Court Opinion

ID: 3168605
Source: CourtListenerOpinion
Date Created: 2016-01-11 22:00:47.692451+00
Date Added: 2024-06-11T11:18:04.565042
License: Public Domain

In the

    United States Court of Appeals
                 For the Seventh Circuit
                       ____________________
No. 15-1057
PETER ENGER, et al.,
                                                Plaintiffs-Appellants,

                                 v.

CHICAGO CARRIAGE CAB CORP., et al.,
                                               Defendants-Appellees.
                       ____________________

         Appeal from the United States District Court for the
           Northern District of Illinois, Eastern Division.
           No. 1:14-CV-02117 — Andrea R. Wood, Judge.
                       ____________________

   ARGUED DECEMBER 7, 2015 — DECIDED JANUARY 11, 2016
                ____________________

   Before FLAUM, WILLIAMS, and SYKES, Circuit Judges.
    FLAUM, Circuit Judge. Plaintiff taxi drivers (collectively,
“the drivers”) brought a class action suit against their taxi
company employers. The drivers contend that defendants
violated the Illinois Wage Payment and Collection Act, 820
ILCS 115 et seq. (“IWPCA”), by improperly charging them to
work and forcing them to bear their own operating expens-
es, among other things. The drivers also assert a cause of ac-
2                                                             No. 15-1057

tion based on a theory of unjust enrichment. Defendants
filed a motion to dismiss.
    The IWPCA provides employees with a cause of action
against employers for the timely and complete payment of
earned wages. The Act defines “wages” narrowly—a wage is
compensation owed by the employer pursuant to an employ-
ment agreement between the parties. See 820 ILCS 115/2. The
district court assumed for purposes of the motion to dismiss
that the drivers were employees and that the parties had en-
tered into an employment agreement. But the court granted
defendants’ motion to dismiss because that employment
agreement did not obligate defendants to compensate the
drivers, and thus, the drivers’ claims regarding improper
fees could not be brought under the IWPCA. For the reasons
that follow, we affirm the judgment of the district court.
                             I. Background
   Plaintiffs are current and former Chicago taxi drivers
who worked for defendant taxi companies.1 To drive one of
defendants’ taxis, the driver must pay a daily or weekly
“shift fee.” Essentially, shift fees are lease payments that al-
low the driver to operate one of defendants’ taxis and earn
income. If paid on a daily basis, the fees range from $100 to
$125, and weekly fees range from $500 to $800 or more. A

    1 Plaintiffs are Peter Enger, Karen Chamberlain, Courtney Creater,
Gregory McGee, and Finn Ebelechukwu. Taxi company defendants are
Chicago Carriage Cab Co.; Yellow Cab Affiliation, Inc.; Flash Cab Co.;
and Dispatch Taxi Affiliation, Inc. As part of this suit, plaintiffs also sued
individual taxi company owners Simon Garber, Michael Levine, Henry
Elizar, Savas Tsitiridis, and Evgeny Friedman.
No. 15-1057                                                    3

driver must also pay operating expenses, which include fuel,
airport taxes, upkeep, and sometimes insurance payments.
    The drivers do not earn traditional wages or overtime
pay—their only source of income is what they make in fares
and tips from passengers. As a result, the drivers contend
that they often receive less than minimum wage and for
some shifts, pay more for fees and expenses than they re-
ceive from fares and tips.
    On March 26, 2014, the drivers brought a putative class
action on behalf of “all … persons who have worked as taxi
drivers in Chicago, Illinois, over the last ten years for any of
the defendants or their affiliates and have had to pay weekly
fees or daily fees (for 12 or 24 hour shifts) in order to work as
taxi drivers.” The drivers’ complaint alleged that defendants
violated the IWPCA by improperly classifying them as in-
dependent contractors, failing to pay them the minimum
wage or overtime pay, improperly charging them to work,
and forcing them to bear their own operating expenses. The
complaint also asserted a cause of action based on a theory
of unjust enrichment.
    Defendants filed a motion to dismiss, arguing that the
drivers could not seek recovery under the IWPCA because
they had not alleged the existence of an employment con-
tract or any agreement to pay the drivers’ wages. Defendants
conceded for purposes of the motion to dismiss that the
drivers would be considered employees under the IWPCA’s
broad employment relationship test.
    The district court granted defendants’ motion to dismiss.
The court determined that the complaint adequately pled the
existence of an implicit employment agreement between the
4                                                   No. 15-1057

