Linda Constr. Inc. v. City of Chi., Case No. 15 C 8714

• Decision Date: 15 March 2016
• Docket Number: Case No. 15 C 8714
• Parties: LINDA CONSTRUCTION INC., LINDA McGEE and JESSE McGEE, Plaintiffs, v. CITY OF CHICAGO, et al., Defendants.
• Court: U.S. District Court — Northern District of Illinois

LINDA CONSTRUCTION INC.,LINDA McGEE and JESSE McGEE, Plaintiffs, v. CITY OF CHICAGO, et al., Defendants.

Case No. 15 C 8714

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

March 15, 2016

Judge Harry D. Leinenweber

MEMORANDUM OPINION AND ORDER

Before the Court are three Motions to Dismiss filed by Defendants Seng LLC ("Seng") and John Doe (collectively the "the Seng Defendants"); Defendants City of Chicago ("the City") and Jamie L. Rhee ("CPO Rhee") (collectively "the City Defendants"); and Defendants Republic Services Inc. ("Republic"), Allied Waste Transportation Inc. ("Allied"), Mark Riley, and Brian Holcomb (collectively "the Republic Defendants") [ECF Nos. 28, 32, 33].

In addition, the Court considers Plaintiffs' Motion for Preliminary Injunction, Motion for Evidentiary Hearing, and Motion for Leave to Present New Evidence [ECF Nos. 17, 56, 60], as well as the Seng Defendants' Motion for Sanctions [ECF No. 42].

For the reasons stated herein, the Motions to Dismiss are granted. The Motion for Preliminary Injunction, Motion for Evidentiary Hearing, and Motion for Leave to Present New Evidence are, in turn, denied as moot. The Motion for Sanctions is also denied.

I. BACKGROUND

The following facts are contained in Plaintiffs' Complaint and documents attached to, referenced in, and critical to, the Complaint. Geinosky v. City of Chicago, 675 F.3d 743, 745 n.1 (7th Cir. 2012). Because Plaintiffs chose not to provide the Court with a statement of the relevant facts in their responsive briefing, the following is the Court's best attempt to cobble together from the disjointed allegations in the Complaint the facts pertaining to the Motions presently before the Court.

On November 9, 2009, the City, through its Department of Procurement Services ("DPS"), advertised for bids on a contract for "Operation and Maintenance of City-Owned Materials Recycling and Recovery Facilities" (the "MRRF contract"). In its solicitation for bids for the MRFF contract the City specified a minimum goal participation of 16.9 percent Minority-Owned Business Enterprises ("MBEs") and 4.5 percent Women-Owned Business Enterprises ("WBEs"). The winning contractor was required to list the utilization percentages of MBEs and WBEs in its bid proposal to the City.

On or about December 11, 2009, Defendant Allied submitted its sealed bid to provide handling, treatment, storage, transportation, hauling, and disposal of Municipal Solid Wastefor a thirty-six month period from March 9, 2010 through February 14, 2013 ("Contract No. 21472"). In the spring of 2010, the City accepted Allied's bid and awarded Contract No. 21472 to Allied. (Compl. Ex. A; City Def.'s Mem. Ex. A, ECF No. 32-1).

Plaintiffs allege that Contract No. 21472 between Allied and the City "required [Allied] to enter into a 'joint venture' with a minority owned contractor"; that Plaintiff Linda Construction Inc. ("LCI") — an African-American owned business — was that contractor; that the contract gave LCI a three-year probationary period to prove it was capable of doing the required work; and that if LCI succeeded during the probationary period it would be eligible to bid for the City contract as prime contractor. After thoroughly examining Contract No. 21472, the Court is unable to find any of these allegations to be true. In ruling on a 12(b)(6) motion, "[w]here an exhibit and the complaint conflict, the exhibit typically controls." Forrest v. Universal Sav. Bank, F.A., 507 F.3d 540, 542 (7th Cir. 2007). Therefore, the Court "is not bound by" LCI's characterization of the exhibit and "may independently examine and form its own opinions about the document." Id.

From the terms of Contract No. 21472, it appears that Allied identified LCI as one of several MBE entities that it would serve as a subcontractor if Allied won the bid with theCity. LCI was identified as a certified MBE subcontractor that would provide Hauling Services to Allied, as prime contractor, and be rewarded equivalent to 3 percent of all net payments made to Allied under the contract. Moreover, LCI was required to "enter into a formal written agreement for the above work with [Allied] as Prime Contractor, conditioned upon [Allied's] execution of a written contract with the City of Chicago. . . ." On March 19, 2010, after Allied was awarded Contract No. 21472, LCI indeed entered into a formal written subcontractor agreement with Allied. But that contract is not attached to the Complaint, nor do Plaintiffs purport to base their claims on the terms of that agreement.

