Gelb v. Air Con Refrigeration & Heating Inc.

Case Date: 11/30/2001
Court: 1st District Appellate
Docket No: 1-00-2099 Rel

FIFTH DIVISION

November 30, 2001

No. 1-00-2099

DANA GELB, Indiv. and on Behalf of Those
Similarly Situated, 

                    Plaintiff-Appellant,

v.

                    

AIR CON REFRIGERATION AND HEATING, 
INC.; HILL MECHANICAL CORPORATION;
CHICAGOLAND SHEET METAL 
CONTRACTORS ASSOCIATION; and John Does
1 to 99, 

                    Defendants-Appellees.

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Appeal from the
Circuit Court of
Cook County.

 

No. 00 CH 1511

 




Honorable
Moshe Jacobius,
Judge Presiding.


JUSTICE GREIMAN delivered the opinion of the court:

Plaintiff Dana Gelb (Gelb) filed this suit on January 28, 2000, alleging that defendants AirCon Refrigeration & Heating, Inc. (Air Con), Hill Mechanical Corp. (Hill), Chicagoland SheetMetal Contractors Association (the Association), and John Does 1 to 99 conspired to violate andwere violating the Illinois Minimum Wage Law (820 ILCS 105/1 et seq. (West 1998)) by providinglower overtime wages than those prescribed by law. Gelb prayed for a determination that the caseproceed as a class action for accounting of lost wages for himself and the class, payment of lostwages for himself and the class, a declaration of the illegality of defendants' unlawful practices, aninjunction barring defendants' unlawful practices, statutory penalties, interest, and attorney's fees. However, days later on the 15th of March, 2000, before the plaintiff filed a motion for classcertification, defendants Hill and Air Con made a settlement offer to pay plaintiff's individual backwages plus interest, statutory penalties, and attorney fees. Plaintiff rejected the settlement offerbecause the amount of back wages to be paid was not specified, the attorney fees were notspecified, and no offer was made to stop the allegedly illegal practice or provide any class relief.

Hill, Air Con, and the Association then filed a joint motion under sections 2-615 and 2-619(a) of the Code of Civil Procedure (735 ILCS 5/2-615, 2-619(a) (West 1998)) to dismiss theplaintiff's complaint on the basis that Hill and Air Con's tender to the plaintiff removed the case orcontroversy between the plaintiff and the named defendants, and accordingly, plaintiff's case wasmoot. The trial court agreed and granted the motion to dismiss plaintiff's complaint and cause ofaction. Plaintiff has appealed, and for the reasons that follow, we reverse and remand.

Plaintiff is a sheet metal worker who was employed by Hill and Air Con and was paidwages on an hourly basis. In his putative class-action complaint, filed on January 28, 2000, heargued that these defendants and John Does 1 to 99 are entities who had entered into a conspiracyto pay their hourly wage earners a lower rate of overtime pay than required by the Minimum WageLaw. Specifically, he alleged that under the Minimum Wage Law, an employer is required to payits employees an overtime premium - 50% of the workers' regular rate of pay - for each hour over40 hours that was worked in a week. However, defendants calculated their workers' overtimepremiums by intentionally lowering the workers' regular rates of pay by $1.62 for "savings planamounts" or "organization and education amounts." Consequently, he avers, these reductions in theemployees' regular rates of pay also resulted in depriving the workers of $0.81 (50% of $1.62) inovertime premiums for every hour of overtime worked. Plaintiff also claimed that, as a part of theconspiracy, the Association instructed the employer-defendants to make the unlawful reductions inovertime pay.

In his prayer for relief, plaintiff sought an express determination that the case shouldproceed as a class action. As previously noted, he also requested an accounting of lost wages forhimself and the class, payment of lost wages for himself and the class, a declaration of the illegalityof defendants' unlawful practices, an injunction barring defendants' unlawful practices, statutorypenalties, interest, and attorney fees.

Roughly two weeks after filing his complaint, plaintiff served Hill, Air Con, and theAssociation with interrogatories and document requests. Those discovery requests were aimed atobtaining the identities of John Does 1 to 99 and other information necessary to file a motion forclass certification. That discovery was stayed.

