Zimmerman et al v. JWCF, LP d/b/a Baker Installations et al

Filing 67

MEMORANDUM Opinion and Order Signed by the Honorable Amy J. St. Eve on 9/28/2011:Mailed notice(kef, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
CHRISTOPHER ZIMMERMAN and
ENRIQUE MACIAS, on behalf of themselves
and all other persons similarly situated, known
and unknown,
Plaintiffs,
v.
JWCF, LP d/b/a/ BAKER INSTALLATIONS,
and SMC COMMUNICATIONS OF ILLINOIS,
LLC,
Defendants.

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No. 10-cv-7426
Honorable Amy J. St. Eve

MEMORANDUM OPINION AND ORDER
AMY J. ST. EVE, District Court Judge:
Plaintiffs Christopher Zimmerman and Enrique Macias, on behalf of themselves and all
other persons similarly situated, filed this lawsuit against Defendants JWCF, LP (d/b/a Baker
Installations) (“JWCF”) and SMC Communications of Illinois, LLC (“SMC LLC”), alleging
violations of the Fair Labor Standards Act, 29 U.S.C. § 201, et seq. (“FLSA”), the Illinois
Minimum Wage Law, 820 ILCS 105/1, et seq., and the Illinois Wage Payment and Collection
Act, 820 ILCS 115/1, et seq. On January 24, 2011, Defendant JWCF filed a motion to dismiss
the Complaint for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure
(“Rule”) 12(b)(2). The Court thereafter allowed the parties to engage in limited discovery with
respect to personal jurisdiction. Defendant JWCF subsequently re-filed its motion to dismiss for
lack of personal jurisdiction. For the following reasons, the Court grants JWCF’s motion.

FACTUAL BACKGROUND
JWCF, a Pennsylvania limited partnership with its headquarters and principal place of
business in McMurray, Pennsylvania, provides cable installation services in several states for
major cable system operators such as Comcast, Cox Communications, and Time Warner
pursuant to non-exclusive, written subcontractor service agreements. (R. 57-1, Baker Decl. ¶¶ 67.) SMC LLC is an Illinois limited liability company, but is no longer actively engaged in
business in Illinois. (Id. ¶ 28.)1
I.

History of Baker, JWCF, SMC Inc., and SMC LLC
Baker Inc. (“Baker”), a Pennsylvania corporation that is not a party to this case, entered

the Chicago cable market in 2003 by teaming up with Bob Sherry, a citizen and resident of
Illinois. (Baker Decl. ¶¶ 19-20.) At that time, Mr. Sherry was already operating a successful
cable installation business in Illinois as a subcontractor for Comcast, and he had an established
work force of cable installation technicians. (Id. ¶ 20) Baker had a relationship with Comcast in
other locations, and Comcast wanted Baker to work with Sherry in the Illinois market. (Id.) For
the next few years, Mr. Sherry ran the day-to-day operations of the cable installation operation in
Illinois, and Baker Inc. provided “back office” support. (Id. ¶ 21.) When Baker ceased active
operations in early 2006, JWCF took over Baker’s active business operations in several states.
(Id. ¶ 22.) JWCF entered into a written licensing agreement with Baker, pursuant to which
JWCF obtained the right to use the “Baker Installations” trade name and trademark. (Id.)

1

SMC LLC ceased operating in Illinois in 2010 as a result of the termination of SMC
LLC and Comcast’s relationship.
2

JWCF briefly took over Baker’s role in the Illinois market in 2006, but Mr. Sherry
continued to run the day-to-day operations in Illinois. (Id. ¶ 23.) In mid-to-late 2006, JWCF
established a Pennsylvania corporation, SMC Communications, Inc. (“SMC Inc.”), to separate
JWCF’s business in other markets from the business in Illinois (and Minnesota) in which it was
working with Mr. Sherry. (Id. ¶ 24.) After creating SMC Inc., JWCF ceased its cable
installation work in Illinois and subcontracted its Illinois cable work to SMC Inc. pursuant to a
written agreement. (Id. ¶ 26.) JWCF’s subcontracting relationship with SMC Inc. ended in
2007, and JWCF has not done any cable installation work in Illinois since that time. (Id. ¶ 27.)
SMC LLC was formed in 2007. (Id. ¶ 28.) JWCF, in its capacity as proprietor of the
“Baker Installations” brand name, entered into a written licensing agreement with SMC LLC,
granting SMC LLC a limited and non-exclusive license to use the “Baker Installations” brand
name. (Id. ¶ 30.) SMC LLC took over the Illinois cable installation work from SMC Inc. in
2008 (id. ¶¶ 31), but SMC LLC and JWCF did not enter into a subcontracting relationship. (Id. ¶
35.) Rather, SMC LLC directly entered into a series of preferred vendor agreements with
Comcast, to which JWCF is not a party. (Id. ¶ 31.)
II.

