynch entered into a
factoring agreement, on Duraco’s behalf, with Franklin Capital Corporation (“Franklin”). (Kevin
Lynch Dep. [118] at 50, Factoring Agreement, Ex. N to Pls.’ 56.1 [109-2].) The factoring agreement
was a financing arrangement under which Franklin purchased Duraco’s accounts receivable at a
discounted rate, advanced to Duraco 80% of the amount owed on each invoice, then collected the
invoice in full and paid Duraco the remaining 20%, less interest and Franklin’s fees. (Kevin Lynch
Dep. [118] at 49-50.)

According to Kevin Lynch, however, Franklin “never honored [the]

agreement.” (Id. at 52.) Kevin Lynch testified that when, “three or four months into ownership,” he
realized that Franklin was routinely underfunding Duraco, the relationship between Duraco and
Franklin devolved into a “fight” that ultimately resulted in Duraco’s hiring an accounting firm to
conduct a forensic accounting of Franklin’s records, terminating the agreement with Franklin, and
entering into a substitute factoring agreement with Bibby Financial Services (“Bibby”). (Id. at 50,
53.)
Kevin Lynch testified that while working for Duraco, Michael Lynch never held an ownership
stake or a corporate office and did not maintain a regular schedule, instead appearing “[o]n an asneeded basis.” [Kevin Lynch Dep. [118] at 14, 23.) Michael explained that he was instructed to
work “at a higher level” than day-to-day management of employee activity. Instead, he “negotiated

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financing with Bibby, making sure the financial deals were complete in bankruptcy court, dealing
with the bankruptcy attorneys . . . .” (Michael Lynch Dep. [119] at 92.) Michael had both domestic
and international responsibilities; he oversaw production at the plant, and he supervised the
company’s Canadian sales team. (Id. at 88.) Though Michael was not a signatory and could not
write checks from Duraco’s bank account, he did have access to Duraco’s bank account
information. (Id. at 42.) Michael Lynch was also responsible for insurance management. He
acknowledged that Kevin Lynch directed him to “make sure there were no issues with Blue Cross
Blue Shield.” (Michael Lynch Dep. [119] at 101.)

In that role, Michael Lynch was aware that

Duraco had “held up payments” to BCBS on the advice of Duraco’s insurance agent, Tom Terrell,
who reportedly discovered that BCBS had charged Duraco a premium for some employees who
had “dropped off” and recommended that Duraco engage in self-help by holding back payments.
(Id. at 105.) What resulted from that decision was “some destructive discourse,” but BCBS and
Terrell eventually reached a resolution. (Id.) It was Michael Lynch who was the contact person for
employees having trouble with their insurance. (Van Dusen Dep. [109-3] at 67.)
Michael also evaluated whether temporary labor forces were necessary, and, on occasion,
terminated an agreement with a staffing agency. (Michael Lynch Dep. [119] at 38.) Kevin Lynch
instructed Michael to focus on the “right sizing of the plant,” bringing in new equipment, “reducing
the work force,” and making the work force more flexible, so that workers could move “from
production to shipping and packing.” (Id. at 37.) Supervisors Bill Sasser and John Cirillo “would
report to [Michael Lynch] . . . on a daily basis” about the ongoing process of streamlining
production. (Id. at 34, 37; M. Lynch Interrogatories [109-1] ¶ 6.) According to Mr. Sasser, the
general manager, Michael Lynch “provided [him] with instructions on a daily basis.” (Sasser Aff.
[128-1] ¶ 4.) And Duraco’s employees understood Kevin and Michael Lynch to be in charge.
(Maria Arteaga Dep., Ex. K to Pls.’ 56.1 [109-2] at 11; Ofelia Arteaga Dep., Ex. J to Pls.’ 56.1 [1092] at 12.)
6

Michael Lynch’s involvement in payroll decisions is also disputed. Defendants contend that
Michael Lynch had no control over whether payroll would be funded because, in their view, the
matter was outside Duraco’s control. The power to make those decisions, they contend, “was held
by Franklin Capital.” (Michael Lynch Response [135] at 2; Kevin Lynch Aff., Ex. A to Michael Lynch
Response [135-1] ¶ 6.) Michael Lynch acknowledged, however, that he participated in plant-wide
meetings with Kevin Lynch and employees to discuss Duraco’s financial difficulties. (Michael Lynch
Dep. [119] at 60-62.) Michael Lynch also discussed payroll concerns with employees on the plant
floor. (Id. at 73.) When employees complained about delayed payments, Michael Lynch made the
employees aware of the “issue with Franklin,” assuring them that he believed that “not only would
everyone get paid in full, but we will be exiting the bankruptcy, and it will be a viable company going
forward.” Id. When employees asked Mr. Sasser, the general manager, whether they would be
paid, Mr. Sasser would consult with Michael Lynch about how to respond; when the employees
were not to be paid, Michael Lynch would instruct William Sasser to tell the workers that “they
would be paid on a later date” and that “he, Michael, and Kevin Lynch would ‘make good’ on the
owed payroll.” (Sasser Aff. [128-1] ¶¶ 8-10.) Plaintiffs assert that Michael Lynch repeatedly
encouraged employees to continue working on the understanding that their wages would be paid
in the future. (Michael Lynch Motion [128] at 2, citing Sasser Aff. [128-1] ¶¶ 7-10.)
The parties also disagree about Michael Lynch’s involvement in the production work
schedule. Plaintiffs assert, again citing William Sasser’s affidavit, that Michael Lynch set the
employee work schedules and exercised authority to change the work schedule either by directly
telling employees or through Sasser. (Sasser Aff. [128-1] ¶ 11.) In an e-mail message from
Michael Lynch to John Cirillo on October 12, 2009 at 10:09 am, Michael Lynch criticized Mr. Cirillo
for making “a change in the production schedule without [Kim Cambra’s] approval.” (E-mail
message, Ex. A to Plaintiffs’ Reply in Support of Michael Lynch Motion [138-1].) Michael Lynch
wrote, “The chain of command is simple: Sasser reports to Cambra, who reports to me. Once the
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schedule is set, it only changes if Kim comes to me for approval of the change. Sasser, Socki or
you cannot make those changes without Kim’s approval who in turn must seek approval from me.”
(Id.)

