Enger et al v. Chicago Carriage Cab Co. et al
Filing
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MEMORANDUM Opinion and Order signed by the Honorable Andrea R. Wood on 12/29/2014. Mailed notice (ac, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
PETER ENGER, KAREN
CHAMBERLAIN, COURTNEY
CREATER, GREGORY MCGEE, and FINN
EBELECHUKWU, individually and on
behalf of all others similarly situated,
Plaintiffs,
v.
CHICAGO CARRIAGE CAB CO.,
YELLOW CAB AFFILIATION, INC.,
FLASH CAB CO., DISPATCH TAXI
AFFILIATION, INC., SIMON GARBER,
MICHAEL LEVINE, HENRY ELIZAR,
SAVAS TSITIRIDIS, and EVEGNY
FRIEDMAN,
Defendants.
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No. 14-cv-02117
Judge Andrea R. Wood
MEMORANDUM OPINION AND ORDER
In this putative class action, current and former Chicago taxi drivers have sued the taxi
cab services for which they have worked, as well as a number of individuals who own those
services. The plaintiffs claim that these defendants violated the Illinois Wage Payment and
Collection Act (“IWPCA”), 820 ILCS 115 et seq., by improperly classifying them as
independent contractors, failing to pay them the minimum wage or overtime pay, improperly
charging them to work, and forcing them to bear their own operating expenses. In addition to the
IWPCA claim, the Complaint also asserts a cause of action based on a theory of unjust
enrichment. The defendants have moved to dismiss these claims pursuant to Federal Rule of
Civil Procedure 12(b)(6) (the “Motion”) (Dkt. No. 33). Because the plaintiffs have failed to
allege the existence of an agreement by which the defendants were obligated to pay them, as
required to state a claim under the IWPCA, the Motion is granted. 1
BACKGROUND
As set forth in the Complaint, plaintiffs Peter Enger, Karen Chamberlain, Courtney
Creater, Gregory McGee, and Finn Ebelechukwu (collectively, “Plaintiffs”) work as taxi drivers
in Chicago, Illinois. (Compl. ¶¶ 2-6, Dkt. No. 1.) 2 Plaintiffs worked for defendant cab services
Chicago Carriage Cab Co., Yellow Cab Affiliation, Inc., 5 Star Flash Inc., and Dispatch Taxi
Affiliation, Inc. (the “Cab Defendants”) or their affiliates. (Id. ¶¶ 8, 10, 12, 14.) Defendants
Simon Garber, Michael Levine, Henry Elizar, Savas Tsitiridis, and Evegny Friedman (the
“Individual Defendants” and, collectively with the Cab Defendants, “Defendants”) own various
of the Cab Defendants. (Id. ¶¶ 8-16.)
To drive for one of the Cab Defendants, taxi drivers must pay fees, either directly to the
Cab Defendants or their affiliates. (Id. ¶ 22.) The drivers may pay these fees on a weekly basis or
a daily basis. If paid on a daily basis, the fees range from $100 to $125 or more, while weekly
fees range from $500 to $800 or more. (Id. ¶¶ 23-24.) Taxi drivers receive no wages for their
work; instead, the drivers’ only source of income from their work for Defendants is what they
manage to make in fares and tips. (Id. ¶ 25.) In addition to paying fees, drivers must also pay the
expenses necessary to operate a taxi, including fuel, airport taxes, upkeep, and often insurance
payments. (Id. ¶ 27.) As a result of this arrangement, taxi drivers in Chicago who pay companies
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Defendants Tsitiridis and Friedman filed a separate motion to dismiss, arguing that the allegations in the
Complaint are insufficient to tie them to the alleged unlawful conduct. (Dkt. No. 8.) Because the Court
concludes that the Plaintiffs have failed to state a claim against any of the defendants with the present
Complaint, the Court denies Tsitiridis and Friedman’s separate motion as moot.
2
For the purposes of the Motion, the Court takes the allegations of the Complaint as true and draws all
reasonable inferences in Plaintiffs’ favor. See, e.g., MCM Partners, Inc. v. Andrews-Bartlett & Assoc., 62
F.3d 967, 972 (7th Cir. 1995).
2
to drive a taxi often receive less than minimum wage from what remains of their fares and tips.
For some shifts, they might even pay more in fees and expenses than they receive from fares and
tips. (Id. ¶ 28.) In addition, the vast majority of these drivers work at least 12 hours per day, often
six days per week. And even though they routinely work more than 40 hours per week, they do
not receive time-and-a-half for overtime pay. (Id. ¶¶ 30-31.)
