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Labor One, Inc. v. Staff Management Solutions, LLC

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

August 5, 2019

LABOR ONE, INC., an Illinois Corporation, Plaintiff,
v.
STAFF MANAGEMENT SOLUTIONS, LLC, an Illinois Limited Liability Company, ARAMARK SERVICES, INC., a Delaware Corporation, and ARAMARK FOOD AND SUPPORT SERVICES, INC., a Delaware Corporation, Defendants.

          MEMORANDUM OPINION AND ORDER

          REBECCA R. PALLMEYER, UNITED STATES DISTRICT JUDGE.

         The parties to this case are both in the business of providing temporary workers to other businesses. Between July 2015 and May 2017, Plaintiff Labor One, Inc. was a subcontractor for Defendant Staff Management Solutions, Inc. Under the parties' contract, Labor One provided temporary employees to Staff Management's clients, including Defendants Aramark Services, Inc. and Aramark Food and Support Services Group, Inc. (collectively, Aramark). A billing dispute arose, however, and Staff Management terminated the contract in May 2017. This lawsuit, between two Illinois entities, followed.

         In a ruling last year, this court concluded that Plaintiff Labor One's claims do not arise under federal law, and that there is no other basis for federal jurisdiction. Labor One, Inc. v. Staff Management Solutions LLC, No. 17 C 7580, 2018 WL 4110676 (N. D. Ill. Aug. 8, 2018). Labor One has filed an amended complaint, but the court stands by its conclusion that the parties' business dispute does not give rise to claims under federal antitrust or civil rights law. Accordingly, Defendants' motion to dismiss [62] is granted.

         BACKGROUND

         Labor One's amended complaint [52] alleges the following: Staff Management is a procurement manager for temporary labor services. (Am. Compl. ¶¶ 13, 22.) It is also "in the business of providing its own temporary workers to other entities while performing centralized management services" in connection with those workers. (Id. ¶ 13.) At some point, Aramark "retained Staff Management as the procurement manager" for temporary employees at McCormick Place, a venue in Chicago, Illinois. (Id. ¶ 22.)

         Labor One, too, is in the business of providing temporary workers. (Id. ¶ 13.) In what it calls a "Community First Program," Labor One hires temporary employees from "specifically targeted low-income neighborhoods" of Chicago "to create local jobs." (Id. ¶¶ 15, 20.) In July 2015, Aramark "contacted Labor One about providing temporary labor services at McCormick Place" under the Community First Program. (Id. ¶ 14.) At the time, Aramark "was aware that Staff Management had its own preferred vendor list for temporary workers" and that Staff Management "did not want Labor One as the provider of temporary labor services at McCormick Place." (Id.) Nonetheless, on July 22, 2015, Labor One and Staff Management entered into a contract under which Labor One would supply temporary employees to Aramark-via Staff Management-for work at McCormick Place. (Id. ¶ 22.) Because Labor One planned to provide temporary workers from its Community First Program, "most, if not all, of the temporary workers to be supplied under the" contract were African American. (Id. ¶ 20.) Indeed, in its original complaint, Labor One alleged that it "only hired African-American workers." (Compl. [1] ¶ 94). Perhaps in response to the court's concern about that allegation (see Memorandum Order [46] at 6-7), Labor One now alleges it "has laborers from various ethnic and racial backgrounds." (Am. Compl. [52] 21.)[1]

         Under the contract between Labor One and Staff Management, Staff Management would receive "a fee of 3% for providing centralized management services" to Aramark in connection with temporary employees that Staff Management procured for McCormick Place. (Id. ¶ 22.) The contract also required Staff Management to use a "Vendor Managed System (VMS) . . . for the acquisition, tracking, reporting and billing of Services for" Aramark. (Id. ¶ 24.) In addition, it required Labor One to "enter its billing hours for temporary labor services into the VMS system." (Id. ¶ 25.) Finally, it required Staff Management to pay Labor One after Aramark approved Labor One's billing entries. (Id. ¶ 26.) Staff Management, in turn, would "receive a commission from all invoices created by Labor One in the VMS system." (Id.)[2]

         Between 2015 and 2017, Labor One "encountered technical issues with the VMS system . . . in entering its billing hours." (Id. ¶ 29.) Labor One made repeated efforts to seek assistance from Staff Management with these issues, but its efforts were "to no avail." (Id. ¶ 31.) On some occasions, Aramark participated in the negotiations between Staff Management and Labor One. (See, e.g., Id. ¶¶ 36-46.) Staff Management, for its part, failed to timely pay Labor One for the services it provided. (See Id. ¶¶ 28, 34.)