drivers and defendants, but nonetheless concluded that the
drivers had failed to state a claim under Federal Rule of Civil
Procedure 12(b)(6) because that agreement did not require
defendants to pay the drivers any wages, nor did it provide
for overtime pay. Thus, the drivers’ claims regarding a lack
of a fair wage and improper fees could not be brought under
the IWPCA. In addition, the district court determined that
because the drivers’ claim for unjust enrichment was prem-
ised on the same allegedly improper conduct as the drivers’
IWPCA claims, the unjust enrichment claim failed. This ap-
peal followed.
                        II. Discussion
    We review a district court’s dismissal under Rule 12(b)(6)
de novo, construing all facts and reasonable inferences in the
light most favorable to the non-moving party. Citadel Grp.
Ltd. v. Wash. Reg’l Med. Ctr., 692 F.3d 580, 591 (7th Cir. 2012).
“Dismissal is proper if it appears beyond doubt that the
plaintiff could prove no set of facts in support of his claim
that would entitle him to the relief requested.” R.J.R. Servs.,
Inc. v. Aetna Cas. & Sur. Co., 895 F.2d 279, 281 (7th Cir. 1989)
(citation omitted).
    A. IWPCA Claims
    On appeal, the drivers contend that the district court re-
lied on an overly narrow definition of “wages” that improp-
erly excluded tips and other forms of indirect compensation.
Specifically, the drivers argue that the implied contract al-
lowing them to collect fares and tips from passengers pro-
vides for indirect compensation from defendants, and thus,
the district court improperly dismissed their IWPCA claims.
The drivers also maintain that defendants violated the
No. 15-1057                                                         5

IWPCA, which prohibits employers from taking deductions
from an employee’s wages unless certain conditions are
met,2 by requiring the drivers to pay shift fees and bear their
own operating expenses.
    The IWPCA provides employees with a cause of action
against employers for the timely and complete payment of
earned wages. 820 ILCS 115/3. The Act defines “wages” nar-
rowly—a wage is “compensation owed an employee by an
employer pursuant to an employment contract or agreement be-
tween the 2 parties … .” 820 ILCS 115/2 (emphasis added).
As such, to state a claim under the IWPCA, the drivers are
required to demonstrate that they are owed compensation
from defendants pursuant to an employment agreement. See,
e.g., Brand v. Comcast Corp., No. 12 CV 1122, 2013 WL
1499008, at *2 (N.D. Ill. Apr. 11, 2013) (holding that “to state
a claim under the IWPCA, [plaintiff] must allege that [de-
fendant] owed him the unpaid wages pursuant to an em-
ployment contract or agreement”); Dominguez v. Micro Ctr.
Sales Corp., No. 11 C 8202, 2012 WL 1719793, at *1 (N.D. Ill.
May 15, 2012) (“[T]he IWPCA mandates overtime pay or any
other specific kind of wage only to the extent the parties’
contract or agreement requires such pay.”). Like the district
court, we assume that the parties’ relationship is governed
by an implicit employment contract.
    We agree with the district court that the drivers’ IWPCA
claims fail because the drivers have not demonstrated that

   2  The employer may take deductions from wages if those deductions
are: “(1) required by law; (2) to … benefit … the employee; (3) in re-
sponse to a valid wage assignment or wage deduction order; [or] (4)
made with the express written consent of the employee, given freely at
the time the deduction is made … .” 820 ILCS 115/9.
6                                                             No. 15-1057

defendants owed them “wages.” It is undisputed that the
parties’ employment agreement did not obligate defendants
to compensate the drivers—it only required defendants to
make their cabs and medallions available to the drivers so
that they could collect tips and fares from passengers. In fact,
the drivers admitted in their complaint that they “receive no
wages; instead, their only source of income is what they
manage to make in fares and tips.”
    In spite of this admission, the drivers insist that we
should construe “wages” as including indirect compensa-
tion.3 To support this argument, the drivers primarily rely
on cases from other state courts involving exotic dancers
who successfully brought claims for unpaid wages under
their state minimum wage statutes, despite the fact that they
received no base wages from their employers. E.g., Terry v.
Sapphire Gentlemen’s Club, 336 P.3d 951, 953 (Nev. 2014); In re
Wage Claims of Smith v. Tyad, Inc., 209 P.3d 228, 233 (Mont.
2009); State ex rel. Roberts v. Bomareto Enters., Inc., 956 P.2d
254, 255 (Or. Ct. App. 1998). The problem with this argu-
ment is that those state minimum wage statutes define
“wages” broadly to include tips and other forms of indirect

    3  Defendants contend that because the drivers admit in their com-
plaint that they do not receive wages, we should not consider this argu-
ment on appeal because it relies on “new facts.” See Flying J Inc. v. City of
New Haven, 549 F.3d 538, 542 n.1 (7th Cir. 2008) (observing that allega-
tions in plaintiff’s briefs must be consistent with the statement of facts
contained in the complaint). Although the drivers’ admission is telling,
their argument that they earn “wages” does not rest on a different factu-
al picture than that in the complaint. Rather, the drivers contend that we
should interpret the IWPCA’s definition of wages as encompassing in-
come earned from third parties. Thus, we are not precluded from ad-
dressing the drivers’ argument in this appeal.
No. 15-1057                                                    7

