Case: 1:11-cv Document #: 36 Filed: 01/12/12 Page 1 of 24 PageID #:285 THE UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS

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1 Case: 1:11-cv Document #: 36 Filed: 01/12/12 Page 1 of 24 PageID #:285 THE UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS Steven Bell, individually and on behalf of all similarly situated individuals, v. Plaintiff, Bimbo Foods Bakeries Distribution, Inc., Defendant. Court File No. 1:11-CV AMENDED CLASS ACTION COMPLAINT AND JURY DEMAND (DECLARATORY AND EQUITABLE RELIEF SOUGHT) Plaintiff, on behalf of himself and other similarly situated individuals, by and through his undersigned counsel, files this Class Action Complaint, and avers as follows: NATURE OF ACTION 1. This is a Class Action Complaint brought to obtain declaratory, injunctive and monetary relief on behalf of a class of individuals who currently distribute within the state of Illinois, or who have distributed in the past during the relevant limitations period, bakery products produced by Defendant, Bimbo Foods Bakeries Distribution Inc. ( Bimbo or Bimbo Distribution ). Defendant has variously characterized its relationship with Plaintiff and the Class as one involving independent operators or independent contractors. In fact, the relationship between Defendant, on the one hand, and Plaintiff and the Class, on the other, constitutes a franchise relationship within the purview of the Illinois Franchise Disclosure Act, 815 ILCS 705/1, et seq. As alleged more fully below, however, Bimbo has failed to comply with the requirements of the Illinois Franchise Act throughout its relationship with Plaintiff and the Class, has breached the terms of its franchise agreement with Plaintiff and the Class, and, most recently, has wrongfully terminated Plaintiffs in violation of the Illinois Act. 1

2 Case: 1:11-cv Document #: 36 Filed: 01/12/12 Page 2 of 24 PageID #: Also, although Defendant claims that Plaintiff and the Plaintiff Class are independent operators or independent contractors, Defendant has in the past, and continues today, to exert control over Plaintiff and the Class to the same degree that it controls other company employees. At the same time, Defendant has failed to accord Plaintiff and the Class the rights to which employees are entitled under the Illinois Minimum Wage Act, 820 ILCS 105/4a and the Illinois Wage Payment and Collection Act, 820 ILCS 115/9 and has violated Illinois common law by virtue of illegal deductions taken from Plaintiffs wages. 3. The class consists of all individuals who sold and distributed Bimbo bakery products and are or were classified by Bimbo as independent operators/independent contractors, and with whom Defendant contracted to sell and distribute its bakery products within the state of Illinois, at any time during the applicable limitations period ( Class or Distributors ). 4. This action challenges the misclassification of these individuals and Defendant s denial to Plaintiff and the Class of the rights, obligations, privileges and benefits owed to them by Bimbo to the extent they have been treated as employees. This action also seeks to enforce the rights, obligations, privileges and benefits owed Plaintiff and the Class as franchisees, including the right to relief for Defendant s breaches of the franchise agreement and de facto wrongful termination of Plaintiff and the Class in violation of the Illinois Franchise Disclosure Act. Plaintiff also seeks remedies for unjust enrichment. 5. Finally, Plaintiffs seek declaratory relief pursuant to 28 U.S.C. 2201, et seq. As described more fully below, declaratory relief is proper because the parties and their interests are adverse, there is a real issue for determination, and the relief sought would finally settle and determine a part of the controversy giving rise to this proceeding. 2

