Fidlar Acquisition Co. v. First American Data Tree LLC

Filing 54

ORDER entered by Judge Sara Darrow on March 28, 2014, DENYING the Third Party Defendant's #36 Motion to Dismiss. (MRD, ilcd)

E-FILED

Friday, 28 March, 2014 07:13:40 PM
Clerk, U.S. District Court, ILCD
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF ILLINOIS
ROCK ISLAND DIVISION
FIDLAR ACQUISITION CO., d/b/a
FIDLAR TECHNOLOGIES,
Plaintiff,
v.
FIRST AMERICAN DATA TREE LLC,
Defendant/
Third Party Plaintiff,
v.
MICHAEL COSTELLO, in his official
capacity as the St. Clair County, Illinois
Recorder of Deeds,
Third Party Defendant.

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Case No. 4:12-cv-04099-SLD-JEH

ORDER
On June 18, 2013, First American Data Tree LLC (“Data Tree”) filed a three-count Third
Party Complaint, ECF No. 24, against Michael Costello, in his official capacity as the Recorder of
Deeds for St. Clair County, Illinois (“the Recorder”).

The Recorder contracts with Fidlar

Technologies (“Fidlar”) to provide electronic records in bulk or compiled form, and Data Tree
collects electronic real estate records from the Recorder using Fidlar’s software services. Fidlar
claims that Data Tree incurred a bill of nearly half a million dollars and refuses to pay it. Data Tree
alleges that the bill is invalid because the Recorder’s arrangement with Fidlar violates the Illinois
Freedom of Information Act (“FOIA”), the Illinois Counties Code, and federal antitrust law. The
Recorder moves to dismiss Count I (FOIA) of the Third Party Complaint under Federal Rules of

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Civil Procedure 12(b)(1) and 12(b)(6), and Count III (federal antitrust) under Rule 12(b)(6), ECF No.
36. For the reasons set forth below, the Court DENIES the Recorder’s Motion to Dismiss.
Background
At the motion to dismiss stage, well-pleaded facts alleged in the complaint are taken as true
and all inferences are drawn in favor of the plaintiff. Tamayo v. Blagojevich, 526 F.3d 1074, 1081
(7th Cir. 2008). Accordingly, the Court rests its decision on the following factual allegations:
Data Tree supplies electronic real property records and documents to its customers through
its online electronic databases. In order to maintain and update its databases, Data Tree requests
electronic copies of real property records, in bulk or compiled forms, from county entities across the
country, like the Recorder. The Recorder disseminates its public records through Fidlar’s programs,
Tapestry and Laredo. The Laredo program offers access to public records in bulk or compiled form
for a monthly fee. The Tapestry program charges a user for each search of public records ($5.95 per
search) and for each page the user prints ($0.50 per page).
The Recorder contracted with Fidlar to be the exclusive and sole provider of its electronic
public records in bulk or compiled form. The Recorder does not provide the records in electronic
bulk or compiled form other than by and through Fidlar. From time to time, the Recorder,
individually or by and through Fidlar, has restricted use of the public records by watermarking or
otherwise defacing the public records copies as compared to the originals, and by placing language
in the access agreements that limits the requester’s use of the records.
On February 15, 2012, Data Tree and the Recorder entered into an agreement whereby the
Recorder granted Data Tree electronic access to its public records through Fidlar’s Laredo program
(the “Laredo Agreement”). Under the Laredo Agreement, Data Tree agreed to pay $400 per month
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to the Recorder for unlimited access to its public records. In March 2012, Data Tree inadvertently
used Tapestry, instead of Laredo, to search the Recorder’s public records. On behalf of the Recorder,
Fidlar charged Data Tree $417,942.25 for those searches.
DISCUSSION
I. Rule 12(b)(1)
By moving to dismiss Count I under Federal Rule of Civil Procedure 12(b)(1), the Recorder
is asserting that this Court lacks subject matter jurisdiction over Data Tree’s claim. In particular, the
Recorder asserts that (1) Data Tree does not have standing to bring its FOIA claim, and (2) Data Tree
has not exhausted its administrative remedies under the FOIA. Mem. in Supp. Mot. Dismiss 3–5,
ECF No. 37.
A. Standing
“In essence the question of standing is whether the litigant is entitled to have the court decide
the merits of the dispute or particular issues.” Apex Digital, Inc. v. Sears, Roebuck & Co., 572 F.3d
440, 443 (7th Cir. 2009) (quoting Perry v. Vill. of Arlington Heights, 186 F.3d 826, 829 (7th Cir.
1999)). “Article III of the United States Constitution limits the jurisdiction of the federal courts to
actual cases and controversies . . . [and] standing is an essential and unchanging part of the
case-or-controversy requirement of Article III.” Schirmer v. Nagode, 621 F.3d 581, 584 (7th Cir.
2010) (citations omitted).
The Recorder offers no support for its contention that a plaintiff only has standing to bring
a FOIA claim if he has “made a formal request for public documents to a public entity.” See Mem.
in Supp. Mot. Dismiss 3. Section 11(a) of the FOIA allows that “[a]ny person denied access to
inspect or copy any public record by a public body may file suit for injunctive or declaratory relief.”
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5 ILCS 140/11(a). A denial of access, not a denial of one’s specific request, provides standing to
sue under the FOIA. Furthermore, “[t]he imposition of a fee not consistent with subsections (6)(a)
and (b) of this Act constitutes a denial of access to public records for the purposes of judicial
review.” 5 ILCS 140/6(d). Therefore, if a public body imposes a fee that is not consistent with its
authority to charge fees under the FOIA, the party on whom the fee is imposed has standing to sue.
Data Tree alleges that Fidlar, on the Recorder’s behalf, charged it fees far exceeding those authorized
under the FOIA for the Recorder’s public records.1 Compl. ¶¶ 37–42, ECF No. 24. Data Tree,
therefore, has standing.
B. Administrative Remedies Exhaustion
Like the Recorder’s argument regarding standing, its argument that Data Tree has not
exhausted its administrative remedies relies on a mistaken reading of the FOIA. As established
above, “[t]he imposition of a fee not consistent with subsections (6)(a) and (b) of this Act constitutes
a denial of access to public records for the purposes of judicial review,” 5 ILCS 140/6(d), and “[a]ny
person denied access to inspect or copy any public record by a public body may file suit for
injunctive or declaratory relief,” 5 ILCS 140/11(a). No intervening administrative review is required.
See, e.g., Fagel v. Dep’t of Transp., 991 N.E.2d 365, 370 (Ill. App. Ct. 2013) (“[S]ection 11 of FOIA
permits any person, such as Fagel here, who is denied access by a public body to inspect or copy any

