Wacker Drive Exec. Suites v. Jones Lang Lasalle Am's (Ill.), LP
| Decision Date | 07 April 2022 |
| Docket Number | 18 C 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 |
This is a civil RICO action which arises from an alleged conspiracy between a building manager and two labor unions to force tenants to hire union-only movers and contractors at 20 commercial office buildings in the Chicago Loop. Plaintiff Wacker Drive Executive Suites, LLC (“WDES”) is a former tenant of a building located at 125 S. Wacker Drive in Chicago, Illinois, and Defendant Jones Lang LaSalle Americas (Illinois), LP (“JLL”) manages 125 S. Wacker Drive as well as other buildings in the Chicago Loop. WDES seeks to certify a class of tenants to sue for alleged civil violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”) based on an alleged extortion and bribery scheme. This is WDES's second attempt to support class certification. The first certification motion was denied without prejudice because WDES had not established that “there are questions of law or fact common” to the class. See Wacker Drive Executive Suites, LLC v. Jones Lange LaSalle Americas (Illinois), LP, 337 F.R.D. 149 (Sept. 23, 2020). The Court then allowed WDES ten months to conduct additional discovery and file supplemental briefing in support of its request for class certification. Having carefully considered the parties' original and supplemental briefing and oral arguments, the Court now denies WDES's supplemental motion for class certification [183]. WDES has not provided significant proof of the central common issues in this case namely those relating to the existence of the required agreements/conspiracies between the building manager and the labor unions and the existence of an enterprise under RICO as to all 20 JLL-managed buildings in the Chicago Loop (the “Class Buildings”).[1] In addition, since no common issue is present, WDES's claims cannot be typical of the claims of the class and common issues do not predominate. The Court also finds that certification is inappropriate on the ground that even if liability could be proven on a classwide basis, WDES did not meet its burden to demonstrate that it can prove damages for tenants who incurred contractor expenses on a classwide basis; that determination would require individualized damage assessments for thousands of tenant class members that would overwhelm classwide issues making class certification inappropriate for class members who incurred contracting expenses.
Between August 2005 and December 2017, WDES leased the third floor of the building located at 125 S. Wacker Drive in Chicago. WDES's primary business was leasing shared-full-service-executive office space to individuals and businesses. JLL manages numerous office buildings in the Chicago Loop, and it has been the 125 S. Wacker Drive property manager since 2012. In this lawsuit, WDES claims that it was required to use union contractors and movers at allegedly inflated costs when it performed renovations to its leased space in 2014 and 2017 and moved office furnishings into its space in 2015 “as the result of an illegal conspiracy/agreement between JLL and [] labor unions to force tenants into hiring union-only movers and union-only building trades contractors” in violation of RICO. Doc. 105 at 2. WDES originally alleged that JLL and three unions, Teamsters Local 705, International Union of Operating Engineers Local 399, and the Service Employees International Union, Local 1, conspired to form a single RICO enterprise. Doc. 76 at ¶¶ 13-14, 54-55, 64; doc. 183 at 4 n.4. After ten months of additional discovery, WDES “does not believe that Local 1 is part of the conspiracy” and now frames its theory of the case as two separate alleged conspiracies-one between JLL and Local 705, and another between JLL and Local 399-but not a single overarching conspiracy. Doc. 183 at 4 n.4; see also Transcript of Oral Argument held on 2/4/2022 at 4.
WDES's basic theory is that JLL entered into an illegal hot cargo agreement with each union to force tenants at 20 office buildings to use union only contractors or movers and that its conduct related to enforcing those agreements violates RICO.[2] WDES's amended complaint consists of two counts arising under RICO. Count I is for a violation of 18 U.S.C. § 1962(c), which prohibits participation in the conduct of an enterprise through a pattern of racketeering activity engaged in interstate commerce. Count II 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: (1) extortion in violation of the Hobbs Act, 18 U.S.C. § 1951 and (2) bribery in violation of Section 302 of the Labor Management Relations Act (“LMRA” or “Taft-Hartley Act”), 29 U.S.C. § 186(a). Doc. 76 at ¶¶ 32-40.