3 Case: 1:11-cv Document #: 36 Filed: 01/12/12 Page 3 of 24 PageID #:287 PARTIES 6. Plaintiff Steven Bell is a resident of Illinois, who sells and distributes Bimbo bakery products in that state. In that position he negotiates the sale of Bimbo s bakery goods to local retailers, delivers those goods, stocks the products on the retailer s shelves, and removes stale product. He has worked as a designated Distributor since August of 1993, first for Best Foods Distribution Inc. and now for Bimbo. Plaintiff has routinely worked hours per week for which he does not receive overtime pay. He is misclassified as an independent contractor. He is, instead, both an employee and a franchisee under Illinois law. 7. Bimbo is a corporation organized and existing under the laws of the state of Delaware. Its principal place of business is 255 Business Center Dr., Horsham, PA Bimbo is a subsidiary of Bimbo Foods, Inc. ( Bimbo Foods ). The primary business of Bimbo Distribution is to deliver or distribute fresh baked goods to retailers. 8. Bimbo hires individuals such as Plaintiff, whom it classifies as independent contractors, to sell and distribute baked products throughout the United States under its trade name and trademarks. The brands consist of products available from Bimbo Foods, including Bimbo, Brownberry, Arnold, Marinela, Mrs Bairds, Orowheat, Boboli, Entenmann s, Francisco, Stroehmann, Tia Rosa, Freihofer s and Thomas. JURISDICTION AND VENUE 9. This Court has jurisdiction over the claims asserted in this action pursuant to 28 U.S.C and the Class Action Fairness Act of There are more than 100 members in the Class, and the amount in controversy, in the aggregate, exceeds $5 million exclusive of interest and costs. 3

4 Case: 1:11-cv Document #: 36 Filed: 01/12/12 Page 4 of 24 PageID #: Venue is proper in this Court under 28 U.S.C 1391(b)(1) and 1391(c) because Bimbo does business in Illinois. 12. Plaintiff brings this action on behalf of himself and an Illinois Class. CLASS ACTION ALLEGATIONS 13. Plaintiff brings this action as a class action pursuant to Rule 23 of the Federal Rules of Civil Procedure on behalf of an Class defined as follows: All individuals who, through a contract or agreement with Defendant or otherwise, sold or distributed Defendant s bakery products within the state of Illinois, and who are or were classified by Defendant as independent operators/independent contractors, at any time during the applicable limitations period. 14. Plaintiff reserves the right to redefine the Class prior to class certification. 15. Numerosity: Members of the Class are so numerous that their individual joinder is impracticable. The precise number of Class members is unknown to Plaintiff. However, upon information and belief, the Class numbers approximately distributors. The true number of Class members is likely known by Defendant, and thus, Class members may be notified of the pendency of this action by first class mail, electronic, and published notice. 16. Commonality: There are numerous questions of law and fact common to Plaintiff and the Class, and those questions predominate over any questions that may affect individual Class members, and include the following: a. whether Plaintiff and members of the Class have been misclassified as independent contractors and actually were or are employees of Defendant; b. whether Defendant has violated the rights of Plaintiff and members of the Class under the Illinois Minimum Wage Act, the Illinois Wage and Hour Act, or common law by failing to pay them overtime, making illegal deductions from their wages, 4

5 Case: 1:11-cv Document #: 36 Filed: 01/12/12 Page 5 of 24 PageID #:289 depriving them of other benefits of being employees and requiring them to pay Defendant s expenses. c. whether Plaintiff and members of the Class are entitled to injunctive and declaratory relief; d. whether Plaintiff and members of the Class are entitled to an accounting by Defendant of all hours worked on behalf of Defendant, all wages paid by Defendant, all deductions made from wages by Defendant and the basis of all such deductions; e. whether Defendant unlawfully failed to provide Plaintiff and members of the Class with workers compensation insurance benefits, unemployment insurance benefits, and other benefits provided to Defendant s employees, including but not limited to health insurance, vacation, and retirement. f. whether any alleged contract between Defendant and Plaintiff and Defendant and members of the Class should be rescinded as void as against public policy because Defendant induced them to incur substantial expenses as independent contractors while its policies, procedures and conduct in fact made them employees; g. whether the Defendant has been unjustly enriched at the expense of Plaintiff and members of the Class; h. whether the Distributor Agreement entered into by Plaintiff and members of the Class, as implemented and enforced, establishes a franchise relationship under the Illinois Franchise Disclosure Act; i. whether Defendant has violated the Illinois Franchise Disclosure Act by de facto terminating Plaintiff and members of the Class wrongfully and without cause as defined in the Franchise Act; 5

