Williams et al v. TGI Fridays Inc

Filing 101

MEMORANDUM OPINION AND ORDER signed by the Honorable Matthew F. Kennelly on 2/23/2018: For the reasons stated in the accompanying Memorandum Opinion and Order, the Court grants TGIF's motion for partial summary judgment [dkt. no. 74]. The pla intiffs' motion to certify a class action [dkt. no. 57] and TGIF's motion to exclude Madansky's expert testimony [dkt. no 78] are both terminated as moot. The Court must still resolve O'Donovan's pending IWPCA claim arising from TGIF's alleged failure to promptly pay her the vacation compensation she was owed. The case is set for a status hearing on February 28, 2018 at 9:30 a.m. to discuss a schedule for further proceedings. (mk)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

GABRIELLE WILLIAMS and TONYA
O'DONOVAN, on behalf of themselves
and all other persons similarly
situated, known and unknown,
Plaintiffs,
vs.
TGI FRIDAYS, INC.,
Defendant.

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Case No. 16 C 4286

MEMORANDUM OPINION AND ORDER
MATTHEW F. KENNELLY, District Judge:
Gabrielle Williams and Tonya O'Donovan are two former employees of TGI
Friday's (TGIF). On behalf of a putative class of ex-employees, the plaintiffs allege that
TGIF violated the Illinois Wage Payment Collection Act (IWPCA) by failing to
compensate them for unused paid vacation benefits they contend they had accrued.
Williams and O'Donovan have moved to certify a class of similarly situated plaintiffs.
TGIF has moved for summary judgment on Williams and O'Donovan's claim. TGIF has
also asked the Court to exclude the plaintiffs' expert witness.
Background
TGIF operated restaurants in Illinois until November 2015. Between 2008 and
2015, it employed over 9,000 hourly employees who no longer work for the company.
Two of those employees—Williams and O'Donovan—contend that TGIF violated the
IWPCA by refusing to compensate them, upon their termination, for earned but unused

vacation pay.
In 2012, TGIF amended its vacation policy by changing the date on which it
began to measure an employee's annual hours: previously it was the date the
employee was hired; henceforth it would be the first day of the fiscal year. But, on the
substantive points, the pre-2012 and post-2012 policies otherwise concur: an employee
is entitled to vacation pay in the current year if, at the end of the previous year, that
employee was still employed and had worked in excess of 1,300 hours in that year.
Williams worked at TGIF from March 18, 2010 to April 14, 2012. She worked 1,032
hours in her first year of employment and 275 hours in her second year of employment.
O'Donovan worked at TGIF from January 10, 2014 to April 18, 2015. She worked 1,781
hours in her first year of employment and 466 hours during the second year. Because
O'Donovan worked more than 1,300 hours in her first year, she was eligible for paid
vacation in her second year. After she left TGIF, she was compensated for the unused
portion of that vacation time but not for vacation time that she contends accrued during
her second year of work for TGIF.
Williams contends that TGIF violated the IWPCA by failing to compensate her for
vacation time she claims to have earned during her tenure at TGIF. O'Donovan
contends TGIF violated the IWPCA by failing to pay her for paid vacation she contends
she accrued during her second year at TGIF. O'Donovan also alleges that TGIF
improperly delayed in paying her the vacation compensation she was owed, but that
claim is not at issue in the present motion for partial summary judgment.
Discussion
TGIF has moved for summary judgment on the plaintiffs' claims except as noted

