The opinion of the court was delivered by: JOAN GOTTSCHALL, District Judge
MEMORANDUM OPINION AND ORDER
Before the court are defendants' motions to dismiss plaintiffs'
Alpha School Bus Co.'s ("Alpha") and Cook-Illinois Corp.'s
("Cook-Illinois") Third Amended Complaint for failure to state a
claim and for lack of subject matter jurisdiction. Addressing the
jurisdictional arguments first, Baker v. IBP, Inc.,
357 F.3d 685, 687 ("subject matter jurisdiction is the first question . . .
in all suits filed in federal court"), defendants Southwest
Transit, Inc. ("Southwest"), Southwest Leasing, L.L.C.
("Southwest Leasing"), Chicago Bear Bones Leasing, Inc. ("Bear
Bones Leasing"), Barbara Ann Hackel, Michael Wagner, and Leroy
Meister contend that this court lacks jurisdiction because
plaintiffs fail to establish a violation of federal law in their
allegations that defendants violated the Sherman Act,
15 U.S.C. § 1, et seq., and the Racketeer Influenced and Corrupt Organizations Act ("RICO"),
18 U.S.C. § 1961-68.*fn1 For the reasons that follow, defendants'
motions to dismiss are granted.
Alpha is a school bus contractor located in Crestwood,
Illinois, and is a wholly owned subsidiary, along with twelve
other subsidiaries licensed as interstate carriers of passengers,
of Cook-Illinois. Alpha provides student transportation services
for a number of school districts in the greater Chicago and Cook
County, Illinois, area. At issue in this case are the 2003-2006
contracts for busing services for the Chicago Board of Education
non-public routes, Southwest Cook County Cooperative Association
for Special Education, and Oak Lawn School District 218
(collectively, the "School Bus Contracts"). In the spring of
2003, when Alpha prepared and submitted its bids to the Chicago
Board of Education, Southwest Cook County Cooperative Association
for Special Education, and Oak Lawn Board of Education
(collectively, the "School Districts"), Michael Wagner and Leroy
Meister were employed by Alpha as General Manager and Director of
Operations, respectively. According to Alpha, both men had access
to confidential Alpha business information, including details of
Alpha's past and present contracts with the School Districts (for
many years prior to 2003, Alpha provided busing services to all three districts), and both helped
prepare Alpha's bid for the School Bus Contracts for 2003-2006.
In addition to incumbent contract holder Alpha, a number of
other transportation companies also bid for the 2003-2006 School
Bus Contracts; the winner was Southwest. Southwest is an Illinois
corporation, owned and controlled by Barbara Hackel, that
provides busing services in competition with Alpha. Southwest
Leasing, an Illinois limited liability company, and Bear Bones
Leasing, a de jure or de facto Illinois corporation, are owned
and controlled by Wagner and operate to lease buses to Southwest.
Plaintiffs allege that Hackel, Wagner, and Meister contracted to
form Southwest and the leasing companies, and that together they
conspired to underbid Alpha for the School Bus Contracts and
eliminate Alpha as a competitor in the special education student
According to the complaint, Wagner and Meister were still
employed by Alpha when they stole Alpha's confidential bid
information and gave it to Hackel and Southwest, who then used it
to prepare Southwest's bid for the School Bus Contracts. As a
result of Wagner's, Meister's, Hackel's and Southwest's allegedly
unlawful conduct, Southwest submitted a lower bid to the School
Districts and won the 2003-2006 contracts. Soon after the
contracts were awarded to Southwest, Wagner and Meister notified
Alpha of their intent to retire and began working for Southwest
and the leasing company defendants.
In summer of 2003 Plaintiffs filed suit in federal court,
arguing that defendants' conduct amounted to forbidden restraint
of trade under the federal and state antitrust laws, civil conspiracy, violation of Illinois trade secret laws,
tortious interference with business opportunity, breach of
fiduciary duty, racketeering, and fraudulent transfer of assets.
