Hanus v. Harting, Inc.

Filing 99

MEMORANDUM Opinion and Order Signed by the Honorable Georgia N Alexakis on 11/26/24.(ca, )

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
MICHELLE HANUS,
Plaintiff,
No. 21 CV 5289
v.
Judge Georgia N. Alexakis
HARTING, INC. OF NORTH AMERICA,
Defendant.
MEMORANDUM OPINION AND ORDER
From November 2019 to August 2021, Michelle Hanus worked as a salaried
customer service representative for Harting, Inc. of North America, which
manufactures electrical connectors. After leaving—and signing a severance
agreement—Hanus brought a putative collective action against Harting under the
Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201, et seq., and the Illinois Minimum
Wage Law, 820 ILCS 105/1, et seq., alleging that Harting failed to pay her and other
customer service representatives overtime pay to which they were entitled. Harting
brought a counterclaim, alleging that Hanus’s suit breached her separation
agreement, which prohibited participation in any collective action based on her
employment at Harting.
Harting now moves for partial summary judgment on its breach-of-contract
counterclaim and Count II of Hanus’s complaint, arguing that, under the agreement,
Hanus cannot proceed with the collective action. [67]. Because the agreement’s
collective-action waiver is enforceable, that motion is granted.

I.

Legal Standards
Summary judgment is appropriate if the movant shows that there is no

genuine dispute as to any material fact and the movant is entitled to judgment as a
matter of law. Spurling v. C & M Fine Pack, Inc., 739 F.3d 1055, 1060 (7th Cir. 2014);
Fed. R. Civ. P. 56(a). A genuine dispute as to any material fact exists if “the evidence
is such that a reasonable jury could return a verdict for the nonmoving party.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The party seeking summary
judgment has the burden of establishing that there is no genuine dispute as to any
material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
II.

Background
Hanus was one of several customer service representatives at Harting, a

company that manufactures and sells electrical connectors for a variety of uses. [79]
¶¶ 1–3. Hanus and the other representatives were salaried employees. [35] ¶¶ 22–
23. The core contention in Hanus’s complaint is that she and the other
representatives were improperly exempted from overtime wages and were therefore
denied overtime pay to which they were entitled under state and federal law. See
generally [1]; 29 U.S.C. §§ 207, 213(a)(1); 820 ILCS 105/4a(1)–(2).
For the instant motion, however, the parties are not concerned with Hanus’s
employment at Harting but rather with her departure. The parties agree on the basic
facts. Hanus left Harting on August 6, 2021. [79] ¶¶ 3–4. She signed a severance
agreement when she departed, for which she received severance benefits. Id. ¶¶ 3–5.
The agreement included the following provision:

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Employee further waives and gives up any right to become, and promises not
to consent to become, a member of any class or collective action in a case in
which claims are asserted against Company that are related in any way to
Employee’s employment or the termination of Employee’s employment with
Company. If, without Employee’s prior knowledge and consent, Employee is
made a member of a class in any proceeding, Employee will opt out of the class
at the first opportunity and will reject all monetary payment.
[72-1] at 2–3.
Hanus filed this suit two months later. [1]. Count I of Hanus’s complaint
brought individual claims under the FLSA, but Cout II sought to bring FLSA claims
collectively on behalf of other customer service representatives. [1] ¶¶ 57–77. Harting
moved for conditional class certification, [14], which Harting opposed with essentially
the same breach-of-contract argument it makes now.1 [24] at 5–8. Harting then
brought the breach-of-contract counterclaim now at issue, [34], which Hanus moved
to dismiss. [36], [37].
The court previously assigned to this matter granted Hanus’s motion for
conditional class certification and denied her motion to dismiss Harting’s breach-ofcontract counterclaim. [62]. In granting the class certification motion, the previous
court concluded that “[c]onditional certification is not the stage at which to consider
substantive arguments regarding the viability of the claim, such as the Agreement’s
waiver provision.” Id. at 3. And because Hanus had “made the necessary modest
factual showing, her collective action qualifie[d] for conditional certification.” Id. at
4. As to Hanus’s motion to dismiss the breach-of-contract counterclaim, the previous

1 Harting also contended that the certification motion should not be granted because Hanus

could not meet the necessary numerosity or notice requirements for the collective action, but
those arguments do not bear on the instant motion. [24] at 8–15.

