CivCon Services, Inc. v. Accesso Services, LLC
MEMORANDUM Opinion and Order signed by the Honorable Virginia M. Kendall on 10/15/2020. Because CivCon has failed to sufficiently plead a pattern of racketeering activity and an interstate effect sufficient to state a RICO claim, Accesso's Motion to Dismiss 23 is granted without prejudice. CivCon is granted leave to amend its Complaint consistent with this Opinion, if possible, within 21 days of the filing of this Opinion. See Opinion for further details. Mailed notice(lk, )
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THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
CIVCON SERVICES, INC.,
ACCESSO SERVICES, LLC.
No. 20 C 1821
Judge Virginia M. Kendall
MEMORANDUM OPINION AND ORDER
Plaintiff CivCon Services, Inc. is a former tenant of a building managed by Defendant
Accesso Services, LLC. Civcon has brought a class action suit against Accesso for damages under
the Racketeer Influenced and Corrupt Organizations Act (“RICO”) on behalf of a class of tenants
of Accesso’s office buildings in the Chicago Loop. Civcon alleges that Accesso has conspired
with the labor unions representing its employees to force tenants to hire union-only contractors.
For the reasons discussed below, Accesso’s motion to dismiss [Dkt. 23] is granted.
The following factual allegations are taken from Civcon’s Complaint (Dkt. 1) and are
assumed true for the purposes of this motion. W. Bend Mut. Ins. Co. v. Schumacher, 844 F.3d 670,
675 (7th Cir. 2016).
Accesso manages large commercial office buildings in the Chicago Loop. (Dkt. 1 ¶ 8).
Since at least 2014, Accesso has allowed three labor unions, the International Union of Operating
Engineers Local 399, AFLCIO, Service Employees International Union, Local 1, and Teamsters
Local 705, to restrict access to its buildings by any non-union contractors. (Id. ¶ 9).
alleges that Accesso and the three unions have an unwritten conspiracy that is a type of unfair labor
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practice that is known as a “hot cargo agreement,” i.e. a pact by an employer and a union to “cease
handling” or otherwise dealing with an entity because it is not unionized. (Id.). Accesso has
agreed to impose this restriction on its Loop tenants as part of its agreement with the three unions
and has generally complied with the power exerted over it by the union. (Id. ¶¶ 12, 13). Accesso
requires that all contractors entering the building be approved by Accesso and be unionized in
order to be approved. (Id. ¶ 16). Civcon acknowledges that the written Collective Bargaining
Agreements between Accesso and the two of the Unions expressly prohibits this type of behavior.
(Id. ¶ 10). Civcon alleges that Local 705, which represents movers, does not have a CBA with
Accesso but successfully pressures Accesso to forbid non-union movers from accessing its
Civcon was a tenant at 230 W. Monroe St, Chicago, a property managed by Accesso, for
several years when it decided to move in April 2016. (Id.). Civcon and Accesso reached an
agreement to allow Civcon to move to a smaller suite in the same property for a reduced rent. (Id.).
CivCon hired the following services as part of its move: (1) a union firm to help it complete its
move; (2) a union firm to install wiring in its new suite; and (3) a union firm to perform fiber
optic/riser work to accommodate AT&T services in its new suite. (Id. ¶¶ 16–20). Civcon alleges
it paid higher prices for the union work and would have preferred a different, cheaper option but
was prohibited from doing so by Accesso due to its agreement with the Unions. (Id.). The
difference in cost between union and non-union labor is significant, at least 20 percent higher for
union workers and movers, if not more. (Id. ¶¶ 21-22). As a result of the agreement between
Accesso and the Unions, CivCon and each putative Class member preferring to use non-union
movers and other contract labor have been overcharged by an estimate of at least 20 percent. (Id.
