Andrews v. Kowa Printing Corp.

• Decision Date: 20 October 2005
• Docket Number: No. 99111.,99111.
• Citation: 838 N.E.2d 894,217 Ill.2d 101
• Parties: Nancy P. ANDREWS et al., Appellants, v. KOWA PRINTING CORPORATION et al., Appellees.
• Court: Illinois Supreme Court

Page 894

838 N.E.2d 894

217 Ill.2d 101

Nancy P. ANDREWS et al., Appellants, v. KOWA PRINTING CORPORATION et al., Appellees.

No. 99111.

Supreme Court of Illinois.

October 20, 2005.

COPYRIGHT MATERIAL OMITTED

Thomas B. Meyer and Steven L. Blakely, of Acton & Snyder, L.L.P., Danville, for appellants.

John F. Martin, of Meachum & Martin, Danville, and Jon D. Robinson and Christopher M. Ellis, of Bolen, Robinson & Ellis, L.L.P., Decatur, for appellees.

Karen L. Root, of Hawkins & Root, P.C., Decatur, for amicus curiae The Printing Industry of Illinois/Indiana.

Chief Justice THOMAS delivered the opinion of the court:

Plaintiffs, 35 former union employees of Kowa Printing Corporation, brought an action under the Illinois Wage Payment and Collection Act (the Wage Act) (820 ILCS 115/1 et seq. (West 2004)) against defendants, Kowa Printing Corporation, Thomas W. Kowa, and Huston-Patterson Corporation. Plaintiffs alleged that they were owed unpaid vacation time and severance pay and that all three defendants were jointly liable for the amounts owed, as all three fell within the Wage Act's definition of "employer." See 820 ILCS 115/2 (West 2002). The circuit court of Vermilion County agreed with plaintiffs and entered judgment against defendants. Defendants appealed, and the appellate court reversed the trial court's judgment as to Thomas Kowa and Huston-Patterson, holding that neither one was plaintiffs' employer for purposes of the Wage Act. 351 Ill.App.3d 668, 286 Ill.Dec. 548, 814 N.E.2d 198. We granted plaintiffs' petition for leave to appeal. 177 Ill.2d R. 315(a).

BACKGROUND

Thomas Kowa owned 100% of Kowa Printing Corporation, a commercial printing firm located in Danville, and 97% of Huston-Patterson Corporation, a commercial printing firm located in Decatur. Both of these firms operated under a common service mark, "The Kowa Group," and Thomas Kowa was the sole officer and sole director of both firms. The two firms were distinct corporate entities that were formed at different times and performed separate printing services. In addition, the two firms had separate employees, separate management, separate bank accounts, separate collective-bargaining agreements, and separate retirement plans. That said, the two firms regularly marketed each other's services and Huston-Patterson provided substantial administrative support to Kowa Printing, including payroll, purchasing, and accounting services.

In 1996, it was discovered that Kowa Printing's accountant, an employee of Huston-Patterson, had embezzled over $500,000 from Kowa Printing, leaving Kowa Printing in dire financial straits. At that time, Kowa Printing's only secured creditor was BankIllinois. On April 9, 1997, BankIllinois notified Kowa Printing that it was in default of its loans. The parties entered into negotiations and eventually executed a forbearance agreement. Under the agreement, BankIllinois gave Kowa Printing until November 1, 1997, to satisfy its liabilities. In exchange, Thomas Kowa agreed to personally guarantee all of Kowa Printing's loans. The parties later extended the deadline for repayment to March 15, 1998. According to Thomas Kowa, the purpose of the forbearance agreement was "to allow the corporation time to find a buyer, to try to save all the jobs and the money that was involved, and get appraisals of the equipment, get the company in as good a position for a seller as possible." On March 13, 1998, Thomas Kowa executed a surrender agreement, which allowed for the peaceful surrender of Kowa Printing's assets in the event of foreclosure.

In early 1998, Thomas Kowa located a buyer who entered into a written agreement to purchase Kowa Printing. As a condition of the purchase, the buyer required certain concessions concerning the accrued vacation time of Kowa Printing's employees. As of April 15, 1998, the buyer was still negotiating with plaintiff's union, and BankIllinois had not yet foreclosed. That same day, plaintiffs' union voted to reject the buyer's first proposal. The buyer quickly offered a new proposal, under which the new company would honor all of Kowa Printing's existing obligations to plaintiffs, with one exception: the new company would unconditionally honor only two-thirds of plaintiffs' accrued vacation time, with the remaining third contingent upon the new company showing a pretax profit of at least $300,000 in its first year. On April 16, 1998, the union rejected that proposal, as well. A few hours later, BankIllinois foreclosed on the loans, seized the Kowa Printing facility, and sent plaintiffs home. From that point forward, neither Thomas Kowa nor Huston-Patterson had access to Kowa Printing's assets or accounts. The parties stipulate that plaintiffs never received their final vacation and severance pay.

