Drake v. Chop Hosp. LLC

KRISTINA DRAKE, JOSEPH BORUCKI, JOSHUA LEISNER,and AUSTIN LYSY Individually, and on Behalf ofAll Others Similarly Situated, Plaintiffs, v. CHOP HOSPITALITY LLC d/b/a CHICAGO CHOP HOUSE,MATTHEW McCAHILL, PHILIP MARTIN, PETER HODO,ADAM WILL, and JAMES LAWRENCE, Defendants.

Case No. 20 C 1574

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

March 22, 2021

Magistrate Judge Sunil R. Harjani

MEMORANDUM OPINION AND ORDER

Plaintiffs, current or former tipped employees who work or worked as servers and bartenders at the Chicago Chop House restaurant during some or all of November 2017 through the present, allege that the restaurant utilizes an invalid tip pool to pay servers and bartenders at an improperly low regular rate of pay. The parties have consented to this Court's jurisdiction, and currently pending before the Court is Defendants' Rule 12(b)(6) Motion to Dismiss Plaintiffs' Amended Complaint [34] on res judicata grounds. For the reasons set forth below, the motion is denied.

BACKGROUND

In reviewing the sufficiency of a complaint for purposes of a motion to dismiss, the Court "construe[s] it in the light most favorable to the nonmoving party, accept[s] well-pleaded facts as true, and draw[s] all inferences in [the nonmoving party's] favor." Bell v. City of Chicago, 835 F.3d 736, 738 (7th Cir 2016) (quoting Reynolds v. CB Sports Bar, Inc., 623 F.3d 1143, 1146 (7th Cir. 2010)). It is also proper for the Court to "consider, in addition to the allegations set forth in the complaint itself, documents that are attached to the complaint, documents that are central to the complaint and are referred to in it, and information that is properly subject to judicial notice." Williamson v. Curran, 714 F.3d 432, 436 (7th Cir. 2013). The Court takes judicial notice of the documents from a previous lawsuit filed in this district because they form the basis for Defendants' motion to dismiss: Leisner, et al. v. Chop Hospitality, LLC, et al., Case No. 18-cv-4612 (N.D. Ill.) (hereinafter the "Leisner Action"). See Fed. R. Evid. 201(b); Daniel v. Cook Cty., 833 F.3d 728, 742 (7th Cir. 2016) ("Courts routinely take judicial notice of the actions of other courts or the contents of filings in other courts."); Fletcher v. Menard Corr. Ctr., 623 F.3d 1172, 1173 (7th Cir. 2010) (courts may "take judicial notice of prior proceedings in a case involving the same litigant.").

A. The Current Drake Action

The instant action was filed on March 3, 2020. Named Plaintiffs Kristina Drake, Joseph Borucki, Joshua Leisner, and Austin Lysy seek compensation for themselves and a class of current and former servers and bartenders based on allegations that Defendants Chop Hospitality LLC ("Hospitality"), Matthew McCahill, Philip Martin, Peter Hodo, Adam Will, and James Lawrence operated a mandatory tip pool that does not comply with the tip credit provisions of the Fair Labor Standards Act, 29 U.S.C. § 201, et seq. ("FLSA"), the Illinois Minimum Wage Law, 820 ILCS 105/1, et seq. ("IMWL"), the Illinois Wage Payment and Collection Act, ("IWPCA"), 820 ILCS 115/1, et seq., and the Chicago Minimum Wage and Paid Sick Leave Ordinance, Chicago, Illinois, Municipal Code § 1-24-010, et seq. ("Chicago Wage Ordinance") (hereinafter the "Drake Action"). In particular, Plaintiffs allege that Defendants kept money from the tip pool for themselves while claiming the money was going to food runners for one or two pay periods and then, for the next seven or eight months, illegally used tip pool money to pay a general manager. Additionally, Defendants are accused of illegally deducting more money from Plaintiffs' tips than was necessary to pay their credit card fees. Defendant Hospitality purchased the Chicago Chop House restaurant in mid-November 2017 and McCahill, Martin, Hodo, Will, and Lawrence (the "McCahill Group") are the owners of Hospitality.

B. The Prior Leisner Action

Prior to this suit, on June 14, 2018, Named Plaintiffs Joshua Leisner, Georgia Euring III, and Christina Callahan filed a one-count collective action complaint in the Northern District of Illinois against Chicago Chop House, Inc. ("CCHI"), Doris Siemen, Charles Patel, and Bharathbhai Patel as well as Hospitality and McCahill on behalf of servers and bartenders at the Chicago Chop House restaurant alleging a violation of the FLSA related to the restaurant's tip pool. Leisner Action, Doc. 1.¹ Specifically, the claims in the Leisner Action accused Chicago Chop House Inc. and the Patels of keeping money from the tip pool for themselves while claiming the money was going to food runners. Subsequently, the Leisner plaintiffs amended their pleading on July 24, 2018 and August 30, 2018, adding Manuel Rivas, a busser, as a Named Plaintiff and adding additional claims under the IMWL, the IWPCA, and the Chicago Wage Ordinance. Id., Docs. 11, 31. Charles Patel and Bharathbhai Patel (the "Patels") owned CCHI, which operated the Chicago Chop House restaurant until mid-November 2017, when the restaurant was sold to Hospitality. Siemen was the General Manager of the restaurant pre and post-sale for a period of time.