William Sasser noted that Michael Lynch would instruct him to direct the production

employees to “come in on weekends and stay late” to meet production quotas. (Sasser Aff. [128-1]
¶ 12.)
Michael Lynch nevertheless denies that he had responsibility for the employees’ work
schedule. He insists that he did not schedule the staffing of hourly employees and that those
responsibilities were assigned to William Sasser and Kenneth Socki. (Michael Lynch Response
[135] at 2; Kevin Lynch Aff. [135-1] ¶¶ 3-4.) Defendants explained that Duraco operated using two
shifts; the job of preparing the schedule for the first shift was assigned to Bill Sasser, and Ken
Socki was assigned to schedule the second shift. (Kevin Lynch Aff. [135-1] ¶ 3.) Plaintiffs
acknowledge that Mr. Sasser and Mr. Socki prepared work schedules, but insist, citing the October
12, 2009 e-mail message, that Michael Lynch exercised authority to make unilateral changes.
Whether Michael Lynch had the authority to hire or fire employees is similarly disputed.
Kevin Lynch says he did not (Kevin Lynch Aff. [135-1] ¶ 5; Kevin Lynch 2010 Dep. [109-1] at 31),
but William Sasser stated that Michael Lynch did have that authority and in fact “periodically
informed [Sasser] of having fired employees.” (Sasser Aff. [128-1] ¶ 14.) It is uncontested that
John Cirillo, Bill Sasser, and Ken Socki could hire employees, and that Sasser and Cirillo reported
to Michael Lynch and were under Michael Lynch’s control. (Michael Lynch Dep. [119] at 34-35.)
Plaintiffs also note the testimony of Patricia Seidl that Michael Lynch “fire[d] her in 2008.” (Pls.’
56.1 [109] ¶ 14; Patricia Seidl Deposition, Ex. I to Pls.’ 56.1 [109-1] at 46.) Michael Lynch denies
terminating Seidl’s employment; he asserts that he merely asked her to leave after an altercation
with her husband Rudy Seidl, who also worked at Duraco. (Michael Lynch Dep. [119] at 120-22.)
Notably, Michael Lynch acknowledges that, as William Sasser recounted, Michael Lynch did
threaten to fire Patricia’s husband Rudy Seidl. (Michael Lynch Resp. [135] at 2; Sasser Aff. [128-1]
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¶ 15.) According to Defendant, William Sasser asked Rudy Siedl to work two extra hours to
change the molding on Duraco’s injection molding machine and Rudy Siedl responded to the
request by pulling out a large socket wrench and threatening to hit Michael Lynch in the head.
(Michael Lynch Response [135] at 2.) In Plaintiffs’ version of events, Michael Lynch threatened to
fire Rudy Seidl if Rudy refused to work past his regular shift to meet the production quota. (Sasser
Aff. [128-1] ¶ 15.)
Amount of Unpaid Wages
The amounts of unpaid wages still due to the Plaintiffs are also disputed. Plaintiffs’ original
request was for $412,731.43 in unpaid compensation, but the Defendants contend that amount is
largely overstated and Plaintiffs have reduced it in response to certain of Defendants’ objections.
As an exhibit to their Motion for Entry of an Order of Judgment [126], Plaintiffs have submitted a
spreadsheet setting forth their calculations, based on payroll records, bank records, and affidavits.
(Spreadsheet of Wages Owed, Ex. D to Plaintiffs’ Motion for Entry of an Order of Judgment [1261].) Plaintiffs relied on similar calculations in support of their claim in the bankruptcy proceedings
for Duraco. (See Amended Motion of Employees of Duraco for Allowance of Admin. Expense
Claim ¶ 9, In re Duraco Products, Inc., 08-B-31353 (Docket No. 782).) On December 1, 2010,
Judge Wedoff of the Bankruptcy Court approved an administrative expense claim against Duraco
in the amount of $394,553.60. (Order Allowing Administrative Expense, Ex. A to Plaintiffs’ Motion
for Entry of an Order of Judgment [126-1].)
In addition to the information they presented to the bankruptcy court, the spreadsheet
submitted in this case includes calculation of liquidated damages, vacation, and unlawful insurance
premium wages. (Spreadsheet [126-1].) The total amounts owed to each Plaintiff range from
$1,008.70 to $59,171.22: thirteen Plaintiffs claim amounts less than $10,000; twelve claim amounts
between $10,000 and $20,000; and five Plaintiffs claim amounts greater than $20,000. Plaintiffs

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also seek unpaid wages for Jose Delgado, whose claim was not part of the bankruptcy filing;
Delgado claims he is entitled to $6,153.60 for six weeks of work as a warehouse forklift driver for
which he was not paid in 2009. (Plaintiffs’ Motion for Entry of an Order of Judgment [126-1] ¶ 11;
Delgado Affidavit, Ex. B to Plaintiffs’ Motion for Entry of an Order of Judgment [126-1] ¶¶ 4-9.) Mr.
Delgado’s claim is supported by his affidavit listing weeks of work for which he was not paid, as well
as payroll and bank records. (Id.) In addition, Plaintiffs seek recovery of health insurance premium
amounts that were deducted from the wages of Plaintiff Brian Hodson and the salaries of Kenneth
Socki, Donna Magnuson, and William Van Dusen. but never remitted to Duraco’s insurance carrier.
(Plaintiffs’ Motion for Entry of an Order of Judgment [126] ¶ 13.)
Defendants contend the amounts Plaintiffs claim are overstated because some of the
claimed wages were in fact paid by wire transfers, and because Plaintiffs have not accounted for
certain cleared checks. (Kevin Lynch Aff, Ex. A to Kevin Lynch’s Response to Plaintiffs’ Motion for
Entry of an Order of Judgment [134-1], ¶¶ 3-7).)

