SUE E. MYERSCOUGH, District Judge.
Before the Court are the Defendant's Motion for Summary Judgment (d/e 51) and the Plaintiff's Motion to Strike Defendant's Response to Additional Fact #193 as Non-Responsive and an Improper Attempt to Add a New Fact (d/e 55). Because a number of questions of material fact prevent granting summary judgment on the Plaintiff's claims, the Defendant's Motion for Summary Judgment is denied. Additionally, the Plaintiff's Motion to Strike is denied because the Defendant did not violate Local Rule 7.1(D)(3)(a) in its response to the Plaintiff's Additional Fact #193.
This case arises out of an alleged retaliatory firing of the Plaintiff, Michelle Kavanagh, by the Defendant, C.D.S. Office Systems, Inc. (CDS), in response to actions Kavanagh took related to the Fair Labor Standards Act (FLSA). Kavanagh began working for CDS, which provides information technology services, on February 21, 2011, under the title of "HR Director." Ex. 85, d/e 51-9 at 2627. Kavanagh's direct supervisor was CDS's Chief Financial Officer, Bruce Egolf. Def.'s Am. Ans., d/e 19 at 2. Egolf in turn reported to the two main directors of the company, Jerome "Jay" Watson and Jay's son, Mark Watson.
During Kavanagh's term of employment at CDS, CDS experienced financial difficulties. In February 2011, after CDS's previous CFO was terminated as part of a reduction in force, Egolf was promoted from Comptroller to CFO. Ex. 95, d/e 51-14; Egolf dep., d/e 51-20 at 64. Egolf then discovered that CDS had a deficit of $1.5 million in its accounts receivables. Egolf dep., d/e 51-21 at 125-26. As a result, CDS had trouble securing financing, with its existing bank informing CDS that it no longer wanted to work with CDS.
At least partly as a result of these financial difficulties, from October 4, 2010, to June 29, 2012, CDS's employee count declined from 146 to 118. Ex. 95, d/e 51-14. Between January 2012 and July 3, 2012, seven total employees were terminated, consolidated, or had their positions left unfilled after resigning.
Also during Kavanagh's time at CDS—and as a result of the financial hardships CDS was facing—CDS began talks with several outside companies about outsourcing CDS's payroll services. In December 2011, Egolf responded to an email from a salesman at an outside payroll company, Automated Data Processing, Inc. (ADP), who had previously attempted to schedule a meeting with Egolf, to set up a meeting on January 10, 2012, to discuss outsourcing CDS's payroll functions. Egolf dep., d/e 51-21 at 140. Egolf and Mark and Jay Watson then viewed a presentation of ADP's technology on February 15, 2012. Ex. 74, d/e 51-7; Egolf dep., d/e 51-21 at 143. On March 19, 2012, Felicia Squires, an accountant at CDS, emailed Egolf stating that Jay Watson had told her that he did not want to hire ADP to take over CDS's payroll, but that he did want to fire Kavanagh by April 2 and hire another accountant to help with payroll and accounts payable. Ex. 36, d/e 51-3. The email did not explain why Jay Watson wanted to fire Kavanagh, but Squires later testified that Watson did not want to fire Kavanagh specifically, rather that he wanted to eliminate her position to reduce costs. Squire dep., d/e 51-27 at 24. Egolf testified that there was an understanding among himself, Squires, and the Watsons by March 2012 that Kavanagh's position would be eliminated after CDS outsourced its payroll responsibilities. Egolf dep., d/e 51-21 at 159-60. Egolf also testified that he was working to secure a new loan for CDS at that time and would not be able to set a date for terminating Kavanagh until the loan was secured. Egolf dep., d/e 51-22 at 216. Egolf and Squires also discussed firing Kavanagh in vague terms via email on May 1 and May 17, 2012. Ex. 49, d/e 51-17; Ex. 50, d/e 51-4. CDS secured the bank financing in mid-June. Egolf dep., d/e 51-20 at 7.
Returning to CDS's outsourcing efforts, on March 21, 2012, Egolf emailed accountant Tim Cravens of Pehlman & Dold, who was the accountant in charge of CDS's account at that firm, asking for advice about outsourcing CDS's payroll. Ex. 75, d/e 51-8. Cravens responded that Pehlman & Dold could possibly handle CDS's payroll, and Egolf began communicating with Linda Buckles, Pehlman & Dold's head bookkeeper, about getting a quote for those services.
