Evans v. United Parcel Service, Inc

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

MICHAEL EVANS, )

)

Plaintiff, )

) Case No. 19 CV 4818

v. )

) Judge Robert W. Gettleman

UNITED PARCEL SERVICE, INC., and )

TEAMSTERS LOCAL UNION NO. 705, )

)

Defendants. )

MEMORANDUM OPINION AND ORDER

Plaintiff Michael Evans is an air driver for defendant United Parcel Service, Inc.

(“UPS”). He is also a member of defendant Teamsters Local Union No. 705 (“the union”).

Plaintiff alleges that UPS denied him overtime pay. He complained to UPS and the union; they

allegedly retaliated. They also allegedly discriminated against plaintiff because he is African

American. Plaintiff sued.

The union moves to dismiss. UPS answered the complaint but moves to dismiss in part.

For the following reasons, the union’s motion is denied and UPS’s motion is granted in part. The

court dismisses three claims against UPS: section 1981 retaliation (Count III), Title VII

retaliation (Count IV), and fraudulent tax reporting under 26 U.S.C. § 7434 (Count V).

1 Teamsters Local Union No. 705’s motion to dismiss

Plaintiff claims that the union: (1) discriminated against him based on his race, 42 U.S.C.

§ 1981; (2) retaliated against him when he complained about his pay, 42 U.S.C. § 1981; and

(3) breached its duty to fairly represent him under the Labor Management Relations Act, 29

U.S.C. § 185(a). The union moves to dismiss, arguing that plaintiff’s claims are untimely.

The union’s motion is frivolous. The union argues that plaintiff failed to sue within 90

days of receiving a right-to-sue notice from the Equal Employment Opportunity Commission

(“EEOC”). See 42 U.S.C. § 2000e–5(f)(1). That, even if true, is irrelevant: “[Section] 1981 does

not require the filing of an EEOC charge before bringing an action in a federal court.” Walker v.

Abbott Labs., 340 F.3d 471, 474 (7th Cir. 2003). Nor do EEOC charges have anything to do with

plaintiff’s fair representation claim under the Labor Management Relations Act.

Nor would it have mattered even if plaintiff had brought his claims against the union

under Title VII of the Civil Rights Act of 1964. Title VII, unlike section 1981, requires

employees to file an EEOC charge before suing. 42 U.S.C. § 2000e–5(e)(1). If the EEOC

declines to prosecute the case and gives a right-to-sue notice, the employee has 90 days to sue.

42 U.S.C. § 2000e–5(f)(1). Plaintiff alleges that the EEOC issued him a right-to-sue notice on

April 19, 2019—less than 90 days before he sued the union on July 17, 2019.

The union relies on a right-to-sue notice dated December 2018, more than 90 days before

plaintiff sued. In response, plaintiff relies on text messages supposedly showing that the union

refused to represent him fairly. But because none of those documents were referred to in

plaintiff’s complaint, the court may not consider them. See Wright v. Associated Insurance

Companies Inc., 29 F.3d 1244, 1248 (7th Cir. 1994).

Nor will the court consider the union’s argument that plaintiff fails to state claims. That

argument was raised for the first time in the union’s reply. Such arguments are too late, for when

a party moves to dismiss “on ground A, his opponent is not required to respond to ground B—a

ground the movant might have presented but did not.” Malhotra v. Cotter & Co., 885 F.2d 1305,

1310 (7th Cir. 1989). In any event, the union’s argument is meritless. It relies on plaintiff’s

alleged failure to raise race discrimination in his EEOC charge. That, as discussed, has nothing to

do with his section 1981 claims. For these reasons, the court denies the union’s motion to

dismiss.

2 United Parcel Service’s motion to dismiss

UPS moves to dismiss in part. For the following reasons, the court: (1) dismisses

plaintiff’s retaliation claims under section 1981 and Title VII; (2) dismisses plaintiff’s fraudulent

payment reporting claim under 26 U.S.C. § 7434; and (3) declines to dismiss plaintiff’s

retaliation claim under the Illinois Whistleblower Act, 740 ILCS 174.