Defendants also challenge Kimberly Cambra’s

claim for 390 hours of unpaid overtime, asserting that Ms. Cambra did not work overtime. (Kevin
Lynch Affidavit [134-1] ¶ 7.) Kevin Lynch’s affidavit claims he is “knowledgeable” about certain
payments, but neither Defendants nor Plaintiffs have presented the bank records themselves.
Instead, Plaintiffs rely on the motion submitted to the bankruptcy court in the Duraco Products
bankruptcy, which includes, as support, affidavits, and an Excel spreadsheet listing check numbers.
Duraco’s Payroll Policies
Yet another dispute concerns the amount of overtime and double-time worked by the
Plaintiffs. Employees were required to clock in to receive credit for hours worked. (M. Lynch
Interrogatories [109-1] ¶ 9.) Duraco’s payroll manager, Dorothea Schmidt, was responsible to
collect the records, record the information in Duraco’s payrolls system, and forward it to a vendor
for the issuance of payroll checks. (Kevin Lynch Dep. [118] at 80.) Defendants assert that

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Plaintiffs are making false claims for overtime pay, but Plaintiffs insist they in fact worked hours on
weekends or after hours for which they are entitled to overtime wages. (Kevin Lynch Aff. [134-1]
¶ 12; Spreadsheet, Ex. B to Plaintiffs’ Reply [137-1].) Plaintiffs note the evidence that Michael
Lynch would instruct the general manager to direct production employees to “come in on weekends
and stay late” to meet production quotas, even during times that Duraco was unable to make
payroll. (Sasser Aff. [128-1] ¶ 12.) Ofelia Arteaga confirmed that Kevin Lynch asked her to “stay
working . . . for extra hours.” (Ofelia Arteaga Dep., Ex. J to Pls.’ 56.1 [109-2], at 12.) The amount
of the overtime claimed is also disputed. Defendants contend that Duraco’s pay policy required
that, before an employee could collect overtime pay, he or she had to work a full forty-hour week,
and that Plaintiffs’ claims include overtime during weeks in which they did not reach that threshold.
(Kevin Lynch Affidavit [134-1] ¶ 10.) Defendants contend, further, that Duraco’s policy did not
provide for double-time pay (id. ¶ 11); but as Plaintiffs note, paystubs for Juan Rodriguez and a
payroll document for Rosa M. Briseno, both dated February 2009, list “Double Time” under the
category of “Earnings,” and set forth amounts earned. (Paystubs, Ex. C to Plaintiffs’ Reply [1371].)
Defendants blame Duraco’s payroll manager, Dorothea Schmidt, for awarding pay
increases, changing pay rates, and authorizing holiday and overtime pay. (Kevin Lynch Affidavit
[134-1] ¶ 8.) They assert that Schmidt manipulated Plaintiffs’ hourly rates without authorization,
and that before she took on the payroll responsibilities, Duraco employees received holiday pay
only on Christmas Day and New Year’s Day, and only if those holidays occurred on a work day.
(Id. ¶¶ 9, 15.) Defendants now note that Dorothea Schmidt provided for unauthorized holiday pay
for herself and others for Easter Sunday 2009. (Id. ¶ 9.)

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Bankruptcy Proceeding
Duraco’s Chapter 11 proceeding was involuntarily converted into a Chapter 7 bankruptcy
on February 17, 2010. (Plaintiffs’ Motion for Entry of an Order of Judgment [126] ¶ 5.) As noted,
the bankruptcy court awarded Plaintiffs $394,553.60 as an administrative expense against the
estate. (Order Allowing Administrative Expense, Ex. A to Plaintiffs’ Motion for Entry of an Order
of Judgment [126-1].)
DISCUSSION
Plaintiffs seek summary judgment for $395,234.40 in damages under the FLSA and
summary judgment as to Michael Lynch’s status as an employer. On this motion, Plaintiffs, who
seek judgment in their favor, bear the initial burden of showing that there is “no genuine dispute
as to any material fact.” FED. R. CIV. P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986);
Insolia v. Philip Morris Inc., 216 F.3d 596, 598 (7th Cir. 2000). Once the moving party has met its
burden, the non-moving party must set forth specific facts showing that there is a genuine issue
for trial. FED. R. CIV. P. 56(e); see Smith v. Shawnee Library Sys., 60 F.3d 317, 320 (7th Cir.1995)
(the non-moving party “must come forward with evidence of a genuine factual dispute”). The mere
existence of some alleged factual dispute between the parties will not defeat an otherwise properly
supported motion for summary judgment. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 24748 (1986). The court will grant a motion for summary judgment if, construing all facts in the light
most favorable to the non-moving party, the moving party demonstrates 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 Kellar v. Summit Seating Inc., 664 F.3d 169, 173 (7th Cir. 2011).
I.

Fair Labor Standards Act
To prevail under the Fair Labor Standards Act, an employee must present evidence that

he has “in fact performed work for which he was improperly compensated” and to show “the

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amount and extent of that work as a matter of just and reasonable inference.” Anderson v. Mt.
Clemens Pottery Co., 328 U.S. 680, 687 (1946). The burden to prove the specific amounts owed,
however, should not be an “impossible hurdle.” Instead, in order to fulfill the “remedial nature of
this statute and the great public policy which it embodies,” employees need not prove their
damages with mathematical precision. Id. at 687. Pursuant to §11(c) of the FLSA, it is the
employer who has the burden to keep records of hours and payment, not the employee. 29
U.S.C.A. § 211. The logic is simple; if the employer keeps proper records, he will be readily able
to meet his burden by producing those records. Anderson, 328 U.S. at 687. In a situation in which
the employer fails to keep the proper records, the consequences of the failure should not fall on
the employee, but the employer. Id. As the Anderson Court explained:
The employer cannot be heard to complain that the damages lack the exactness
and precision of measurement that would be possible had he kept records in
accordance with the requirements of 11(c) of the Act. And even where the lack of
accurate records grows out of a bona fide mistake as to whether certain activities
or non-activities constitute work, the employer, having received the benefits of such
work, cannot object to the payment for the work on the most accurate basis possible
under the circumstances. Nor is such a result to be condemned by the rule that
precludes the recovery of uncertain and speculative damages. That rule applies
only to situations where the fact of damage is itself uncertain. But here we are
assuming that the employee has proved that he has performed work and has not
been paid in accordance with the statute. The damage is therefore certain. The
uncertainty lies only in the amount of damages arising from the statutory violation
by the employer. In such a case ‘it would be a perversion of fundamental principles
of justice to deny all relief to the injured person, and thereby relieve the wrongdoer
from making any amend for his acts.’ Story Parchment Co. v. Paterson Parchment
Co., 282 U.S. 555, 563, 51 S. Ct. 248, 250, 75 L.Ed. 544.
Anderson, 328 U.S. at 688.
Thus, when the employee has made a prima facie showing, the employer must “come
forward with evidence of the precise amount of work performed or with evidence to negative the
reasonableness of the inference to be drawn from the employee’s evidence.” Id. If the employer
fails to produce such evidence, the “court may then award damages to the employee, even though
the result be only approximate.” Id.
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A.

