Soc. Bicycles LLC v. City of Chi. Dep't of Transp., Case No. 19 C 5253
| Decision Date | 22 January 2020 |
| Docket Number | Case No. 19 C 5253 |
| Citation | 435 F.Supp.3d 933 |
| Parties | SOCIAL BICYCLES LLC d/b/a JUMP, Plaintiff, v. CITY OF CHICAGO DEPARTMENT OF TRANSPORTATION; City of Chicago, Defendants. |
| Court | U.S. District Court — Northern District of Illinois |
Benjamin D. White, Pro Hac Vice, John C. Quinn, Pro Hac Vice, Roberta A. Kaplan, Kaplan Hecker & Fink LLP, New York, NY, Suyash Agrawal, Leonard A. Gail, Massey & Gail LLP, Chicago, IL, for Plaintiff.
John Lawrence Hendricks, Andrew W. Worseck, Fiona A. Burke, City of Chicago Department of Law, Justin Tresnowski, Hughes Socol Piers Resnick & Dym, Ltd., Chicago, IL, for Defendants.
Joan H. Lefkow, U.S. District Judge Plaintiff Social Bicycles LLC doing business as JUMP ("JUMP"), a provider of bikeshare systems, has sued the City of Chicago and the City's Department of Transportation ("CDOT") for entering into an exclusive contract with a competitor in alleged violation of state and municipal competitive bidding requirements. Defendants move to dismiss the complaint for lack of standing and failure to state a claim. (Dkt. 21.) The motion is granted.1
Municipal-sponsored bikeshare systems—programs in which bicycles are made available for short-term rentals—have gained popularity around the world in recent years. (Dkt. 34 ¶¶ 10–11.) This case involves Chicago's "Divvy" bikeshare system, which was launched in 2013 as a system of docked bicycles, in which users can rent bicycles to ride between a network of fixed locations that house the bicycles when not in use. (Id. ¶¶ 12-13.) JUMP challenges the contract CDOT entered into with Alta Bicycle Share, Inc. ("Alta") to create the Divvy system ("the 2013 Agreement") and a subsequent renewal and "dramatic expansion" of that contract ("the 2019 Amendment") as violating competitive bidding requirements of state and municipal law. The 2019 Amendment was negotiated by former Mayor Rahm Emanuel's administration "behind closed doors" with a "favored private partner" and was "hastily" approved by the City Council as the end of Mayor Emanuel's term approached. (Id. ¶¶ 34-40; dkt. 29 at 2.)3
The 2013 Agreement arose from a request for proposal ("RFP") process the City initiated in 2011. That year, the City received an $18 million grant from the Federal Highway Administration to build the infrastructure necessary for a bikeshare program. (Dkt. 34 ¶ 15.) The City's Department of Procurement Services ("DPS") issued an RFP on behalf of CDOT to select a private vendor to operate the bikeshare program, the component parts of which the City planned to purchase. (Id. ¶ 16.)
The RFP included information on the process through which proposals would be evaluated. (Id. ¶ 18.) It provided that an Evaluation Committee composed of CDOT, DPS, and other city officials would review and evaluate the proposals based on nine listed criteria, including technical competence and cost. (Id. ; dkt. 32-1 at 20.) The Evaluation Committee would then make a recommendation to the CDOT Commissioner, who was granted authority to select a proposal irrespective of the Evaluation Committee's recommendation. (Id. ¶¶ 18, 19.) The RFP also provided that the "[e]xecution of a contract by the CDOT Commissioner must be authorized by City Council." (Id. )
JUMP argues that the RFP "noted in several instances the City's purported commitment to comply with state and local public contracting laws." (Id. ¶ 20.) JUMP highlights Section 8.2 of the RFP, which states that the city may "utilize ... procurement method[s] available under the Municipal Purchasing Act ["MPA"] and the Municipal Code of Chicago ["MCC"], to obtain the Services described here." (Id. ; dkt. 32-1 at 22.) JUMP also points to the following sections:
Three companies responded to the RFP. (Id. ¶ 22.) JUMP was not one of them, as it did not enter the public bikeshare market until years later. (Id. ¶¶ 22, 28; dkt. 29 at 2) The Evaluation Committee unanimously selected Alta's proposal despite its being significantly more expensive than the two alternative proposals. (Dkt. 34 ¶ 22.)