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court accepted Harting’s plausibly alleged facts indicating that Hanus had signed an
agreement with a collective-action waiver and rejected Hanus’s argument that as the
class representative she would not be a member of the proposed class and thus fell
outside of the text of the waiver provision. Id. at 6–7. Importantly, for purposes of
her motion to dismiss the counterclaim, Hanus “assum[ed] without conceding that
the Agreement was enforceable.” [36] ¶ 5; [62] at 3. In other words, the enforceability
of the collective-action waiver has not yet been squarely addressed in this proceeding.
III.

Analysis
The FLSA authorizes employees to bring a collective action against an

employer for unpaid wages on behalf of “themselves and other employees similarly
situated.” 29 U.S.C. § 216(b). The parties agree that the text of the agreement would
prohibit Hanus from participating in such a collective action. [68] at 1; [76] at 4.
Harting believes this collective-action waiver is enforceable, [68] at 10; Hanus does
not, [76] at 2.
The Supreme Court has “frequently emphasized the nonwaivable nature of an
individual employee’s right to a minimum wage and to overtime pay under the
[FLSA].” Barrentine v. Arkansas-Best Freight Sys., Inc., 450 U.S. 728, 740 (1981).
This stance makes sense. Enforcing contracts that waived these rights would “nullify
the purposes of the statute and thwart the legislative policies it was designed to
effectuate.” Id. (citing Brooklyn Savings Bank v. O’Neil, 324 U.S. 697, 707 (1945))
(quotation marks omitted). Indeed, Harting concedes that Hanus’s individual wage
and hour claims have not been waived. [69] at 1.

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The Seventh Circuit has not directly addressed the issue of whether FLSA
collective action rights can be waived, but Harting points to two district court cases
holding that such waivers, in severance-agreement provisions worded in a
substantially similar manner as the provision here, to be enforceable.2 [69] at 8–11
(citing Brown v. Sears Holdings Management Corporation, No. 09 C 2203, 2009 WL
2514173 (N.D. Ill. Aug.17, 2009); Copello v. Boehringer Ingelheim Pharms. Inc., 812
F. Supp. 2d 886 (N.D. Ill. 2011)). Both Brown and Copello analogized to the Supreme
Court’s line of cases allowing waiver of collective action rights in the context of
arbitration agreements to conclude that “while the FLSA prohibits substantive wage
and hour rights from being contractually waived, it does not prohibit contractually
waiving the procedural right to join a collective action.” Copello, 812 F. Supp. 2d at
894; see also Brown, 2009 WL 2514173, at *4 (disagreeing “that Brown could not as a
matter of law waive her ability to bring a class action under the FLSA”).
Like the instant case, Brown did not involve an arbitration agreement. 2009
WL 2514173, at *3–4. But Brown examined the line of cases involving § 216(b)
collective actions waivers in the context of arbitration agreements and concluded that
while an employer “cannot contract itself out of paying overtime ... cases examining
the availability of particular mechanisms for vindicating those rights have not
concluded that they share the substantive and nonwaivable character of the various

2 Harting also discusses Niiranen v. Carrier One, Inc., No. 20-CV-06781, 2022 WL 103722

(N.D. Ill. Jan. 11, 2022), at length, [69] at 10-12, but because that case expressly distinguishes
the state law claim it addressed from an FLSA collective action, see Niiranen, 2022 WL
103722, at *7, and the particular state law at issue in Niiranen is not at issue in the instant
motion, the Court does not find Niiranen especially persuasive.

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monetary remedies set out in § 216(b).” Id. at *3 (listing cases). As a result, Brown
concluded “the mere fact that class actions are mentioned within § 216(b) does not
create a ‘right’ for a plaintiff to bring a class action.” Id.
Both Brown and Copello rely on Gilmer v. Interstate/Johnson Lane Corp., 500
U.S. 20 (1991). The plaintiff in Gilmer sued his former employer under the Age
Discrimination in Employment Act (“ADEA”) but had signed an agreement to
arbitrate any disputes arising out of his termination. Id. at 23. This is relevant here
because the ADEA and FLSA have identical collective action provisions.3 As a result,
one of plaintiff Gilmer’s arguments was that enforcing mandatory arbitration of his
age-discrimination claims was inconsistent with the purpose of the ADEA because
“arbitration procedures … do not provide for broad equitable relief and class actions.”
Id. at 32. After noting the “liberal federal policy favoring arbitration agreements,” id.
(cleaned up), the Supreme Court rejected Gilmer’s argument because “arbitrators do
have the power to fashion equitable relief” and because “even if the arbitration could
not go forward as a class action or class relief could not be granted by the arbitrator,
the fact that the [ADEA] provides for the possibility of bringing a collective action
does not mean that individual attempts at conciliation were intended to be barred.”
Id. at 33 (quoting Nicholson v. CPC Int’l Inc., 877 F.2d 221, 241 (3d Cir. 1989) (Becker,
J., dissenting)). Gilmer further noted that arbitration agreements did not preclude
the EEOC from seeking class-wide relief. Id.

