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Neptun Light, Inc. v. City of Chicago

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

April 16, 2018

NEPTUN LIGHT, INC. Plaintiff,
v.
CITY OF CHICAGO; CHICAGO INFRASTRUCTURE TRUST; and AMERESCO, INC., Defendants.

          MEMORANDUM OPINION AND ORDER

          AMY J. ST. EVE UNITED STATES DISTRICT COURT JUDGE.

         Defendants City of Chicago (the “City”), Chicago Infrastructure Trust (“CIT”), and Ameresco, Inc. (collectively, “Defendants”) have moved pursuant to Federal Rule of Civil Procedure 12(b)(6) to dismiss Plaintiff Neptun Light, Inc.'s Complaint alleging a violation of Section 1 of the Sherman Act, 15 U.S.C. § 1. (R. 18.) For the following reasons, the Court grants Defendants' motion.

         BACKGROUND

         This case concerns streetlights, and how the City went about procuring subcontractors to supply new and energy-efficient ones. The Complaint alleges that in November 2016 the City prepared a revamp of the City's lights with “smart lighting.” To get the process underway, the City issued the Chicago Smart Lighting Project Request for Proposals (“RFP”) to various contractors. (Compl. ¶ 22.) The City did so “in coordination” with CIT (id.), which is a nonprofit organization that assists the City “in providing alternative financing and project delivery options for transformative infrastructure projects” (id. ¶ 16). With their RFP, the City and CIT sought to “select a single Proposer that delivers the best value.” (Id. ¶ 24.) The RFP therefore requested “competitive detailed proposals, ” or bids, and the City and CIT would consider only proposals that satisfied the RFP's stated criteria. (Id. ¶¶ 23-25.)

         The RFP required that bids must include new “LED Luminaires, ” a type of efficient electric-lighting unit, and that those luminaires meet certain specifications for installation in 270, 000 fixtures. (Id. ¶ 28.) These RFP specifications-including wattage, range, and weight requirements-were specific to various different “lighting contexts, ” such as alley, residential, or arterial streets. (Id. ¶ 30.) The RFP also attached Form 4, which contractors had to complete by filling in data for their luminaires. (Id. ¶ 32.) Contractors further had to submit physical samples with their bids under the RFP. (Id. ¶ 33.)

         The RFP contemplated that the City and CIT could conduct a demonstration of the submitted luminaires, and if they did, they would “utilize the relevant samples submitted by each Proposer.” (Id. ¶¶ 34-35.) A comprehensive demonstration, however, was to occur only after the deadline to submit bids. (Id. ¶ 37.) The RFP stated that its goal was “to create a fair and uniform basis for the evaluation of the Proposals” and that the City would award the contract to the “Proposer whose Proposal conforms to the requirements of the RFP” and after considering the criteria it would “determine which proposal represents the ‘best value.'” (Id. ¶ 36.) The RFP initially called for bids by December 14, 2016, but through a later addendum dated December 9, 2016, the City and CIT moved the deadline to January 9, 2017. (Id. ¶ 39.)

         The Complaint alleges that Defendants ran afoul of the RFP in an effort to steer the luminaire subcontracting deal to General Electric (“GE”) Lighting and away from Neptun and other competitors. According to the Complaint, this effort became evident in December 2016. That month, the City and CIT performed a neighborhood demonstration, but rather than use luminaires supplied by “each” subcontractor, as the RFP contemplated, they used only GE Lighting's luminaires. (Id. ¶¶ 40-48.) The next month, on the deadline of January 9, 2017, the City and CIT received six proposals from contractors, including ones from Commonwealth Edison (“ComEd”), Aldridge Electric, Inc., Itron, Inc., and Ameresco. ComEd's proposal listed GE Lighting as the luminaire manufacturer, but explained that GE Lighting's luminaires could not meet each specification for all lighting contexts. (Id. ¶¶ 56, 57-58.) GE Lighting's luminaires also had not been independently tested by a recognized laboratory, as the RFP required. (Id. ¶¶ 57-61.) Similarly, Aldridge's bid listed GE Lighting, and Aldridge too conceded that GE Lighting's luminaires did not meet specifications. (Id. ¶¶ 62-64.)