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CivCon has brought two counts alleging violations of the Hobbs Act that serve as predicate
offenses for RICO violations. Count I alleges violations under 18 U.S.C. §1962(c) for its alleged
overpayment to service providers related to its move. (Id. ¶¶ 39–51). Count II alleges violations
under 18 U.S.C. §1962(d) for its alleged conspiracy with the unions. (Id. ¶¶ 52–60).
To survive a motion to dismiss under Rule 12(b)(6), the complaint “must contain sufficient
factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks omitted). A claim is facially plausible
“when the plaintiff pleads factual content that allows the court to draw the reasonable inference
that the defendant is liable for the misconduct alleged.” Id. The Court accepts the complaint’s
factual allegations as true and draws all permissible inferences in Plaintiff’s favor. Schumacher,
844 F.3d at 675 (quoting Iqbal, 556 U.S. at 678). The Court is “not bound to accept as true a legal
conclusion couched as a factual allegation.” Olson v. Champaign Cty., 784 F.3d 1093, 1099 (7th
Cir. 2015) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Evaluating whether a
plaintiff’s claim is sufficiently plausible to survive a motion to dismiss is “a context-specific task
that requires the reviewing court to draw on its judicial experience and common sense.”
Schumacher, 844 F.3d 676 (quoting McCauley v. City of Chicago, 671 F.3d 611, 616 (7th Cir.
2011); Iqbal, 556 U.S. at 678)).
The Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961–1968 makes
it unlawful “to conduct” an “enterprise's affairs through a pattern of racketeering activity,” where
“racketeering” is defined as behavior that violates certain enumerated federal statutes or state laws
addressing specific topics and bearing specific penalties. 18 U.S.C. §§ 1962(c); 1961(1). RICO
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is a “unique cause of action that is concerned with eradicating organized, long-term, habitual
criminal activity.” Gamboa v. Velez, 457 F.3d 703, 705 (7th Cir. 2006). When Congress enacted
RICO, it chose to supplement criminal enforcement of its provision by providing that “[a]ny person
injured in his business or property” by a RICO violation may seek treble damages and attorney's
fees. 18 U.S.C. § 1964(c); Goren v. New Vision Intern., Inc., 156 F.3d 721, 726 (7th Cir.1998).
As this Court has discussed previously, “[w]hile Congress never intended RICO to be employed
to allow plaintiffs to turn garden-variety state law fraud cases into RICO claims, the breadth of
RICO's text and lure of treble damages and attorney's fees have proven irresistible to plaintiffs
bent on federalizing such claims.” Guaranteed Rate, Inc. v. Barr, 912 F.Supp. 2d 671, 681 (N.D.
Ill. 2012) (Kendall, J.) (internal citations omitted); see also Gamboa, 457 F.3d at 710 (“Civil RICO
plaintiffs persist in trying to fit a square peg in a round hole by squeezing garden-variety business
disputes into civil RICO actions. While it is clear that the scope of civil RICO extends beyond the
prototypical mobster or organized crime syndicate, it is equally evident that RICO has not
federalized every state common law cause of action available to remedy business deals gone
In order to state a RICO claim, a Plaintiff must allege a cognizable injury to its business
or property resulting from the: “(1) conduct (2) of an enterprise (3) through a pattern (4) of
racketeering activity.” Gamboa, 457 F.3d at 705; Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S.
479, 496 (1985). Because Plaintiff fails to adequately plead these elements, Plaintiff’s claim is
dismissed without prejudice.
Pattern of Racketeering Activity
Congress defined a “pattern of racketeering activity” to require “at least two acts of
racketeering activity” within a ten-year period. 18 U.S.C. § 1961(5). Satisfying the pattern
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element is difficult “and its precise requirements have bedeviled courts.” Menzies v. Seyfarth
Shaw, LLP, 943 F.3d 328, 336 (7th Cir. 2019). To plead a pattern of racketeering activity, “a
plaintiff must demonstrate a relationship between the predicate acts as well as a threat of
continuing activity,” a standard known as the “continuity plus relationship” test. Id. (citing
DeGuelle v. Camilli, 664 F.3d 192, 199 (7th Cir. 2011)). The relationship prong of the test is
satisfied by acts of criminal conduct close in time and character, undertaken for similar purposes,
or involving the same or similar victims, participants, or means of commission. H.J., Inc. v.
