Linda Construction Inc., et al v. City of Chicago et al
Filing
185
MEMORANDUM OPINION AND ORDER Signed by the Honorable Harry D. Leinenweber on 3/31/2017:Mailed notice(wp, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
LINDA CONSTRUCTION INC.,
Plaintiff,
v.
ALLIED WASTE INDUSTRIES,
ALLIED WASTE NORTH AMERICA,
ALLIED WASTE TRANSPORTATION,
REPUBLIC SERVICES, INC.,
REPUBLIC SERVICES
PROCUREMENT, CITY OF CHICAGO,
CPO JAMIE L. RHEE, NATIONAL
CASUALTY COMPANY, RT
SPECIALISTS, INC., SENG LLC,
and KENNETH SENG,
Case No. 15 C 8714
Judge Harry D. Leinenweber
Defendants.
MEMORANDUM OPINION AND ORDER
Before the Court are four Motions to Dismiss [ECF Nos. 153,
156, 161, and 163].
For the reasons stated herein, the Court
grants the Motions found at ECF Nos. 153, 156, and 163.
The
remaining Motion [ECF No. 161] is granted in part and denied in
part.
The
Defendants
Court
with
dismisses
Counts
prejudice.
I
Count
through
VI,
as
V
against
narrowed
all
below,
survives.
I.
The
following
facts
BACKGROUND
are
taken
from
Plaintiff’s
Third
Amended Complaint (the “TAC”) and the documents attached to or
referenced in that Complaint that are critical to it.
See,
Geinosky v. City of Chi., 675 F.3d 743, 745 n.1 (7th Cir. 2012).
The Court accepts as true all well-pleaded factual allegations
in the TAC, but where an attached exhibit and the TAC conflict,
the
exhibit
controls.
See,
Forrest
v.
Universal
Sav.
Bank,
F.A., 507 F.3d 540, 542 (7th Cir. 2007).
Plaintiff Linda Construction, Inc. (“LCI”) is a garbagehauling business whose owners are African-American.
3.
TAC, ¶¶ 2-
The company is certified as a Minority Business Enterprise
(“MBE”) by the City of Chicago. Id. ¶¶ 2, 5.
This designation
gives LCI certain advantages when it comes to contracts with the
City, which generally requires that a percentage of the work it
contracts
out
be
done
by
MBEs
and
WBEs
(Women
Business
Enterprises). Id. ¶ 16.
In
November
Defendant
2009,
Republic
LCI
Services
entered
into
Procurement,
an
agreement
with
Inc.
(“RSPI”).
The
parties signed an agreement called the “Master Transportation
Services
Agreement,”
or
“Transport
Agreement.”
Under
the
agreement, LCI was to send its trucks to locations known as
transfer stations and from there pick up garbage and haul it to
landfills.
Transport
See, ECF No. 137 (“Transport Agreement”) at 3.
Agreement
imposed
certain
conditions
on
LCI
The
and
allowed RSPI to terminate the contract if LCI failed to abide by
them. Id. at 4-5.
- 2 -
Around the same time that RSPI committed to the Transport
Agreement, Republic Services, Inc. (“Republic”) submitted a bid
for a waste hauling contract with the City of Chicago.
¶¶ 19-20.
between
(LCI
RSPI
is
mum
and
as
to
Republic.
the
nature
of
the
The
Court
makes
assumption that they are corporate affiliates.)
TAC
relationship
do
with
the
Republic made
the bid through a wholly-owned subsidiary that is one of the
Allied entities sued in this litigation.
Plaintiff sues three
such Allied entities – Allied Waste Industries, Allied Waste
North
America,
and
Allied
Waste
Transportation
(collectively,
“Allied”) – and refers to the Allied corporations and Republic
as Defendant Republic/Allied.
TAC ¶ 9.
The litigation was to come years later, however.
In 2009,
LCI was one of the companies Allied listed in its bid as a MBE
that
would
work
as
garbage. TAC ¶ 26.
a
subcontractor
to
transport
the
City’s
The inclusion of such subcontractors helped
to satisfy the City’s requirement that a fixed percentage of the
contract be performed by MBEs.
ECF No. 149, Ex. C at 42.
Allied had run into trouble with the City of Chicago over
its MBE/WBE participation in the past.
In early 2012, Allied
settled a claim with the City over violations that it committed
in the period before 2010.
The Office of Inspector General
(“OIG”) released a statement reporting the settlement.
As is
detailed by the OIG, Allied had participated in a “pass through”
- 3 -
scheme in which the company “arranged for the work purportedly
done by the certified MWBE haulers to be done by non-certified
hauling firms.” ECF No. 149, Ex. E at 1.
Allied;
the
MWBE
firms,
which
were
The OIG excoriated
“willing
participants
in
Allied’s scheme,” “essentially selling their certification” for
a cut of the contract’s price; and the City of Chicago for its
poor administration of the program. Id. at 1-2.
time,
the
stepped
OIG
“applaud[ed]
forward,
disclosing
Republic
possible
for
At the same
having
violations
voluntarily
and
reforming
the operation,” something the company presumably did after it
bought Allied. Id. at 2.
The OIG concluded its report by making
recommendations to the City on how to improve its MWBE program.
See, id. at 2-4.
of
inserting
authorized
For example, the OIG recommended that instead
the
by
law
highest
in
each
MWBE-participation
contract,
the
percentages
City
should
set
realistic goals based on “how much MWBE capacity actually exists
in those areas.” Id. at 2.
In any case, Allied won the bid it entered.
and
the
City
of
Chicago
then
signed
a
The company
contract,
the
“Main
Contract,” giving Allied $24 million worth of work over a threeyear period beginning on March 19, 2010.
ECF No. 149, Ex. C
(the
Summary
Sheet.
document
that
“Main
Contract
was
Contract”),
a
Contract
hundred-page-plus
laid
The
out
Main
the
responsibilities and obligations of the Contractor (Allied) and
- 4 -
the
City,
(“CPO”).
as
represented
by
its
Chief
Procurement
Officer
Defendant Jamie Rhee (“CPO Rhee”) occupied the CPO
position throughout the relevant period.
The
Main
Contract
subcontractors and the CPO.
made
“The
Chief
Procurement
references
both
to
the
For example, Section 2.21 stated:
Officer
may,
whenever
he
have
[sic]
reason to believe that the Contractor has neglected or failed to
pay any subcontractors, workmen or employees for work performed
. . ., order and direct that no future vouchers and estimates be
issued and no further payments be made upon the contract until
said
Chief
Procurement
subcontractors,
paid. . . .”
workmen
Officer
and
has
been
employees
satisfied
have
that
been
such
fully
Main Contract at 13.
