Kim v. StoneX Group Inc. et al

Filing 44

MEMORANDUM Opinion and Order: The Court denies Defendants' partial motion to dismiss 8 . Signed by the Honorable Sharon Johnson Coleman on 11/18/2022. Mailed notice. (ym, )

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
Benjamin Kim

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) Case No. 22-cv-02392
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) Judge Sharon Johnson Coleman
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Plaintiff,
v.
StoneX Group Inc., Global Asset Advisors
LLC, Ken Packard and Glenn Swanson,
individually
Defendants.

MEMORANDUM ORDER AND OPINION
Plaintiff Benjamin Kim filed a five-count complaint against Defendants StoneX Group Inc.
(“StoneX”), Global Asset Advisors LLC (“Global”), Ken Packard, and Glenn Swanson, alleging
racial discrimination and unlawful withholding of earnings, in violation of Title VII of the Civil
Rights Act of 1964, 42 U.S.C. § 2000 et seq. (“Title VII”), the Fair Labor Standards Act, 29 U.S.C. §
201 et seq. (“FLSA”), and the Illinois Wage Payment and Collection Act, 820 ILCS 115/1 et seq.
(“IWPCA”). Defendant StoneX has moved to dismiss all counts against its pursuant to Federal
Rules of Civil Procedure 12(b)(1) and 12(b)(6). For the reasons outlined below, the Court denies
Defendant’s partial motion to dismiss Kim’s complaint [Dkt. 8].
Background
For the purposes of assessing Defendant’s Motion to Dismiss, the Court accepts the
following facts as true. Defendant Global is a brokerage. Plaintiff Benjamin Kim was employed as
a broker by defendant Global from 2011 until December 14, 2020. During the relevant period,
individual defendants Ken Packard and Glenn Swanson served in managerial roles at Global.
Around July 31, 2020, StoneX acquired GAIN Capital Holdings, Inc., Global’s parent company,

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therefore acquiring Global. Plaintiff alleges that he and defendants Packard and Swanson became
employees of StoneX at that time. After the acquisition, Kim received a text message from Packard
noting a plan to “integrate [with StoneX] as a team,” and after the acquisition, Kim received at least
one W-2 Wage and Tax statement identifying StoneX as his employer.
Kim, who is Asian-American, alleges that he was subjected to differential treatment based on
his ethnicity during the course of his employment. Specifically, he alleges that he was subjected to
racist remarks in the workplace, was denied career opportunities (such as responsibility for lucrative
accounts), and had a greater amount of his earnings withheld as “reserves” for trading losses than
similarly situated white employees, all in violation of Title VII. Kim also alleges that the withholding
of earnings violated the FLSA and IWCPA. Ultimately, Kim was terminated on December 14, 2020.
Legal Standard
Although Defendant has fashioned its motion to dismiss under both Federal Rule of Civil
Procedure 12(b)(1) and 12(b)(6), this Court will employ the legal standard articulated in Rule 12(b)(6)
in assessing the motion. A claim must be dismissed under Rule 12(b)(1) if the district court lacks
subject-matter jurisdiction to hear the case. But the Supreme Court has held that the question of
whether a party is an employer within the meaning of Title VII is an element of the party’s claim,
and is not a jurisdictional question. Arbaugh v. Y & H Corp., 546 U.S. 500, 516 126 S. Ct. 1235, 163
L. Ed. 2d 1097 (2006). Courts within this circuit have applied the same approach when assessing
employment under the FLSA, and this Court will do the same. See Gross v. Peoples Gas Light & Coke
Co., No. 17-CV-3214, 2018 WL 558515 at *1 (N.D. Ill. Jan. 24, 2018) (Gottschall, J.); Brown v. ABM
Indus., Inc., No. 15 C 6729, 2015 WL 7731946, at *3 (N.D. Ill. Dec. 1, 2015) (St. Eve, J.). As
employment status is not a jurisdictional question, this Court thus assesses Defendant’s Motion to
Dismiss under the standard found in Rule 12(b)(6).