Northwestern Bell Tel. Co., 492 U.S. 229, 240 (1989). The relatedness of the predicate acts is not
often disputed, and, as here, the arguments often focus on the continuity prong. See id.; Vicom,
Inc. v. Harbridge Merchant Servs., Inc., 20 F.3d 771, 780 (7th Cir. 1994).
In order to adequately plead the continuity dimension of the continuity-plus-relationship
test, a plaintiff must plead sufficiently to meet one of the following prongs: “(1) demonstrating a
closed-ended series of conduct that existed for such an extended period of time that a threat of
future harm is implicit, or (2) an open-ended series of conduct that, while short-lived, shows clear
signs of threatening to continue into the future.” Roger Whitmore’s Auto Servs., Inc. v. Lake
County, Ill., 424 F.3d 659, 673 (7th Cir. 2005). In the closed-ended inquiry, the Court asks whether
there were enough predicate acts over a finite time to support a conclusion that the criminal
behavior would continue, and the focus is on “the number and variety of predicate acts and the
length of time over which they were committed, the number of victims, the presence of separate
schemes and the occurrence of distinct injuries.” Menzies, 943 F.3d at 337; Vicom, 20 F.3d at
In the alternative, the open-ended inquiry looks not on “what acts occurred in the past but
on whether a concrete threat remains for the conduct to continue moving forward.” Menzies, 943
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F.3d at 337. This inquiry can be met “by showing that a defendant’s actions pose a specific threat
of repetition; that the predicate acts form part of the defendant’s ongoing and regular way of doing
business; or that the defendant operates a long-term association for criminal purposes.” Id.; see
also Empress Casino Joliet Corp. v. Balmoral Racing Club, Inc., 831 F.3d 815, 828 (7th Cir.
2016). However, it is not enough to base an open-ended continuity theory on just one prior
predicate act and an otherwise unsupported assertion that criminal activity will continue into the
future. Id. at 337-38; see also Gamboa, 457 F.3d at 709 (explaining that when “a complaint
explicitly presents a distinct and non-recurring scheme with a built-in termination point and
provides no indication that the perpetrators have engaged or will engage in similar misconduct,
the complaint does not sufficiently allege continuity”).
Accesso does not dispute that the relatedness element can be pled based on the allegations
that CivCon used three union-only services in the April 2016. Accesso disputes whether the
continuity test can be met here under either the open-ended or close-ended prong. Plaintiff has not
pled sufficient facts to state a claim under either inquiry. First, under the close-ended inquiry,
Plaintiff has not alleged a sufficiently lengthy time period, as their alleged acts only occurred under
a one-month period. (Dkt. 1 ¶¶ 16–20). It is well-settled that “predicate acts extending over a few
weeks or months and threatening no future criminal conduct do not satisfy this requirement:
Congress was concerned in RICO with long-term criminal conduct.” H.J. Inc., 492 U.S. at 242.
Plaintiff claims that they have pled that the RICO conspiracy lasted four years, but such allegations
are conclusory and not properly pled. (Dkt. 1 ¶ 41 (“Accesso has committed a pattern of repeated
violations of §§ 1951 for the past four years”); Id. at ¶ 54 (“This agreement has been ongoing
between these entities for at least the last four years, and likely, longer.”)). However, there is
nothing in the Complaint to support this bald assertion. See Iqbal, 556 U.S. at 678 (“A pleading
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that offers labels and conclusions or a formulaic recitation of the elements of a cause of action will
not do.”) (internal citations omitted).