At some point before July 1, 2012, Buckles realized that Pehlman & Dold's computer system would not be ready to take over CDS's payroll services by July 1. Buckles dep., d/e 51-18 at 22-23. Buckles first testified that she realized she would have difficulties setting up CDS's payroll in "[p]robably July,"
While Kavanagh worked for CDS, she took several HR-related actions in support of employees' rights. On March 3, 2011, Kavanagh asked Egolf about whether a CDS employee who was not exempt under the FLSA should be clocking in and out, as he was not registered in CDS's time-tracking system. Ex. 64, d/e 52-14. On March 23, 2011, Kavanagh emailed Egolf and Jay Watson to warn them that they may have been violating Illinois law by delaying sending a commission payment to an employee who had recently left CDS. Ex. 66, d/e 52-15. Kavanagh also emailed Egolf on March 23 to tell him that CDS's vacation policy should be updated to account for the fact that Illinois law required CDS to pay employees for unused vacation time. Ex. 67, d/e 52-16. On April 11, 2011, Kavanagh asked Egolf whether a CDS employee was entitled to overtime pay. Ex. 68, d/e 52-17. Kavanagh discussed whether a salaried employee should be clocking in and out with Egolf on July 14, 2011. Ex. 69, d/e 52-18. Furthermore, Kavanagh testified that she talked to CDS's Vice-President of Operations, Robert Milner, about the implications under the FLSA of employees not taking lunch breaks. Kavanagh dep., d/e 52-24, at 148; R. Milner dep., d/e 51-26 at 27-28. Kavanagh sent an article to Milner about that topic on August 18, 2011, titled "Lunch and Breaks—`Little' Violations, But Fines Add Up Quickly," in an email with the subject line "FLSA Rules [W]e Discussed." Ex. 71, d/e 52-19. On April 11, 2012, Kavanagh emailed Egolf about her concern that CDS could be audited under the FLSA and that CDS may have been improperly classifying two branch administrators as exempt under the FLSA and two as non-exempt. Ex. 73, d/e 52-20 at 3177-79. Egolf responded that there was no difference between the branch administrators' duties, and that "they should all be non-exempt."
Kavanagh's most significant HR-related actions for purposes of this case began on May 29, 2012, when Kavanagh sent out an HR newsletter to several CDS supervisors titled "FMLA, ADA, FLSA and More: The 10 Employment Laws Every Manager Should Know." Ex. 13, d/e 51-1 at 579. CDS's IT Manager, Scott Brown, responded to Kavanagh's email and asked to meet to discuss overtime pay with her.
On June 7, 2012, Egolf and Jay and Mark Watson called an attorney with the Business Technology Association, Robert Goldberg, for a free consultation about FLSA issues. The call lasted between 10 and 20 minutes. Goldberg dep., d/e 51-23 at 25-26; J. Watson dep., d/e 52-32 at 43. Goldberg did not recall what occurred during the call. Goldberg dep., d/e 51-23 at 25-26. Jay Watson testified that Goldberg "didn't tell us a great deal. So we— we weren't sure what to do." J. Watson dep., d/e 52-32 at 42. Watson further stated that the call "wasn't very long because [Goldberg] really didn't give us what we were wanting. We wanted some kind of an opinion or how to rectify if there was a problem and he really didn't go to that extent. We went to him to begin with because he was free, to be honest."
However, the flex plan was never put in writing. M. Watson dep., d/e 51-25 at 33; J. Watson dep., d/e 52-32 at 46. Mark Watson and Egolf also did not know who communicated the existence of the flex plan to CDS's employees. M. Watson dep., d/e 51-25 at 34; Egolf dep., d/e 51-20 at 75. Mark Watson testified that the flex plan went into effect sometime in 2012 after June 6. M. Watson dep., d/e 51-25 at 32-33. Bob Goldesberry, on the other hand, testified that he was unaware that a flex plan was instituted after June 6, 2012. Goldesberry dep., d/e 52-29 at 19. Gail Milner, who was an IT purchasing employee at CDS, testified that she was unaware that CDS had a flex plan. G. Milner dep., d/e 52-31 at 38. Kavanagh also testified she had never heard of a flex plan while she was at CDS. Kavanagh dep., d/e 51-24 at 172.