Following the foreclosure, plaintiffs filed a complaint alleging that Kowa Printing, Thomas Kowa, and Huston-Patterson were plaintiffs' employers, as defined by the Wage Act, and that all three had violated section 5 of the Wage Act, which requires every employer to "pay the final compensation of separated employees in full, at the time of separation, if possible, but in no case later than the next regularly scheduled payday for such employee." 820 ILCS 115/5 (West 2002). Following a bench trial, the trial court ruled in plaintiffs' favor and entered judgment against all three defendants. Defendants appealed, and the appellate court reversed the portion of the judgment holding Thomas Kowa and Huston-Patterson liable for the unpaid vacation and severance pay. 351 Ill.App.3d 668, 286 Ill.Dec. 548, 814 N.E.2d 198. This appeal followed.

DISCUSSION

In this appeal, we must decide whether Thomas Kowa and Huston-Patterson qualify as plaintiffs' "employer," as that term is defined in the Wage Act. This is a question of statutory interpretation, and the principles governing our inquiry are familiar. The fundamental rule of statutory construction is to ascertain and give effect to the legislature's intent. Michigan Avenue National Bank v. County of Cook, 191 Ill.2d 493, 503-04, 247 Ill.Dec. 473, 732 N.E.2d 528 (2000). Accordingly, courts should consider the statute in its entirety, keeping in mind the subject it addresses and the legislature's apparent objective in enacting it. People v. Davis, 199 Ill.2d 130, 135, 262 Ill.Dec. 721, 766 N.E.2d 641 (2002). The best indication of legislative intent is the statutory language, given its plain and ordinary meaning. Illinois Graphics Co. v. Nickum, 159 Ill.2d 469, 479, 203 Ill.Dec. 463, 639 N.E.2d 1282 (1994). Where the language is clear and unambiguous, we must apply the statute without resort to further aids of statutory construction. Davis v. Toshiba Machine Co., America, 186 Ill.2d 181, 184-85, 237 Ill.Dec. 769, 710 N.E.2d 399 (1999). The construction of a statute is a question of law that is reviewed de novo. In re Estate of Dierkes, 191 Ill.2d 326, 330, 246 Ill.Dec. 636, 730 N.E.2d 1101 (2000).

Section 5 of the Wage Act provides that "[e]very employer shall pay the final compensation of separated employees in full, at the time of separation, if possible, but in no case later than the next regularly scheduled payday for such employee." 820 ILCS 115/5 (West 2002). In this case, no one disputes that plaintiffs are still owed unpaid vacation and severance pay and that Kowa Printing, as plaintiffs' employer, is liable for the amounts owed. The issue is whether Thomas Kowa and Huston-Patterson are likewise liable. To resolve this issue, we must decide whether Thomas Kowa and Huston-Patterson were, along with Kowa Printing, plaintiffs' "employer," as that term is defined by the Wage Act.

The Wage Act defines the term "employer" in two different places. Section 2 of the Wage Act states that, "[a]s used in [the Wage Act], the term `employer' shall include any individual, partnership, association, corporation, business trust * * *, or any person or group of persons acting directly or indirectly in the interest of an employer in relation to an employee, for which one or more persons is gainfully employed." 820 ILCS 115/2 (West 2002). Section 13, in turn, states that "any officers of a corporation or agents of an employer who knowingly permit such employer to violate the provisions of this Act shall be deemed to be the employers of the employees of the corporation." 820 ILCS 115/13 (West 2002).

We begin our analysis with section 2, which states that "any person * * * acting directly or indirectly in the interest of an employer in relation to an employee" is deemed an "employer" for purposes of the Wage Act. 820 ILCS 115/2 (West 2002). The breadth of this language is confounding, to say the least. Read literally, section 2 would make an "employer" out of every person who possesses even a modicum of authority over another employee, from the CEO to the head of the maintenance staff, as such persons undeniably act "directly or indirectly in the interest of an employer in relation to an employee." This cannot be, however, as such a reading would render other provisions of the Wage Act utterly absurd. Section 3, for example, states that "[e]very employer shall be required, at least semi-monthly, to pay every employee all wages earned during the semi-monthly pay period." 820 ILCS 115/3 (West 2004). Similarly, section 5 requires every "employer" to "pay the final compensation of separated employees in full, at the time of separation." 820 ILCS 115/5 (West 2004). Notably, both of these duties are strict, with no consideration given to the purported employer's ability to effectuate compliance. Given our obligation to presume that the legislature did not intend to produce absurd or unjust results (Eastman v. Messner, 188 Ill.2d 404, 414, 242 Ill.Dec. 623, 721 N.E.2d 1154 (1999)), we refuse to believe that, in drafting section 2, the legislature set out to make every supervisory employee strictly and personally liable for the payment of his or her subordinates' wages.¹ This,...