Rubloff Dev. Grp., Inc. v. Supervalu, Inc.

• Decision Date: 27 March 2012
• Docket Number: Case No. 10 C 3917.
• Citation: 863 F.Supp.2d 732
• Parties: RUBLOFF DEVELOPMENT GROUP, INC., Rubloff Mundelein LLC, McVickers Development, LLC, McVickers New Lenox, LLC, McVickers Cooper, LLC, McVickers Hickory Creek, LLC, McVickers Tonnell, LLC, McVickers Williams, LLC, Plaintiffs, v. SUPERVALU, INC., d/b/a Jewel–Osco, and the Said Consulting Group, Inc., Defendants.
• Court: U.S. District Court — Northern District of Illinois

863 F.Supp.2d 732

RUBLOFF DEVELOPMENT GROUP, INC., Rubloff Mundelein LLC, McVickers Development, LLC, McVickers New Lenox, LLC, McVickers Cooper, LLC, McVickers Hickory Creek, LLC, McVickers Tonnell, LLC, McVickers Williams, LLC, Plaintiffs,

v.SUPERVALU, INC., d/b/a Jewel–Osco, and the Said Consulting Group, Inc., Defendants.

Case No. 10 C 3917.

United States District Court,

N.D. Illinois,

Eastern Division.

March 27, 2012.

Thomas James Frederick, Cornelius Moore Murphy, Dana E. Schaffner, Joanna C. Wade, Renee Ourania Sotos, Winston & Strawn LLP, Chicago, IL, for Plaintiff.

Joshua Buchanon Strom, Robins Kaplan, Miller & Ciresi, LLP, Minneapolis, MN, Martin B. Carroll, Fox, Hefter, Swibel, Levin & Carroll, LLP, Craig Allen Knot, Caroline Lee Schiff, David Max Layfer, Gregory H. Furda, Michelle Alyce Ramirez, Sidley Austin LLP, Chicago, IL, for Defendants.

MEMORANDUM OPINION AND ORDER

HARRY D. LEINENWEBER, District Judge.

Before the Court are Defendants' Motions to Dismiss Plaintiffs' Consolidated Complaint, and the Consolidated Motion of the two Rubloff entities to dismiss the Counter–Complaint of Defendant The Saint Consulting Group (hereinafter, “Saint”). For the following reasons, the Defendants' Motions to Dismiss are granted and the Rubloff entities' Motion to Dismiss is denied in part and granted in part.

I. BACKGROUND

At the heart of this case is the battle for grocery shoppers' dollars in suburban Chicago. Plaintiffs develop shopping centers and say Defendants used sneaky and underhanded tactics to try to kill or delay their developments, which would have included grocery stores that compete with Defendant SuperValu, Inc. (“SuperValu”).

Plaintiffs brought actions alleging federal and state antitrust violations, RICO violations, tortious interference with prospective economic advantage, common law fraud, abuse of process and conspiracy to commit overt tortious and unlawful acts.

Defendants do not really deny they were sneaky, but claim being sneaky is legal under the Constitution. Defendant Saint brings Counterclaims against the two Rubloff entities, contending these Plaintiffs paid a former Saint employee to hand over confidential information, which exposed their underhanded tactics. Saint alleges inducement of breach of fiduciary duty, conversion, replevin, tortious interference with contractual relations and misappropriation of trade secrets.

A. The Parties

Plaintiff Rubloff Development Group, Inc. (“Rubloff Development”) is a Rockford, Illinois corporation. Plaintiff Rubloff Mundelein, LLC (“Rubloff Mundelein”) is also in Rockford. (The Rubloff entities are referred to collectively as “Rubloff”). Rubloff develops commercial real estate, including shopping centers. All other Plaintiffs are collectively referred to as “McVickers,” and have their primary place of business in Buffalo Grove, Illinois. They, too, develop commercial real estate.

Defendant SuperValu, Inc. (“SuperValu”) is a Delaware corporation headquartered in Minnesota. It has interests in many grocery store chains, such as Albertson's, Jewel–Osco, Cub and others.

Defendant Saint is both incorporated in and has its principal place of business in Massachusetts. It is a consulting firm that advertises itself as “protect[ing] clients from unwanted competition” and touts its staff as “Walmart killers.”

B. The Developments

Rubloff acquired a purchase option on a parcel near Mundelein, Illinois (the “Mundelein Development”) that was annexed to the village in 2005. Rubloff planned to develop a shopping center, and signed an agreement with Menards to buy part of the parcel. It also reached an agreement “in principle” with Walmart for another portion of the parcel and signed lease agreements with several other big-name stores. Rubloff expected construction to start in 2007 and finish in 2008.

In December 2005, Rubloff began talking with landowners near the parcel as part of its development efforts. Rubloff contends these meetings were going along just swimmingly—that nearby landowners did not object to the development in principle—when it ran into a wall.