The Supreme Court has described the ADEA collective action provision as “identical
collective action scheme (in fact, one borrowed from the FLSA).” Epic Sys. Corp. v. Lewis,
584 U.S. 497, 515 (2018).
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More recently, in a case that post-dates Brown and Copello, the Supreme Court
has reaffirmed that collective action schemes like that of the FLSA do not “displace
the [Federal] Arbitration Act or prohibit individualized arbitration proceedings.” See
Lewis, 584 U.S. at 515 (citing Gilmer, 500 U.S. at 32). In Lewis, the Supreme Court
concluded

that

arbitration agreements requiring

individualized arbitration

proceedings for FLSA claims were enforceable under the Federal Arbitration Act
(“FAA”). Id. at 525. Harting argues that this shows that the “FLSA does not provide
an unwaivable right to a collective action.” [83] at 9.
The Court agrees with Harting’s reading of the relevant jurisprudence and is
especially persuaded by the reasoning articulated in Brown. The waiver language in
Brown and here is nearly identical. [68] at 8. And the Court agrees that the best way
to read the existing cases concerning FLSA waivers is that although the core
substantive individual rights and remedies afforded by the FLSA are nonwaivable,
the procedural mechanisms are not. See Brown, 2009 WL 2514173, at *3; Long John
Silver’s Restaurants, Inc. v. Cole, 514 F.3d 345, 351 (4th Cir. 2008) (“opt-in” aspect of
§ 216(b) waivable in arbitration); Cameron-Grant v. Maxim Healthcare Services, Inc.,
347 F.3d 1240, 1249 (11th Cir. 2003) (§ 216(b) language does not create free-standing
“right” to represent other plaintiffs). Brown’s conclusion has only been bolstered by
Lewis, which addressed the question of whether “employees [should] always be
permitted to bring their claims in class or collective actions, no matter what they
agreed with their employer” and concluded that, at least in the context of the National

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Labor Relations Act and FAA, the answer was no.4 584 U.S. at 502 (emphasis added).
If the individualized arbitration proceedings at issue in Lewis were sufficient to
vindicate FLSA rights, the Court does not see why individualized litigation in a
judicial forum—something § 216(b) specifically provides for—would not be.
For her part, Hanus acknowledges that Gilmer and Lewis suggest that “the
proposition that FLSA collective actions can be waived may be true,” but contends
that this is only true “where the parties agree to arbitrate their claims.” [76] at 3. In
support of this position, Hanus cites to Killion v. KeHE Distributors, LLC, 761 F.3d
574 (6th Cir. 2014), in which the Sixth Circuit concluded that similar collective-action
waivers in severance agreements were not enforceable outside of the arbitration
context. [78] at 3-4. Because no arbitration agreement existed, Killion concluded that
Gilmer and similar cases did not apply because “no countervailing federal policy []
outweigh[ed] the policy articulated in the FLSA.” 761 F.3d at 592. Killion thus found
§ 216(b) collective action unwaivable, because allowing waivers would give employers
an “unfair advantage” and “discourage the employee from bringing a claim for
overtime wages,” all of which would run counter to the purpose of the FLSA. Id.

4 Although the underlying issue in Lewis involved an FLSA collective action, the plaintiff-

appellee did not argue that an FLSA collective action was an unwaivable right. The Lewis
majority noted this curious omission and, in so doing, strongly indicated that Gilmer already
foreclosed that position. See 584 U.S. at 499 (“In another contextual clue, the employees'
underlying causes of action arise not under the NLRA but under the Fair Labor Standards
Act, which permits the sort of collective action the employees wish to pursue here. Yet they
do not suggest that the FLSA displaces the Arbitration Act, presumably because the Court
has held that an identical collective action scheme does not prohibit individualized
arbitration proceedings.”) (citing Gilmer, 500 U.S. at 468).