JWCF and SMC LLC During the Relevant Time Period2
JWCF is not incorporated or registered to do business in Illinois, does not maintain any

offices in Illinois, does not own any real or personal property in Illinois, does not maintain any
bank accounts in Illinois, does not advertise or solicit business in Illinois and has not appointed
an agent for service of process in Illinois. (Baker Decl. ¶¶ 10-11; 13-17.) JWCF has no partners

2

The relevant time period in Plaintiffs’ Complaint is August 2008 to April 2010.
(Compl. ¶¶ 6, 8.)
3

or employees who are citizens of Illinois. (Id. ¶ 12.) JWCF never entered into an agreement
with SMC LLC to provide cable installation services in Illinois, and SMC LLC never performed
any cable installation services for JWCF. (Id. ¶ 35.)
JWCF is the sole member of SMC LLC. (Id. ¶ 38.) SMC LLC is a “manager-managed”
limited liability company, and the managers of SMC LLC (Wade Baker, James Mazur and Chad
Baker) are all citizens and residents of Pennsylvania. (Id. ¶¶ 39-41.) None of the managers of
SMC LLC has ever had any responsibility or involvement in its day-to-day operations. (Id. ¶¶
40-41.) Mr. Sherry and James Allen ran SMC LLC’s day-to-day operations in Illinois. (Id. ¶
42.) Neither Mr. Sherry nor Mr. Allen had a role in or received compensation from JWCF, and
neither had any involvement with JWCF’s operations in other states. (Id. ¶ 43.) SMC LLC
employed cable installers in Illinois, including Plaintiffs, who reported directly to supervisors
that also worked for SMC LLC in Illinois. (Id. ¶ 44.)
JWCF and SMC LLC maintain separate bank accounts and separate books. (Id. ¶ 48.)
SMC LLC rented the warehouse and office facilities it used in Illinois from a third party
unrelated to JWCF. (Id. ¶ 50.)
JWCF filed tax returns with the Illinois Department of Revenue for the years 2007
through 2010, and SMC LLC did not file tax returns with the Illinois Department of Revenue.
(R. 60-2, Baker Dep. 102:8-104:17.) According to JWCF, SMC LLC is a single-member LLC,
which is classified as a “disregarded entity” under federal and state tax laws. (Id. ¶ 65.)
Therefore, for tax purposes, SMC LLC is treated as a sole proprietor and cannot file tax returns
separately from JWCF. (Id.) Because SMC LLC is a disregarded entity, JWCF’s state and
federal tax returns for the years 2008 through 2010 include the results of SMC LLC’s operations

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in Illinois, including the taxes SMC LLC paid in Illinois. (Id.) Even though the Illinois taxes
were reported on JWCF’s returns, SMC LLC paid all of the Illinois taxes. (Id.)
JWCF provided various clerical and administrative services to SMC LLC. JWCF printed
checks drawn on SMC LLC’s bank account to pay SMC LLC’s vendors, and printing and
sending invoices to SMC LLC’s customers. (Id. ¶ 51.) SMC LLC paid its own expenses from
its separate bank account, either directly to the vendors or by reimbursing JWCF if JWCF paid
the bill in the first place. (Id. ¶ 49; Baker Dep. 108:6-110:3; Baker Dep. Ex. 9.) Although
JWCF printed the checks, SMC LLC issued Plaintiffs’ paychecks and W-2s. (Id. ¶ 34.) JWCF
also processed payroll for SMC LLC according to policies SMC LLC set, and the payroll was
generated from data that SMC LLC employees in Illinois entered into a computer program. (Id.
¶ 52; R. 60-3, Bronzenec Decl. ¶¶ 7-8.) JWCF’s employees maintained SMC LLC’s general
ledger and generated SMC LLC’s monthly income and balance sheet. (Baker Dep. 108:2-109:5;
R. 60-3, McClain Dep. 79:14-22.)
Additionally, JWCF provided human resources support to SMC LLC by placing
employment advertisements on websites such as monster.com and for open positions with
“Baker Installations.” (Id. ¶ 54.) SMC LLC reimbursed JWCF for the costs of those ads. (Id.)
JWCF referred any leads on employment candidates in Illinois that came in from the Baker
Installations website or the ads to SMC LLC although JWCF would sometimes conduct initial
screening interviews. (Id. ¶ 55.) JWCF also filed paperwork relating to drug tests and
background checks. (Id. ¶¶ 56.) SMC LLC was free to reject candidates, and it made all
employment decisions relating to its business, including the decision to hire, fire, promote and
discipline all employees, to assign work and to determine the rate and method of compensating

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employees. (Id. ¶ 55.)
SMC LLC employees completed online training through a portal that JWCF maintained.
(Id. ¶ 58; R. 63-3, Zimmerman Decl. ¶ 5.) The training website does not contain the JWCF
name, but rather contains the “Baker Installations” name. (Id.) Plaintiff Zimmerman was
instructed to call JWCF if he had issues with his compensation. (Zimmerman Decl. ¶ 3.) SMC
LLC paid management fees to JWCF for the administrative services JWCF performed. (Baker
Decl. ¶ 59.)
In 2008, JWCF “dispatched” its Vice President of Client Relations, Marianne McClain,
to SMC LLC to assist Messrs. Sherry and Allen in running SMC LLC’s cable operation. (Id. ¶
60.) McClain served as the Vice President of Client Relations of SMC LLC,3 while at the same
time continuing to hold the same title with JWCF. (Id.) In her capacity as Vice President of
Client Relations of SMC LLC, she reported to the three managers of SMC LLC–Mr. Mazur, Mr.
Wade Baker and Mr. Chad Baker. (McClain Dep. 26:9-16.) She did not report to SMC LLC’s
Vice President of Operations, Mr. Sherry, but rather she and Mr. Sherry worked together as
equals in overseeing the general management and operations of SMC LLC. (McClain Dep.
38:14-24; 40:1-4; R. 57-3, McClain Decl. ¶ 11.) JWCF issued paychecks to Ms. McClain during
the time period, but SMC LLC reimbursed JWCF for her salary. (McClain Dep. 42:11-17; 74:413; Baker Decl. ¶ 61.) SMC LLC also paid travel and other expenses Ms. McClain incurred on
SMC LLC’s behalf. (Baker Decl. ¶ 61; McClain Decl. ¶ 8.) When her travel involved work for

