Kim v. Korean News of Chi., Inc.

IN-KYU KIM, Plaintiff, v. THE KOREAN NEWS OF CHICAGO, INC., ANDREW HUH, SOOK Y. KIM, and ROBERT B. KIM, Defendants.

17 C 1300

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

January 29, 2020

Judge Thomas M. Durkin

MEMORANDUM OPINION AND ORDER

In-Kyu Kim ("Plaintiff") brings this action against The Korean News of Chicago, Inc. ("KNCI"), Andrew Huh, and husband and wife Sook K. Kim ("Mrs. Kim") and Robert B. Kim ("Mr. Kim") under the Fair Labor Standards Act ("FLSA") and Illinois Minimum Wage Law ("IMWL") for minimum wage and overtime pay during his employment as KNCI's president. Plaintiff also sued for breach of an alleged oral agreement to make him a 30% shareholder in KNCI. Each defendant moved for summary judgment, and Plaintiff cross-moved for partial summary judgment on his FLSA and IMWL claims. R. 82; R. 85; R. 88; R. 91; R. 99. For the following reasons, Mrs. Kim's motion is granted in its entirety, each remaining Defendants' motion is granted in part and denied in part, and Plaintiff's motion is granted in part and denied in part.

Standard

Summary judgment is appropriate "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). The Court considers the entire evidentiary record and must view all of the evidence and draw all reasonable inferences from that evidence in the light most favorable to the nonmovant. Horton v. Pobjecky, 883 F.3d 941, 948 (7th Cir. 2018). To defeat summary judgment, a nonmovant must produce more than a "mere scintilla of evidence" and come forward with "specific facts showing that there is a genuine issue for trial." Johnson v. Advocate Health and Hosps. Corp., 892 F.3d 887, 894, 896 (7th Cir. 2018). Ultimately, summary judgment is warranted only if a reasonable jury could not return a verdict for the nonmovant. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

Local Rule 56.1

Local Rule 56.1 requires parties moving for summary judgment to submit in support of their motion a statement of material facts comprised of short numbered paragraphs with citations to admissible evidence. L.R. 56.1(a). It requires the nonmovant to then respond particularly to each such numbered paragraph, and, in the case of disagreement, provide citations to supporting evidentiary material. L.R. 56.1(b). When a nonmovant fails to controvert those facts in the manner proscribed, they are deemed admitted. Id.; Smith v. Lamz, 321 F.3d 680, 683 (7th Cir. 2003). Here, Plaintiff failed to respond to Defendants' Local Rule 56.1 statements. Theassertions in each are supported by evidentiary material, so the Court credits Defendants' uncontroverted version of the facts to the extent not disputed by Plaintiff's own Local Rule 56.1 statement and evidentiary material. Keeton v. Morningstar, Inc., 667 F.3d 877, 880 (7th Cir. 2012) (citing FTC v. Bay Area Bus. Council, Inc., 423 F.3d 627, 634 (7th Cir. 2005)).

Further, although Plaintiff submitted an "appendix" in response to Defendants' motions that purports to include additional evidence, because Plaintiff failed to respond to Defendants' Rule 56.1 statements (and failed to submit a statement of additional facts of his own), Plaintiff's "appendix" is not properly before the Court. See L.R. 56.1(b)(3)(C) (a party opposing summary judgment shall submit "a statement, consisting of short numbered paragraphs, of any additional facts that require the denial of summary judgment"). Accordingly, the Court will not consider its contents. Even so, Defendants still must demonstrate that they are entitled to judgment as a matter of law, and the Court still draws all reasonable inferences in Plaintiff's favor in considering Defendants' motions. Keeton, 667 F.3d at 884; Yancick v. Hanna Steel Corp., 653 F.3d 532, 543 (7th Cir. 2011). With this in mind, the Court turns to those facts set forth in and supported by the parties' submissions in accordance with Local Rule 56.1.

