Toney v. Quality Resources, Inc. et al
MEMORANDUM Opinion and Order: Plaintiff's motion to compel 353 is granted. Defendant Mercuris's motion for sanctions 354 is denied. Signed by the Honorable Milton I. Shadur on 7/5/2017:Mailed notice(srn, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
SARAH TONEY, on behalf of herself and
others similarly situated,
QUALITY RESOURCES, INC., et al.,
Case No. 13 C 42
MEMORANDUM OPINION AND ORDER
This Court is regrettably unable to return to its chambers to carry on the normal conduct
of its judicial responsibilities in the ordinary course because it has very recently undergone major
surgery and is in the process of post-operative rehabilitation. It has nonetheless continued to
monitor the inflow of filings in cases on its calendar, and that has disclosed two very recent
filings in this case:
"Plaintiff's Motion To Compel Defendants Quality Resources, Inc. and
Cheryl Mercuris To Provide Complete Discovery Responses" (Dkt.
No. 353) filed by plaintiff Sarah Toney ("Toney").
"Defendant's Motion For Sanctions and Incorporated Memorandum of
Law" (Dkt. No. 354) filed by codefendant Cheryl Mercuris ("Mercuris").
Toney's clearly meritorious motion is granted without the further delay that would be
created if Mercuris were provided with a date to respond -- an alternative that would continue the
prior stalling by Mercuris that is referred to in Toney's motion and that is further exemplified by
Mercuris' own current motion. This opinion turns, then to the Mercuris motion.
Mercuris' motion for sanctions is ironic, for it proceeds from a substantively warped
perception of Toney's real effort to advance her claim against Mercuris individually. On that
score look at what Mercuris' motion says in her page 1 Introduction section:
The legal contentions set forth in Counts III and V against the Defendant are not
warranted by existing law and the factual contentions upon which the foregoing is
premised lack evidentiary support. Sanctions are appropriate as a result.
But in those terms Mercuris' counsel have lashed out with a motion for sanctions against
Toney instead of first looking inward, as they should, at the acknowledged conduct of their own
client that has created the prospect of recovery by Toney and her potential class member
plaintiffs in this action. Mercuris' counsel have thus turned a blind eye to the prospect of
personal liability on Mercuris' part based on her conduct, as the sole stockholder, chief executive
officer and total controller of the activities of Quality Resources, Inc. ("Quality"), in causing it to
engage in concert with former codefendant Sempris, LLC ("Sempris") in actions that have more
than a substantial likelihood of constituting a violation of the Telephone Consumer Protection
Act. 1 Indeed, counsel's recital at pages 2 and 3 of Mercuris' current motion, with its drumbeat
repetition of italicizing "Quality" in its narrative, plainly states the predicate for Mercuris'
potential individual liability to Toney in equitable terms often expressed by the labels "alter ego"
or "piercing the corporate veil." 2
It is noteworthy that Sempris, confronted with the allegations in the Complaint and the
discovery that confirmed those allegations, has chosen to settle the class claim against it for
$2,125,000 -- a class claim that is based on its course of action conjoined with Quality (and,
under the analysis in this opinion, potentially extended to Mercuris individually).
As the text's reference to "potential individual liability" reflects, this opinion is not a
ruling on the merits of the case, which of course must await the completion of discovery and the
outcome of the ensuing trial or ultimate summary judgment.
In that respect it is clear that Mercuris' counsel have not read -- or if they have read, have
forgotten -- the fundamental principle taught by NAACP v. Am. Family Mut. Ins. Co., 978 F. 2d
287, 292 (7th Cir. 1992) and Bartholet v. Reishauer A.G.(Zurich), 953 F.2d 1073 (7th Cir. 1992)
and repeated by our Court of Appeals in its jurisprudence ever since (most frequently by citing to
the shorter treatment of that principle in Bartholet, even though the more expansive discussion
by Judge Easterbrook in NAACP is particularly worth reading and heeding). In brief, the key to
evaluating a plaintiff's pleading in federal terms is whether it states a "claim for relief" rather
than the state law concept of a "cause of action" that necessitates the identification of a theory of
As those Seventh Circuit cases teach, it is not a matter of whether a plaintiff has
identified a right or wrong theory of recovery or, indeed, any theory of recovery at all. Instead
the proper analysis turns on whether a plaintiff has advanced a claim that meets the "plausibility"
requirement called for by what this Court often refers to in shorthand terms as the
"Twombly-Iqbal canon." And properly read when the allegations that needlessly specify theories
of recovery are ignored, Toney's allegations clearly meet that standard. 3
Although this does not alter the conclusion reached in this opinion, it may be noted that
Toney's counsel has contributed to the need for this opinion's extended analysis by engaging in
the too-frequently-encountered practice of carving their federal claim for relief into multiple
counts that, as in the state court "cause of action" practice, set out different theories of recovery,
despite the fact that Fed. R. Civ. P. 10(b) (the section that expressly defines the use and scope of
counts in federal practice) does not provide for such usage. Indeed, it has been the frequent
miguided drafting of complaints in that fashion that has occasioned misguided motions such as
Mercuris' submission here, leading to the rejection of those motions by opinions such as those in
NAACP and Bartholet and their progeny. But in that regard a few words may be added about
Mercuris' attack on the Complaint on the ground that the Florida statutes relied on by Toney
apply only to dissolved corporations, while Quality has not been dissolved. True enough, but
Quality has been stripped of all assets when Mercuris shut it down and terminated all of its
employees without notice, leaving an empty and inactive shell in place. Hence the challenged
In short, the plain prospect that Toney's claim for relief (and not the inappropriate "causes
of action" as now framed in separate counts of the Complaint), based on the substantive
allegations in the Complaint that readily qualify in terms of plausibility in Twombly-Iqbal terms,
may result in the imposition of individual liability on the part of Mercuris, requires the rejection
of her motion for sanctions (Dkt. No. 354). That motion is denied, and this action will proceed
in the regular course.
Milton I. Shadur
Senior United States District Judge
Date: July 5, 2017
counts may stay in place until it is determined whether or not the Florida courts have recognized
de facto corporate dissolutions in that context.
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