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First Division
November 8, 2004

No. 1-03-1975

JUSTICE McBRIDE delivered the modified opinion of the court upon denial of rehearing:

Defendants, First American Group of Companies, Inc. (First American), and Asif Sayeed,appeal the trial court's finding that plaintiff, Randall S. Anderson, qualified as an "employee"under section 2 of the Illinois Wage Payment and Collection Act (Wage Act) (820 ILCS 115/1through 15 (West 2000)), and therefore, plaintiff was entitled to severance compensation asprovided in plaintiff's employment contract as well as attorney fees. Defendants argue thatplaintiff's position as vice president of operations for First American is not an "employee" withinthe meaning of section 2 (820 ILCS 115/2 (West 2000)). Defendants also contend that plaintiff isnot an "employee" under section 1 of the Attorneys Fees in Wage Actions Act (Fee Act) (705ILCS 225/0.01 through 1 (West 2000)) or, in the alternative, plaintiff failed to comply with theFee Act and is not entitled to an award of attorney fees.

The following evidence was admitted at the May 2003 bench trial.

First American is a holding company for two subsidiaries: American Health Care ProviderPlan, Inc. (AHCP), and American Unified Life and Health Company, Inc. (AULH). AHCP was ahealth maintenance organization (HMO) and AULH was a preferred provider organization (PPO). First American operates in Illinois, Indiana and Arkansas.

In 1999, First American was in the process of acquiring another HMO, Maxicare. Plaintiffwas employed with Maxicare at that time, but became aware of First American during theacquisition. Plaintiff began to speak and interview with Asif Sayeed and other senior executivesat First American about future employment with that company. On February 15, 1999, plaintiffaccepted an offer of employment with First American and began work on March 15, 1999, as thevice president of operations.

Plaintiff signed an employment contract with First American. The employment contractprovided plaintiff with a salary of $160,000 to be paid biweekly. The contract also allowedrelocation expenses for plaintiff in the amount of $16,000 for plaintiff to move from California toIllinois. A separate letter raised the relocation expense reimbursement from $16,000 to $20,000.As for termination, the contract stated that if plaintiff is terminated for cause, then First Americanis under no further obligation. However, if plaintiff is terminated without cause, then FirstAmerican shall continue to pay plaintiff "an amount equal to fifty percent" of plaintiff's annualbase salary in effect on the effective date of termination for a period of six months. The contractwas signed by plaintiff and Elizabeth Stolkowski, First American's vice president and chiefoperating officer.

Once plaintiff began work, the following chain of command was in effect: plaintiffreported to Stolkowski, who reported to Daniel Splain, First American's senior vice president,who reported to Sayeed, First American's president and chief executive officer. Sayeed alsoserved as the owner and one of the directors for First American.

Plaintiff's responsibilities at First American included overseeing claims, customer service,enrollment, and account management for AHCP. Plaintiff was later placed in charge ofinformation technology. Plaintiff oversaw several employees, and the directors for operations,enrollment and information technology. He also hired a deputy to his position and an operationsperson to assist in Medicare operations. Plaintiff also had the authority to hire consultants forFirst American. Dr. Nalani Thakrar also oversaw the payment of claims. Plaintiff was not anofficer or director of First American. Plaintiff needed approval from Sayeed before making anysignificant changes in company policy or processes. Sayeed also had to approve plaintiff'sexpense reimbursement requests.

In the summer and fall of 1999, First American began to struggle and became the subjectof an audit by the Illinois Department of Insurance. The Department of Insurance retainedAmerican Insurance Management (AIM) to perform the audit of First American. The Office ofthe Special Deputy (OSD) of the Department of Insurance moved into First American and beganhandling financial operations of AHCP and AULH. During this time of First American'sinstability, plaintiff began to consider investing in the purchase of another HMO. Eventually, inthe fall of 1999, plaintiff invested in the purchase of Emerald HMO, later renamed Renaissance. Renaissance operated in Ohio. Plaintiff participated in this purchase with Stolkowski, Splain, andother former First American executives. Plaintiff was listed as the senior vice president ofRenaissance in its licensure filings in the State of Ohio. Plaintiff remained employed at FirstAmerican while the purchase of Renaissance took place, but stated that he did not work forRenaissance until after he was terminated and did not perform work for Renaissance on FirstAmerican's time.