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In JWCF’s Reply brief, it states that Ms. McClain’s title at SMC LLC was Vice
President of Operations. (R. 63, JWCF’s Reply at 5.) Because Ms. McClain’s sworn
Declaration states that her title was Vice President of Client Relations, however, the Court has
adopted that explanation.
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both SMC LLC and JWCF, she segregated the expenses accordingly and obtained
reimbursement from the appropriate company. (McClain Decl. ¶ 10.)
During the time Ms. McClain served as Vice President of Client Relations of SMC LLC,
she attended executive meetings with Mr. Mazur and others either face-to-face at JWCF’s office
in Pennsylvania or by phone approximately two to four times per month to discuss general
business topics as they related to JWCF and SMC LLC. Ms. McClain testified that topics of
discussion with respect to SMC LLC related to its work force, overall information in general and
client issues. They may also have discussed issues related to SMC LLC’s payroll. (McClain
Dep. 27:24-38:13.) In addition, Ms. McClain attended market manager meetings at JWCF’s
office for the purpose of discussing how the markets operated and potential improvements. (Id.
43:18-44:14.) Mr. Allen and Mr. Sherry also also attended two or three of those meetings,
representing SMC LLC. (Id. 43:3-11; 44:11-14.)
From 2007 to 2010, Mr. Wade Baker, a limited partner and CFO of JWCF and also a
manager of SMC LLC,4 traveled to Illinois approximately four times each year to attend a
personal development coaching program. (Id. ¶ 62.) During those trips, which were a day and a
half in duration, he would stop at SMC LLC’s office for a short visit, but he did not conduct any
formal meetings, and he generally considered his visits to be “social calls.” (Id. ¶ 63.) In 2009,
Mr. Baker traveled to Illinois to meet with Ms. McClain, Mr. Sherry and Mr. Mazur at SMC
LLC in his capacity as manager of SMC LLC, during which they discussed SMC LLC’s

4

The meaning of the term “manager” in the context of the organizational structure of an
Illinois LLC bears mentioning here. Illinois law provides that an LLC may vest management of
the company in either managers (a “manager-managed LLC”) or in members (a “membermanaged LLC”). See 805 ILCS 180/5-5. This does not mean, however, that the “managers”
have operational duties with the company.
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financial projections and planning. (Id. ¶ 64.) Mr. Baker rarely communicated with Mr. Sherry
although, occasionally, in his capacity as manager of SMC LLC, he would discuss high-level
strategic issues relating to SMC LLC. (Id. ¶ 47.) They would not discuss day-to-day operational
issues. (Id.) Mr. Baker has no recollection of ever communicating with Mr. Allen regarding
SMC LLC’s operations. (Id. ¶ 46.) Mr. Mazur, a manager of SMC LLC, traveled to Illinois on
occasion to attend industry events on behalf of SMC LLC.
LEGAL STANDARD
A motion to dismiss for lack of personal jurisdiction pursuant to Rule 12(b)(2) tests
whether a federal court has personal jurisdiction over a defendant. See Fed.R.Civ.P. 12(b)(2);
Central States v. Phencorp Reins. Co., 440 F.3d 870, 875 (7th Cir. 2006); Fed.R.Civ.P. 12(b)(2).
In ruling on a Rule 12(b)(2) motion, courts may consider matters outside of the pleadings. See
Purdue Research Found. v. Sanofi-Sythlabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003). When a
court determines a Rule 12(b)(2) motion based on the submission of written materials without
holding an evidentiary hearing, the plaintiff must make a prima facie case of personal
jurisdiction. See uBID, Inc. v. GoDaddy Grp., Inc., 623 F.3d 421, 423-24 (7th Cir. 2010);
GCIU-Emp’r Ret. Fund v. Goldfarb Corp., 565 F.3d 1018, 1023 (7th Cir. 2009). As such, the
plaintiff bears the burden of establishing that personal jurisdiction exists. See uBID, Inc., 623
F.3d at 423-24; GCIU-Emp’r Ret., 565 F.3d at 1023. In determining whether the plaintiff has
met its burden, a court must resolve all factual disputes in the plaintiff’s favor. See GCIU-Emp’r
Ret. Fund, 565 F.3d at 1020 n.1. Courts will, however, accept as true any facts contained in the
defendant’s affidavits that the plaintiff does not refute. Id.; see also Purdue Research Found.,
338 F.3d at 783 (if the defendant submits affidavits or other evidence in opposition to the