Amount of Damages

In an earlier ruling, the court determined that Defendant Kevin Lynch is an “employer” under
the FLSA and is liable for unpaid wages under the FLSA, the IMWL, and the IWPCA. Arteaga,
2012 WL 3819899. Plaintiffs now seek an award of their damages. In support, they submit an
Order for Administrative Expense issued by Judge Wedoff in Duraco’s previous bankruptcy
proceeding (Ex. A to Plaintiffs’ Motion for Entry of an Order of Judgment [126-1]); a signed affidavit
from a previous employee (Ex. B [126-1]); an Excel spreadsheet specifying damages and totals
for each Plaintiff (Ex. D [126-1]); a summary of Duraco’s cash receipts and cash disbursements
(Ex. A to Pls.’ 56.1 [109-1]); copies of checks returned due to insufficient funds (Ex. O to Pls.’ 56.1
[109-2]); a sampling of undisbursed checks (Ex. P to Pls.’ 56.1[109-2]); Duraco bank statements
(Ex. Q to Pls.’ 56.1 [109-3]); a sampling of paychecks (Ex. X to Pls.’ 56.1[109-3]); BCBS billing
summaries (Ex. Z to Pls.’ 56.1[109-3]); timestamp reports (Ex. DD to Pls.’ 56.1 [109-3]); and
timesheets (Ex. EE to Pls.’ 56.1 [109-3]). Under the burden of proof paradigm outlined by the
Supreme Court in Anderson, this evidence is sufficient to establish that the Plaintiffs performed
work for which they were not compensated, and the amounts claimed are based on reasonable
inferences. Indeed, Defendants do not dispute that the employees are owed some amounts of
unpaid wages. (See Kevin Lynch’s Sur-Reply in Opposition to Plaintiffs’ Motion for Entry of
Judgment [143-2] at 4.)
Defendants thus bear the burden to produce records “of the precise amount of work
performed or with evidence to negative the reasonableness of the inference.” Anderson,.328 U.S.
at 687-88. Even construing the evidence in their favor on this motion, the court concludes
Defendants have not met that burden, as explained below.

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1.

Cleared checks/wire transfers

Defendants argue, first, that the amounts claimed fail to reflect certain wages recovered
when multiple checks cleared or funds were wire-transferred to Plaintiffs. (see Kevin Lynch
Response [134], at 4.) Defendants identify several check numbers for payments to Donna
Magnuson, William Van Dusen, Patricia Seidl, Juan Rodriguez, and Kim.

None of these

assertions, however, are supported with bank account records, copies of the checks, or other
supporting documentation. Plaintiffs contend that several of the payments cited by Defendants
predate the periods of time for which they seek compensation; for some others, there is no
evidence that the checks cleared. Plaintiffs do concede that there may be disputes of fact with
respect to certain of the paychecks and have deducted those amounts from their damages claim
in this court. (See Plaintiffs’ Reply in Support of Motion for Entry of an Order of Judgment [137].)
With those disputes off the table, Defendants have no basis to resist judgment beyond “the mere
allegations or denials of [their] pleading.” Those allegations are insufficient to rebut the reasonable
inferences created by the Plaintiffs’ evidence. Anderson v. Liberty Lobby, Inc., 477 U.S. at 248.
An early case, Wirtz v. Turner, 330 F. 2d 11 (7th Cir. 1964), is instructive. Plaintiff in that
case, a mail carrier, alleged he was not paid for his overtime hours from April 1, 1960 to July 15,
1961. Plaintiff identified three periods of time and estimated that he worked “52 to 53 1/2 hours
per week; 50 to 52 hours per week; and 48 to 50 hours per week” during those three periods. 330
F.2d at 13.

Reversing summary judgment in favor of the employer, the Court of Appeals

acknowledged that plaintiff’s submissions did not establish precisely what amounts plaintiff was
owed, but held that under the FLSA, a plaintiff “may recover even if the exact amount due is not
capable of mathematical ascertainment.” Id. In the case before this court, Plaintiffs’ estimates are
based on much more documentation than their own recollections or estimates: they rely on clock-in
times, affidavits, and bank statements. (See Employee Affidavits, Ex. B to Plaintiffs’ Motion for