6 Case: 1:11-cv Document #: 36 Filed: 01/12/12 Page 6 of 24 PageID #:290 j. whether Defendant has otherwise breached its Distributor Agreement with Plaintiff and members of the Class by imposing expenses and obligations on Plaintiff and members of the Class not permitted under the Agreement. 17. Typicality: Plaintiff s claims based on his status as an employee are typical of the claims of other members of the Class. Plaintiff is informed and believes that, like other Distributors, he was misclassified as an independent contractor or independent operator, when he actually was a statutory and common law employee, and was therefore deprived of the protections and benefits of employee status under the law. Plaintiff had the same duties and responsibilities as other Class members, and was subject to the same policies and practices, and the same or substantially similar conditions of employment. Plaintiff s claims based on his status as a franchisee under Illinois franchise law are also typical of the claims of other members of the Class. Plaintiff s distribution agreement is similar in all material respects to those entered into by other Class members, his duties and responsibilities under the agreement are the same as those of other Class members, and the conduct that gives rise to Plaintiff s claims similarly impacted all other members of the Class. 18. Adequacy: The named Plaintiff will adequately represent the interests of the Class. He has been treated in the same manner as other Class Members by Defendant and has been damaged by this treatment in the same manner as other class Members by his exclusion from employee compensation programs, plans and agreements, and his payment of Defendant s expenses. Plaintiff is committed to vigorously prosecuting this action. He has retained counsel who are well-qualified to handle lawsuits of this type. Plaintiff has no interests that are adverse to those of the Class. 6

7 Case: 1:11-cv Document #: 36 Filed: 01/12/12 Page 7 of 24 PageID #: Predominance: This case should be certified as a class action because the common questions of law and fact concerning Defendant s liability predominate over any individual questions, including the amount of damages incurred by each person. 20. Superiority: A class action is the only realistic method available for the fair and efficient adjudication of the claims of the Class. The expense and burden of individual litigation makes it impracticable for members of the Class to seek redress individually for the wrongful conduct alleged in this Complaint. Were each individual member required to bring a separate lawsuit, the resulting multiplicity of proceedings would cause undue hardship and expense for the litigants and the Court, and create the risk of inconsistent rulings, which would be contrary to the interest of justice and equity. FACTS COMMON TO ALL CLAIMS 21. Plaintiff and members of the Class have each contracted with Defendant to sell and distribute bakery products produced by, and purchased from, Defendant to customers/outlets within a defined distribution area. 22. As a condition of operating as a vendor/distributor for Defendant and of marketing products bearing Defendant s trade names and trademarks, Plaintiff and members of the Class were required to purchase the right to operate within the specified territory through payment of a fee. 23. The Distributor Agreements executed by Plaintiff and the Class provide Distributors with the right to engage in the business of offering, selling, and distributing Defendant s bakery goods under a marketing plan or system which was prescribed in significant part by Defendant. 7

8 Case: 1:11-cv Document #: 36 Filed: 01/12/12 Page 8 of 24 PageID #: Defendant s Distributors obtain, through their Distributor Agreements, the right to service specified Outlets within a designated Sales Area, including convenience/drug stores, grocery stores, restaurants/institutions, vending machines and business entities distributing products for vending machines, and other specified retail markets and stores that sell products directly to retail customers and do not require weekend service. 25. While Plaintiff Bell s Distributor Agreement and upon information and belief the Agreements of other Class members reserved for Defendant the right to appoint another distributor or itself to distribute products to non-outlets in the designated Sales Area, Plaintiff and the Class understood that they owned exclusively the distribution rights with respect to the specified Outlets within their designated Sales Area. Plaintiff, and upon information and belief, other Class members would not have entered into the Distributor Agreement had those rights not been exclusive. 26. Plaintiff s success, and the success of other Class members, as Distributors of Defendant s bakery products is closely associated with, and, indeed, dependent upon, the value of Defendant s trademarks, trade names, advertising, and brand identity within the relevant sales territory. In the conduct of their business, Plaintiff and other members of the Class identify their business to customers primarily using Defendant s name, brand identity, trade name, and trademarks in a way that conveys to its customers that it is associated with Defendant. The association between Plaintiff and Defendant is underscored in the Distributor Agreement executed by Plaintiff Bell which specifically references Defendant s reputation for quality and value, and the strong consumer recognition and approval associated with its branded products as inducements for entering into the Agreement. 8

