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JONES v. SABIS EDUCATIONAL SYSTEMS

June 1, 1999

GLEN O. JONES, PLAINTIFF,
v.
SABIS EDUCATIONAL SYSTEMS, INC., INTERNATIONAL SCHOOL OF MINNESOTA, INC.; SABIS INTERNATIONAL, SCHOOL; CHICAGO INTERNATIONAL CHARTER SCHOOL; CHICAGO CHARTER SCHOOL FOUNDATION, INC.; JAMES MURPHY; KARLA LIFFMANN LIVNEY; LEILA C. SAAD; RALPH BISTANY; AL BISTANY; UDO SCHULZ; NADIA REDA; FERN BISTANY; JOY N'DAUO; JIM BOWDEN; AND SAM REDDICK, DEFENDANTS.



The opinion of the court was delivered by: Gettleman, District Judge.

  CORRECTED MEMORANDUM OPINION AND ORDER

Plaintiff Glen O. Jones ("plaintiff') has filed a 13 count complaint against multiple defendants, alleging that he was wrongfully terminated from employment in violation of federal and Illinois law. The complaint (in a classic case of over-pleading) names 17 defendants: (1) SABIS Enterprises, Inc.; (2) International School of Minnesota, Inc.; (3) SABIS International School; (4) SABIS School Network; (5) Chicago International Charter School; (6) Chicago Charter School Foundation, Inc. ("the Foundation");. (7) James Murphy ("Murphy"); (8) Karla Livney ("Livney"); (9) Leila Saad ("Saad"); (10) Ralph Bistany; (11) Al Bistany; (12) Udo Schulz ("Schulz");. (13) Nadia Reda ("Reda"); (14) Fern Bistany; (15) Joy N'Dauo ("N'Dauo"); (16) Jim Bowden ("Bowden"); and (17) Sam Reddick ("Reddick").*fn1 The complaint alleges 13 causes of action: (1) Title VII (count V(A)); (2) 42 U.S.C. § 1981 (count V(B)); (3) 42 U.S, C. § 1985 (count V(C)); (4) 42 U.S.C. § 1986 (count V(D)); (5) 42 U.S.C. § 1983 (count V(E)); (6) failure to provide "COBRA" notice (count V(F)); (7) slander (count VI(A));, (8) false light (count VI(B)); (9) tortious interference with contract (count VI(C)); (10) tortious interference with prospective business advantage (count VI(D)); (11) breach, of employment contract (count VI(E)); (12), wrongful discharge (count VI(F)); and (13) wage collection (count, VI(G)).

The International School of Minnesota, Inc., SABIS Educational Systems, Inc., SABIS International Charter School, and the Chicago International Charter School (collectively, "SABIS") have moved to dismiss counts V(B), V(C), V(E), VI(C) and VI (E). Al Bistany, Schulz, Reda, Fern Bistany, N'Dauo, Bowden and Reddick (the "individual SABIS defendants") have moved to dismiss counts V(B), V(C), V(E), VI(C), VI(D), VI(E) and VI(F). The Foundation has moved to dismiss counts V(A), V(B), V(E), V(F), VI(C), VI(E), and VI(F). Murphy and Livney (the "individual Foundation defendants") have moved to dismiss counts V(B), V(C), V(E), VI(C), VI(E) and VI(F). All the motions described above are filed under Rule 12(b)(6). Reddick and Schulz have moved to dismiss all counts under Rule 12(b)(2) for lack of personal jurisdiction.

As discussed below, SABIS's motion is granted in part and denied in part, the individual SABIS defendants' motion is granted, the Foundation's motion is granted, the individual Foundation defendants' motion is granted in part and denied in part, and Reddick and Schulz's motion is granted in part and denied in part as moot.

FACTS

According to the complaint and attached exhibits, the Foundation entered into an agreement with the Chicago Reform Board of Trustees in 1997 to open two charter schools in Chicago — the North Campus and South Campus.*fn2 The Foundation then entered into an agreement with SABIS for SABIS to provide education programs and otherwise operate the schools. Both agreements specified that all instructional. providers and other employees of the schools would be employees of SABIS, and not the Foundation. The campuses operated under the name Chicago International Charter School (the "School").

Defendant Ralph Bistany, SABIS's Director General, hired plaintiff as principal/director of the School's South Campus. This position entailed hiring administrative and teaching staff, procuring basic materials for the School's operation, and increasing enrollment through meetings with parents of prospective students and advertising through the local media. Plaintiff was formerly a school administrator in Georgia.

The South Campus opened in August 1997 for the 1997-98 academic year. Profits for the first year exceeded SABIS's expectations. To reward plaintiff for his performance, Ralph Bistany gave him a $5,000 bonus and informed him that additional bonuses would be forthcoming should his performance and the School's enrollment continue to grow.