15

Entry of an Order of Judgment [126-1]; Bank Statements, Ex. Q to Pls.’ 56.1 [109-3]; Timestamp
Reports, Ex. DD to Pls.’ 56.1 [109-3]; Timesheets, Ex. EE to Pls.’ 56.1 [109-3].)
Plaintiffs are not required to establish their claims with precision. In Harper v. Wilson,
plaintiff presented timecards, checks, and his own testimony in support of his claim for unpaid
wages. 302 F. Supp. 2d 873, 882-83 (N.D. Ill. 2004). Defendants, who failed to keep accurate
records, contended that plaintiff was required to present his paystubs, as well. As the court
observed, however, once the employee has shown that his work was uncompensated, the burden
shifts to the employer to prove “the precise amount of work performed or . . . evidence to negative
the reasonableness of the inference to be drawn from the employee's evidence,” Harper, 302 F.
Supp. 2d at 883 (quoting Anderson, 328 U.S. at 687), and the paychecks and time cards the
employer produced did not establish that plaintiff had been paid for all hours worked. Plaintiffs here
present similar evidence: timecards, checks, and affidavits. In an exhibit to a proposed sur-reply,
Defendants have performed belated calculations of amounts they contend Plaintiffs are owed. (Ex.
A to Kevin Lynch Sur-Reply [143-2].) The court notes that even those calculations demonstrate
that Plaintiffs are entitled to recover tens of thousands of dollars. More importantly, Defendants’
calculations have no documentary support apart from Kevin Lynch’s assertions; he offers no payroll
records, no payroll check stubs, no contemporaneous pay scale information, and no bank records.
In Harper, where defendants were unable to explain precisely how its employee’s “pay was
computed, what rate he was paid for overtime, or what deductions were made,” the court awarded
the amount supported by plaintiff’s testimony. The same result is appropriate here, where
Defendants offer no copies of the cleared checks or other documentary support or explanation of
how the Excel spreadsheets they rely on were calculated. See also Walton v. United Consumers
Club, Inc., 786 F.2d 303, 314-315 (7th Cir.1986) (an employer who fails to keep accurate records
must “suffer the consequences for any inaccuracy of hours worked”).

16

Defendants’ assertions that they paid other amounts via wire transfers—without supporting
documentation—are also insufficient to create a genuine factual dispute. In Uphoff v. Elegant Bath,
Ltd., 176 F.3d 399 (7th Cir. 1999), former employees of a kitchen and bathroom renovating
company sought unpaid overtime wages, and the employer admitted that the employees had
performed overtime work. Defendant contended the workers had been compensated by way of
numerous cash payments and the use of equipment and supplies, but offered no payroll records,
accounting statements, receipts or other documents to establish that plaintiffs were in fact
adequately compensated. 176 F.3d at 404. The Seventh Circuit affirmed the district court’s
determination that, absent evidence that the payments and facility use were intended to serve as
overtime compensation, the employer did not meet its burden. Id. at 406. As did the employer in
Uphoff, Defendants here rely on the fact that some wire transfers compensated Plaintiffs and were
not deducted from the total amount owed. But no evidence identifies the hours for which those wire
transfers were purportedly earmarked, and Plaintiffs assert that some of the transfers occurred
during periods of time unrelated to their claims. Absent explanation, or any documentation of the
nature or purpose for the wire transfers, Defendants’ assertions about the wire transfers do not
create a genuine issue of material fact. The bankruptcy court’s allowance of Plaintiff’s claim, while
not dispositive, provides further confirmation. Defendants have failed to show that a “genuine issue
of fact” exists as to the amount of damages.
2.

Dorothea Schmidt’s role

Defendants have suggested that Dorothea Schmidt, who was assigned to maintain payroll,
gave unauthorized pay raises, holiday pay, overtime and double time not in accordance with
Duraco’s pay policies. (Kevin Lynch Aff. [134-1] ¶¶ 8-11.) Thus, they argue that Kevin Lynch
cannot be held liable for those amounts. (Kevin Lynch Response [134] at 5-7.) Beyond their own
affidavits, no evidence supports the notion that Dorothea Schmidt manipulated the payroll. Even

17

if Ms. Schmidt did act beyond her authority, these circumstances would not excuse Kevin Lynch
in this case. Kevin Lynch has admitted that he gave Ms. Schmidt authority, and the court found
earlier that Kevin Lynch himself retained “primary control over Duraco’s payroll.” Arteaga, 2012
WL 3879899, *6. Significantly, it was Kevin Lynch who made decisions about whether or not to
issue paychecks at all when funds were low. Id. *6. The record shows, further, that Kevin Lynch
kept tabs on the amounts the employees claimed they were owed, and that he wrote letters to his
employees’ creditors, expressing optimism that Duraco would pay them soon. Id. *7. Whatever
Dorothea Schmidt may or may not have done (there is no evidence beyond Mr. Lynch’s surmise),
her conduct does not excuse Kevin Lynch or support the conclusion that Plaintiffs’ calculations
must be rejected.
3.

Employer liability for overtime

Defendants argue that Duraco policies prohibited any double-time pay, and that overtime
was never compensated until an employee had already worked 40 hours that week. (Kevin Lynch
Response [134] at 6-7.) The documentary evidence defeats these assertions. The paystubs
submitted by Plaintiffs show, on their face, that double-time was awarded on a regular basis.
(Paystubs, Ex. C to Pls.’ Reply in Support of Motion for Entry of Judgment [137-1].) Defendants
have not suggested that the paystubs are not authentic, and in light of this evidence, Kevin Lynch’s
unexplained and unsupported denials do not defeat a motion for summary judgment. Anderson v.
Liberty Lobby, Inc., 477 U.S. at 248.
Plaintiffs testified that Michael Lynch himself and other managers directed them to work
overtime. In any event, if an employer does not want employees to work more than straight time,
“it is the duty of the management to exercise its control and see that the work is not performed.
[Management] cannot sit back and accept the benefits without compensating for them.” 29 C.F.R.
§ 785.13. The employer will be liable for overtime work performed “even where the employer has

18

not requested the overtime be performed or does not desire the employee to work, or where the
employee fails to report his overtime hours.” Kellar v. Summit Seating Inc., 664 F.3d 169, 177 (7th
Cir. 2011); see also Chao v. Gotham Registry, Inc., 514 F.3d 280, 288 (2d Cir.2008) (“an employer
[who] has knowledge of a worker's overtime activities” is liable “whether the employee agreed to
work overtime voluntarily or under duress.”)
So long as the employer has “actual or constructive knowledge” that the employee has
performed uncompensated work, it is liable on a fair pay claim. DeMarco v. Nw. Mem'l Healthcare,
10 C 397, 2011 WL 3510896 (N.D. Ill. Aug. 10, 2011). The evidence in this case is that Kevin
Lynch signed, or authorized his signature, on payroll checks, signed off on operating reports
concerning finances, was “highly involved in the day-to-day operations of Duraco,” Arteaga, 2012
WL 3879899 *7, and therefore had actual or constructive knowledge that employees were working
overtime. (Kevin Lynch Dep. [118] at 80, 119.) Defendants’ objection to overtime claims is
overruled.
4.

