Raven Securities, Inc. et al v. East St Louis IL et al

Filing 45

ORDER DISMISSING CASE, GRANTING 26 MOTION to Dismiss for Failure to State a Claim MOTION to Dismiss for Lack of Jurisdiction filed by City of East St Louis IL, 29 MOTION to Dismiss filed by Waste Management Inc. Counts I, II, IV-XVIII and plaintiffs prayers for punitivedamages are hereby DISMISSED with prejudice. Count III is DISMISSED without prejudice. The Clerk of the Court is DIRECTED to enter judgment on allcounts except Count III because the Court finds no just reason for delay. Signed by Chief Judge David R. Herndon on 07/02/2014. (kbl)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS

RAVEN SECURITIES, INC., HAWK
PROPERTIES, INC., and FALCON
LTD., on behalf of themselves and
others similarly situated,

No.

3:13-cv-639-DRH-PMF

Plaintiffs,
vs.

THE CITY OF EAST ST. LOUIS,
ILLINOIS, a municipal corporation,
WASTE MANAGEMENT OF ILLINOIS,
Defendants.

MEMORANDUM AND ORDER

HERNDON, Chief Judge:

This matter comes before the Court on defendant the City of East St. Louis,
Illinois’ (“the City”) and defendant Waste Management of Illinois, Inc.’s (“Waste
Management”) motions to dismiss (Docs. 26, 29). Plaintiffs oppose the motions
(Docs. 28, 32). The City replied (Doc. 31).
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As a preliminary matter, the City’s reply is hereby STRICKEN.

The City’s

reply is noting more than a disagreement with plaintiffs’ argument. Therefore, it
fails to meet Local Rule 7.1’s requirement of “exceptional circumstances.” For the
following reasons, the motions to dismiss are GRANTED.
I.

Background

In their eighteen-count amended complaint, plaintiffs generally allege the
following. The City used its Nuisance Ordinances 1 as to trash and garbage to
target plaintiffs and others similarly situated because they did not have or did not
pay for trash collection. Plaintiffs further allege a conspiracy between the City and
Waste Management whereby Waste Management would provide the City with a list
of delinquent customers and those customers would receive citations. Plaintiffs
seek relief, on behalf of themselves and all others similarly situated, pursuant to 42
U.S.C. § 1983, the Fourteenth Amendment, the Fair Debt Collection Practices Act,
the Sherman Antitrust Act, and various Illinois state statutes.
In its motion to dismiss, the City asserts that the amended complaint should
be dismissed pursuant to Federal Rules of Civil Procedure 9(b), 12(b)(1) and
12(b)(6). Shortly thereafter, Waste Management also filed a motion to dismiss the
claims against it (Counts II and IV) pursuant to Federal Rule of Civil Procedure
12(b)(6).

In its response to the City’s motion to dismiss (Doc. 28), plaintiffs

concede that Counts V, VIII, X, and XVII cannot be maintained and voluntarily
dismiss them. Plaintiffs also concede to the City’s request to strike all prayers for
1

East St. Louis, Illinois Code of Ordinances, Chapter 50, Article III, Sections 71 & 72.

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punitive damages against the City. The specific arguments relating the remaining
claims will be addressed below.
II.

Analysis

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6)
challenges the sufficiency of the complaint for failure to state a claim upon which
relief may be granted. Gen. Elc. Capital Corp. v. Lease Resolution Corp., 128
F.3d 1074, 1080 (7th Cir. 1997). To survive a motion to dismiss, a complaint
must establish a plausible right to relief. Bell Atl. Corp. v. Twombly, 550 U.S.
544, 555 (2007). The allegations of the complaint must be sufficient “to raise a
right to relief above the speculative level.” Id. In making this assessment, the
district court accepts as true all well-pleaded factual allegations and draws all
reasonable inferences in the plaintiff’s favor. See Rujawitz v. Martin, 561 F.3d
685, 688 (7th Cir. 2009); St. John’s United Church of Christ v. City of Chi., 502
F.3d 616, 625 (7th Cir. 2007).
A.