The relationship between plaintiff and SABIS deteriorated, however, when plaintiff began objecting to a number of Ralph Bistany's hiring and administrative decisions. First, after the Chicago Public School had rejected the School's disciplinary code, concluding that it was illegal under the Individuals with Disabilities in Education Act, ("IDEA"), 20 U.S.C. § 1400, et. seq., Ralph Bistany nevertheless insisted that the School implement the code. Bistany informed plaintiff that SABIS did not want to become a "school for the disabled." Plaintiff objected to this course of action, arguing that it violated the rights of disabled students.

Next, after plaintiff offered a kindergarten teacher position to an African American male, Ralph Bistany forced plaintiff to refrain from hiring him. Bistany explained to plaintiff that "it is not the SABIS way" to hire male teachers for lower school positions because they are prone to sexually molest their own students. Despite plaintiffs objection, Bistany insisted that the male not be hired. Ralph Bistany also forced plaintiff, over plaintiffs objection, to refrain from hiring a male for a first grade teaching position (for identical reasons).

Then, after plaintiff had hired an African American female as a Spanish teacher, Ralph Bistany criticized plaintiff for his choice. Bistany informed plaintiff that it is the "SABIS way to hire only native speakers to teach foreign languages." Subsequently, over plaintiffs objection, Ralph Bistany, N'Dauo and Reda pressured plaintiff into terminating the teacher.

Finally, in December 1997 and February 1998, plaintiff made numerous objections to Ralph Bistany and N'Dauo that the School's education of disabled students violated the IDEA. In response, Ralph Bistany told plaintiff to go along with "the SABIS way," and threatened to terminate plaintiff if he did not cease his objections.

On February 5, 1998, at Ralph Bistany's direction, plaintiff took a personal leave of absence from the School. On February 6, N'Dauo called plaintiff and advised him not to retain legal counsel or "go around blabbing" his objections to employment decisions. Plaintiff informed N'Dauo that he had already contacted legal counsel, that he was preparing a letter outlining his objections, and that three of his subordinates were preparing a memorandum (the "memo") raising objections to SABIS's employment practices. On February 9, plaintiff transmitted the letter and memo to SABIS (addressed to Ralph Bistany), objecting to SABIS's race and gender-based employment decisions and education of disabled students. When Ralph Bistany learned of the letter and memo, he instructed Reddick, SABIS's General Counsel, to travel to Chicago and fire plaintiff for objecting in writing to SABIS's discriminatory hiring practices. In cooperation with Bistany, Livney, the Foundation's Executive Director, came to the School and advised SABIS and the Foundation on how to terminate plaintiff and what to tell staff, parents, and the Chicago Public Schools. Livney also assisted in interrogating two of the memo's three authors. On February 10, Reddick met with plaintiff at the School and terminated him.

Thereafter, several defendants allegedly took actions to cover up SABIS's true motivations for terminating plaintiff and to prevent others from making written objections to SABIS's employment practices. First, on the day of plaintiffs termination, one of the memo's authors was put on administrative leave. Second, Livney, Murphy, Reda, N'Dauo and Ralph Bistany intimidated another of the memo's authors for making written objections. Third, SABIS, the Foundation and Livney conducted a "sham" audit of the South Campus to create support and justification for their retaliatory actions against plaintiff. Finally, to avoid informing the parents of the real reason for plaintiffs termination, N'Dauo and Al Bistany suggested to parents of the students that plaintiff had embezzled money from the School.

DISCUSSION

I. STANDARDS FOR A MOTION TO DISMISS

In ruling on a motion to dismiss for failure to state a claim, the court considers "whether relief is possible under any set of facts that could be established consistent with the allegations." Bartholet v. Reishauer A.G., 953 F.2d 1073, 1078 (7th Cir. 1992). A claim may be dismissed only if it is beyond doubt that under no set of facts would the plaintiffs allegations entitle him to relief. See Travel All Over the World, Inc. v. Kingdom of Saudi Arabia, 73 F.3d 1423, 1429-30 (7th Cir. 1996). The purpose of a motion to dismiss is to test the sufficiency of the complaint, not to decide its merits. See Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). For purposes of a motion to dismiss, the court accepts the factual allegations of the complaint as true and draws all reasonable inferences in favor of the plaintiff. See Travel All Over the World, 73 F.3d at 1428.

II. SECTION 1981

All defendants move to dismiss count V(B), which alleges that SABIS, the Foundation, and the individual SABIS and Foundation defendants violated plaintiff's rights under 42 U.S.C. § 1981 to "make and enforce contracts," by terminating plaintiffs employment contract because of his objections to SABIS's race-based hiring decisions.

A. SABIS

SABIS argues that the court should dismiss plaintiffs § 1981 claim against it for two reasons: (1) there was no "contract" between SABIS and plaintiff, and (2) plaintiff lacks standing.