Background

This case concerns compensation allegedly owed to Plaintiff in connection with the acquisition and operation of the Korea Times Chicago newspaper (the "Newspaper") by KNCI. Plaintiff met Robert Kim in or about 2008, when Plaintiffwas president of the Newspaper. R. 89 ¶ 4. At that time, the Newspaper was owned by The Korea Times Chicago, Inc. Id. Plaintiff left the Newspaper in 2010, but when he learned that it was for sale in Spring 2014, he notified Mr. Kim to see if he would buy it. Id. ¶ 6. Initially, Mr. Kim declined because he did not have experience in the newspaper business. Id. ¶ 7. But Plaintiff approached Mr. Kim again a short time later, telling him that if he invested in the Newspaper and Plaintiff became president, he could generate profits as he had for its previous owners. Id. On July 14, 2014, Huh and Mr. Kim's wife, Mrs. Kim, formed KNCI as 50% shareholders and directors in order to purchase the Newspaper. R. 89, Ex. B ¶ 7; R. 83 ¶ 9; R. 100 ¶ 3; R. 110 ¶ 3. Although KNCI did not yet own the Newspaper, Mrs. Kim and Huh appointed Plaintiff president and Huh publisher that same day, and took certain additional steps concerning the Newspaper's operation prior to the consummation of the sale. R. 100 ¶¶ 3, 7; R. 110 ¶ 7. Plaintiff, who was working for another company in New York at the time, claims that he too began working between 8 and 10 hours per week "performing phone calls and other tasks . . . for the benefit of [KNCI] as it worked to purchase [the Newspaper]." R. 100 ¶ 8 (citing R. 102, Ex. A ¶ 5). Plaintiff was not paid for this work, R. 100 ¶ 9; R. 110 ¶ 9, but sometime between July 14, 2014 and the Newspaper's purchase, Plaintiff and Mr. Kim discussed Plaintiff's compensation (among other things), R. 89, Ex. B ¶ 9. There is no dispute that beginning after KNCI purchased the Newspaper, Plaintiff was paid a salary. But while the parties acknowledge a pre-acquisition agreement for additional compensation once KNCI purchased the Newspaper, they dispute what was promised. That is, Mr. Kimcontends that the agreement was that Plaintiff would receive 30% of KNCI's net profits, R. 89, Ex. B ¶ 9, whereas Plaintiff contends he was to become a 30% shareholder in KNCI, R. 107, Ex. A ¶ 23. KNCI purchased the Newspaper on August 15, 2014. Id. ¶ 8. Plaintiff moved from New York to Chicago that same day, and began operating the Newspaper thereafter. R. 92 ¶¶ 5, 7. Approximately one month later, Mrs. Kim, who had served as corporate secretary, transferred her shares in KNCI to Mr. Kim. R. 83 ¶ 9. Thereafter, she had no ownership interest in KNCI and was no longer an officer or director. Id. ¶¶ 9-10.

As KNCI's president, Plaintiff was responsible for KNCI's revenue growth, managing and supervising its employees and directing its overall business operations. R. 92 ¶¶ 7, 11. Plaintiff also was head of KNCI's editing and publication department. Id. ¶ 7. From August 16, 2014 through January 31, 2015, Plaintiff was paid $2000 per month in semi-monthly installments of $1000 regardless of the number of hours he worked. R. 100 ¶ 12; R. 110 ¶ 12. According to Plaintiff, beginning August 16, 2014, he spent 75 to 100 hours per week performing his duties.¹

Effective February 4, 2015, KNCI terminated Plaintiff's employment through its directors, Huh and Mr. Kim. R. 110 ¶ 5. Plaintiff was not paid his salary for his last week of employment (February 1 through February 4, 2015). But he obtained $500 in gas cards for personal use with a KNCI credit card. R. 110, Ex. B2 ¶ 4.Plaintiff has not received any share in KNCI's profits and was not made a shareholder.

Plaintiff filed a five-count complaint against Defendants alleging: Defendants failed to pay him overtime wages in violation of the FLSA (Count I) and IMWL (Count IV); Defendants failed to pay him minimum wage in violation of the FLSA (Count II) and IMWL (Count III); and Defendants breached an oral contract to make him a shareholder in KNCI (Count V). R. 1. Each Defendant moved for summary judgment on Plaintiff's FLSA and IMWL claims, and the individual defendants also moved for summary judgment on Plaintiff's breach of contract claim. Plaintiff cross-moved for summary judgment on his FLSA and IMWL claims.

Analysis

I. FLSA and IMWL Claims as to All Defendants

The parties' cross motions each seek summary judgment on Plaintiff's overtime and minimum wage claims under the FLSA and IMWL. The parties' arguments turn in part on whether Plaintiff is subject to any exemption, and in part on whether Defendants can be considered "employers" within the meaning of the FLSA and IMWL. Defendants also argue that Plaintiff was not protected by either the FLSA or the IMWL before KNCI purchased the Newspaper and he assumed his duties as president. The Court addresses each issue below, beginning with the last.

A. Whether Plaintiff was covered by the FLSA or IMWL during the pre-acquisition period

FLSA. Defendants argue that Plaintiff was not covered by the FLSA before KNCI purchased the Newspaper (the "pre-acquisition period") and therefore was notsubject to its protections during that time. A plaintiff is protected by the FLSA if either the employer is a covered enterprise or the plaintiff is a covered individual. Villareal v. El Chile, Inc., 776 F. Supp. 2d 778, 790 (N.D. Ill. 2010) (citing Tony & Susan Alamo Found. v. Sec'y of Labor, 471 U.S. 290, 295 n.8 (1985)). It is plaintiff's burden to prove that at least one is true. Kim v. Ctr. for Seniors, 2019 WL 5183848, at *2 (N.D. Ill. Oct. 15, 2019). A covered enterprise has (1) "employees engaged in commerce or the production of goods for commerce or . . . employees handling, selling, or otherwise working on goods or materials that have been moved in or produced for commerce by any person;" and (2) an annual gross volume of sales made or business done of at least $500,000. 29 U.S.C. § 203(s)(1)(A)(i), (ii). If enterprise...