Around the end of March 2000, Sayeed discovered plaintiff's involvement in theRenaissance acquisition, but he did not confront plaintiff with that information. On March 31,2000, Sayeed fired plaintiff, stating that plaintiff was not a team player and was not performing hisjob. Plaintiff had not received any negative performance reviews prior to his termination. Plaintiffmade a demand through his attorneys for severance under his employment contract and forrelocation expenses, which included rent payments of $900 per month. First American deniedplaintiff's demand.

Following the trial, the trial court ruled in favor of plaintiff, finding that plaintiff was an"employee" under the Wage Act and that plaintiff was terminated without cause. The trial courtawarded plaintiff $6,666.67 in severance and $4,050.88 in relocation expenses. The trial courtrejected plaintiff's claim for reimbursement for rent. The trial court also ruled that plaintiff wasentitled to attorney fees and entered an order granting plaintiff $34,495 in attorney fees and$2,835.92 in costs. Defendants raise two issues on appeal.

The first question for this court to consider is whether plaintiff is an "employee" undersection 2 of the Wage Act. Defendants maintain that this issue raises a mixed question of law andfact and is subject to a clearly erroneous standard of review. Plaintiff disagrees and asserts thatthe trial court's decision that plaintiff is an "employee" under the Wage Act is reviewed todetermine if it was against the manifest weight of the evidence.

We agree with defendants. A mixed question of law and fact is one involving anexamination of the legal effect of a given set of facts. AFM Messenger Service, Inc. v.Department of Employment Security, 198 Ill. 2d 380, 391 (2001). Stated another way, a mixedquestion is one in which the historical facts are admitted or established, the rule of law isundisputed, and the issue is whether the facts satisfy the statutory standard, or whether the rule oflaw as applied to the established facts is or is not violated. AFM Messenger, 198 Ill. 2d at 391. Here, the question as to whether plaintiff qualifies as an "employee" under the Wage Act presentsa mixed question of law and fact. Our analysis is partially factual because we must considerwhether plaintiff's position with First American falls within the definition of "employee" in section2. However, we also face a legal question in interpreting section 2.

The clearly erroneous standard of review lies between the manifest weight of the evidencestandard and the de novo standard, and as such, it grants some deference to the trial court'sdecision. AFM Messenger, 198 Ill. 2d at 392. When faced with a mixed question of law and fact,the trial court's decision will be deemed "clearly erroneous" only where the reviewing court, onthe entire record, is " 'left with the definite and firm conviction that a mistake has beencommitted.' " AFM Messenger, 198 Ill. 2d at 395, quoting United States v. United StatesGypsum Co., 333 U.S. 364, 395, 92 L. Ed. 746, 766, 68 S. Ct. 525, 542 (1948). Nonetheless,that the clearly erroneous standard is largely deferential does not mean, however, that a reviewingcourt must blindly defer to the trial court's decision. AFM Messenger, 198 Ill. 2d at 395.

Section 2 of the Wage Act provides, in relevant part:

"As used in this Act, the term 'employee' shall include anyindividual permitted to work by an employer in an occupation, butshall not include any individual:

(1) who has been and will continue to be free fromcontrol and direction over the performance of his work,both under his contract of service with his employer and infact; and

(2) who performs work which is either outside theusual course of business or is performed outside all of theplaces of business of the employer unless the employer is inthe business of contracting with third parties for theplacement of employees; and

(3) who is in an independently established trade,occupation, profession or business." 820 ILCS 115/2 (West2000).

