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Linda Construction Inc. v. City of Chicago

United States District Court, N.D. Illinois, Eastern Division.

August 22, 2016

LINDA CONSTRUCTION INC., LINDA McGEE and JESSE McGEE, Plaintiffs,
v.
CITY OF CHICAGO, et al., Defendants.

          MEMORANDUM OPINION AND ORDER

          HARRY D. LEINENWEBER, JUDGE.

         On March 15, 2016, the Court granted Motions to Dismiss Plaintiffs’ original six-count Complaint. (See, ECF No. 64). All claims brought by Plaintiffs Linda and Jesse McGee were dismissed without prejudice for lack of standing; Plaintiffs’ claims under Section 1981 and Title VII were dismissed with prejudice; their claims under Sections 1983 and 1985(3), and for tortious interference with contract were dismissed without prejudice; and their breach of contract claim was dismissed with prejudice as to Defendant City of Chicago (“the City”), but without prejudice as to Defendants Republic Services, Inc. (“Republic”) and Allied Waste Transportation, Inc. (“Allied”). Plaintiffs were granted leave to amend the Complaint within 14 days. On March 28, 2016, Plaintiffs filed the First Amended Complaint (the “FAC”), in which they assert claims against some of the same, and some new, Defendants under Sections 1981, 1983, and 1985(3) and for breach of contract [ECF No. 65].

         Before the Court are four Motions to Dismiss filed by Defendants Seng LLC and Kenneth Seng (collectively, “Seng”), the City and Chief Procurement Officer Jamie L. Rhee (“CPO Rhee”) (collectively, “the City Defendants”), National Casualty Company (“NCC”), and Republic, Allied, Mark Riley and Brian Holcomb (collectively, “the Republic Defendants”) [ECF Nos. 74, 82, 85 and 88]. Since the filing of these Motions, Plaintiffs have substituted counsel and voluntarily withdrawn their breach of contract claim. Thus, the Court limits its analysis in this opinion to the civil rights claims.

         For the reasons stated herein, all claims brought by Linda and Jesse McGee are dismissed with prejudice for lack of standing; Plaintiffs’ claims under Sections 1981 and 1985(3) are dismissed without prejudice; and their Section 1983 claim is dismissed without prejudice as to the City and CPO Rhee, but with prejudice as to the remaining Defendants.

         I. ANALYSIS

         A. Standing as to Linda and Jesse McGee

         The Court previously dismissed the claims brought by Linda and Jesse McGee (the “McGees”) for lack of standing because they were unable to allege an injury that affected their own legal rights, rather than those of their company, Linda Construction, Inc. (“LCI”). J.F. Shea Co. v. City of Chicago, 992 F.2d 745, 749 (7th Cir. 1993). The McGees were given leave to amend the Complaint to state a personal stake in this matter. They have failed to do so.

         The McGees are not party to any of the contracts in question. Domino’s Pizza, Inc. v. McDonald, 546 U.S. 470, 477 (2006) (affirming dismissal of corporate officer’s civil rights and common law claims for lack of standing because officer was not party to contract). The alleged discriminatory conduct was directed at them only in their position as owners of LCI, not personally. The only injury the McGees can point to is their loss of income and livelihood. This injury, which is entirely attributable to the McGees’ status as the sole investors in LCI, is derivative of the company’s injury. Sw. Suburban Bd. of Realtors, Inc. v. Beverly Area Planning Ass’n, 830 F.2d 1374, 1378 (7th Cir. 1987) (An individual may in fact suffer “some injury as a result of the alleged [conduct], presumably in the form of reduced salary, commissions, or other employment benefits due to the corporation’s weakened competitive position, ” but such an injury is “merely derivative of the injury suffered by the corporation itself.”). The McGees have failed to allege that they suffered an injury that is separate and distinct from that suffered by LCI, therefore the Court dismisses with prejudice all claims brought by them.

         B. 42 U.S.C. § 1981

         In its March 15, 2016 Opinion, the Court dismissed with prejudice Plaintiffs’ Section 1981 claim based on Defendants’ alleged interference with “the making of” a contract between LCI and the City. (ECF No. 64, at 10-11). A dismissal with prejudice operates as an adjudication upon the merits of a claim, and bars a later action. Marlow v. Winston & Strawn, 19 F.3d 300, 306 (7th Cir. 1994). It means “that the claim cannot be refiled in that court.” Styskal v. Weld Cty. Bd. of Cty. Comm’rs, 365 F.3d 855, 859 (10th Cir. 2004) (internal quotation marks and citation omitted). At first blush, Plaintiffs’ Section 1981 claim in the FAC appears to fly in the face of this well-established precedent. But upon closer examination, the FAC actually states a wholly separate Section 1981 claim based on an alleged three-year probationary contract between LCI and Republic.

         Plaintiffs claim that LCI was hired by Republic for a three-year probationary period to haul garbage from city transfer stations to landfills; this is the contract upon which Plaintiffs base their new Section 1981 claim. Plaintiffs contend that this contract was terminated due to LCI’s status as a minority-owned business and to ensure that LCI would not satisfy its probationary period and therefore would not qualify to bid for city contracts. To be clear, the Court previously dismissed Plaintiffs’ Section 1981 claim based on Defendants’ alleged interference with LCI’s ability to bid for city contracts. Thus, the Court only considers allegations in the FAC regarding Defendants’ interference with the making or enforcement of LCI’s three-year probationary contract.

         To state a claim under 42 U.S.C. § 1981, Plaintiffs must allege that: (1) they are members of a racial or ethnic minority; (2) Defendants intended to discriminate against them on the basis of race or ethnicity; and (3) the discrimination concerned the making and enforcing of a contract. Pourghoraishi v. Flying J, Inc., 449 F.3d 751, 756 (7th Cir. 2006). Although Plaintiffs have pleaded the existence of (and interference with) a contract and established that they were members of a racial minority, the FAC contains only conclusory allegations that fail to create a plausible inference of intentional discrimination on the basis of race.

         Allegations of race discrimination must be supported by material facts, not mere conclusions. Jafree v. Barber, 689 F.2d 640, 643 (7th Cir. 1982). Plaintiffs cannot satisfy this burden simply by tacking “because of [Plaintiffs’] race” onto their allegations or by merely alleging that Defendants “treated [Plaintiffs] differently than whites, on the basis of racial animus.” Plaintiffs appear to allege that because they are black, Defendants’ alleged conduct towards them was indisputably due to their race. But saying it is so does not make it so. Plaintiffs must connect the dots between the alleged cause (their race) and the alleged effect (the discriminatory conduct). The FAC fails to do so; Plaintiffs do not allege any facts to bolster the repeated conclusion that Defendants acted with racial animus. Therefore, Plaintiffs’ Section 1981 claim is dismissed; because Plaintiffs’ new counsel has requested one more chance to cure the defects in the Complaint, the Court grants Plaintiffs 14 days to amend the Complaint and provide factual support for the new Section 1981 claim. Failure to do so will result in dismissal with prejudice.

         C. 42 ...


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