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June 15, 2004.

Alpha School Bus Company, Inc., and Cook-Illinois Corp., Plaintiffs,
Michael W. Wagner, Barbara Ann Hackel, Leroy Meister, Southwest Transit, Inc., Chicago Bear Bones Leasing, Inc., and Southwest Transit Leasing, LLC, Sunrise Southwest, L.L.C., Sunrise Transportation, Inc., Defendants.

The opinion of the court was delivered by: JOAN GOTTSCHALL, District Judge


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.

I. Background

  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 transportation business.

  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.

  II. Discussion

  A. Standard of Review

  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 that.

  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 ...

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