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plaintiff’s motion, “the plaintiff must go beyond the pleadings and submit affirmative evidence
supporting the exercise of jurisdiction”).
The FLSA does not authorize nationwide service of process. Aviles v. Kunkle, 978 F.2d
201, 204 (5th Cir. 1992). In a federal question case “where federal statutes do not authorize
nationwide service of process, a federal court in Illinois may exercise personal jurisdiction over a
defendant if it would be permitted to do so under the Illinois long-arm statute.” uBID, Inc., 623
F.3d at 425 (citing Fed.R.Civ.P. 4(k)(1)(A)). “A state’s exercise of personal jurisdiction is also
subject to the demands of the Fourteenth Amendment’s due process clause. Because Illinois
permits personal jurisdiction if it would be authorized by either the Illinois Constitution or the
United States Constitution, the state statutory and federal constitutional requirements merge.”
Id. (citing State of Illinois v. Hemi Group LLC, 622 F.3d 754, 756-57 (7th Cir. 2010) and
Tamburo v. Dworkin, 601 F.3d 693, 700 (7th Cir. 2010)); see also Philos Techs., Inc. v. Philos &
D, Inc., 645 F.3d 851, 855, n.2 (7th Cir. 2011).
It is well-established that the due process test for personal jurisdiction requires that a
defendant have minimum contacts with the forum state “such that the maintenance of the suit
does not offend traditional notions of fair play and substantial justice.” Int’l Shoe Co. v.
Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158 (1945) (quotations and citations omitted);
uBid, Inc., 623 F.3d at 425 (citation omitted). There are two types of personal jurisdiction:
general and specific. See Helicopteros Nactionales de Colombia v. Hall, 466 U.S. 408, 414-16,
104 S.Ct. 1868 (1984); uBid, Inc., 623 F.3d at 425. “General jurisdiction is for suits neither
arising out of nor related to the defendant’s contacts with the State, and is permitted only where
the defendant conducts continuous and systematic general business within the forum state.”

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GCIU-Emp’r Ret., 565 F.3d at 1023; see also Helicopteros Nacionales de Colombia, 466 U.S. at
416. Specific jurisdiction is narrower and “refers to jurisdiction over a defendant in a suit arising
out of or related to the defendant’s contacts with the forum.” GCIU-Emp’r Ret., 565 F.3d at
1023.
ANALYSIS
I.

General Jurisdiction
The Seventh Circuit has emphasized that the standard for general jurisdiction is

“demanding” and requires the defendant to have such “extensive contacts with the state that it
can be treated as present in the state for essentially all purposes.” uBID, 623 F.3d at 426. In
determining whether to exercise general jurisdiction over a defendant, courts typically apply a
five-part test: “(1) whether and to what extent the defendant conducts business in the forum
state; (2) whether the defendant maintains an office or employees within the forum state; (3)
whether the defendant sends agents into the forum state to conduct business; (4) whether the
defendant advertises or solicits business in the forum state; and (5) whether the defendant has
designated an agent for service of process in the forum state.” See Corus Int’l Trading Ltd. v.
Eregli Dermir Ve Celik Fabrikalari, T.A.S., 765 F. Supp.2d 1079, 1083 (N.D. Ill. 2011) (citing,
among other cases, Helicopteros Nacionales de Colombia, 466 U.S. at 416).
Plaintiffs argue that JWCF’s relationship and involvement with its Illinois subsidiary,
SMC LLC, confers personal jurisdiction over JWCF in Illinois.5 They argue that SMC LLC was

5

Plaintiffs do not argue that JWCF, when analyzed separate and apart from SMC LLC,
has sufficient contacts with Illinois such that the Court could exercise general jurisdiction over it.
Therefore, the Court need not analyze JWCF’s independent contacts with Illinois for purposes of
the general jurisdiction analysis.
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established to do business for JWCF in Illinois and that JWCF controls SMC LLC’s business.
(R. 60, Plfs.’ Resp. at 9-12.)
In Illinois, an exercise of jurisdiction over a foreign parent corporation based on its
subsidiary’s contact with the forum state is proper where “where the corporate veil can be
pierced” or “where all the corporate formalities are observed but the subsidiary’s only purpose is
to conduct the business of the parent.” See Central States v. Reimer Express World Corp., 230
F.3d 934, 940 (7th Cir. 2000) (citing IDS Life Ins. Co. v. SunAmerica Life Ins. Co., 136 F.3d 537,
541 (7th Cir. 1998)). Plaintiffs do not argue that the Court should pierce the corporate veil.6
Rather, they argue that general jurisdiction is proper under the so-called Maunder theory,
pursuant to which a court may exercise jurisdiction over a nonresident parent corporation where
the subsidiary is “acting as the parent corporation’s Illinois agent in the sense of conducting the
parent’s business rather than its own.” Old Orchard Urban Ltd., 389 Ill. App.3d at 66, 904
N.E.2d at 1059 (citing Alderson v. Southern Co., 321 Ill. App.3d 832, 854, 747 N.E.2d 926, 944
(2001)); see also Maunder v. DeHavilland Aircraft of Canada, 102 Ill.2d 342, 352-53, 466
N.E.2d 217, 222-23 (1984)).
It is well-established in the Seventh Circuit that “personal jurisdiction cannot be
premised on corporate affiliation or stock ownership alone where corporate formalities are
substantially observed and the parent does not exercise an unusually high degree of control over

