Amando Morales, et al v. Ryco Construction Company, Inc., et al

Filing 53

WRITTEN Opinion entered by the Honorable Robert M. Dow, Jr on 2/22/2013: For the reasons stated below, the Court lacks subject matter jurisdiction and the case is dismissed. All pending motions are terminated. Mailed notice(tbk, )

Order Form (01/2005)

United States District Court, Northern District of Illinois
Name of Assigned Judge
or Magistrate Judge

Robert M. Dow, Jr.

CASE NUMBER

11 C 6554

CASE
TITLE

Sitting Judge if Other
than Assigned Judge

DATE

2/22/2013

Ugalde, et al. vs. Ryco Construction Company, Inc, et al.

DOCKET ENTRY TEXT

For the reasons stated below, the Court lacks subject matter jurisdiction and the case is dismissed. All pending
motions are terminated.
O[ For further details see text below.]

Docketing to mail notices.

STATEMENT
Defendant Ryco is a landscaping and snow removal company; Defendants Colin and Ryan Taheny have an
ownership interest in Ryco. Ryco employed Plaintiff Ugalde from April 22 to December 23, 2009 and from
April 9 to November 16, 2010, and Plaintiff Morales from April 24, 2009 to February 27, 2010 and from
December 4, 2010 to February 4, 2011. Plaintiffs were classified and paid as hourly employees. In
September 2011, Plaintiffs filed this lawsuit alleging that they were (1) paid at straight-time rates for hours
worked in excess of 40 hours in a week and (2) not paid for all hours worked in violation of the Fair Labor
Standards Act (FLSA), 29 U.S.C. § 201 et seq. and the Illinois Wage Payment Collection Act (IWPCA), 820
ILCS 115/2 et seq.
Defendants reviewed Plaintiffs’ timekeeping records and determined that Ugalde’s and Morales’ claims for
unpaid wages equaled $874.18 and $289.11, respectively. Based on those calculations, Ryco paid Ugalde and
Morales their unpaid wages, liquidated damages (an amount equal to the unpaid wages), and punitive
damages under Illinois law (2% of unpaid overtime for each month it remained unpaid). In addition to
Plaintiffs’ claims for damages, Ryco advised Plaintiffs’ counsel that it was willing to pay reasonable
attorneys’ fees and costs, and, to that end, that Plaintiffs’ counsel should provide it with a copy of their time
records and costs. Plaintiffs admit that they have not provided Defendants with those records.
The parties’ negotiations over fees and costs broke down, and Defendants moved for summary judgment,
arguing that Ryco’s satisfaction of Ugalde’s and Morales’ claims for damages moots the case. Plaintiffs
concede that their claims for damages have been satisfied, but maintain that the Court should deny
Defendants’ motion because of the unresolved issue of attorneys’ fees (and costs).
The parties agree that the issue before the Court is whether the case has been mooted by Ryco’s satisfaction
of Plaintiffs’ claims for damages. A case is moot when a “justiciable controversy ceases to exist between the

11C6554 Ugalde, et al. Vs. Ryco Construction Company, Inc, et al.