Trustee Period

The Seventh Circuit has not ruled on the issue of whether employers are liable under the
FLSA for violations during and after bankruptcy proceedings. In Stafford v. Puro, 63 F.3d 1436,
1445 (7th Cir. 1995), the Court of Appeals found that the owners of Purofied Down Products
Corporation were personally liable under the IWPCA for unpaid wages during the course of a
Chapter 11 bankruptcy. Furthermore, other circuits have found that officers of a corporation are
liable through bankruptcy proceedings for violations of FLSA. See Boucher v. Shaw, 572 F.3d
1087, 1093-94 (9th Cir. 2009) (holding that the company’s bankruptcy has no effect on the claims
against the individual managers under the FLSA where the defendants include the CEO, CFO, and
the person in charge of labor and employment matters). The court agrees with Kevin Lynch,
however, that he ought not be held liable for unpaid wages after he was, by operation of the

19

bankruptcy court and its trustee, no longer in operational control over Duraco. In an exhibit to his
proposed sur-reply, Kevin Lynch has identified a handful of wage claims for pay periods after the
bankruptcy trustee had taken control over Duraco. The court agrees that Defendants are not liable
for those claims and will direct Plaintiffs to submit an amended proposed judgment order that
eliminates them.
5.

IRS Lien

Kevin Lynch notes that the IRS has filed a lien for unpaid taxes. The court agrees with
Plaintiffs that the IRS lien does not affect the amounts they are owed. The lien is limited to the
amounts Lynch himself owes to the IRS. If some part of that lien is for employee taxes, the
employees themselves will be liable for those amounts after they receive their unpaid wages.
B.

Liquidated Damages

Section 216(b) of the FLSA, provides for liquidated damages in the form of doubling the
award for unpaid overtime compensation or unpaid minimum wages.

29 U.S.C. § 216(b)

(Supp.1993). As originally written, the FLSA made doubling mandatory. See Overnight Motor
Transportation Co. v. Missel, 316 U.S. 572, 581 (1942). The Act was amended in 1947 to render
the doubling provision discretionary, but there remains a strong presumption in favor of doubling.
See Walton v. United Consumers Club, 786 F.2d 303, 310 (7th Cir.1986). Thus, under the present
scheme, double damages remains the norm, while single damages are the exception, and the
employer bears the burden of defeating such an award by showing that it acted in good faith and
with reasonable grounds to believe it was not violating the law. Id. at 310; see also Shea v. Galaxie
Lumber & Const. Co., Ltd., 152 F.3d 729, 733 (7th Cir. 1998) (double damages “mandatory” unless
the defendant makes such a showing). Kevin Lynch knew his employees were not being paid,
acted intentionally in withholding their paychecks, and acknowledges in this lawsuit that they have
not been fully compensated. The law requires an award of double damages on this record.

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C.

Michael Lynch’s Employer Status

Under the FLSA, an “employer” is “any person acting directly or indirectly in the interest of
an employer in relation to an employee.” 29 U.S.C. § 203(d). Whether a person or entity qualifies
as an employer under the Act is a question of law. Karr v. Strong Detective Agency, Inc., 787 F.2d
1205, 1206 (7th Cir.1985). The word “employer” is defined broadly under the FLSA to fulfill
Congress’s remedial intent. Nationwide Mutual Ins. Co. v. Darden, 503 U.S. 318, 326 (1992);
Bastian v. Apartment Inv. and Mgmt. Co., No. 07 C 2069, 2008 WL 4671763 (N.D. Ill. Oct. 21,
2008). More than one person may be an employer and liable for FLSA violations simultaneously
under the Act. Villareal v. El Chile, Inc., 776 F. Supp. 2d 778, 784-85 (N.D. Ill. 2011), citing Falk v.
Brennan, 414 U.S. 190, 191 (1973)). Courts evaluating FLSA claims have imposed liability on
individuals in a range of corporate positions, including general managers, provided such individuals
acted on behalf of the corporation to cause the violations. Dole v. Simpson, 784 F. Supp. 538, 545
(S.D. Ind.1991); Villanueva v. Falcon Const. Co., Inc., No. 2:09-CV-107-PPS-PRC, 2011 WL
1114430, *2 (N.D. Ind. Mar. 24, 2011). In some circumstances, another employee may be liable,
so long as that employee had supervisory authority over the unpaid worker and was responsible
in whole or part for the alleged violation. Riordan v. Kempiners, 831 F.2d 690, 694 (7th Cir. 1987).
To determine whether an individual is an employer, courts often utilize the “economic reality”
test, a fact-based inquiry that is not intended to be rigid or formalistic. See generally Goldberg v.
Whitaker House Co-op, Inc., 366 U.S. 28, 33 (1961) (economic reality should govern the
determination of employer status under the FLSA). In applying this test, courts consider “all the
circumstances of the work activity.” Sec’y of Labor v. Lauritzen, 835 F.2d 1529, 1534 (7th Cir.
1987) (articulating a test for determining who is an “employee” under the FLSA, but not for
identifying a person who might be deemed an “employer”). The First and Ninth Circuits utilize a
four-factor analysis which has been used often by district courts in this Circuit as well. See Bay

