Chicago United Industries, Ltd. v. City of Chicago

• Decision Date: 25 April 2006
• Docket Number: No. 05-4092.,05-4092.
• Citation: 445 F.3d 940
• Parties: CHICAGO UNITED INDUSTRIES, LTD., et al., Plaintiffs-Appellees, v. CITY OF CHICAGO, et al., Defendants-Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

445 F.3d 940

CHICAGO UNITED INDUSTRIES, LTD., et al., Plaintiffs-Appellees, v. CITY OF CHICAGO, et al., Defendants-Appellants.

No. 05-4092.

United States Court of Appeals, Seventh Circuit.

Argued March 28, 2006.

Decided April 25, 2006.

Mark A. LaRose (argued), LaRose & Bosco, Chicago, IL, for Plaintiffs-Appellees.

Christopher S. Norborg (argued), Office of the Corporation Counsel Appeals Division, Chicago, IL, for Defendants-Appellants.

Before POSNER, EASTERBROOK, and WILLIAMS, Circuit Judges.

POSNER, Circuit Judge.

This appeal presents jurisdictional issues, specifically regarding temporary restraining orders and preliminary injunctions, arising from a dispute between the City of Chicago and one of its contractors, Chicago United Industries. (The other parties to the appeal can be ignored.) Believing that CUI had billed the City for goods that the contractor knew it had not delivered, the City, after months of wrangling, notified CUI that it proposed to cancel all CUI's contracts with the City and bar it ("debarment," the parties call this) from further contracts with the City. The company was given 30 days to respond to the proposal; it responded; and the City then terminated the contracts and instituted a three-year bar, whereupon CUI filed this suit in the federal district court in Chicago. The suit sought injunctive relief on the ground that the City had violated the due process clause of the Fourteenth Amendment by failing to give CUI a predeprivation hearing. CUI moved for a preliminary injunction, and (until it was granted) a temporary restraining order, to prevent the cancellation and debarment.

The court issued the TRO on August 31, 2005, the day after CUI had moved for it, saying that "plaintiffs have no adequate remedy at law as there is no appeal provision of the debarment at the City level, and any further administrative appeal would be an inadequate opportunity to present the constitutional matters at issue in this litigation." The court added that the plaintiffs would "suffer irreparable harm if the temporary restraining order is not granted since continuation of the debarment, even for a short period of time, will materially impair their business and their ability to do business." The TRO stated that the defendants were "temporarily restrained and enjoined from 1) enforcing the debarment of [CUI] 2) from canceling any existing contracts that CUI has with the City of Chicago and 3) from conducting any further decertification or administrative hearing regarding, related to or based upon the issue of debarment pending further action of this Court."

The order was to remain in force for 10 days, but at the end of that period the court renewed it for another 10 days. During the extension period, the City notified CUI that it was withdrawing its cancellation of CUI's contracts with the City and rescinding the debarment order, though without prejudice to seeking both cancellation and debarment in the future based on the same alleged fraudulent billing. On the basis of these representations, the City moved to dismiss CUI's lawsuit as moot. The district court, troubled by the "without prejudice" qualification, denied the motion. The temporary restraining order was then extended by agreement of the parties for another month, to October 31.

During this further extension period, CUI asked the district court to modify the order to prevent the City from circumventing it. Also on the table was the need to set a date for the hearing on CUI's motion for a preliminary injunction. Because a temporary restraining order cannot remain in force for more than 20 days without the consent of the parties, Fed. R.Civ.P. 65(b), the district court offered to hold the hearing on November 7. The City asked for an extension. The district court offered to extend the date to November 21, provided the City agreed to an extension of the restraining order for another month, to November 28. The City agreed. But before either date arrived, the court modified the TRO, essentially as requested by CUI, by adding to its previous terms that the City was also restrained "from [1] awarding any of the following contracts [ten are listed] to any company other than Chicago United if it is the lowest responsive bidder, or using its emergency purchasing power to circumvent the award to Chicago United and pay a higher price to some other company, unless and until the City provides this Court with a showing that awarding the contract to or purchasing such goods from such other company is in accordance with the status quo ante bellum ... and ... [2] imposing any restrictions on communications between Chicago United and employees of the City with the exception that Chicago United and its attorneys may not speak directly with any employees of the City regarding matters directly related to this action."