Violation of the Fair Debt Collection Practices Act (Counts I & II)
Plaintiffs bring Fair Debt Collection Practices Act (“FDCPA”) claims against

both the City and Waste Management. Plaintiffs assert that the City violated the
FDCPA by (1) falsely representing to consumers that they committed a crime, (2)
communicating credit information which was known or should have been known to
be false, (3) using false representations or deceptive means to collect or attempt to
collect any debt, and (4) using unfair or unconscionable means to collect or attempt

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to collect an amount that is not expressly permitted by law (Am. Compl. at 10-11)
(Count I).

Plaintiffs assert that Waste Management violated the FDCPA by

publishing to the City a list of consumers who allegedly refuse to pay debts owed to
Waste Management (Am. Compl. at 11) (Count II).
The FDCPA generally prohibits “debt collectors” from engaging in abusive,
deceptive, or unfair debt-collection practices.

See 15 U.S.C. § 1692 et seq.

Specifically, it prohibits debt collectors from engaging in harassing, oppressive, or
abusive measures to collect a debt, § 1692d, and bans the use of false, deceptive,
misleading, unfair, or unconscionable means of collecting a debt. §§ 1692e, 1692f.
The FDCPA does not apply unless two threshold requirements are satisfied.
First, the defendant must qualify as a “debt collector,” defined as,
[A]ny person who uses any instrumentality of interstate commerce or the
mails in any business the principal purpose of which is the collection of any
debts, or who regularly collects or attempts to collect, directly or indirectly,
debts owed or due or asserted to be owed or due another.
§ 1692a(6). Second, the debt collector must have made the communication “in
connection with the collection of any debt.” §§ 1692c(a)-(b), 1692e, 1692g.
Defendants assert that they are not “debt collectors” under the statute.
Specifically, the City argues that the complaint does not allege that the City used any
“instrumentality of interstate commerce or the mails” and also fails to allege any
facts that establish that the City is “the business of which is the collection of any
debts, or who regularly collects or attempts to collect, directly or indirectly, debts
owed or due or asserted to be owed or due another” (Doc. 27 at 6).
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Waste

Management asserts that it is not a debt collector but instead a creditor under the
complaint’s allegations, that the allegations establish that Waste Management is the
person to “whom the debt is owed” (Doc. 30 at 2).
In their responses, plaintiffs assert that they have successfully pled claims
against both the City and Waste Management under the FDCPA.

Specifically,

plaintiffs argue that the City falls under the second portion of the debt collector
definition as it attempted to collect the debts owed to Waste Management indirectly
by issuing citations to those who were delinquent on their Waste Management bill.
Regarding Waste Management, plaintiffs assert that while creditors are generally
excluded from the definition of debt collector, Waste Management would fall under
the false name exception as outlined in Avila v. Rubin, 84 F.3d 222 (7th Cir. 1996).
Further, plaintiffs argue that the debts at issue are primarily for personal, family, or
household purposes because the properties at issue are lease to own properties and
citations are issued to the renters.
The Court concurs with defendants.

Neither the City nor Waste

Management is a debt collector as defined by the FDCPA. A reasonable inference
in favor of plaintiffs is that the City receives a list of delinquent Waste Management
account holders and the City uses this list to issues citations under its nuisance
ordinance.

However, these allegations, even if ultimately proven true, do not

establish that the City collects debts on behalf of Waste Management. A fine is not
a debt under the FDCPA and plaintiffs do not allege that the collected fines are given

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to Waste Management.

Even if the issuance of fines economically incentivizes

plaintiffs to maintain trash collection service with Waste Management, this
assertion does not establish that the City is a debt collector under FDCPA.
Plaintiffs have also failed to establish that Waste Management is a debt
collector under the FDCPA. Under the FDCPA, a creditor is “any person who
offers or extends credit creating a debt or to whom a debt is owed . . . .” 15 U.S.C.
§ 1692a(4). Plaintiffs clearly allege that Waste Management provides “to the City a
list of consumers who allegedly refuse to pay debts owed to Waste Management”
(Am. Compl. at 11) (emphasis added). Therefore Waste Management is a creditor
not a debt collector and “[a]n entity that tries to collect money owed to itself is
outside the FDCPA.” Carter v. AMC, LLC, 645 F.3d 840, 842 (7th Cir. 2011).
In their response, plaintiffs counter that the false name exception applies as
outlined in Avila, 84 F.3d at 227-228.

