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Chicago United Industries, Ltd. v. City of Chicago

April 29, 2008

CHICAGO UNITED INDUSTRIES, LTD., AN ILLINOIS CORPORATION, GEORGE LOERA, AND NICK MASSARELLA, PLAINTIFFS,
v.
CITY OF CHICAGO, AN ILLINOIS MUNICIPAL CORPORATION, MARY DEMPSEY, AND LOUIS LANGONE, DEFENDANTS.



The opinion of the court was delivered by: Robert M. Dow, Jr. United States District Judge

MEMORANDUM OPINION AND ORDER

This matter is before the Court on a Motion to Reconsider Pursuant to Rule 59(e) (DE 208), filed by Plaintiffs George Loera and Nick Massarella on December 17, 2007. On December 3, 2007, the judge previously assigned to this case granted summary judgment against individual Plaintiffs George Loera and Nick Massarella on their claims for procedural due process (Count I), substantive due process (Count II), and retaliation (Count IV). Plaintiffs Loera and Massarella ask this Court to revisit the prior ruling, specifically, Judge Kennelly's decision to grant summary judgment for Defendants on Loera and Massarella's procedural due process claims.*fn1 For the reasons stated below, the Court denies the motion to reconsider.

I. Background*fn2

Plaintiffs' claims arise from the City of Chicago's decision in August 2005 to bar Chicago United Industries ("CUI"), George Loera, and Nick Massarella from doing business with the City. Prior to the debarment, CUI had been awarded contracts to provide City departments with stop signs, traffic control signals, fire extinguisher boxes, emergency telecommunications equipment, and other items. As a result of the debarment, the City allegedly terminated or stopped performing on over forty contracts that CUI had with the City, whose value, CUI alleges, was around $12 million. Plaintiffs contend that the debarment also had the effect of preventing them from doing business with other firms that had City contracts. Plaintiffs allege that the debarment and termination violated Loera and Massarella's rights to due process -- because Loera and Massarella never were notified that the City was considering debarring them personally -- and that the procedure the City used was a sham. Plaintiffs also allege that during the debarment proceedings, the City and its representatives made false and defamatory statements about CUI, Loera, and Massarella to the press, City departments, and companies with which CUI does business. Finally, Plaintiffs allege that Defendants later retaliated against them for filing suit to challenge the debarment.

Plaintiffs filed this suit on August 30, 2005, six days after the debarment. They obtained a temporary restraining order from the judge to whom the case was then assigned. The Seventh Circuit reversed the order after concluding that it amounted to an appealable preliminary injunction because of its duration and finding that the claim for injunctive relief had been rendered moot by the City's reinstatement of the cancelled contracts, rescission of the debarment order, and amendment of debarment rules to provide for additional procedures before a debarment could occur. See Chicago United Inds., Ltd. v. City of Chicago, 445 F.3d 940 (7th Cir. 2006). The Seventh Circuit vacated the injunction but remanded the case for consideration of any claims for damages.

After remand, Plaintiffs filed three amended complaints. The third (and currently operative) amended complaint, filed in August 2007, alleges that CUI has been doing business with the City, the City's primary contractors, and other governmental agencies in northern Illinois for approximately twenty years. Plaintiffs allege that on an unspecified date, CUI was awarded a contract by the City, worth $1,530,000, to provide more than 300,000 blank signs ("blanks") to the City's Department of Transportation (DOT). Pursuant to that contract, DOT placed an order for 12,000 blanks, which CUI delivered in January 2005. Shortly thereafter, Louis Langone, DOT's director of administration, claimed that CUI had shorted the City by 222 blanks, saying he had counted the blanks by hand. Massarella allegedly visited the DOT's sign shop and saw that the blanks were still shrink-wrapped. He believed that Langone could not possibly have counted the blanks and had made a false allegation against CUI as an excuse to avoid or delay payment. CUI then provided the City with documentation that the appropriate number of blanks had been delivered and requested payment. According to Plaintiffs, CUI was told to deal only with the City's Department of Procurement Services ("DPS") and its attorneys. CUI was eventually paid for all but 222 blanks.

On March 31, 2005, the City issued a notice of intent to debar CUI.*fn3 In that notice, the City asserted that CUI had submitted a false shipping ticket to DOT regarding the delivery of the blanks and tried to collect $2,400 that it knew was not owed. The notice did not state that the City was considering debarring Loera or Massarella personally. Plaintiffs also allege that at the time the City issued the notice, it issued press releases falsely claiming that CUI was dishonest and had committed a fraud on the City. On April 29, 2005, CUI submitted a written response to the notice of intent to debar, including a sworn affidavit from the manufacturer of the blanks stating that any shortage was the result of its own error and that CUI and its representatives were unaware of the error.

According to Plaintiffs, during the ensuing four months, DOT and the City did not respond to Plaintiffs' requests for meetings or a hearing regarding the allegations in the notice. Plaintiffs also allege that during this time, DPS directed other City departments not to honor their contracts with CUI or do business with CUI and advised other contractors to do the same, even though this allegedly violated the City's debarment procedures. As a result, Plaintiffs allege that manufacturers and suppliers under contract with CUI terminated their relationships with the company.*fn4 Plaintiffs say they repeatedly protested these actions by the City and requested a hearing and meetings with DPS and Mary Dempsey (the City's interim chief procurement officer), but were ignored.

On August 24, 2005, the City debarred CUI, corporately, and Massarella and Loera, individually, from conducting any business with the City of Chicago for a period of three years. Plaintiffs contend that the debarment occurred without any opportunity to rebut the evidence against them and without findings by an impartial finder of fact. As a result of the debarment, Plaintiffs allege that CUI's business with the City was terminated, and all payments due to CUI were placed on hold.

CUI, Loera, and Massarella then filed this lawsuit and moved for a temporary restraining order. As noted earlier, the judge to whom the case was then assigned issued the TRO, enjoining the City from (i) enforcing the debarment of Plaintiffs, (ii) canceling any existing contracts with CUI, and (iii) conducting any further proceedings on the decertification. The TRO was later extended and modified to prevent the City from doing an end run around CUI's existing contracts by procuring from other entities the materials covered by those contracts.

Plaintiffs allege that after the filing of this suit and the entry of the TRO, the City retaliated against Plaintiffs by threatening to institute new debarment proceedings, failing to inform City departments and vendors that CUI was again eligible to do business with the City, canceling existing contracts, refusing to award other contracts to CUI even though it was the low bidder, offering other City contractors unspecified "incentives" not to do business with CUI, and taking various other actions. As a result, Plaintiffs contend that certain vendors declined to do business with Plaintiffs. CUI also alleges that the City further retaliated by refusing to act on CUI's request for re-certification as a minority business enterprise and charging Massarella with violating a City ordinance imposing civil penalties for making false claims (a charge that the City later dropped).

Defendants moved for summary judgment against Plaintiffs Loera and Massarella on their claims for procedural due process (Count I), substantive due process (Count II), and retaliation (Count IV) and also asserted that Count V (for "injunctive relief") did not establish a distinct claim and was "purely remedial." Judge Kennelly granted summary judgment for Defendants on all issues raised by Defendants' motion. In the instant motion, Plaintiffs challenge only Judge Kennelly's decision to grant summary judgment for Defendants on Loera and Massarella's procedural due process claims.

II. Analysis

A. Standard for a Motion to ...


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