Martin v. Haling
| Decision Date | 25 October 2022 |
| Docket Number | 21 C 5494 |
| Parties | SUZY MARTIN, Plaintiff, v. SUSAN HALING, MICHELLE CASEY, DONALD EDWARDS, CHICAGO HOUSING AUTHORITY, MARK LISCHKA, MICHAEL MORAN, BOARD OF EDUCATION OF CITY OF CHICAGO, JONATHAN MAPLES, and DOES 1-10, Defendants. |
| Court | U.S. District Court — Northern District of Illinois |
Gary Feinerman Judge.
Suzy Martin brought this suit, alleging violations of her Fourteenth Amendment procedural due process rights, against Susan Haling, Michelle Casey, and Donald Edwards in their official capacities as Illinois state officials; the Chicago Housing Authority (“CHA”) and two of its employees, Mark Lischka and Michael Moran, in their official and individual capacities; and the Board of Education of the City of Chicago and its employee, Jonathan Maples, in his official and individual capacity. Doc. 1. Defendants moved under Civil Rules 12(b)(1) and 12(b)(6) to dismiss the original complaint, and the court denied the Rule 12(b)(1) motions, granted the Rule 12(b)(6) motions, and allowed Martin to replead. Docs. 64-65 (reported at 2022 WL 1228233 (N.D. Ill. Apr. 26, 2022)). Martin filed an amended complaint. Doc. 68. Edwards and Haling again move under Rule 12(b)(1) to dismiss for lack of subject matter jurisdiction and all Defendants again move under Rule 12(b)(6) to dismiss for failure to state a claim. Docs. 70, 72, 74, 76, 77, 79. The Rule 12(b)(1) motions are denied, the Rule 12(b)(6) motions are granted, and the case is dismissed with prejudice.
In resolving a Rule 12(b)(1) motion asserting a facial challenge to subject matter jurisdiction, as in resolving a Rule 12(b)(6) motion, the court assumes the truth of the operative complaint's well-pleaded factual allegations, but not its legal conclusions. See Zahn v. N. Am. Power & Gas LLC, 815 F.3d 1082, 1087 (7th Cir. 2016) (Rule 12(b)(6)); Silha v. ACT, Inc., 807 F.3d 169, 173 (7th Cir. 2015) (Rule 12(b)(1)). The court must also consider “documents attached to the complaint, documents that are critical to the complaint and referred to in it, and information that is subject to proper judicial notice,” along with additional facts set forth in Martin's brief opposing dismissal, so long as those additional facts “are consistent with the pleadings.” Phillips v. Prudential Ins. Co. of Am., 714 F.3d 1017, 1020 (7th Cir. 2013) (internal quotation marks omitted). The facts are set forth as favorably to Martin as those materials allow. See Domanus v. Locke Lord, LLP, 847 F.3d 469, 478-79 (7th Cir. 2017). In setting forth the facts at this stage the court does not vouch for their “objective truth.” Goldberg v. United States, 881 F.3d 529, 531 (7th Cir. 2018).
Martin is the owner and president of Smart Elevators Co., an elevator service and repair company. Doc. 68 at ¶¶ 11, 25. From October 2010 through March 2016, Smart Elevators provided elevator and escalator services to the University of Illinois Chicago (“UIC”). Id. at ¶¶ 28-33. On October 16, 2015, the Office of the Executive Inspector General for the Agencies of the Illinois Governor (“OEIG”) received a whistleblower complaint alleging that Martin and Smart Elevators participated in a bribery and kickback scheme in which a UIC procurement employee directed work to Smart Elevators and paid it for services that it did not provide. Id. at ¶¶ 3, 34-38.
The OEIG opened an investigation. Id. at ¶ 35. On March 4, 2016, UIC informed Smart Elevators that it could no longer provide elevator services for UIC. Id. at ¶ 44. On May 26, the OEIG referred its uncompleted investigation to the U.S. Attorney for the Northern District of Illinois. Id. at ¶ 45. The U.S. Attorney's Office asked the OEIG to suspend its investigation, which it did. Id. at ¶ 46. But after learning that Smart Elevators had bid on a contract to provide elevator repair services to UIC, the OEIG decided to issue a report “in order for UIC to be able to make an informed decision in its procurement process regarding Smart Elevators.” Id. at ¶ 47.
The OEIG and the Illinois Executive Ethics Commission (“EEC”)-the governmental body that publishes OEIG reports-issued a non-public version of the report on April 3, 2017, finding that Martin participated in a kickback scheme and recommending that UIC “terminate any existing contracts and work orders with Smart Elevators, and bar Smart Elevators, or any other business operated by Suzy Martin, from future UIC contracts or work.” Id. at ¶¶ 48-49. In response to the report, UIC's Executive Director of University Ethics and Compliance stated that UIC would defer action on the report's recommendations until the OEIG concluded its investigation. Id. at ¶¶ 54, 64. According to Martin, UIC in fact decided to bar her and Smart Elevators from any UIC work based on the report, imposing what she calls a “shadow debarment.” Id. at ¶¶ 64-65.