In its latest Complaint, LCI also highlights Section 5.9 of
the Main Contract.
Section 5.9 governs Arbitration.
It reads:
In the event a contractor has not complied with the
contractual MBEs/WBEs percentage in its Schedule D,
underutilization
of
MBEs/WBEs
shall
entitle
the
affected MBE/WBE to recover from the contractor
damages suffered by such entity as a result of being
underutilized; provided, however, that this provision
shall not apply to the extent such utilization occurs
pursuant to a waiver or substitution approved by the
City.
The Ordinance and contracts subject thereto
provide that any disputes between the contractor and
such affected MBEs/WBEs regarding damages shall be
resolved by binding arbitration. . . . This provision
is intended [to] the benefit of any MBE/WBE affected
by underutilization and grants such entity specific
third party beneficiary rights.
Main Contract at 49.
- 5 -
Before the contract between Allied and the City even took
effect, however, RSPI and LCI began to have problems under their
Transport Agreement.
On March 18, 2010, RSPI sent LCI a notice
letter, apprising LCI of its breach of the Transport Agreement.
See, ECF No. 149, Ex. A at 1.
Although RSPI then attempted to
terminate its agreement with LCI, see, id., the parties appear
to have worked out their differences afterwards.
In July 2010,
RSPI and LCI amended their Transport Agreement to extend the
contract term through August 16, 2015. Id. at 2.
The amended
Transport Agreement also included an exclusivity clause in favor
of LCI.
Id. § 1(b) at 2.
However, more than a year before the contract extension was
to expire, RSPI terminated its agreement with LCI.
On April 7,
2014, RSPI sent LCI a termination letter effective immediately.
See, ECF
No.
149,
Ex.
L.
In
its
letter,
RSPI
cited
three
independent grounds for terminating the contract, all of which
LCI disputes.
See, ECF No. 149, Ex. H.
These included the
contentions that LCI had not paid its union contributions, that
LCI
had
subcontracted
work
to
another
trucking
unit
without
obtaining consent from RSPI, and that LCI had become insolvent.
Id. at 1-3.
On this last point, RSPI cited the statement of
Jessie McGee, one of LCI’s owners.
According to RSPI, “Mr.
McGee
was
stated
that
Linda
Construction
financial obligations.” Id. at 3.
- 6 -
unable
to
meet
its
“Furthermore,” said RSPI, “on
March 30, 2014 Republic received the enclosed inquiry from Ken
Seng of Seng, LLC, one of Linda Construction’s creditors, which
provides
further
According
to
evidence
Mr.
of
Linda
Seng,
Linda
Construction’s
Construction
insolvency.
currently
has
an
unpaid debt to him of around $80,000.00. . . .
In his email,
Mr.
repossess
Seng
stated
that
.
.
.
Seng,
LLC
will
the
equipment by April 15, 2014.” Id.
In
October
2015,
LCI
filed
this
lawsuit,
naming
RSPI,
Republic, Allied, the City of Chicago, CPO Rhee, Ken Seng, Seng,
LLC (collectively “Seng”), and others as Defendants.
Many of
these other Defendants have been dismissed in the year and a
half since the suit was filed, but two remain:
Inc.
and
National
Casualty
Company
RT Specialists,
(collectively
“NCC”).
(Again, LCI does not say what the relationship is between RT
Specialists and National Casualty Company.
Instead, it makes
identical allegations, sometimes naming RT Specialists as the
alleged
perpetrator
Company.
and
sometimes
naming
National
Casualty
Since treating the two entities as fungible does not
change the substance of this Opinion, the Court proceeds as if
RT
Specialists
defendant.)
2014,
NCC
Missouri,
deposit.
and
National
Casualty
Company
were
one
LCI alleges that NCC was its insurer, but that in
failed
raised
to
obtain
LCI’s
insurance
premiums,
TAC ¶¶ 66-68.
- 7 -
and
for
LCI
wrongly
to
operate
retained
in
LCI’s
LCI
asserts
various
causes
of
action
against
RSPI,
Republic, Allied, the City of Chicago, CPO Rhee, Seng, and NCC
(collectively
“the
Defendants”).
The
nub
of
the
company’s
grievances is that the Defendants discriminated against it on
account of it being owned by African Americans.
37, 46-59, 66, 69.
See, TAC ¶¶ 36-
LCI alleges that the Defendants engaged in
racial discrimination by taking various adverse actions – either
individually or as part of a conspiracy – against LCI that were
not taken against “white-owned contracts.”
(“Defendant
Republic,
Rhee’s
Kenneth
collusion
Seng,
Seng
See, TAC ¶¶ 50-52
with
Defendants
LLC,
NCC
and
Republic/Allied,
RT
Specialists
to
discriminate against LCI was based on racial animus against LCI
because
LCI’s
According
pretext
to
for
owners
LCI,
RSPI
are
these
to
African
Americans.”),
discriminatory
terminate
its
actions
contract
57,
66,
69.
provided
the
with
LCI.
LCI
alleges that but for the Defendants’ unlawful actions motivated
by racial animus, LCI would have “graduated” from a three-year
mentoring
obligated
effort
to
give
that
it
Republic/Allied
and
thus
qualified
was
to
contractually
bid
as
a
prime
contractor for the City’s next contract.
On these facts, LCI prays for over $20 million in damages.
II.
PROCEDURAL HISTORY
This is not the first time that the Court has been asked to
dismiss
LCI’s
Complaint.
Twice
- 8 -
before
have
the
Defendants
briefed their 12(b)(6) motions, and twice before has the Court
found it appropriate to dismiss the Complaint in its entirety.
Unfortunately for the Defendants, this appears to be a case of
“if you first succeed, still you must try and try again.”
LCI,
after one change of counsel, a withdrawal and reappearance of
substitute
and
counsel,
seventeen
two
months
dismissals,
of
trying
to
three
amended
complaints,
state
a
upon
claim
which
relief can be granted, brings in its TAC causes of action which
rest on allegations that have been rejected as conclusory.
The
reasons for the previous dismissals thus continue to be relevant
for disposition of the current Motions, and the Court covers its
prior rulings in some detail.
The Court probed and found wanting LCI’s original Complaint
in March of 2016.
See, ECF No. 64 at 25-26.
Among the claims
dismissed in that ruling were a 42 U.S.C. § 1983 claim brought
against the City of Chicago and CPO Rhee, a 42 U.S.C. § 1985(3)
conspiracy claim brought against all the Defendants, and a claim
for
breach
of
the
Main
Contract
made
against
the
City
and
Republic/Allied. Id. at 14-22.
