Linda Construction Inc., et al v. City of Chicago et al

Filing 131

MEMORANDUM OPINION AND ORDER Signed by the Honorable Harry D. Leinenweber on 8/22/2016:Mailed notice(wp, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

LINDA CONSTRUCTION INC.,
LINDA McGEE and JESSE McGEE,
Plaintiffs,

Case No. 15 C 8714

v.

Judge Harry D. Leinenweber

CITY OF CHICAGO, et al.,
Defendants.

MEMORANDUM OPINION AND ORDER
On March 15, 2016, the Court granted Motions to Dismiss
Plaintiffs’ original six-count Complaint.
All

claims

brought

by

Plaintiffs

Linda

(See, ECF No. 64).
and

Jesse

McGee

were

dismissed without prejudice for lack of standing; Plaintiffs’
claims

under

Section

1981

and

Title

VII

were

dismissed

with

prejudice; their claims under Sections 1983 and 1985(3), and for
tortious

interference

with

contract

were

dismissed

without

prejudice; and their breach of contract claim was dismissed with
prejudice
without

as

to

prejudice

Defendant
as

to

City

of

Defendants

Chicago

(“the

Republic

City”),

Services,

but
Inc.

(“Republic”) and Allied Waste Transportation, Inc. (“Allied”).
Plaintiffs were granted leave to amend the Complaint within 14
days.

On March 28, 2016, Plaintiffs filed the First Amended

Complaint (the “FAC”), in which they assert claims against some
of the same, and some new, Defendants under Sections 1981, 1983,
and 1985(3) and for breach of contract [ECF No. 65].
Before

the

Court

are

four

Motions

to

Dismiss

filed

by

Defendants Seng LLC and Kenneth Seng (collectively, “Seng”), the
City and Chief Procurement Officer Jamie L. Rhee (“CPO Rhee”)
(collectively, “the City Defendants”), National Casualty Company
(“NCC”),

and

Republic,

Allied,

Mark

Riley

and

Brian

Holcomb

(collectively, “the Republic Defendants”) [ECF Nos. 74, 82, 85
and 88].

Since the filing of these Motions, Plaintiffs have

substituted counsel and voluntarily withdrawn their breach of
contract claim.

Thus, the Court limits its analysis in this

opinion to the civil rights claims.
For the reasons stated herein, all claims brought by Linda
and

Jesse

McGee

are

dismissed

with

prejudice

for

lack

of

standing; Plaintiffs’ claims under Sections 1981 and 1985(3) are
dismissed without prejudice; and their Section 1983 claim is
dismissed without prejudice as to the City and CPO Rhee, but
with prejudice as to the remaining Defendants.
I.
A.

ANALYSIS

Standing as to Linda and Jesse McGee

The Court previously dismissed the claims brought by Linda
and Jesse McGee (the “McGees”) for lack of standing because they
were unable to allege an injury that affected their own legal
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rights, rather than those of their company, Linda Construction,
Inc. (“LCI”).

J.F. Shea Co. v. City of Chicago, 992 F.2d 745,

749 (7th Cir. 1993).

The McGees were given leave to amend the

Complaint to state a personal stake in this matter.

They have

failed to do so.
The

McGees

question.

are

not

party

to

any

of

the

contracts

in

Domino’s Pizza, Inc. v. McDonald, 546 U.S. 470, 477

(2006) (affirming dismissal of corporate officer’s civil rights
and common law claims for lack of standing because officer was
not party to contract).

The alleged discriminatory conduct was

directed at them only in their position as owners of LCI, not
personally.

The only injury the McGees can point to is their

loss of income and livelihood.

This injury, which is entirely

attributable to the McGees’ status as the sole investors in LCI,
is derivative of the company’s injury.

Sw. Suburban Bd. of

Realtors, Inc. v. Beverly Area Planning Ass’n, 830 F.2d 1374,
1378 (7th Cir. 1987) (An individual may in fact suffer “some
injury as a result of the alleged [conduct], presumably in the
form

of

benefits
position,”

reduced
due
but

salary,

to
such

the
an

commissions,
corporation’s

injury

is

or

other

weakened

“merely

employment
competitive

derivative

injury suffered by the corporation itself.”).

of

the

The McGees have

failed to allege that they suffered an injury that is separate

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and

distinct

from

that

suffered

by

LCI,

therefore

the

Court

dismisses with prejudice all claims brought by them.
B.

42 U.S.C. § 1981

In its March 15, 2016 Opinion, the Court dismissed with
prejudice Plaintiffs’ Section 1981 claim based on Defendants’
alleged interference with “the making of” a contract between LCI
and

the

City.

prejudice

(ECF

operates

No.

as

an

64,

at

10-11).

adjudication

claim, and bars a later action.
F.3d 300, 306 (7th Cir. 1994).
be refiled in that court.”