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In Illinois, piercing the corporate veil requires a plaintiff to demonstrate that the
subsidiary “is so controlled, and its affairs so conducted by a parent that observance of the
fiction of separate identities would sanction a fraud or promote injustice.” Old Orchard Urban
Ltd. v. Harry Rosen, Inc., 389 Ill. App.3d 58, 71, 904 N.E.2d 1050, 1061-62 (1st Dist. 2009).
Piercing the corporate veil is a distinct analysis from the Maunder agency theory of jurisdiction,
which is discussed below. Id.
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the subsidiary.” Reimer Express World Corp., 230 F.3d at 943. The “critical question” under
the Maunder theory “is whether the Illinois subsidiary exists for no purpose other than
conducting the business of its parent.” Alderson, 321 Ill. App.3d at 855, 747 N.E.2d at 944. The
determination “does not turn on whether the distinction of separate corporate identities has been
blurred.” Old Orchard Urban Ltd., 389 Ill. App.3d at 66, 904 N.E.2d at 1056. In Alderson, the
Illinois Appellate Court stated that jurisdiction over a foreign parent under Maunder is conferred
where the parent is “merely a holding company that has established many subsidiaries to carry
out its business” or is an “umbrella company” that exists “merely to bid on projects or
investments, merely for tax purposes, or to own the assets” through which the parent conducts its
business ventures. Id.; see also IDS Life Ins. Co., 136 F.3d at 541 (“If the subsidiaries were
acting as [the parent’s] Illinois agent in the sense of conducting [the parent’s] business rather
than their own business, the parent could be sued.”) (citing, among other cases, Maunder, 102
Ill.2d 342, 466 N.E.2d 217).
A.

SMC LLC was not JWCF’s “service arm” in the Illinois market

Plaintiffs maintain that JWCF is subject to personal jurisdiction in Illinois because SMC
LLC acts as JWCF’s “service arm” in the Illinois market. (R. 60, Plfs.’ Resp. at 10, citing Japax,
Inc. v. Sodick Co. Ltd., 186 Ill. App.3d 656, 664, 542 N.E.2d 792, 797 (1st Dist. 1989).) In
support of their argument, Plaintiffs state that JWCF operated in the Illinois market in 2006 and
2007, and they contend that SMC LLC was established “to separate [JWCF] on paper from the
Illinois market.” (Plfs.’ Resp. at 10.) Plaintiffs further state that JWCF (1) hired SMC LLC’s
technicians; (2) filed tax returns in Illinois; (3) computed SMC LLC’s technicians’ wages; (4)
prepared SMC LLC’s invoices to Comcast; (5) paid bills on behalf of SMC LLC; (6) prepared a

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“gamut” of financial and productivity reports for work SMC LLC performed in the Illinois
market; and (7) assigned one of its executives the task of directly overseeing SMC LLC’s
operations in the Illinois market. (Id. at 11.)
Plaintiffs aver repeatedly throughout their brief, without citations to or support in the
record, that JWCF “hired” technicians for SMC LLC. See id. at 11-13. JWCF, however, has
submitted evidence that SMC LLC “made all employment decisions relating to its business,
including the decision to hire, fire, promote and discipline employees, to assign work and to
determine the rate and method of compensating employees.” (Baker Decl. ¶¶ 55-56.) Plaintiffs
point to no evidence to the contrary. Instead, Plaintiffs cite evidence showing that JWCF
performed certain human resource functions for SMC LLC, including advertising job openings,
conducting initial screening interviews, and performing background checks on technicians, see
Plfs.’ Resp. at 8, which JWCF does not dispute. (R. 57, JWCF’s Mem. at 5-6.) That evidence,
however, does not support a broad assertion that JWCF “hired” technicians, and it does not
contradict JWCF’s evidence that it “made all employment decisions relating to its business,
including the decision to hire, fire, promote and discipline employees, to assign work and to
determine the rate and method of compensating employees.” Plaintiff Zimmerman discusses his
employment in a sworn Declaration he submitted in support of Plaintiffs’ response brief. Among
other things, he stated that he obtained his job as a technician by responding to a “Baker
Installations” job advertisement and that “Baker Installations” interviewed him over the phone
from their Pennsylvania headquarters. (Zimmerman Dec. ¶¶ 2, 4.)7 These statements, however,

