Hudgins et al v. Total Quality Logistics, LLC

Filing 361

MEMORANDUM Opinion and Order: Defendant Total Quality Logistics, LLC's ("TQL") Motion for Protective Order 344 is denied. Defendant is ordered to respond to Plaintiffs' discovery requests within 14 days of this order. The Cou rt sets the following briefing schedule on Plaintiffs' Motion for Sanctions 328 : Defendant's response brief is due 2/11/22; Plaintiff's reply is due 2/25/22. [For further details see order]. Signed by the Honorable Susan E. Cox on 1/21/2022: Mailed notice (gw, )

Case: 1:16-cv-07331 Document #: 361 Filed: 01/21/22 Page 1 of 9 PageID #:6144

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
BRIAN HUDGINS, et al.,
Plaintiffs,
v.
TOTAL QUALITY LOGISTICS, LLC,
Defendant.

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Case No: 16-cv-7331
Judge Martha M. Pacold
Magistrate Judge Susan E. Cox

MEMORANDUM OPINION AND ORDER
Defendant Total Quality Logistics, LLC’s (“TQL”) Motion for Protective Order [344] is
denied. Defendant is ordered to respond to Plaintiffs’ discovery requests within 14 days of this
order. The Court sets the following briefing schedule on Plaintiffs’ Motion for Sanctions [328]:
Defendant’s response brief is due 2/11/22; Plaintiff’s reply is due 2/25/22.
BACKGROUND
Plaintiffs allege TQL violated the Fair Labor Standards Act (“FLSA”) by improperly
classifying TQL’s Logistics Account Executives (“LAEs”) and Logistics Account Executive
Trainees (“LAETs”) as exempt from the FLSA’s overtime requirements. [Dkt. 1.] Two central
issues in this suit are: 1) whether TQL’s alleged violation was “in good faith and that [it] had
reasonable grounds for believing that his act or omission was not a violation of the [FLSA],” 29
U.S.C. § 260; and 2) whether TQL’s alleged violations were willful; see 29 U.C.C. § 255.
During discovery, the following requests and responses were propounded by the Plaintiffs
and TQL, respectively:
If Defendant has been sued or investigated by any individual(s) or
the U.S. Department of Labor or has received a claim by or demand
from any employee regarding minimum wage or overtime
compensation, state the name of the claimant(s) for the suit, claim
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and/or investigation and describe in detail the claimant’s position or
title, factual basis of the suit, claim and/or investigation. Identify
any such claim by claim number or case number, case or claim
caption and venue where proceedings took place.
RESPONSE: No such documents exist.
[TQL’s Response to Plaintiffs’ Am. First Request for Production (“RFP”) 47, Dkt. 328, Ex. B.]
If Defendant has been sued or investigated by any individual(s) or
the U.S. Department of Labor or has received a claim by or demand
from any employee regarding minimum wage or overtime
compensation, state the name of the claimant(s) for the suit, claim
and/or investigation and describe in detail the claimant’s position or
title, factual basis of the suit, claim and/or investigation. Identify any
such claim by claim number or case number, case or claim caption
and venue where proceedings took place.
ANSWER: Objection. Defendant objects to this Interrogatory