On September 11, 2018, Defendants Hospitality, McCahill, and Siemen filed a motion to compel arbitration. Leisner Action, Doc. 38. On December 6, 2018, District Judge Bucklo granted the motion to compel arbitration as to all claims brought by or on behalf of plaintiffs who signed the arbitration agreements and denied the motion as to all claims brought by or on behalf of plaintiffs who did not sign that agreement.² Id., Docs. 68, 69. Thereafter, Hospitality and McCahill did not participate in the Leisner Action. Id., Doc. 131 at 3, ¶ 12. Siemen remained in the case only for any liability she may have had for events prior to the sale of the restaurant in mid-November 2017. Id., Doc. 120 at 3.

On December 13, 2018, the Judge Bucklo granted Plaintiffs' motion to conditionally certify a collective action and facilitate notice pursuant to 29 U.S.C. § 216(b). Leisner Action, Doc. 72. Twenty-four individuals opted in, creating a total class of 27 plaintiffs. Plaintiffs did not move to certify a class under the IMWL, the IWPCA, or the Chicago Wage Ordinance. On March 27, 2019, Judge Bucklo referred the case to the undersigned magistrate judge to conduct a settlement conference. Id., Docs. 90, 92.³

At a settlement conference before this Court on December 16, 2019, Named Plaintiffs Euring, Callahan and Rivas and Defendants CCHI, Charles Patel, Bharathbhai Patel, and Doris Siemen agreed to settle all claims accruing from the start of the relevant statutes of limitations periods through sale of the restaurant in mid-November 2017. Leisner Action, Docs. 127, 130, 131 at 3, ¶ 10. Two days later in a minute entry, this Court noted that that the parties at the settlement conference had represented that Defendants Hospitality and McCahill were no longer defendants in the case because Judge Bucklo's December 6, 2018 Order compelled them to arbitrate but there was no separate dismissal order as to these defendants. Id., Doc. 130. Accordingly, the Court directed the parties to file a motion to dismiss Hospitality and McCahill without prejudice with the district court.⁴ Id.

On December 27, 2019, counsel for all parties, including counsel for Hospitality and McCahill, filed an Agreed Motion for Voluntary Dismissal of Hospitality and McCahill.⁵ Leisner Action, Doc. 131. In the motion, the parties all agreed that the dismissal should be without prejudice and that the settlement agreement covered "claims accruing from the start of the relevant statutes of limitations periods through the sale of the restaurant in mid-November 2017." Id., Doc. 131 at 3, ¶10. The parties further agreed that after the December 6, 2018 Order compelling arbitration, "Plaintiff Leisner ceased his involvement in this case as did Defendants Chop Hospitality LLC and Matthew McCahill." Id., Doc. 131 at 3, ¶12. The parties requested an order dismissing Hospitality and McCahill from the Leisner Action "without prejudice so the remaining parties can proceed with their agreed upon settlement." Id. at 3. On December 30, 2019, District Judge Seeger dismissed Hospitality and McCahill as defendants without prejudice. Id., Doc. 133.

That same day, following the dismissal of Hospitality and McCahill, the Leisner Action was reassigned to this Court by consent of the remaining parties. Leisner Action, Docs. 128, 134. On January 31, 2020, a settlement agreement was fully executed between Named Plaintiffs Euring, Callahan, and Rivas and 24 opt-in Plaintiffs, CCHI, Charles Patel, and Bharathbhai Patel. Siemen was not a party to the settlement and Plaintiffs moved to dismiss Siemen without prejudice from the Leisner Action on February 7, 2020. Id., Doc. 136. This Court granted Plaintiffs' Unopposed Motion to Voluntarily Dismiss Defendant Doris Siemen on February 11, 2020. Id., Doc. 138.

On April 6, 2020, after consideration of the parties' Joint Motion for Approval of FLSA Settlement, this Court dismissed the Leisner "action, and all claims asserted or that could have been asserted therein . . in its and their entirety with prejudice as to all Plaintiffs" (the "Leisner Final Judgment"). Leisner Action, Doc. 149. The Settlement and General Release Agreement (the "Leisner Settlement Agreement") is attached to the Joint Motion for Approval of FLSA Settlement. Id., Doc. 139-1.

In the meantime, on January 6, 2020, Plaintiff Leisner filed a Demand for Arbitration against Hospitality and McCahill. Hospitality and McCahill refused to participate in arbitration, and on February 26, 2020, the American Arbitration Association ("AAA"), stated that it would not administer any future employment matters involving Hospitality. Drake Action, Doc. 21 at 3, ¶ 8; doc. 42, Exh. D.

DISCUSSION

Defendants now argue in their motion to dismiss that Plaintiffs' claims in this case are barred by the doctrine of res judicata. They move to dismiss Plaintiffs' Amended...