Chicago School Reform Bd. of Trustees v. Substance

• Decision Date: 04 January 2000
• Docket Number: No. 99 C 440.,99 C 440.
• Citation: Chicago School Reform Bd. of Trustees v. Substance, 79 F.Supp.2d 919 (N.D. Ill. 2000)
• Parties: CHICAGO SCHOOL REFORM BOARD OF TRUSTEES, an Illinois Municipal Corporation, Plaintiff, v. SUBSTANCE, INC., an Illinois Corporation; George N. Schmidt, individually; Jane or John Does (One through Twenty), individually, and Volumes XXIV, Nos. 5 and 6 of Substance (January-February, 1999), in rem, Defendants. Substance, Inc., an Illinois Corporation; and George N. Schmidt, Third-Party Plaintiffs, v. Paul Vallas, Chief Executive Officer, Chicago Public Schools, in his official capacity, Third-Party Defendant.
• Court: U.S. District Court — Northern District of Illinois

79 F.Supp.2d 919

CHICAGO SCHOOL REFORM BOARD OF TRUSTEES, an Illinois Municipal Corporation, Plaintiff, v.SUBSTANCE, INC., an Illinois Corporation; George N. Schmidt, individually; Jane or John Does (One through Twenty), individually, and Volumes XXIV, Nos. 5 and 6 of Substance (January-February, 1999), in rem, Defendants.

Substance, Inc., an Illinois Corporation; and George N. Schmidt, Third-Party Plaintiffs, v.Paul Vallas, ChiefExecutive Officer, Chicago Public Schools, in his official capacity, Third-Party Defendant.

No. 99 C 440.

United States District Court, N.D. Illinois, Eastern Division.

January 4, 2000.

Patricia Anne Felch, Laura J. DeMoor, Gilberto Hernandez, Banner & Witcoff, Ltd., Chicago, IL, Joshua Lee Smith, Peterson & Ross, Chicago, IL, Edmund Sebree McAlister, Sachnoff & Weaver, Ltd., Chicago, IL, for Chicago School Reform Board of Trustees, an Illinois municipal corporation, plaintiff.

Jeffrey Charles Boulden, Despres Schwartz & Geoghegan, Chicago, IL, Alan Barinholtz, Barinholtz & Gault, Chicago, IL, Mark H. Barinholtz, Chicago, IL, for defendants.

Laura J. DeMoor, Gilberto Hernandez, Banner & Witcoff, Ltd., Chicago, IL, for Paul Vallas, third-party defendant.

OPINION and ORDER

NORGLE, District Judge.

PlaintiffChicago School Reform Board of Trustees and Third-Party DefendantPaul Vallas move to dismiss Defendants' Counterclaim and Third-Party Complaint and to strike three of Defendants' Affirmative Defenses.For the following reasons, the court grants the motion.

I.Background¹

The Illinois Common Schools Act empowers the Plaintiff in this case, the Chicago School Reform Board of Trustees("the Board"), to develop and administer educational level tests.See105 ILCS §§ 5/34-2.4,5/34-3.3.Pursuant to this authority, the Board developed the 1998 Chicago Academic Standards Examinations ("CASE" or "tests").The Board designed the tests to assess the educational levels of Chicago Public High School freshman and sophomore students, and to calculate up to 20% of a student's grade in various academic subjects.The Board expected to use the tests, 22 in all, in 1999 and in future years.(SeeAm.Compl. ¶ 13.)

According to the Board, the tests cost approximately $1.3 million to develop.Of this cost, the John D. and Catherine T. MacArthur Foundation contributed $500,000 from a fund that was "dedicated to pay for the professional testing design services of the Center for Research on Evaluation, Standards, and Student Testing [and] to assist [the Board] in designing CASE."(Id.¶ 10.)Illinois taxpayers funded the remaining $800,000.(Seeid.)

To protect its interest in the tests, the Board included a copyright notice on each of the 22 tests.That notice reads:

© 1998Chicago School Reform Board of Trustees

(Answer¶ 17.)Each of the tests also contains the following restriction:

This work may not be reproduced in any form or by any means (electronic, including photography, recording, or any information storage and retrieval) without prior permission in writing from the Chicago Public Schools.

(Id.)Additionally, the Board implemented the "Chicago Public Schools Test Security Guidelines," which required the Guidelines to be distributed to all staff members who handle test materials.These Guidelines, as well as the CASE General Administration Policies, expressly prohibit copying the CASE examinations.

The Board administered the tests to students from January 11, 1999 through January 15, 1999.(Id.)DefendantGeorge Schmidt("Schmidt"), a Chicago Public School teacher and editor of Defendant newspaper Substance, Inc.("Substance"),² helped administer the January 1999 test for freshman English.(Seeid.¶ 22.)Prior to administering the test, Schmidt received a copy of a booklet entitled "Instructions for Administering the CASE Constructed Response and Multiple Choice Examination."(Seeid.¶ R4.)The Instructions state in large, bold type: "According to the Test Security Guidelines, CASE material may not be duplicated."(Id.¶ 25.)