On April 18, 2012, the City Council passed an ordinance (the "2012 Ordinance") to establish the bikeshare program to be operated by Alta. (Id. ¶ 24.) The ordinance authorized the CDOT Commissioner to negotiate with Alta and execute the relevant lease, easement, license, and other agreements necessary for the bikeshare system. (Id. )
On January 24, 2013, Alta and CDOT finalized a comprehensive agreement contemplating the City's initial purchase of 3,000 bicycles and 301 docking stations and providing for Alta to operate the program for an initial term of sixty months, with the City retaining the right to extend the Agreement for up to two additional sixty-month terms. (Id. ¶ 25.) The City launched the bikeshare system under the Divvy brand name in June 2013. (Id. ¶ 26.) The Divvy system has never turned an annual profit, and the City and Alta have split its losses. (Id. ¶ 27; see also dkt. 22-3 at 4.)
In October 2017, the CDOT Commissioner notified Alta—now renamed Motivate—that the City was exercising its right to extend the Agreement for a term of sixty months, to January 23, 2023. (Dkt. 34 at 9 n. 8.) In or around July 2018, Motivate was acquired by Lyft, Inc., which is the principal competitor of JUMP's parent company, Uber. (Id. ¶ 31.) Lyft approached CDOT Commissioner Rebekah Scheinfeld shortly after its acquisition of Motivate to seek a broadening of its bikeshare deal with the City. (Id. ¶ 32.) Lyft and officials in Mayor Rahm Emanuel's administration then negotiated amendments to the 2013 Agreement over a period of several months. (Id. ) Lyft and the officials agreed to terms of the 2019 Amendment, which would provide for the introduction of dockless and electric bikes to the system, grant Motivate "exclusive rights to offer bicycle sharing on the public right of way"—as to "any type of bicycle"—and commit the City to future negotiations to expand Motivate's operation to include other micromobility fields, such as electric scooters. (Dkt. 34 ¶¶ 33, 36, 37.)
In March 2019, the Emanuel administration publicly announced its intention to go forward with the 2019 Amendment. (Id. ¶ 34.) On April 10, 2019, the City Council passed an ordinance (the "2019 Ordinance") authorizing the Amendment, noting it would "dramatically expand the System in terms of size and technological sophistication." (Id. ¶¶ 34, 41.) The Amendment was executed on May 8, 2019. (Dkt. 22 at 4; dkt. 22-4.)
JUMP alleges the City and CDOT violated provisions of the MPA, MCC, and the due process clauses of the Illinois and United States Constitutions by failing to follow applicable competitive bidding requirements for both the Agreement and the Amendment.4 JUMP seeks a declaratory judgment that the Agreement and Amendment are void because of those purported violations.
Defendants move under Rule 12(b)(6) to dismiss the complaint in its entirety for failure to state a claim for relief.5 (Dkt. 21.) They also argue JUMP lacks standing to contest the 2013 Agreement and is time-barred from bringing any claims related to that Agreement under Illinois' five-year "catch all" statute of limitations. 735 Ill. Comp. Stat. 5/13-205.
A motion to dismiss under Rule 12(b)(6) challenges a complaint for failure to state a claim on which relief may be granted. In ruling on a Rule 12(b)(6) motion, the court accepts as true all well-pleaded facts in the plaintiff's complaint and draws all reasonable inferences from those facts in the plaintiff's favor. Active Disposal, Inc. v. City of Darien , 635 F.3d 883, 886 (7th Cir. 2011). To survive a Rule 12(b)(6) motion, the complaint must not only provide the defendant with fair notice of a claim's basis but must also establish that the requested relief is plausible on its face. See Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S. Ct. 1937, 173 L.Ed.2d 868 (2009) ; Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S. Ct. 1955, 167 L.Ed.2d 929 (2007). The allegations in the complaint must be "enough to raise a right to relief above the speculative level." Twombly , 550 U.S. at 555, 127 S. Ct. 1955. At the same time, the plaintiff need not plead legal theories; it is the facts that count. Hatmaker v. Mem'l Med. Ctr. , 619 F.3d 741, 743 (7th Cir. 2010).
Rule 12(b)(1) permits a defendant to move to dismiss for lack of standing. Retired Chicago Police Ass'n v. City of Chicago , 76 F.3d 856, 862 (7th Cir. 1996). Challenges to standing may be either facial or factual. Apex Digital, Inc. v. Sears, Roebuck & Co. , 572 F.3d 440, 443 (7th Cir. 2009). A facial challenge requires the court only to look to the complaint and see if the plaintiff has sufficiently alleged the existence of standing. Id. A factual challenge, in contrast, concedes the...
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