On June 13, 2012, Kavanagh sent an email to Egolf following up on Kavanagh's June 6 email and asking if they could meet to discuss Kavanagh's concerns about CDS's compliance with the FLSA. Ex. 13, d/e 51-1 at 5. Kavanagh also emailed Egolf a document on June 15 titled "Service Techs FLSA."
Kavanagh met with Egolf later in the day on June 15, 2012. Egolf dep., d/e 51-20 at 81-82; Kavanagh dep., d/e 51-24 at 172-73; Ex. 40, d/e 52-11. Kavanagh and Egolf contest what occurred during this meeting. Egolf first testified that he did not recall meeting on June 15 at all. Egolf dep., d/e 51-20 at 80-82. Kavanagh testified that Egolf asked her why Bob Goldesberry and Dakota Kennedy came to her with their overtime complaints and Kavanagh explained that it was because she was the HR Director. Compl., d/e 1 at 3-4; Kavanagh dep., d/e 51-24 at 172-73. Kavanagh stated that she felt like under the FLSA, CDS's computer technicians were owed overtime pay. Compl., d/e 1 at 4; Kavanagh dep., d/e 51-24 at 172-73. According to Kavanagh, Egolf stated that he was not surprised that Goldesberry had complained about overtime because "Bob likes to complain and stir up trouble," but that he was surprised by Dakota Kennedy's complaint because Kennedy was Jay Watson's step-grandson.
Kavanagh testified that Egolf then asked her, "How can we make this go away?," to which she responded, "Bruce, we can't make this go away, the law is what the law is and as an employer we will have to follow it."
Egolf testified that he may have discussed Kavanagh's concerns about CDS's lack of compliance with the FLSA, but he did not remember saying that he would talk to Kelly Kennedy about getting Dakota Kennedy to stop complaining. Egolf dep., d/e 51-20 at 82-86. Egolf denied telling Kavanagh to make the FLSA issue "go away" and telling her that she just needed to "stay safe."
After the June 15 meeting, Kavanagh began working on her FLSA audit. Ex. 13, d/e 51-13 at 662-63, 543-44, 658, 1623-24, 3288-89, 3284-85, 572-74. On June 21, 2012, Kavanagh emailed Gail Milner asking for information about CDS employees to complete her FLSA audit classifications. Ex. 22, d/e 52-6. Kavanagh sent a follow-up email to Milner on June 26 that stated "I really need this information so I can finish my report and get it to Bruce [Egolf]."
On June 26, 2012, Kavanagh placed her completed audit, which broke down each employee's status under the FLSA, on Egolf's chair. Ex. 13, d/e 51-1 at 11-12. Egolf testified that he did not pass the audit along to the Watsons. Egolf dep., d/e 51-20 at 95. However, Scott Brown testified that he met with Jay Watson after June 26 and that Watson had a copy of the audit with him. Brown dep., d/e 52-34 at 53-55. Kavanagh sent a follow-up email to Egolf on June 27 stating that she left the audit on Egolf's chair. Ex. 13, d/e 51-1 at 13. The email also discussed some of the legal tests under the FLSA and concluded that several CDS employees should be considered non-exempt under the FLSA.
Kavanagh sent an email to Dakota Kennedy on July 3, 2012, explaining that she met with Egolf about overtime issues on June 15, that Egolf asked her to perform an FLSA audit of CDS, and that she submitted that audit to Egolf on June 27.
After Kavanagh was fired, Dakota Kennedy emailed Egolf asking who would address his FLSA complaint in light of Kavanagh's termination. Ex. 13, d/e 51-1 at 1874. Egolf forwarded that email to Jay and Mark Watson, stating, "We will need to address this issue with Dakota." Ex. 12, d/e 51-3. Egolf testified that CDS paid Kennedy for "something like" 16 hours of overtime afterwards. Egolf dep., d/e 51-20 at 100. Kennedy was the only CDS IT engineer to receive overtime pay at this time. Ex. 204, d/e 52-27. The only other employee who received overtime pay at any point was Bob Goldesberry, who was paid overtime in 2009 after complaining to his supervisor. Goldesberry dep., d/e 52-29 at 16.