2.1 Plaintiff’s retaliation claims under section 1981 and Title VII

UPS argues that plaintiff fails to state retaliation claims. To avoid dismissal, a claim must

be plausible. Plaintiff’s retaliation claims are plausible if the court, taking the allegations as true,

can reasonably infer that UPS is liable. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), citing Bell

Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). The standards for retaliation claims under

section 1981 and Title VII are identical. Humphries v. CBOCS West, Inc., 474 F.3d 387, 403–04

(7th Cir. 2007). An employer may not retaliate against a plaintiff for engaging in a statutorily-

protected activity—that is, for “reporting or otherwise opposing” conduct prohibited by the

statutes. Gleason v. Mesirow Financial, Inc., 118 F.3d 1134, 1146 (7th Cir. 1997). Section 1981

and Title VII both prohibit employment discrimination based on race.

Plaintiff fails to state retaliation claims. The complaint lacks any allegation that plaintiff

reported or otherwise opposed race discrimination. He alleges in his complaint only that: (1) he

complained about being denied overtime pay; and (2) in retaliation, UPS reduced his hours,

“effectively demot[ing] him to a part-time worker.” Those allegations have nothing to do with

reporting or opposing race discrimination. The court disregards as conclusory the allegation that,

“At relevant times, UPS intentionally discriminated against [plaintiff] on the basis of his race by

treating similarly situated employees who are not African-American more favorably.” That

allegation is a “conclusory statement[ ] without reference to its factual context,” which “the

Federal Rules do not require courts to credit.” Iqbal, 556 U.S. at 686 (disregarding a detainee’s

allegation that he was discriminated against “on account of [his] religion, race, and/or national

origin and for no legitimate penological interest”).

Nor did plaintiff allege race discrimination in his two EEOC charges against UPS.

“Although filing an official complaint with an employer may constitute statutorily protected

activity under Title VII, the complaint must indicate the discrimination occurred because of sex,

race, national origin, or some other protected class.” Tomanovich v. Indianapolis, 457 F.3d 656,

663 (7th Cir. 2006). Plaintiff’s EEOC charges against UPS—which he incorporated into his

complaint—raised the same overtime pay and retaliation issues that he raised in his complaint.

Neither of those charges raised race discrimination.

2.2 Plaintiff’s fraudulent payment reporting claim under 26 U.S.C. § 7434

Next, UPS argues that plaintiff fails to state a claim for fraudulent payment reporting

under 26 U.S.C. § 7434. Section 7434(a) forbids “any person” from “willfully fil[ing] a

fraudulent information return with respect to payments purported to be made to any other

person” (emphasis added). Violating section 7434 thus requires more than filing a fraudulent

information return. The return must be fraudulent because it misrepresents the amount of

payments actually made.

Plaintiff fails to state a fraudulent payment reporting claim. Plaintiff alleges not that UPS

misrepresented the amount it paid him, but that that UPS ought to have paid him more. As Judge

McDade explains, “a proper § 7434 violation must be predicated on a purported misstatement of

amount.” Derolf v. Risinger Bros. Transfer, 259 F. Supp. 3d 876, 885 (C.D. Ill. 2017). That

follows from the text: section 7434 forbids the filing of “a fraudulent information return with

respect to payments purported to be made to any other person.” 26 U.S.C. § 7434(a) (emphasis

added). Thus, if an employer files a tax return that accurately reports the payments made to an

employee, that return is not “fraudulent” under section 7434—even if the employer ought to

have paid that employee more for whatever reason. Construing section 7434 to impose liability

for filing tax returns that might be fraudulent in other ways—for example, by misclassifying an

employee as an independent contractor—would make the modifying text superfluous: “with

respect to payments purported to be made to any other person.”

Whether that reading of section 7434 is right has yet to be decided by either the Seventh

Circuit or by any other Court of Appeals. Nonetheless, the majority of the district courts to have

interpreted section 7434 agree: a violation requires misrepresenting the amount of payments

made. Those decisions are persuasive. The district courts that have taken the minority view

limited their analyses to whether the tax return was “fraudulent” without discussing the

modifying text: “with respect to payments purported to be made.” Compare Liverett v. Torres

Advanced Enterprise Solutions LLC, 192 F. Supp. 3d 648, 651–55 (E.D. Va. 2016) (concluding

that based on its text, context, and congressional purpose, section 7434 “must be read to provide

a private cause of action only where a defendant willfully files information returns that

misrepresent the amount of payments made”), Tran v. Tran, 239 F. Supp. 3d 1296, 1297–98