A

upon

dismissal

the

merits

with
of

a

Marlow v. Winston & Strawn, 19
It means “that the claim cannot

Styskal v. Weld Cty. Bd. of Cty.

Comm’rs, 365 F.3d 855, 859 (10th Cir. 2004) (internal quotation
marks

and

citation

omitted).

At

first

blush,

Plaintiffs’

Section 1981 claim in the FAC appears to fly in the face of this
well-established precedent.

But upon closer examination, the

FAC actually states a wholly separate Section 1981 claim based
on an alleged three-year probationary contract between LCI and
Republic.
Plaintiffs
three-year

claim

that

was

hired

by

period

to

haul

garbage

probationary

LCI

Republic

for

from

a

city

transfer stations to landfills; this is the contract upon which
Plaintiffs

base

their

new

Section

1981

claim.

Plaintiffs

contend that this contract was terminated due to LCI’s status as
a

minority-owned

business

and

to

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ensure

that

LCI

would

not

satisfy its probationary period and therefore would not qualify
to bid for city contracts.

To be clear, the Court previously

dismissed Plaintiffs’ Section 1981 claim based on Defendants’
alleged

interference

contracts.
FAC

with

LCI’s

ability

to

bid

for

city

Thus, the Court only considers allegations in the

regarding

Defendants’

interference

with

the

making

or

enforcement of LCI’s three-year probationary contract.
To state a claim under 42 U.S.C. § 1981, Plaintiffs must
allege

that:

(1)

they

are

members

of

a

racial

or

ethnic

minority; (2) Defendants intended to discriminate against them
on the basis of race or ethnicity; and (3) the discrimination
concerned the making and enforcing of a contract.

Pourghoraishi

v. Flying J, Inc., 449 F.3d 751, 756 (7th Cir. 2006).

Although

Plaintiffs have pleaded the existence of (and interference with)
a contract and established that they were members of a racial
minority, the FAC contains only conclusory allegations that fail
to create a plausible inference of intentional discrimination on
the basis of race.
Allegations

of

race

discrimination

material facts, not mere conclusions.
F.2d 640, 643 (7th Cir. 1982).

must

be

supported

by

Jafree v. Barber, 689

Plaintiffs cannot satisfy this

burden simply by tacking “because of [Plaintiffs’] race” onto
their allegations or by merely alleging that Defendants “treated
[Plaintiffs] differently than whites, on the basis of racial
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animus.”

Plaintiffs

appear

to

allege

that

because

they

are

black, Defendants’ alleged conduct towards them was indisputably
due to their race.
Plaintiffs
(their

must

race)

conduct).

But saying it is so does not make it so.

connect
and

the

the

dots

alleged

between
effect

the
(the

alleged

cause

discriminatory

The FAC fails to do so; Plaintiffs do not allege any

facts to bolster the repeated conclusion that Defendants acted
with racial animus.

Therefore, Plaintiffs’ Section 1981 claim

is dismissed; because Plaintiffs’ new counsel has requested one
more chance to cure the defects in the Complaint, the Court
grants Plaintiffs 14 days to amend the Complaint and provide
factual support for the new Section 1981 claim.

Failure to do

so will result in dismissal with prejudice.
C.
To

state

a

cause

42 U.S.C. § 1983
of

action

under

42

U.S.C.

§

1983,

a

plaintiff must allege that “some person has deprived him of a
federal right” and “that the person who has deprived him of the
right acted under color of state . . . law.”
446 U.S. 635, 640 (1980).

Gomez v. Toledo,

Like the original Complaint, the FAC

does not contain facts to support Plaintiffs’ claim that the
City

had

a

policy

to

discriminate

against

minority-owned

contractors; nor have Plaintiffs pleaded with any specificity
the existence of a widespread practice of discrimination against
minority-owned

businesses;

and

they

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fail

to

plead

factual

support for their claim that CPO Rhee was a person with final
policymaking authority for the City.
of

City

of

Chgo,

300

F.Supp.2d

See, Moore v. Bd. of Educ.

641,

645

(N.D.

Ill.

2004).

Plaintiffs’ empty allegations of discrimination based on race
are insufficient for purposes of imposing liability on the City.
Therefore, the Section 1983 claim against the City is dismissed.
Plaintiffs

allege

that

CPO

Rhee,

acting

under

color

of

state law, deprived them of equal protection under the law in
violation of the Fourteenth Amendment.

