Andrews v. Kowa Printing Corp.

SUPREME COURT CASES

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State: Illinois

Court: 4th District Appellate

Docket No: 4-03-0885 Rel

Case Date: 08/04/2004

NO. 4-03-0885

IN THE APPELLATE COURT

OF ILLINOIS

FOURTH DISTRICT

NANCY P. ANDREWS; GLEN T. BLANTON; DOROTHYSPENCER BROMAN; RONALD S. BYERS; JAMES F.
CLARK; ROBERT W. CONSTANS; JULIE D. CROUCH;
JAMES A. CZAJKOWSKI; JERRY EDWARDS; JOSEPH E.EICKHOFF; GREGORY D. FEGETT; JAMES C.
GIBBONS; MARILYN GOOCH; RICHARD L.
GREENLEE; DAVID GUYMON; ORMAL S. HANDLEY,
JR.; JERRY W. HARPER; MARY M. HIRES; KAREN S.JOHNSON; DAVID L. KELLEY, NELLIE M. KNAPP;
SHARON KRAMER; WARDER E. McCORD; GLENNMICHAELSON; RONALD NIKEL; BRUCE M.
OVERSTREET; ARTHUR J. POWELL; CHARLOTTE R.
QUICK; MICHAEL L. RIBBINGS; LINDA L. SANDS;
SHIRLEY G. SMITH; JAMIE A. STAFFORD; MICHAEL G.WALKER; LOIS J. WILLIAMS; and JOSEPH F. YOUNG,
          Plaintiffs-Appellees,
          v.
KOWA PRINTING CORPORATION, an Illinois
Corporation; THOMAS W. KOWA, Personally; and
HUSTON-PATTERSON CORPORATION, an Illinois
Corporation,
          Defendants-Appellants.

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Appeal from
Circuit Court of
Vermilion County
No. 00L14

Honorable
Craig H. DeArmond,
Judge Presiding.

JUSTICE APPLETON delivered the opinion of the court:

Defendants, Kowa Printing Corporation (Kowa Printing), Thomas W. Kowa, and Huston-Patterson Corporation (Huston-Patterson), appeal the trial court's judgment awarding plaintiffs vacationand severance pay. Plaintiffs are former union employees of Kowa Printing. Defendants argue plaintiffs'claims are preempted by federal law due to the existence of a collective-bargaining agreement and that theprovisions of federal law require the employees to exhaust all grievance procedures before filing suit. Inthe alternative, defendants Kowa and Huston-Patterson claim they are not "employers" within the meaningof the Illinois Wage Payment and Collection Act (Wage Act) (820 ILCS 115/1 through 15 (West 2000)). Kowa Printing claims it did not wilfully violate the Wage Act, and all defendants claim the trial court erredin awarding plaintiffs prejudgment interest and attorney fees. We affirm in part and reverse in part.

I. BACKGROUND

Robert Kowa owned and operated Huston-Patterson in Decatur, Illinois, and Kowa Printing inDanville, Illinois. Upon Robert Kowa's death in November 1991, his son, Thomas Kowa, purchased100% of the shares of Kowa Printing and 97% of the shares of Huston-Patterson (the remaining 3% areowned by Kowa's brother, Steve, who is not individually involved in this appeal).

Since his purchases of the businesses, Kowa has been the sole officer and director of both KowaPrinting and Huston-Patterson. Kowa also owned 100% of the shares of Sygma Graphics Corporation(Sygma Graphics) in Ottawa, Illinois, and Kowa Graphics, Inc., in Champaign, Illinois. In February 1996,Kowa merged Kowa Graphics, Inc., and Kowa Printing and operated the merged companies out of KowaPrinting's facility in Danville. Kowa Printing, Huston-Patterson, and Sygma Graphics, all printingcompanies, were known under the servicemark The Kowa Group.

The three companies were distinct, separate entities, yet were intertwined for business purposes. For example, sales representatives for each company would market all three companies within The KowaGroup depending on the type of job desired by the customer. Each company performed different printingservices.

Huston-Patterson provided management services, including payroll and accounting services, toKowa Printing and Sygma Graphics under a written management-services agreement. According toKowa, Huston-Patterson was also considered one of Kowa Printing's biggest customers.

Plaintiffs were all employees of Kowa Printing and were members of one of two union groups,Graphic Communications International Union Local No. 257-C (Local 257-C) and Graphic Communications International Union Local No. 171-B (Local 171-B). Each union had a collective-bargainingagreement with Kowa Printing.

In 1996, it was discovered that Kowa Printing's bookkeeper, an employee of Huston-Patterson,had embezzled over $500,000 from Kowa Printing since 1991. After several months of analyzing thestatus of the corporation, Kowa discovered that Kowa Printing was in dire financial straits. The company's1996 tax return showed a loss of $2,267,072.

Kowa Printing's only secured creditor was BankIllinois. As of June 1997, Kowa Printing was indefault on the bank's loans, but the bank had agreed in writing to temporarily delay foreclosure. Kowalocated a buyer for Kowa Printing. He and the prospective buyer reached an agreement with regard tothe sale. Kowa presented a proposal to the two employees' unions involved, but they rejected both thatproposal and several modified proposals. Thereafter, the sale fell through.

BankIllinois foreclosed on the loans and seized all of the assets of Kowa Printing on April 16,1998. Bank representatives arrived at Kowa Printing escorted by officers of the Danville policedepartment, took possession of the facility, and sent the employees home. The closing did not directlyaffect the operation of Huston-Patterson or Sygma Graphics.

On December 30, 1998, the Illinois Department of Labor (Department), on behalf of plaintiffs,found Kowa Printing, Kowa, and Huston-Patterson liable for $5,274.70 unpaid wages. According to theDepartment, it had no jurisdiction to evaluate the employees' claims for vacation or severance pay becauseentitlement to those amounts was covered by the collective-bargaining agreements and thus fell within thejurisdiction of the federal court system pursuant to section 301 of the Labor Management Relations Act(LMRA) (29 U.S.C.