on the grounds that it is overly broad and unduly burdensome
because it seeks all information from unrelated lawsuits
regardless of whether such documents are relevant to any claim
or defense in this litigation. Defendant further objects on the
grounds such information is available by undertaking a
relatively simple public records search.
[TQL’s Response to Plaintiffs’ Amended First Set of Interrogatories, Number 9, Dkt. 328, Ex. D.]
Plaintiffs took TQL up on its suggestion and issued a Freedom of Information Act
(“FOIA”) request for records from the United States Department of Labor (“DOL”) relating to
TQL. [Dkt. 358 at 3.] Approximately six weeks before this case was set to go to trial, Plaintiffs
received a response from the DOL, which indicated that the DOL had investigated TQL’s
Columbus, Ohio branch in 2017 (the “Columbus Investigation”) to determine whether LAEs were
properly classified as exempt employees, and TQL’s Tampa, Florida branch in 2018 (the “Tampa
Investigation”) to determine whether LAEs and LAETs were properly classified as exempt
employees. [Dkt. 358-1.]
In the Tampa Investigation, TQL maintained that LAEs and LAETs are exempt employees
under the administrative exemption, executive exemption, or highly compensated employee
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exemption. [Dkt. 358-1 at 7.] The DOL denied the administrative exemption, did not reach the
executive exemption, and found that no more than 10 employees were likely to qualify for the
highly compensated employee exemption. [Id. at 8-9.] The DOL Wage and Hour Investigator
recommended that the investigation be considered “for review for vetting processes” with the
Regional Office or Regional Office of the Solicitor. [Dkt. 328-5 at 15.] In the Columbus
Investigation, the DOL dropped the investigation and made no findings regarding exemptions due
to the private class action lawsuit already pending that would determine the same exemptions.
[Dkt. 358-1 at 16.]
Upon reviewing the DOL FOIA materials, Plaintiff filed a motion for sanctions against
TQL, based on TQL’s representation that no documents existed in its response to RFP 47.
[Dkt. 328.] That motion was referred to this Court by the District Judge. Following a hearing, this
Court ordered Plaintiff to subpoena the DOL “for records relating to the relevant investigation as
soon as possible” and also ruled that “Plaintiffs are also permitted to serve written discovery on
Defendant related to the relevant DOL investigation and Defendant's knowledge thereof.”
[Dkt. 342.] Pursuant to the Court’s order, Plaintiff’s served discovery requests on TQL related to
the DOL investigations. In response, TQL filed the instant motion for protective order. TQL argues
that it should not have to respond to the discovery requests because: 1) they seek irrelevant
information; 2) they seek documents and communications protected by the attorney-client
privilege; and 3) the documents and communications they seek are protected by Federal Rule of
Evidence 408. For the reasons discussed below, the Court rejects these arguments and denies
TQL’s motion.
DISCUSSION
I.

