Chicago Business Litigation Lawyer Blog

Five-Year Statute of Limitations Applies to Enforcement of Arbitration Award, First District Finds

February 23, 2011 | Peter S. Lubin and Patrick Austermuehle

As Illinois arbitration lawyers, we were interested to see a ruling on the statute of limitations for enforcing an award won in private arbitration. Peregrine Financial Group Inc. v. Futronix Trading, Ltd. No. 1-09-2293 (Ill. 1st May 21, 210) pits Peregrine, a commodities brokerage firm, against Futronix, a client that became delinquent in its accounts with Peregrine. The plaintiff took the defendant to arbitration and won an award of the delinquent amount plus interest. However, that was in August of 2003, and the plaintiff waited until November of 2008 to file in court to enforce the award. The defendant successfully moved to dismiss on the grounds that the statute of limitations had passed, under Illinois Code of Civil Procedure sec. 13-205. The plaintiff moved to reconsider but was denied, and appealed both decisions to the First District Court of Appeal.

Defendants hired plaintiffs to act as their agent in commodities futures purchasing. However, the defendants did not maintain enough money in its account to cover its losses, causing it to go delinquent in the amount of $115,512.64. The plaintiff filed an arbitration action with the National Futures Association and won that amount plus costs. The defendants then moved and did not pay the award. Five years and three months later, the plaintiffs filed in Cook County court to confirm the award. Defendants moved to dismiss on several grounds, including the statute of limitations. The plaintiff argued that there is no statute of limitation on an arbitration award, but the trial court was unmoved. Plaintiff appealed.

On appeal, the First noted that sec. 13-205 of the Code of Civil Procedure explicitly includes “awards of arbitration” among the types of actions to which it applies. Nonetheless, the plaintiff cited a federal case, United Steelworkers of America v. Danly Machine Corp., 658 F. Supp. 736 (N.D. Ill. 1987), in support of its argument. In that case, the district court for northern Illinois specifically said Illinois law does not impose a statute of limitations on arbitration awards. However, the First said, the district court gave no support or reasoning for its statement, and federal law is not binding on state courts.

The First also rejected an argument that if a statute of limitations applies, it should be sec. 13-206 of the Code, which gives a 10-year statute of limitations for actions arising from “written evidence of indebtedness” such as written contracts and promissory notes. In support, the plaintiff cited Blacke v. Industrial Comm’n, 268 Ill. App. 3d 26, 644 N.E.2d 23 (1994), a case about whether sec. 13-205 applied to collection actions under the Workers’ Compensation Act. That court decided that 13-205 applies to all statutory rights of action unless the legislature specifically intended otherwise, and rejected the argument that sec. 13-206 applied to the Workers’ Compensation Act or any other statute. The plaintiff argued the inverse: that the 10-year statute of limitations applies because its cause of action was based on a contract. However, the First said, that’s not quite true — the arbitration was based on a contract, but the suit seeking to enforce the arbitration award was not.

Finally, the court rejected three more arguments. One was based on public policy — that applying the five-year statute of limitations would run counter to Illinois public policy of enforcing arbitration awards. While it’s true that Illinois has such a public policy, the court said, it also has a public policy to enforce statutes of limitations. The plaintiff then argued that the statute of limitations should have been tolled when the defendants moved without paying. But this did not prevent the plaintiff from filing, the court noted, although it would have required the plaintiff to serve notice of the claim by publication. The last argument plaintiff made was that fundamental fairness should require the court to allow the case to go forward. The First rejected this, saying the plaintiff hadn’t shown any good reason for its five-year delay in filing. Thus, it upheld both the original judgment of the trial court and its denial of plaintiff’s motion to reconsider.

Central District of Illinois Rules that Filing Opt-in Consent Forms is not Enough to Establish a Class-action Under FLSA

February 21, 2011 | Peter S. Lubin and Patrick Austermuehle

Across the nation, there are employees who go to work each day and earn overtime wages, but are unaware that they should be getting paid time and a half for the time they work over forty hours each week. Lubin Austermuehle focuses on wage and hour law, and our attorneys frequently meet clients who have years worth of unpaid overtime, and we help them get the wages they are owed. Our Chicago unpaid overtime class action attorneys discovered a case from the federal court for the Central District of Illinois that we wanted to share with our readers due to the unique nature of the issues tackled by the Court in its opinion.