The § 1983 and § 1985 claims against the City of Chicago
were dismissed because LCI did not adequately plead that its
civil rights were violated by a City’s custom or policy.
ECF
No.
that
the
ratified,
the
64
at
allegations
15-16.
that
The
“the
Court
City
specifically
acquiesced
- 9 -
in,
found
or
misbehavior of the other Defendants and CPO Rhee” did not amount
to a municipal policy because such conduct was not a practice
“so permanent and well settled as to constitute a custom or
usage with the force of law.”
Id. (citing Moore v. Bd. of Educ.
of City of Chicago, 300 F.Supp.2d 641, 645 (N.D. Ill. 2004))
(internal quotation marks omitted).
The Court dismissed the same claims brought against CPO
Rhee on the additional ground that LCI failed to allege that CPO
Rhee’s
actions
were
“allegations
as
general
conclusory”
and
to
motivated
CPO
by
Rhee’s
and
race.
It
found
discriminatory
as
such,
that
motive
“d[id]
not
the
[were]
raise
a
plausible claim of intentional discrimination on the basis of
race.”
ECF No. 64 at 17.
The § 1985(3) civil conspiracy claim asserted against the
other Defendants failed for the same reason.
ECF No. 64 at 20.
As the Court noted, “Plaintiffs’ allegations in the body of the
Complaint that they were ‘treated differently than white owned
contractors,’
.
.
.
are
conclusory
at
best.”
Id.
Such
conclusions did not suffice to sustain a cause of action, and
the Court pointed out to LCI that it needed to “allege facts
[to] show[] . . . racial animus on the part of the City or the
other Defendants.”
Id. (emphasis in original).
In addition,
LCI did not make out the elements of a conspiracy since it did
not plead any facts tending to show that a “meeting of the minds
- 10 -
occurred between the City and the various Defendants to deprive
Plaintiffs of their constitutional rights.”
Id. at 19-20.
LCI’s contract claim fared even worse.
While the Court
gave LCI leave to amend its Complaint as to the other causes of
action, it dismissed the contract claim with prejudice because
LCI was “not a party to Contract No. 21472 [i.e., the Main
Contract], which is between Allied and the City.”
21-22.
could
ECF No. 64 at
Moreover, LCI and its owners have not alleged “(nor
they
in
beneficiaries”
good
of
the
faith)
Main
that
they
Contract.
Id.
are
third-party
(citing
Cronimet
Holdings, Inc. v. Keywell Metals, LLC, 73 F.Supp.3d 907, 917
(N.D. Ill. 2014)).
Presumably
due
to
the
dismissal
with
prejudice,
LCI
abandoned the contract claim in its First Amended Complaint.
The company hung on to the civil rights causes of action, and
the Court again looked to find factual allegations to support
them.
It looked in vain.
Accordingly, the Court dismissed the
§ 1983 and § 1985(3) claims for a second time.
the
same
reasons
that
it
did
five
months
It did so for
before:
LCI’s
Complaint contained no facts from which the Court could infer a
municipal
policy,
racial
animus,
or
a
meeting
of
the
minds.
See, ECF No. 131 at 7-12.
The Court further dismissed the
§ 1981
that
claim
on
the
ground
LCI
failed
to
support
its
allegations of race discrimination with any factual pleading.
- 11 -
Id. at 5-7.
The Court concluded that LCI appeared to allege
nothing
more
than
alleged
conduct
race.” Id. 6.
that
towards
“because
them
they
was
are
black,
indisputably
Defendants’
due
to
their
“But saying it is so does not make it so.” Id.
Throughout
its
opinion
dismissing
LCI’s
First
Amended
Complaint, the Court exhorted LCI to provide factual support for
its claims. ECF No. 131 at 7-8.
The Court more than once warned
LCI that failure “to amend the Complaint and provide factual
support . . . will result in dismissal with prejudice.” Id.
LCI
responded
to
the
Court’s
warnings
deadline for amending the Complaint.
at 3:19-20.
by
missing
the
See, ECF No. 155, Ex. A
The Court excused this irregularity when LCI’s new
counsel appeared and explained that his secretary had died.
at 4:22-5:6.
Id.
Counsel then attempted to have the Court stay the
litigation in favor of arbitration.
See, ECF No. 158, Ex. A.
The Court denied the request on account of the fact that LCI
waived its arbitration rights by bringing a breach of contract
claim. Id. at 14:10-15.
LCI then sought leave to amend its
Complaint for a third time “to allow us to add back in the
breach
of
contract
actions
because
the
only
reason
[LCI]
voluntarily dismiss[ed] [them] is we thought we were going to
proceed
under
arbitration.”
Id.
at
14:20-23.
The
Court
permitted LCI to file a Motion for Leave to Amend the Complaint.
Id.
at
15:8-9,
16:4,
17:4-18:10.
- 12 -
After
some
more
misunderstanding on LCI’s part as to what it has to do at this
point, see, Tr. Mot. Hr’g Oct 11, 2016, LCI filed its TAC.
As
will
be
seen,
the
deficiencies
in
LCI’s
previous
complaints remain in the TAC.
III.
ANALYSIS
LCI’s latest pleading is a six-count complaint.
Counts I,
II (brought against the City and CPO Rhee only), and III are
civil rights claims brought under 42 U.S.C. §§ 1981, 1983, and
1985(3),
respectively.
contract claims.
The
remaining
counts
are
breach
of
Counts IV and V are premised on the Main
Agreement and are asserted against the two signatories to that
contract, the City of Chicago (Count IV) and Republic/Allied
(Count V).
and
is
Count VI alleges a breach of the Transport Agreement
brought
against
LCI’s
counterparty
to
the
agreement,
RSPI.
Common elements underlie these claims.
III
Counts I, II, and
require
things,
LCI
to
plead,
among
other
that
the
Defendants were motivated by race when they acted to injure the
company.
Count IV and V require LCI to have the right to sue
under the Main Contract.
The Court first examines these common
elements before turning to Count VI.
- 13 -
A.
Counts I, II, and III Must Be Dismissed for
Lack of Adequate Pleading of Racial Animus
As the Court stated in its prior opinions, to carry the
burden to plead a 42 U.S.C. §§ 1981, 1983, or 1985 claim, LCI
must allege that the Defendants discriminated against it because
its owners are African Americans.
See, ECF No. 64 at 14-22, ECF
No. 131 at 5-11; see also, Morris v. Office Max, 89 F.3d 411,
413-14 (7th Cir. 1996) (listing an intention to discriminate on
the basis of race as one of the elements of a § 1981 action);
Sherwin Manor Nursing Ctr. v. McAuliffe, 37 F.3d 1216, 1220 (7th
Cir.
