Kennedy v. Intraspectrum Counseling, Ltd.
699 F.Supp.3d 667
N.D. Ill.2023Background
- Kennedy worked for Intraspectrum as a billing coordinator for over a decade and was terminated days after reporting sexual harassment by her supervisor.
- Kennedy alleges termination was retaliation in violation of Title VII; she filed an EEOC charge and obtained a right-to-sue letter in July 2022.
- Intraspectrum counterclaimed for breach of contract and conversion, asserting Kennedy failed to perform contractual billing duties, cancelled a client phone line, mismanaged client financial files, caused re-billing costs and personnel expenses, and failed to return a company-owned book after termination.
- Intraspectrum says it discovered the alleged misconduct after termination and seeks discrete costs directly tied to contractual breaches and return of property.
- Kennedy moved to dismiss both counterclaims, arguing they are bad-faith/retaliatory, that Illinois law bars employer recovery for mere poor performance absent explicit contractual damages provisions, and that the conversion claim is de minimis (the book valued at about $100).
- The court denied the motion to dismiss, finding the counterclaims sufficiently pleaded to proceed and noting sanctions remain possible if bad faith is shown on the evidence.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of contract counterclaim | Illinois law bars employer recovery for negligent/poor performance absent express contractual remedies | Kennedy failed to perform specific contractual duties and caused direct, identifiable costs | Denied — complaint pleads specific duties, direct losses, and elements of breach under Illinois law |
| Conversion counterclaim (book) | Claim is de minimis (~$100) and should be dismissed | Employer owned the book, demanded its return, and Kennedy retained it without authorization | Denied — value not negligible compared to de minimis precedents; elements of conversion adequately alleged |
| Motive/bad-faith/retaliation of counterclaims | Counterclaims are retaliatory and filed opportunistically after pleadings deadline; should be dismissed as sham | Counterclaims were asserted after discovery of issues and seek narrow relief; pleaded in good faith on their face | Denied — on pleadings alone cannot dismiss as retaliatory; sanctions remain possible if bad faith proven later |
Key Cases Cited
- Urological Group, Ltd. v. Petersen (In re Petersen), 296 B.R. 766 (C.D. Ill. 2003) (applying agency principles and holding absent express agreement an agent not liable for incidental losses from mere mistakes)
- Barbagallo v. Marcum LLP, 925 F. Supp. 2d 275 (E.D.N.Y. 2013) (discussing limits on employer recovery from employees for negligent performance)
- Van Diest Supply Co. v. Shelby Cty. State Bank, 425 F.3d 437 (7th Cir. 2005) (elements required to plead conversion)
- Cirrincione v. Johnson, 703 N.E.2d 67 (Ill. 1998) (Illinois conversion law principles)
- Gonzalez v. Am. Exp. Credit Corp., 733 N.E.2d 345 (Ill. 2000) (elements of breach of contract under Illinois law)