Murray v. Tyson Foods is a case to determine whether Tyson should have paid overtime wages for the time that Plaintiffs spent putting on and taking off protective clothing worn in Tyson’s beef and pork processing plants. The case is one of many similar actions filed in five different states regarding this same issue. Plaintiffs filed a class-action suit alleging that Defendant’s failure to compensate Plaintiffs for that time constituted violations of the Illinois Wage Payment and Collection Act (IWPCA) and the Illinois Minimum Wage Law (IMWL), and filed individual claims for violations of the Fair Labor Standards Act (FLSA),
After the start of the litigation, Defendant filed a motion for partial summary judgment on the basis that the state law claims were preempted by the Labor Management Relations Act and the parties’ collective bargaining agreement. This motion was was granted, eliminating the class action issues and leaving only the FLSA claim for the six named Plaintiffs. The parties went on to discovery, and three days before the close of discovery, Plaintiffs noticed a 30(b)(6) deposition. Defendant opposed the deposition and filed for a protective order on the grounds that Plaintiffs sought the deposition to gather information on the previously dismissed class action claims. Plaintiffs responded by asserting that the filing of 1,474 opt-in consent forms from other putative class-members had created a collective action under FLSA.

The Court declined to agree with Plaintiffs’ argument because the complaint did not contain a representative FLSA claim and no motion was ever filed to certify a class-action on the claim. Thus, the opt-in consent forms had no legal meaning and did not create a class-action under FLSA. Additionally, the Court found that Plaintiffs’ 30(b)(6) notice was too broad, and granted Defendant’s protective order, but gave Plaintiffs time to issue a more tailored 30(b)(6) notice.

Southern District of Illinois Federal Court Conditionally Certifies FLSA Overtime Class-Action

February 21, 2011 | Peter S. Lubin and Patrick Austermuehle

Whether intentional or not, many companies implement policies and procedures that create violations of both federal and state wage laws. In our years of practicing law, Lubin Austermuehle has seen many such policies, and our Crystal Lake overtime attorneys have helped many previous clients victimized by them. Our lawyers recently discovered a wage and hour class-action case regarding one such policy and wanted to share it with our readers.

In Marshall v. Amsted Industries, Inc., the two named Plaintiffs worked at Defendants’ steel foundry as an hourly leadman and hourly chipper, respectively. Plaintiffs filed a class-action suit for unpaid overtime and a failure to keep accurate payroll records pursuant to the Fair Labor Standards Act (FLSA). They sought conditional certification of a class comprised of all current and former hourly employees who worked at Defendants’ facility in the last three years. Plaintiffs alleged that Defendants implemented a company policy that all hourly workers had to perform maintenance and service tasks as well as don protective clothing prior to the beginning of their work shifts. Additionally, Plaintiffs had to carry out shut-down and clean-up procedures after the end of their shifts, but were never compensated for the work performed during these times. In response to Plaintiff’s motion for conditional certification, Defendants’ moved to de-certify the action.

The Court found that they met the requirements of certification under FLSA and conditionally certified a class, despite the presence of four different collective bargaining agreements and varied job titles of the potential plaintiffs. The Court based their conditional approval on the fact that all of the hourly workers were similarly situated enough to allow Plaintiffs to send out opt-in notices. In so holding, the Court decided that Defendans’ company policies of requiring workers to complete pre- and post-shift tasks applied equally to all of the hourly workers and deprived them of their overtime pay.

Amicus Brief Filed by Illinois Trial Lawyers Association and National Association of Consumer Advocates in Illinois Class Action Appeal Regarding Government Required Processing Fee That is Not in Fact a Government Charge

February 14, 2011 | Peter S. Lubin and Patrick Austermuehle

The Illinois Trial Lawyers Association and the National Association of Consumer Advocates filed an amicus or friend of the Court brief before Illinois’s First District Appellate Court in an appeal in a consumer fraud and breach of contract class action Lubin Austermuehle is prosecuting. The brief explains why the right to pursue class actions is so important to consumers who cannot afford an attorney to correct small frauds or unfair practices which can result in Defendants reaping large gains. The brief states:

Another significant statement that appears in the defendant’s brief is the following:
“If the Circuit Court ruling is reversed, it is highly likely this case will be settled, given the low dollar value of Plaintiff’s individual claim for damages and the fact that the Plaintiff has no evidence that any other Advance customer allegedly also misunderstood the Governement Required Processing Fee. …

As to the statement that if the class certification decision is reversed, it is highly likely the case will be settled, given the low dollar value of the plaintiff’s individual claim. This is precisely why this claim needs to proceed as a class action.

As pointed out by Judge Posner, a defendant who resists a class action by stating that there are a multitude of class members makes no argument at all. “The more claimants there are, the more likely a class action is to yield substantial economies in litigation. It would hardly be an improvement to have in lieu of this single class action, 17 million suits, each seeking damages of $15 to $30 . . . The realistic alternative to a class action is not 17 million individual suits, but zero individual suits, as only a lunatic or a fanatic sues for $30. But a class action has to be unwieldy indeed before it can be pronounced an inferior alternative – no matter how massive the fraud or other wrongdoing that will go unpunished if class treatment is denied – to no litigation at all.” Carnegie v. Household International Inc., 376 F.3d 656, 661 (7th Cir. 2004) (emphasis in original).

