Barker v. Atl. Pac. Lines
| Decision Date | 14 August 2013 |
| Docket Number | No. 13 C 1272,13 C 1272 |
| Parties | PETER BARKER, Plaintiff, v. ATLANTIC PACIFIC LINES and MUNISH SACHDEV, Defendants. |
| Court | U.S. District Court — Northern District of Illinois |
AMENDED OPINION AND ORDER
Plaintiff, Peter Barker, filed a five-count complaint against defendants, Atlantic Pacific Lines ("APL") and Munish Sachdev (collectively referred to as "defendants"), alleging claims for retaliatory discharge, violation of the Illinois Whistleblower Act ("IWA"), 740 Ill. Comp. Stat. 174/1 et seq., violation of the Illinois Wage Payment and Collection Act ("IWPCA"), 820 Ill. Comp. Stat. 115/1 et. seq., and breach of contract.1 Sachdev has moved to dismiss for lack of personal jurisdiction [dkt. 12] under Federal Rule of Civil Procedure 12(b)(2), and APL and Sachdev moved to dismiss [dkt. 14] under Rule 12(b)(6) for failure to state a claim upon which relief may be granted. For the following reasons, Sachdev's motion to dismiss for lack of personal jurisdiction [dkt. 12] is denied and defendants' motion to dismiss for failure to state a claim [dkt. 14] is granted in part and denied in part.
Atlantic Pacific Lines ("APL") is a privately owned nonvessel ocean common carrier offering full export and import services, including warehousing and distribution. APL isincorporated in New Jersey and serves commercial customers out of its principal place of business in West Long Branch, New Jersey, and from offices in Michigan, Illinois, New York, India, Italy, and China. APL's Illinois office, opened in 2008, has one employee and leased office space. Sachdev is a citizen of New Jersey and the owner and president of APL.
In September 2010, Barker began working as the vice president of sales for APL in its Illinois office. When APL hired Barker, it entered into an agreement to pay him an annual salary of $90,000. Barker continued working for APL in connection with that agreement. APL also provided Barker with employee benefits including health insurance and a car allowance. APL issued Barker traditional paychecks and withheld the requisite federal and state payroll taxes and reported Barker's yearly earnings on an IRS W-2 Form.3 As vice president of sales, Barker reported directly to Sachdev. Barker's responsibilities included calling prospective and existing clients to sell APL's products and services. APL provided Barker with a laptop computer, office telephone, printer, facsimile machine and a company credit card. APL also paid for Barker's business-related expenses and his cellular telephone. Barker consistently received positive feedback on his sales and job performance and received salary increases. In early October 2012, Barker's yearly salary was $225,000.
In September 2012, Sachdev offered Barker two options: (1) he could remain an employee but APL would cut his salary by $75,000 or (2) he could choose to become an independent contractor and APL would pay him a commission based salary. Barker questioned the legality of his reclassification to an independent contractor. Without informing Barker, APL unilaterally reclassified Barker as an independent contractor. Although labeled independent contractor, Barker's day-to-day job responsibilities remained the same; he continued performingthe same duties, reported to Sachdev, and received the same employee benefits and car allowance. Barker learned about this change in employment status after receiving a paycheck, which reflected a lower salary and failed to make federal and state payroll tax withholdings.
Sachdev told Barker that he changed Barker's employment status to avoid paying payroll taxes. Barker questioned how he could receive employee health insurance yet be denied employee status. Barker additionally told Sachdev that his paychecks after the reclassification did not reflect the full amount of commissions to which Barker claimed he was entitled. Throughout the remainder of October and into November 2012, Barker continued asking defendants how they calculated his salary. Defendants ultimately acquiesced to Barker's requests and provided him with a summary of his sales. This summary, however, was inaccurate and omitted sales that Barker alleges that he made. Barker asked for an explanation but defendants failed to provide one.
On November 27, 2012, Barker requested information from Sachdev on his sales and commissions so he could prepare invoices to APL. Barker explained to Sachdev that he needed this documentation in the event that the IRS ever audited Barker. As an independent contractor, Barker was responsible for accounting for his earnings for tax purposes. On November 29, 2012, Barker called Sachdev again for an explanation regarding how defendants calculated his commissions. During this conversation, Sachdev became upset and told Barker that he should have accepted the fixed salary option. In the same conversation, Sachdev terminated Barker's employment despite having told Barker a few days earlier that he was having an outstanding sales month. After his termination, Barker requested his final paycheck, which defendants refused to provide. In February 2013, defendants remitted Barker's final paycheck without an explanation regarding why it took several months to issue. Barker claims that he is still owedpart of his annual salary and sales commissions after being reclassified as an independent contractor.