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STATEMENT
parties.” Aslin v. Financial Industry Regulatory Authority, Inc., 704 F.3d 475, 477 (7th Cir. 2013) (citing
Honig v. Doe, 484 U.S. 305, 317 (1988)). And, of course, where there is not a justiciable controversy, federal
courts lack subject matter jurisdiction. Id. at 478. Defendants’ position, therefore, is that the Court lacks
subject matter jurisdiction over this case, and it must be dismissed. Defendants’ motion [51], however, is for
summary judgment. That was a mistake: “a grant of summary judgment is a decision on the merits, a court
must dismiss the case without ever reaching the merits if it concludes that it has no jurisdiction. In short, the
question of jurisdiction is inappropriate for summary judgment, and discussing the interplay between Rule
12(b)(1) [dismissal for lack of subject matter jurisdiction] and Rule 56 [summary judgment] verges on non
sequitor.” Capitol Leasing, Co. v. FDIC, 999 F.2d 188, 191 (7th Cir. 1993) (internal citations omitted).
Defendants should have moved to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1).
Perhaps Defendants believed that they needed to proceed under Rule 56 because their argument depends on
factual matter outside the pleadings. If that’s true, Defendants misunderstand Rule 12(b)(1), for “[i]n
considering such a motion, ‘[t]he district court may properly look beyond the jurisdictional allegations of the
complaint and view whatever evidence has been submitted on the issue to determine whether in fact subject
matter jurisdiction exists.’” St. John’s United Church of Christ v. City of Chicago, 502 F.3d 616, 625 (7th
Cir. 2007) (quoting Long v. Shorebank Dev. Corp., 182 F.3d 548, 554 (7th Cir. 1999)); Islamic Center of
Western Suburbs v. County of DuPage, 2012 WL 6605011, at *4 n. 1 (N.D. Ill. Dec. 18, 2012); Miller v. Am.
Airlines, Inc., 2004 WL 2203425, at *1 (N.D. Ill. Sept. 29, 2004); see also Apex Digital v. Sears, Roebuck &
Co., 572 F.3d 440, 443-44 (7th Cir. 2009) (proper to consider “extrinsic evidence” in deciding factual
challenges to jurisdiction under Rule 12(b)(1)).
Consistent with the substance of Defendants’ motion for summary judgment, the Court will treat it “as a
‘suggestion’ of lack of subject matter jurisdiction” and consider the issue under Rule 12(b)(1). 5B Wright &
Miller, FEDERAL PRACTICE & PROCEDURE: CIVIL 3D § 1357 at n. 34 (citing cases treating summary judgment
motions seeking dismissal on jurisdictional grounds as suggestions that the case be dismissed under Rule
12(b)(1)). The parties have argued the motion as a dispute about the Court’s subject matter jurisdiction, so
deciding it under the correct rule of civil procedure will not prejudice either side.
Despite the procedural twist, the question before the Court is simple: Absent a dispute on the merits, is the
lingering disagreement over attorneys’ fees (and costs) sufficient to give the Court subject matter jurisdiction?
In short, the answer is no. “It is well-settled that an interest in attorney’s fees is insufficient to create a case or
controversy when none exists on the merits.” Breneisen v. Motorola, Inc., 656 F.3d 701, 706 (7th Cir. 2011)
(citing Lewis v. Continental Bank Corp., 494 U.S. 472, 480 (1990)). Because there is no remaining dispute
on the merits, the case is moot, and must be dismissed.
Breneisen leaves no room for a different result.1 In Breneisen, one of the plaintiffs alleged that she was
penalized in retaliation for conduct protected by the Family and Medical Leave Act (FMLA). 656 F.3d at
704. The defendant tendered a check for twice the amount the plaintiff claimed to be owed and then moved
to dismiss the case as moot. Id. The district court granted the defendant’s motion. Id. On appeal, the
plaintiff argued that her demand for attorneys’ fees gave her a stake in the case that prevented it from being
moot. Id. at 706. The Seventh Circuit rejected that argument and affirmed the district court, citing the rule
that a dispute about fees will not keep a case alive where there is no dispute on the merits. Id. Although it is
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STATEMENT
true that the FMLA has a fee-shifting provision that awards attorneys’ fees and costs “in addition to” any
judgment for the plaintiff, that provision does not transform a fee dispute into a claim on the merits. Id.
(quoting 29 U.S.C. § 2617(a)(3)). “[The] language [of the provision] clearly establishes that costs and fees
are ancillary to the merits of a claim, not part of the claim itself.” Id.
[FN 1] Puzzlingly, Plaintiffs did not address Breneisen at all in their brief [42], but instead addressed
in detail a recent decision from another circuit, Dionne v. Floormasters Enterprises, Inc., 647 F.3d
1109 (11th Cir. 2011). This Court, of course, is bound to follow Breneisen and all other decisions of
the Seventh Circuit.

The fee-shifting provisions of the FLSA, at issue in this case, and the FMLA, at issue in Breneisen, are
substantially identical. The FLSA’s fee-shifting provision states that “[t]he court in such action shall, in
addition to any judgment awarded to the plaintiff or plaintiffs, allow a reasonable attorney's fee to be paid by
the defendant, and costs of the action.” 29 USC § 216(b) (emphasis added). Following Breneisen, this
language establishes that costs and fees are ancillary to the merits. Thus the general rule — that a dispute
over attorneys’ fees does not create a dispute on the merits — also holds in FLSA cases.
Finally, it is worth noting that Breneisen rejected the plaintiff’s argument that denying her the benefit of a feeshifting provision in circumstances such as these was unjust or contrary to public policy. 656 F.3d at 706.
The unfairness argument depends on the “catalyst theory,” i.e., that the lawsuit brought about the change in
the defendant’s behavior, so the plaintiff should be considered a prevailing party. But the Supreme Court has
rejected that theory on the grounds that there must be “a judicially sanctioned change in the relationship
between the parties for a court to award attorney’s fees on the basis of the change.” Id. (citing Buckhannon
Board and Care Home, Inc. v. W. Va. Dep’t of Health and Human Resources, 532 U.S. 598, 605 (2001)).
There not been a “judicially sanctioned change” in this case. The parties resolved the merits of their dispute
on their own. On the merits, there is nothing left for the Court to do. Accordingly, dismissal is appropriate.2
[FN 2] The parties’ briefs [42, 49] reference the possibility that Local Rule 54.3 still might be
available as a mechanism for resolving their fee dispute. The Court expresses no opinion on that
subject, nor does it address whether Plaintiffs might have any other avenue for litigating the fee
dispute. However, given the prior negotiations also referenced in the briefs and the amount at issue,
the Court urges the parties to get together with the goal of bridging the current gap without the need
for any further court proceedings.

For the reasons stated above, the Court lacks subject matter jurisdiction and the case is dismissed. All
pending motions are terminated.

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