Ivery v. RMH Franchise Corp.

Decision Date08 December 2017
Docket NumberNo. 17 C 1619,17 C 1619
Citation280 F.Supp.3d 1121
Parties Chamora IVERY, individually and on behalf of others similarly situated, Plaintiff, v. RMH FRANCHISE CORP., RMH Illinois, LLC, and RMH Franchise Holdings, Inc., Defendants.
CourtU.S. District Court — Northern District of Illinois

Gregg I. Shavitz, Alan L Quiles, Shavitz Law Group, P.A., Boca Raton, FL, Melissa Lardo Stewart, Justin Mitchell Swartz, Outten and Golden LLP, New York, NY, Cristina Schrum–Herrera, Relic Sun, Outten & Golden LLP, San Francisco, CA, Paul William Mollica, Outten & Golden, Chicago, IL, for Plaintiff.

Jennifer L. Schilling, Oyindamola Hanna Badmus, Littler Mendelson, P.C., Chicago, IL, Angelo Spinola, Littler Mendelson, PC, Atlanta, GA, for Defendants.


John J. Tharp, Jr., United States District Judge

This is an action for unpaid overtime wages. Plaintiff Chamora Ivery contends that Defendant RMH Franchise Holdings, Inc. ("RMH Holdings") and its subsidiaries, RMH Franchise Corp. ("RMH Franchise") and RMH Illinois, LLC ("RMH Illinois")—owners of franchised Applebee's Neighborhood Grill & Bar ("Applebee's") restaurants—improperly classified her and other assistant managers ("AMs") as exempt from overtime under the Fair Labor Standards Act ("FLSA") and Illinois wage laws. Before the Court are two motions. The first is Ivery's motion for conditional certification of a FLSA collective action and for authorization to issue step-one notice. Ivery contends that she is similarly situated to other AMs who worked for the defendants and asks the Court to notify those AMs about their right to opt in as plaintiffs in this litigation. The second is the defendants' partial motion to dismiss. The defendants argue that Ivery does not properly allege that RMH Franchise was her employer and thus is not a proper defendant, and that Ivery fails to plead a necessary element of one her Illinois wage claims. For the reasons stated below, the motion to dismiss is granted and the motion for conditional certification is granted in part and denied in part.

I. Background

The following allegations are taken from Ivery's amended complaint. The defendants operate an Applebee's franchise with over 175 restaurants throughout the United States. (Am. Compl. ¶¶ 1–2, ECF No. 65.) RMH Holdings is the parent company of the franchise, while RMH Franchise and RMH Illinois are its subsidiaries. (Id. ¶¶ 34, 41, 48.) The defendants operate a single website to advertise their restaurants. (Id. ¶¶ 3, 26.) They share office space, a human resource staff, payroll functions, training materials, and an onboarding system to manage their employees. (Id. ¶¶ 23, 26.) The defendants also maintain joint control and oversight over human resources, compensation, timekeeping, and other employment policies and practices, and apply the same employment policies and procedures to AMs at all of their restaurants. (Id. ¶¶ 37–38, 44–45, 51–52.) Moreover, the defendants use the same job postings and descriptions to advertise open AM positions and allow their employees to transfer seamlessly across locations. (Id. ¶¶ 24–25.)

Ivery worked as an AM at an Applebee's location in Chicago, Illinois between early 2013 and June 2014. (Id. ¶ 15.) According to the amended complaint, Ivery was employed by "RMH"—which the complaint defines as all three defendants—during that period. (Id. ¶¶ 1, 15.) Ivery worked an average of 50 to 60 hours per week as an AM. (Id. ¶ 17.) However, the defendants did not pay her overtime for any time worked in excess of 40 hours per week, even though she frequently performed the functions of an hourly employee. (Id. ¶¶ 16, 18.)

Ivery asserts several related causes of action. She claims that the defendants' policy of classifying AMs as exempt from overtime violates the FLSA, the Illinois Minimum Wage Law, 820 Ill. Comp. Stat. 105/1 et seq. ("IMWL"), and the Illinois Wage Payment and Collection Act, 820 Ill. Comp. Stat. 115/1 et seq. ("IWPCA"). She seeks to certify a collective action under the FLSA and a class action under both the IMWL and IWPCA to recover unpaid overtimes wages.

The initial complaint was filed on March 1, 2017.1 On May 5, 2017, Ivery filed a notice of consent to be party in a FLSA collective action. (Notice of Consent, ECF No. 33.) Ten days later, she moved for conditional certification and for authorization to issue notice to prospective opt-in members. (Mot. for Court–Authorized Notice, ECF No. 35.) Ivery's proposed collective includes anyone who has "been employed as an [AM], including a Front of House Manager or Kitchen Manager, at an Applebee's restaurant operated by RMH between March 1, 2014 and the present." (Pl. Court–Authorized Notice, ECF No. 37–4.) While her motion for certification was pending, Ivery filed, with the approval of the Court, an amended complaint on July 6, 2017. (Order, ECF No. 64.) Two weeks later, the defendants filed a partial motion to dismiss her amended complaint. (Defs. Mot. to Dismiss, ECF No. 69.) The Court will address the defendants' motion to dismiss first and then turn to Ivery's certification motion.