RELEVANCE
Federal Rule of Civil Procedure 26(b)(1) permits the discovery of all relevant, non3

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privileged material, provided it is “proportional to the needs of the case, considering the
importance of the issues at stake in the action, the amount in controversy, the parties’ relative
access to relevant information, the parties’ resources, the importance of the discovery in resolving
the issues, and whether the burden or expense of the proposed discovery outweighs its likely
benefit.” Evidence is relevant if “it has any tendency to make a fact more or less probable than it
would be without the evidence.” Federal Rule of Evidence 401(a). Federal Rule of Civil Procedure
26(c) allows the Court to enter a protective order to protect a party from undue burden, expense,
or annoyance.
Although liquidated damages are the default for FLSA violations, a court may choose not
to award liquidated damages “if the employer shows to the satisfaction of the court that the act or
omission giving rise to such action was in good faith and that he had reasonable grounds for
believing his act or omission was not in violation of the [FLSA].” 29 U.S.C. § 260. “The good
faith defense requires proof of the employer’s subjective intent to comply with the Act, as well as
evidence of objective reasonableness in the employer’s application of the Act.” Castro v.
Chicago Housing Authority, 360 F.3d 721, 730 (7th Cir. 2004) (emphasis added) (citing Saxion v.
Titan-C-Manufacturing, Inc., 86 F.3d 553, 561-62 (6th Cir.1996)). “A good heart but an empty
head does not produce a defense; objective criteria are highly valued here as in other inquiries into
‘good faith,’ not the least because corporations . . . do not have subjective mental states.” Walton
v. United Consumers Club, Inc., 786 F.2d 303, 312 (7th Cir. 1986) (citing Harlow v. Fitzgerald,
457 U.S. 800, 815-20, 102 S.Ct. 2727, 2736-39 (1982)).
The documents and communications relating to the DOL investigations are clearly relevant
to the objective reasonableness of TQL’s classification of the LAEs and LAETs, and should be
produced. In order to prove its good faith defense, TQL need not only prove that it subjectively
believed that its classifications were correct, but that the classifications were objectively
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reasonable. The DOL investigators’ explanations of the job duties of LAEs and LAETs analysis
of the potential exemptions would help a jury determine whether TQL’s reading of the FLSA
exemptions was objectively reasonable. 1 In other words, these documents have the tendency to
make it more or less probable that TQL’s decision to classify LAEs and LAETs as exempt
employees was objectively reasonable – i.e., they are relevant. Although the filings did not discuss
the issue very much, the Court also finds that the likely relevance of the proposed discovery
outweighs the burden of production. The documents are very important to the issue of whether
TQL’s belief that LAEs and LAETs were exempt from the FLSA’s overtime requirements was
objectively reasonable, which TQL must prove to sustain its good faith defense. The burden and
expense of production appears to be fairly limited and the Court finds that a protective order is not
appropriate in this instance.
TQL’s arguments to the contrary are not persuasive. First, TQL asserts that the discovery
is not relevant because the exemption decision took place before the DOL investigations began,
and, therefore, the DOL investigations could not have affected TQL’s decision-making. This
presupposes that TQL’s subjective knowledge and understanding of the FLSA is the only relevant
inquiry for purposes of the good faith defense. As noted above, there is also an objective
component to the good faith defense that TQL must prove and Plaintiffs must be given the
opportunity to rebut. The Court rejects this argument.
Second, TQL argues that the documents are not relevant because “TQL was never notified
that the DOL had found a violation that might have impacted TQL’s classification decisions.”
[Dkt. 345 at 7.] Again, this presumes that the only dispositive issue is whether TQL had a

The documents may also bear on the subjective prong of the good faith defense, depending on the contents of
TQL’s internal communications. To be clear, this Memorandum Opinion and Order is not intended to limit relevance
of such documents to the objective prong of the good faith defense, but only highlights the most obvious relevance of
the discovery for purposes of this motion.
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subjective good faith belief the exemptions were justified, but the law in the Seventh Circuit
requires proof that TQL had objectively reasonable grounds for believing it had properly classified
the LAEs and LAETs. As such, the Court also rejects this argument.
Third, TQL maintains that the discovery is not relevant because the DOL investigations do
not represent a final, official finding by the DOL that TQL violated the FLSA. Assuming without
deciding that TQL is correct, the DOL investigation documents and communications relating to
them would be relevant, nonetheless. The Court does not believe the evidence must constitute a
final agency decision by the DOL to fit within the broad definition of relevance under the Federal
Rules of Evidence or the Federal Rules of Civil Procedure. The DOL analyzing the same job titles
at issue here, examining the same exemptions, and recounting its discussions with TQL’s in-house
and outside counsel regarding same would all tend to make TQL’s good faith defense more or less
probable. Likewise, TQL’s internal communications regarding these investigations may yield
relevant evidence. As discussed above, that relevance is not outweighed by the expense or burden
of production. Certainly, a final agency finding would have more probative value than the
documents at issue here, but that goes to the weight of the evidence, not its relevance. The only
issue in front of this Court is whether the discovery is relevant, and if that relevance is outweighed
by any of the factors listed in Rule 26(b)(1). The Court does not accept TQL’s argument to the
contrary and denies the motion on this basis.
Finally, TQL argues that the discovery is not relevant because none of the class plaintiffs
were covered by either the Columbus Investigation or the Tampa Investigation. Once more, this
argument goes to the probative weight of the discovery, not its relevance. Because the Columbus
Investigation and the Tampa Investigation cover the same job title and FLSA exemptions, the
discovery sought has the tendency to prove TQL lacked an objectively reasonable believe its
actions did not violate the FLSA. While TQL might contend the discovery has little probative
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value because it does not relate to the specific plaintiffs in this case, that argument is best left for
a motion in limine based on Federal Rule of Evidence 403, not a motion for protective order. The
discovery at issue here is relevant, and the Court denies the motion for protective order.
II.