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A motion to dismiss pursuant to Rule 12(b)(6) for failure to state a claim tests the sufficiency
of the complaint, not its merits. See Camasta v. Jos. A. Bank Clothiers, Inc., 761 F.3d 732, 736 (7th Cir.
2014). When considering dismissal of a complaint, the Court accepts well pleaded factual allegations
as true and draws all reasonable inferences in favor of the plaintiff. Erickson v. Pardus, 551 U.S. 89,
94, 127 S.Ct. 2197, 167 L. Ed. 2d 1081 (2007); Trujillo v. Rockledge Furniture LLC, 926 F.3d 395, 397
(7th Cir. 2019). To survive a motion to dismiss, plaintiff must “state a claim to relief that is plausible
on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L. Ed. 2d 929
(2007). Threadbare recitals of the elements of a cause of action and allegations that are merely legal
conclusions are not sufficient to survive a motion to dismiss. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129
S.Ct. 1937, 173 L. Ed. 2d 868 (2009).
Discussion
The question presented before the Court is whether StoneX employed Kim during the
events in question. Defendant StoneX argues that it is was not Kim’s employer within the meaning
of any of the FLSA, IWPCA, and Title VII, and thus must be dismissed. Kim responds that he has
sufficiently pled that StoneX was his employer or joint employer.
Courts adopt distinct, but similar, tests for determining whether a relationship constitutes an
employer-employee relationship under the FLSA, IWPCA, and Title VII. “The Supreme Court has
instructed the courts to construe the terms ‘employee’ and ‘employer’ expansively under the FLSA.”
Vanskike v. Peters, 974 F.2d 806, 807 (7th Cir. 1992) (citing Nationwide Mut. Ins. Co. v. Darden, 503 U.S.
318, 326, 112 S.Ct. 1344, 117 L.Ed.2d 581 (1992). Under these tests, enumerated in greater detail
below, a court generally must examine the “economic reality” of the relationship. Id. at 808.
Here, there is no dispute that Global was Kim’s employer. Rather, the question in dispute is
whether StoneX was also his employer under the joint employer theory. In the Seventh Circuit, “for
a joint-employer relationship to exist, each alleged employer must exercise control over the working

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conditions of the employee, although the ultimate determination will vary depending on the specific
facts of each case.” Moldenhauer v. Tazewell-Pekin Consol. Commc'ns Ctr., 536 F.3d 640, 644 (7th Cir.
2008).
A circuit split exists regarding the precise test used to evaluate joint employment under the
FLSA; the Seventh Circuit has not endorsed a test, but has found that the factors enumerated by the
Ninth Circuit are “certainly relevant” if not exclusively so. Moldenhauer 536 F.3d at 644. 1 Other
district courts in this circuit have looked to the test adopted by the Ninth Circuit. See, e.g., Morgan v.
SpeakEasy, LLC, 625 F. Supp. 2d 632, 649 (N.D. Ill. 2007) (Nolan, J.); Schneider v. Cornerstone Pints,
Inc., 148 F. Supp. 3d 690 (N.D. Ill. 2015) (Shah, J.). In the Ninth Circuit’s four-factor test, courts
asks whether the putative employer (1) had the power to hire and fire the employee; (2) supervised
and controlled employee work schedules or conditions of employment; (3) determened the rate and
method of payment; and (4) maintained employment records. Bonnette v. California Health and Welfare
Agency, 704 F.2d 1465, 1470 (9th Cir. 1983).
In assessing the existence of a joint employment relationship under the IWPCA, the Illinois
Supreme Court employs a similar test. Relevant factors include the “putative joint employer's role in
hiring and firing; promotions and demotions; setting wages, work hours, and other terms and
conditions of employment; discipline; and actual day-to-day supervision and direction of employees
on the job.” Andrews v. Kowa Printing Corp., 217 Ill. 2d 101, 117, 838 N.E.2d 894, 904 (2005) (citation
omitted).
Similarly, for Title VII, courts must ask “whether the putative employer exercised sufficient
control, and whether the ‘economic realities’ are such that the putative employer can be held liable
under Title VII.” Love v. JP Cullen & Sons, Inc., 779 F.3d 697 (7th Cir. 2015) (citing Knight v. United

