Galiot v. Midwest Tennis Programs, LLC
1:17-cv-04739
N.D. Ill.Nov 20, 2017Background
- Plaintiff Marina Galiot worked for Frank Sacks Tennis Camps, Inc. (FSTC) from Nov. 2007 to Dec. 5, 2008 and filed a DOL claim alleging unpaid wages.
- An ALJ and then the DOL Administrative Review Board ruled for Galiot, assessing back wages against FSTC (final, unappealed in Feb. 2012).
- Midwest Tennis Programs, LLC was formed in Dec. 2011; Frank Sacks is the sole manager of Midwest and had been FSTC's president/agent.
- FSTC was involuntarily dissolved on Apr. 13, 2012; Galiot alleges Midwest is a successor created to avoid paying the DOL judgment and refuses to pay.
- Midwest moved to dismiss under Rule 12(b)(7) for failure to join FSTC as a required party under Rule 19. The court considered plaintiff’s allegations as true for purposes of the motion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether complete relief among existing parties requires joinder of FSTC | Galiot: Midwest is FSTC's successor; judgment against Midwest can fully resolve relief between parties | Midwest: FSTC likely is solely responsible for the DOL award, so joinder required | Court: No; complete relief among existing parties can be accorded without FSTC because successor-liability adjudication between Galiot and Midwest suffices |
| Whether FSTC's ability to protect its interest would be impaired if not joined | Galiot: FSTC is dissolved and Galiot seeks relief from Midwest as successor; any FSTC interest is speculative | Midwest: Absent joinder, FSTC may be impaired (e.g., discovery obligations) | Court: No; defendant failed to show how absence impairs FSTC; absent party normally must assert such an interest and could intervene if needed |
| Whether non-joinder would expose existing parties to risk of multiple or inconsistent obligations | Galiot: Adjudicating successor liability will not create inconsistency—if Midwest loses, it simply owes the debt | Midwest: Risk of inconsistent obligations because an independent entity (FSTC) holds the judgment | Court: No substantial risk of inconsistent obligations; an adverse ruling imposes successor liability, not inconsistent duties |
| Whether dismissal is appropriate at pleading stage based on assumed merits | Galiot: Allegations must be accepted as true for Rule 12(b)(7) analysis | Midwest: Court should not assume plaintiff can prove successor liability or enforceability | Court: Court must accept plaintiff’s allegations and draw inferences for her benefit; dismissal inappropriate at this stage |
Key Cases Cited
- Nanko Shipping, USA v. Alcoa, Inc., 850 F.3d 461 (D.C. Cir. 2017) (pleading-stage standard for Rule 12(b)(7) requires accepting plaintiff’s allegations and drawing inferences in plaintiff’s favor)
- Deb v. SIRVA, Inc., 832 F.3d 800 (7th Cir. 2016) (courts may consider matters outside the pleadings to resolve factual questions about jurisdiction, process, or indispensable parties)
- Davis Cos. v. Emerald Casino, Inc., 268 F.3d 477 (7th Cir. 2001) ("complete relief" in Rule 19 refers to relief among existing parties; conflicts resolved in plaintiff's favor at pleading stage)
- Tsareff v. ManWeb Servs., Inc., 794 F.3d 841 (7th Cir. 2015) (successor liability may be imposed when successor had notice of predecessor’s claim and there was substantial continuity of the business)