7

Plaintiff Zimmerman stated that he was employed by “the Company,” which he defines
as SMC LLC and “Baker Installations,” collectively, and he further stated that he understood
Baker Installations and SMC LLC to be the same company. (Zimmerman Decl. ¶¶ 2, 4.) This
13

do not indicate that JWCF hired him or that JWCF determined the rate or method by which SMC
LLC compensated him. Therefore, they do not contradict JWCF’s proffered evidence.
Although Plaintiffs’ assertion that JWCF “paid bills on behalf of SMC LLC” is
technically accurate, JWCF explains with uncontested evidence that it “did nothing more than
carry out the administrative function of printing and sending checks drawn on SMC [LLC]’s
bank account to SMC [LLC]’s vendors.” (R. 63, JWCF’s Reply at 4, citing Baker Dep. 109;
Baker Decl. ¶¶ 51-52)). Indeed, it is undisputed that JWCF and SMC LLC maintained separate
bank accounts and separate books (Baker Decl. ¶ 48), and SMC LLC paid expenses out of its
own bank account. (Id. ¶ 49). Moreover, SMC LLC paid JWCF for its administrative services.
(Id. ¶ 59). Because a parent corporation “may provide administrative services for its subsidiary
in the ordinary course of business without undermining corporate separateness and triggering
personal jurisdiction over the parent,” Reimer Express World Corp., 230 F.3d at 945, JWCF’s
rendering of administrative services does not undermine corporate separateness here. The same
reasoning applies to the uncontested facts that JWCF printed and sent checks to SMC LLC’s
vendors, prepared SMC LLC’s invoices to Comcast, and prepared SMC LLC’s financial and
productivity reports. See id. (explaining that “parent corporations regularly provide certain
services to their subsidiaries,” and holding that they are “not sufficient minimum contacts to
support the exercise of jurisdiction”).

understanding does not, however, support an assertion that any entity other than SMC LLC
employed Mr. Zimmerman because SMC LLC had license to use the “Baker Installations”
trademark and trade name in Illinois. (Baker Decl. ¶ 30.) Moreover, Plaintiffs concede that
SMC LLC employed the Plaintiffs in this case. See Plfs.’ Resp. at 9 (“SMC employed the
plaintiff cable installers in Illinois”) and at 13 (“The wage and hour claims at issue in this lawsuit
arose out of work installers performed for SMC in Illinois”).
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Plaintiffs’ argument that JWCF “computed” SMC LLC’s technicians’ wages also misses
the mark because the unrefuted evidence in the record shows that JWCF had no involvement in
establishing SMC LLC’s pay policies, nor did it determine the method or rate of compensation
for SMC LLC’s cable installation technicians. (Baker Decl. ¶ 52.) Further, SMC LLC’s
employees in Illinois were responsible for entering the necessary data into the computer system
from which SMC LLC issued paychecks. (Id.; R. 60-3, Bronzenec Dec. ¶¶ 7-8.) JWCF’s only
involvement with respect to SMC LLC’s payroll was administrative in nature–i.e., computing
the pay according to SMC LLC’s policies and printing the payroll checks.8
JWCF’s filing of tax returns in Illinois (and accounting for SMC LLC’s profits) also does
not undermine the corporate separateness of SMC LLC and JWCF. As JWCF explained in its
reply brief, a single-member LLC (such as SMC LLC) is classified by default under federal and
state tax regulations as a “disregarded entity,” and its profits are taxed as part of the profits of its
single member (here, JWCF). (JWCF’s Reply at 4; see also Baker Decl. ¶ 65; 26 C.F.R. §
301.7701-3(a); 86 Ill. Admin. Code tit. § 100.9750(b)(1)(A); IRS Form 8832, Entity
Classification Election at 5.) Further, JWCF submitted evidence, which Plaintiffs have failed to
refute, that SMC LLC paid all of the Illinois taxes. (Baker Decl. ¶ 65.) Plaintiffs do not cite to,
and the Court is not aware of, any authority holding that personal jurisdiction over a foreign
parent is appropriate simply because the parent filed a tax return in the state where its subsidiary
does business.

8

JWCF likened the payroll services it provided to SMC LLC to those that ADP (a wellknown third party payroll vendor) might provide to a company. See JWCF’s Reply at 4; Baker
Dep. 95:13-16; 19-24.
15

Plaintiffs make much of the fact that JWCF’s Vice President of Client Relations, Ms.
McClain, was also the Vice President of Client Relations for SMC LLC. The existence of
common officers of both the parent and the subsidiary, however, is insufficient to exercise
personal jurisdiction over the nonresident parent. See Old Orchard, 389 Ill. App.3d at 67, 904
N.E.2d. 1059 (citation omitted) (personal jurisdiction not conferred where foreign parent and
domestic subsidiaries shared officers and directors); see also Alderson, 321 Ill. App.3d at 854;
747 N.E.2d at 944-45 (the existence of officers or directors servicing both corporations is not
sufficient to confer jurisdiction over a nonresident parent corporation) (citation omitted).
According to evidence JWCF submitted, Ms. McClain, in her capacity as Vice President of
Client Relations for SMC LLC, reported to SMC LLC’s managers. (McClain Dep. 26:9-16.)
Moreover, SMC LLC, and not JWCF, paid Ms. McClain’s salary and travel expenses during the
time she worked for SMC LLC. (McClain Dep. 42:11-17; Baker Decl. ¶ 61; McClain Decl. ¶¶
8-10.) Plaintiffs do not refute these facts. Ms. McClain’s role does not confer personal
jurisdiction over JWCF. See Reimer Express World Corp., 230 F.3d at 946 (“[w]hen the parent
receives compensation for the subsidiary’s use of the services of an employee of the parent, the
employee acts on behalf of the subsidiary and not the parent, and the employee acts at the
direction of the subsidiary’s officers, the parent, at most, provides standard administrative
services to the subsidiary” and “is not a sufficient minimum contact”).
Plaintiffs analogize this case to Japax, 186 Ill. App.3d at 664-65; 542 N.E.2d at 797, but
the facts are readily distinguishable. In Japax, the court found that the subsidiary functioned as
the “service arm” of the foreign parent corporation because the subsidiary sold the parent
company’s products in Illinois, and because the parent “loaned” employees to the subsidiary