1. Contractual Relationship

Section 1981 governs contractual relationships, guaranteeing to all persons in the United States "the same right . . . to make and enforce contracts . . . as is enjoyed by white citizens." 42 U.S.C. § 1981(a). To assert a § 1981 claim, "there must at least be a contract." Gonzalez v. Ingersoll Milling Machine Co., 133 F.3d 1025, 1034 (7th Cir. 1998). SABIS argues that plaintiff was an at will employee, and therefore, did not have a "contract" under § 1981. In response, plaintiff contends that a provision in SABIS's teaching staff handbook limits his at will status. Alternatively, plaintiff argues, even if his employment was at will, he nevertheless has a protected "contract" for purposes of § 1981. To resolve these arguments, the court must determine if plaintiff's employment was at will and, if so, whether an at will employee may state a claim under § 1981.

a. Plaintiffs At Will Status

The employment at will doctrine allows an employer "to discharge an employee at will for any reasons or for no reasons, except when the discharge violates clearly mandated public policy." Talley v. Washington Inventory Service, 37 F.3d 310, 311 (7th Cir. 1994). In Illinois, there is a presumption that employment without a fixed term is employment at will. See Duldulao v. Saint Mary of Nazareth Hosp. Ctr., 115 Ill.2d 482, 106 Ill.Dec. 8, 505 N.E.2d 314, 318 (111. 1987). An employee handbook or other policy statement may serve to rebut this presumption only if it creates enforceable contractual rights. See id. at 318. Under Duldulao, a handbook or policy statement must satisfy three conditions in order to create an enforceable contract:

  First, the language of the policy statement must
  contain a promise clear enough that an employee would
  reasonably believe that an offer has been made.
  Second, the statement must be disseminated to the
  employee in such a manner that the employee is aware
  of its contents and reasonably believes it to be an
  offer. Third, the employee must accept the offer by
  commencing or continuing to work after learning of the
  policy statement. Id.

The first prong of the Duldulao test requires an examination of the handbook itself. SABIS's handbook contains three sections that are relevant for deciding whether it creates a sufficiently clear contract offer. The first page of the Handbook, entitled "Introduction," provides:

  This Employee Handbook is intended as a guide to
  introduce SABIS teachers to the policies, rules and
  regulations under which the school operates. It is not
  intended to be a contract or a promise of employment
  or of specific terms, benefits, or duration of
  employment . . . Employment at The School is "at
  will," and the Employee Handbook and Policies and
  Procedures Manual does not create a contract or
  promise of employment or of any specific terms of
  employment.

The second relevant section, entitled "Termination," states:

  Employment at The School is "at-will" and this
  Employee Handbook and the Policies and Procedures
  Manual are not intended to and do not create a
  contract or promise of employment or of any specific
  terms, benefits, or duration of employment. A teacher
  can be terminated at any time, without notice, and for
  any reason.

Finally, the "Employee Social Responsibility Act" section, on which plaintiff relies to argue that the handbook creates an enforceable contract, provides:

  An employer may not discharge, discipline, threaten,
  discriminate against, or penalize an employee
  regarding the employee's compensation, conditions, or
  privileges of employment because:
  The employee, in good faith, reports a violation or
  suspected violation of any state or federal law to any
  governmental body;
  The employee is requested by a public body to
  participate in an investigation, hearing, or inquiry;
  or
  The employee refuses an employer's order to perform an
  action the employee has an objective basis in fact to
  believe violates any state or federal law, and the
  employee informs the employer that the order is being
  refused for that reason.

Reading the handbook as a "coherent whole," Barder v. City of Crystal Lake, 75 F.3d 270, 274 (7th Cir. 1996), the court concludes that it fails the first prong of the Duldulao test, which requires the language to contain a sufficiently clear contract offer. The disclaimer language both at the beginning of the handbook and repeated in the "Termination" section is clear: the handbook "is not intended to be a contract or a promise of employment or of specific terms, benefits, or duration of employment." Plaintiff could not reasonably have believed by reading the handbook that it had made an employment contract offer. See Border, 75 F.3d at 273 ("Illinois courts have recognized that a disclaimer within an employee handbook can be sufficient to show that no "clear promise' of continuing employment was made, and thus that [a] handbook [does] not create a legitimate claim of entitlement to employment").

The "Employee Social Responsibility Act" section does not alter this conclusion. A primary principle of the Duldulao test is that a handbook creates contract rights only when "specific procedures have been prescribed by positive and mandatory language." Saint Peters v. Shell Oil Co., 77 F.3d 184, 187 (7th Cir. 1996). The Act does not speak in terms of employee rights, but rather, of employer duties. That is, while it imposes a duty on employers not to retaliate against employees for certain reasons, it does not grant continuing employment rights to employees. Moreover, and most significantly, the disclaimer language clarifies that the ...


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