Defendants moved to dismiss all claims against them. Because
federal jurisdiction in this case depends on the existence of a
claim under either the Sherman Act or RICO, the court's opinion
will address these claims first.
In considering a motion to dismiss for lack of jurisdiction,
the court must accept as true all well-pleaded factual
allegations and draw all reasonable inferences in favor of the
plaintiff. Alicea-Hernandez v. Catholic Bishop of Chicago,
320 F.3d 698, 701 (7th Cir. 2003). Plaintiffs here assert that
federal jurisdiction exists because defendants violated the
Sherman Act, 15 U.S.C. § 1, and RICO, 18 U.S.C. § 1962. See
28 U.S.C. § 1337. Defendants, however, contend that this court is
without jurisdiction because plaintiffs have failed to state a
claim under either federal statute.
Plaintiffs' federal claims are subject to two different
standards of pleading under the Federal Rules of Civil Procedure.
For plaintiffs' antitrust claim to survive, it must provide a
short and plain statement which demonstrates that plaintiffs
suffered an injury caused by defendants' restraint of interstate
commerce. Midwest Gas Servs. v. Indiana Gas Co., 317 F.3d 703,
711 (7th Cir. 2003); FED. R. CIV. P. 8(a). Importantly,
plaintiffs' injury must be an "antitrust injury which is to
say, injury by reason of those things that make the practice
unlawful, such as reduced output and higher prices," as opposed
to mere economic loss. Gypsum Co. v. Indiana Gas Co., 350 F.3d 623, 626-27 (7th Cir. 2003); Loeb Indus. v. Sumitomo Corp.,
306 F.3d 469, 481 (7th Cir. 2001). For plaintiffs' RICO claims
alleging predicate acts of mail and wire fraud to survive, they
must describe with particularity "the identity of the person who
made the [mis]representation, the time, place, and content of the
misrepresentation, and the method by which the misrepresentation
was communicated to the plaintiff." Slaney v. International
Amateur Athletic Fed'n, 244 F.3d 580, 599 (7th Cir. 2001); FED.
R. CIV. P. 9(b). A successful RICO claim also requires a
plaintiff to show that his injury was proximately caused by
defendants' racketeering activity. Holmes v. Securities Investor
Prot. Corp., 503 U.S. 258, 268-69 (1992). Since plaintiffs fail
to state a claim under either federal law and they assert no
other basis for federal jurisdiction, this case must be dismissed
pursuant to FED. R. CIV. P. 12(h)(3).
B. Sherman Act Antitrust Claim
Section 1 of the Sherman Act, which defendants' act of
underbidding Alpha for the School Bus Contracts by using Alpha's
confidential information is alleged to violate, forbids
conspiracies in restraint of trade or commerce among the states
or with foreign nations. In re High Fructose Corn Syrup
Antitrust Litig., 295 F.3d 651, 654 (7th Cir. 2002). Though all
an antitrust claim need allege to survive a motion to dismiss is
that a plaintiff suffered an injury due to a defendant's unlawful
restraint of interstate commerce, Midwest Gas, 317 F.3d at 711,
it is quite possible for a plaintiff to plead himself out of
court by alleging facts that could not under any circumstances
constitute an antitrust violation, Hammes v. AAMCO
Transmissions, Inc., 33 F.3d 774, 782 (7th Cir. 1994). Plaintiffs in this case have done exactly
A successful claim under § 1 of the Sherman Act requires proof
that (1) a contract, combination, or conspiracy between two or
more persons (2) to restrain interstate commerce in the relevant
market (3) caused an injury of the sort Congress intended to
prevent by enacting the antitrust laws. See Denny's Marina Inc.
v. Renfro Prods., Inc., 8 F.3d 1217, 1220 (7th Cir. 1993);
Hammes, 33 F.3d at 782. Defendants here argue that plaintiffs
fail to establish a § 1 violation in all respects, including (1)
failure to plead a sufficient ...