Regarding CDS's handling of employee complaints, Jeff Greer, a former CDS employee, testified that:
Greer dep., d/e 52-33 at 47-48. Bob Goldesberry also testified that he did not bring his overtime complaint to the Department of Labor because, after meeting with Kavanagh on June 1, 2012,
Goldesberry dep., d/e 52-29 at 50-51. Additionally, Scott Brown testified that when Jay Watson met with Brown about Kavanagh's audit, Watson "was angry that [Brown] didn't talk to him about it first, and mentioned that if [CDS] had to pay the guys overtime that it would cause financial hardships to the company." Brown dep., d/e 52-34 at 91.
Brown also testified that he got the impression from Watson that CDS would not pay the IT engineers overtime pay regardless of what Kavanagh suggested.
Kavanagh filed suit against CDS on December 14, 2012.
Summary judgment is appropriate where the record, viewed in the light most favorable to the nonmovant, reveals that there are no genuine issues as to any material fact, meaning that the moving party is entitled to a judgment as a matter of law. Fed. R. Civ. P. 56(a);
Summary judgment should be denied when a court is required to "resolve conflicting deposition testimony."
CDS argues that it is entitled to summary judgment on Kavanagh's claims because Kavanagh's position was terminated as part of a legitimate reduction in force when CDS outsourced its payroll services, meaning that Kavanagh was not fired for retaliatory reasons. Def.'s Mot. for Summ. J., d/e 51 at 1-2. CDS also argues that Kavanagh's claim under the Illinois Whistleblower Act fails because Kavanagh did not establish that she refused to perform an illegal act.
Kavanagh argues that CDS's response to one of her additional facts was "non-responsive and an improper attempt to add a new fact." Pl.'s Mot. to Strike, d/e 55 at 1. In her Additional Fact #193, Kavanagh stated that "Plaintiff was shocked about her termination and asked Egolf whether there might be other positions that she could fill at CDS. Egolf told her there were no such positions." Pl.'s Resp. to Def.'s Mot. for Summ. J., d/e 52 at 42. In its Reply, CDS responded that,
Def.'s Rep. to Pl.'s Resp. to Def.'s Mot. for Summ. J., d/e 53 at 26. CDS also attached the deposition of Dan Kavanagh to their Reply.
Kavanagh argues that CDS's response to Additional Fact #193 violated Local Rule 7.1(D)(3)(a), which provides that if a party concedes that an additional fact is material but argues that it is disputed, the party must "provide support [for] the claim that the fact is disputed by providing citations to specific pages of evidentiary documentation" and "[i]nclude as exhibits all cited documentary evidence not already submitted." L.R. 7.1(D)(3)(a)(2). Kavanagh contends that CDS violated the Local Rule because their response was "wholly unresponsive and introduces a new fact which was not included in its original Statement of Facts in its Motion for Summary Judgment," meaning that "Plaintiff has never had an opportunity to dispute this fact with appropriate cites to the record." Pl.'s Mot. to Strike, d/e 55 at 2. For that reason, Kavanagh argues that the Court should strike CDS's response.
The Court finds that CDS did not violate Local Rule 7.1(D)(3)(a) and that there is no need to strike CDS's response to Additional Fact #193. CDS was entitled to dispute the proposition raised by Kavanagh in Additional Fact #193, and Local Rule 7.1(D)(3)(a)(2) expressly provides for CDS's ability to introduce new evidence in doing so. Kavanagh may disagree about the relevance of her ex-husband's testimony to whether Kavanagh was "shocked about her termination," but Dan Kavanagh's testimony is at least relevant enough to be considered responsive to Kavanagh's assertion. Therefore, Kavanagh's Motion to Strike (d/e 55) is denied. The Court will, however, consider CDS's response to Kavanagh's Additional Fact #193 to be disputed for the reasons expressed in Kavanagh's Memorandum in Support of Her Motion to Strike (d/e 56).
CDS moves for summary judgment on Kavanagh's claims under the FLSA and Illinois common law for retaliatory discharge. CDS's arguments for summary judgment on Kavanagh's claims focus exclusively on the causation element of the claims, so the Court's analysis will do the same. CDS argues that because it had a number of legitimate reasons to fire Kavanagh, Kavanagh cannot establish that she was fired because of her FLSA-related activity. However, Kavanagh has raised a number of factual disputes as to the legitimacy of CDS's stated justifications and as to the possibility that those justifications were pretextual. Therefore, if a jury sided with Kavanagh, the jury could find that CDS fired Kavanagh in retaliation for her FLSA-related activities.