Rule 12(b)(2) permits dismissal of a claim based on lack of personal jurisdiction. See Fed. R. Civ. P. 12(b)(2). The burden of proof on jurisdictional challenges is on the party asserting jurisdiction. United Phosphorous, Ltd. v. Angus Chem. Co., 322 F.3d 942, 946 (7th Cir. 2003); RAR, Inc. v. Turner, 107 F.3d 1272, 1276 (7th Cir. 1997). In considering a motion to dismiss for lack of personal jurisdiction, the court may review affidavits submitted by the parties. Purdue Research Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003). When the court rules on th motion without a hearing, however, the plaintiff need only establish a "prima facie case of personal jurisdiction." Id. at 782 (quoting Hyatt Int'l Corp. v. Coco, 302 F.3d 707, 713 (7th Cir. 2002)). The court will "read the complaint liberally, in its entirety, and with every inference drawn in favor of" of the plaintiff. Central States, Se. & Sw. Areas Pension Fund v. Phencorp Reinsurance Co., 440 F.3d 870, 878 (7th Cir. 2006) (quoting Textor v. Bd. of Regents of N. Ill. Univ., 711 F.3d 1387, 1393 (7th Cir. 1993)). Disputes concerning relevant facts are resolved in favor of the plaintiff. Purdue, 338 F.3d at 782 (citing Nelson v. Park Indus., 717 F.2d 1120, 1123 (7th Cir. 1983)).
A motion to dismiss under Rule 12(b)(6) challenges a complaint for failure to state a claim upon which relief may be granted. Fed. R. Civ. P. 12(b)(6); Gen. Elec. Capital Corp. v. Lease Resolution Corp., 128 F.3d 1074, 1080 (7th Cir. 1997). In ruling on a Rule 12(b)(6) motion to dismiss, the court accepts as true all well-pleaded facts in the plaintiff's complaint and draws all reasonable inferences from those facts in the plaintiff's favor. Dixon v. Page, 291 F.3d 485, 486 (7th Cir. 2002). To survive a Rule 12(b)(6) motion, the complaint must not only provide the defendant with fair notice of a claim's basis, but must also establish that therequested relief is plausible on its face. Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009); see also Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678. At the same time, the plaintiff need not plead legal theories. Hatmaker v. Mem'l Med. Ctr., 619 F.3d 741, 743 (7th Cir. 2010). Rather, it is the facts that count.
Sachdev argues that the court lacks personal jurisdiction because he is a New Jersey citizen with attenuated contacts with Illinois. Sachdev included a sworn declaration providing that he had only been to Illinois twice since APL opened its Illinois office and that the negotiations leading to APL's hiring Barker occurred in Wisconsin, not Illinois. Assuming, arguendo, that personal jurisdiction exists, Sachdev additionally argues that he was acting on behalf of APL and the fiduciary shield doctrine thus precludes the court from exercising personal jurisdiction over him.
Barker alleges that Sachdev breached his employment contract and committed tortious conduct by reclassifying Barker to an independent contractor, for refusing to pay the entirety of his salary, and firing him for complaining about the conduct. As Sachdev directed this conduct towards Illinois, argues Barker, the court can properly exercise personal jurisdiction over Sachdev. Barker further argues that Sachdev had a personal financial stake in the decision to reclassify and terminate Barker's employment and that the amount of discretion he exercised in doing so belies the applicability of the fiduciary shield doctrine.
The court, sitting in diversity, has personal jurisdiction over Sachdev to the extent that an Illinois court could exercise personal jurisdiction. See Klump v. Duffus, 71 F.3d 1368, 1371 (7th Cir. 1995). Illinois allows for personal jurisdiction to the extent authorized by the Fourteenth Amendment's due process clause, which merges the federal constitutional and state statutory inquiries together. Tamburo v. Dworkin, 601 F.3d 693, 700 (7th Cir. 2010); 735 Ill. Comp. Stat. 5/2-209(c). Under the Illinois long-arm statute, personal jurisdiction can be general or specific. uBid, Inc. v. GoDaddy Grp., Inc., 623 F.3d 421, 425 (7th Cir. 2010). General jurisdiction is a demanding standard in which a defendant can be haled into an Illinois court if they have "'continuous and systematic...
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