United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
Rowe and his company (together, “Rowe”) allege in
this suit that Checkers Drive-In Restaurant, Inc.
discriminated against him in violation of 42 U.S.C. §
1981 when it declined to enter into franchise agreements with
him to operate two Checkers restaurants. Doc. 1. Checkers
moves under Federal Rule of Civil Procedure 12(b)(6) to
dismiss on statute of limitations grounds Rowe's claim as
to one of the restaurants. Doc. 22. The motion is granted,
but Rowe will have the opportunity to replead that claim.
resolving a Rule 12(b)(6) motion, the court assumes the truth
of the operative complaint's well-pleaded factual
allegations, though not its legal conclusions. See Zahn
v. N. Am. Power & Gas, LLC, 815 F.3d 1082, 1087 (7th
Cir. 2016). The court must also consider “documents
attached to the complaint, documents that are critical to the
complaint and referred to in it, and information that is
subject to proper judicial notice, ” along with
additional facts set forth in Rowe's brief opposing
dismissal, so long as those additional facts “are
consistent with the pleadings.” Phillips v.
Prudential Ins. Co. of Am., 714 F.3d 1017, 1020 (7th
Cir. 2013). The facts are set forth as favorably to Rowe as
those materials allow. See Pierce v. Zoetis, 818
F.3d 274, 277 (7th Cir. 2016). In setting forth those facts
at the pleading stage, the court does not vouch for their
accuracy. See Jay E. Hayden Found. v. First Neighbor
Bank, N.A., 610 F.3d 382, 384 (7th Cir. 2010).
2008, Rowe and Checkers entered into a franchise agreement
for Rowe to operate a Checkers restaurant in Dixmoor,
Illinois. Doc. 1 at ¶¶ 2, 7. The restaurant opened
in 2009. Id. at ¶ 7. In 2011, Rowe and Checkers
entered into a second franchise agreement for a restaurant on
the south side of Chicago. Id. at ¶ 8. Both
restaurants have been successful and profitable. Id.
at ¶ 9. Rowe is the only African-American Checkers
franchisee in the Chicago market, and one of only a few
nationwide. Id. at ¶ 10.
2012, Rowe sought to purchase an existing Checkers restaurant
at 5451 South Wentworth Avenue in Chicago from a franchisee
looking to retire. Id. at ¶ 11. Checkers
previously had declined to purchase the restaurant from the
franchisee, but after the franchisee sought Checkers's
approval to sell to Rowe, Checkers exercised its option to
purchase the restaurant rather than allowing Rowe to do so.
Ibid. Checkers executed the purchase contract on
July 5, 2012. Doc. 22-1. This marked the first time that
Checkers exercised its right of first refusal to block a
current franchisee from acquiring an existing restaurant.
Doc. 1 at ¶ 12. Checkers afterwards promised that it
would “make it up to [Rowe]” by helping him
expand and by waiving the franchise fee on his next
restaurant. Doc. 30 at 4.
2016, Rowe proposed opening a restaurant at 10258 South
Halsted Street in Chicago. Doc. 1 at ¶ 13. Local
Checkers representatives told him it was a “great site,
” and the franchise was conditionally approved in
August 2016. Id. at ¶¶ 15-16. However,
Checkers then insisted on conducting a market study because
the Halsted site would be less than two miles from an
existing Checkers restaurant. Id. at ¶ 18.
Checkers insisted on this study even though the Halsted site
had previously been a Checkers restaurant and had coexisted
with the other nearby site. Id. at ¶ 17.
Moreover, Checkers's franchise offering requires impact
studies only for locations within one mile (not two miles) of
one another. Id. at ¶¶ 19-20. For other
recently proposed sites in the Chicago area within two miles
of existing restaurants, Checkers did not require an impact
study. Id. at ¶ 21. Those sites were not opened
by African-Americans or African-American owned entities.
Id. at ¶ 22. Checkers ultimately denied
approval of Rowe's proposed Halsted site, citing the
impact study. Id. at ¶ 23.
filed this suit on October 21, 2016. Doc. 1. He alleges that
Checkers's purchase of the Wentworth restaurant and
denial of his request to open the Halsted site violated his
right under 42 U.S.C. § 1981 to make and enforce
contracts. Id. at ¶¶ 27-37.
argues that Rowe's claim as to the Wentworth location is
time-barred. It submits that a two-year statute of
limitations applies because the claim rests on Checkers's
unwillingness to enter into a new contract, not its
discriminatory performance of an existing contract. Doc. 22
at 4. Rowe counters that the Checkers's purchase of the
Wentworth location was in fact a deprivation of the
“benefits, privileges, terms and conditions of the
franchise relationship, ” making it actionable under
§ 1981(b) and thus subject to a four-year statute of
limitations. Doc. 30 at 7 (brackets omitted). The parties
also disagree about the date that Rowe's Wentworth claim
accrued. Checkers argues that the claim accrued in July 2012,
when it purchased the Wentworth location from the existing
franchisee. Doc. 22 at 6. Rowe contends that it accrued only
when he knew or had reason to know that the harm he suffered
(being deprived of the chance to purchase the restaurant) was
the product of intentional racial discrimination. Doc. 30 at
4. In his view, that did not occur until the 2016 rejection
of his proposed Halsted location prompted him to learn more
about Checkers's practices, which in turn alerted him to
the deviations from past practice that he believes are
evidence of racial discrimination. Id. at 5-6.
the accrual date, Checkers is correct. “A
plaintiff's action accrues when he discovers that he has
been injured, not when he determines that the injury was
unlawful.” Thelen v. Marc's Big Boy Corp.,
64 F.3d 264, 267 (7th Cir. 1995); see also Jamison v.
Urban, 411 F. App'x 919, 921 (7th Cir. 2011);
Stepney v. Naperville Sch. Dist. 203, 392 F.3d 236,
240 (7th Cir. 2004). The injury was the loss of the
opportunity to purchase the restaurant at the Wentworth site.
That injury occurred on July 5, 2012, when Checkers exercised
its option to purchase the restaurant, as shown by the
contract attached as an exhibit to the motion to dismiss.
Although exhibits to a Rule 12(b)(6) motion ordinarily may
not be used to support dismissal, Rowe acknowledges that
considering the contract is proper here. Doc. 30 at 2.
Furthermore, at the hearing on the motion, Rowe conceded the
factual accuracy of the July 2012 date. So Rowe was on notice
of his injury in July 2012, thus triggering the limitations
cites Moskowitz v. Trustees of Purdue University, 5
F.3d 279 (7th Cir. 1993), for the proposition that the
“discovery rule” provides that a discrimination
claim does not accrue until the plaintiff suspects
discrimination. Doc. 30 at 4. This misreads
Moskowitz, which speaks not to when a claim accrues,
but rather to when the equitable tolling doctrine tolls the
statute of limitations due to the plaintiff's inability
to know of the wrongful nature of the defendant's act. As
Under the doctrine of equitable tolling … a person
injured by an unlawful act need not sue until he knows, or
through the exercise of reasonable diligence would have
known, not only that he has been injured (for once he
discovers that, his cause of action has accrued and the
statute of limitations begins to run) but also that he
has been injured by a possibly wrongful act of the defendant.
5 F.3d at 281 (emphasis added). In Cada v. Baxter
Healthcare Corp., 920 F.2d 446 (7th Cir. 1990), the
Seventh Circuit observed that the equitable tolling doctrine
“permits a plaintiff to avoid the bar of the statute of
limitations if despite all due diligence he is
unable to obtain vital information bearing on the
existence of his claim.” Id. at 451 (emphasis
added). In so doing, the court ...