Regarding extortion, WDES alleges that JLL “preys on the tenants' fear of lost income that will result if they cannot get their office spaces worked on by tradesmen” to force tenants to use union-only labor and the “extorted property is the money that [tenants are] required to spend on more expensive union services.” Doc. 76 at ¶ 34. Put another way, WDES says that unless tenants “accede to JLL's demands [to use union-only labor], they will not be able to start or complete their renovations and open for business.” Id. According to WDES, the hot cargo agreement in violation of § 8(e) proves the wrongfulness element of its predicate extortion claim. See 18 U.S.C. § 1951(b)(2) (extortion requires “obtaining of property from another, without his consent, induced by wrongful use of actual or threatened force, violence, or fear”). WDES says that the union-only policy also violates 29 U.S.C. § 186(a) by causing tenants to pay increased labor costs that are effectively kickbacks to the union contractors or movers who would otherwise not be hired by the tenants. Doc. 76 at ¶ 39. WDES seeks monetary damages consisting of the increased price for union labor and moving costs and an injunction prohibiting JLL from continuing to enforce the union-only rule.
WDES now moves again for certification of a class of “[a]ll tenants in the class buildings who were subjected to JLL's requirement to hire union contractors exclusively and who incurred moving expenses and/or hired contractors to make improvements/renovations in their tenant space since August 14, 2014.” Doc. 105 at 7. Specifically, WDES seeks certification of two subclasses under Rule 23(b)(2) and 23(b)(3): (1) class members who were subjected to JLL's union-only mover rule and incurred moving expenses (“the Moving Subclass”) and (2) class members who were subjected to JLL's union-only contractor rule and incurred contracting expenses (“the Contracting Subclass.”). Id. at 7-8; doc. 183 at 2.
WDES has had the opportunity to conduct substantial discovery to obtain evidence to support class certification. Prior to its first class certification motion, WDES served document production requests and interrogatories on JLL, deposed two JLL witnesses, and served document subpoenas on the three unions and three of the building owners. Doc. 125 at 9 n.3. Based on this evidence, the Court denied certification of the class, finding that the commonality requirement was not satisfied because WDES had not shown a common question that is subject to classwide proof. In particular, the Court found WDES's commonality theory factually inadequate because it had provided no proof of its critical contentions “that the union-only restriction is imposed as a result of an agreement between JLL and the Unions” and “that JLL and the Unions operated together as a single unit implementing the union-only rule” to potentially tie all its tenant claims together. Wacker Drive, 337 F.R.D. at 155. To address that concern, WDES was allowed to conduct ten months of additional discovery which included eight depositions and the production of more than 35, 000 pages of documents, including 19, 000 pages of emails. Doc. 190 at 4; doc. 193 at 2. The Court determined that it was more appropriate to make the final determination on class certification after discovery had been completed, rather than in the midst of it. Priddy v. Health Care Serv. Corp., 870 F.3d 657, 660 (7th Cir. 2017) (). Despite being afforded the opportunity to conduct this additional discovery, WDES still has not met its burden of offering significant proof that the tenants in question meet the requirements under Rule 23 for the certification of either proposed subclass.
Federal Rule of Civil Procedure 23 governs motions for class certification. “To achieve certification, a proposed class under Rule 23(b) must meet the requirements of Rule 23(a)- numerosity, typicality, commonality, and adequacy of representation-and one of the alternatives listed in Rule 23(b).” Howard v. Cook County Sheriff's Office, 989 F.3d 587, 597 (7th Cir. 2021). “Failure to meet any of the Rule's requirements precludes class certification.” Arreola v Godinez, 546 F.3d 788, 794 (7th Cir. 2008). The Supreme Court has made clear that Rule 23 “does not set forth a mere pleading standard.” Wal-Mart, 564 U.S.at 350. Instead, [a] party seeking class certification must affi...
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