While the Seventh Circuit certainly

recognizes an alias or false name exception to the creditor rule, Waste Management
does not fall into this exception. Nielsen v. Dickerson, 307 F.3d 623, 631 (7th Cir.
2002) (“[A] creditor or an affiliate of a creditor who uses someone else’s name so as
to suggest to the debtor that a third party is involved in the debt collection process,
when in fact that party is not involved, can be treated as a ‘debt collector’ under the
FDCPA”).

Plaintiffs’ reliance on Avila is misplaced.

Even assuming the

allegations in the complaint are true, they fail to establish that the City is acting as a
puppet for Waste Management as required under this exception. See Avila, 84

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F.3d at 229.
Finally, plaintiffs do not fall into the class of individuals the FDCPA was
intended to protect. Plaintiffs are not “consumers” under the FDCPA. 15 U.S.C. §
1692a(3) (“The term ‘consumer’ means any natural person obligated or allegedly
obligated to pay any debt”).
natural persons.

Plaintiffs are clearly business organizations, not

Even if plaintiffs were natural persons, obligations owed by

individuals who own their property for business purposes do not qualify as debts
under the FDCPA because the services provided are not “primarily for personal,
family, or household purposes.” 15 U.S.C. § 1692a(5); see also Miller v. McCalla,
Raymer, Padrick, Cobb, Nichols, & Clark, LLC, 214 F.3d 872, 874-75 (7th Cir.
2000). Therefore, Counts I and II are DISMISSED with prejudice.
B.

Violation of 42 U.S.C. § 1983 (Count III)
Plaintiffs next assert that the City violated Section 1983 by denying plaintiffs’,

and other class members, due process rights under the Fourteenth Amendment
when it conducted hearings regarding the nuisance citations without taking the
necessary steps to ensure fairness prior to a possible deprivation of property.
Plaintiffs specifically list the following alleged violations: not having an impartial
hearing officer, not having a qualified hearing officer, and failing to separate the
duties of police officer and hearing officer.
In its motion to dismiss, the City asserts that plaintiffs lack standing to bring
their Section 1983 claim because they fail to allege an injury in fact. The City also

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argues that plaintiffs dot not allege causation because they fail to allege that they
were subjected to a particular administrative determination where the hearing
officer was also the person who issued the citation or who was not trained.
Plaintiffs

respond

indicating

that

their

statements

regarding

their

“information and belief” are nothing more than boilerplate language and that they
include, as exhibits, citations 2 indicating that plaintiffs have suffered a direct
injury. They also respond that they are not required to allege specific allegations
regarding the hearing officers’ lack of training.
As a preliminary matter, the Court will treat the citations as a part of
plaintiffs’ pleadings.

Fed. R. Civ. P. 10(c); see also Gburek v. Litton Loan

Servicing LP, 614 F.3d 380, 384 (7th Cir. 2010). The Court also notes that while
the Court has the authority to dismiss this claim because plaintiffs fail to cite to any
legal authority in support of their position as required by Local Rule 7.1(d), the
Court will review it.
A plaintiff has standing if she suffered an “injury in fact,” there is a causal
connection between the injury and the conduct complained of, and it is “likely” that
the injury will be “redressed by a favorable decision.”

Lujan v. Defenders of

Wildlife, 504 U.S. 555, 560 (1992). An injury in fact is defined as an invasion of a
legally protected interest which was both concrete and particularized and actual or
imminent, not conjectural or hypothetical. Id. (internal citations and quotations
2

One against Falcon dated 04/26/2014 (Doc. 16-1), two against Hawk dated 4/3/2013 and
4/24/2013 (Docs. 16-2, 16-3), two against Raven dated 2/15/2013 and 4/5/2013 (Docs. 16-4, 16-5),
and one against Illinois Realty Group (Doc. 16-4).