(M.D. Fla. 2017) (agreeing with Liverett and concluding that filing “the wrong form establishes

no liability under Section 7434 unless the form willfully misstates the payee’s income”), Derolf,

259 F. Supp. 3d at 884–85 (C.D. Ill. 2017) (agreeing with Liverett and Tran), Sims v. UNATION,

LLC, 292 F. Supp. 3d 1286, 1297–99 (M.D. Fla. 2018) (same), and Guerra v. Teixeira, No. CV

TDC-16-0618, 2018 WL 3756716, at *8 (D. Md. Aug. 8, 2018) (agreeing with Liverett), with

Seijo v. Casa Salsa, Inc., No. 12-60892-CIV, 2013 WL 6184969, at *7 (S.D. Fla. Nov. 25, 2013)

(holding that misclassifying employees as independent contractors violates section 7434 even

when “[t]he amount of the payment [is] not in dispute”), and Leon v. Tapas & Tintos, Inc., 51 F.

Supp. 3d 1290, 1297–98 (S.D. Fla. 2014) (same). See also Greenwald v. Regency Management

Services, LLC, 372 F. Supp. 3d 266, 270–71 (D. Md. 2019) (distinguishing Liverett, Tran, and

Guerra based on allegations that employee W-2s “did not include the 1099 payments” that their

employer “made to them after their employment ended”).

2.3 Plaintiff’s Illinois Whistleblower Act claim

Finally, UPS argues that plaintiff’s Illinois Whistleblower Act claim is preempted. The

Whistleblower Act forbids employers from “retaliat[ing] against an employee for disclosing

information to a government . . . agency, where the employee has reasonable cause to believe

that the information discloses a violation of a State or federal law, rule, or regulation.” 740 ILCS

174/15(b). Plaintiff alleges that UPS retaliated against him for sharing such information with two

government agencies: the National Labor Relations Board and the EEOC.

UPS argues that plaintiff’s whistleblower claim is preempted by three statutes: the

National Labor Relations Act, the Labor Management Relations Act, and the Illinois Human

Rights Act. The court disagrees. Plaintiff’s whistleblower claim is preempted so far as it relies on

his having disclosed information to the National Labor Relations Board. But his claim is not

preempted so far as it relies on having disclosed information to the EEOC.

Disclosure of information to the National Labor Relations Board. As plaintiff seems

to concede, his whistleblower claim is preempted to the extent it relies on his having disclosed

information to the National Labor Relations Board. Federal labor law preempts state-law claims

when it “may fairly be assumed that the activities which a State purports to regulate … constitute

an unfair labor practice under § 8” of the National Labor Relations Act. San Diego Building

Trades Council, Millmen's Union, Local 2020 v. Garmon, 359 U.S. 236, 244 (1959). Section 8

makes it an unfair labor practice for an employer to “discriminate against an employee because

he has filed charges or given testimony under this subchapter.” 29 U.S.C. § 158(a)(4). Thus, so

far as plaintiff alleges that UPS discriminated against him for disclosing information to the

National Labor Relations Board, he alleges that UPS engaged in an unfair labor practice under

section 8 of the National Labor Relations Act. Garmon preempts state-law claims based on such

allegations.

Disclosure of information to the EEOC. Plaintiff also disclosed information to the

EEOC. He filed two EEOC charges. In his second charge, plaintiff complained that: (1) he was

denied overtime pay to which he was entitled under the collective bargaining agreement; (2) he

previously filed an EEOC charge; and (3) UPS retaliated by reducing his work hours and giving

more work hours to employees with less tenure. UPS argues that a whistleblower claim based on

those allegations is preempted by section 301 of the Labor Management Relations Act and by the

Illinois Human Rights Act.