Several landowners retained the unfortunately named attorney William Graft (“Graft”), who began pressing certain objections to the development, both in hearings with the village and in court. Landowners objected to the loss of wetlands, possible grease and oil runoff from the parking lot, traffic congestion, landscaping plans, fencing, lighting and other concerns. Two groups of landowners (the “Acker” plaintiffs and the Ivanhoe Country Club “Ivanhoe”) sued the Mundelein in the fall of 2007 in Lake County Circuit Court, alleging violations of due process rights in zoning approvals Mundelein had granted. These cases were consolidated. Ivanhoe also filed suit directly against Rubloff in January 2009, alleging nuisance and trespass against the not-yet-developed shopping center. The legal fight continued until January 2011, when Mundelein and Rubloff settled all three lawsuits, with Rubloff agreeing to certain redesigns and paying out a total of $200,000 to various plaintiffs.

The battles caused great delay and the Mundelein development is still not built, and may never be, according to Plaintiffs. Rubloff claims millions of dollars of expenses due to the delays and millions in lost profits.

Meanwhile, in New Lenox, Illinois, McVickers was also planning a shopping center (the “New Lenox Development”). It acquired 73 acres in 2005, and signed land sale contracts with Walmart and Menards. It also had lease or purchase agreements with Aldi Foods and many other big-name stores. Like Rubloff, it expected to break ground in 2007 and complete construction in 2008. It, too, ran into problems getting permits from New Lenox and the Illinois Department of Transportation (“IDOT”). Its construction start was delayed until late 2009, forcing it to pay additional purchase option fees and suffer the loss of several stores. It also claims lost sales tax revenue due to the delays, and attributes Menards' indefinite delay in building on its parcel to the delays.

All of this bad fortune would likely have been attributed simply to the whim of NIMBY (“Not In My Backyard”) residents had it not been for a man named Greg Olson (“Olson”). Or, more accurately, a man named Leigh Mayo (“Mayo”), which was Greg Olson's real name. Mayo contacted Rubloff co-founder Robert Brownson (“Brownson”) in August 2009 and dropped a bombshell.

Mayo was an agent provocateur for Saint and used the pseudonym of Olson to organize local opposition to the Mundelein development. SuperValu had retained Saint in 2007 and Mayo, in turn, had engaged Graft to represent community landowners before the Mundelein Village board and in the state court proceedings. Plaintiffs allege community members were never told that Graft was actually being paid by SuperValu. Saint's practice was to have “project managers” like Mayo use pseudonyms, even employing e-mail accounts utilizing the pseudonyms.

Over the course of several meetings, Saint alleges, Brownson, a lawyer, learned that Mayo had signed a confidentiality agreement but nonetheless induced him (by paying Mayo) to turn over roughly 3,000 Saint documents. The documents revealed that Saint's avowed purpose was to delay or kill the development, and delays won at village hearings and in court were celebrated with glee. In one report to SuperValu, Saint boasted “the hearings under administrative review could take an enormous amount of time as court dockets are clogged and a Judge will allow us to present testimony for as long as we desire.” Pl.'s Compl. 8. Attorney Graft celebrated delays as well, updating Saint on litigation progress and also reveling in delays. “Happy 1 year Anniversary, by the way. We cost these guys [Rubloff] a ton of money,” he wrote to Saint. Id. at 14.

Other questionable tactics included the rewriting of expert reports for use in litigation, “backchannel” communications with a Lake County judge to try to get a read on how that litigation would turn out, and attorney Graft's failure to promptly forward settlement offers to his landowner clients, presumably as another delay tactic.

The exposure of these documents to public light in a Wall Street Journal article cost Saint at least one client, it alleges.

C. Procedural Background

Plaintiffs and Saint agreed to proceed to summary judgment on one count of Plaintiffs' First Amended Complaint, which sought a declaratory judgment that “no privilege, trade secret, or other protection exists” in the Saint documents Rubloff acquired. The Court reviewed the documents and ruled on June 30, 2011 on a declaratory judgment count that Saint's various contentions, including claims of confidential business information, were without merit. The one exception to this ruling was twelve pages dealing with an unrelated Hoffman Estates matter and attorney Graft. Saint claimed the same attorney-client privilege in regard to those twelve pages that it had in regard to Graft legal documents concerning the Mundelein development. The Court found no privilege as to the latter documents because Saint was not Graft's client (the landowners were), even if Graft had been paid by Saint or SuperValu. But because there was no evidence before the Court on whether a similar client arrangement existed in the Hoffman Estates matter, the Court presumed the documents were indeed privileged.

On September 15, 2011, the Court denied a motion to reconsider the summary judgment, despite Saint's contention that Rubloff was threatening further exposure of the documents to leverage a settlement.

II. LEGAL STANDARD

On a motion to dismiss, all of a plaintiff's and counter-plaintiff's allegations are treated as true. Fed. R. Civ. P. 12(b)(6); Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547, 554–55 (7th Cir.2012). Complaints and counter-complaints will survive a motion to dismiss if they contain sufficient factual matter to state a claim to relief that is plausible on its face....