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A challenge to standing may be either facial or factual. See Apex Digital, Inc. v. Sears Roebuck & Co., 572 F.3d
440, 443–44 (7th Cir. 2009). A factual challenge contends that the complaint is formally sufficient but points to
external facts that defeat standing; in contrast, a facial challenge attacks the sufficiency of the allegations as to
standing in the complaint. Id. In considering a factual attack, “the district court may properly look beyond the
jurisdictional allegations of the complaint and view whatever evidence has been submitted on the issue to determine
whether in fact subject matter jurisdiction exists.” Id. at 444. Here, the Recorder facially challenged Data Tree’s
standing, so the Court confines its review to the sufficiency of Data Tree’s allegations and does not examine any
external evidence, such as the exhibit Data Tree attached to its memorandum, Mem. in Resp. Mot. Dismiss Ex. A,
ECF No. 40.

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public record, to file an action for injunctive or declaratory relief in the circuit court.”). The Recorder
does not specify what administrative remedies Data Tree should have sought, or what procedures
it should have followed to exhaust them. Rather, the Recorder offers a single, out-of-context quote
from the FOIA to support its claim that Data Tree did not exhaust its administrative remedies: “Any
person making a request for public records shall be deemed to have exhausted his or her
administrative remedies with respect to that request if the public body fails to act within the time
periods provided in Section 3 of this Act.” Mem. in Supp. Mot. Dismiss 4 (quoting 5 ILCS
140/9(c)). This subsection does not create a requirement that a requester seek administrative review
of a denied request; it simply describes a way for those remedies to be deemed exhausted if the
denial is not prompt. Therefore, the Court does not find that Data Tree failed to exhaust its
administrative remedies.
II. Rule 12(b)(6)
The Federal Rules of Civil Procedure require a pleading to contain “a short and plain
statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a). To survive
a motion to dismiss under Rule 12(b)(6), a complaint must state a claim to relief that is “plausible
on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (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.” Aschroft v. Iqbal, 556 U.S. 662, 678 (2009). The
Seventh Circuit has identified the practical requirements of Twombly and Iqbal for federal pleading:
First, a plaintiff must provide notice to defendants of her claims. Second, courts
must accept a plaintiff’s factual allegations as true, but some factual allegations will
be so sketchy or implausible that they fail to provide sufficient notice to defendants
of the plaintiff’s claim. Third, in considering the plaintiff’s factual allegations, courts