II. Discussion
A. The Defendants' Motion to Dismiss

The defendants ask the Court to dismiss RMH Franchise as a defendant altogether and to dismiss Ivery's IWPCA claim. They seek dismissal of RMH Franchise on two fronts: under Rule 12(b)(1) for lack of standing (and thus lack of subject matter jurisdiction) and under Rule 12(b)(6) for failure to state a claim. The defendants also move to dismiss Ivery's IWPCA claim under Rule 12(b)(6) on the basis that she has failed to assert an essential element of that claim.

To survive the defendants' standing challenge, Ivery must show that she suffered (1) an injury in fact that is (2) fairly traceable to the challenged conduct of RMH Franchise and (3) that likely will be redressed by a favorable decision. Berger v. Nat'l Collegiate Athletic Ass'n , 843 F.3d 285, 289 (7th Cir. 2016) (citing Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc. , 528 U.S. 167, 180–81, 120 S.Ct. 693, 145 L.Ed.2d 610 (2000) ). Here, the defendants raise a facial challenge to standing, (Defs. Mem. in Supp. of Mot. to Dismiss 12, ECF No. 70); thus, the Court must evaluate whether Ivery's complaint adequately pleads the elements of standing by applying the "same analysis used to review whether a complaint adequately states a claim" under Rule 12(b)(6). Silha v. ACT, Inc. , 807 F.3d 169, 173–74 (7th Cir. 2015) (citations omitted). Ivery therefore "must plead sufficient factual allegations, taken as true, that ‘plausibly suggest’ each standing element is met. Berger , 843 F.3d at 289 (quoting Silha , 807 F.3d at 174 ).

To overcome a Rule 12(b)(6) motion, "a complaint must ‘state a claim to relief that is plausible on its face.’ " Adams v. City of Indianapolis , 742 F.3d 720, 728 (7th Cir. 2014) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 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." W. Bend Mut. Ins. Co. v. Schumacher , 844 F.3d 670, 675 (7th Cir. 2016) (quoting Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) ). This Court "must accept as true all factual allegations in the ... complaint and draw all permissible inferences" in Ivery's favor. Id. (quoting Bible v. United Student Aid Funds, Inc. , 799 F.3d 633, 639 (7th Cir. 2015) (internal quotation marks omitted)). However, "[w]hile a plaintiff need not plead ‘detailed factual allegations’ to survive a motion to dismiss, she still must provide more than mere ‘labels and conclusions or a formulaic recitation of the elements of a cause of action’ for her complaint to be considered adequate under [Rule] 8." Bell v. City of Chicago , 835 F.3d 736, 738 (7th Cir. 2016) (quoting Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 ).

1. Dismissal of RMH Franchise: Joint Employer Liability

Although the defendants move to dismiss RMH Franchise for lack of standing and failure to state a claim, both challenges center on a single issue: whether Ivery adequately alleges that RMH Franchise was her employer under the FLSA. The basis for dismissal under Rule 12(b)(6) is that liability for unpaid overtime wages extends only to an "employer." 29 U.S.C. § 207(a). And because employees have standing to sue only their current or former employers under the FLSA, dismissal under Rule 12(b)(1) also hinges on Ivery's relationship with RMH Franchise. Berger , 843 F.3d at 289 ("Under the FLSA, alleged employees' injuries are only traceable to, and redressable by, those who employed them.") (internal quotation marks omitted).2

The language of the statute should be the starting place for a determination of Ivery's status vis-à-vis RMH Franchise, but the text of the FLSA provides no guidance in this regard, unhelpfully defining employment relationships in circular fashion. An "employee" means "any individual employed by an employer." Id. § 203(e). To "employ" means to "suffer or permit to work." Id. § 203(g). And "employer" includes "any person acting directly or indirectly in the interest of an employer in relation to an employee." 29 U.S.C. § 203(d). In the absence of a meaningful statutory definition, and consistent with Supreme Court guidance to construe the terms "employer" and "employee" broadly, the Seventh Circuit has concluded that courts must examine the economic reality of the working relationship to assess whether an entity is an employer. Hollins v. Regency Corp. , 867 F.3d 830, 835 (7th Cir. 2017) ; see also Goldberg v. Whitaker House Coop. , 366 U.S. 28, 33, 81 S.Ct. 933, 6 L.Ed.2d 100 (1961). Whether an entity is an employer under the Act is a question of law. Karr v. Strong Detective Agency Inc. , 787 F.2d 1205, 1206–07 (7th Cir. 1986).

In examining the "economic realities" of working relationships, courts must look to "the totality of...

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