compensation and are thus distinguishable. The drivers do
not cite to a single case interpreting the IWPCA as including
indirect compensation in its narrow definition of “wages.”
    By contrast, the Illinois Minimum Wage Law, which sets
the minimum hourly rate that an employee must be paid re-
gardless of the underlying employment agreement, defines
“wages” broadly to include “compensation due to an em-
ployee by reason of his employment, including allowances …
for gratuities … .” 820 ILCS 105/3(b) (emphasis added). In
other words, the legislature evidenced its ability to define
“wages” so as to encompass indirect forms of compensation
in a neighboring wage law. This textual difference further
supports our conclusion that an employee suing under the
IWPCA must seek to collect compensation owed by his em-
ployer, and not third parties. See Keene Corp. v. United States,
508 U.S. 200, 208 (1993) (“[W]here [the legislature] includes
particular language in one section of a statute but omits it in
another …, it is generally presumed that [the legislature] acts
intentionally and purposely in the disparate inclusion or ex-
clusion.” (quoting Russello v. United States, 464 U.S. 16, 23
(1983)) (internal quotation marks omitted)).
    Lastly, the drivers argue that even under the IWPCA’s
narrow definition, the district court ignored evidence that
the drivers receive “wages” from defendants in the form of
credit card remittances. When a passenger pays by credit
card, that fare may be processed by the taxi company’s cred-
it card processing service and remitted to the driver by de-
fendants (although some drivers use their own credit card
processing services to bypass defendants altogether). But the
fact that payment sometimes flows through defendants does
not alter the reality that the obligation to pay the driver aris-
8                                                          No. 15-1057

es from the passenger, and not the taxi company. If, for ex-
ample, the passenger’s credit card was declined and the pas-
senger had no cash to pay for the fare, the taxi company
would not be required to compensate the driver for the
money that the passenger should have paid. In other words,
the taxi company is nothing more than an intermediary, and
it is inaccurate to characterize any remittance from defend-
ants as a wage.
    Because the drivers have not shown that they are entitled
to wages from defendants, their argument that defendants
made improper deductions from their wages by requiring
them to pay fees and expenses fails as a matter of law. De-
fendants do not pay the drivers’ wages and so they cannot
be sued for taking deductions from those non-existent wag-
es. More broadly, it is inaccurate to characterize the shift fees
and other expenses that the drivers voluntarily pay to oper-
ate defendants’ cabs as a deduction. Instead, the drivers’
payment of fees and expenses is the consideration offered in
exchange for the right to lease a cab and medallion under the
parties’ implicit agreement. And although the drivers agreed
to pay those fees and expenses, they now attempt to use the
IWPCA to rewrite the terms of their employment agreement.
But again, the IWPCA provides no substantive relief beyond
what the underlying employment contract requires. In other
words, the IWPCA exists to hold the employer to his prom-
ise under the employment agreement; by asking the judici-
ary to graft new terms into an employment contract without
employer’s consent, the drivers turn the IWPCA on its
head.4

    4Although the drivers have failed to state a claim under the IWPCA,
we note that there are arguably other avenues of redress for the allegedly
No. 15-1057                                                           9

   B. Unjust Enrichment Claim
    In their complaint, the drivers argued that under their
employment arrangement with defendants, they were forced
to pay substantial sums of money to work, and that defend-
ants unjustly benefitted as a result. The district court dis-
missed the drivers’ unjust enrichment claim because it was
based on the same allegedly improper conduct as their
IWPCA claims. See Cleary v. Philip Morris Inc., 656 F.3d 511,
517 (7th Cir. 2011) (“[I]f an unjust enrichment claim rests on
the same improper conduct alleged in another claim, then
the unjust enrichment claim will be tied to this related
claim—and, of course, unjust enrichment will stand or fall
with the related claim.”).
    On appeal, the parties dispute whether unjust enrich-
ment provides an independent cause of action under Illinois
law. However, we need not resolve this issue because
“[w]hen two parties’ relationship is governed by contract,
they may not bring a claim of unjust enrichment unless the
claim falls outside the contract.” Utility Audit, Inc. v. Horace
Mann Serv. Corp., 383 F.3d 683, 688–89 (7th Cir. 2004); see also
People ex rel. Hartigan v. E & E Hauling, Inc., 607 N.E.2d 165,
177 (Ill. 1992). The drivers do not dispute that the parties’
employment relationship is governed by an implied con-
tract. Because the drivers’ claim of unjust enrichment chal-

unjust terms of their employment. For example, if the drivers are unable
to earn a minimum wage under the terms of their employment arrange-
ment, they may have a cause of action under either the Illinois Minimum
Wage Law or the Fair Labor Standards Act. See 820 ILCS 105; 29 U.S.C. §
201, et seq.
10                                               No. 15-1057

lenges the terms of that contract, the doctrine of unjust en-
richment has no application.

                      III. Conclusion
    For the foregoing reasons, we AFFIRM the judgment of the
district court.