Moldenhauer dealt with the Family Medical Leave Act, not the FLSA, but the court noted that “[t]he joint-employer
regulation in the FLSA mirrors that in the FMLA.” Moldenhauer, 536 F.3d at 644.
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Farm Bureau Mutual Insurance Co., 950 F.2d 377, 378–79 (7th Cir.1991)). The Seventh Circuit has
employed a five-part test to assess joint employment under Title VII. The test assesses:
(1) extent of the [purported] employer's control and supervision over the worker, including
directions on scheduling and performance of work, (2) the kind of occupation and nature of
skill required, including whether skills are obtained in the workplace, (3) responsibility for
the costs of operation, such as equipment, supplies, fees, licenses, workplace, and
maintenance of operations, (4) method and form of payment and benefits, and (5) length of
job commitment and/or expectations.
Nischan v. Stratosphere Quality, LLC, 865 F.3d 922, 929 (7th Cir. 2017). The first factor is the most
important, and the factors ultimately all relate to whether the putative joint employer exercised
control over the employee. Id.
The existence of these relatively complex, multi-factor tests implies that the question of joint
employment requires “a fact-intensive inquiry that typically requires further development through
discovery.” Penteris v. Citgo Petroleum Corp., 104 F. Supp. 3d 894, 900 (N.D. Ill. 2015) (Ellis, J.).
Indeed, “[t]he issue of whether an entity is a joint employer is generally unsuitable for resolution at
the motion to dismiss stage.” Nor v. Alrashid, No. 20 C 7470, 2022 WL 815542 at *3 (N.D. Ill. Mar.
17, 2022) (Kocoras, J.).
At this stage, plaintiff has sufficiently plead facts alleging that StoneX controlled aspects of
his work environment and was thus his joint employer under the FLSA, IWPCA, and Title VII.
First, Kim alleges not only that StoneX had the power to fire him, but did in fact do so. (Dkt. 1 ¶
71.) Second, Kim alleges that Packard and Swanson, who supervised him, were employed by
StoneX, suggesting that StoneX played a role in controlling the conditions of his employment. (Dkt.
1 ¶¶ 10, 15.); Moldenhauer, 536 F.3d at 644. Third, Kim alleges StoneX issued Kim one or more
paychecks, suggesting a role in determining the rate and method of payment. (Dkt. 1 ¶¶ 50, 53.) Of
course, discovery may bring to light facts suggesting that StoneX was not Kim’s joint employer, at
which point StoneX may again raise the issue at Summary Judgment. But at this stage of litigation,

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plaintiff has met his burden. See Nor v. Alrashid, No. 20 C 7470, 2022 WL 815542 at *3 (N.D. Ill.
Mar. 17, 2022) (Kocoras, J.)
The Court also declines to take judicial notice of plaintiff’s purportedly exclusive National
Futures Association registration with Global, while also noting that this registration does not
dispositively establish the lack of an employment relationship between Kim and StoneX. It is wellestablished that an employee may have multiple employers, and while Kim’s registration with Global
might support an employment relationship between Kim and Global, it alone does not undermine a
joint relationship with StoneX. Ivery v. RMH Franchise Corp., 280 F. Supp. 3d 1121, 1128 (N.D. Ill.
2017) (Tharp, J.) (citing Falk v. Brennan, 414 U.S. 190, 195 (1973)).
Conclusion
Based on the foregoing, the Court denies Defendants’ partial motion to dismiss [Dkt. 8].

IT IS SO ORDERED.

Date: 11/18/2022
Entered: _____________________________
SHARON JOHNSON COLEMAN
United States District Court Judge

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