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INTERNATIONAL TEST & BALANCE, INC. v. ASSOCIATED A

July 15, 1998

INTERNATIONAL TEST AND BALANCE, INC., Plaintiff,
v.
ASSOCIATED AIR AND BALANCE COUNCIL, and Certain Members Thereof, Whose Identities Presently are Unknown, Defendants.



The opinion of the court was delivered by: NORGLE

OPINION AND ORDER

 CHARLES R. NORGLE, SR., District Judge:

 Before the court is Plaintiff's Motion for a Preliminary Injunction (Doc. No. 5). For the following reasons, Plaintiff's Motion is denied.

 I. BACKGROUND

 On March 27, 1998, International Test and Balance, Inc. ("International"), an Illinois corporation, filed a three-count complaint against its former trade association, Associated Air Balance Council ("AABC"), and certain unknown members of AABC, in the Circuit Court of Cook County, Illinois. Counts I and II allege conspiracy in restraint of trade and an unlawful monopoly, respectively, in violation of Section 10/3 of the Illinois Antitrust Act. See 740 ILCS 10/3. Count III alleges common law intentional interference with contract.

 On April 27, 1998, AABC, a California corporation with its principal place of business in Washington, D.C., removed the case to federal court, claiming diversity of citizenship. *fn1" International has since amended its complaint to include a claim of "wrongful expulsion," and now moves for a preliminary injunction that would reinstate its membership in AABC pending a full-trial on the merits. At trial, International would seek a permanent injunction that would prevent AABC from unlawfully excluding International from membership in AABC. The relevant facts follow.

 International provides testing and balancing services of heat, vent and air conditioning ("HVAC") equipment to mechanical contractors and others in the construction industry. Testing and balancing is the process of measuring, regulating and adjusting the HVAC system of a building to insure that it complies with performance specifications. In the course of balancing, International utilizes instruments to take readings of the air and water flow through the HVAC system. International also notes the settings of the mechanical devices, makes necessary adjustments and recommendations, and documents its findings in a balancing report to the client.

 Up until its expulsion on May 1, 1998, International was a member of AABC. AABC is a non-profit trade association composed of 85 independent firms that provide testing and balancing services of HVAC systems throughout the United States. Membership in the AABC is allegedly desirable because firms must meet certain requirements evidencing competence, and because it enables firms to issue a "National Project Certification Performance Guaranty" ("Guaranty"). Issuance of the Guaranty indicates that the HVAC equipment installed during a project meets engineering expectations and is balanced in accordance with accepted trade practice and the AABC National Standards.

 Additionally, the Guaranty enables a party who uses the services of a AABC member, e.g., a contractor or engineer, to file a complaint with AABC if the services performed by the member fail to meet quality specifications, are inadequate, or otherwise insufficient. AABC then initiates an investigation into the allegations of the complaint and agrees to supervise any remaining work. That turn of events is what happened here, and is what led to the eventual expulsion of International from AABC.

 In 1995, International entered into a contract with Western Sheet Metal, Inc. ("Western") to provide test and balancing services at the Copper Hills School Project ("Project") for the Jordan School District in Salt Lake City, Utah. In early 1997, Olsen & Peterson ("O&P"), a mechanical engineering consulting firm working on the Project, filed two successive complaints with AABC regarding International's performance. *fn2" In the first complaint, dated March 25, 1997, O&P wrote a letter to AABC's executive director, Kenneth Sufka ("Sufka"), alleging that International was failing to complete its work on the Project. (See Def.'s Mem. in Opp'n, Ex. 3.) The letter also strongly expressed O&P's dissatisfaction with International and questioned how International qualified for membership in the AABC. In accordance with AABC's policies and procedures, Sufka notified International of O&P's complaint and provided International 14 days to respond. (See id., Ex. 4.) In a letter to Sufka dated April 14, 1997, International denied O&P's allegations and cited the inability of the mechanical contractor on the project to complete its own work as the reason for the subsequent delay in performance by International. (See id., Ex. 5.)

 On April 22, 1997, O&P sent a second letter of complaint to AABC. (See id., Ex. 6.) In that letter, O&P alleged that a report issued by International in April 1996 was "totally unacceptable" and "in substantial noncompliance with the contract documents." (Id.) Sufka in turn notified International of the second complaint and directed International to send AABC a copy of the final balancing report and a copy of the drawings for the Project. (See id., Ex. 7.) On May 22, 1997, International sent the relevant documents to AABC. (See id., Ex. 8.) AABC then initiated an investigation into the complaints against International.

 On May 30, 1997, AABC held a meeting in Salt Lake City to address O&P's complaints against International. A vice-president of AABC, Robert Conboy ("Conboy"), along with representatives of International, O&P, and other contractors on the Project, attended. After reviewing the allegations against International, the attendees (except those from O&P) conducted a walk-through at the site of the Project. Upon completion of the walk-through, it was agreed that 18 of the 25 deficiencies that International had previously claimed as stumbling blocks were no longer at issue. For the remaining seven deficiencies, however, the parties agreed to coordinate their efforts to allow prompt completion. (See id., E's. 9, 10.)

 In early August 1997, Conboy and another AABC vice-president, Mike Young ("Young"), visited the site of the Project in connection with the ongoing investigation of International's performance. The purpose of the visit was to determine the accuracy of International's most-recent report on the Project. Upon completion of the visit, Conboy issued a report criticizing the accuracy of International's report and expressing doubt on the latest deficiencies that International claimed was preventing it from completing its work. (See id., E's. 11, 12.)

 Based on the findings and conclusions in Conboy's report, the AABC Board of Directors concluded that International had failed to comply with AABC policies and standards, a condition of membership. Accordingly, on November 5, 1997, the Board voted to place International on probation. (See id., E's. 20, 27.) International then petitioned AABC to reconsider its decision. (See id., Ex. 15.)

 While International's appeal was pending, O&P and other contractors visited the site of the Project to verify the results of International's latest report. O&P determined that the air system on the Project was still not properly balanced. O&P advised International of its conclusion and stated that the Jordan School District did not want International to return to the site. O&P later persuaded the school district to allow International to return and complete its work. (See id., E's. 16-18.)

 On February 13, 1998, the Board issued a written opinion detailing the results of its investigation and rejecting International's appeal. (See id., Ex. 20.) The Board also took issue with International's challenge of the investigation results. Most notably, the Board emphasized that it was International personnel, rather than AABC representatives, who performed the investigation's test readings that indicated prior inaccuracies. "AABC representatives merely observed the procedure and compared the information obtained with the information contained in [International's] report." (Id. at p. 5.) Finally, the Board outlined the conditions of International's probation:

 
1) That International be placed on probation for a period of two years, beginning on January 31, 1998;
 
2) That International comply with the terms and conditions of the probation as described in the AABC Policies and Procedures;
 
3) That International pay the costs ($ 4,728) for the AABC investigation of the Project as required by the AABC Policies and Procedures on or before March 1, 1998;
 
4) That International provide a written statement concerning its views on AABC independence, the National Performance Guaranty, and the AABC Policies and Procedures no later than March 1, 1998;
 
5) That International return to the Project to complete the balancing in accordance with AABC standards.

 (Id. at p. 6.)

 The terms of the probation also meant that, pursuant to the Guaranty, International became subject to the supervision of AABC for its remaining work on the Project. (See id., Ex. 21) The Board assigned AABC's Executive Vice-President, Rick Cox ("Cox"), and another AABC representative, Herb Crask ("Crask"), to supervise International's completion of the Project. (See id., E's. 22, 23.) In addition to his position as Executive ...


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