9 Case: 1:11-cv Document #: 36 Filed: 01/12/12 Page 9 of 24 PageID #: Consistent with the importance of Defendant s trade name and the brand identity of its product lines, the Distributor Agreement executed by Plaintiff Bell delineates certain specific responsibilities of Defendant and its Distributors related to the protection, preservation and further development of Defendant s brand identity. Those responsibilities include such things as agreeing to use best efforts to develop and maximize the sale of product to Outlets within the Sales Area, to service the Sales Area on a basis consistent with good industry practice, to maintain an adequate and fresh supply of Products in all Outlets, and to maintain proper service and delivery to all Outlets in the Sales Area requesting service. Upon information and belief, the Distributor Agreements executed by the Class members contain similar language. 28. As illustrated above, the Distributor Agreement signed by Bell, and, upon information and belief, the Agreements signed by other Class members, generally set forth standards to be met by the Distributor, but do not dictate specifically how these standards are to be achieved. This approach is consistent with Defendant s characterization of its Distributors in Plaintiff Bell s Distributor Agreement as independent contractors whose strong entrepreneurial motivation was valued and acknowledged by the Company. 29. In fact, however, Defendant does not accord its Distributors the independence and flexibility in the performance of their contractual responsibilities expected of an independent contractor relationship or consistent with the Distributor Agreement s purported guarantee of the Distributor s right to conduct, direct and operate its business activities. To the contrary, Defendant treats its Distributors as employees, although it deprives them of significant benefits to which employees are entitled as a matter of law. 9

10 Case: 1:11-cv Document #: 36 Filed: 01/12/12 Page 10 of 24 PageID #: Specifically, at all relevant times Defendant has retained or exercised the right to control the Distributors work in ways that go beyond the express obligations and responsibilities spelled out in the Distributor Agreements executed by Plaintiff and the Class. Among other examples of centralized, company-wide control, the Defendant: a. determines the outlets within a distribution area where the designated Bimbo products may be picked up; b. requires Distributors to purchase, operate and maintain expensive trucks for Defendant s exclusive benefit; c. dictates when product must be picked up from the warehouse; d. directs the days, times and locations for distributions; e. negotiates contracts with outlets, negotiates retail prices with merchants for its products, determines promotions, and thereby controls profit margin of Distributors; f. sets arbitrary schedules and levies fines on Distributors who do not comply; g. decides how much product a Distributor can deliver; h. requires Distributors to take more product than necessary or requested i. tells Distributors when to remove product from shelves; j. requires Distributors to offer promotions that end up causing the Distributors to lose money; k. directs Distributors in how to manage their routes; l. disciplines Distributors for not following its regulations; m. threatens Distributors with a claim of breach when they make a business decision that does not align with Defendant s purported rules ; 10

11 Case: 1:11-cv Document #: 36 Filed: 01/12/12 Page 11 of 24 PageID #:295 n. requires Distributors to complete paperwork using a company-determined hand-held computer device; o. requires Distributors to work so many hours on its behalf that they are extremely limited in having any time for additional distribution work; p. limits the Distributors ability to grow business; q. controls whether Distributors can buy or sell routes; r. removes sales areas or accounts from a Distributor s sales area at will; s. controls the Distributor s profit margins; t. handles customer complaints against the Distributor; u. withholds pay for certain specified expenses; v. requires purchase of insurance and numerous other purchases by the Distributor; w. unilaterally terminates the employment relationship; x. unilaterally varies the standards, guidelines, and operating procedures and requirements of the Distributor; y. subjects Distributors to training on their routes and engages in frequent route audits to check compliance with the route regardless of whether Distributors are satisfying their obligations under the Distributor Agreement; and z. exercises various other rights to exert control over its distributors. 31. Plaintiff and Class members were, or are, required to accept Defendant s conditions of employment, without any changes made to the terms, even though many of the terms and condition of employment imposed by Defendant are nowhere provided for in the Distributor Agreement. 11