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above. The moving party is entitled to summary judgment when there is "no genuine
issue as to any material fact and . . . the moving party is entitled to judgment as a matter
of law." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
The plaintiffs contend that TGIF wrongly deprived them of earned vacation
benefits when it concluded they did not meet the program's requirements and were
ineligible for paid vacation. Within this contention by plaintiffs are two assumptions that
TGIF challenges: (1) the plaintiffs were eligible to participate in TGIF's vacation
program in the first place, and (2) the plaintiffs earned the paid vacation time in
question, rather than being potentially eligible to receive it as an incentive. The Court
does not address the second assumption because it concludes that TGIF is entitled to
summary judgment given the infirmity of the first assumption. The plaintiffs were not
eligible for the vacation pay in question to begin with, so TGIF never owed them
vacation pay that would give rise to an IWPCA claim.
The IWPCA requires an employer to pay an employee all final compensation
upon the employee's departure, 820 ILCS 115/5 (2018), but "[it] does not apply if there
is no final compensation to collect." Covinsky v. Hannah Marine Corp., 388 Ill. App. 3d
478, 487, 903 N.E.2d 422, 430 (2009). "Whether an employee [is entitled to] paid
vacation in the first place depends on the terms of the employer's employment policy."
McCaster v. Darden Rests., Inc., 845 F.3d 794, 798 (7th Cir. 2017).
TGIF operates a vacation policy in which eligible employees are entitled to paid
vacation. To be eligible for paid vacation in the upcoming year, an individual must have
worked more than 1,300 hours in the previous year and must be employed with TGIF
when the vacation hours for the upcoming year are disbursed. D.E. 77, Def.'s Ex. 4

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(Pre-2012 Carlson Policy); D.E. 77, Def.'s Ex. 5 (Post-2012 Carlson Policy). The issue
before the Court is whether the plaintiffs—who worked fewer than 1,300 hours during
the relevant years, were no longer employed when the vacation benefits were
disbursed, or both—were eligible to participate in TGIF's paid vacation program.
In McCaster, the Seventh Circuit affirmed a grant of summary judgment against
the plaintiff, finding that the plaintiff did not have a viable IWPCA claim because she
was never eligible for vacation compensation as a part-time employee. Id. at 799.
Darden Restaurants, the employer, extended vacation benefits only to full-time
employees, which it defined as employees who worked at least thirty hours per week.
Id. at 797. The plaintiff in Darden argued that she earned vacation hours as a part-time
employee and that Darden failed to compensate her for these hours. Id. at 797-98.
The court concluded that the terms of Darden's policy excluded part-time employees
like the plaintiff from participation in the program altogether, so the court affirmed the
entry of summary judgment against the plaintiff. Id.
TGIF contends that the plaintiffs' claim is foreclosed by McCaster. Like the
employer in McCaster, TGIF has eligibility requirements for its paid vacation program.
According to TGIF, the plaintiffs did not meet those requirements, so they are not
entitled to the vacation pay they seek. Def.'s Mem. in Supp. of Mot. for Summ. J. at 1113. The plaintiffs argue that McCaster is inapposite, because TGIF does not distinguish
between full-time and part-time employees in its eligibility requirements. Pls.' Resp. to
Mot. for Summ. J. at 11-12.
The plaintiffs' response misses the point. In McCaster, the Seventh Circuit did
not emphasize that full-time employees were eligible for vacation benefits, it

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emphasized that there were eligibility requirements for vacation benefits. An employer
is free to set eligibility requirements for the vacation policy employed beyond whether an
employee is part-time or full-time. As the court emphasized, an employee may only
present an IWPCA claim for paid vacation "earned in accordance with such contract of
employment or policy." McCaster, 845 F.3d at 798 (quoting 820 ILCS 115/5) (emphasis
in original). The terms of the IWPCA do not constrain an employer from drafting a
vacation contract or policy that extends benefits only to certain employees, nor do the
terms of the statute limit an employer to drawing distinctions only between part-time and
full-time employees.
The Court's ruling is not affected by the fact that TGIF appears to calculate the
value of vacation benefits by considering the previous year's hours. This argument,
which the plaintiffs do not press in their briefs, goes to whether TGIF has adopted a
compensation or incentive vacation policy, not whether the plaintiffs were eligible ex
ante to participate in that policy. The Court need not and does not reach whether
TGIF's vacation policy compensated or incentivized its employees, as its decision rests
on finding that the plaintiffs were not eligible to participate.
The plaintiffs also argue that TGIF "rel[ies] on the terms in its own policy to justify
its lawlessness . . . ." Pls.' Resp. to Def.'s Mot. for Summ. J. at 10. They suggest that
TGIF is claiming that the plaintiffs are not eligible to receive vacation benefits so it can
avoid paying already-accrued benefits. Id. This argument presupposes the point that
the plaintiffs are attempting to prove. The plaintiffs can establish that TGIF unlawfully
refused to provide paid vacation only if they show the vacation program applied to them,
and TGIF argues that the program did not apply to them (or to any other ineligible