1994)
plaintiff
(“To
must
state
allege
an
equal
that
protection
a
state
claim,
actor
a
§ 1983
purposefully
discriminated against him because of his identification with a
particular
(presumably
historically
disadvantaged)
group.”);
Rodgers v. Lincoln Towing Serv., Inc., 771 F.2d 194, 203 (7th
Cir. 1985) (“A successful Section 1985(3) claim requires the
plaintiff to establish some racial, or perhaps otherwise classbased,
invidiously
conspirators’
Moreover,
such
action.”)
discriminatory
(internal
“[a]llegations
of
animus
quotation
race
behind
marks
discrimination
supported by material facts, not mere conclusions.”
the
omitted).
must
be
See, ECF
No. 64 at 6 (citing Jafree v. Barber, 689 F.2d 640, 643 (7th
Cir. 1982)).
Yet despite having been instructed thusly, LCI
again leans on the same allegations that were twice found to be
- 14 -
conclusory and insufficient to support an inference of racial
animus.
Against NCC, the TAC continues to have nothing to say but
that NCC failed to obtain insurance coverage necessary for LCI’s
trucks
to
operate
in
retained its deposit.
Missouri,
raised
LCI’s
premiums,
and
While LCI alleges that NCC does not do
these things to “white-owned contracts,” it has pleaded no facts
to support the allegation.
LCI makes no effort to identify,
even in a general manner, any such white-owned businesses.
Nor
does it allege that NCC was aware that LCI was owned by nonwhites.
See, Pourghoraishi v. Flying J, Inc., 449 F.3d 751, 757
(7th Cir. 2006) (“[T]he defendants could not have discriminated
against Pourghoraishi on the basis of race if they were unaware
of his race. . . .”).
LCI attempts to supplement the allegations it makes against
NCC in its response to NCC’s Motion to Dismiss.
This is plainly
inappropriate, as the Court suspects LCI’s experienced counsel
knows.
Thomason v. Nachtrieb, 888 F.2d 1202, 1205 (7th Cir.
1989) (“It is a basic principle that the complaint may not be
amended
by
the
dismiss. . . .”).
briefs
in
opposition
to
a
motion
to
In any case, the hastily added allegations
are speculative and conclusory.
They bring no support to LCI’s
case.
- 15 -
Against Seng, LCI contends that as there is “no plausible
reason” for Seng to email Republic/Allied, the email itself must
be racially motivated.
The text of the email, however, refutes
the contention that Seng did not have a legitimate reason to
email
Republic/Allied.
Seng’s
email,
consisting
of
seven
sentences in total, reads in part, “Jesse [LCI’s owner] tells me
that, Republic, is not paying him timely, that you owe him over
$700,000. . . . Please let me know if this is true, and what can
be
done
to
help.”
ECF
No.
181-1.
Even
when
it
draws
all
reasonable inferences in favor of LCI, the Court cannot see how
such an email rules out every “plausible reason” for Seng to
have contacted Republic/Allied, thus leaving only race as the
motivation for the communication.
LCI’s process-of-elimination
argument to arrive at racial animus falls flat.
Likewise, the allegations made against CPO Rhee, the City
of Chicago, Republic/Allied, and RSPI amount to nothing more
than
the
bald
and
hackneyed
assertion
that
the
Defendants
treated “LCI differently as compared to white-owned companies.”
See, TAC ¶¶ 37, 39, 46, 50-52, 48, 57, 66.
Strangely enough,
LCI attempts to shift the burden onto the Defendants, asserting
that
if
“they
were
not
discriminatory,
the
Defendants
would
certainly contend that such was [sic] conduct was done to nonMBEs also.” ECF No. 175 at 10.
LCI then faults the Defendants
for not making the contending protests to LCI’s satisfaction.
- 16 -
Id.
But the burden to plead the necessary elements of its own
claims rests squarely on LCI.
999
F.Supp.
1145,
1152
See, e.g., Payne v. Abbott Labs.,
(N.D.
Ill.
1998)
(Leinenweber,
J.)
(stating that the plaintiffs “must plead the elements of the
prima facie case of discrimination”).
Insofar
as
LCI’s
allegations
are
mere
repetitions
or
cosmetic variants of the conclusory allegations found in the
previous Complaints, the Court incorporates its stated reasons
for
rejecting
them.
See,
ECF
No.
64
at
14-17,
18-21
(“Plaintiffs fail to allege facts showing any kind of racial
animus
on
the
part
of
the
City
or
the
other
Defendants.”)
(emphasis in original); ECF No. 131 at 5-12 (“Plaintiffs do not
allege
any
facts
to
bolster
the
repeated
conclusion
that
Defendants acted with racial animus.”) (emphasis in original).
To the extent that LCI makes any new allegation in the TAC,
it is the reliance the company now puts on the OIG reports.
While
it
is
true
that
the
OIG
documented
problems
with
the
MBE/WBE program, these problems do not show that any of the
Defendants in this case harbor racial animosity.
that
the
OIG
addressed
involved
the
City
of
The problems
Chicago’s
poor
administration of the program, which allowed MBE companies to
sell their certifications to City contractors like Allied.
The
MBEs did no work themselves but still got paid for being MBEcertified.
This “pass through” scheme benefited Allied and the
- 17 -
MBEs at the expense of the City of Chicago, its taxpayers (who
footed the bill), and other MBEs that would have done the work,
assuming that such MBEs existed.
(The OIG obliquely expressed
its doubt on the availability of such MBEs by recommending that
the
City
demand
less
MBE
participation
than
the
statutory
maximum and instead work to ascertain “how much MWBE capacity
actually exists in those areas.”
ECF No. 149, Ex. E at 2.)
Whites and blacks thus show up on both sides of the ledger, as
those who (wrongly) benefited from the scheme and those who paid
for
it.
The
pass
through
scheme
is
discreditable,
because it discriminated against racial minorities.
but
not
As such,
the scheme – and the OIG’s condemnation of it – offer no support
for
LCI’s
allegations
that
the
Defendants
in
this
case
discriminated against it on account of race.
In
sum,
LCI
has
once
again
failed
to
plead
Defendants acted with the requisite racial animus.
that
the
The Court
thus dismisses Counts I, II, and III of its Complaint.
B. Counts I, II, and III Must also be
Dismissed for Other, Independent Reasons
Dismissal of Counts I and II as asserted against the City
of Chicago is also appropriate because LCI has not alleged any
municipal policy that deprived it of its constitutional rights.