On May 2, 2018, the U.S. Attorney's Office issued a press release announcing federal bribery charges against Martin. Id. at ¶ 56. In January 2019, the EEC publicly released the OEIG report. Id. at ¶ 57. On February 22, 2019, after a four-day trial, a jury found Martin not guilty of all charges. Id. at ¶ 62. The OEIG and the EEC have nonetheless refused to withdraw the OEIG report, on which the UIC continues to rely to bar Martin and Smart Elevators from any UIC work, “directly or as a subcontractor.” Id. at ¶¶ 63, 65. In January 2021, UIC employees told a contractor that UIC would not award it any work if it used Smart Elevators as a subcontractor. Id. at ¶ 67.
In April 2019, a CHA contractor hired Smart Elevators as a subcontractor. Id. at ¶ 70. That month, the CHA Office of the Inspector General (“CHA OIG”) learned of the OEIG report. Id. at ¶ 71. CHA OIG Investigator Mark Lischka contacted UIC's Executive Director of University Ethics and Compliance, who told him that UIC was not awarding Smart Elevators any contracts given the OIEG investigation and the federal criminal charges. Id. at ¶¶ 72-73. The CHA OIG concluded that there was “strong and sufficient evidence” that Martin and Smart Elevators had operated a kickback scheme, and it recommended that they be debarred from doing any business with CHA for three years. Id. at ¶ 74.
On October 16, 2019, Michael Moran, CHA's Chief Financial Officer and Acting Chief Procurement Officer, sent Martin a letter stating that CHA had determined that she and Smart Elevators were “non-responsible, and therefore, ineligible to enter into new contracts to perform services at CHA and CHA-related properties.” Id. at ¶ 77. Smart Elevators's contracts with CHA were cancelled, and Martin and Smart Elevators remain ineligible to provide work to CHA. Id. at ¶ 79. In November 2020, Martin wrote to CHA's Chair of the Board of Commissioners asking that she clear Martin's name and reject the OEIG report's findings, but Martin never received a response. Id. at ¶ 78. Martin has since written to other CHA leaders as well. Ibid.
Smart Elevators began working as a subcontractor for Chicago Public Schools (“CPS”) in 2017. Id. at ¶ 80. On January 22, 2020, Martin met with Jonathan Maples, the Chief Procurement Officer for the Chicago Board of Education, to discuss the OEIG report. Id. at ¶ 84. On February 23, 2021, Maples issued a Notice of Proposed Debarment and Interim Restraints to Martin and Smart Elevators. Id. at ¶ 85. Citing the OEIG report, the notice informed Martin and Smart Elevators that they were immediately suspended from performing under any existing Board contract or subcontract, proposed that the Board's Chief Operating Officer impose interim constraints making them ineligible to obtain any new Board business, and recommended that the Board's Chief Operating Officer seek Board approval to permanently debar them. Id. at ¶¶ 86-87, 89. In response to the notice, Martin denied wrongdoing and requested a hearing before the Board, but no hearing was held. Id. at ¶ 90. Martin and Smart Elevators are currently treated as ineligible to perform work for CPS. Id. at ¶ 91.
Before the OEIG report, Smart Elevators performed work for private entities, state agencies, and the federal government. Id. at ¶ 26. Eighty percent of Smart Elevators's contracts by revenue “were for state or municipal agencies in Chicago like UIC, CHA[,] or CPS-either as a direct contractor or as a subcontractor for other entities.” Id. at ¶ 94 (emphasis added). In 2019 and 2020, Smart Elevators lost two subcontracts for municipal work in Chicago worth $2 million each and was stricken from bids that would have generated $14 million in subcontracts. Id. at ¶ 98. Two banks refused to continue to do business with Smart Elevators or Martin, and a third bank closed Martin's investment accounts. Id. at ¶ 102. Martin “has no direct contracts today with the State of Illinois or any of its agencies.” Id. at ¶ 26 (emphasis added).
On March 6, 2019, shortly after Martin's acquittal, the U.S. Department of the Navy terminated the suspension that it had imposed on Martin and Smart Elevators. Id. at ¶ 69. In 2021, the U.S. Department of Justice awarded Smart Elevators a contract to perform elevator renovation services at the Metropolitan Correctional Center in Chicago. Id. at ¶ 68. Martin has also been awarded bids in other States, though not always for elevator work. Id. at ¶ 104. D. Procedural History
Martin's original complaint alleged, as does the operative complaint that Smart Elevators currently has contracts with the Department of Justice and private entities, and that it is free to compete for contracts with the Department of the Navy. Doc. 1 at ¶¶ 25, 70-71. The original complaint also alleged that Smart Elevators has contracts with state...
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