A temporary restraining order is not appealable, despite its close resemblance to a preliminary injunction, which is appealable. 28 U.S.C. § 1292(a)(1). But if kept in force by the district court for more than 20 days without the consent of the parties, the order is deemed a preliminary injunction and so is appealable, since otherwise a district court could by the simple expedient of extending the TRO circumvent (to use CUI's favorite word) the right of appeal granted by section 1292(a)(1). Sampson v. Murray, 415 U.S. 61, 86-88, 94 S.Ct. 937, 39 L.Ed.2d 166 (1974); United Airlines, Inc. v. U.S. Bank N.A., 406 F.3d 918, 923 (7th Cir.2005); United States v. Board of Education of City of Chicago, 11 F.3d 668, 671-72 (7th Cir.1993); SEC v. Black, 163 F.3d 188, 194 (3d Cir.1998). CUI argues that the City consented to the final extension and therefore cannot appeal.

The City could have elided the issue of consent by waiting until November 29, the day after the expiration of the period of extension that the parties had agreed upon, to appeal. For at that point there would have been no doubt that the temporary restraining order was appealable. Instead the City filed its notice of appeal during the extension period. The preliminary-injunction hearing had been set for November 21, and evidently the City didn't want to participate in such a hearing. Had it done so, and a preliminary injunction been issued, the City could, again uncontroversially, have appealed. When the City foreswore the hearing, the district court extended the TRO indefinitely — thus unequivocally converting it into an appealable preliminary injunction — without the City's agreement. Again the City could have appealed uncontroversially. Furthermore, although the only notice of appeal that the City filed preceded the expiration of the TRO on November 28, Rule 4(a)(2) of the Federal Rules of Appellate Procedure provides that "a notice of appeal filed after the court announces a decision or order — but before the entry of the judgment or order — is treated as filed on the date of and after the entry," see also Otis v. Chicago, 29 F.3d 1159, 1166 (7th Cir. 1994) (en banc), and that is a plausible description of what happened here. The TRO "announced" the preliminary relief that became an appealable order by the passage of time, bringing the case within our jurisdiction after November 28, 2005, whether or not the TRO was modified.

In any event it is apparent that the City did not consent to the extension of the TRO that expired on that date. It consented to the extension of the existing TRO, not to the entry of a modified order the text of which it had not seen because the district judge had not yet drafted it. The judge had told the City that he would accept a modified order if the parties could agree to one, and if not he would review competing draft orders submitted by the parties and decide which one to adopt. But he entered the modified order right after CUI submitted its draft order and before the City submitted its draft order.

CUI ripostes that there was no "modification," that all that the new provisions that we quoted did was to particularize the original order, which had forbidden cancellation and debarment, so that in consenting to the extension of the original order the City should be taken to have consented to the additional provisions. That argument is frivolous. The additional provisions are vague, open-ended, and onerous, enjoining as they do conduct that goes far beyond cancellation and debarment. The City cannot be deemed to have consented to them.

In insisting that there was no modification, CUI further argues that the new provisions were intended, like the original TRO, merely to maintain the "status quo ante bellum" ("bellum" being Latin for "war"). That temporary restraining orders and preliminary injunctions are intended to "preserve the status quo" is indeed a common formula, e.g., Ellis v. Sheahan, 412 F.3d 754, 757 (7th Cir.2005), but it is much, and rightly, criticized. E.g., Praefke Auto Electric & Battery Co., Inc. v. Tecumseh Products Co., 255 F.3d 460, 464 (7th Cir.2001); O Centro Espirita Beneficiente Uniao Do Vegetal v. Ashcroft, 389 F.3d 973, 1001-04 (10th Cir.2004) (en banc) (separate opinion of Seymour, J.), affirmed on other grounds, ___ U.S. ___, 126 S.Ct. 1211, 163 L.Ed.2d 1017 (2006); United Food & Commercial Workers Union, Local 1099 v. Southwest Ohio Regional Transit Authority, 163 F.3d 341, 348 (6th Cir.1998), Rum Creek Coal Sales, Inc. v. Caperton, 926 F.2d 353, 359-60 (4th Cir.1991); Ortho Pharmaceutical Corp. v. Amgen, Inc., 882 F.2d 806, 813-14 (3d Cir.1989); Canal Authority of State of Fla. v. Callaway, 489 F.2d 567, 576 (5th Cir. 1974); Thomas R. Lee, "Preliminary Injunctions and the Status Quo," 58 Wash. & Lee L.Rev. 109, 157-66 (2001).

Preliminary relief is properly sought only to avert irreparable harm to the moving party. In re Aimster Copyright Litigation, 334 F.3d 643, 655-56 (7th Cir.2003); Jones v. InfoCure Corp., 310 F.3d 529, 534-35 (7th Cir.2002); Rum Creek Coal Sales, Inc. v. Caperton, supra, 926 F.2d at 359-60....