Instead, Plaintiffs center their claims on Contract No. 21472, the contract between Allied and the City. They allege that the City and Allied were not happy that LCI was awarded the MBE contract, and therefore set about doing "whatever was possible to cause [LCI] to fail . . . so that [LCI] would not become eligible to bid for any [future] contracts." (Compl. ¶ 5). Plaintiffs allege that Allied and its parent company, Republic, with the help and participation of the City, recruited other named Defendants to treat LCI "differently than they treated white owned contractors" and "to ensure that LCI failed . . . by obstructing LCI's operations", (id. at ¶ 6), and rendering it insolvent. (Id. at ¶ 50). Insupport of this accusation, Plaintiffs point to the following occurrences:

1. Republic and Allied — who operated the transfer station — refused to load LCI's trucks and intentionally delayed the loading process to ensure LCI was unable to complete the required number of daily loads. (Id. at ¶¶ 35, 42).

2. Republic instructed Local Union 731 not to allow LCI employees to sign membership applications, and then Allied attempted to terminate its agreement with LCI because LCI employees were not members of the Union. (Id. at ¶ 35).

3. Even after resolving this dispute with the Union, LCI was prohibited from bringing any disciplinary actions against its employees for any reason. Specifically, LCI contends that the Union leaders encouraged LCI employees to misbehave and obstruct LCI's operations, and then consistently sided with LCI's employees despite their obvious misconduct. (Id. at ¶¶ 36, 37). LCI filed a grievance with the Union to no avail. (Id. at ¶ 36).

4. The Union filed frivolous lawsuits against LCI for unpaid dues, and then reportedly threatened LCI's attorneys retained to defend against the suits. (Id. at ¶ 39).

5. CPO Rhee paid Republic and Allied without obtaining signed approvals from LCI, in violation of the City's express policy. (Id. at ¶ 41).

6. Brian Holcomb, of Allied, promised to pay LCI $800,000 towards a $1.6 million invoice, but failed to do so. (Id. at ¶ 43). Later, Holcomb told LCI that Allied could only pay $400,000 towards the invoice. (Id.). But to date, no funds have been paid. (Id.).

7. LCI brought the aforementioned concerns to the attention of CPO Rhee (in fact, they made at least 24 complaints in 16 months), but she did nothing to remedy the situation. (Id. at ¶¶ 42, 44, 47).

8. On March 29, 2012, Allied attempted unsuccessfully to terminate LCI by claiming lack of performance. (Id. at ¶ 45).

9. Allied allowed TC Transportation, a white-owned company, to utilize sites that were contractually exclusive to LCI. (Id. at ¶ 46).

10. In December 2013, Republic refused to pay LCI on a $1.4 million invoice because it claimed LCI had failed to meet its daily load requirement (it is unclear from the pleadings whether this invoice is different than the $1.6 million invoice discussed previously). (Id. at ¶ 48).

11. Seng, a creditor of LCI, claimed it was owed money and seized LCI's trucks. LCI contends that it had already paid Seng and therefore Seng's claim against it was false and the seizure of the trucks was improper. (Id. at ¶ 50).

12. In March 2014, Allied accused LCI of violating the terms of its agreement by allowing garbage to build up at the transfer station, but withdrew the allegation once it was disclosed that the garbage build-up was due to Allied shutting down the transfer station for a day and a half. (Id. at ¶ 52).

Ultimately, on April 7, 2015, Allied terminated its agreement with LCI claiming that LCI was insolvent and unable to perform at the required level. (Id. at ¶ 53). Plaintiffs contest these allegations and contend that their circumstances were the product of Defendants' actions. As a result of the foregoing conduct, LCI was unable to bid on the November City contracts. (Id. at ¶ 54).

Plaintiffs filed the instant suit raising five counts against the various Defendants: violation of 42 U.S.C. § 1981 (Count I); violation of 42 U.S.C. § 2000e (Count II); violationof 42 U.S.C. § 1983 (Count III); violation of 42 U.S.C. § 1985(3) (Count IV); and tortious interference with contract (Count VI). Plaintiffs also allege that the City, Republic and Allied committed breach of contract (Count V). The Seng Defendants, the City Defendants, and the Republic Defendants now bring three separate Motions to Dismiss. The City and Republic Defendants both argue that Plaintiffs Linda and Jesse McGee lack standing to maintain any of the alleged causes of action. The Court will address this argument first. The Court will then discuss the viability of each of Plaintiffs' claims in light of the numerous interrelated and independent reasons for dismissal cited by Defendants.

II. LEGAL STANDARD

A motion to dismiss for failure to state a claim under Rule 12(b)(6) challenges the legal sufficiency of a complaint. Hallinan v. Fraternal Order of Chi. Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009). A complaint must contain "enough facts to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). When considering a Rule 12(b)(6) motion to dismiss, a court must accept the plaintiff's allegations as true, and view them in the light most favorable to the plaintiff. Meriwether v. Faulkner, 821 F.2d 408, 410 (7th Cir. 1987). A court need not accept as true "legal conclusions, or...