12 Case: 1:11-cv Document #: 36 Filed: 01/12/12 Page 12 of 24 PageID #: Defendant maintains compensation and benefit plans, agreements and programs available to persons who are classified by Defendant as employees. Upon information and belief, the benefit plans include: medical, dental and vision coverage, health care and family care spending accounts, life and accidental death and dismemberment insurance, short and long term disability, vacation and holiday pay, a retirement 401(k) plan, and educational assistance program. 33. Plaintiff and members of the Class are and have been denied the rights and benefits of employment, including, but not limited to wages, overtime and the employee benefits described above. They also are and have been or were denied workers compensation and unemployment insurance, income tax withholding and contribution, meal, break and rest periods, and reimbursement of business expenses, including but not limited to, vehicle expenses. 34. Plaintiff and members of the Class are and have been excluded from the compensation plans and programs and benefit plans described above for all or a portion of their work for Defendant due to their misclassification as non-employees. 35. Plaintiff and members of the Class are, or have been, required to pay Defendant s operating expenses, including, but not limited to: a. All costs associated with providing a reliable delivery vehicle, including the cost of the vehicle itself, fuel, vehicle maintenance and repairs; b. Insurance coverage, including vehicle insurance and work accident insurance; c. the costs of product loss, product return, and product expiration; d. tax and bookkeeping costs and, e. the cost of hand-held computer necessary to transact business. 12

13 Case: 1:11-cv Document #: 36 Filed: 01/12/12 Page 13 of 24 PageID #: Defendant failed to pay Plaintiff and members of the Class the difference between what the outlet paid for the product and what it charged Distributors to purchase the product. 37. During the relevant time period, Plaintiff Bell worked in excess of 40 hours every week of the year; he typically worked from hours per week for which he was not paid overtime wages. Of the distributors that he observes and with whom he interacts, Plaintiff estimates that at least 80% similarly work more than 40 hours per week and are not paid overtime wages. 38. Defendant's accounting practices make it unreasonably difficult for Distributors to determine whether they have been properly compensated for their work or reimbursed for returns. 39. Defendant s mischaracterization of its distributors as independent contractors, the concealment and/or non-disclosure of the true nature of the relationship between Defendant and the distributors and the attendant deprivation of substantial rights and benefits of employment are part of an on-going unlawful practice by Defendant which this Court should enjoin. 40. Apart from Defendant s failure to pay its distributors employee benefits consistent with its treatment of its distributors as employees, Defendant has imposed on its distributors duties and responsibilities nowhere set forth in the Distributor Agreement and which are, in fact, inconsistent with that Agreement. To the extent Defendant purports to enforce obligations not contained in an Agreement which purports to set forth the entire contractual undertaking of the parties, Defendant s conduct is in violation of its Distributor Agreements. 13

14 Case: 1:11-cv Document #: 36 Filed: 01/12/12 Page 14 of 24 PageID #: Defendant s most glaring violation of its Distributor Agreements results from Defendant s acquisition of Sara Lee Corporation s North American bakery business in Upon information and belief, Sara Lee bakery products, including its sliced bread, compete directly with products manufactured by Defendant and distributed by Plaintiff and the Class to Outlets within their specified Sales Area. Further upon information and belief, Defendant is marketing the Sara Lee product line within Sales Areas assigned to Plaintiff and the Class under the Distribution Agreements previously executed by Plaintiff and the Class members. The Sara Lee product line, including specifically its breads, competes directly with products sold by Plaintiff and the Class. In undertaking to sell this competitive product line in direct competition with Plaintiff and the Class, Defendant has essentially voided, or terminated, the Distribution Agreements of Plaintiff and the Class, all of which are integrally premised on the assurance of an exclusive Sales Area and the right to sell exclusively particular products to specified Outlets within the designated Sales Area. COUNT I FAILURE TO PAY OVERTIME TO THE CLASS IN VIOLATION OF THE ILLINOIS MINIMUM WAGE LAWS ACT 42. Plaintiff re-alleges and incorporates by reference each and every allegation set forth in the preceding Paragraphs. follows: 43. The Illinois Minimum Wage Laws Act provides, in relevant part, as 820 ILCS 105/4a. No employer shall employ any of his employees for a workweek of more than 40 hours unless such employee receives compensation for his employment in excess of the hours above specified at a rate of not less than 1 ½ times the regular rate at which he is employed.. 14