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(accounting for a significant portion of the subsidiary’s domestic personnel) and loaned money
to or guaranteed millions of dollars on behalf of the subsidiary. Id. The court also found that the
parent’s employees frequently came to the United States and Illinois to train the subsidiary’s
personnel, to assist in the subsidiary’s service activities, and to attend trade shows. Id. The
court further found that the subsidiary’s officers reported to the parent’s executive managing
director. Id.
In contrast, there is no evidence in this case that JWCF “loaned” employees to SMC LLC
or that JWCF had the responsibility for any of SMC LLC’s financial obligations. Although Ms.
McClain worked for both JWCF and SMC LLC, it is uncontested that SMC LLC ultimately paid
for her services, whether directly or through reimbursing JWCF. Further, SMC LLC had its own
employees and officers, including Mr. Allen and Mr. Sherry, who ran its day-to-day operations
and were not employees of or otherwise affiliated with JWCF. (Baker Decl. ¶¶ 42-43.) SMC
LLC employed its own cable installation technicians, including Plaintiffs, who reported to SMC
LLC supervisors in Illinois. (Id. at ¶ 44.) Mr. Baker, JWCF’s CFO, recalled only one instance
during the relevant time period where he traveled to Illinois for the purpose of attending a formal
meeting, and even then, he was acting in his capacity as a manager of SMC LLC. (Id. ¶ 64.) His
other visits to Illinois during the relevant time period were social in nature. (Id. ¶ 63.) Mr.
Mazur, another of SMC LLC’s managers, traveled to Illinois on only one occasion to attend
industry events, and he attended on SMC LLC’s behalf. (McClain Decl. ¶ 14.)
Additionally, the uncontested evidence shows that SMC LLC did not conduct business
for JWCF. Instead, it conducted business for Comcast, with which it contracted to provide cable
installation services in Illinois. (Baker Decl. ¶ 31.) Indeed, SMC LLC’s Vice President of

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Operations, Mr. Sherry, already had a successful cable installation business in Illinois and a
subcontractor relationship with Comcast before either JWCF or SMC LLC was incorporated.
(Id. ¶¶ 6-7, 20.) JWCF was not a party to the contract between SMC LLC and Comcast. (Id. ¶
31.) In fact, SMC LLC never entered into an agreement with JWCF to provide cable services in
Illinois, and SMC LLC never performed any cable installation services for JWCF. (Id. ¶ 35.) It
cannot, therefore, be said that SMC LLC exists “for no purpose other than conducting the
business of” JWCF. See Alderson, 38 Ill. App.3d at 66, 904 N.E.2d at 1058.
B.

JWCF did not control SMC LLC’s business

Plaintiffs rely on many of the same facts for their “service arm” argument as they do for
their “control” argument, and therefore the Court’s analyses do not vary significantly. They
argue that JWCF executives and employees operated in the Illinois market, but the uncontested
evidence shows that the only JWCF employee who had a role in the day-to-day operation of
SMC LLC was Ms. McClain.9 She held the title of Vice President of Client Relations with SMC
LLC and acted in that capacity when she performed work for that entity. Moreover, she reported
to the three managers of SMC LLC in her role as Vice President of Client Relations for SMC
LLC. She, along with Mr. Sherry and Mr. Allen, who were employed by SMC LLC and who
were not affiliated with JWCF, ran SMC LLC’s day-to-day operations. (Baker Decl. ¶¶ 42-43.)
The fact that Ms. McClain, Mr. Sherry and Mr. Allen at times reported on the status of SMC
LLC’s operations in Illinois or attended meetings with JWCF employees does not mean that

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Plaintiffs argue that John Shedd, a Vice President for JWCF, “traveled to Illinois on at
least one occasion to monitor how the Illinois office staff entered technician jobs and hours onto
the Rumba system.” (Plfs.’ Resp. at 5.) Plaintiffs citations to the record, however, do not
support their assertion. Moreover, their citations affirm that Mr. Shedd had no role at SMC
LLC. See McClain Dep. at 80:24-81:5.
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JWCF had “an unusually high degree of control” over SMC LLC. See Reimer Express World
Corp., 230 F.3d at 943; Old Orchard, 389 Ill. App. at 66, 904 N.E.2d at 1060 (“Parents of
wholly owned subsidiary corporations necessarily control and direct the activities of the
subsidiaries to some extent[.]”) (citing Alderson v. Southern Co., 321 Ill. App.3d 832, 854, 747
N.E.2d 926, 944 (2001)).
Plaintiffs have not met their burden of showing that JWCF exercised the requisite degree
of control over SMC LLC’s business. The evidence indicates that SMC LLC employees ran its
day-to-day operations, and Plaintiffs have failed to refute that evidence. Therefore, the Court
cannot exercise general personal jurisdiction over JWCF.
II.