Defendants contend that plaintiff's position as an executive employee at First Americanremoves him from section 2's coverage. Defendants base this assertion on their construction ofthe Wage Act. Defendants cite to section 2(1) and argue that plaintiff's work placed him "freefrom control and direction over the performance of his work." Defendants do not contend thatplaintiff fulfills section 2(2) or (3), but maintain that the statute is to be read in the disjunctive. Under defendants' interpretation, one must only meet one prong for the exclusion in section 2 totake effect. Plaintiff counters that the plain language of the section indicates that section 2 is to beread in the conjunctive because of the use of word "and" connecting the exclusionary prongs. Plaintiff maintains that all three factors must be met in order for the exclusion to apply.

We agree with plaintiff's interpretation. The cardinal rule of statutory interpretation, towhich all other rules are subordinate, is to ascertain and give effect to the intent of the legislature. People v. Maggette, 195 Ill. 2d 336, 348 (2001). In determining the legislature's intent, a courtshould first consider the statutory language; this is the best means of determining the legislativeintent. Maggette, 195 Ill. 2d at 348. A court must consider the entire statute and interpret eachof its relevant parts together. Paris v. Feder, 179 Ill. 2d 173, 177 (1997). If legislative intent canbe ascertained from the statute's plain language, that intent must prevail without resort to otherinterpretive aids. Paris, 179 Ill. 2d at 177.

Section 2 is drafted in the conjunctive. Generally, principles of statutory constructioninterpret the term "and" as conjunctive rather than disjunctive. City of Carbondale v. Bower, 332Ill. App. 3d 928, 933 (2002); see also AFM Messenger, 198 Ill. 2d at 397 (reading section 212 ofthe Unemployment Insurance Act (820 ILCS 405/212 (West 2000)) as conjunctive). The word"and" joins section 2(1), (2), and (3), which indicates the legislative intent for all three prongs tobe met in order to fall within the statutory exclusion in the Wage Act's definition of "employee."

The Illinois Supreme Court's construction of section 212 of the Unemployment InsuranceAct in AFM Messenger provides support for this conclusion. Section 212 provides:

"Service performed by an individual for an employing unit,whether or not such individual employs others in connection withthe performance of such services, shall be deemed to beemployment unless and until it is proven in any proceeding wheresuch issue is involved that--

A. Such individual has been and will continue to be freefrom control or direction over the performance of such services,both under his contract of service and in fact; and

B. Such service is either outside the usual course of thebusiness for which such service is performed or that such service isperformed outside of all the places of business of the enterprise forwhich such service is performed; and

C. Such individual is engaged in an independentlyestablished trade, occupation, profession, or business." 820 ILCS405/212 (West 2000).

The supreme court considered this similarly worded exclusion and reasoned that "[b]ecause thethree conditions of section 212 are phrased in the conjunctive, all three conditions must besatisfied for the independent-contractor exemption to apply." AFM Messenger, 198 Ill. 2d at 397. This interpretation by the supreme court supports our determination that section 2 is to be read inthe conjunctive with all factors to be met before the exclusion applies. See also Adams v.Catrambone, 359 F.3d 858, 864-65 (7th Cir. 2004).

The Illinois Administrative Code (Code) also aids our analysis. Section 300.460 of Title56 regulates section 2 of the Wage Act and further defines its exclusion. Section 300.460 states:

"Independent Contractor Exemption

a) All three conditions enumerated in Section 2 of the Actmust be satisfied for the independent contractor exemption toapply. For purposes of Section 2 of the Act:

1) 'Control' means the existence of general controlor right to general control, even though the details of work are leftto an individual's judgment.

2) 'An independently established trade, occupation,profession or business' means the individual performing the serviceshas a proprietary interest in such business, to the extent that he/sheoperates the business without hindrance from any other person and,as the enterprise's owner, may sell or otherwise transfer thebusiness.

b) An individual may be an employee without being entirelydependent upon his/her relationship with a specified employer forhis/her livelihood. A person engaged in other occupations may bean employee of a specified employer even though he/she onlyworked intermittently or part time.

c) In determining whether this exemption applies, theDepartment shall consider the actual, rather than the alleged,relationship between an employer and a claimant; designations andterminology used by the parties are not controlling nor is theclaimant's status for tax purposes controlling." (Emphasis added.)56 Ill. Admin. Code