15 Case: 1:11-cv Document #: 36 Filed: 01/12/12 Page 15 of 24 PageID #: Plaintiff and the other members of the Class, either regularly or from time to time, worked more than 40 hours per week, but did not receive overtime pay. 45. In committing the wrongful acts alleged to be in violation of the Illinois Minimum Wage Laws Act, Defendant acted willfully, not in good faith and without reasonable grounds in that they knowingly, deliberately and intentionally failed to pay overtime to Plaintiff and other members of the Class. 46. As a result of Defendant s misclassification of its Distributors and failure to pay overtime, Plaintiff and the other members of the Class were damaged in an amount to be proved at trial. 47. Therefore, Plaintiff demands that he and the other members of the Class be paid overtime compensation as required by the Illinois Minimum Wage Act for every hour of overtime worked in any work week for which they were not compensated, plus interest, damages, penalties, attorneys fees and any other remedies provided by law. COUNT II ILLEGAL DEDUCTIONS IN VIOLATION OF THE ILLINOIS WAGE PAYMENT AND COLLECTION ACT 48. Plaintiff re-alleges and incorporates by reference each and every allegation set forth in the preceding Paragraphs. 49. Plaintiff and the members of the Class are employees of Defendant as defined in 820 Ill. Comp. Stat. 115/2 and are not free from the control and direction of Defendant. 50. The Illinois Wage Payment and Collection Act 820 ILCS 115/9 limits deductions from employee wages to particular circumstances including being required by law, 15

16 Case: 1:11-cv Document #: 36 Filed: 01/12/12 Page 16 of 24 PageID #:300 to the benefit of the employee, or in response to a valid wage assignment or wage deduction order, but these deductions are only allowed after giving the employee written notice of the amount to be deducted. 51. Defendant has unlawfully withheld monies from the compensation earned by Plaintiff and the Class for business expenses of Defendant, including but not limited to, vehicle expenses, insurance claims, customer charges and communications equipment, in violation of Illinois law. Plaintiff the members of the Class have not expressly and freely given written consent to such deductions and these deductions are not made in response to a valid wage assignment or deduction order. 52. Defendant has withheld these funds unlawfully without providing advance notice to the Plaintiff and members of the Class of the amounts, reasons, or documentation to justify such deductions, and absent any lawfully sufficient reason for such conduct. 53. As a direct and proximate result of Defendant s conduct, Plaintiff and members of the Class have been deprived of compensation to which they were entitled, and have suffered substantial losses including monetary damage, pre-judgment interest, costs, and reasonable attorneys fees. 16

17 Case: 1:11-cv Document #: 36 Filed: 01/12/12 Page 17 of 24 PageID #:301 COUNT III RESCISSION 54. Plaintiff re-alleges and incorporates by reference each and every allegation set forth in the preceding paragraphs. 55. Despite any contractual terms characterizing the Distributors as Independent Contractors, the relationship of the Plaintiff and members of the Class with Defendant satisfies the test for employment, and not independent contractor status. Plaintiff and members of the Class therefore are wrongly classified as independent contractors. 56. As a result of their misclassification, the Distributors must pay substantial sums of their own money for work-related expenses, including but not limited to, the purchase or lease of vehicles meeting Company specifications, and all costs of operating, insuring and maintaining those vehicles. 57. The misclassification of the Distributors in the Agreement illegally and unfairly advantages Defendant, allowing it, among other things, to evade employment-related obligations, such as social security contributions, workers compensation coverage, and state disability and unemployment compensation as well as to illegally shift business expenses and the expense of workers compensation coverage and other expenses to the Plaintiff and members of the Class. 58. Any Agreement between Defendant and Plaintiff and each member of the Class is void as against public policy and therefore unenforceable to the extent the Agreement fails to recognize the employment status of the Plaintiff and the Class members, and wrongfully denies them the legally cognizable benefits of employment. 17

18 Case: 1:11-cv Document #: 36 Filed: 01/12/12 Page 18 of 24 PageID #: To the extent the Agreement between Defendant and Plaintiff and each Class member deprives them of benefits guaranteed them by Illinois law, the Agreement is an unconscionable contract of adhesion, which is unenforceable as contrary to the public interest, policy and law. 60. As a direct and proximate result of Defendant s conduct, Defendant has received substantial benefits to which it had no entitlement, at the expense of the Plaintiff and the Class, including lost profits, self-employment taxes, premiums for insurance to replace workers compensation and disability benefits, business expenses, compensation of replacement workers, and other expenses. 61. Plaintiff and the Class are entitled to rescission of any Agreement, and compensation for all of the business expenses they were illegally required by Defendant to bear, for all of the employment taxes, unemployment compensation and workers compensation the Defendant should have but did not pay, and Plaintiff and the Class are entitled to the quantum meruit value of their services as employees. COUNT IV UNJUST ENRICHMENT 62. Plaintiff re-alleges and incorporates by reference each and every allegation set forth in the preceding Paragraphs. 63. Plaintiff and the members of the Class are actually employees of Defendant, not independent contractors. 64. Plaintiff and members of the Class were required to pay operating expenses detailed in this Complaint which were properly the expenses of Defendant. 18

