Aiello et al v. Kube, LLC et al
Filing
103
MEMORANDUM Opinion and Order. Plaintiff's Motion for Entry of Consent Judgment 78 is denied. Defendant's Motion to Dismiss 87 is granted. Counts I and II are dismissed without prejudice, Counts II and IV are dismissed with prejudic e. Plaintiffs shall file an amended complaint on or before 5/17/19 or the Court's dismissal of Counts I and II will convert to one with prejudice. The motion to withdraw 101 is granted. Goli Rahimi will be withdrawn as Defendant's counsel of record. Status hearing set for 4/30/19 is re-set to 5/28/19 at 9:00 a.m. If by that time Plaintiff has not already filed an amended settlement with Kube for the Court's approval, Plaintiff shall inform the Court of the status of its Kube settlement. Signed by the Honorable Harry D. Leinenweber on 4/26/2019:Mailed notice(maf)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
PATRICIA AIELLO, et al.,
Plaintiffs, Individually
and as Assignees of
Claims Owned by Kube,
LLC,
v.
Case No. 17 C 985
INVISION MARKETING SOLUTIONS,
a division of SOUTHERN WINE
& SPIRITS OF AMERICA, INC.,
and successor entity
SOURTHERN [sic] GLAZER’S WINE
AND SPIRITS OF ILLINOIS,
LLC, an Illinois corporation,
Judge Harry D. Leinenweber
Defendants.
MEMORANDUM OPINION AND ORDER
For the reasons stated herein, Defendant’s Motion to Dismiss
(Dkt. No. 87) is granted and Plaintiffs’ Motion for Entry of
Consent Judgment (Dkt. No. 78) is denied.
I.
BACKGROUND
The actual Defendant in this wage and hours case is Southern
Glazer’s Wine and Spirits of Illinois, LLC (“Southern Glazer”),
which is a successor to Invision Marketing Solutions, which was a
division of Southern Glazer’s predecessor, Southern Wine & Spirits
of America, Inc (“SWSA”).
The Plaintiffs are former employees of
Kube, LLC (“Kube”). According to the Third Amended Complaint, Kube
and
Southern
Glazer,
through
Invision,
were
co-employers
of
Plaintiffs and as such Southern Glazer is responsible for unpaid
wages owed to Plaintiffs by Kube. The Third Amended Complaint
contains four claims against Southern Glazer: (1) Count I for
violations of the Fair Labor Standards Act (“FLSA”); (2) Count II
for violation of the Illinois Minimum Wage Payment and Collections
Act (“IMWPCA”); (3) Count III for unjust enrichment; and (4) Count
IV for indemnity. Southern Glazer denies its predecessor was a coemployer
of
Plaintiffs
and
contends
that
the
Third
Amended
Complaint fails to allege sufficient facts to establish a joint
employer relationship between Invision and Kube.
It also alleges
that the Complaint fails to allege any basis for unjust enrichment
or for indemnity. Accordingly, it moves to dismiss. Plaintiffs, in
response, contend that Iqbal and Twombly did not do away with
notice pleading and the Third Amended Complaint alleges more than
bare bones allegations by providing detailed allegations of fact
that show a joint employment relationship. They further argue that
unjust enrichment is an alternative to Counts I and II and should
be viable in the event the Court fails to find FSLA applicable.
Plaintiffs acknowledge that Count IV for indemnity is not viable.
II.