         Itron, meanwhile, listed Neptun as its luminaire subcontractor. Neptun, unlike GE Lighting, provided the required data and samples. (Id. ¶ 51.) Ameresco listed yet another luminaire manufacturer, but it noted that it could work with another “major manufacturer” already “aligned with another contractor” should “the CIT, City, and Parks have an interest in utilizing their products”-a not-so-subtle hint that Ameresco could secure GE Lighting's luminaires, according to the Complaint. (Id. ¶ 54.)

         The City and CIT ultimately selected Ameresco as the project's contractor. No comprehensive demonstration of Ameresco's listed luminaires took place, however, as the RFP required. (Id. ¶ 66.) Instead, in February 2017, Ameresco notified Neptun that it was fielding additional luminaire sub-bids based on revised specifications. (Id. ¶ 68.) The City and CIT made many of those revisions to account for GE Lighting's shortcomings, according to the Complaint. Indeed, one of the revisions obviated the need to submit physical samples, which GE Lighting had failed to do in the first instance. (Id. ¶¶ 69, 72-73.) After receiving Ameresco's notice about the revised specifications, Neptun again had its luminaires tested independently, and it submitted documentation with its “best proposal, ” providing “all information the City asked for.” (Id. ¶¶ 72, 70.) In March 2017, Ameresco informed Neptun that it was not selected for any lighting context. GE Lighting was selected for five. (Id. ¶¶ 74-75.)

         The Complaint goes on to allege in some detail how Neptun's luminaires were more efficient-by cost, lifespan, wattage-than GE Lighting's in each of the five lighting contexts GE Lighting was awarded. (Id. ¶¶ 78-106.) Looking for answers, Neptun sent a letter to Ameresco. The letter noted that Neptun, unlike GE Lighting, was a Chicagoland company, and that it “performed unequivocally” better than the companies selected. Ameresco never responded. (Id. ¶¶ 108-109.) Neptun then turned to the City, which did respond, and stated that it had suggested to Ameresco to “reach out to the broadest possible market by contacting each of the manufacturers of the six proposals, including Neptun.” (Id. ¶ 113.) The City asserted further that Neptun did not provide the “best value” considering several factors, including “local manufacturing capability, large-scale experience, low dirt depreciation, and affordable lifecycle cost.” (Id. ¶ 114.) According to the Complaint, those assertions were not only unsupported, they were simply wrong. The Complaint alleges, for example, that Neptun already makes luminaires in a Chicago suburb (id. ¶ 119), has manufactured over 400, 000 luminaires (id. ¶ 125), includes better sealing properties in its luminaires than GE Lighting (id. ¶ 128), and offers less expensive, longer lasting luminaires than GE Lighting (id. ¶ 131).

         Based on the City's empty justifications and in light of how the luminaire bidding panned out, the Complaint claims that Defendants entered into an unlawful agreement in violation of Section 1 of the Sherman Act. That agreement, it alleges, entailed “relaxing” the specification requirements and then holding a “purportedly open and free competition to select luminaire manufacturers as a pretext in order to include GE Lighting as a luminaire manufacturer- notwithstanding the inferiority of GE Lighting's luminaires.” (Id. ¶ 133.) The Complaint claims that not only did GE Lighting's selection contravene the RFP's stated goal to host a competitive bidding process and find the “best value, ” it also contravened Illinois law, which requires that “all purchase orders or contracts . . . involving amounts in excess of $10, 000, made by or on behalf of [a] municipality, shall be let by free and open competitive bidding.” (Id. ¶ 134 (quoting 65 ILC 5/8-10-3).) The Complaint alleges that Defendants' unlawful agreement to fix the bidding process for GE Lighting has harmed Neptun, which could have earned millions on the project, and Chicagoans, who now suffer less efficient and more expensive luminaires over their streets. (Id. ¶¶ 136-140.)

         LEGAL STANDARD

         “A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) challenges the viability of a complaint by arguing that it fails to state a claim upon which relief may be granted.” Camasta v. Jos. A. Bank Clothiers, Inc., 761 F.3d 732, 736 (7th Cir. 2014); see also Hill v. Serv. Emp. Int'l Union, 850 F.3d 861, 863 (7th Cir. 2017). Under Rule 8(a)(2), a complaint must include “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). To survive a Rule 12(b)(6) challenge, a “complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic v. Twombly, 550 U.S. 544, 570 (2007)). Courts, of course, accept all well-pleaded facts as true and draw reasonable inferences in the plaintiff's favor. See, e.g., Forgue v. City of Chicago, 873 F.3d 962, 966 (7th Cir. 2017). ...


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