Although historically taxi drivers in Chicago were classified as employees, over the last
ten years, Defendants all have classified their drivers as independent contractors. (Id. ¶ 38.)
Despite this classification, Plaintiffs are subject to extensive control by Defendants. (Id. ¶ 36.)
For example, Defendants exercise control over Plaintiffs’ working conditions and can prevent
Plaintiffs from working on a temporary or permanent basis. (Id.) Plaintiffs are not engaged in an
independently established trade, occupation, profession, or business. (Id. ¶ 37.) Instead, they are
entirely dependent upon Defendants because, without a “medallion,” Plaintiffs cannot operate a
taxi. (Id.)
Plaintiffs have filed a two-count Complaint alleging that Defendants (1) violated the
IWPCA, and (2) were unjustly enriched by their misconduct. The suit is a putative class action
on behalf of “all other persons who have worked as taxi drivers in Chicago, Illinois, over the last
ten years for any of the defendants or their affiliates and have had to pay weekly fees or daily
fees (for 12 or 24 hour shifts) in order to work as taxi drivers.” (Id. ¶ 1.) Plaintiffs claim that
they, and others similarly situated to them, are mischaracterized as independent contractors.
Plaintiffs further allege that as a result of this misclassification, Defendants have not only
charged Plaintiffs to work, but also have required them to pay the expenses necessary to operate
a taxi and have failed to ensure that their taxi drivers earn minimum wage or overtime pay, have
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protection under employment discrimination or unemployment statutes, or enjoy any other
privileges, benefits, or protections of employment. (Id. ¶¶ 39-41.)
DISCUSSION
Federal Rule of Civil Procedure 8(a) requires that a complaint contain a short plain
statement of the claim showing that the pleader is entitled to relief. Fed. R. Civ. P. 8(a). To
survive a Rule 12(b)(6) motion, this short plain statement must overcome two hurdles. First, the
complaint’s factual allegations must be enough to give the defendant fair notice of the claim and
the grounds upon which it rests. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Second,
the complaint must contain sufficient allegations based on more than speculation to state a claim
for relief that is plausible on its face. Id. This pleading standard does not necessarily require a
complaint to contain “detailed factual allegations.” Id. (citing Sanjuan v. Am. Bd. of Psychiatry
and Neurology, Inc., 40 F.3d 247, 251 (7th Cir. 1994)). Rather, “[a] claim has facial plausibility
when the plaintiff pleads factual content that allows the court to draw the reasonable inference
that the defendant is liable for the misconduct alleged.” Adams v. City of Indianapolis, 742 F.3d
720, 728 (7th Cir. 2014) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).
The IWPCA allows for a cause of action based on wrongfully held compensation
pursuant to a contract or agreement. 3 Brown v. Club Assist Rd. Serv. U.S., Inc., No. 12 CV 5710,
2013 WL 5304100, at *8 (N.D. Ill. Sept. 19, 2013). “The IWPCA does not establish a
substantive right to overtime pay or any other kind of wage.” Dominguez v. Micro Ctr. Sales
Corp., No. 11 C 8202, 2012 WL 1719793, at *1 (N.D. Ill. May 15, 2012) (citing Hall v. Sterling
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The IWPCA “applies to all employers and employees” in the State of Illinois. 820 ILCS 115/1.
Although Defendants appear to concede (at least for the sake of the Motion) that Plaintiffs are
“employees” covered by the IWPCA, Plaintiffs nonetheless spend much of their response brief addressing
whether they are properly considered Defendants’ employees. (See Pls.’ Opp’n at 7-9, Dkt. No. 39.) The
Court notes that the IWPCA does not provide a cause of action for damages based on the mere
mischaracterization of an employee as an independent contractor.
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Park Dist., Nos. 08 C 50116, 09 C 50146, 2011 WL 1748710, at *6 (N.D. Ill. May 4, 2011)).
Therefore, plaintiffs suing under the IWPCA must allege that compensation is due to them under
an employment “contract or agreement.” Landers-Scelfo v. Corporate Office Sys., Inc., 827
N.E.2d 1051, 1058 (Ill. App. Ct. 2d Dist. 2005). Illinois courts have interpreted the term
“agreement” to be broader than a contract and to require only a manifestation of mutual assent.
Brown, 2013 WL 5304100, at *8 (quoting Hess v. Kanoski & Assocs., 668 F.3d 446, 452 (7th
Cir. 2012)). Accordingly, Plaintiffs do not need to plead all of the elements of a contract if they
can plead facts showing mutual assent to an agreement. Id.