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omitted). “The party invoking federal jurisdiction bears the burden of establishing
the elements of standing.” Perry v. Vill. Of Arlington Heights, 186 F.3d 826, 829
(7th Cir. 1999) (citing Lujan, 504 U.S. at 561).
Plaintiffs’ claim violations of their due process rights, specifically those
issues indicated above.
establish standing.

However, plaintiffs have not alleged facts sufficient to

Their allegations not only include the phrase “upon

information and belief” but the factual paragraphs addressing the Section 1983
claim are extremely vague. Specifically plaintiffs fail to allege that they participated
in any hearing with a defect or received a result from such a hearing. Statements
that the hearing officer is “often” the same person who issued the citation or that
“the same person usually plays the role of policeman, judge, jury, and executioner”
are not sufficient to establish that these alleged violations of their due process rights
caused the citations to be issued (Am. Compl. ¶¶ 27, 28). Furthermore, they note a
“possible deprivation of property.” These allegations are insufficient to establish
that the plaintiffs have standing to assert this claim. While plaintiffs direct the
Court to the citations appended to their complaint, the citations themselves are
insufficient to establish standing as they do not indicate any of the alleged
constitutional violations asserted.
Therefore, Count III is DISMISSED without prejudice.
E.

State Law Claims (Counts IV, V, VI, VII, IX, X, XI, XII, XIII, XV, XVI, XVII,

and XVIII)

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Plaintiffs allege several state law claims against the City: Conspiracy (Count
IV); Violation of the Illinois Municipal Code (Count V); Abuse of Process (Count VI),
Malicious Prosecution (Count VII); violation of the Illinois Collection Agency Act
(Count VIII); violation of the Illinois Uniform Deceptive Trade Practices Act (Count
IX); violation of the Illinois Consumer Fraud and Deceptive Practices Act (Count X);
Fraud

(Count

XI);

Fraudulent

Concealment

(Count

XII);

Intentional

Misrepresentation (Count XIII); Negligent Misrepresentation (Count XIV); Slander
per se (Count XV); Slander per quod (Count XVI); Intentional Infliction of
Emotional Distress (Count XVII); Interference with a Prospective Business
Advantage (Count XVIII).
In its motion to dismiss, the City argues that Counts VI, VII, IX, X, XI, XII,
XIII, XIV, XV, XVI, XVII, and XVIII are barred under issue preclusion, that the City’s
nuisance ordinances do not support the plaintiffs’ theories in Counts IV, VI, VII, IX,
X, XII, XII, XIII, XIV, XV, XVI, XVII, and XVIII; that Count VIII should be dismissed
as the ICAA is not applicable to the City; plaintiffs’ fraud based claims, Counts X,
XI, XII, XIII, XIV, XV, XVI, XVII, and XVIII, do not comply with Rule 9(b); that Count
X should be dismissed because the ICFA does not apply to the City; Count XVII
should be dismissed because plaintiffs, as non-natural persons, cannot bring a
claim for emotional distress; and Count V should be dismissed because the City did
not violate the Illinois Municipal Code.

Again, the Court will not address any

arguments as they relate to Counts V, VIII, X, and XVII because plaintiffs have

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voluntarily dismissed these claims. The Court will therefore address the issues as
they relate to remaining state law claims below.
1. Issue Preclusion
The collateral-estoppel, or issue-preclusion, doctrine “is central to the
purposes for which civil courts have been established, the conclusive resolution of
disputes within their jurisdiction.” Montana v. United States, 440 U.S. 147, 153,
(1979). Under the doctrine, “once a court has decided an issue of fact or law
necessary to its judgment, that decision may preclude relitigation of the issue in a
suit on a different cause of action involving a party to the first case.” Allen v.
McCurry, 449 U.S. 90, 94 (1983) (citing Montana); see also Adair v. Sherman, 230
F.3d 890, 893 (7th Cir. 2000).