Likewise, Plaintiff has not sufficiently pled to meet the standards of the open-ended
inquiry. Plaintiff has pled that they paid higher prices due to an alleged hot cargo agreement in
April 2016. But there is nothing in the Complaint to suggest that Defendant’s actions pose a
specific threat of repetition, that the predicate acts form part of the Accesso’s ongoing way of
doing business, or that it is a long-term association for criminal purposes. Menzies, 943 F.3d at
337. Again, the only allegations to support a long-term agreement are Plaintiff’s conclusory
allegations that “[t]his relationship has been ongoing for many years,” (Dkt. 1 ¶ 46) and the
enterprise “has been ongoing for years.” (Id. at ¶ 44). 1 Plaintiff argues that its allegations are
sufficient because even if they haven’t personally experienced an ongoing injury for years,
unnamed class members have. As discussed, Plaintiff has not plausibly pled an ongoing injury.
Its allegations pertaining to the length of the alleged RICO violation are conclusory and vague.
Plaintiff’s reliance on Corley v. Rosewood Care Ctr., Inc., 142 F.3d 1041, 1050 (7th Cir. 1998) is
misplaced. First, that case was at the summary judgment stage after discovery had been completed.
Second, in that case, Corley alleged that “defendants made similar misrepresentations to other
prospective Rosewood residents and their relatives about the availability of private suites, the
availability of two entree choices at each meal, and the guarantee of continuing care with Medicaid
reimbursement first at the Peoria facility and then at the Rosewood facility in East Peoria, Illinois,”
CivCon fails to make any such specific allegations as to other unnamed plaintiffs. Corley, 142
The Court notes the similarities between the instant case and Wacker Drive Executive Suites, LLC v. Jones Lang
LaSalle Americas (Illinois), LP, Case No. 18-CV-5492, 2019 WL 2270000, *1 (N.D. Ill. May 28, 2019), a nonprecedential but recent decision in this District. The plaintiff there specifically pled two instances of the plaintiff
paying higher prices for union workers in 2014 and 2017. There was therefore a longer period of time in between
the well-pleaded allegations of the hot cargo agreement. The Court also notes that the defendant in Wacker Drive did
not challenge the continuity prong.
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F.3d at 1050. Therefore, Civcon has failed to state a RICO claim because it has not sufficiently
pled to meet the continuity-plus test.
Effect on Interstate Commerce
This Court would also grant Defendant’s Motion to Dismiss because Plaintiff has failed to
plead any effect on interstate commerce as required. To establish an effect on interstate commerce
in a RICO claim, a “minor or minimal influence on interstate commerce is sufficient,” and “the
required nexus between the activities of the enterprise and interstate commerce need not be great.”
United States v. Farmer, 924 F.2d 647, 651 (7th Cir. 1991); see also U.S. v. Espinoza, 52 Fed.
App’x 846, 849 (7th Cir. 2002) (RICO claim requires de minimis effect on interstate commerce).
Here, Plaintiff has not pled any effect on interstate commerce, as required under the test. Plaintiff
asks the Court to read between the lines and assume that since they plead that Accesso manages
numerous large commercial buildings in Chicago’s Loop, (Dkt. 1 ¶ 7), the tenants “undoubtedly
participate in interstate commerce.” (Dkt. 28 at 8). Plaintiff also claims that since they have pled
that Accesso is in an alleged RICO conspiracy with the unions this naturally gives rise to the
inference that interstate commerce was affected. In the case they cite as support, Shales v. General
Chauffeurs, Salesdrivers & Helpers Local Union No. 330, 04 C 8358, 2005 WL 8179183, *3 (N.D.
Ill. Aug. 17, 2005), the union was a named defendant in the case and plaintiff pled specifically that
the union was a local labor organization under 29 U.S.C. § 402(i), which specifically is defined as
a labor organization engaged in an industry affecting commerce, pleadings that are missing here.
Finally, Plaintiff claims that since they are a Florida-based company, this is sufficient to give rise
to an interstate effect for RICO purposes. The Court can find no support for this proposition.