Defendants argue that Plaintiffs have failed to plead any sort of “contract or agreement”
that could support their IWPCA claim. Plaintiffs respond by arguing that they have pleaded facts
regarding the working arrangement between themselves and Defendants that sufficiently allege
an agreement under Illinois law. According to Plaintiffs,
in order to drive a taxi in the City of Chicago, because they do not own taxis or
the required medallion licenses, they must work for taxi companies, such as the
ones operated by Defendants. . . . [A]s a result, they work for Defendants pursuant
to an agreement whereby their compensation derives solely from fares and tips
paid by customers. Pursuant to this same agreement, Plaintiffs are required to pay
fees to Defendants for the right to drive the cabs ranging from $100 to $125 per
day to $500 to $800 per week. Under this agreement, Plaintiffs must also pay for
business expenses necessary to operate the taxis, including fuel, airport taxes,
upkeep, and insurance payments.
(Pls.’ Opp’n at 11, Dkt. No. 39 (citations omitted).)
As pleaded, the Complaint adequately alleges the existence of an agreement between
Plaintiffs and Defendants, as broadly defined by Illinois law. “Illinois courts have held that an
employment agreement need not be a formally negotiated contract, and that parties may enter
into an agreement without the formalities and accompanying legal protections of a contract.”
Wharton v. Comcast Corp., 912 F. Supp. 2d 655, 659 (N.D. Ill. 2012) (internal quotation marks
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and alterations omitted). Thus, under the IWPCA, “an employment agreement can be entirely
implicit” and “employers and employees can manifest their assent to conditions of employment
by conduct alone.” Landers-Scelfo, 827 N.E.2d at 1058-59. Under this standard, Plaintiffs have
pleaded the existence of an employment agreement within the meaning of the IWPCA, under
which Plaintiffs have agreed—by conduct, even if not by formal contract—that they will pay
Defendants for the right to drive their cabs and bear all operating expenses, while accepting only
fares and tips paid by customers as compensation.
But while Plaintiffs have successfully alleged an agreement with Defendants, they still
fail to state a claim under the IWPCA because the agreement did not provide for the payment of
any wages to Plaintiffs by Defendants. The IWPCA “does not grant any independent right to
payment of wages and benefits; instead it only enforces the terms of an existing contract or
agreement.” Wharton, 912 F. Supp. 2d at 658. Here, Plaintiffs do not plead that the relevant
agreement provided for payment of any sort by Defendants. Thus, their claims regarding a lack
of minimum wage or overtime pay must fail under the IWPCA. See, e.g., Dominguez, 2012 WL
1719793, at *1 (“[T]he IWPCA mandates overtime pay or any other specific kind of wage only
to the extent the parties’ contract or agreement requires such pay.”).
For similar reasons, Plaintiffs’ allegations regarding Defendants improperly requiring
them to pay fees and all operating expenses also must fail. Although the IWPCA prohibits most
“deductions by employers from wages or final compensation,” see 820 ILCS 115/9, the IWPCA
defines both “wages” and “final compensation” in relation to payment “pursuant to an
employment contract or agreement between the 2 parties.” 820 ILCS 115/2. As previously
discussed, Plaintiffs allege that the relevant agreement does not provide for any payment to them
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from Defendants. Under the plain language of the statute, then, there can be no “deductions” that
violate the IWPCA, as the relevant agreement does not provide for any payment to be made.
In an attempt to salvage their IWPCA claim, Plaintiffs argue that the term “wages” is
“defined broadly in the IWPCA to include ‘any compensation,’ which could include the fares
and tips collected by drivers from customers.” (Pls.’ Opp’n at 4-5, Dkt. No. 39.) But Plaintiffs
fail to cite a single case arising under the IWPCA that supports their interpretation of the statute. 4
And for good reason: the plain language of the IWPCA contradicts such an interpretation. The
IWPCA defines “wages” as “any compensation owed an employee by an employer” pursuant to
an agreement between the two parties. 820 ILCS 115/2 (emphasis added). In the Complaint,
Plaintiffs allege that the relevant agreement called for no payments to be made by Defendants to
Plaintiffs, and that any compensation Plaintiffs obtained would be in the form of fares and tips
paid by customers. (Compl. ¶ 25, Dkt. No. 1.) Thus, under the plain language of the statute, no
“wages” could have been owed to Plaintiffs (the employees) by Defendants (the employers),
since there was no agreement between the two that provided for Plaintiffs to be compensated by
Defendants.