The doctrine thus “has the dual purpose of

protecting litigants from the burden of relitigating an identical issue with the same
party or his privy and of promoting judicial economy by preventing needless
litigation.” Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326 (1979).
“Federal courts may not employ their own rules in determining the effect of
state judgments, bust must accept the rules chosen by the State from which the
judgment is taken. Matsushita Elec. Indus. Co., Ltd. v. Epstein, 516 U.S. 367,
373 (1996). Therefore, here the Court must employ Illinois law. Under Illinois
law, an issue litigated in a prior proceeding may not be relitigated if: “(1) there was
a final judgment on the merits rendered by a court of competent jurisdiction, (2)
there is an identity of cause of action, and (3) there is an identity of parties or their

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privies.” Dookeran v. County of Cook, Illinois, 719 F.3d 570, 575 (7th Cir. 2013)
(citing Nowak v. St. Rita High Sch., 757 N.E.2s 471, 477 (Ill. 2001)). “Issue
preclusion is an affirmative defense and the party asserting it has the burden of
proof.” E.E.O.C. v. AutoZone, Inc., 707 F.3d 824, 831-32 (7th Cir. 2013).
Here, the City seeks to invoke issue preclusion based on the prior
administrative adjudications of the nuisance violations. The City asserts that the
adjudication of these citations are “the bedrock upon which Plaintiffs’ claims
against the City in Counts VI, VII, IX, X, XI, XII, XIII, XIV, XV, XVI, XVII, and XVIII
rests” (Doc. 27 at 10). Plaintiffs respond that issue preclusion is inapplicable as
the complaint does not indicate an actual adjudication or determination on the
merits of these claims. Plaintiffs also state that many of these citations have not yet
received a final determination as they are still in the process of trying to resolve this
dispute with the City.
Applying the test set forth by the Illinois courts, the Court finds issue
preclusion inapplicable in this instance. Counts VI (“abuse of process”) and VII
(“malicious prosecution”) do not require a final determination and would not be
barred pursuant to issue preclusion. The foundation of the remaining claims,
Counts IX-XVIII, appears to the Court to be the issuance of the citations, not the
final adjudication of them.
2. Nuisance Ordinances
The City next asserts that Counts IV, VI, VII, IX-XVIII rest “upon a theory that

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the Nuisance Ordinances do not require trash collections services” and should be
dismissed because the Defendant contends that it has sufficiently put the City on
notice that “they are being accused of issuing citations for failure to have trash
service under the guise of a nuisance ordinance” (Doc. 28 at 13).

Plaintiffs

respond, asserting that the City’s nuisance Ordinances support their claims.
Specifically, plaintiffs argue that they are not challenging the validity of the
ordinances but “the City’s conduct and motives in wielding their ordinance power”
(Doc. 28 at 11). The Court again notes that plaintiffs fail to cite any legal authority.
The Court will address Count IV, the Conspiracy claim, below.
The Court finds that the foundation of plaintiffs’ claims is that the citations
were issued by the City for “failure to have a trash service provider” or “trash
service” (See, e.g., Doc. 16 at 15, 16, 18, 19, 20, 21, 22, 23, 26). Plaintiffs indicate
in their complaint that, “The City’s false statements that a trash service provider
was required . . .” (Doc. 16 at 22) and “No Illinois State statute requires a person to
have a trash service provider” (Doc. 16 at 3). In fact, pursuant to East Saint Louis
Code, trash service is a requirement. Specifically, “All owners of real estate . . ., in
the absence of a citywide or neighborhood contract for curbside or alley refuse
pickup, shall arrange for such pickup no less than weekly by a private hauler who
has received a permit under this article.” East Saint Louis, Ill., Code § 94-61
(2003); East Saint Louis, Ill., Ordinance 91-10050 (Nov. 6, 1991).
Plaintiffs may assert that the true issue is that the citations indicate a

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violation of a nuisance ordinance not a violation of the trash service ordinance. As
previously discussed, the plaintiffs then assert that these nuisance violations were
used to compel them to enlist the trash service with Waste Management. However,
upon review of the “East Saint Louis Sanitation Code,” the Court finds that the City
has the authority to either provide citywide or neighborhood contract or may
choose to only license one provider. In this case, the only licensed trash collector
pursuant to the City Code is Waste Management.

