Hoke v. Abrams et al

Filing 63

MEMORANDUM Opinion and Order: For the reasons stated in the attached memorandum opinion and order, Abrams's and Sharan's motion for judgment on the pleadings 44 ,is denied. Signed by the Honorable Thomas M. Durkin on 1/12/2017:Mailed notice(srn, )

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
RITA HOKE,
Plaintiff,
v.

No. 16 C 1174

DANIEL J. ABRAMS AND ASHWINI SHARAN,

Judge Thomas M. Durkin

Defendants and Third
Party Plaintiffs,
v.
CAMERON C. HORAN,
Third Party Defendant.
MEMORANDUM OPINION AND ORDER
Rita Hoke alleges that Daniel Abrams and Ashwini Sharan failed to pay her
certain wages in violation of the Illinois Wage Payment and Collection Act
(“IWPCA”) for her work at their company, Integrated Care Pharmacy LLC (“ICP”).
R. 1. Abrams and Sharan argue that Hoke waived her claims when she became a
member of ICP and signed ICP’s LLC agreement. See R. 44. On that basis, they
move for judgment on the pleadings pursuant to Federal Rule of Civil Procedure
12(c). See id. For the following reasons, that motion is denied.
Legal Standard
Federal Rule of Civil Procedure 12(c) permits a party to move for judgment
after the parties have filed the complaint and answer. See Buchanan–Moore v.

County of Milwaukee, 570 F.3d 824, 827 (7th Cir. 2009). A Rule 12(c) motion is
subject to the same standard as a Rule 12(b)(6) motion. See Lodholtz v. York Risk
Servs. Group, Inc., 778 F.3d 635, 639 (7th Cir. 2015). A Rule 12(b)(6) motion tests
the minimum sufficiency of a claim.

A claim must include “a short and plain

statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P.
8(2). The statement must be sufficient to “give the defendant fair notice” about the
nature of the claim.

Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)

(quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). While the claimant need not
plead detailed factual allegations, formulaic presentation of the bare elements of the
offense do not suffice.

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); see also

Killingsworth v. HSBC Bank Nevada, N.A., 507 F.3d 614, 618–19 (7th Cir. 2007).
In reviewing a 12(b)(6) motion, the court must construe all alleged facts “in the light
most favorable to the [claimant].” Tamayo v. Blagojevich, 526 F.3d 1074, 1081 (7th
Cir. 2008). The claim must rise “above the speculative level,” Twombly, 550 U.S. at
555, such that it “is plausible on its face.” Iqbal, 556 U.S. at 678 (citing Twombly,
550 U.S. at 570).
Analysis
ICP’s LLC agreement provides the following:
No Member or Manager shall be personally liable for any
indebtedness, liability or obligation of the Company,
except as specifically provided for in this Agreement or
required pursuant to the Act or any other applicable law.
R. 19-3 at 20 (Section 6.06(c)). On this basis, Abrams and Sharan argue that the
LLC agreement “bars the claims [Hoke] has asserted against [them] individually for
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unpaid wages.” R. 44 at 4. But this provision of the LLC agreement only waives
Abrams’s and Sharan’s liability for ICP’s obligations. By contrast, the IWPCA
creates direct personal liability for “any officers of a corporation or agents of an
employer who knowingly permit such employer to violate the provisions of the
[IWPCA].” 820 ILCS 115/13. By virtue of this provision, Hoke is seeking to recover
for an obligation of Abrams and Sharan, not an obligation of ICP. Therefore, the
LLC agreement’s provision purporting to waive claims against members and
managers for obligations of the company does not serve as a waiver of Hoke’s direct
claims against Abrams and Sharan.
In any event, IWPCA claims are not waivable. See Lewis v. Giordano’s
Enters., Inc., 921 N.E.2d 740, 753 (Ill. App. Ct. 1st Dist. 2009) (“A finding that
employees can waive their rights under [the IWPCA] by signing a release would be
contrary to public policy, and therefore, defendants’ argument that releases are
valid based on a freedom to contract is without merit.”); O’Brien v. Encotech Const.
Servs., Inc., 183 F. Supp. 2d 1047, 1049-50 (N.D. Ill. 2002) (“[W]here a right is
conferred for the benefit of the public at large, and the implementation of that right
requires a limitation of the directly-involved individuals’ freedom of contract, the
argument in favor of nonwaivability is particularly compelling. The legislature is
clearly stating that the larger public purposes served by such wage laws trump
individual contract rights.”); Ladegaard v. Hard Rock Concrete Cutters, Inc., 2001
WL 1403007, at *6 (N.D. Ill. Nov. 9, 2001) (“the court concludes that it would be

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against the public policy of the IMWL and IWPCA to permit the parties to release
their claims thereunder”).
Abrams and Sharan contend that the Court’s prior opinion dismissing their
counterclaim that Hoke violated her fiduciary duty to ICP “made clear that Illinois
law does not apply to the relationship between the members of the ICP, and,
instead Delaware law governs that relationship.” R. 44 at 6. For this reason, they
argue that the Court must dismiss Hoke’s IWPCA claim, which is of course a
statute of Illinois, as opposed to Delaware. But the Court’s prior opinion did not
hold that Delaware law is the exclusive law applicable to all claims in this case.
Rather, the Court held that “Illinois choice of law principles, which govern this case
because it was filed in Illinois, make the law applicable to a suit against a director
for breach of fiduciary duty that of the state of incorporation.” R. 38 at 4 (Hoke v.
Abrams, 2016 WL 3907051, at *2 (N.D. Ill. July 19, 2016) (quoting CDX Liquidating
Trust v. Venrock Assocs., 640 F.3d 209, 212 (7th Cir. 2011))). And applying
Delaware law, the Court held that the LLC agreement’s “elimination” of the
members’ fiduciary duties to the company was permissible. See R. 38 (Hoke, 2016
WL 3907051). Nothing about this holding prevents Hoke from bringing a separate
claim under Illinois law (if it is otherwise applicable, which Abrams and Sharan
have not challenged to this point in the case). Additionally, nothing about this
holding requires the Court to apply Delaware’s wage act, or Delaware case law
interpreting its wage act, as opposed to the IWPCA.

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Abrams and Sharan seem to believe that in any given case only the law of
one jurisdiction is applicable. Certainly, the Court must make a choice of law
decision with respect to each particular legal claim. See Ruiz v. Blentech Corp., 89
F.3d 320, 324 (7th Cir. 1996) (“A court therefore conducts a separate choice-of-law
analysis for each issue in a case . . . .”). But Abrams and Sharan have not cited any
authority for their contention that the Court’s decision that a certain jurisdiction’s
laws apply to one claim requires its application to any claim at issue in the same
case. In fact, contrary to Abrams and Sharan’s argument, well established choice-oflaw theory reveals that application of more than one jurisdiction’s laws in a single
case is not a particularly unusual circumstance. See id. (“[T]he Second Restatement
follows the principle of depecage, which has been long applied in connection with
various methods for choice of law. When roughly translated, depecage refers to the
process of cutting something into pieces. Here it refers to the process of cutting up a
case into individual issues, each subject to a separate choice-of-law analysis.”)
(internal citations omitted).
Conclusion
For the foregoing reasons, Abrams’s and Sharan’s motion for judgment on the
pleadings, R. 44, is denied.
ENTERED:
______________________________
Honorable Thomas M. Durkin
United States District Judge

Dated: January 12, 2016
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