Plaintiffs cite a number of cases from other jurisdictions in support of their interpretation
of the IWPCA. None of these cases is persuasive, however, as they do not involve statutes
analogous to the IWPCA. For example, Plaintiffs cite two Massachusetts state court cases,
Awuah v. Coverall North America, 952 N.E. 2d 890 (Mass. 2011), and Sebago v. Tutunjian, 85
Mass. App. Ct. 1119 (2014), in support of their argument that the fees and operating expenses
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Plaintiffs contend that Brown, 2013 WL 5304100, supports their theory that they can proceed with an
IWPCA cause of action notwithstanding the fact that they have pleaded that Defendants did not agree to
pay them. The Court disagrees. The plaintiffs in Brown were emergency service drivers who alleged that
they were being paid directly by the defendant on a “piece basis” depending on the number of service
calls that the plaintiffs provided. Id. at *3, 7. That is not the case here, where Plaintiffs have affirmatively
pleaded that the relevant “agreement” provided for no payment by Defendants.
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borne by Plaintiffs violate the IWPCA. However, both of those cases arose under provisions of
the Massachusetts Wage Act, which, in contrast to the IWPCA, does not require that a cause of
action proceed on the basis of an employment contract or agreement. See M.G.L.A. 149 § 148.
Similarly, Plaintiffs cite a number of cases from various jurisdictions for the proposition that
“courts have repeatedly found that exotic dancers can bring wage payment claims despite the fact
that they received no base wages from their employers.” (Pls.’ Opp’n at 4 (collecting cases), Dkt.
No. 39.) But each of the cases cited was decided on the basis of the federal Fair Labor Standards
Act (“FLSA”) or analogous state law statutes that provide a substantive basis for workers to
obtain a minimum wage and overtime pay, in contrast with the IWPCA, which does not establish
a substantive right to wages from an employer. See DeMarco v. Nw. Mem’l Healthcare, No. 10
C 397, 2011 WL 3510896, at *6 (N.D. Ill. Aug. 10, 2011) (“Unlike FLSA . . . IWPCA does not
establish a substantive right to overtime pay. . . . IWPCA mandates overtime pay (or any other
kind of wage) only to the extent the parties’ contract or agreement requires such pay.”). 5
Because Plaintiffs’ IWPCA claim fails, their cause of action for unjust enrichment also
fails. To state a cause of action based on a theory of unjust enrichment under Illinois law, a
plaintiff must allege “that the defendant has unjustly retained a benefit to the plaintiff’s detriment
and that the defendant’s retention of the benefit violates the fundamental principles of justice,
equity, and good conscience.” Siegel v. Shell Oil Co., 612 F.3d 932, 937 (7th Cir. 2010) (citing
HPI Health Care Servs., Inc. v. Mt. Vernon Hosp., Inc., 545 N.E. 2d 672 (Ill. 1989)). Where a
claim of unjust enrichment is premised on the same improper conduct as alleged in another
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Plaintiffs’ reliance on these cases from other jurisdictions belies their policy-based argument that
dismissal of the IWPCA claim means “that if an employer agreed to pay an employee no wages, that
employee could never file a wage claim against the employer because there would be no agreement by the
employer to pay wages” (Pls.’ Opp’n at 2-3, Dkt. No. 39.) Although Plaintiffs are correct that an
employee in that situation could not state a cause of action under the IWPCA, he or she could still bring
an action under the Illinois Minimum Wage Act or the FLSA, each of which provides workers with
substantive rights to the payment of wages.
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claim, then the unjust enrichment claim will “stand or fall” based on the disposition of the related
cause of action. Cleary v. Philip Morris, Inc., 656 F.3d 511, 516-517 (7th Cir. 2011). Because
Plaintiffs’ claims are based on the same alleged conduct, the unjust enrichment claim fails along
with the IWPCA claim. See, e.g., Camilotes v. Resurrection Health Care Corp., No. 10-cv-366,
2012 WL 2905528, at *6 (N.D. Ill. July 16, 2012).
CONCLUSION
For the foregoing reasons, Defendants’ Motion to Dismiss the Complaint (Dkt. No. 33) is
granted. Plaintiffs’ Complaint is dismissed without prejudice to refiling within 28 days, if
Plaintiffs can do so consistent with the requirements of Federal Rule of Civil Procedure 11. The
Motion to Dismiss Complaint as to Defendants Freidman and Tstiridis (Dkt. No. 8) is denied as
moot.
ENTERED:
Dated: December 29, 2014
__________________________
Andrea R. Wood
United States District Judge
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