One month later, Hill and Air Con made a settlement offer. Those defendants offered to:

"[P]rovide Mr. Gelb all overtime wages allegedly due or unpaid to him (pursuant tothe allegations set forth in his complaint) in accordance with the Illinois MinimumWage Law. The [d]efendants will award him pre-judgment interest as he claims heis entitled to receive pursuant to 815 ILCS 205/2. The [d]efendants will award the[p]laintiff individual punitive damages as he claims entitlement pursuant to 820ILCS 105/12. Finally, the [d]efendants will pay Mr. Gelb's reasonable attorney'sfees and costs incurred pursuing his claim against them. It is our understanding thatMr. Gelb is not currently employed by either Hill Mechanical Corp. or Air ConRefrigeration & Heating, Inc., at this time."

Defendants' offer further stated:

"This offer is being made for settlement purposes only. It is not anadmission of nor a comment upon the merits of any claim Mr. Gelb may havealleged against any [d]efendant in case 00-CH-1511."

In a letter dated March 24, 2000, plaintiff rejected the settlement offer, and his counsel respondedas follows:

"Mr. Gelb would be interested in your offer if it were to provide the offered relief toall members of the class. Furthermore, we believe that it is in all parties' interest forany settlement to include a provision ending your client's unlawful practice (andconspiracy) of deducting 'savings plan' amounts and 'organizing' amounts fromemployees regular rate in the calculation of overtime pay.

Please let me know whether you wish to continue pursuing the possibility ofsettlement at the present time. In any event, I remain open to discussing settlementwith you at any time during the litigation."

Also on that date, defendants Hill, Air Con, and the Association filed a motion to dismisspursuant to section 2-619(a). In that motion, defendants admitted that the employer-defendantswere, in fact, subtracting $0.81 per hour of overtime worked. However, they argued that theemployer-defendants were required to do so until 2002 under a collective bargaining agreementinto which they entered with the Sheet Metal Workers International Association Local No. 73 (theunion). Because plaintiff was a member of the union, he was subject to the terms of thatagreement. They also argued that by virtue of Hill and Air Con's settlement offer, plaintiff hadbeen offered everything that he was individually requesting in his complaint and that there was nojusticiable controversy between the parties. Consequently, they claimed that plaintiff's individualclaims had been mooted by the settlement tender and that he could no longer maintain any claim forhimself or for any class.

On May 19, 2000, the circuit court granted defendants' motion and dismissed plaintiff'scomplaint.

As we recently noted in In re Marriage of Buck, 318 Ill. App. 3d 489, 493 (2000), "[a]motion to dismiss admits all well-pleaded facts. Its purpose is to raise an issue of law as to thelegal sufficiency of the allegations of the complaint. Ostendorf [ v. International Harvester Corp.],89 Ill. 2d [273, 280 (1982)]. The standard of review for a dismissal based on a section 2-619motion is de novo. Kedzie & 103rd Currency Exchange, Inc. v. Hodge, 156 Ill. 2d 112, 116, 619N.E.2d 732 (1993). A motion to dismiss should not be granted unless it clearly appears that no setof facts could ever be proved that would entitle the plaintiff to recover. Ostendorf, 89 Ill. 2d at280."

Our main task in this case is to determine whether defendants' tender mooted plaintiff'sputative class action. To reiterate, plaintiff's complaint alleged that defendants were paying theirworkers $0.81 less per hour of overtime work than required by law. In his prayer for relief, plaintiffrequested defendants account for an undetermined number of overtime hours worked and overtimewages due during the class period and up to the date of entry of judgment and that they reimbursean undetermined amount of overtime wages due and unpaid during that period as well. Thecomplaint also sought an undetermined amount of prejudgment interest, punitive damages, andattorney fees and costs.

After plaintiff's complaint was filed but before a motion for class certification came beforethe trial court, Air Con and Hill offered: (1) "all overtime wages allegedly due or unpaid to him";(2) "pre-judgment interest as he claims he is entitled to receive"; (3) "individual punitive damages[to which] he claims entitlement"; and (4) "reasonable attorney's fees and costs incurred pursuinghis claim." In other words, defendants offered a total reimbursement of the entire amountsdemanded by plaintiff in his prayer for relief.

Plaintiff's first argument is that he was never offered a full and complete tender of the reliefhe requested where: (1) defendants did not provide plaintiff with an accounting of his lost wages asrequested; (2) defendants did not offer a declaration as requested that the employer-defendants'practice of paying the workers less than their due, as well as the conspiracy to perpetuate this, wasunlawful; and (3) defendants' offer did not provide for a consent decree or anything resembling theinjunction requested in the complaint. Plaintiff claims that because such tender did not provide himwith all that he was requesting, it is not sufficient to moot his claims.