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should not accept as adequate abstract recitations of the elements of a cause of action
or conclusory legal statements.
Brooks v. Ross, 578 F.3d 574, 581 (7th Cir. 2009). In general, a “plaintiff is not required to plead
facts or legal theories or cases or statutes, but merely to describe his claim briefly and simply.” Shah
v. Inter-Cont’l Hotel Chicago Operating Corp., 314 F.3d 278, 282 (7th Cir. 2002). Likewise, a
plaintiff is not required to “set forth explicitly his theory of the case.” Riemer v. Illinois Dep’t of
Transp., 148 F.3d 800, 804 (7th Cir. 1998).
A. Count I
1. Request for records
In moving to dismiss Count I for failure to state a claim under Rule 12(b)(6), the Recorder
once again argues that “[i]n order to bring an action for an alleged violation of the Illinois FOIA, the
Plaintiff must have made a formal request for public documents to a public entity.” Mem. in Supp.
Mot. Dismiss 3. As explained above, Section 11(a) of the FOIA allows that “[a]ny person denied
access to inspect or copy any public record by a public body may file suit for injunctive or
declaratory relief.” 5 ILCS 140/11(a). In other words, a party only needs to allege a denial of access
to state a claim. Furthermore, “[t]he imposition of a fee not consistent with subsections (6)(a) and
(b) of this Act constitutes a denial of access to public records for the purposes of judicial review.”
5 ILCS 140/6(d). Therefore, by alleging that it was charged fees in excess of those authorized by
the FOIA, Data Tree has alleged a denial of access and has stated a claim.
Moreover, Data Tree has alleged a request, Compl. ¶ 38; the Recorder’s definition is simply
much narrower than the FOIA’s. As an initial matter, the word “formal” never appears in the FOIA.
The Recorder is correct that Section 3, subsection (c), states: “Requests for inspection or copies shall

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be made in writing and directed to the public body.” 5 ILCS 140/3(c). It continues, however:
“Written requests may be submitted to a public body via personal delivery, mail, telefax, or other
means available to the public body.” Id. Moreover, “[a] public body may honor oral requests for
inspection or copying,” and “[a] public body may not require that a request be submitted on a
standard form . . . .” Id. The FOIA is to be liberally construed, particularly in the realm of
technological advances. Section 1 of the Act states:
The General Assembly further recognizes that technology may advance at a rate that
outpaces its ability to address those advances legislatively. To the extent that this Act
may not expressly apply to those technological advances, this Act should nonetheless
be interpreted to further the declared policy of this Act that public records shall be
made available upon request except when denial of access furthers the public policy
underlying a specific exemption.
5 ILCS 140/1. Data Tree argues, and the Court agrees, that “other means available to the public
body” is broad enough to include the Recorder’s alleged arrangement with Fidlar—and Fidlar’s
individual subscribers, like Data Tree—to provide its public records electronically.
2. The Illinois Counties Code does not “preempt” the FOIA
The Recorder’s final argument to dismiss Count I is that the Illinois Counties Code, 55 ILCS
5/5-106.1(c), is “more relevant than the FOIA,” and so “preempts” it. As Data Tree points out, this
argument rests on outdated case law. Mem. in Resp. Mot. Dismiss 6, ECF No. 40.
The relevant section of the Illinois Counties Code states, in its entirety:
(a) Any county may provide Internet access to public records maintained in electronic
form. This access shall be provided at no charge to the public. Any county that
provides public Internet access to records maintained in electronic form may also
enter into a contractual arrangement for the dissemination of the same electronic data
in bulk or compiled form.
(b) For the purposes of this Section, “electronic data in bulk form” is defined as all,
or a significant subset, of any records to which the public has free Internet access, as
is and without modification or compilation; and “electronic data in compiled form”
is defined as any records to which the public has free Internet access but that has been
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specifically selected, aggregated, or manipulated and is not maintained or used in the
county’s regular course of business.
(c) If, but only if, a county provides free Internet access to public records maintained
in electronic form, the county may charge a fee for the dissemination of the electronic
data in bulk or compiled form, but the fee may not exceed 110% of the actual cost,
if any, of providing the electronic data in bulk or compiled form.
The fee must be paid to the county treasurer and deposited into a fund designated as
the County Automation Fund; except that in counties with a population exceeding
3,000,000, the fee shall be paid into a fund designated as the Recorder’s Automation
Fund.
(d) The county must make available for public inspection and copying an itemization
of the actual cost, if any, of providing electronic data in bulk or compiled form,
including any and all supporting documents. The county is prohibited from granting
to any person or entity, whether by contract, license, or otherwise, the exclusive right
to access and disseminate any public record.
55 ILCS 5/5-1106.1.
The Recorder relies on Sage Information Services v. King, 910 N.E.2d 1180, 1186 (Ill. App.
Ct. 2009), in which the Appellate Court of Illinois held that the Illinois Property Tax Code allowed
fees for electronic records above those authorized by Section 6 of the FOIA because the Property Tax
Code fee provision was more specific. Central to that court’s reasoning was the reference in Section
6 to other statutes: “unless otherwise provided by State statute.” King, 910 N.E.2d at 1185. Section
6 of the FOIA was amended after the King decision was rendered, however, and that language is now
gone. 2009 Ill. Legis. Serv. P.A. 96-542 (S.B. 189) (West); Sage Info. Servs. v. Humm, 977 N.E.2d
895, 900 (Ill. App. Ct. 2012). “By its own terms, the current version of section 6 of the FOIA does
not allow a fee in excess of the cost of the electronic medium for the reproduction of electronic
records unless another statute expressly provides that the fees for producing paper records also apply
to electronic copies.” Humm, 977 N.E.2d at 900. The Illinois Counties Code does not so provide;
it states that access to “public records maintained in electronic form . . . shall be provided at no
charge to the public,” and if the county provides free access, it “may charge a fee for the