         After this billing dispute arose, Staff Management "began to raise concerns about the honesty and quality of Labor One's temporary workers." (Id. ¶ 41.) At one point, Staff Management "accused Labor One's temporary workers of 'stealing time and hours' when assigned to a job with Aramark" and stated that the workers' conduct in this regard "was the reason for the delay in payment of the invoices." (Id. ¶ 42.) In addition, "[a]s a result of Labor One's efforts to get paid for its services, Staff Management began to request [repeated] background checks and drug tests for all of its temporary laborers working at McCormick place." (Id. ¶ 44; see also Id. ¶ 46 (alleging that Staff Management started requesting "full-scale drug testing . . . even though the [contract with Labor One] provided for random testing").) And in a meeting around November 2016, Staff Management asked Labor One to "stop providing 'those people'"-meaning workers from the Community First Program-to Aramark at McCormick Place. (Id. ¶ 45.) Staff Management tried to force Labor One to instead "hire temporary workers from Staff Management's parent company or transition [Labor One's] temporary workers to Staff Management's preferred vendor list." (Id. ¶ 98; see also Id. ¶ 45.) Around the same time, "Aramark employees" disclosed to Labor One supervisors that Staff Management was withholding payment from Labor One "in an attempt to force [it] to terminate the Contract and get rid of Labor One's workers from the Community First Program." (Id. ¶ 46.) In a letter dated May 26, 2017, "Staff Management unilaterally terminated" the contract with Labor One and "claim[ed] that the termination was due to Labor One's failure to enter time correctly in the VMS system." (Id. ¶ 48.)

         According to Labor One, Staff Management still owes it $48, 063.75. (Id. ¶ 49.) Labor One asserts claims against Staff Management for breach of contract (Count I); intentional interference with prospective economic relations (Count II); negligent interference with economic relations (Count III); violation of Section 2 of the Sherman Act, 15 U.S.C. § 2 (Count V); violation of Illinois' unfair competition law (Count VI); commercial disparagement under Illinois common law (Count VII); and violation of the Civil Rights Act, 42 U.S.C. § 1981 (Count VIII). Labor One asserts a claim against Aramark for unjust enrichment (Count IV).

         DISCUSSION

         As in Labor One's original complaint, only two of the counts in the amended complaint invoke federal law: Count V, which asserts a claim arising under the Sherman Act, 15 U.S.C. § 2, and Count VIII, which asserts a claim arising under the Civil Rights Act, 42 U.S.C. § 1981. To survive Staff Management's motion to dismiss these counts, Labor One's amended complaint must include enough factual detail to give Staff Management fair notice of the claims and the grounds upon which they rest, and the allegations must amount to a claim for relief that is plausible on its face. Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009). To state a plausible claim, Labor One must allege enough factual matter, taken as true, to "raise a right to relief above the speculative level" and "nudge[] [its] claims across the line from conceivable to plausible." Bell Atl. v. Twombly, 550 U.S. 544, 555-57 (2007). In determining whether Labor One meets this test, the court accepts all well-pleaded facts as true and draws all reasonable inferences in favor of Labor One. Iqbal, 556 U.S. at 679. The court does not, however, accept as true legal conclusions couched as factual allegations. Iqbal, 556 U.S. at 679. Formulaic recitation of the elements of a cause of action supported by conclusory statements are insufficient. Id. at 678; see also Tamburo v. Dworkin, 601 F.3d 693, 699 (7th Cir. 2010) (affirming dismissal of antitrust claims that were "pleaded in a wholly conclusory fashion" and "appear[ed] to sweep in the entire gamut of federal antitrust violations"); Swanson v. Citibank, N.A., 614 F.3d 400, 405 (7th Cir. 2010) (in general, antitrust claims "will require more detail, both to give the opposing party notice of what the case is all about and to show how . . . the dots should be connected").

         As the court will explain, Labor One's allegations that Staff Management violated the Sherman Act and the Civil Rights Act do not meet these pleading standards.

         A. ...


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