Plaintiff has pled only facts relating to and impacting Illinois and the Complaint is wholly missing
any allegations related to an interstate effect. The Court declines to read into the Complaint to
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make up for deficient pleading. 2 While Plaintiff has a low bar of pleading de minimis effects,
failing to plead any interstate effect and only pleading an impact in Illinois is insufficient.
Accesso claims that CivCon’s allegations of a hot cargo agreement are preempted by the
NLRA under the doctrine of San Diego Bldg. Trades Council v. Garmon, 359 U.S. 236, 245
(1959). While Defendant agrees this is not a jurisdictional issue under 12(b)(1) in its Reply, its
initial Motion to Dismiss indicated it believed NLRB jurisdiction to preempt this Court’s
jurisdiction. This argument is unpersuasive and the Court wishes to clarify why NLRB jurisdiction
is not preemptive should Plaintiff amend its Complaint consistent with this opinion. As Defendant
acknowledges, if Congress did not expressly carve out the predicate act, i.e. conduct that is
arguably protected or prohibited by the NLRA, federal courts are precluded from hearing the case
unless the labor questions are peripheral. Kaiser Steel Corp. v. Mullins, 455 U.S. 72, 85 (1982).
However, the intersection between RICO and the NLRA is not a Rule 12(b)(1) subject
matter jurisdiction analysis and is analyzed under a 12(b)(6) motion to dismiss. As the Seventh
Circuit in Baker v. IBP, Inc., 357 F.3d 685, 688 (7th Cir. 2004) explained, “Federal statutes do not
“preempt” other federal statutes, and, though one may repeal another implicitly if they are
irreconcilable, RICO was enacted after the National Labor Relations Act. Federal laws do preempt
state laws, but preemption is a defense and thus does not affect subject-matter jurisdiction.” The
Baker Court found the district court’s grant of a motion to dismiss for lack of subject matter
jurisdiction improper because the RICO claim was not preempted under the Garmon doctrine,
Plaintiff also alleges a number of facts in its response (Dkt. 28) that are not included in the Complaint, such as that
CivCon’s rent payments are made to a Delaware corporation. Since they were not properly pled, the Court will not
consider them at this juncture.
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although it found there was a failure to state a RICO claim and affirmed the dismissal under Rule
12(b)(6). Id. at 691.
The RICO claim here is not preempted by the NLRA. In describing another decision,
Talbot v. Robert Matthews Distributing Co., 961 F.2d 654, 662 (7th Cir.1992), where the Court
did find a RICO claim preempted by the NLRA, the Baker Court stated that “it was vital
in Talbot that ‘the underlying conduct of the plaintiffs' RICO claim [was] wrongful only by virtue
of the labor laws.’” Baker, 357 F.3d at 688–89). However, the Court here is not being asked to
resolve whether the alleged hot cargo agreement violates the NLRA. The predicate claim under
RICO here is the Hobbs Act, not the NLRA. Solely because the resolution of the RICO claim may
touch on labor issues does not mean this Court is precluded from hearing the case. See Baker, 357
F.3d at 690 (“Many federal statutes require courts to resolve issues that touch on labor relations.
Consider ERISA: pension and welfare benefits often turn on the interpretation or validity of
collective bargaining agreements, questions that courts resolve without the Labor Board's
assistance. Just so with a claim under RICO.”) (internal citations omitted). It is also not clear the
NLRB would be able to hear a claim brought by the Plaintiff, who is a third-party and not subject
to the CBA between Accesso and the Unions. While the Court grants the motion to dismiss for
failure to plead a sufficient claim, it declines to do so on this ground.
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Because CivCon has failed to sufficiently plead a pattern of racketeering activity and an
interstate effect sufficient to state a RICO claim, Accesso’s Motion to Dismiss [Dkt. 23] is granted
without prejudice. CivCon is granted leave to amend its Complaint consistent with this Opinion,
if possible, within 21 days of the filing of this Opinion.
Virginia M. Kendall
United States District Judge
Date: October 15, 2020
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