Likewise,
Count
III
must
be
dismissed
- 18 -
because
LCI
has
not
averred any facts tending to show that the Defendants entered a
conspiracy.
1.
Municipal Policy
To state a civil rights claim against a municipality like
the City of Chicago, LCI must alleged that the its rights were
violated by a municipal policy, as that term is understood post
Monell v. Dep’t of Soc. Servs., 436 U.S. 658, 694 (1978).
See,
id. (“[I]t is when execution of a government’s policy or custom,
whether made by its lawmakers or by those whose edicts or acts
may fairly be said to represent official policy, inflicts the
injury that the government as an entity is responsible under
§ 1983.”); Looper Maint. Serv. v. City of Indianapolis, 197 F.3d
908,
913
(7th
Cir.
1999)
(“[A]s
in
his
Section
1983
claim,
[Plaintiff] Looper must show that the violation of his right to
make contracts protected by § 1981 was caused by a custom or
policy
within
the
meaning
of
Monell
(internal quotation marks omitted).
be
found
in
one
of
three
places:
and
subsequent
cases.”)
Such a municipal policy may
(1)
in
a
City’s
express
policy; (2) through a widespread practice that “is so permanent
and well settled” as to constitute a “custom or usage” with the
force of law; or (3) through the acts of a person with “final
policymaking authority.”
Baxter by Baxter v. Vigo County Sch.
Corp., 26 F.3d 728, 734 (7th Cir. 1994), superseded by statute
on other grounds.
- 19 -
LCI
does
not
allege
that
the
harm
to
its
federally
protected rights flowed from an express policy of the City.
Nor
could it given that “the City’s express policy on contracts not
only prohibits discrimination against minorities, but actually
requires the City to have a goal of granting contracts to MBEs.”
ECF No. 64 at 16; see generally, Municipal Code of Chicago § 292-420 et seq. (establishing a program that reserves certain
contract awards to MBEs and WBEs).
This leaves two avenues for LCI to pursue in trying to make
out a municipal policy:
a City’s implied policy in the form of
a widespread practice carrying the force of law and the act of a
final
policymaker.
LCI
grabs
for
both
options
in
its
TAC.
Unfortunately, the attempt is no more successful than it was
previously.
See, ECF No. 131 at 7 (“Like [in] the original
Complaint, . . . Plaintiffs
specificity
the
[have
existence
of
not]
a
pleaded
widespread
with
any
practice
of
discrimination against minority-owned businesses; and they fail
to plead factual support for their claim that CPO Rhee was a
person with final policymaking authority for the City.”).
LCI
has
not
supplemented
its
factual
pleadings
of
a
widespread practice of racial discrimination with anything more
than
the
OIG
reports.
But,
as
explained
previously,
the
problems documented in those reports do not suggest that the
City has a practice of discriminating against minorities.
- 20 -
As
such,
LCI’s
allegations
of
a
municipal
policy
again
lack
“factual support that a city policy does exist” and so “are
insufficient.”
Rodgers, 771 F.2d at 202.
LCI tries harder with its claim that CPO Rhee is a final
policymaker.
Recognizing that “the identity of a government’s
policymaker is a question of local law,” Auriemma v. Rice, 957
F.2d 397, 400 (7th Cir. 1992), LCI points to Municipal Code of
Chicago (“MCC”) § 2-92-490.
It is true that this section of the
MCC lays out the duties of a Chief Procurement Officer.
Yet, it
is difficult to understand how LCI could read the section and
think that CPO Rhee has final policymaking authority over the
actions that LCI alleged caused it harm.
Under MCC § 2-92-490,
the CPO is tasked with administering the MBE/WBE program and
carrying
out
certification
various
(e.g.,
activities
recruiting
associated
businesses
with
to
MBE/WBE
apply
for
certification, maintaining an electronic directory of certified
businesses, etc.).
None of these tasks suggest that CPO Rhee
has the authority to make policy.
MCC § 2-92-490 gives the CPO
no power to “establish rules,” “countermand the statutes,” or
“adopt[] rules for the conduct of government.”
See, Auriemma,
957 F.2d at 401 (listing these as the powers of a policymaker).
Instead, the code rather clearly indicates that the CPO is an
administrator of a program whose goals and policies are set by
statute.
- 21 -
LCI further alleges that the Main Contract shows that CPO
Rhee has policymaking power, as does a letter that the CPO wrote
in response to LCI’s inquiries.
However, LCI cites no authority
to support the proposition that a contract or a letter – as
opposed to local law – may establish a local government employee
as the final policymaker for the municipality.
Furthermore, the
contract provisions that LCI cites do not favor the theory that
CPO
Rhee
may
make
policy
binding
the
example, Section 2.21 of the contract.
City.
Consider,
for
As may be recalled, this
provision permits (but does not require) the CPO to stop payment
to
a
contractor
if
she
has
reason
to
subcontractor like LCI has not been paid.
believe
that
a
The provision does
not say that whether the CPO chooses to do so in any particular
instance
City.
then
becomes
a
rule
prescribing
the
conduct
of
the
It does not hint at any policymaking authority on the
part of the CPO.
The letter is even weaker evidence.
LCI emphasizes a line
from the letter which reads, “one of our top goals is making
sure that minority-and women-owned businesses can grow and find
a consistent, stable place in the market.” TAC ¶ 49.
This line
simply echoes the goals behind the City’s MBE/WBE policies as
set out in the municipal codes.
It and the rest of letter
utterly
Rhee
fail
to
show
that
CPO
authority.
- 22 -
has
any
policymaking
Because LCI has not adequately pleaded that a City’s policy
violated its federally protected rights, the § 1981 and § 1983
claims against the City must be dismissed.
2.
Conspiracy
The Court next examines the civil conspiracy claim under
§ 1985(3).
To
establish
a
prima
facie
case
of
such
a
conspiracy, LCI must plead specific material facts to show an
express or implied agreement among the Defendants to deprive it
of its constitutional rights.
See, Scherer v. Balkema, 840 F.2d
437, 442 (7th Cir. 1988); Jafree, 689 F.2d at 644.
agreement
occurs
when
the
Defendants
had
“a
meeting
Such an
of
the
minds” whereby they reached “an understanding to achieve the
conspiracy’s
objectives.”
See,
Hernandez
v.
Joliet
Police
Dep’t, 197 F.3d 256, 263 (7th Cir. 1999).
LCI’s allegations of facts supporting a conspiracy among
the Defendants can be summed up in four words:
other.
a
See, TAC ¶¶ 59-69.
long-standing
Defendant
they knew each
For example, LCI says that NCC “has
relationship
Republic/Allied.”
with
TAC
Defendant
¶ 67.