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dissemination of the electronic data in bulk or compiled form, but the fee may not exceed 110% of
the actual cost, if any, of providing the electronic data in bulk or compiled form.” 55 ILCS
5/5-1106.1(a), (c). Therefore, the Court rejects the Recorder’s argument that the Illinois Counties
Code “preempts” the FOIA, and declines to dismiss Count I.
B. Count III
1. Sufficient factual allegations
The Recorder argues that Data Tree fails to state a claim in Count III of its complaint because
“the Third Party Defendant is left to guess exactly what section of the Sherman or Clayton Act is
allegedly being violated.” Mem. in Supp. Mot. Dismiss 6. But plaintiffs need not plead legal
theories or cases or statutes, so long as they describe their claims briefly and simply. Shah, 314 F.3d
at 282 (7th Cir. 2002). Failure to specify the specific sections of the Sherman and Clayton Acts is
therefore not fatal to Data Tree’s antitrust claim. As described below, the Court finds that Data Tree
has sufficiently stated a claim under Section 1 of the Sherman Antitrust Act.
“[A] plaintiff must prove three elements to succeed under § 1 of the Sherman Act: (1) a
contract, combination, or conspiracy; (2) a resultant unreasonable restraint of trade in a relevant
market; and (3) an accompanying injury.” Agnew v. Nat’l Collegiate Athletic Ass’n, 683 F.3d 328,
335 (7th Cir. 2012). As to element one, Data Tree alleges a contract between the Recorder and
Fidlar. Regarding element two, the contract gives Fidlar the exclusive right to disseminate the
Recorder’s records in electronic bulk and compiled formats, and the records are not available in that
format by any other means, according to Data Tree. Therefore, it is reasonable to infer that all
competition is eliminated in the first-sale market for that format, so Data Tree has sufficiently stated
an unreasonable restraint of trade. As to the third element, Data Tree alleges that its cost to access
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the records is higher than it would be absent this exclusive contract. Taking these facts as true, and
drawing all reasonable inferences in favor of Data Tree, the Court concludes the Data Tree has
alleged sufficient facts to support each of the three elements of a Section 1 claim. See Tamayo, 526
F.3d at 1081. To the extent Data Tree is seeking relief on other grounds, the Court grants Data Tree
leave to amend its complaint to allege those claims.
2. State Action Immunity
The Recorder asserts that it is immune from antitrust liability under the state action
exemption, first described in Parker v. Brown, 317 U.S. 341 (1943). In Parker, the Court held that
because “nothing in the language of the Sherman Act or in its history suggested that Congress
intended to restrict the sovereign capacity of the States to regulate their economies, the Act should
not be read to bar States from imposing market restraints as an act of government.” F.T.C. v. Phoebe
Putney Health Sys., Inc., 133 S. Ct. 1003, 1010 (2013) (internal quotations omitted) (citing Parker,
317 U.S. at 350, 352). In general, “[s]tate-action immunity is disfavored.” Id at 1010.
Because this case involves allegedly anticompetitive conduct undertaken by a substate
governmental entity, and municipalities and other political subdivisions are not themselves
sovereign, state-action immunity under Parker does not apply to the Recorder directly. See id. But,
“substate governmental entities do receive immunity from antitrust scrutiny when they act ‘pursuant
to state policy to displace competition with regulation or monopoly public service.’” Id. (quoting
Lafayette v. Louisiana Power Light, Co., 435 U.S. 389, 413 (1978) (plurality opinion). The purpose
of this rule is to “preserve[] to the States their freedom . . . to use their municipalities to administer
state regulatory policies free of the inhibitions of the federal antitrust laws without at the same time
permitting purely parochial interests to disrupt the Nation’s free-market goals.” Id. at 1011.
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Therefore, “immunity will only attach to the activities of local governmental entities if they are
undertaken pursuant to a ‘clearly articulated and affirmatively expressed’ state policy to displace
competition.” Id. (quoting Community Commc’ns Co. v. Boulder, 455 U.S. 40, 52 (1982)).2 Neither
a statute nor its legislative history need expressly state that “the legislature intends for the delegated
action to have anticompetitive effects”; the test is whether “the anticompetitive effect was the
foreseeable result of what the State authorized.” Id.
Here, the Recorder’s authority to enter into a contract with Fidlar to be its exclusive provider
of records in electronic format is murky, at best, so the Court declines to apply state action doctrine
immunity at the motion-to-dismiss stage. The Illinois Counties Code states that “[a]ny county that
provides public Internet access to records maintained in electronic form may also enter into a
contractual arrangement for the dissemination of the same electronic data in bulk or compiled form.”
55 ILCS 5/5-1106.1(a). It also states, however, that “[t]he county is prohibited from granting to any
person or entity, whether by contract, license, or otherwise, the exclusive right to access and
disseminate any public record.” 55 ILCS 5/5-1106.1(d). Read together, these two sections create
ambiguity as to whether a county may grant an exclusive right to disseminate public records in a
particular format, so long as the right is not to disseminate a given public record in all its forms. But
this ambiguity also prevents the Court from finding that the alleged agreement between the Recorder
and Fidlar was “the foreseeable result of what the State authorized.” See Phoebe, 133 S. Ct. at 1011.
The Court therefore declines to dismiss Data Tree’s antitrust claims on the basis of state action
doctrine immunity.