19 Case: 1:11-cv Document #: 36 Filed: 01/12/12 Page 19 of 24 PageID #: Defendant was unjustly enriched by requiring Plaintiff and the members of the Class to pay their operating expenses. 66. Because the alleged contracts between Plaintiff and members of the Class and Defendant are void as against public policy and constitute contracts of adhesion, the workrelated dealings between the Plaintiff, the class and Defendant are not subject to a contract. 67. The performance of work activities and payment of business expenses as described in this Complaint convey a benefit to Defendant, which it has knowingly received and retained without payment. 68. Defendant is not entitled to this benefit, and retaining it without paying for it would be unjust to Plaintiff and the other members of the Class. 69. Consequently, Plaintiff and the members of the Class are entitled to recover the reasonable value of the benefits conveyed to Defendant by the performance of the work activities as described in this Complaint. COUNT V WRONGFUL TERMINATION/ILLINOIS FRANCHISE DISCLOSURE ACT 70. Plaintiff re-alleges and incorporates by reference each and every allegation set forth in the preceding Paragraphs. 71. The Distributor Agreement entered into by Plaintiff and other members of the Class, as implemented by the parties, creates a franchise relationship within the meaning of the Illinois Franchise Disclosure Act, 815 ILCS 705/ Under Section 19 of the Illinois Franchise Disclosure Act, 815 ILCS 705/19, it is a violation of the Act for a franchisor to terminate a franchise of a franchised 19

20 Case: 1:11-cv Document #: 36 Filed: 01/12/12 Page 20 of 24 PageID #:304 business located in the State prior to the expiration of its term except for good cause as defined in the Act. 73. From the Distributor s perspective, the right to service exclusively specified Outlets within a designated Sales Area is the essence of the Distributor Agreement executed by Plaintiff Bell and, upon information and belief, all other members of the Class. Without this assurance, neither Plaintiff nor other members of the Class would have entered into a Distributor Agreement or paid the franchise fee required to obtain the right to sell and distribute Defendant s bakery goods within the Sales Area. 74. In the course of performing his Distributor Agreement with Defendant over many years, Plaintiff Bell, and, upon information and belief, other members of the Class have invested substantially in the development and growth of Defendant s brand identity within their designated Sales Areas. 75. Defendant s decision to market Sara Lee bakery goods, including specifically its sliced bread products, within the Sales Areas assigned pursuant to Distributor Agreements to Plaintiff and the Class seriously and materially and directly undermines its Distributors franchise investments, and, in so doing, abrogates the sine qua non of the Distributor Agreements it entered into with those Distributors. 76. Defendant s abrogation of an essential provision within the Distributor Agreement from the Distributor s perspective effectively terminates the franchise agreement, and does so without good cause as defined in the Illinois Franchise Disclosure Act. 77. Under Section 26 of the Illinois Franchise Disclosure Act, 815 ILCS 705/26, any person who terminates a franchise in violation of the Act shall be liable in a private civil action to the franchisee for damages caused thereby. Any franchisee in whose favor 20

21 Case: 1:11-cv Document #: 36 Filed: 01/12/12 Page 21 of 24 PageID #:305 judgment is entered in an action brought under the same Section is entitled to recover, in addition to damages, the costs of bringing suit including, without limitation, reasonable attorney s fees. 78. Plaintiff and the Class have sustained, and will continue to sustain, damages in an amount to be established at trial as a consequence of Defendant s effective termination of its franchise agreement with Plaintiff and the members of the Class. 79. In addition to, and wholly apart from, Defendant s substantial and material breach amounting to termination of the franchise relationship through the above-described decision to compete directly with its Distributors with respect to the sale and distribution of Sara Lee bakery goods, Defendant has materially breached and thus effectively terminated its franchise relationship with its Distributors by its repeated imposition and enforcement of rules and requirements which contravene and contradict the terms of the Distributor Agreements executed by Plaintiff and members of the Class. 80. Plaintiff and the members of the Class are entitled to damages caused by Defendant s undermining and effective termination of the franchise relationship in an amount to be proven at trial, together with costs and attorneys fees as provided by Section 26 of the Illinois Franchise Disclosure Act, 815 ILCS 705/26. COUNT VI BREACH OF CONTRACT 81. Plaintiff re-alleges and incorporates by reference each and every allegation set forth in the preceding Paragraphs. 82. Defendant has repeatedly imposed and enforced terms and conditions not contained in the Distributor Agreements executed by Plaintiff and the Class, and which go beyond any requirements reasonably required to protect Defendant s brand identity, including by 21

