Guzman et al v. Laredo Systems, Inc. et al.

Filing 196

MEMORANDUM Order. Signed by the Honorable Milton I. Shadur on 1/18/2017.Mailed notice(clw, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

JOSE GUZMAN, JAIME MERCADO,
BERNARDO MERCADO, CRISANTO
PICHARDO and CELESTINO MERCADO,
Plaintiffs,
v.
LAREDO SYSTEMS, INC., LAREDO
SYSTEMS, LLC and ENRIQUE JAIME,
Defendants.

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Case No. 10 C 1499

MEMORANDUM ORDER
On October 19, 2012 this Court's former colleague Honorable Blanche Manning entered
an order granting partial summary judgment in favor of the plaintiffs in this action confirming
the violation by defendants Laredo Systems, Inc., Laredo Systems, LLC and Enrique Jaime
("Jaime") individually of the Fair Labor Standards Act and two Illinois statutes: the Illinois
Minimum Wage Law and the Illinois Prevailing Wage Act. On February 14, 2013 this Court, to
whose calendar the action had then been transferred, entered a judgment order (the "Order") in
favor of plaintiffs and against the three defendants, jointly and severally (see Order ¶ 6), for
plaintiffs' interim attorneys' fees in the amount of $167,862.50 and their interim nontaxable
expenses in the amount of $11,890.52, for a total of $179,753.02.
With no part of that amount having been paid, on November 14, 2014 plaintiffs' counsel
presented a "Motion for Rule To Show Cause Regarding Contempt," and considerable time and
effort has been expended since that date in pursuit of and in opposition to that motion, although a
filing in bankruptcy by individual defendant Jaime created a statutory automatic stay as to him.

But in part because Jaime's post-bankruptcy-filing activities appeared to create a potential for
recovery on the judgment order against him, this Court conducted an evidentiary hearing
involving all three judgment order debtors on January 13 and 17, 2017.
It developed during that hearing without dispute that both Laredo Systems, Inc. and
Laredo Systems, LLC had been organized at Jaime's request by counsel representing him, but
that neither of those corporations had ever functioned in any respect -- each was a mere sham, a
totally empty shell. Instead all operations of Jaime's landscaping business were conducted by
him as a sole proprietorship d/b/a "Laredo Systems" 1 -- without even the pretense of any
corporate activity. 2
Although neither counsel approached the evidentiary hearing in particularly realistic
terms, focusing in large part as they did on the total inactivity of the two corporations, this Court
held at the conclusion of the hearing, with counsel for each side concurring without objection in
the following rulings:
1.

Because of the defendants' joint and several liability for the obligation of
$179,753.02 embodied in the Order, although any claimed responsibility
of the totally nonfunctioning corporations -- Laredo Systems, Inc. and

1

P. Ex. 7 comprised 143 checks issued to "Laredo Systems" (not one of the checks had
the meaningless "Inc." or "LLC" tacked on) in payment for landscaping services performed by
Jaime's sole proprietorship, with the aggregate of those payments running into several million
dollars.
2

This memorandum order will not pause to address the numerous ways in which Jaime
prepared and submitted false documentation (including a good many in the names of one or the
other of the nonfunctioning corporate shells) in conjunction with his conduct of business as his
own sole proprietorship. Nor will this Court address the legal significance of Jaime's payment of
all his personal living expenses (and his mother's as well) out of the landscaping business' funds.

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Laredo Systems, LLC -- is meaningless in legal terms, Jaime is fully
responsible personally for that entire amount.
2.

This Court has not been provided with sufficient input to determine
whether enforcement of the judgment order against Jaime individually can
be pursued in this federal district court or whether, alternatively, such
enforcement must be the subject of a state court action. 3

__________________________________________
Milton I. Shadur
Senior United States District Judge
Date: January 18, 2017

3

This Court learned at the conclusion of the January 17 hearing that the pendency of
certain adversary proceedings against Jaime in the Bankruptcy Court may, if successful, give rise
to the vacation of Jaime's discharge in bankruptcy, a ruling that would potentially impact on the
question raised in the paragraph to which this footnote is appended.
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