Republic
Likewise,
and/or
“Defendants
Republic/Allied and Defendants Seng were enough acquainted with
each
other
so
that
Seng
could
send
an
email
to
person, Todd Bruck of Defendant Republic/Allied.”
at 8.
a
specific
ECF No. 174
But simply because the Defendants know each other does
not give rise to the inference that they agreed to “obstruct LCI
- 23 -
operations
and
attempt
to
render
LCI
insolvent”
all
so
Republic/Allied could “eliminate the only qualified MBE to bid
for
the
City
garbage
hauling
contract.”
TAC
¶
59;
see,
Hernandez, 197 F.3d at 263-64 (finding no evidence to support an
inference of a conspiracy when there was “no evidence that [the
alleged
conspirators]
relationship”
and
had
“nothing
anything
in
this
more
record
than
a
explains
working
why
[one
defendant] would go out on a limb to prepare a false police
report at [the other defendant’s] behest”).
Besides these scattershot allegations as to the Defendants’
knowledge
of
each
other
and
the
conclusory
statement
that
Republic/Allied recruited the Defendants to break the law on its
behalf, all LCI can point to show agreement is what it considers
suspicious timing in the Defendants’ actions.
Specifically, LCI
asserts that “Defendants had no issues with Plaintiff for six
months while the bid was pending, but one week after Defendant
Republic/Allied
Defendant
was
awarded
million
Republic/Allied
Defendant
in
invoices,
Seng
the
fails
contract
to
Plaintiff’s
contacts
Defendant
that it is owed money by Plaintiff.”
pay
work
with
Plaintiff
is
the
for
questioned,
Republic/Allied
City,
$1.4
[and]
contending
See, e.g., ECF No. 175 at
11-12 (the same sentence is found verbatim in all four of LCI’s
responsive briefs to the Defendants’ motions to dismiss).
- 24 -
LCI’s assertion is simply not true.
not
take
place
within
a
week
of
All these events did
Republic/Allied
contract.
2010.
It allegedly failed to pay LCI the $1.4 million four
later,
sometime
in
won
2014.
the
contract
Likewise,
in
the
City’s
years
Republic/Allied
winning
Seng
March
emailed
Republic/Allied in 2014, and NCC appeared to have committed its
alleged wrongdoings in that year.
Although LCI did not specify
exact dates, the events in 2014 do not appear to have happened
within a week of each other either.
Finally, it is not true
that the Defendants had no issues with LCI “for six months while
the bid was pending.”
At least one of the Defendants, RSPI, had
enough “issues” with LCI to send it a notice letter of breach
four months after signing the Transport Agreement with LCI and
before the City’s contract was to begin.
In sum, even if suspicious timing were enough to raise an
inference of conspiracy, LCI has not aroused any such suspicion.
But see, Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556-57 (2007)
(stating that “[w]ithout more, parallel conduct does not suggest
conspiracy”); Adamski v. McGinnis, No. 13-CV-962-JPS, 2015 U.S.
Dist. LEXIS 40501, at *10 (E.D. Wis. Mar. 30, 2015) (applying
Twombly’s language to dismiss a § 1985 claim).
LCI’s § 1985(3)
conspiracy claim fails because, as with its previous Complaints,
LCI has not “offer[ed] a single fact to support the inference
that
the
City
or
CPO
Rhee
and
- 25 -
the
private-actor
Defendants
entered
into
[]
an
agreement”
rights.
to
violate
its
constitutional
ECF No. 131 at 9-10.
C. Counts IV and V must be Dismissed because LCI may
not bring a Breach of Contract Claim under the Main Contract
Having disposed of LCI’s civil rights claims, the Court
next turns its attention to the breach of contract causes of
action.
LCI’s breach of contract claims as alleged in Counts IV
and V of the TAC run into two obstacles:
(1) the claims were
previously dismissed with prejudice; and (2) LCI is not a thirdparty beneficiary to the contract under which it seeks to sue
(the Main Contract).
The Court is of the view that LCI has not
overcome either of these problems.
1.
Prior Dismissal with Prejudice
In its March 2016 order, the Court dismissed with prejudice
LCI’s claims against the City and Republic/Allied for breach of
the Main Contract.
ECF No. 64 at 21-22.
(While the Court
stated that the dismissal against Allied was without prejudice,
that
dismissal
Transport
in
Agreement.
permission
claims.
was
from
this
Id.
regards
to
breaches
at
22,
25.)
Court
(or
any
premised
LCI
has
other)
to
not
on
the
received
refile
these
See, Marlow v. Winston & Strawn, 19 F.3d 300, 306 (7th
Cir. 1994) (“[O]nce the order of dismissal [with prejudice] was
entered it had the same effect as an adjudication on the merits,
which could be altered only by filing a motion to reopen the
- 26 -
judgment pursuant to Rule 59, or doing as Marlow did and take an
appeal.”).
LCI contends that it is nonetheless entitled to file
Counts IV and V because, whereas before it sued as a direct
party to the Main Contract, it is now asserting standing to sue
as a third-party beneficiary.
The argument is unpersuasive.
The Court’s Order dismissing
the claims clearly stated that the Court considered both whether
LCI was a party to the Main Contract and whether it was a thirdparty beneficiary to that contract.
See, ECF No. 64 at 21.
The
Court found that LCI was neither and so dismissed its claims
with prejudice.
LCI should not be allowed to bring the same
claims now without court approval.
2.
Third-Party Beneficiary
Even if the Court were to reconsider the claims, still it
would find that LCI does not have standing to sue for alleged
breaches of the Main Contract.
Since LCI is not a signatory to
the Main Contract, it can enforce the contract only if “the
contract’s
original
parties
intentionally
contract for [its] direct benefit.”
entered
into
the
Martis v. Grinnell Mut.
Reinsurance Co., 388 Ill. App. 3d 1017, 1020 (2009); see also,
XL Disposal Corp. v. John Sexton Contractors Co., 168 Ill. 2d
355,
361
(1995).
But
as
the
Seventh
Circuit
has
remarked,
“Illinois has made it very difficult to prove intent to benefit
the third party.”
Quinn v. McGraw-Hill Cos., 168 F.3d 331, 334
- 27 -
(7th Cir. 1999).
This is because “there is a strong presumption
that parties to a contract intend that the contract’s provisions
apply to only them and not to third parties.”
155 Harbor Drive
Condo. Ass’n v. Harbor Point, Inc., 209 Ill. App. 3d 631, 647
(1991) (emphasis as added in 155 Harbor Drive) (quoting from
Ball Corp. v. Bohlin Building Corp., 187 Ill. App. 3d 175, 177
(1989)) (internal quotation marks omitted).