PRIVILEGE
Next TQL argues the Court should grant the motion to protective order because Plaintiffs’

discovery requests seek documents and communications protected by the attorney-client privilege.
The Court denies the motion without prejudice on procedural grounds. The Federal Rules of Civil
Procedure state that a party seeking to withhold information due to the attorney-client privilege
must expressly claim the privilege and then “describe the nature of the documents,
communications, or tangible things not produced or disclosed—and do so in a manner that, without
revealing information itself privileged or protected, will enable other parties to assess the claim.”
Fed. R. Civ. P. 26(b)(5). In other words, the appropriate move here was for TQL to make its
production, assert privilege over the documents it believes are privileged, and produce a privilege
log that complies with Rule 26(b)(5). The motion is denied without prejudice until TQL does so.
The Court notes that according to TQL, Plaintiffs claimed during the meet and confer
process that TQL’s assertion of the good faith defense waived its right to assert the attorney-client
privilege. However, TQL has specifically disclaimed an “advice of counsel” defense in this case,
which is the only way in which the good faith defense would constitute a waiver of the attorneyclient privilege. 2 The Court does not believe that TQL waived the attorney-client privilege, and it
may withhold privileged documents from its production.
III.

FRE 408
TQL also claims that it entitled to a protective order because the proposed discovery seeks

The DOL investigation documents’ summary of discussions between TQL counsel and the DOL investigators is
not tantamount to a waiver of the attorney-client privilege. [See Dkt. 358 at 15 n.14.]
2

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documents and communications protected by Federal Rule of Evidence 408. Federal Rule of
Evidence 408 only concerns the admissibility of settlement communications, not their
discoverability. As such, it is not relevant here and not a valid basis for a protective order pursuant
to Federal Rule of Civil Procedure 26(c)(1).
IV.

ATTORNEYS’ FEES
Federal Rule of Civil Procedure 26(c)(3) states that Rule 37(a)(5) applies to awarding

expenses for a motion for protective order. Rule 37(a)(5)(B) states: “[i]f the motion is denied, the
court . . . must, after giving an opportunity to be heard, require the movant, the attorney filing the
motion, or both to pay the party or deponent who opposed the motion its reasonable expenses
incurred in opposing the motion, including attorney's fees,” unless “the motion was substantially
justified or other circumstances make an award of expenses unjust.” The parties are ordered to
address the issue of attorneys’ fees in their upcoming briefing on the motion for sanctions; that
briefing will constitute TQL’s opportunity to be heard pursuant to Rule 37(a)(5). The Court notes
that the discovery at issue was specifically permitted by this Court in its minute order of July 14,
2021. [Dkt. 342.] Moreover, the District Judge was so concerned by TQL’s failure to identify the
DOL investigations or produce documents related to them that she stopped proceedings and
referred the motion for sanctions to this Court only a few weeks before trial was set to begin.
Instead of obeying this Court’s order permitting discovery, TQL filed the extremely thin motion
presently before the Court, thereby delaying resolution of this suit by several months. The Court
does not prejudge the issue, but notes that TQL will have a very difficult time persuading this
Court that the instant motion was substantially justified.
CONCLUSION
Defendant Total Quality Logistics, LLC’s (“TQL”) Motion for Protective Order [344] is
denied. Defendant is ordered to respond to Plaintiffs’ discovery requests within 14 days of this
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order. The Court sets the following briefing schedule on Plaintiffs’ Motion for Sanctions [328]:
Defendant’s response brief is due 2/11/22; Plaintiff’s reply is due 2/25/22.

ENTERED: 1/21/2022

_____________________________________

United States Magistrate Judge
Susan E. Cox

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