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Government entities, unlike private parties, are not subject to an “active state supervision requirement.” See id.

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3. Own products
The Recorder’s final argument to dismiss Data Tree’s antitrust claims is that “an entity
cannot be said to have a monopoly over its own product, and the public records of St. Clair County,
Illinois, are the products of St. Clair County, Illinois.” Because this argument appears to be a
defense to Data Tree’s claims, and does not go to their sufficiency, the Court declines to consider
it. Generally, a court will not dismiss a complaint because of an affirmative defense raised by the
defendant in its motion to dismiss. Xechem, Inc. v. Bristol-Myers Squibb Co., 372 F.3d 899, 901
(7th Cir. 2004). Such a dismissal under Rule 12(b)(6) would be inappropriate because “[c]omplaints
need not contain any information about defenses and may not be dismissed for that omission.” Id.
“Only when the plaintiff pleads itself out of court—that is, admits all the ingredients of an
impenetrable defense—may a complaint that otherwise states a claim be dismissed under Rule
12(b)(6).” Id. Whether the public records are the Recorder’s own products does not go to the
sufficiency of Data Tree’s antitrust claims, and is not raised in the complaint, so it is an inappropriate
basis for a Rule 12(b)(6) motion.
CONCLUSION
For the foregoing reasons, the Third Party Defendant’s Motion to Dismiss, ECF No. 36, is
DENIED.

Entered this 28th day of March, 2014.
s/ Sara Darrow
SARA DARROW
UNITED STATES DISTRICT JUDGE

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