Kavanagh's evidence is sufficient for a jury to find that, even if CDS was going to terminate Kavanagh as a result of outsourcing its payroll services, she was fired earlier than she otherwise would have been due to her FLSA advocacy. Key among Kavanagh's evidence is Linda Buckles's testimony that she likely told CDS that she would not be ready to handle CDS's payroll services by July 1, 2012. Buckles dep., d/e 51-18 at 23. If a jury credits that testimony, CDS's justification for firing Kavanagh when they did would be significantly weakened. Furthermore, when the facts are construed in Kavanagh's favor, a jury could doubt CDS's justification based on CDS's hostility to FLSA complaints, CDS's lack of a response to the IT engineers' complaints after firing Kavanagh, and Jay Watson's angry discussion about Kavanagh's audit with Scott Brown a few days before Kavanagh was fired,
CDS characterizes Kavanagh's argument that CDS used its outsourcing to Pehlman & Dold as a pretext for firing Kavanagh as requiring an "astonishing inference" that CDS kept Pehlman & Dold "`on-hold' for an indefinite period of time, as insurance in case Kavanagh ever brought suit."
The Court recognizes that CDS may have fired Kavanagh eventually because it was outsourcing its payroll services. However, Kavanagh has presented evidence that CDS knew that Pehlman & Dold would not be prepared to assume CDS's payroll work in July 2012, which could allow a jury to find that CDS used the Pehlman & Dold outsourcing as a pretext to prematurely fire Kavanagh. This sort of premature termination, if caused by an illegal retaliatory motive, would be considered an adverse employment action.
Kavanagh also argues that she had a number of HR-related duties beyond working on payroll, meaning that CDS's statements about firing her as a result of outsourcing their payroll work could be pretextual. This argument may hold some merit, but the argument's strength is undercut by the fact that CDS management had been discussing firing Kavanagh as far back as March 2012, well before she began actively pushing CDS to comply with the FLSA.
In sum, Kavanagh's evidence of CDS's possible knowledge that Pehlman & Dold would not be ready on July 1, 2012, as well as her evidence of CDS's resistance to FLSA compliance and her counter-arguments to CDS's reduction in force evidence, create questions of material fact about whether CDS's stated reasons for firing Kavanagh were a pretext for a retaliatory firing in violation of the FLSA and Illinois common law. Therefore, CDS's motion for summary judgment on Kavanagh's FLSA and Illinois common law retaliatory discharge claims must be denied.
CDS argues that it should be granted summary judgment on Kavanagh's claim under the Illinois Whistleblower Act because Kavanagh has not established that she refused to participate in an illegal act. Under the Illinois Whistleblower Act, "[a]n employer may not retaliate against an employee for refusing to participate in an activity that would result in a violation of a State or federal law, rule, or regulation." 740 ILCS 174/20. To bring a claim under the Illinois Whistleblower Act, a plaintiff must show that (1) she refused to participate in an illegal act, and (2) her employer retaliated against her because of that refusal.
CDS argues that, even if Kavanagh did refuse to make the IT engineers' FLSA complaints "go away," she has not established that her actions constituted a refusal to participate in an illegal act because she has not shown that the IT engineers actually had valid claims under the FLSA. However, Kavanagh has presented sufficient evidence for a jury to find that CDS was violating the FLSA by not giving its IT engineers overtime pay. The record contains a number of emails that Kavanagh sent explaining why she believed CDS was violating the FLSA.
For those reasons, CDS's Motion for Summary Judgment (d/e 51) and Kavanagh's Motion to Strike (d/e 55) are DENIED. The Court will schedule final pretrial conference and trial dates at the telephonic conference set for Wednesday, August 26, 2015, at 11:00 AM.
Q. Did you ever communicate to CDS during June leading up to when payroll was about to begin that this might take longer than you thought?
A. Oh, I probably did because I wasn't going to be ready July 1 so I would have told them.
Q. And you would have told them that probably in June?
A. Yes.
Buckles dep., d/e 51-18 at 23.