Specific Jurisdiction
Plaintiffs also argue that JWCF is subject to specific jurisdiction in Illinois. “Specific

personal jurisdiction is appropriate when the defendant purposefully directs its activities at the
forum state and the alleged injury arises out of those activities.” Mobile Anesthesiologists
Chicago, LLC v. Anesthesia Assocs. of Houston Metroplex, P.A., 623 F.3d 440, 444 (7th Cir.
2010). In deciding whether the Court may exercise specific jurisdiction over JWCF, the Court
must 1) identify JWCF’s contacts with Illinois; 2) analyze whether those contacts meet
constitutional minimums and whether exercising jurisdiction on the basis of the minimum
contacts sufficiently comports with fairness and justice; and 3) determine whether the sufficient
minimum contacts, if any, arise out of or are related to the causes of action in Plaintiffs’ suit.
See Reimer Express World Corp., 230 F.3d at 944.
Plaintiffs set forth two separate specific jurisdiction arguments. First, they claim that
JWCF is subject to specific jurisdiction in Illinois under Maunder because of its alleged
involvement with SMC LLC’s pay policies at issue in this case. (Plfs.’ Resp. at 13.) Second,
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they argue that JWCF is subject to specific jurisdiction because of its independent contacts with
Illinois. (Plfs.’ Resp. at 12-13.)
A.

JWCF is not subject to specific personal jurisdiction under Maunder

For many of the same reasons JWCF is not subject to general personal jurisdiction based
on its parent-subsidiary relationship with SMC LLC, JWCF is not subject to specific jurisdiction.
This case is about SMC LLC’s pay policies and the compensation it allegedly paid (or did not
pay) to Plaintiffs and other members of the putative class. (Compl., passim.) As discussed
above, the unrefuted evidence shows that JWCF had no involvement in establishing SMC LLC’s
pay policies, nor did it determine the method or rate of compensation for SMC LLC’s cable
installation technicians. (Baker Decl. ¶ 52.) Further, SMC LLC’s employees in Illinois were
responsible for entering the necessary data into the computer system from which SMC LLC
issued paychecks. (Id.; R. 60-3, Brozenec Decl. ¶¶ 7-8.) JWCF’s only involvement with respect
to SMC LLC’s payroll was administrative in nature. Those facts render this case unlike the facts
in Hundt v. DirectSat USA, LLC, No. 08 C 7238, 2010 WL 1996590 (N.D. Ill. May 17, 2010), on
which Plaintiffs rely. (Plfs.’ Resp. at 13.) In Hundt, the plaintiffs (who were represented by the
same counsel as Plaintiffs in this case) sought leave to amend their complaint to add additional
parties. In discussing whether amendment would be futile based on lack of personal jurisdiction,
the court concluded that a party who set the pay policies at issue in the lawsuit and who admitted
to “devising, directing, implementing, and supervising the wage and hour practices and policies
relating to employees,” including the plaintiff, would be subject to personal jurisdiction in
Illinois. Id. at *5. In this case, however, there is simply no evidence from which the Court could
conclude that JWCF had any involvement with, let alone exercised an “an unusually high degree

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of” control over, SMC LLC’s pay policies at issue in this case.
B.

JWCF is not subject to specific personal jurisdiction by virtue of its
independent contacts with Illinois

The Court disagrees with Plaintiffs’ argument that JWCF had sufficient minimum
contacts with Illinois to confer specific personal jurisdiction over it. Plaintiffs argue that JWCF
“computed the wages paid to Illinois technicians,” relying on testimony from Ms. Brozenec, Ms.
McClain, Mr. Baker and Mr. Zimmerman. (Plfs.’ Resp. at 6, 13-14.) As stated above, however,
this evidence shows, at most, that JWCF performed the administrative function of computing
wages according to policies SMC LLC set and using data SMC LLC employees entered into the
computer system. (See, e.g., Brozenec Decl. ¶ 8.) The evidence does not prove that JWCF had
any role in establishing SMC LLC’s payroll policies at issue in this case. Indeed, the
uncontested evidence demonstrates that SMC LLC established its own payroll policies. (Baker
Decl. ¶¶ 52, 55.) Moreover, the fact that SMC LLC technicians were instructed to raise issues
regarding their pay with JWCF employees (see Zimmerman Decl. ¶ 6) does not undermine the
fact that SMC LLC set the pay policies and made all employment decisions. As discussed
above, Plaintiffs’ assertion that JWCF “hired” SMC LLC’s technicians is unsupported by its own
evidence and contradicted by the evidence JWCF has set forth, which shows that SMC LLC
made all decisions with respect to hiring and firing its employees. (Id. ¶ 55.)
JWCF did not have sufficient minimum contacts with Illinois during the relevant period,
and accordingly, the Court will not exercise specific jurisdiction over it. Because the Court finds
that JWCF did not have sufficient minimum contacts with the State of Illinois, the Court need
not undertake an analysis of whether exercising jurisdiction over JWCF will offend the notions
of fair play and substantial justice.
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CONCLUSION
For the reasons set forth above, the Court grants JWCF’s motion to dismiss for lack of
personal jurisdiction. The motion is granted with prejudice as to Plaintiffs’ ability to refile this
lawsuit against JWCF in Illinois.
Date: September 28, 2011
ENTERED

_______________________________
AMY J. ST. EVE
United States District Court Judge

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