It is without dispute

that CPO Rhee was acting under the color of state law at all
times

relevant

failed

to

to

raise

the
a

FAC.

But

plausible

Plaintiffs

claim

that

once
CPO

again
Rhee

have
acted

intentionally to discriminate against them on the basis of race.
The FAC is devoid of a single fact from which the Court could
conclude CPO Rhee acted with discriminatory intent.

Therefore,

the Court dismisses Plaintiffs’ Section 1983 claim against CPO
Rhee.
replead

Plaintiffs are granted 14 days to amend the Complaint and
in

a

non-conclusory

fashion

the

Section

1983

claims

against the City and CPO Rhee; failure to amend or to provide
factual support for these claims will result in dismissal with
prejudice.
The FAC makes no allegation, and contains no facts from
which the Court could infer, that the remaining Defendants were
acting under color of state law when they committed the alleged
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discriminatory conduct against Plaintiffs.

See, Sherwin Manor

Nursing Ctr., Inc. v. McAuliffe, 37 F.3d 1216, 1220 (7th Cir.
1994) (explaining that to state an equal protection claim, a
Section

1983

plaintiff

person

acting

under

must
the

allege

color

that

of

a

state

state

actor

law

or

a

purposefully

discriminated against him because of his identification with a
particular group).

Nor can the Court conceive of a factual

scenario in which there would be such a “close nexus between the
State

and

the

challenged

action[s]”

of

these

private-actor

Defendants that their conduct “may be fairly treated as that of
the State itself.”

Jackson v. Metro. Edison Co., 419 U.S. 345,

351 (1974) (defining action under color of state law). ,For this
reason,

the

Court

dismisses

the

Section

1983

claim

with

prejudice as to Seng LLC, Kenneth Seng, NCC, Republic, Allied,
Mark Riley and Brian Holcomb.
D.

42 U.S.C. § 1985(3)

To establish a prima facie case of civil conspiracy under
Section

1985(3),

agreement

among

Plaintiffs

must

Defendants

to

show

an

deprive

express

or

Plaintiffs

of

implied
their

constitutional rights, and a deprivation of those rights in the
form of an overt act in furtherance of the agreement.
v.

Balkema,

Plaintiffs

840

must

F.2d
plead

437,

441

specific

(7th

Cir.

material

1988).

facts

that

Scherer
Moreover,
show

the

existence of the agreement, see, Winterland Concessions Co. v.
- 8 -

Trela, 735 F.2d 257, 262 (7th Cir. 1984), and must allege that,
in entering the agreement, Defendants intended to discriminate
against

Plaintiffs

and

deprive

them

of

their

constitutional

rights because of Plaintiffs’ race, Griffin v. Breckenridge, 403
U.S. 88, 102-03 (1983).
Plaintiffs allege that Defendants entered into an express
and implied agreement to “obstruct[] LCI’s operations” and that
they took the actions described in the complaint “in an effort
to prohibit LCI from becoming qualified to bid for the City
contract.”

But Plaintiffs have failed to plead factual support

for this allegation; they do not offer a single fact to support
an inference that the City or CPO Rhee and the private-actor
Defendants entered into such an agreement.

Cf. Hernandez v.

Joliet Police Dep’t, 197 F.3d 256, 263 (7th Cir. 1999) (stating
that an “agreement may be inferred from circumstantial evidence,
but only if there is sufficient evidence . . . to conclude that
a meeting of the minds had occurred and that the parties had an
understanding to achieve the conspiracy’s objectives.”).

Nor

have they alleged anything to suggest that the members of the
purported conspiracy were aware of the existence of this plan.
See, Hoffman–LaRoche, Inc. v. Greenberg, 447 F.2d 872, 875 (7th
Cir. 1971) (A conspiracy requires a “single plan, the essential
nature and scope of which is known to each person who is to be
held

responsible

for

its

consequences.”).
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In

fact,

the

pleadings

offer

very

little

to

suggest

that

the

various

Defendants were even aware of, or associated with, one another,
let alone that a meeting of the minds occurred.
What’s more, Plaintiffs have not provided factual support
for their allegation that the Defendants conspired against them
because of their race.

See, Jafree v. Barber, 689 F.2d 640, 643

(7th Cir. 1982) (“To sufficiently state a cause of action [under
Section

1985]

the

plaintiff

must

allege

some

facts

that

demonstrate that his race was the reason for the defendant’s
[action].”

(emphasis

added)).