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The Court is unpersuaded by Killion. While Killion emphasizes the strong
policy in favor of arbitration, the other federal appeals courts that have found waivers
enforceable in the arbitration context have reached that result after concluding that
the FLSA itself does not create a “non-waivable substantive right to a collective
action.” Walthour v. Chipio Windshield Repair, LLC, 745 F.3d 1326, 1335 (11th Cir.
2014); Owen v. Bristol Care, Inc., 702 F.3d 1050, 1052–53 (8th Cir. 2013) (“Even
assuming Congress intended to create some ‘right’ to class actions, if an employee
must affirmatively opt in to any such class action, surely the employee has the power
to waive participation in a class action as well.”). Because those conclusions about
FLSA rights do not depend on the FAA, they “hold[] regardless of whether or not the
waiver is made in the context of arbitration.” Benedict v. Hewlett-Packard Co., 13CV-00119-BLF, 2016 WL 1213985, at *5 (N.D. Cal. Mar. 29, 2016).
A more recent Northern District of Illinois case—in part relying on Killion—
submitted that an FLSA waiver was unenforceable where no arbitration agreement
existed. See Quinn v. Auto Inj. Sols., Inc., No. 1:20-CV-1966, 2020 WL 9397520, at *3
(N.D. Ill. Nov. 24, 2020). But the facts of Quinn distinguish it from Brown, Copello,
and the instant matter: Unlike those cases, which involved waivers specifically of
collective action rights, the waiver at issue in Quinn purported to release the
employer “from any and all claims or demands of any kind.” Id. at *2; see also id. at
*3 (“Defendants have another problem: there is no language waiving FLSA collective
actions in Quinn’s release.”). And, indeed, Quinn expressly distinguishes itself from
Copello on that basis. Id. As a result, Quinn “decline[ed] to rewrite the parties’

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agreement” to prevent the plaintiff from participating in the collective action. Id. But
no judicial “rewriting” is needed here to craft an agreement that preserves Hanus’s
individual FLSA rights; that is the agreement that she signed.
An Illinois breach-of-contract action has four elements: “(1) the existence of a
valid and enforceable contract; (2) performance by the plaintiff; (3) breach of the
contract by the defendant; and (4) resultant injury to the plaintiff.” See Gonzalzles v.
Am. Exp. Credit Corp., 315 Ill. App. 3d 199, 206 (1st Dist. 2000) (elements of Illinois
breach-of-contract claim). Because the collective-action waiver is enforceable,
Harting has proven the first element. Id. Hanus admits that Harting performed its
obligations under the agreement, so Harting has met the second element. [65] ¶ 27.
Hanus has brought a collective action claim under the FLSA related to her
employment at Harting, something clearly prohibited by the collective-action waiver
and thus meeting the third element. [1] ¶¶ 66-77; [65] ¶ 12; Gonzalzles, 315 Ill. App.
3d 199 at 206 (“A defendant's failure to comply with a duty imposed by the contract
gives rise to the breach.”). And Harting has spent time and money litigating the
waiver as a result of the breach, thus satisfying the fourth element. [69] at 8.
Hanus’s other arguments against the existence of the contract are unavailing.
Hanus contends that there was no consideration, and the waiver fails on that basis.
[76] at 5-6. But Hanus was given money by Harting as part of the severance
agreement, [65] ¶ 16, and anyway mutual binding promises can by themselves
provide adequate consideration under Illinois law. See Vassilkovska v. Woodfield
Nissan, Inc., 358 Ill. App. 3d 20, 28, 830 N.E.2d 619, 625 (1st Dist. 2005) (“A mutual

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promise to arbitrate would be sufficient consideration to support an independent
arbitration agreement.”). Finally, Hanus’s argument that Harting has “unclean
hands” relies on the assumption that the collective-action waiver is not enforceable.
[76] at 7. But, as discussed above, it is enforceable. So Harting’s hands are no less
clean than the employers in Gilmer or Lewis.
IV.

Conclusion
Because the collective-action waiver is enforceable, Harting has demonstrated

that it is entitled to judgement as a matter of law on its breach-of-contract
counterclaim and on Count II of Hanus’s complaint. Its motion for partial summary
judgment [67] is therefore granted, and Count II of Hanus’s complaint is dismissed
with prejudice.
The parties are directed to appear for an in-person hearing status hearing on
December 18, 2024, at 9:30 a.m. to discuss their proposed next steps in this matter.

ENTERED: 11/26/24
___________________________
Georgia N. Alexakis
United States District Judge

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