Therefore, even if Waste

Management was providing a list to the City of properties delinquent on their Waste
Management bills there is nothing in plaintiffs’ complaint that indicates 1) that this
practice was unlawful or 2) that this was used as coercion for anything but already
legally proscribed activity, namely providing the legally required trash service and
maintaining clean streets in the City.

Therefore, the Court DISMISSES with

prejudice Counts VI, VII, IX, XI-XVI, and XVIII.
3. Fraud
The City next asserts that Counts X-XVIII, plaintiffs’ fraud counts, should be
dismissed for failure to comply with Federal Rule of Civil Procedure 9(b).
Plaintiffs assert that they have satisfied the requirement.

Specifically, the

allegations adequately describe the time, place, and particular content of the false
representations. While the Court has dismissed these counts with prejudice as
without merit, the Court will address the heightened pleading standard of Rule 9(b).
Pursuant to Rule 9(b)’s heightened pleading standards, “In alleging fraud or

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mistake, a party must state with particularity the circumstances constituting fraud
or mistake. Malice, intent, knowledge, and other conditions of a person’s mind
may be alleged generally.”

“And that means describing the who, what, when,

where, and how of the fraud.” Cincinnati Life Ins. Co. v. Beyrer, 722 F.3d 939,
950 (7th Cir. 2013) (internal citations and quotations omitted).
Rule 9(b) therefore provides the Court with an alternative means to dismiss
these Counts. Plaintiffs assert that the who, what, where, when and how is that
“the City (who) has been fraudulently issuing citations to its citizens for failure to
have a trash service provider under an ordinance that does not require having a
trash service provider and issuing citations to those who have committed no
ordinance violation at all in furtherance of Waste Management’s bill collection
(what, where, and how . . .) (Doc. 28 at 16). However, the Court fails to see any
fraudulent activity in that statement. In the light most favorable to the plaintiffs,
again, even if the City is relying on the list provided by Waste Management, it is not
collecting funds on behalf of Waste Management but instead, issuing citations for
the alleged buildup of refuse. The companies are then afforded a hearing on the
issue and, if an outcome was indicated in the complaint, would have the ability to
appeal said decision to the appropriate state court. Therefore, any publication of
this information on public websites in accordance with the City’s internal reporting
procedures or to external collection agencies would also not amount to slander nor
does it amount to a unjustifiable or wrongful interference with plaintiffs’

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prospective business advantage.

The Court therefore alternatively dismisses

Counts XI-XVI and XVIII for failure to meet the heightened pleading requirements of
Rule 9(b).
4. Conspiracy
In Count IV, plaintiffs allege that the defendants agreed and combined to
wrongfully accomplish the collection of Waste Management debts. They assert that
by wrongfully issuing citations for failure to have a trash service provider, the City
committed an overt act in furtherance of the conspiracy. In its motion to dismiss,
Waste Management argues that plaintiffs have failed to allege that Waste
Management violated Illinois state law, thus plaintiffs’ state law conspiracy must be
dismissed against Waste Management. The Court need not go into much detail
here. As the underlying tort claims have failed, so must the conspiracy claim.
Coghlan v. Beck, 984 N.E.2d 132, 150 (Ill. App. 2013) (“[C]onspiracy is not an
independent tort: the conspiracy claim fails if the independent cause of action
underlying the conspiracy allegation fails.”)

Therefore, the Court DISMISSES

Count IV with prejudice.

III.

Conclusion

For the reasons stated above, the Court GRANTS defendants’ motions to
dismiss (Docs. 26, 29). Counts I, II, IV-XVIII and plaintiffs’ prayers for punitive
damages are hereby DISMISSED with prejudice.

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Count III is DISMISSED

without prejudice.

The Clerk of the Court is DIRECTED to enter judgment on all

counts except Count III because the Court finds no just reason for delay.
IT IS SO ORDERED.

Digitally signed by
David R. Herndon
Date: 2014.07.02
14:32:40 -05'00'
Chief Judge
United States District Court

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