The

body

of

the

Complaint

contains only conclusions that there was “racial animus against
[LCI’s]

owners

because

they

are

African-American,”

that

Defendants were obstructing LCI’s operations “because it was a
black-owned contractor,” and that Defendants “participated in a
scheme to ensure that no black-owned contractor [] qualified for
the

City

support

contract.”

of

these

Plaintiffs

conclusions.

fail
The

to

point

fact

that

to

facts

Plaintiffs

in
are

black does not prove in and of itself that the alleged conduct
against them was due to their race.

Nothing in the Complaint

suggests Defendants acted with the requisite racial animus.
Finally, as the Court noted in its earlier opinion, the
Section 1985(3) claim against the City must be dismissed because
Plaintiffs
custom,

have

policy,

not
or

sufficiently
practice

has
- 10 -

alleged
caused

that

their

an

official

constitutional

injury.
U.S.

Monell v. Dep’t of Soc. Servs. of City of New York, 436

658,

support

694

for

(1978).
their

discriminate

against

plead

any

with

practice

of

Plaintiffs

claim

that

the

minority-owned

specificity

discrimination

have

the

against

failed

City

to

had

a

contractors;
City’s

offer

any

policy

to

nor

alleged

minority-owned

do

they

widespread
businesses;

and they have failed to plead factual support for their claim
that CPO Rhee was a person with final policymaking authority for
the City.

Without such allegations, the City cannot be held

liable under Section 1985(3).
Therefore, Plaintiffs’ Section 1985(3) claim is dismissed
without prejudice as to all Defendants.

Plaintiffs may amend

the Complaint within 14 days of the date of this opinion.
II.
As

a

final

matter,

SANCTIONS

the

Court

considers

Seng’s

Amended

Motion for Sanctions against Plaintiffs’ prior counsel, Maurice
James Salem (“Salem”), pursuant to FED. R. CIV. P. 11 [ECF No.
76].
filed

Seng argues that sanctions are appropriate because Salem
the

Amended

Complaint

for

the

improper

purpose

of

litigating a version of the same claims arising out of the same
facts and against the same parties as a case in Illinois state
court.

Seng

claims

the

state

case

resulted

in

a

judgment

against LCI, and therefore res judicata prevents Plaintiffs from
re-litigating the matter in federal court.
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This argument fails

for two reasons.
judgment

upon

First, the Court has been made aware that the

which

Seng

relies

was

recently

vacated;

this

completely knocks the bottom out of Seng’s sanctions argument.
Moreover,

the

state

court

judgment

against

Plaintiffs

was

a

default judgment; thus, even if the Court were to rely on this
recently-vacated judgment, it did not involve a determination on
the merits of any of the issues presented in this case.
res judicata is inapplicable.

Thus,

Lee v. City of Peoria, 685 F.2d

196, 198 (7th Cir. 1982) (“[R]es judicata bars . . . those
issues which were actually decided in the prior action. . . .”).
Seng argues, nonetheless, that the “allegations raised in
Plaintiff’s

amended

complaint

are

concerning

the

exact

between the same parties as those in the State case.”
Court is not convinced this is true.

issue

But the

The state case, brought by

Seng against LCI, presents a detinue action to recover vehicles
Seng leased to LCI, and a claim for breach of contract for LCI’s
failure

to

Plaintiffs’

comply

with

allegations

the
in

terms
the

of

the

present

lease.

case

include

Although
Seng’s

wrongful seizure of Plaintiffs’ vehicle, this allegation is made
in the context of a broader conspiracy claim.

Plaintiffs have

not presented a breach of contract claim or a detinue action to
recover the vehicle in question from Seng.

At this stage, it is

hard to say that the two cases will result in resolution of

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identical issues.

In light of these circumstances, the Court

denies Seng’s Amended Motion for Sanctions.
III. CONCLUSION
For the reasons stated herein, the four Motions to Dismiss
filed

by

Seng,

the

City

Defendants,

NCC,

and

the

Defendants [ECF Nos. 73, 82, 85 and 88] are granted.

Republic
The Court

dismisses with prejudice all claims brought by Plaintiffs Linda
and

Jesse

McGee

for

lack

Section 1981

claim

based

contract

their

Section

and

of
on

standing.
their

1985(3)

leave to amend within 14 days.

Plaintiffs’

three-year
claim

are

new

probationary

dismissed

with

Their Section 1983 claim as to

the City and CPO Rhee is dismissed with leave to amend within 14
days, but is dismissed with prejudice as to Seng LLC, Kenneth
Seng,

NCC,

Republic,

Allied,

Mark

Riley

and

Brian

Holcomb.

Seng’s Amended Motion for Sanctions [ECF No. 76] is denied.

IT IS SO ORDERED.

Harry D. Leinenweber, Judge
United States District Court
Dated: August 22, 2016

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