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State Alternative Staffing Inv. v. Herman, 163 F.3d 668, 675 (1st Cir.1988); Bonnett v. Calif. Health
and Welfare Agency, 704 F.2d 1465, 1470 (9th Cir.1983) (overruled in part on unrelated grounds
in Garcia v. San Antonio Metropolitan Transit Auth., 469 U.S. 528 (1985)); see, e.g., Nehmelman v.
Penn Nat. Gaming, Inc., 790 F. Supp. 2d 787, 795 (N.D. Ill. 2011). Those factors include whether
the alleged employer “(1) had the power to hire and fire the employees, (2) supervised and
controlled employee work schedules or conditions of employment, (3) determined the rate and
method of payment, and (4) maintained employment records.” Babych v. Psychiatric Solutions,
Inc., 09 C 8000, 2011 WL 5507374 (N.D. Ill. Nov. 9, 2011) (quoting Bonnette, 704 F.2d at 1470.)
The ultimate question is whether the individual had “supervisory authority over the complaining
employee” and is “responsible in whole or part for the alleged violation.” Hernandez v. City Wide
Insulation of Madison, Inc., 05-C-303, 2006 WL 1993552 (E.D. Wis. July 14, 2006) (quoting
Riordan, 831 F.2d at 694). No one factor is dispositive. Brock v. Superior Care, Inc., 840 F.2d
1054, 1059 (2d Cir.1988). Instead, the court considers the totality of the circumstances that
underscore the economic reality of the employment relationship. Villareal, 776 F. Supp. 2d at 785;
Donovan v. Sabine Irrigation Co., Inc., 695 F.2d 190, 194 (5th Cir.1983)).
As noted, Michael Lynch denies that he possessed the power to fire employees. In at least
one instance, Michael Lynch admits he threatened to fire Rudy Seidl, a production employee, but
Michael Lynch contends the threat was a response to being threatened with a large socket wrench.
And although Plaintiffs contend that after this heated exchange, Michael Lynch actually did fire Mr.
Seidl’s wife Patricia, Michael Lynch insists he did not terminate Patricia Seidl, but instead merely
asked her to leave what was, in his opinion, an “unprofessional” atmosphere. (See Michael Lynch
Response [135] at 2; Michael Lynch Dep. [119] at 122.) It is uncontested, however, that Bill Sasser
and other higher level managers had the ability to hire and that Bill Sasser reported directly to
Michael Lynch. (See Michael Lynch Dep. [119] at 34, 35, 37.) Sasser recalled hearing Michael
admit to having fired employees. That Sasser, who was subordinate to Michael Lynch, had hiring
22

and firing authority, strongly suggests Michael Lynch had it as well. The court concludes this factor
weighs in favor of finding Michael Lynch an employer for purpose of the FLSA.
With respect to Michael Lynch’s supervisory role and his control over work schedules or
conditions of employment, the court notes the undisputed evidence that Sasser and others reported
directly to him. In addition, Michael Lynch admitted that it was his responsibility to “oversee
production at the plant.” (Id. at 88.)

Defendants assert that the responsibility to set work

schedules was assigned to Stocki and Sasser. (see Kevin Lynch Aff [134-1] ¶ 3.) Yet the October
2009 e-mail message from Michael Lynch to John Cirillo demonstrates that although Michael Lynch
did not create the schedule, he had final authority over it: in no uncertain terms, Michael Lynch
warned Cirillo that any changes to the schedule must be approved by him. Id. Furthermore,
although Michael Lynch did not staff the hourly employees, he did contract with temporary
employee agencies for necessary labor. (See Michael Lynch Dep. [119] at 38, 92.) Plaintiffs have
also offered evidence that individual employees considered him to be an employer and were
directed by him to continue working, even when paychecks were not being paid. (See Maria
Arteaga Dep. [109-2] at 11; Ofelia Arteaga Dep.[109-2] at 12; Sasser Aff. [128-1] ¶ 12.) This
factor, too, weighs in favor of the conclusion that Michael Lynch is an employer under the FLSA.
There is little evidence that Michael Lynch determined the rate or method of payment.
Unlike Kevin Lynch, Michael Lynch did not sign off on checks or approve the payroll. An individual
may be deemed an employer even if he is not solely responsible for determining the rates and
methods of payment, however; “significant participation” in those decisions may be sufficient.
Hernandez v. City Wide Insulation of Madison, Inc., 05-C-303, 2006 WL 1993552 (E.D. Wis. July
14, 2006); see also Herman v. RSR Sec. Servs. Ltd., 172 F.3d 132, 139 (2d Cir. 1999) (stating that
“[c]ontrol may be . . . exercised only occasionally, without removing the employment relationship
from the protections of the FLSA, since such limitation on control does not diminish the significance
of its existence”). Though Michael Lynch did not sign paychecks, he had significant influence on
23

the amount employees were paid. Like the defendant at issue in Hernandez, Michael played a
consulting role to Kevin Lynch who controlled the payroll, and he spoke with employees about pay
issues on the plant floor and in meetings. The court concludes the third factor is, at worst for
Plaintiffs, inconclusive in determining Michael Lynch’s status. Finally, as there is no evidence that
Michael Lynch maintained employment records as a part of his duties at Duraco, the fourth factor
weighs against a finding that Michael Lynch is an employer.
Beyond application of the four-factor analysis, the court notes that the Seventh Circuit puts
great weight on the alleged employer’s ability to bring about the violations of the FLSA. See
Riordan, 831 F.2d at 694. Michael Lynch was aware that Duraco employees were not getting paid
every week. (See Michael Lynch Dep. [119] at 60-62, 73.) An individual’s knowledge that
employees were receiving paychecks returned for insufficient funds weighs in favor of finding that
an individual to be an employer under the FLSA. Reich v. Harmelech, No. 93C3458, 1996 WL
308272 (N.D. Ill. June 5, 1996). In this case, Michael Lynch acknowledged that he discussed the
payroll issues on the floor with employees and directed Bill Sasser how to respond to complaints.
(Michael Lynch Dep. [119] at 73; Sasser Aff. [128-1] ¶ 8-9.) Michael Lynch encouraged employees
to keep working, even though he knew that Duraco would be unable to make payroll. He made
promises to employees that the company would “make good” on their paychecks. In the court’s
view, these promises support an inference that Michael Lynch believed he had enough control over
payroll to assure the employees that their wages would be paid. Michael Lynch’s involvement with
employee pay issues weighs in favor of finding him liable in this case
The Villareal case, cited by both parties, is distinguishable. In Villareal, the court denied the
plaintiffs’ motion for summary judgment as to the defendants’ status as employers because the
evidence was unclear whether the defendants were a part of the day-to-day operations of the
business or whether they had delegated those functions to the managers. 776 F. Supp. 2d at 784.
Defendants in Villareal actually resided in Mexico for a substantial portion of the time when the
24