While it is true that defendant's tender did not include an accounting of plaintiff's lostwages, the reality of the situation is that plaintiff would not have lost wages once the tender wasmade. Further, while defendants did not supply a declaration that their practice of underpaying theworkers was unlawful, it is also true that once the tender is made, plaintiff ostensibly would not bean underpaid worker who shared interests with other class members. As a result, defendants wouldhave nothing illegal to admit with respect to plaintiff's individual claims, since technically, nowrong would be visited upon plaintiff once his monetary damages were tendered. Lastly, it is alsoundisputed that defendants never supplied a consent decree or anything resembling an injunction asrequested. However, it certainly would be unusual for defendants to enjoin themselves from actingin a particular way where no specific harm seemingly could be alleged by the named party-plaintiff. Once plaintiff is offered the full amount of his claims, he then has no grounds on which tocomplain. See, e.g., Deposit Guaranty National Bank of Jackson, Mississippi v. Roper, 445 U.S.326, 333, 63 L. Ed. 2d 427, 436, 100 S. Ct. 1166, 1171 (1980).

Ultimately, however, a determination of whether defendants' tender has supplied plaintiffwith all he requested is not the deciding factor of this case. Rather, we believe the crux of thematter is to be resolved through an examination of when, in the life span of this suit at the triallevel, such tender was made. For even if a court is to conclude, as we have, that full tender hasbeen made, a question still exists as to whether the tender unfairly "picked off" the prospectiveclass action representative without offering him a full opportunity to develop his class action claim. As will become apparent, we believe that is exactly what happened in this case.

Recently, we confronted a somewhat similar situation in Yu v. International BusinessMachines Corp., 314 Ill. App. 3d 892 (2000). There, the plaintiff filed a class action seeking torecover damages arising out of the sale of computer software that was not year 2000 (Y2K)compliant. Yu, 314 Ill. App. 3d at 893-94. However, before filing his motion for classcertification, plaintiff became aware of a free upgrade offered by defendant that, once installed,would make the software Y2K compliant. Yu, 314 Ill. App. 3d at 895-96. In order to mitigate hisdamages, plaintiff accepted the upgrade. Yu, 314 Ill. App. 3d at 896. Defendant then filed asection 2-619(a)(9) motion to dismiss, alleging that plaintiff's case was rendered moot due todefendant's tender. Yu, 314 Ill. App. 3d at 896. The trial court granted defendant's motion, and weaffirmed, noting that "[a]n issue is moot if no actual controversy exists or where events occur thatmake it impossible for the court to grant effectual relief. Wheatley v. Board of Education ofTownship High School District 205, 99 Ill. 2d 481, 484-85, 459 N.E.2d 1364 (1984)." Yu, 314 Ill.App. 3d at 898. Ultimately, we found:

"Once defendants tendered the requested relief to plaintiff and his Medic system wasY2K compliant, there was no longer a case or controversy. As in Wheatley, onceplaintiff accepted this remedy, plaintiff was no longer an appropriate representativeof the interests of the class. ' "If none of the named plaintiffs purporting to representa class establishes the requisite of a case or controversy with the defendants, nonemay seek relief on behalf of himself or any other member of the class." ' Magnusonv. City of Hickory Hills, 933 F.2d 562, 565 (7th Cir. 1991), quoting O'Shea v.Littleton, 414 U.S. 488, 494, 38 L. Ed. 2d 674, 682, 94 S. Ct. 669, 675 (1974)." Yu,314 Ill. App. 3d at 898-99.

Unlike the plaintiffs in Wheatley and Yu, however, the plaintiff in the present case neveraccepted the tender given by the defendants. Consequently, we must decide whether it is the act ofdefendant's tender -before plaintiff files for class certification- of full relief to the plaintiff thatpulls plaintiff out of the controversy, or whether plaintiff's rejection of that tender keeps his caseand controversy alive. Furthermore, we must decide whether the timing of defendant's tender wassuch that it unfairly prohibited plaintiff from developing his claim.