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employee).
The plaintiffs also argue that TGIF's reading is inconsistent with a string of cases
within this circuit. See Arrez v. Kelly Servs., Inc., 522 F. Supp. 2d 997 (N.D. Ill. 2007);
Ortiz v. Manpower, Inc., No. 11-2009, 2012 WL 12903661 (C.D. Ill. Apr. 10, 2012);
Rosales v. Placers, Ltd., No. 09 C 1706, 2011 WL 833359 (N.D. Ill. Mar. 4, 2011).
These cases are distinguishable from this one. In each case, the employees
participated in a paid vacation program but received a benefit only if they met certain
requirements. In Arrez, a vacation benefit payment issued "automatically" to any party
that worked in excess of 1,500 hours. 522 F. Supp. 2d at 1000. In Rosales, the
employer "automatically" conferred vacation benefits to employees that met the
requirements. 2011 WL 833359, at *1. Likewise, the court in Ortiz concluded that the
vacation policy at issue was virtually identical to those in Arrez and Rosales. 2012 WL
12903661, at *2. Thus the plaintiff in each of these cases carried with him or her a
crucial predicate that the plaintiffs in this case lack: they were eligible to participate in
the vacation benefit program in the first place. To the extent these cases might seem to
support plaintiffs' contention, they appear to be incompatible with the Seventh Circuit's
decision in McCaster. The Court is bound by the Seventh Circuit's interpretation of
Illinois law. Reiser v. Residential Funding Corp., 380 F.3d 1027, 1029 (7th Cir. 2004) (a
federal appellate court's interpretation of state law binds a federal district court unless
the state supreme court reaches a subsequent, contrary decision). For this reason, the
Court's decision is controlled by McCaster, not by Arrez, Ortiz, or Rosales. Similarly,
Munno v. Guardsmark, LLC, No. 08 CH 14354, at *4 (Cir. Ct. Cook Cty. Feb. 14, 2013),
is not binding upon the Court as it was not decided by the Illinois Supreme Court.

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As the reasoning of McCaster emphasizes, the text of the IWPCA makes clear
that the rule against forfeiting paid vacation applies only "when[] a contract of
employment or employment policy provides for paid vacations." 820 ILCS 115/5. Thus
the Court must first look to the TGIF policy itself, which plainly excludes employees like
the plaintiffs, who worked less than 1,300 hours in the previous year or who were not
employed on the date the vacation hours are disbursed. D.E. 77, Def.'s Ex. 4 (Pre-2012
Carlson Policy); D.E. 77, Def.'s Ex. 5 (Post-2012 Carlson Policy. Under McCaster, the
plaintiffs are not entitled to vacation benefits that TGIF did not agree to provide under
the terms of the policy. 845 F.3d at 799.
TGIF is entitled to summary judgment. Neither Williams, who never worked more
than 1,300 hours in one year, nor O'Donovan, who worked less than 1,300 hours in her
second year, met TGIF's criteria for eligibility to participate in the company's paid
vacation program for the years in question. See Def.'s Mem. in Supp. of Mot. for
Summ. J. at 11-12. Thus TGIF has no obligation to pay either Williams or O'Donovan
for unused paid vacation time, as neither was eligible to receive that benefit under the
terms of the company's program.
Conclusion
For the foregoing reasons, the Court grants TGIF's motion for partial summary
judgment [dkt. no. 74]. The plaintiffs' motion to certify a class action [dkt. no. 57] and
TGIF's motion to exclude Madansky's expert testimony [dkt. no 78] are both terminated
as moot. The Court must still resolve O'Donovan's pending IWPCA claim arising from
TGIF's alleged failure to promptly pay her the vacation compensation she was owed.
The case is set for a status hearing on February 28, 2018 at 9:30 a.m. to discuss a

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schedule for further proceedings.

________________________________
MATTHEW F. KENNELLY
United States District Judge
Date: February 23, 2018

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