To overcome this
strong presumption, a nonparty like LCI must point to language
in
the
Main
Contract
and
“the
circumstances
surrounding
the
parties at the time of its execution” that together constitute
“practically
an
Republic/Allied
benefit.
express
entered
declaration”
into
that
that
contract
the
for
City
LCI’s
and
direct
See, id.; XL Disposal, 168 Ill. 2d at 361; Martis, 388
Ill. App. 3d at 1020.
The
strongest
evidence
LCI
has
of
this
declaration” is Section 5.1 of the Main Contract.
reads, in part:
“express
Section 5.1
“This provision is intended [to] the benefit of
any MBE/WBE affected by underutilization and grants such entity
specific
because
third
it
conferred
has
by
party
beneficiary
“specific
Section
5.1,
third
it
rights.”
party
may
sue
LCI
argues
beneficiary
to
enforce
that
rights”
all
as
other
provisions of the Main Contract.
This argument fails for two reasons.
First, Section 5.1
gives LCI the right to arbitrate an underutilization claim.
- 28 -
The
sentence immediately preceding the one just quoted stipulates
that,
“[t]he
Ordinance
and
contracts
subject
thereto
provide
that any disputes between the contractor and such affected [by
underutilization] MBEs/WBEs regarding damages shall be resolved
by binding arbitration.”
Thus, Section 5.1 has nothing to say
as to whether LCI may litigate its underutilization claim as a
third-party
beneficiary
to
the
Main
Contract.
Moreover,
Section 5.1’s careful language giving LCI the “specific third
party
beneficiary
suggests
that
rights”
LCI’s
to
rights
limited to just that claim.
as
complain
a
of
underutilization
third-party
beneficiary
are
In other words, it appears that LCI
has the “specific” right conferred by Section 5.1 to arbitrate a
particular claim but not the general right to enforce all of the
provisions of the Main Contract.
Because LCI has not convinced the Court that Section 5.1
alone
gives
it
third-party
beneficiary
considers the rest of the Main Contract.
status,
the
Court
That contract and the
circumstances surrounding its signing are similar to those found
in
ESG
Tech.
Servs.,
LLC
No. 1:09-cv-00030-TWP-TAB,
Ind. June 6, 2011).
v.
2011
Advantage
U.S.
Health
Dist.
sued,
like
Inc.,
59619
(S.D.
LEXIS
As in this case, the plaintiff in ESG was a
MBE owned by an African American. Id. at *2.
ESG
Sols.,
Republic/Allied,
had
The companies that
listed
ESG
as
a
MBE
subcontractor in their bid for a contract with the state of
- 29 -
Indiana. Id. at *3.
These defendant companies won the state
contract and so ESG’s name was included in the list of MBEs
participating in the contract. Id. at *5.
ESG
did
not
contract
with
the
subcontracting work. Id. at *8.
Ultimately, however,
defendants
to
perform
the
ESG then sued, asserting a
claim of breach of the contract between the defendants and the
state. Id. at *10.
At summary judgment, the issue was whether
ESG was an intended third-party beneficiary to the contract.
Judge Pratt determined that ESG was not such a beneficiary.
ESG, 2011 U.S. Dist. LEXIS 59619 at *20. ESG, like LCI in this
case, made much of the fact that its name was listed in the
contract with the state as a participating MBE.
However, the
judge reasoned that “[t]he fact that ESG is mentioned in the
contract . . . does not establish an intent to benefit ESG as a
third-party
beneficiary;
rather,
evidence of such an intent.”
naming
a
party
is
merely
Id. at *14; see also, E.B. Harper
& Co. v. Nortek, Inc., 104 F.3d 913, 920 n.4 (7th Cir. 1997)
(finding that a plaintiff is not a third-party beneficiary to a
contract
despite
being
mentioned
“incidentally
in
the
Stock
Purchase Agreement between Nortek and the Pozzis as the broker
involved
in
the
deal”);
Martis,
388
Ill.
App.
3d
at
1020
(stating that “[i]f a contract makes no mention of the plaintiff
or
the
class
to
which
he
belongs,
he
is
not
a
third-party
beneficiary of the contract” but not that if a contract does
- 30 -
make
such
a
mention,
beneficiary).
Judge
then
Pratt
the
plaintiff
found
that
automatically
rest
of
the
is
a
contract
militated against the conclusion that the parties intended to
benefit ESG.
As is relevant for our case, the judge found the following
instructive.
First, in a 22-page contract with 53 provisions,
ESG was named only in the provision that addressed MBE and WBE
participation.
*15.
ESG Tech. Servs., 2011 U.S. Dist. LEXIS 59619 at
Second, the contract allowed the defendants to swap out
the participating MBEs and WBEs provided that the defendants
obtain written approval from the state. Id. at *15-16.
other
provisions
to
the
contract
“detail[ed]
the
Third,
rights
and
obligations of the parties.” Id. at *16-17.
The
Court
finds
ESG
relevant
and
persuasive.
The
difference in procedural posture between this case and ESG does
not outweigh their similarities.
This is especially true given
that the evidence relied on in ESG was simply the terms of the
contract and that the reasoning from ESG has been adopted to
decide a motion to dismiss.
See, Bucher & Christian Consulting,
Inc. v. Novitex Enter. Sols., No. 1:15-cv-00010-TWP-MJD, 2015
U.S. Dist. LEXIS 118378, at *20-39 (S.D. Ind. May 22, 2015)
(recommending
dismissal
of
a
plaintiff’s
breach
of
contract
claim), adopting recommendation, 2015 U.S. Dist. LEXIS 117578,
at *3-4 (S.D. Ind. Sep. 3, 2015).
- 31 -
Many of the factors that swayed the ESG court to find that
the MBE plaintiff was not an intended third-party beneficiary
are present in this case.
The Main Contract is over a hundred
pages long, and LCI’s name is mentioned only in an insert to the
contract.
Moreover, the Main Contract permits Republic/Allied
to substitute MBE subcontractors if it gives notice to the City.
See, ECF No. 149, Ex. C at 48.
This indicates that the parties
did not intend to benefit a specific MBE such as LCI.
Finally,
the bulk of the Main Contract revolves around the rights and
responsibilities of the parties themselves, not LCI.
Overall,
the Main Contract is a document that is “perfectly reasonable”
for the parties to have entered on their own behalf.
See,
Quinn, 168 F.3d at 334-35 (rejecting that a plaintiff may claim
third-party
contract
beneficiary
was
“a
status
when,
perfectly
among
other
reasonable
–
things,
perhaps
the
even
indispensable – contract for AHAC to have entered for its own
purposes”).