Plaintiff’s whistleblower claim is not preempted by the section 301 of the Labor

Management Relations Act, 29 U.S.C. § 185. Section 301 preempts state-law claims that require

a collective bargaining agreement’s “interpretation.” In re Bentz Metal Products Co., Inc., 253

F.3d 283, 289 (7th Cir. 2001) (en banc). Plaintiff’s claim does not require interpreting the union’s

collective bargaining agreement. Suppose that plaintiff’s interpretation were wrong and that the

bargaining agreement, in fact, entitled him to no overtime pay. Under the Whistleblower Act,

plaintiff was nonetheless entitled to file a charge with the EEOC free from retaliation—at least so

long as he had “reasonable cause to believe” that his charge disclosed a legal violation. 740 ILCS

174/15(b). UPS argues that plaintiff lacked reasonable cause, but whatever the merits of that

argument, UPS raised it only in its reply—too late for plaintiff to respond, and thus too late for

this court to consider. Malhotra, 885 F.2d at 1310.

At most, plaintiff’s whistleblower claim requires only a “reference” to the collective

bargaining agreement. In re Bentz, 253 F.3d at 289. If so, preemption would not apply. Id. The

agreement “may, of course, contain information such as rate of pay and other economic benefits

that might be helpful in determining the damages” to which plaintiff is allegedly entitled. Lingle

v. Norge Division of Magic Chef, Inc., 486 U.S. 399, 413 n.12 (1988). “[F]ederal law would

govern the interpretation of the agreement, but the separate state-law analysis would not be

thereby pre-empted.” Id.

Nor is plaintiff’s whistleblower claim preempted by the Illinois Human Rights Act. That

statute has a limitation: “[N]o court . . . shall have jurisdiction over the subject of an alleged civil

rights violation other than as set forth in this Act.” 775 ILCS 5/8-111(D). This limitation

preempts claims “when the Act furnishe[s] the legal duty that the defendant was alleged to have

breached.” Maksimovic v. Tsogalis, 177 Ill. 2d 511, 517 (Ill. 1997). But claims are not preempted

when their elements may be proven “without reference to legal duties created by the Act.” Id.

Contrary to UPS’s argument, plaintiff need not assert “independent factual grounds to support

[his] claim”—preemption turns not on “the factual overlap between the claims,” but on “an

examination of legal duties.” Richards v. U.S. Steel, 869 F.3d 557, 564 (7th Cir. 2017) (quotation

marks and alteration omitted).

Plaintiff’s claim does not rest on UPS breaching any legal duty created by the Human

Rights Act. It rests on UPS breaching the anti-retaliation provision of the Whistleblower Act

after plaintiff filed an EEOC charge. As Judge Chang explains in Torres, plaintiff “argu[es] that

there was a breach of federal law reported to a federal agency, and that [UPS] later retaliated on

that basis. That retaliation, in turn, violates the state Whistleblower Act. No mention of the

Illinois Human Rights Act is needed at all, so there is no preemption.” Torres v. Merck Sharp &

Dohme Corp., 255 F. Supp. 3d 826, 833 (N.D. Ill. 2017). And Torres is not unique. See

Washington v. Magna Exteriors, No. 18 C 50368, 2019 WL 4918146, at *6 (N.D. IIL. Oct. 4,

2019) (holding that the Human Rights Act did not preempt a retaliation claim brought under the

Whistleblower Act); Carbayal v. City of Highland Park, No. 16 C 8364, 2017 WL 818858,

at *4—5 (N.D. Ill. Mar. 2, 2017) (same); Thurman v. BMO Capital Markets Corp., No. 10 C 5727,

2011 WL 1004652, at *5 (N.D. Ill. Mar. 16, 2011) (same); Cochran v. BMA Management, Ltd.,

No. 08-CV-215-DRH-CIJP, 2009 WL 1372987, at *5—6 (S.D. Ill. May 15, 2009) (same).

CONCLUSION

Defendant Teamsters Local Union No. 705’s motion to dismiss [Doc. 7] is denied.

Defendant United Parcel Service, Inc.’s partial motion to dismiss [Doc. 14] is granted in part.

The court dismisses the following claims against UPS: section 1981 retaliation (Count III), Title

VII retaliation (Count IV), and fraudulent tax reporting under 26 U.S.C. § 7434 (Count V).

The union must answer the complaint on or before March 16, 2020. The parties are

directed to file a joint status report using this court’s form on or before March 23, 2020. This

matter is set for a status hearing on April 7, 2020, at 9:00 a.m.

ENTER: February 18, 2020

“| dls. Gate

| Breas TW. Cae onan

United States District Judge