22 Case: 1:11-cv Document #: 36 Filed: 01/12/12 Page 22 of 24 PageID #:306 way of illustration, but not exhaustively, conduct falling within paragraph 30, subsections (c), (d), (e), (f), (g), (h), (j), (k), (m), (o), (r), (u), (w), (x) and (y). The imposition and enforcement of such terms and conditions constitutes a material breach of Defendant s contract with its Distributors. 83. Plaintiff and the Class have been damaged by Defendant s complete disregard and material breach of the terms of the Distributor Agreements and its imposition and enforcement of terms and conditions not contained in the Agreements. 84. Plaintiff and the Class are entitled to damages, including compensatory damages, proximately caused by Defendant s material breaches of its contract with its Distributors. PRAYER FOR RELIEF WHEREFORE, Plaintiff requests of this Court the following relief on behalf of himself, all members of the Class and all others similarly situated individuals: a. An Order certifying the Class, appointing Plaintiff as Class Representative, and appointing the undersigned counsel of record as Class Counsel; b. An Order for declaratory and injunctive relief determining that Plaintiff and members of the Class are employees within the meaning of the Illinois wage and hour statutes identified herein, and enjoining Defendants from pursuing the illegal policies, acts and practices described in this Complaint going forward; c. An Order declaring Defendant s conduct to have been willful, not in good faith and not based on reasonable grounds; d. An Order requiring Defendants to compensate Plaintiff and the other members of the Class for the reasonable value of the benefits wrongfully extracted by 22

23 Case: 1:11-cv Document #: 36 Filed: 01/12/12 Page 23 of 24 PageID #:307 Defendants from Plaintiffs in violation of the Illinois employee wage and hour statutes and common law as referenced in the Complaint; e. An Order reimbursing Plaintiff and the other members of the Class for expenditures, costs, benefits, losses and other damages suffered as a result of the conduct alleged in the Complaint, including specifically reimbursement of unpaid wages at overtime rates for all overtime work as described in this Complaint, pre-judgment interest as allowed by law, and the payment of any penalties or other amounts permitted under any applicable laws, statutes or regulations, including but not limited to liquidated damages, and punitive damages; f. An Order declaring that the relationship between Defendant and its Distributors constitutes a franchise relationship within the meaning of the Illinois Franchise Disclosure Act and that Defendant wrongfully terminated the franchise agreements entered into with Plaintiff and the other members of the Class by its conduct as described in the Complaint; g. An Order awarding Plaintiff and other members of the Class damages incurred as a result of Defendant s wrongful termination of the franchise relationship as described in the Complaint; h. An Order awarding Plaintiff and other members of the Class damages, including compensatory damages, incurred as a result of Defendant s material breaches of its Distribution Agreement as described in the Complaint; i. An Order awarding Plaintiff reasonable attorneys fees and costs; and j. An Order granting such other and further legal and equitable relief as this Court deems just and necessary. 23

24 Case: 1:11-cv Document #: 36 Filed: 01/12/12 Page 24 of 24 PageID #:308 JURY DEMAND Plaintiff, on behalf of himself and members of the Class, hereby demand a trial by jury on all issues so triable. Dated: January 12, 2012 s/michael A. Johnson MICHAEL A. JOHNSON 415 N. LaSalle, Suite 502 Chicago, IL (312) HALUNEN & ASSOCIATES s/clayton D Halunen Clayton D. Halunen MN # Susan M. Coler MN # South Eighth Street 1650 IDS Center Minneapolis, MN Telephone: (612) Fax: (612) ATTORNEYS FOR NAMED PLAINTIFF 24