A number of federal courts have addressed factually similar situations. In Holstein v. Cityof Chicago, 29 F.3d 1145 (7th Cir. 1994), a named plaintiff, Brian Grove, sued the City of Chicago(City) individually and on behalf of those similarly situated. He argued that after the City towed hiscar, its post-tow hearing procedures were unconstitutional. Holstein, 29 F.3d at 1147. Within threemonths after Grove's car was towed, however, the City responded to his previous written and oralcomplaints that the tows were improper, and offered to refund his money. Holstein, 29 F.3d at1147. At that point, Grove had not sought certification from the district court of his putative class,but refused the City's offer of restitution. Holstein, 29 F.3d at 1146, 1147. The court held:

"[T]he City has offered Grove all the damages due him; he does not argue that theoffer does not adequately reimburse him or that the City's offer is insincere. Grovemay not spurn this offer of all the damages he is owed and proceed to trial. SeeAlliance to End Repression v. City of Chicago, 820 F.2d 873, 878 (7th Cir. 1987).'Once the defendant offers to satisfy the plaintiff's entire demand, there is no disputeover which to litigate, and a plaintiff who refuses to acknowledge this loses outright,under Fed. R. Civ. P. 12(b)(1), because he has no remaining stake.' Rand v.Monsanto Co., 926 F.2d 596, 598 (7th Cir. 1991) (citations omitted). Hence,Grove's claim is moot." Holstein, 29 F.3d at 1147.

The court also noted the different treatment to be given in instances where a plaintiff seeks torepresent a class:

"Ordinarily, simply determining that a plaintiff's case is moot dictates thathis claim must be dismissed for lack of subject matter jurisdiction. But mootnessrequirements are somewhat different where the plaintiff attempts to represent aclass. If the district court has certified the class before the expiration of theplaintiff's claims, mootness is avoided. [Citation.] Here, *** Grove did not evenmove for class certification prior to the evaporation of his personal stake. Grove,then, cannot avail himself of the class exception to the mootness doctrine." Holstein, 29 F.3d at 1147.

In the case upon which the trial court primarily relied, Greisz v. Household Bank (Illinois),N.A., 176 F.3d 1012 (7th Cir. 1999), the plaintiff sued a company from which she bought a furnaceand air conditioning unit and the bank-issuer of the credit card used to make the purchase. Thedistrict court granted the issuer's motion for partial summary judgment, then denied classcertification, and ultimately dismissed the entire action. Greisz, 176 F.3d at 1013. The SeventhCircuit Court of Appeals affirmed, holding:

"Without any evidence of actual damages, the maximum damages she could obtainwere $1000 [citations] plus reasonable costs and attorney's fees. [Citation.]By[making a Federal Rule 68 offer of judgment] offering her $1,200 plus reasonablecosts and attorney's fees, the bank thus was offering her more than her claim wasworth to her in a pecuniary sense. Such an offer, by giving the plaintiff theequivalent of a default judgment (here it was actually larger by $200 than a defaultjudgment would have been), eliminates a legal dispute upon which federaljurisdiction can be based. Holstein v. City of Chicago, 29 F.3d 1145, 1147 (7th Cir.1994); Rand v. Monsanto, 926 F.2d 596, 597-98 (7th Cir. 1991); Alpern v.UtiliCorp United, Inc., 84 F.3d 1525, 1539 (8th Cir. 1996); Zimmerman v. Bell, 800F.2d 386, 390 (4th Cir. 1986). You cannot persist in suing after you've won." Greisz, 176 F. 3d at 1015.

However, the court went on:

"We would have a different case if the bank had tried to buy off Greisz witha settlement offer greater than her claim before the judge decided whether to certifythe class. For then [plaintiff's attorney] would have had to find another namedplaintiff to keep the suit alive, and if the defendants had bought off that plaintiff aswell and had repeated this tactic as [plaintiff's attorney] scrounged for a classrepresentative, they might have hamstrung the suit. The tactic is precluded by thefact that before the class is certified, which is to say at a time when there are manypotential party plaintiffs to the suit, an offer to one is not an offer of the entire reliefsuit, Alpern v. UtiliCorp United, Inc., supra 84 F.3d 1525, 1539 (8th Cir. 1996);Deposit Guaranty National Bank v. Roper, 445 U.S. 326, 341, 100 S. Ct. 1166, 63 L.Ed. 2d 427 (1980) (concurring opinion), unless the offer comes before classcertification is sought, Holstein v. City of Chicago, supra, 29 F.3d at 1147, and sobefore the existence of other potential plaintiffs has been announced." (Emphasis inoriginal.) Greisz, 176 F.3d at 1015.

Similarly, in a recent district court opinion, Wiskur v. Short Term Loans, LLC, 94 F. Supp.2d 937 (N.D. Ill. 2000), the plaintiff filed a putative class action complaint alleging violations ofthe Federal Truth in Lending Act (15 U.S.C.