RJB Properties v. Bd. of Educ. of the City of Chicago, No 06-1547 (7th Cir. Nov. 15, 2006)
The U.S. Court of Appeals for the Seventh Circuit has held that a lower court properly dismissed a lawsuit by a vendor that claimed its Fourteenth Amendment rights to equal protection and due process were violated when the school board of Chicago Public Schools (CPS) denied it two contracts to provide janitorial services. RJB, a minority-owned business that had won CPS contracts in the past, submitted a bid in response to a September 2004 request-for-proposal (RFP) for janitorial services. When school board president Michael Scott received the CPS staff recommendation that RJB be awarded a contract, he asked staff to check whether there were any past issues with RJB’s contract performance. Staff found that a 2001 investigative report by the board’s Office of Inspector General (OIG) had found that RJB was merely acting as a broker for other milk vendors, rather than participating directly, as the contract required. A 2004 OIG report suggested RJB "was involved in a wide range of suspicious activity: performing no ‘commercially independent function’ as a minority-owned subcontractor; refusing to provide information about income it received as a subcontractor for a majority-owned company; overcharging the school board for milk; passing money designated for a minority-owned business to a majority-owned company; and making fraudulent misrepresentations in contractor disclosure documents." The board decided not to award RJB a contract and later declined to do so under a second RFP issued in April 2004. While the board’s Procurement Department issued a memorandum noting the board had determined RJB was "non-responsible," the board’s letters to RJB were the standard "will not award letters." The board later awarded contracts to other companies it had investigated along with RJB. RJB sued on equal protection, due process, and state law grounds, but the U.S. district court granted the board’s motion for summary judgment in the case.
The Seventh Circuit affirmed, finding that RJB had failed to offer evidence from which a jury reasonably could have found in its favor. Since RJB’s "class of one" equal protection claim did not involve a fundamental right or suspect classification like race, CPS merely needed to show it had a "rational basis" for its decisions. A "class of one" claim requires the plaintiff to meet the "very significant burden" of showing the government treated other "similarly situated" entities differently. The court found the OIG allegations against the other companies were different from those leveled against RJB, so the board rationally could have concluded RJB posed a greater risk of future misconduct. That the board’s rationale differed from the one revealed in a staff e-mail exchange later obtained by RJB was irrelevant, because prior case law has established that "the government may defend the rationality of its action on any ground it can muster, not just the one articulated at the time of the decision." Nor did RJB denials of misconduct matter; OIG’s suspicion was enough to justify the board’s decision, "even if not confirmed by evidence satisfying some burden of proof."
As to RJB’s procedural due process claim, the court noted that RJB must prove that CPS deprived it of a protected liberty or property interest and in so doing failed to provide RJB adequate process. The court rejected RJB’s allegation that the school board deprived it of a liberty interest in its good name by publicly disclosing stigmatizing information or precluded it from pursuing employment. Although the board had placed stigmatizing information in documents available to the public under the Illinois Freedom of Information Act, the Seventh Circuit has previously ruled that information is not considered "publicly disseminated" where it may be, but has not yet been, disclosed to third parties.
RJB Properties v. Bd. of Educ. of the City of Chicago, No 06-1547 (7th Cir. Nov. 15, 2006)
[Full opinion]