Insofar as the Main Contract reflects rules that the City
set down regarding MBE participation, those rules make LCI, one
MBE out of the class of many, an incidental beneficiary of the
contract.
contract.
Such
a
beneficiary
cannot
sue
to
See, Martis, 388 Ill. App. 3d at 1020.
enforce
the
LCI stands in
the same shoes as the physician in Martis who provided medical
services
to
an
injured
employee
- 32 -
covered
by
the
defendant
insurer.
Such
a
physician
benefitted
from
the
insurance
contract (he got paid by the insurance) but may not sue on it
because his benefit was only incidental.
See, id. at 1021-23.
As the Martis court stated, “medical providers are generally not
third party beneficiaries of insurance policies . . . [except]
when (1) the policy expressly identifies medical providers as
third party beneficiaries . . . or (2) the policy provides for
payment directly to medical providers.” Id. at 1022.
exception applies to LCI.
Neither
LCI is not expressly named as a
third-party beneficiary (no MBE is), and it receives no payment
directly from the City.
Like the medical provider then, LCI
benefits from the Main Contract but cannot sue on it.
To the extent that the contract lays out the requirements
on
subcontractors
indicates
that
responsibility
(MBEs
it
to
is
ensure
those requirements.
and
the
non-MBEs
alike),
contractor’s
that
the
its
language
(Republic/Allied’s)
subcontractors
comply
with
Such provisions do not suggest that the
City has any legally enforceable rights against non-signatory
subcontractors like LCI and so do not “bind” LCI and make it a
third-party beneficiary to the contract.
See, Barney v. Unity
Paving, 266 Ill. App. 3d 13, 19-23 (1994) (holding that the
plaintiff has not overcome the strong presumption against thirdparty beneficiaries when “the contract as a whole clearly shows
that the intent of the City . . . was solely to set forth the
- 33 -
parties’ respective responsibilities and to protect the City”)
(emphasis added).
For
these
reasons,
LCI
cannot
sustain
its
breach
of
contract claims under the Main Contract against either the City
or Republic/Allied.
D.
The Dismissals are with Prejudice.
The Court has twice dismissed LCI’s claims with leave to
amend and clear instructions to cure the persistent deficiencies
in its pleading.
LCI yet again fails to do so.
Accordingly,
the Court now does what it before warned LCI that it would do in
the face of such failures:
the Court dismisses Counts I through
V of the TAC with prejudice.
See, Airborne Beepers & Video,
Inc. v. AT&T Mobility LLC, 499 F.3d 663, 666-67 (7th Cir. 2007)
(“Where the plaintiff has repeatedly failed to remedy the same
deficiency, the district court did not abuse its discretion by
dismissing the claim with prejudice.”) (internal quotation and
alteration marks omitted).
LCI may not amend its pleadings in
the absence of a written motion explaining how it would cure the
defective allegations.
See, Jafree, 689 F.2d at 644-45; Looper,
197 F.3d at 914; Airborne, 499 F.3d at 666-68.
E. Count VI Survives Only to the Extent that LCI is Alleging
that RSPI Breached the Terms of the Transport Agreement
The Court arrives at the last cause of action.
Count VI of
the TAC alleges that RSPI breached the Transport Agreement.
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The
emphases
are
necessary
indiscriminately
mixes
because
in
allegations
pleading
of
Republic/Allied under the Main Contract.
this
breaches
claim,
by
LCI
Defendant
As may be remembered,
Republic/Allied is actually shorthand for four entities, none of
which is RSPI and none of which is a party to the Transport
Agreement.
To justify throwing in Republic/Allied to this cause
of action, LCI blandly asserts that “[a]ny misinterpretation of
the Defendants’ roles is purely the result of Movants’ doing.”
ECF No. 176 at 15.
The Court agrees that if a plaintiff’s own
“misinterpretation” and confusion were cognizable grounds to sue
somebody, then LCI’s case would have gone a lot better for it in
the year and a half since the case has been pending.
They are
not.
In
addition,
Contract.
Typically
the
Transport
Agreement
is
not
the
Main
These contracts are two legally distinct documents.
“documents
executed
at
the
same
time
by
the
same
parties concerning the same subject matter will be construed as
one.”
Home Sav. Assn., F.A. v. State Bank of Woodstock, 763
F.Supp.
292,
296-97
(N.D.
Ill.
1991)
(emphasis
in
original)
(citing Main Bank of Chicago v. Baker, 86 Ill. 2d 188, 201
(1981)).
The Transport Agreement and the Main Contract were
executed months apart, entered into by different parties, and
concerned different subject matters.
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There is no reason why the
two
contracts
should
be
treated
as
the
same
document
that
imposed cumulative obligations on RSPI.
What
does
impose
obligations
on
RSPI
are
the
contract
provisions found in the Transport Agreement and its amendments.
But these provisions do not include any duty to mentor LCI.
LCI
has made several factual allegations to support the charge that
RSPI (or was it Republic/Allied?) ought to have mentored LCI.
See, TAC ¶¶ 37, 38(O); ECF No. 149 Ex. B & Ex. Q.
However, no
such mentoring obligation was incorporated into the Transport
Agreement.
LCI
is
here
alleging
breaches
of
that
specific
agreement and so cannot rely on supposed duties not found in the
agreement.
For
the
allegations
above
from
reasons,
Count
VI
the
that
Court
do
not
strikes
concern
imposed on RSPI by the Transport Agreement.
all
an
of
the
obligation
What remains in
Count VI, which include the allegations that RSPI violated the
exclusivity
terminated
clause
the
of
the
contract,
Transport
may
Agreement
proceed.
LCI
and
has
wrongfully
sufficiently
pleaded a breach of the exclusivity clause by alleging that RSPI
“hired another hauler to do LCI’s work for which LCI had the
exclusive hauling contract per Section 1(b) of the July 19, 2010
Settlement Agreement [an amendment to the Transport Agreement].”
TAC ¶ 38(H).
Likewise, it has alleged wrongful termination by
disputing that it breached any of the three provisions in the
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Transport
Agreement
that
RSPI
contract.
See, ECF No. 149 Ex. H.
IV.
relied
on
to
terminate
the
CONCLUSION
For the reasons stated herein, the Court rules as follows:
1.
Counts I through V of the Third Amended Complaint are
dismissed with prejudice; and
2.
The remaining Count VI, as limited to allegations of
RSPI’s breaches of the Transport Agreement, may proceed.
IT IS SO ORDERED.
Harry D. Leinenweber, Judge
United States District Court
Dated: 3/31/2017
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