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Chicago Studio Rental, Inc. v. Illinois Department of Commerce and Economic Opportunity

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

April 3, 2017

CHICAGO STUDIO RENTAL INC., and CHICAGO STUDIO REAL ESTATE HOLDINGS, LLC Plaintiffs,
v.
ILLINOIS DEPARTMENT OF COMMERCE AND ECONOMIC OPPORTUNITY, ILLINOIS FILM OFFICE, and BETSY STEINBERG, in her individual and official capacity, Defendants.

          OPINION AND ORDER

          SARA L.ELLIS United States District Judge.

         Feeling shut out of the television and film production business in Chicago, Plaintiffs Chicago Studio Rental Incorporated and Chicago Studio Real Estate Holdings, LLC, collectively doing business as Chicago Studio City (“CSC”), filed suit against the Illinois Department of Commerce and Economic Opportunity (“IDCEO”), the Illinois Film Office (“IFO”), and Betsy Steinberg (“Steinberg”), the former managing director of IFO, (collectively, “Defendants”), alleging that Defendants conspired to steer film and television production work in the City of Chicago to Chicago Film Studio Holdings, LLC a/k/a Chicago Film Studios Industrial Real Estate Holdings, LLC (“Cinespace”) in violation of Sections 1 and 2 of the Sherman Anti-Trust Act, 15 U.S.C. § 1 et seq. CSC also alleges that Steinberg, in her individual capacity, violated its equal protection and due process rights under the Fourteenth and Fifth Amendments, respectively.

         The Court previously dismissed CSC's initial complaint against IDCEO and Steinberg in her official capacity on the basis of sovereign immunity, and dismissed the due process and antitrust claims against Steinberg in her individual capacity for failure to adequately plead those claims. CSC filed its amended complaint in an attempt to address those issues and added IFO as a Defendant as well. Defendants now move to dismiss the antitrust (Count II) and due process (Count III) claims of the amended complaint [41], arguing that the antitrust claims against IDCEO, IFO, and Steinberg in her official capacity are barred by sovereign immunity, and that CSC has failed to adequately allege its remaining claims against Steinberg in her individual capacity. Because IDCEO, IFO, and Steinberg in her official capacity are immune from suit under the Sherman Act, and because CSC has failed to allege an antitrust injury, the Court grants the motion to dismiss Count II. The Court grants Steinberg's motion to dismiss Count III because CSC has not alleged that Steinberg deprived it of a constitutionally protected property interest.

         BACKGROUND[1]

         IDCEO is a division of the Illinois government. It is tasked with “rais[ing] Illinois' profile as a premier global business destination; and to provide a foundation for the economic prosperity of all Illinoisans, through coordination of business recruitment and retention, provision of essential capital to small businesses . . . and administration of state and federal grant programs.” Doc. 38 ¶ 6. IFO is a division of IDCEO. Steinberg was the Managing Director of IFO at all times relevant to this action. IFO's principal purpose is to support film, television and commercial production activity in Illinois, particularly in Chicago (the “Chicago Film Production Market”). One method of support is to offer producers tax credits for bringing their film production business to Illinois. Through its authority to approve these tax credits, IFO is able to exert control over Chicago-oriented producers.

         Since 1979, CSC has operated film and television production studio facilities and provided equipment to producers of films, television programs, and commercials in Chicago. Until 2010, CSC successfully provided such services in Chicago and received repeat business from Hollywood studios and other Chicago-oriented producers. In 2010, however, Cinespace entered the Chicago Film Production Market as CSC's competitor. Thereafter, CSC's business declined due to Defendants' actions. Specifically, IDCEO began steering Chicago-oriented producers to Cinespace. Because these producers want to receive Illinois tax credits, IDCEO was able to use its authority in approving these tax credits to persuade producers to take their business to Cinespace.

         In early 2014, Steinberg confirmed the steering of production of the NBC television series “Chicago Fire” to Cinespace when she “attributed to Governor Quinn the following direction: ‘Cinespace Chicago. We need to support this as a State.'” Doc. 38 ¶ 59. Governor Quinn expressed his preference for Cinespace by holding annual press conferences regarding Chicago production revenue at Cinespace's facilities in 2011, 2013 and 2014. Governor Quinn declined repeated invitations to visit CSC's facilities. In addition, IDCEO did not show Chicago-oriented producers CSC's facilities when the producers were looking for studio space, did not afford CSC the opportunity to bid for production opportunities, did not include CSC in any meetings or events to promote production activities in Chicago, and fostered a belief among producers that in order to receive tax credits the producers had to bring their business to Cinespace. As a result of the Quinn administration's preference for and steering of production business to Cinespace, CSC lost millions of dollars in potential revenue.

         Additionally, due to Cinespace's political and labor union contacts, it received millions of dollars in state grant money from Illinois under the Quinn administration. In November of 2014, Cinespace applied for and received $10, 000, 000 in grant funds to purchase seven properties near its facilities. Following a review by Governor Rauner's administration, however, it was discovered that Governor Quinn's administration had not abided by the normal procedures in approving the grant. Governor Rauner terminated the grant and reclaimed the $10, 000, 000 in grant funds. IDCEO told CSC that no funds were available when CSC sought grant assistance.

         Defendants' actions of awarding grants to Cinespace and directing film producers to Cinespace resulted in Cinespace obtaining a monopoly in the Chicago Film Production Market.

         LEGAL STANDARD

         A motion to dismiss under Rule 12(b)(6) challenges the sufficiency of the complaint, not its merits. Fed.R.Civ.P. 12(b)(6); Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). In considering a Rule 12(b)(6) motion to dismiss, the Court accepts as true all well-pleaded facts in the complaint and draws all reasonable inferences from those facts in the plaintiff's favor. AnchorBank, FSB v. Hofer, 649 F.3d 610, 614 (7th Cir. 2011). To survive a Rule 12(b)(6) motion, the complaint must not only provide the defendant with fair notice of a claim's basis but must also be facially plausible. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009); see also Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. “While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the ‘grounds' of his ‘entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555 (internal citations omitted). “The plausibility standard is not akin to a ‘probability requirement, ' but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Iqbal, 556 U.S. at 678.

         ANALYSIS

         I. Antitrust Claim

         A. Eleventh ...


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