DISCUSSION
By attaching the contract between Invision and Kube to the
Complaint, Plaintiffs have created a problem for themselves in
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attempting
to
allege
Invision and Kube.
a
joint
employment
relationship
between
The contract in paragraph 12 specifically
states:
12. INDEPENDENT CONTRACTOR. This Agreement shall
not render KUBE a partner, agent of, trust, joint
venture,
employee,
joint
employer
or
any
other
association with INVISION for any purpose. KUBE is and
will
remain
an
independent
contractor
in
its
relationship to INVISION. INVISION shall not withhold on
behalf of KUBE any sums for income tax, unemployment
insurance, or social security. Related thereto, all such
payments and compensation hereunder and withholding
obligations shall be the sole responsibility of KUBE,
and KUBE will indemnify and hold INVISION harmless from
any and all damages, injuries, suits, losses or
liabilities arising from KUBE's failure to make such
payments, withhold such amounts, or in the event
INVISION is obligated to make payments to the Internal
Revenue Service or any other state or local taxing agency
on behalf of KUBE or its employees. KUBE, and employees
of KUBE who render Services to INVISION, shall have no
claim against INVISION, including, without limitation,
claims hereunder or otherwise for vacation pay, sick
leave, retirement benefits, licenses, permits needed to
perform
the
Services,
social
security,
worker's
compensation,
health
or
disability
benefits,
unemployment insurance benefits, or employee benefits of
any kind. All persons rendering Services to INVISION
under this Agreement shall be solely employed by KUBE
and KUBE shall be solely responsible for every aspect of
the employment of those employees.
As can be seen from this provision, the parties specifically
disavowed any intention that they be considered “joint employers.”
Therefore, to allege a joint employer relationship after such a
total disavowal, it was incumbent upon Plaintiffs to allege some
specific factual allegations to counter such a contrary statement
and to establish a plausible case for joint employment.
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In other
words, it is not sufficient for a plaintiff merely to allege a
joint
employment
relationship
in
the
face
of
a
contractual
provision stating otherwise. Brown v. Cook County, No. 17 C 8085,
2018
WL
3122174,
conclusionary
*13
(N.D.
statements
Ill.
June
concerning
26,
joint
2018)
states
employment
are
that
not
enough. Richardson v Help at Home, LLC, No. 17 CV 00060, 2017 WL
2080448, *3 (N.D. Ill. May 15, 2017), is similar: “While a covered
employee can have more than one employer at a time [plaintiff]
fails
to
sufficiently
allege
that
she
performed
work
for
[defendant].”
Plaintiffs’ Complaint is similarly devoid of any allegations
supporting their allegations of joint employment.
lumps Kube and Invision as “Defendants.”
distinguish
them
as
to
specific
The Complaint
There is no attempt to
allegations.
The
allegations
themselves are sparse and mostly amount to specific assignments
and activities that one would expect a firm who is under contract
to provide such services to perform.
The specific allegations of
the Complaint are set forth in Plaintiffs’ response brief as
follows:
•
•
Plaintiffs, as “brand advocates” were required
to appear at particular times, in particular
places (Third Amended Complaint at ¶ 94
(“TAC”), Dkt. No. 73);
Defendants required a “dress code” (TAC at
¶¶ 95-98);
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•
•
•
•
•
•
•
•
Defendants imposed a 7-day prep plan (TAC at
¶ 99);
Defendants imposed requirements regarding
“chilling” procedures (TAC at ¶ 103);
Defendants imposed display requirements and
standards (TAC at ¶¶ 104-106);
Defendants made “consumer engagement”
requirements (TAC at ¶ 107);
Defendants required the use of “closing” scripts
(TAC at ¶ 108);
Defendants required submission of event “re-cap”
reports (TAC at ¶ 109);
Defendants prohibited Plaintiffs from shopping,
while in “uniform,” at the stores after the
event (TAC at ¶ 114); and
Defendants prohibited Plaintiffs from bringing
significant others (e.g. spouses/boyfriends) to
tasting events (TAC at ¶ 115).
The measure of a joint employment relationship is the degree
that a putative employer controls the individual employee. The
most basic facts that would tend to support a joint employment
relationship, is who hired them, who paid them, who decided the
amount of payment, who had the power to fire them, who decided
when the person would work, and other similar factors.