The courts developed the class action device to handle cases like this one. “The policy at the very core of the class action mechanism is to overcome the problem that small recoveries do not provide the incentive for any individual to bring a solo action prosecuting his or her rights. A class action solves this problem by aggregating the relatively paltry potential recoveries into something worth someone’s (usually an attorney’s) labor.” Amchem Products, Inc. v. Windsor, 521 U.S. 591, 617 (1997) (quoting Mace v. Van Ru Credit Corp., 109 F.3d 338, 344 (7th Cir. 1997).

The Defendant has tipped its hand in its statement that the case will settle if the court reverses class certification. This is because if the court reverses class certification the defendant will pay off the Plaintiff by refunding the small sum of money it managed to take from it …

To review the full brief click here

A New Article On Mandatory Arbitration: The Struggle to Shape American Arbitration

February 13, 2011 | Peter S. Lubin and Patrick Austermuehle

As Chicago business attorneys and Chicago consumer lawyers we were very interested to read the new law review article on the projected impact that mandatory consumer arbritration agreements could have in harming business arbitrations. Agreed upon arbitration of business disputes is a great way to resolve suhc disputes in a cost effective manner. On the other hand take or leave it clauses requiring consumers to arbitrate small disputes and banning class actions usually has the effect of barring acess to justice and redress for mass consumer frauds or unfair practices.

Click here to read the entire article: Revelation and Reaction: The Struggle to Shape American Arbitration in CONTEMPORARY ISSUES INTERNATIONAL ARBITRATION AND MEDIATION: THE FORDHAM PAPERS 2010, Martin Nijhoff, 2011.

Below is an abstract of the article:

Illinois District Court Holds that Termination is Not a Wage Reduction under FMLA

February 9, 2011 | Peter S. Lubin and Patrick Austermuehle

We here at Lubin Austermuehle have extensive experience as Joliet overtime class-action lawyers and are constantly scouring the federal court dockets in Illinois for cases that may help our practice. One particularly instructive opinion was issued by the Northern District of Illinois, Eastern Division earlier this year in Ottaviano v. Home Depot Inc.

In Ottaviano v. Home Depot Inc., the Plaintiff employees worked for Home Depot as assistant store managers, and allege that they and their fellow class members were misclassified as exempt employees. Plaintiff’s claimed that Defendant’s misclassification was intentional for the purpose of circumventing the Illinois Minimum Wage Law (IMWL). Defendant Home Depot denied the claims and filed to dismiss the action through a motion for summary judgment.

The named Plaintiffs had worked for Defendant between approximately two to six years, and had worked well in excess of forty hours per week during the entirety of their employment. During the time that the Plaintiffs worked for Home Depot, they were paid a salary and were required to work fifty-five hours a week. Home Depot requires that all assistant store managers (ASM), including Plaintiffs, go through a training stage for two to eight weeks before they are deemed to be a qualified and capable ASM able to fulfill the responsibilities required for the position. The trainee ASM’s are classified as exempt by Defendants and are paid a salary during this period. Defendant has a universal policy of scheduling its ASM’s for fifty-five hours per week, and Home Depot terminates assistant store managers who fail to work the hours they are scheduled.

Plaintiffs filed their class action alleging that they were owed overtime for the training period and for every other week of their employment with Home Depot. Plaintiffs contended that Defendant’s policy of terminating ASM’s who do not work fifty-five hours a week is effectively a wage reduction under the Federal Labor Standards Act (FMLA). Plaintiffs also argued that under the salary-basis test, any employee whose wages can be reduced by their employer is non-exempt. The Court did not find Plaintiffs’ arguments persuasive, and in dismissing the claims Judge Dow cited a U.S. Supreme Court ruling that true exempt employees are disciplined by terminations, demotions, or restricted work assignments, as the Plaintiffs were, instead of wage deductions. The District Court went on to say that employers are permitted to set requirements for the overall number of hours worked by their exempt employees. Finally, the Court granted summary judgment to dismiss the overtime claims for the training period because they were barred by the applicable statute of limitations.

Appellate Court Certifies Class-Action in Title Insurance and Consumer Fraud Act Case

February 7, 2011 | Peter S. Lubin and Patrick Austermuehle

The purchase of land is a complex and multi-layered process that presents many opportunities for not only misunderstandings and mistakes, but also fraud and misrepresentations. Lubin Austermuehle has many attorneys who focus on handling consumer fraud cases, so we are always tracking developments in that field of the law. Chultem v. Ticor Title Insurance is a recent Illinois appellate decision concerning title insurance agent kickbacks in the sale of real properties here in Illinois.