violations were alleged to have occurred—facts quite different from this case. There certainly are
contested facts here, but it is not disputed that Bill Sasser regularly reported to Michael Lynch, or
that Michael himself spent time on the plant floor talking to employees. Nor does this case
resemble Gray v. Powers, 673 F.3d 352, 353-54 (5th Cir. 2012) where the defendant visited the
worksite on “only . . . five or six occasions during the seventeen months the club was open for
business.” Instead, Michael Lynch’s personal contacts with employees to discuss their payroll
concerns, and directions to Bill Sasser about how to address those concerns weigh in favor of
finding Michael Lynch an employer. See Villanueva v. Falcon Const. Co., Inc., No. 2:09-CV-107PPS-PRC, 2011 WL 1114430 (N.D. Ind. Mar. 24, 2011) (defendant who calculated payroll and who
dealt directly with the plaintiff regarding her payroll concerns, responding to questions about when
she would be paid, deemed an employer).
The Fifth Circuit’s analysis of similar facts is illustrative. In Reich v. Circle C. Investments,
Inc., 998 F.2d 324, 329 (5th Cir. 1993), the defendant claimed he was not an “employer” under the
FLSA because his “consulting” agreement with the company excluded personnel matters from his
job description. He also had no ownership interest and did not control the day-to-day operations
of the corporation. Id. The court found none of those circumstances dispositive. The defendant
was indeed an employer, the court held, because he hired employees, was known to be a
supervisor, signed payroll checks, and gave specific instructions to employees. Id. Similarly,
Michael Lynch gave instructions to employees, was recognized to be one of the owners, exercised
scheduling authority, and claimed authority to fire employees. Furthermore, Michael Lynch was
involved in the operation of Duraco and spoke to employees regularly about payroll issues. In light
of “all the circumstances of the work activity,” Lauritzen, 835 F.2d at 1534, the court concludes that
Michael Lynch is an employer under the FLSA.

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II.

The IMWL Claims
The court’s analysis of Plaintiffs’ FLSA claims similarly applies to Plaintiffs’ IMWL claims,

because the two statutes are substantively congruent. See, e.g., Condo v. Sysco Corp., 1 F.3d
599, 601 (7th Cir. 1993) (applying the same analysis to the plaintiff’s FLSA and IMWL claims for
unpaid overtime wages); see also Ladegaard v. Hard Rock Concrete Cutters, Inc., No. 00 C 5755,
2004 WL 1882449 *4 (N.D. Ill. Aug. 18, 2004) (“[c]ourts have generally held that the IMWL parallels
the FLSA”) (collecting cases). The Illinois Administrative Code also approves FLSA regulations as
guidance in interpreting the IMWL (Ill. Admin. Code tit. 56, pt. 210.120 (2009)), and courts have
recognized that “federal decisions interpreting the FLSA also apply to claims asserted under the
IMWL.” Plaintiffs are entitled to summary judgment on their IMWL claim for unpaid minimum
wages (Count III) and unpaid overtime wages (Count IV), as well.
III.

The IWPCA Claims
The court’s analysis under the IWPCA is somewhat different, yet yields essentially the same

result. The IWPCA requires that “[a]ll wages earned by an employee during a semi-monthly or
biweekly pay period shall be paid to such employee not later than 13 days after the end of the pay
period in which such wages were earned.” 820 ILCS 115/4. Adopting language from the FLSA,
the IWPCA defines the term “employer” as including “any person or group of persons acting directly
or indirectly in the interest of an employer in relation to an employee.” 820 ILCS 115/2. According
to the Illinois Supreme Court, however, there is no need to apply the economic realities test to
determine who constitutes an employer under the IWPCA, because, unlike the FLSA, the IWPCA
expressly imposes liability on “those individual decision makers who knowingly permitted the Wage
Act violation.” Andrews v. Kowa Printing Corp., 217 Ill.2d 101, 109, 111-12, 838 N.E.2d 894, 899900, 901 (Ill. 2005); see also 820 ILCS 115/13 (stating that “employer” status “includes any officers

26

of a corporation or agents of an employer who knowingly permit such employer to violate the
provisions of [the IWPCA]”).
The evidence that supports a liability finding on Plaintiffs’ FLSA and IMWL claims also
shows the Defendants “knowingly permit[ted]” Duraco to violate the IWPCA provision requiring
payment of wages within thirteen days after the end of a pay period. There is no doubt that the
Defendants were fully aware of Duraco’s financial instability and that they decided to continue
operations long after repeated incidents in which Duraco did not pay Plaintiffs the wages they were
due. The court concludes that the individual Defendants were “employers” under the IWPCA and
grants summary judgment against the Defendants on the IWPCA claims for earned wages and
vacation pay.
CONCLUSION
For the reasons explained herein, the court grants Plaintiffs’ motion for summary judgment
[126] against Defendant Kevin Lynch regarding the amount of his liability on the claims for unpaid
wages brought under the FLSA, the IMWL, and the IWPCA. The court also grants Plaintiff’s
motion for summary judgment against Michael Lynch [128] regarding his status as an “employer”
under the FLSA and his liability on the claims for unpaid wages brought under the FLSA, the IMWL,
and the IWPCA. The court previously denied Defendant Kevin Lynch’s motion fo leave to file a
Sur-Reply [143] and stands by that ruling, though the court did consider some of the material
submitted with that brief. The Clerk is directed to terminate that motion. Plaintiffs are directed to
submit a proposed revised judgment order consistent with the court’s determinations that
Defendants are not liable for unpaid wages during the period of time in which Duraco was under
control of the bankruptcy trustee.
ENTER:

Dated: September 26, 2013

_________________________________________
REBECCA R. PALLMEYER
United States District Judge

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