See Vill.
of Winfield v. Illinois State Labor Relations Bd., 678 N.E.2d 1041,
1044 (1997) (stating Illinois joint employment test). To the extent
that the Complaint answers any of these questions, the answer is
Kube. For example, Plaintiffs could manage their wages through the
Kube web site, and the employees were paid directly by Kube.
The Complaint therefore fails allege any plausible basis for
a court to find a joint employment relationship between Kube and
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Invision. The Motion to Dismiss is granted. Plaintiff requests
leave to file an Amended Complaint as to Counts I and II if the
Court dismisses them. Since this is the first Complaint that
attempts to hold Southern Glazer responsible, the Court dismisses
without prejudice. However, the Court expects Plaintiffs to allege
specific facts relating only to Invision without coupling them
with the allegations against Kube.
The
Court
enrichment.
also
dismisses
Count
Although
Plaintiff
has
III,
pled
based
on
unjust
unjust
enrichment
(according to their brief) as an alternative to Counts I and II,
nevertheless, it fails factually on the basis that Invision paid
Kube under its contract in part for the wages of Kube’s employees.
The fact that Kube kept the money without paying Plaintiffs is not
Invision’s fault. The gravamen of an unjust enrichment claim is
that a defendant retained some monetary benefit that was due to
plaintiffs
and
that
such
retention
“violates
fundamental
principles of justice, equity, and good conscience.”
Chicago
Faucet Shoppe, Inc. v. Nestle Waters, 24 F. Supp. 3d 750, 763 (N.D.
Ill. 2014).
Count III is dismissed.
The Court turns to Plaintiffs’ Motion for Entry of Consent
Judgment. Plaintiffs reached a settlement with Kube in which Kube
agreed, among other things, to the entry of a consent judgment in
the amount of $303,423.32. Plaintiffs now move the Court to enter
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that $303,423.32 consent judgment. This request fails for two
reasons.
First, the Seventh Circuit has indicated that stipulated
settlements in FLSA cases must be approved by a district court or
the U.S. Department of Labor. See Walton v. United Consumers Club,
Inc.,
786
Standards
F.2d
Act
303,
is
306
designed
(7th
to
Cir.
1986)
prevent
(“[T]he
consenting
Fair
Labor
adults
from
transacting about minimum wages and overtime pay. Once the Act
makes it impossible to agree on the amount of pay, it is necessary
to ban private settlements of disputes about pay.
Otherwise the
parties’ ability to settle disputes would allow them to establish
sub-minimum wages. Courts therefore have refused to enforce wholly
private settlements.”). As a result, district courts in this
Circuit
routinely
require
approval
of
FLSA
settlements.
See
Salcedo v. D’Arcy Buick GMC, Inc., 227 F. Supp. 3d 960, 961 (N.D.
Ill. 2016) (collecting cases). The Court will not enter a consent
judgment based on a settlement agreement that it has not approved.
Second, the Court will not enter the consent judgment because
a key provision of the settlement agreement upon which it is based
is invalid. As part of the settlement agreement, Kube assigned all
its rights under its contract with SWSA/Invision to Plaintiffs.
However, that same contract prohibits any party from assigning its
rights without the counterparty’s written consent. Southern Glazer
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has
not
consented
to
assignment.
In
abandoning
their
indemnification claim, Plaintiffs conceded that the non-assignment
clause
prohibits
Kube’s
assignment
in
the
settlement.
Accordingly, if Plaintiffs and Kube still want to settle, they
must rewrite the settlement agreement and present it to the Court
for approval.
III.
CONCLUSION
For the reasons stated herein, Defendant’s Motion to Dismiss
(Dkt. No. 87) is granted. Counts I and II are dismissed without
prejudice,
Counts
III
and
IV
are
dismissed
with
prejudice.
Plaintiffs are granted twenty-one (21) days to file an Amended
Complaint.
IT IS SO ORDERED.
Harry D. Leinenweber, Judge
United States District Court
Dated: 4/26/2019
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