During the week of January 11, 1999, Schmidt asked Bowen High School's CASE coordinator, Judy Wiatrowski, for copies of an unspecified number of tests for subject areas other than freshman English.Wiatrowski provided him the requested copies, and Schmidt returned them to her shortly thereafter.However, in their Counterclaim and Third Party Complaint (collectively "Counterclaims"), Schmidt and Substance("Defendants") maintain that "[i]n January 1999, [they] received, through anonymous sources, copies of some of the [CASE] pilot B Examinations."(Countercl.¶ 13.)³Defendants assert that an anonymous source left one test on Substance's doorstep, although the court notes that Defendants share the same address.(Seeid.)Defendants also claim that several other tests were delivered in plain envelopes to Substance's mailbox.(Seeid.)On or before January 21, 1999, Schmidt published, in the January-February, 1999 issue of Substance(VolumesXXIV, Nos. 5 and 6), entire copies of five of the tests and a substantial portion of a sixth.(SeeAnswer¶ 27.)In two of the test reproductions, Schmidt included the copyright notice and the "no reproduction" restriction.(Seeid.¶ 28.)As for the other four reproductions, Schmidt deleted the copyright notice and the "no reproduction" restriction.(Seeid.)In the same issue of Substance that included copies of the tests, Schmidt criticized the tests.

On January 26, 1999, the Board filed a verified Complaint against Schmidt, Substance, Jane or John Does (One through Twenty), and VolumesXXIV, Nos. 5 and 6 of Substance(January-February, 1999), in rem.Also on January 26, 1999, the Board moved for a Temporary Restraining Order and Writ of Seizure to restrain Defendants from copying or disseminating any of the CASE tests in any format, and to give up for seizure any and all copies of Substance VolumeXXIV, Nos. 5-6(January-February 1999).The court granted the Board's motion on the same day.On February 1, 1999, the Board sought to extend the temporary restraining order.The court denied the Board's request.

On February 5, 1999, the Board filed an Amended Verified Complaint.Count I alleges that Defendants published the Board's copyrighted literary works, see17 U.S.C. § 102(a)(1), and thus violated the United States Copyright Act ("Copyright Act"), 17 U.S.C. §§ 101 et seq., and Count II claims that Defendants misappropriated trade secrets in violation of Illinois' trade secret statutes, 765 ILCS §§ 1065/1 et seq.(SeeAm.Compl.at 8-14.)The Board maintains that by publishing the tests, Defendants divulged confidential materials and destroyed the Board's future use of the tests.The Board asserts that developing more tests to replace the now-unusable tests will cost in excess of $1,000,000.(Seeid.¶ 49.)The Board asks the court(1) to enjoin Defendants from continuing to publish and deliver issues of Substance which contain reproductions of the tests; (2) to order the seizure and destruction of all copies of Substance in which the tests were reproduced; (3) to report the conduct of Defendants and other "Teacher-Publishers" to the United States Attorney for the Northern District of Illinois, Eastern Division, pursuant to section 506 of the Copyright Act;(4) to award the Board damages, attorneys fees and costs, pursuant to the Copyright Act;(5) to award the Board damages, punitive damages, attorneys fees and costs, and prejudgment interest pursuant to the Illinois Trade Secrets Act; and (6) for other relief the court deems appropriate.(Seeid. at 14-18.)

On February 23, 1999, the court entered the parties' agreed protective order, requiring Defendants to deliver all copies of the tests and all copies of Substance that contained reproductions of the tests to the Board.(SeeAgreed Protective Order¶ 12.)Defendants also agreed to make no new copies of the tests until further court order.(Seeid.¶ 13.)In the meantime, the Board transferred Schmidt from his teaching position to an administrative position, and then, on March 5, 1999, suspended him without pay pending an Illinois State Board of Education hearing regarding his termination.(SeeCounterclaims¶ 16.)

On April 2, 1999, Defendants answered the Amended Verified Complaint.In their Answer, Defendants assert the following affirmative defenses: (1) Counts I and II fail to allege valid claims under Federal Rule of Civil Procedure 12(b)(6);(2)Defendants' reproductions of the tests are privileged under the doctrine of fair use, 17 U.S.C. § 107;(3)Defendants' reproductions of the tests are privileged under the First and Fourteenth Amendments;(4)Defendants' reproductions of the tests are privileged by the "Free Speech and Press provisions of applicable state constitutions"; (5) the Board's action is barred by estoppel; (6) the Board's action is barred by waiver; and (7) the Board's action is barred by laches.(SeeAnswerat 26.)

In the same pleading, Defendants filed their Counterclaims, pursuant to 42 U.S.C. § 1983.SeeCounterclaims reproducedinfra p. 34.In those Counterclaims, Defendants allege that the Board's participation in the decision-making process regarding Schmidt's employment and its filing of the instant suit violates Defendants' substantive due process rights under the First and Fourteenth Amendments.⁴(SeeCountercl.¶ 19-21.)Additionally, Defendants add Paul Vallas, Chief Executive Officer of the Chicago Public Schools, in his official capacity, as a third-party defendant.(SeeCountercl.¶ 3.)Defendants ask the court to: (1) declare the actions of the Board and Vallas violative of the First Amendment;(2) enjoin the Board and Vallas from taking future discriminatory employment action against Schmidt; (3) return Schmidt to his job as a Chicago Public School teacher; and (4) award Schmidt punitive damages of over $1,000,000.(SeeCountercl.at 31.)

On May 10, 1999, the Board and Vallas moved to dismiss Defendants' Counterclaim...