Chultem v. Ticor Title Insurance began as two separate class-actions that were consolidated into one case. In both cases, however, Plaintiffs purchased a parcel of land that also included the purchase of a title insurance policy from Defendants. Plaintiffs were sold the title insurance by an attorney agent who also represented one or more of the parties in the real estate transactions in question. Defendants, as title insurance companies, paid these lawyer agents an additional sum “over and above the attorney fees” paid to them by their clients (who were parties to the transaction).

Plaintiffs filed suit because Defendants paid the attorney agents based upon “the amount of insurance premiums generated from the referred clients” instead of for the services that the lawyers actually performed in their role as title insurance agents. In doing so, Plaintiffs alleged that in doing so, Defendants violated the Title Insurance Act and the Consumer Fraud and Deceptive Business Practices Act. Plaintiffs sought to certify a class, but the lower court denied certification because it would not be possible to determine across the board liability. Plaintiffs then filed an appeal.

On appeal, the Court addressed Defendants’ argument that a transaction-by-transaction analysis would be required in order to determine liability, and as such common issues could not predominate as required for class certification. The Court did not find Defendants’ arguments persuasive, however, because the agreement between the attorney agents and Defendants provided for a pro forma commitment. The Court went on to reason that if Plaintiffs are able to show that the agreements were pro forma and that the agents received full compensation as insurance agents, then liability for all claims could be established. Therefore the Court reversed the lower court ruling and remanded the case consistent with the finding that the Plaintiffs had satisfied the predominance requirement for class-certification.

Reuter’s Reports: “Kraft Loses Bid to Keep Distributing Starbucks”

February 6, 2011 | Peter S. Lubin and Patrick Austermuehle

It is very difficult to obtain an injunction when monetary damages can compensate for a business’s losses. A recent article in Reuter’s regarding Kraft Food’s bid to require Starbucks to allow it to continue to distribute Star Buck’s coffee illustrates the point. Reuter’s reports:

A federal judge rejected Kraft Foods’ bid to force Starbucks Corp to keep using Kraft to distribute packaged coffee to supermarkets in North America and Europe, a decision that allows Starbucks to move ahead with a new partner.

In a ruling from the bench, U.S. District Judge Cathy Seibel in White Plains, New York, on Friday also noted that Starbucks could end up owing Kraft “a boatload of money” if an arbitrator decided the coffee chain breached a 1998 agreement with Kraft.

Consumer Law and Policy Blog Reports on New California Supreme Court Opinion Affirming Consumer’s Right to Sue for False Advertising Claims

February 6, 2011 | Peter S. Lubin and Patrick Austermuehle

Consumer Law and Policy Blog reports:

In a closely watched case, the California Supreme Court on Thursday issued a decision preserving the broad availability of the state’s principal consumer protection laws in cases involving mislabeled goods.The question at issue in Kwikset v. Superior Court (Benson) was whether a consumer who has bought a product that was mislabeled — a “union-made” shirt that was in fact manufactured in a sweatshop, “organic” produce that was grown with pesticides, or (as in this case) a “Made in the USA” lockset that had actually been partly manufactured in Taiwan and Mexico — may bring suit under the Unfair Competition Law (UCL) and the False Advertising Law (FAL). Proposition 64, passed by referendum in 2004, inserted in both laws a requirement that a private plaintiff have “lost money or property.” But what if the product the customer received was perfectly functional even if it wasn’t what the customer had ordered? Was there still a loss of money or property? The Court of Appeal thought not: since the item received was of equal value, plaintiffs had not “lost money” and therefore could not bring a claim under the UCL or FAL.

The California Supreme Court, however, disagreed. The Supreme Court held that neither the language nor the logic of Prop 64 precluded suits by consumers who did not get what they paid for. “Plaintiffs who can truthfully allege they were deceived by a product’s label into spending money to purchase the product, and would not have purchased it otherwise, have ‘lost money or property’ within the meaning of Proposition 64 and have standing to sue.” It doesn’t matter that to some other people, or by some objective measure, the mislabeled product is worth as much as the one the consumer expected. What matters is the consumer’s subjective valuation.

A New Article in the Illinois Bar Journal: “Officers and Directors Can Require Their Corporation to Pay Their Legal Fees”

February 6, 2011 | Peter S. Lubin and Patrick Austermuehle

A new article in the Illinois Bar Journal explains officers and directors rights to the corporation paying for their legal fees and costs when they face litigation for corporate related activities.

The article focuses on corporations’ contractual obligations to advance litigation expenses to its directors and officers–even where the corporation has sued the director or officer. As explained in the article, most states allow companies to provide their officers and directors a right to advancement of litigation expenses in suits filed by reason of their corporate poistion.

The article states: