Wacker Drive Exec. Suites, LLC v. Jones Lang LaSalle Ams. (Ill.), LP
| Decision Date | 28 May 2019 |
| Docket Number | Case No. 18-CV-5492 |
| Parties | WACKER DRIVE EXECUTIVE SUITES, LLC, on behalf of itself, individually, and on behalf of all others similarly situated, Plaintiff, v. JONES LANG LASALLE AMERICAS (ILLINOIS), LP, Defendant. |
| Court | U.S. District Court — Northern District of Illinois |
MEMORANDUM OPINION AND ORDER
Wacker Drive Executive Suites, LLC ("WDES") leased office space at 125 S. Wacker Drive in the Chicago Loop between 2005 and 2017. When the building manager, Jones Lang LaSalle Americas (Illinois), LP ("JLL"), insisted that WDES hire union movers and contractors to make improvements to its leased space, WDES sued alleging that JLL illegally conspired with three unions to bar non-union labor from the building to induce tenants to purchase union labor at inflated prices. JLL now moves to dismiss the complaint in its entirety. The motion is denied.
WDES was a tenant on the third floor of a building located at 125 S. Wacker Drive in Chicago, Illinois from August 2005 through December 2017. Cmplt. ¶ 18. WDES's primary business was leasing shared-full-service-executive office space to people and businesses. Id. JLL has been the 125 S. Wacker Drive property manager since 2012. Id. Under WDES's lease with the landlord, WDES received a sum of money paid by the landlord to improve its spacecalled a construction allowance. Id. at ¶ 19. WDES's landlord is not named as a defendant in this action.
The construction allowance was disbursed to WDES to pay for renovations in its leased space in two phases: one phase in 2014 and the other in 2017. Cmplt. ¶ 20. In 2014, WDES spent $325,000 of its $355,520 construction allowance on improving the ceiling, lighting, carpeting, tiling, kitchen, and cabling. Id. at ¶ 21. Although WDES wanted to use less expensive non-union contractors, JLL did not permit it to do so. Id. at ¶¶ 22, 23. JLL told WDES that if non-union contractors showed up at the building, they would not be allowed on the freight elevator. Id. In 2017, WDES spent $45,000 of its $266,000 construction allowance to modify its office, upgrade the electrical system, and replace carpeting. Id. at ¶ 25. In 2017, JLL forbade WDES from using the cheaper, non-union contractors it wanted to use. Id. at ¶¶ 26-27. Additionally, in January 2015, WDES purchased office furnishings and JLL forced it to use union movers to transport the furnishings into its space at a cost of $975. Id. at ¶ 28.
In this putative class action, WDES alleges violations of the Racketeer Influenced and Corrupt Organizations Act (RICO).2 Specifically, WDES alleges that JLL repeatedly violated the Hobbs Act, 18 U.S.C. § 1951 (extortion), and the Labor Management Relations Act of 1947 ("Taft-Harley Act"), 29 U.S.C. § 186 (bribery), by preventing non-union contractors from accessing and working in buildings managed by JLL in the Chicago Loop. As result, WDES alleges that it and other similarly situated tenants were forced to pay union contractors and movers at least 20% more than they otherwise would have paid due to the higher cost of union labor.
WDES's Complaint consists of two counts arising under RICO. The first count is for a violation of 18 U.S.C. § 1962(c), which prohibits participation through a pattern of racketeering activity in the affairs of enterprise engaged in interstate commerce The second count alleges a conspiracy to violate subsection (c), which is a violation of 18 U.S.C. § 1962(d). WDES alleges two types of activity that could be considered predicate acts of racketeering. First, WDES alleges that JLL entered into an illegal hot cargo agreement with three unions (the "Unions")3 under Section 8(e) of the National Labor Relations Act ("NLRA"), 29 U.S.C. § 158(e), and its actions in furtherance of the agreement yielded a pattern of repeated violations of the Hobbs Act, 18 U.S.C. § 1951 (extortion). See Cmplt. ¶¶ 13, 32.4 Rather than oppose the Unions' demands for exclusivity, WDES claims JLL accedes and enforces a union-only policy through its tenant handbook/rules and by directing its employees to keep non-union contractors out of the buildings it manages. Id. at ¶¶ 16-17. Additionally, JLL allows union agents to monitor the buildings JLL manages to alert JLL whenever non-union contractors are present to demand their removal. Id. at ¶ 15. Accordingly, contractors unable to provide proof of union membership are denied entry into JLL managed buildings. Id. at ¶ 17.
As for the second type of racketeering activity, WDES alleges that the union-only rule effectively constitutes bribery in violation of Section 302 of the Labor Management Relations Act ("LMRA" or "Taft-Hartley Act"), 29 U.S.C. § 186(a). WDES supports this allegation bycharacterizing the union-only policy as a "kickback" to unionized contractors as it forces the tenants into hiring union contractors for work that otherwise would have gone to non-union contractors. Cmplt. ¶¶ 32, 38-39.
JLL moves to dismiss the Complaint based on Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure. JLL's Rule 12(b)(1) motion challenges WDES's constitutional standing to bring this lawsuit. Rule 12(b)(1) "provides for dismissal of a claim based on lack of subject matter jurisdiction, including lack of standing." Stubenfield v. Chicago Housing Authority, 6 F.Supp.3d 779, 782 (N.D. Ill. 2013) (citing Retired Chicago Police Ass'n v. City of Chicago, 76 F.3d 856, 862 (7th Cir. 1996)). "In ruling on a motion to dismiss for want of standing [based on a facial challenge], the district court must accept as true all material allegations of the complaint and must draw all reasonable inferences therefrom in favor of the plaintiff." Retired Chicago Police Ass'n, 76 F.3d at 862.
The Rule 12(b)(6) portion of JLL's motion attacks the sufficiency of WDES's complaint. When deciding a Rule 12(b)(6) motion to dismiss, the court also accepts all the well-pleaded allegations of the complaint as true and draws all reasonable inferences in favor of the plaintiff. Kubiak v. City of Chicago, 810 F.3d 476, 480-81 (7th Cir. 2016). Under the Federal Rules of Civil Procedure, a complaint need only contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). This standard does not require "detailed factual allegations," but the plaintiff must allege facts that, when "accepted as true ... 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). In analyzing whether a complaint has met this standard, the "reviewing court [must] draw on its judicial experience and common sense." Id. at 679. Resolving a fact intensive inquiry necessaryto decide a question of law is not appropriate at the motion to dismiss stage. See, e.g., Craftwood II, Inc. v. Generac Power Sys., Inc., 920 F.3d 479, 482 (7th Cir. 2019); In re Dealer Mgmt. Sys. Antitrust Litig., 362 F.Supp.3d 510, 538-39 (N.D. Ill. 2019). As further explained below, a number of JLL's arguments in its motion to dismiss involve fact-based inquiries that cannot be resolved in a Rule 12(b)(6) proceeding.
RICO provides a private cause of action for "[a]ny person injured in his business or property by reason of a violation of [18 U.S.C. § 1962]." 18 U.S.C. § 1964(c). Subsections 1962(a) through (c) prohibit certain "pattern[s] of racketeering activity" in relation to an "enterprise." Subsection 1962(d) makes it unlawful to conspire to violate subsections (a), (b), or (c) of section 1962. To survive a motion to dismiss, WDES must allege a violation of 18 U.S.C. § 1962(c), and specifically: (1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity. Sabrina Roppo v. Travelers Commercial Ins. Co., 869 F.3d 568, 587-88 (7th Cir. 2017). The pattern of racketeering activity must consist of at least two violations of certain crimes. 18 U.S.C. § 1961(1)(A) () (quotations omitted). To bring a claim under § 1962(d), WDES must allege that JLL: (1) agreed to participate or maintain an interest in the operation of an enterprise through a pattern of racketeering activity; and (2) that JLL agreed that a person would commit at least two predicate acts. See DeGuelle v. Camilli, 664 F.3d 192, 204 (7th Cir. 2011) (citing Slaney v. Int'l Amateur Athletic Fed'n, 244 F.3d 580, 600 (7th Cir. 2001)).
According to JLL, its conduct, as alleged in the Complaint, did not violate either the Hobbs Act or the LMRA. In its Motion, JLL contends that WDES's complaint should bedismissed in its entirety on the following grounds: (A) lack of Article III standing; (B) failure to plead a predicate act of extortion under the Hobbs Act because (1) mere acquiescence to union pressure does not amount to an agreement under Section 8(e) of the NLRA, (2) any agreement to ban non-union labor would be permissible under the construction industry proviso exception to Section 8(e), (3) JLL did not obtain extorted property, (4) JLL's conduct was not wrongful; (C) failure to plead a predicate act of bribery under the Taft-Hartley Act because of its statutory exception under subsection (c)(3); and (D) failure to allege that JLL conducted the enterprise's affairs under RICO. The Court analyzes each of these issues in turn.
Because Article III standing is jurisdictional, standing issues must be addressed before reaching the merits. See Milwaukee Police Ass'n v. Flynn, 863 F.3d 636, 639 (2017). Constitutional standing requires a plaintiff show: (1) that it has suffered a concrete injury, (2) that the injury is fairly traceable to actions of the defendant and not the result of the independent action of a third party not before the court, and (3) that it is likely that the injury will be...
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